<PAGE>
As filed with the Securities and Exchange Commission on September 11, 2000
Registration No. 333-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
---------------------
A. Exact Name of Trust:
NATIONAL EQUITY TRUST
Forbes Semiconductor Index Trust
B. Name of depositor:
PRUDENTIAL SECURITIES INCORPORATED
C. Complete address of depositor's principal executive office:
One Seaport Plaza
199 Water Street
New York, New York 10292
D. Name and complete address of agent for service:
Copy to:
NOAH D. SORKIN, ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
E. Title and amount of securities being registered:
An indefinite number of Units of
NATIONAL EQUITY TRUST,
Forbes Semiconductor Index Trust
Pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940 as amended
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
Indefinite
G. Amount of filing fee:
N/A
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the registration
statement.
===========================================================================
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall hereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
NATIONAL EQUITY TRUST
Forbes Semiconductor Index Trust
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Trust .........................) Prospectus front cover
(b) Title of securities issued ............)
2. Name and address of each depositor .......... Sponsor; Prospectus back
cover
3. Name and address of trustee ................. Trustee
4. Name and address of each principal
underwriter ............................... Sponsor
5. State of organization of trust .............. The Trust
6. Execution and termination of trust
agreement ................................. Summary of Essential
Information; The
Trust; Amendment and
Termination of the
Indenture
7. Changes of Name .............................) *
8. Fiscal year .................................) *
9. Litigation ..................................) *
II. General Description of the Trust and
Securities of the Trust
-----------------------
* Inapplicable, answer negative or not required.
i
<PAGE>
10. (a) Registered or bearer securities .......) *
(b) Cumulative or distributive
securities .......................... *
(c) Redemption ............................ Rights of Unit Holders
-- Redemption
(d) Conversion, transfer, etc. ............ Rights of Unit Holders
-- Redemption
(e) Periodic payment plan .................) *
(f) Voting rights ......................... *
(g) Notice to certificateholders .......... The Trust; Rights of
Unit Holders -- Reports
and Records; Sponsor
-- Responsibility;
Sponsor --
Resignation; Trustee
-- Resignation;
Amendment and
Termination of the
Indenture
(h) Consents required ..................... The Trust; Amendment and
Termination of the
Indenture
(i) Other provisions ...................... Tax Status
11. Type of securities comprising units ......... Prospectus front cover;
Objective; Security
Selection; The Trust
12. Certain information regarding
periodic payment certificates ............. *
13. (a) Load, fees, expenses, etc. ............ Summary of Essential
Information; Public
Offering of Units --
Public Offering Price;
Public Offering of
Units -- Sponsor's and
Underwriter's Profits;
Public Offering of
Units -- Volume
Discount; Public
Offering of Units --
Employee Discount;
Exchange Option;
Reinvestment Program;
Expenses and Charges;
Sponsor --
Responsibility
-----------------------
* Inapplicable, answer negative or not required.
ii
<PAGE>
(b) Certain information regarding
periodic payment certificates ....... *
(c) Certain percentages ................... Summary of Essential
Information; Public
Offering of Units --
Public Offering Price;
Public Offering of Units
-- Profit of Sponsor;
Public Offering of Units
-- Volume Discount;
Public Offering of Units
-- Employee Discount;
Exchange Option
(d) Price Differentials ................... Public Offering of Units
-- Employee Discount
(e) Certain other fees, etc. payable
by holders .......................... Rights of Unit Holders
-- Certificates
(f) Certain other profits receivable
by depositor, principal under-
writer, trustee or affiliated
persons ............................. The Trust -- Objectives
and Securities
Selection; Rights of
Unit Holders --
Redemption -- Purchase
by the Sponsor of
Units Tendered for
Redemption
(g) Ratio of annual charges to
income .............................. *
14. Issuance of trust's securities .............. The Trust; Rights of
Unit Holders --
Certificates
15. Receipt and handling of payments from
purchasers ................................ *
16. Acquisition and disposition of under-
lying securities .......................... The Trust -- Portfolio
Summary; The Trust --
Objectives and
Securities Selection;
Rights of Unit Holders
-----------------------
* Inapplicable, answer negative or not required.
iii
<PAGE>
-- Redemption; Sponsor
- Responsibility
17. Withdrawal or redemption .................... Rights of Unit Holders
-- Redemption
18. (a) Receipt, custody and disposition
of income ........................... Rights of Unit Holders
-- Distribution of
Interest and
Principal; Rights of
Unit Holders - Reports
and Records
(b) Reinvestment of distributions ......... Reinvestment Programs
(c) Reserves or special funds ............. Expenses and Charges;
Rights of Unit Holders
-- Distribution of
Interest and Principal
(d) Schedule of distributions ............. *
19. Records, accounts and reports ............... Rights of Unit Holders
-- Distributions of
Interest and
Principal; Rights of
Unit Holders --
Reports and Records
20. Certain miscellaneous provisions of
trust agreement ........................... Sponsor -- Limitations
on Liabil-
(a) Amendment .............................) ity; Sponsor --
Resignation;
(b) Termination ...........................) Trustee -- Limitations
on Liabil-
(c) and (d) Trustee, removal and ity; Trustee -
successor ...........................) Resignation;
Amendment and
Termination of
(e) and (f) Depositor, removal and the Indenture
successor ...........................)
21. Loans to security holders ................... *
22. Limitation on liability ..................... The Trust -- Portfolio
Summary; Sponsor --
Limitations on
Liability; Trustee --
-----------------------
* Inapplicable, answer negative or not required.
iv
<PAGE>
Limitations on
Liability; Evaluator
-- Limitations on
Liability
23. Bonding arrangements ........................ Additional Information
-- Item A
24. Other material provisions of trust
agreement ................................. *
III. Organization, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor ................... Sponsor
26. Fees received by depositor .................. *
27. Business of depositor ....................... Sponsor
28. Certain information as to officials
and affiliated persons of
depositor ................................. Contents of Registration
Statement -- Part II
29. Companies controlling depositor ............. Sponsor
30. Persons controlling depositor ............... *
31. Payments by depositor for certain
services rendered to trust ................) *
32. Payments by depositor for certain
other services rendered to trust ..........) *
33. Remuneration of employees of depositor
for certain services rendered to
trust .....................................) *
34. Remuneration of other persons for
certain services rendered to trust ........) *
35. Distribution of trust's securities
in states ................................. Public Offering of Units
-- Public Distribution
-----------------------
* Inapplicable, answer negative or not required.
v
<PAGE>
36. Suspension of sales of trust's
securities ................................) *
37. Revocation of authority to distribute .......) *
38. (a) Method of distribution ................) *
(b) Underwriting agreements ............... Public Offering of Units
(c) Selling agreements ....................) *
39. (a) Organization of principal under-
writer ..............................) Sponsor
(b) N.A.S.D. membership of principal
underwriter .........................) Sponsor
40. Certain fees received by principal
underwriter ............................... *
41. (a) Business of principal underwriter ..... Sponsor
(b) Branch offices of principal
underwriter .........................) *
(c) Salesmen of principal underwriter .....) *
42. Ownership of trust's securities by
certain persons ...........................) *
43. Certain brokerage commissions received
by principal underwriter ..................) *
44. (a) Method of valuation ................... Summary of Essential
Information; Public
Offering of Units --
Public Offering Price;
Public Offering of
Units -- Public
Distribution; Public
Offering of Units --
Secondary Market
(b) Schedule as to offering price ......... *
(c) Variation in offering price to
certain persons ..................... Public Offering of Units
-- Public
Distribution; Public
Offering of Units --
Volume Discount;
Public Offering of
Units -- Employee
-----------------------
* Inapplicable, answer negative or not required.
vi
<PAGE>
Discount; Exchange
Option
45. Suspension of redemption rights ............. *
46. (a) Redemption Valuation .................. Summary of Essential
Information; Rights of
Unit Holders --
Redemption --
Computation of
Redemption Price per
Unit
(b) Schedule as to redemption price ....... *
47. Maintenance of position in underlying
securities ................................ Public Offering of Units
-- Secondary Market;
Rights of Unit Holders
-- Redemption --
Computation of
Redemption Price per
Unit; Rights of Unit
Holders -- Redemption
-- Purchase by the
Sponsor of Units
Tendered for
Redemption
IV. Information Concerning the Trustee
or Custodian
48. Organization and regulation of
trustee ................................... Trustee
49. Fees and expenses of trustee ................ Expenses and Charges
50. Trustee's lien .............................. Expenses and Charges --
Other Charges
V. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's
securities ................................. The Trust -- Insurance
on the Securities in
the Portfolio of an
Insured Trust
-----------------------
* Inapplicable, answer negative or not required.
vii
<PAGE>
VI. Policy of Registrant
52. (a) Provisions of trust agreement with
respect to selection or elimina-
tion of underlying securities ....... Prospectus front cover;
The Trust -- Portfolio
Summary; The Trust --
Insurance on the
Securities in the
Portfolio of an Insured
Trust; The Trust --
Objectives and
Securities Selection;
Sponsor --
Responsibility
(b) Transactions involving elimination
of underlying securities ............ *
(c) Policy regarding substitution or
elimination of underlying
securities .......................... Sponsor --
Responsibility
(d) Fundamental policy not otherwise
covered ............................. *
53. Tax status of trust ......................... Prospectus front cover;
Tax Status
VII. Financial and Statistical Information
54. Trust's securities during last ten
years .....................................) *
55. )
56. Certain information regarding periodic
payment certificates ......................) *
57. )
58. )
59. Financial statements (Instruction 1(c)
to Form S-6) .............................. Statement of Financial
Condition of the Trust
-----------------------
* Inapplicable, answer negative or not required.
viii
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 11, 2000
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
[LOGO]
--------------------------------------------------------------------------------
The objective of the Trust is capital appreciation. The Trust will invest in a
portfolio consisting of the common stocks in the Forbes Semiconductor Index.
--------------------------------------------------------------------------------
SPONSOR:
[LOGO]
PLEASE READ AND RETAIN Prospectus dated , 2000
THIS PROSPECTUS FOR FUTURE REFERENCE.
--------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved these
securities, or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------
<PAGE>
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................ A-1
Fee Table............................................................... A-3
Summary of Essential Information........................................ A-4
Independent Auditors' Report............................................ A-7
Statement of Financial Condition........................................ A-8
Schedule of Portfolio Securities........................................ A-9
The Trust............................................................... B-1
Summary Description of the Portfolio.................................. B-1
Risk Factors............................................................ B-2
Market Risks.......................................................... B-2
Fluctuating Security Value............................................ B-2
Payment Risks......................................................... B-2
Unit Creation........................................................... B-3
Deposit of Securities................................................. B-3
Tax Status of the Trust................................................. B-4
Retirement Plans........................................................ B-6
Public Offering of Units................................................ B-6
Public Offering Price................................................. B-6
Sales Charge.......................................................... B-6
Public Distribution................................................... B-7
Secondary Market...................................................... B-8
Profit of Sponsor..................................................... B-8
Volume Discount....................................................... B-8
Employee Discount..................................................... B-9
Rights of Unit Holders.................................................. B-9
Ownership of Units.................................................... B-9
Certain Limitations................................................... B-9
Distribution.......................................................... B-9
Tender of Units for Redemption........................................ B-10
Purchase by the Sponsor of Units Tendered for Redemption.............. B-11
Computation of Redemption Price per Unit.............................. B-11
Exchange Option......................................................... B-12
Expenses and Charges.................................................... B-13
Organization Costs.................................................... B-13
Trust Fees and Expenses............................................... B-13
Creation and Development Fee.......................................... B-13
Other Charges......................................................... B-13
Administration of the Trust............................................. B-14
Reports and Records................................................... B-14
Amendment............................................................... B-16
Termination............................................................. B-16
Termination Options................................................... B-16
Resignation, Removal and Liability...................................... B-18
Trustee................................................................. B-18
Limitations on Liability.............................................. B-18
Responsibility........................................................ B-18
Resignation........................................................... B-18
Sponsor................................................................. B-18
Limitations on Liability.............................................. B-19
Responsibility........................................................ B-19
Resignation........................................................... B-19
Code of Ethics........................................................ B-19
Legal Opinions.......................................................... B-20
Independent Auditors.................................................... B-20
</TABLE>
<PAGE>
OBJECTIVE--The objective of the National Equity Trust, Forbes Semiconductor
Index Trust (the "Trust") is capital appreciation. The Trust seeks to achieve
its objective through an investment for approximately three years in a portfolio
of the Securities in the Forbes Semiconductor Index.
o Capital appreciation: an increase in the value per Unit of the Securities
in the Portfolio of the Trust at the termination of the Trust when compared
to the value per Unit of the Securities in the Portfolio of the Trust at the
commencement of the Trust.
Dividend income is not an objective of the Trust.
STRATEGY--The Trust Portfolio consists of common stock issued by the 25
companies whose stocks constitute the Forbes Semiconductor Index* (the
"Securities" or "Security" as the context requires).
The Securities were selected irrespective of any buy or sell recommendation
by the Sponsor. The Sponsor may have a sell recommendation on one or more of the
stocks in the Trust.
SECURITIES SELECTION. The Securities in the Forbes Semiconductor Index
(the "Index") are determined by Forbes as follows:
The Index is an equally weighted index of the common stock of 25
semiconductor companies selected from the annual Forbes 500 issue ("Index
Securities").
The Index was created by Forbes on May 11, 2000 by taking the top 25
semiconductor companies from the April 17 Forbes 500 Largest U.S. Companies List
in order of market capitalization. Once the 25 companies are selected,
additional companies are not added to the hypothetical portfolio to replace
companies that have been removed as a result of mergers, acquisitions, or other
corporate actions. In the event of such actions, the terms of the merger,
acquisition, sale or other corporate action are followed and the Index is
adjusted accordingly on a case by case basis. The Index may contain more or less
than 25 stocks during a performance year. The Index holdings assume an
approximate life of 12 months, at which time the selection process is repeated.
Changes to the Index will occur after the release of the annual Forbes 500
issue.
The Portfolio of the Trust will change as the Index changes. The actual
return of an investment in the Trust may vary from the performance of the Index
because the portfolio of the Trust may not match that of the companies in the
Index and Units of the Trust are subject to a sales charge and Trust expenses.
If Securities are sold for compliance with the regulated investment company
rules or other reasons and other securities are not acquired such that the
securities in the Index are exactly replicated in the Portfolio of the Trust,
the performance of the Trust will likely be different from the performance of
the Index.
RISK FACTORS--There can be no assurance that the Trust's objective can be
realized.
o You may lose money by buying Units in the Trust.
o The price of a Security may fall.
The factors affecting the value of the Securities are those factors that
have an impact upon the value of equity securities in general and particularly
those factors that affect the economic and financial condition of each issuer of
a Security in particular. You should note that the Index was selected on
May 11, 2000. After that date:
o one or more of the Securities may not be included in the Index due to, for
example, various corporate actions.
The portfolio of the Trust was established on the Date of Deposit based, as
closely as practicable, on the weighting of the securities in the Index on that
date and, therefore, the Securities in the Trust may not reflect the equal
weighting of 4% per security that existed on May 11, 2000 when the Index was
selected.
Since the Trust Portfolio consists of common stock, an investment in Units
of the Trust should be made with an understanding of the risks inherent in any
investment in common stocks. The risks of investing in common stock include
risks associated with the rights to receive payments from the issuer which are
generally inferior to rights of creditors of, or holders of debt obligations or
preferred stocks issued by, the issuer. Holders of common stock have a right to
receive dividends only when and if, and in the amounts, declared by the issuer's
board of directors and to participate in amounts available for distribution by
the issuer only after all other claims on the issuer have been paid or provided
for. Common stock does not represent an obligation of the issuer and therefore
does not offer any assurance of income or provide the degree of protection of
capital of debt securities. Common stock has neither a fixed principal amount
nor a maturity and has values which are subject to market fluctuations for as
long as the common stock remains outstanding. These factors similarly impact on
the ability of an issuer to pay dividends.
The Trust is not a "managed" registered investment company and Securities
will not be sold by the Trustee as a result of ordinary market fluctuations. The
value of the stock in the Trust may be expected to fluctuate over the life of
the Trust to values higher or lower than those prevailing on the Date of
Deposit.
o The value of a Unit may be subject to greater volatility than an
investment in a more diversified portfolio since the Trust Portfolio
contains stocks concentrated in the semiconductor industry.
o The value of the Units will fluctuate depending on the value of the
Securities.
o The value of the Securities will fluctuate based on all the factors that
have an impact on the economy and the equity markets.
The Securities intended to be used to reimburse the Sponsor for the Trust's
organization costs may decrease in
------------------
* The Trust is not sponsored, endorsed, sold or promoted by Forbes Index Inc.,
or its affiliates ("Forbes") and Forbes makes no representation regarding the
advisability of investing in the Trust. "Forbes"(R) and "Forbes Semiconductor
Index"(R) are trademarks of Forbes Management Co. Inc. and have been licensed
by Forbes for use by the Sponsor on behalf of the Trust.
------------------
A-1
<PAGE>
value during the initial offering period. To the extent the proceeds from the
sale of these Securities are insufficient to repay the Sponsor for the
organization costs, the Trustee will sell additional Securities to allow the
full reimbursement of the Sponsor. The net asset value per Unit will be reduced
by the amount of Securities sold.
SEMICONDUCTOR INDUSTRY--ADDITIONAL RISKS
The portfolio of the Trust is concentrated in issuers within the
semiconductor industry. A portfolio concentrated in a single industry may
present more risk than a portfolio broadly diversified over several industries.
The Trust, and therefore Unitholders, may be particularly susceptible to a
negative impact resulting from adverse market conditions or other factors
affecting semiconductor issuers because any negative impact on the semiconductor
industry will not be diversified among issuers within other unrelated
industries. Accordingly, an investment in Units should be made with an
understanding of the characteristics of the semiconductor industry and the risks
which such an investment may entail.
The semiconductor business is intensely competitive, subject to rapid
technological change and pricing pressures and requires high rates of
investment. The rapid pace of change and technological breakthroughs constantly
create new opportunities for a company's competitors and start-ups, which can
quickly render existing technologies less valuable. Rapid price erosion is a
significant risk in the semiconductor industry. To the extent that a company
depends on a limited number of customers for a major portion of its revenues a
loss of one or more of those customers could materially adversely affect a
company.
The semiconductor business is cyclical in nature. An increase in
manufacturing capacity followed by a decline in demand for products will likely
materially adversely affect a semiconductor company. The semiconductor industry
is characterized by frequent claims and litigation involving patent and other
intellectual property rights. Many semiconductor companies rely on third-party
wafer fabricators to supply product. These fabricators may be located in
unstable foreign locations. Semiconductor companies may be adversely affected
by, among other things, unavailability or increased prices of raw materials,
labor unrest, production disruption or shortages and currency exchange rates
fluctuations.
The success of the issuers of the Securities depends in subtantial part on
the timely and successful introduction of new products. An unexpected change in
one or more of the technologies affecting an issuer's products or in the market
for products based on a particular technology could have a material adverse
affect on an issuer's operating results. Furthermore, we cannot assure that the
issuers of the Securities will be able to respond timely to compete in the
rapidly developing marketplace.
The Trust's Securities in the past have experienced, and in the future are
likely to experience, substantial price volatility and speculative trading.
Accordingly, upon redemption of Units or termination of the Trust a Unitholder
may receive an amount less than the Unitholder's initial investment.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of semiconductor stocks to
fluctuate substantially. In addition, semiconductor company stocks have
experienced extreme price and volume fluctuations that often have been unrelated
to the operating performance of such companies. This market volatility may
adversely affect the market price of the Securities and therefore the Units.
The Sponsor cannot predict the impact the above-stated risks may have on
the Securities in the portfolio over the life of the Trust.
Please see Part B for additional Risk Factors.
A-2
<PAGE>
FEE TABLE
This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See Part B--"Public Offering of Units" and
"Expenses and Charges." Although the Trust has a term of approximately three
years and is a unit investment trust rather than a mutual fund, this information
is presented to permit a comparison of fees.
<TABLE>
<CAPTION>
AMOUNT PER
1,000
UNIT HOLDER TRANSACTION EXPENSES UNITS
-------------------------------------------------- ---------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase
(as a percentage of offering price)............. 1.00 %(a) $10.00
Deferred Sales Charge per Year (as a percentage of
original purchase price)........................ 1.75 %(b) 17.50
----- ------
Total................................... 2.75 % $27.50
===== ======
Additional Deferred Sales Charge per year for Unit
Holders on the Second Year Commencement Date (as
a percentage of Initial Offering Price)......... 1.75 % $17.50
Total (including first and second year Deferred
Sales Charge)................................... 4.50 % $45.00
Additional Deferred Sales Charge per year for Unit
Holders on the Third Year Commencement Date (as
a percentage of Initial Offering Price)......... 1.75 % $17.50
Total (including first, second and third year
Deferred Sales Charge).......................... 6.25 % $62.50
ORGANIZATIONAL COSTS AND EXPENSES(c).............. $
======
ANNUAL TRUST OPERATING EXPENSES (as a percentage
of average net assets)
Trustee's Fee................................... % $
Creation and Development Fee(d)................... % $
Other Operating Expenses (including Portfolio
Supervision, Bookkeeping and Administrative
Fees)........................................... % $
----- ------
Total(e)................................ % $
===== ======
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE
CUMULATIVE EXPENSES
PAID FOR PERIOD:
---------------------------
1 3
YEAR YEARS
---------- ---------
<S> <C> <C>
An investor would pay the following expenses on a
$10,000 investment, assuming the Trust's
operating expense ratio and organization cost of
. % and a 5% annual return on the
investment throughout the periods............... $ $
</TABLE>
The Example assumes a redemption and reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return. For purposes of the
Example, an annual reinvestment of the 5% annual return is assumed. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL
RATE OF RETURN; THE ACTUAL EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR
LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE.
------------------
(a) The Initial Sales Charge is actually the difference between 2.75% and the
Deferred Sales Charge ("DSC") in the first year ($17.50 per 1,000 Units) and
would exceed 1% if the Public Offering Price exceeds $1,000 per 1,000 Units.
As the DSC is paid, the Initial Sales Charge will increase.
(b) The actual fee is $1.75 per month per 1,000 Units, irrespective of purchase
or redemption price, deducted over 10 months commencing on the first DSC
Deduction Date. If a Holder sells, exchanges or redeems Units before all of
these deductions have been made, the balance of the DSC will be deducted
from the Unit proceeds except that if the exchange, redemption, or sale
occurs before the Second Year Commencement Date, the Second and Third Year
DSC will be waived and if the exchange, redemption or sale occurs before the
Third Year Commencement Date, the Third Year DSC will be waived. If the Unit
price exceeds $1 per Unit, the DSC in the first year will be less than
1.75%; if the Unit price is less than $1 per Unit, the DSC will exceed
1.75%.
(c) Investors will bear all or a portion of the costs incurred in organizing the
Trust including the costs of the preparation, printing and execution of the
Indenture, Registration Statement and other documents relating to the Trust,
federal and state registration fees and costs, the initial fees and expenses
of the Trustee, legal and auditing expenses and other out of pocket
expenses. Estimated organization costs are included in the Public Offering
Price and will be reimbursed to the Sponsor at the close of the initial
offering period.
(d) The Creation and Development Fee is a new charge that compensates the
Sponsor for the creation and development of the Trust. The Trust accrues
this fee monthly during the life of the Trust based on its net asset value
on the last business day of each month and pays the Sponsor monthly. In
connection with the Creation and Development Fee, in no event will the
Sponsor collect over the life of the Trust more than 1.00% of the Unit
Holder's initial investment. For further information about this fee see
"Creation and Development Fee" later in this Prospectus.
(e) The estimates do not include the cost borne by Unitholders of purchasing and
selling Securities.
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
AS OF , 2000*
<TABLE>
<S> <C>
AGGREGATE VALUE OF SECURITIES..................... $
NUMBER OF UNITS...................................
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
REPRESENTED BY EACH UNIT........................ 1/ th
Value of Securities in the Trust (per 1,000
Units)....................................... $
Plus value of Securities for organization costs
(per 1,000 Units)**.......................... $
-------------
Total value of Securities (per 1,000
Units)***.................................... $ 990.00
Plus maximum sales charge of 2.75% of Public
offering Price (2.778% of net amount invested
in Securities)****........................... $ 27.50
Less Deferred Sales Charge per 1,000 Units...... (17.50)
-------------
Public Offering Price per 1,000 Units*****...... $ 1,000.00
Plus the amount per 1,000 Units in the Income
Account...................................... $ 0.00
-------------
Total per 1,000 Units................... $ 1,000.00
=============
REDEMPTION AND SPONSOR'S SECONDARY MARKET REPURCHASE
PRICE PER 1,000 UNITS******....................
(based on the value of the underlying Securities
less the Deferred Sales Charge per 1,000
Units).......................................... $
For Units redeemed or repurchased on or after the
Second Year Commencement Date................... $
-------------
For Units redeemed or repurchased on or after the
Third Year Commencement Date.................... $
-------------
MINIMUM PRINCIPAL DISTRIBUTION: No distribution
need be made from the Principal Account if the
balance therein is less than $1.00 per 1,000
Units.
TRUSTEE'S FEE AND ESTIMATED EXPENSES: $ per
1,000 Units+
CREATION AND DEVELOPMENT FEE: $2.50 per 1,000
Units.
SPONSOR'S PORTFOLIO SUPERVISION FEE+: Maximum of
$0.25 per 1,000 Units.
EVALUATION TIME: 4:00 P.M. New York Time
TERMINATION DATE: ++
SPONSOR'S GAIN/LOSS ON DEPOSIT: $
MINIMUM VALUE OF TRUST: The Indenture may be
terminated if the value of the Trust is less
than 40% of the value of the Securities
calculated after the last deposit of Securities.
DEFERRED SALES CHARGE DEDUCTION DATES: The 1st day of each month
commencing 1, 2000.
SECOND YEAR COMMENCEMENT DATE: , 2001+++
THIRD YEAR COMMENCEMENT DATE: , 2002+++
MINIMUM PURCHASE: $250.00.
</TABLE>
------------------
* The Date of Deposit. The Date of Deposit is the date on which the Trust
Indenture and Agreement was signed and the initial deposit of Securities
with the Trustee was made.
** $ per 1,000 Units will be distributed to the Sponsor to reimburse
the Sponsor for the payment of the organization costs. The Securities
are subject to the sales charge.
*** After deduction of the Deferred Sales Charge then payable (zero on the
date of this Summary of Essential Information).
**** The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred
Sales Charge in the first year of the Trust ($17.50 per 1,000 Units) from
the aggregate sales charge (a maximum of 2.75% of the Public Offering
Price); thus on the date of this Summary of Essential Information, the
maximum Initial Sales Charge is $10 per 1,000 Units or 1% of the Public
Offering Price. Unit Holders holding Units on the Second Year
Commencement Date will be charged an additional Deferred Sales Charge of
$17.50 per 1,000 Units, payable at the rate of $1.75 per 1,000 Units for
the first 10 months in the second year of the Trust (the total deferred
sales charge for such Unit Holders will be $35.00 per 1,000 Units--the
Initial Sales Charge and the Deferred Sales Charge payable over 2 years
of $35.00 will equal approximately 4.5% of the initial Public Offering
Price). Unit Holders holding Units on the Third Year Commencement Date
will be charged an additional Deferred Sales Charge of $17.50 per 1,000
Units, payable at the rate of $1.75 per 1,000 Units for the first 10
months in the third year of the Trust (the total deferred
(Footnotes continued on next page)
A-4
<PAGE>
(Footnotes continued from previous page)
sales charge for such Unit Holders will be $52.50 per 1,000 Units--the
Initial Sales Charge and the Deferred Sales Charge payable over 3 years
of $52.50 will equal approximately 6.25% of the initial Public Offering
Price). The Initial Sales Charge is deducted from the purchase price at
the time of purchase and is reduced on a graduated basis on purchases of
$50,000 or more (see Part B--"Public Offering of Units--Volume
Discount"). The Deferred Sales Charge is paid through reduction of the
net asset value of the Trust by $1.75 per 1,000 Units on each Deferred
Sales Charge Deduction Date. On a repurchase or redemption of Units
before the last Deferred Sales Charge Deduction Date, any remaining
Deferred Sales Charge payments will be deducted from the proceeds. On an
exchange, sale or redemption of Units before the last Deferred Sales
Charge Deduction Date, any remaining Deferred Sales Charge payments will
be deducted from the proceeds except that if the exchange, redemption or
sale occurs before the Second or Third Year Commencement Date, the Second
or Third Year Deferred Sales Charge of $17.50 will be waived.
***** This price is computed as of the Date of Deposit. This price may vary on
the date of this Prospectus or any subsequent date.
****** This price is computed as of the Date of Deposit. This price may vary on
the date of this Prospectus or any subsequent date. This price reflects
deductions for remaining Deferred Sales Charge payments ($17.50 per 1,000
Units initially). The redemption and repurchase price will be further
reduced to reflect the Trust's costs of liquidating Securities to meet
the redemption, currently estimated at $ per 1,000 Units.
+ See: "Expenses and Charges" in this Prospectus. The fee accrues daily
and is payable quarterly. Estimated dividends from the Securities, based
on the last dividends actually paid, are not expected by the Sponsor to
be sufficient to pay the estimated expenses of the Trust. The Trust will
sell Securities to pay Trust expenses if the Trust expenses exceed the
dividend income of the Trust. In addition, brokerage fees borne by the
Trust in connection with the purchase of Securities by the Trustee with
cash deposited in the Trust are currently estimated at $ per 1,000
Units.
++ The Trust may be terminated before the Termination Date. See Part
B--"Termination." The sale of Securities will occur during the
Liquidation Period, the 10 business day period commencing on the
Termination Date.
+++ The total Deferred Sales Charge for Units held on the Second Year
Commencement Date will be $35.00. The total Deferred Sales Charge for
Units held on the Third Year Commencement Date will be $52.50.
A-5
<PAGE>
SPECIAL CHARACTERISTICS OF THE TRUST
The original proportionate relationship between the number of shares of
each Security in the Trust will be adjusted to reflect the occurrence of a stock
dividend, a stock split, merger, reorganization or a similar event which affects
the capital structure of the issuer of a Security in the Trust and to reflect
changes to the Index. The proportionate relationship for all future subsequent
deposits will be adjusted to reflect changes in the Index.
If you buy Units just before the Trust deducts a distribution from its net
asset value, you will pay the full price for the Units (including a sales
charge) and then receive a portion of the price back as a taxable distribution.
Because the expenses of the Trust are expected to exceed the dividend
income received by the Trust, the Trust is not expected to distribute income to
Unit Holders.
PUBLIC OFFERING PRICE: The Public Offering Price of the Units of the Trust
during the initial offering period is based on the value of the underlying
Securities in the Trust's Portfolio divided by the number of Units outstanding
in the Trust, plus the applicable sales charge. A proportionate share of
amounts, if any, in the Income Account is also added to the Public Offering
Price. (See Part B--"Public Offering of Units--Public Offering Price.") The
Initial Sales Charge will vary with changes in the aggregate sales charge.
Unitholders investing the proceeds of distribution from a previous
terminating Series of National Equity Trust, upon purchase of Units of the
Trust, will be subject only to the Deferred Sales Charge on those Units.
SECONDARY MARKET--The Sponsor, although not obligated to do so, presently
intends to maintain a secondary market for the Units in the Trust as more fully
described under Part B--"Public Offering of Units--Secondary Market." If this
market is not maintained, a Unit Holder will be able to dispose of his Units
only by tendering his Units to the Trustee for redemption. (See Part B--"Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.") The
Sponsor's Repurchase Price, like the Redemption Price, will reflect the
deduction from the value of the underlying Securities of any unpaid amount of
the Deferred Sales Charge. To the extent the entire Deferred Sales Charge has
not been deducted or paid at the time of redemption of the Units, the remainder
will be deducted from the proceeds of redemption or in calculating an in-kind
redemption. If a Unit Holder owns Units on the Second or Third Year Commencement
Date and exchanges, redeems or sells his Units before the last Deferred Sales
Charge Deduction Date, the Unit Holder is obligated to pay any remaining
Deferred Sales Charge. i.e., $35.00 in the second year and $52.50 in the third
year less the Deferred Sales Charge previously deducted.
TRUST TERMINATION--The Trust will terminate on the Termination Date unless
terminated earlier. A Unit Holder's Units will be redeemed in-kind on the
Termination Date by distribution of the Unit Holder's pro rata share of the
Securities and any cash in the Portfolio of the Trust on that date to the
Distribution Agent who will act as agent for that Unit Holder.
SECURITIES DISPOSITION OPTIONS ON TERMINATION--You must notify the Trustee
before the Termination Date of the Trust of the option(s) that you choose. You
may elect one or more of the following three options.
o Receipt of Securities "in-kind"
o Receipt of the cash value of the Unit
o Receipt of units in a new trust for the cash proceeds of your Units of
this Trust (you may realize a tax gain or loss from the sale of
Securities).
Please see the Termination Options section for additional information about
each option and for information about how the Trust will terminate.
A-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL EQUITY TRUST FORBES SEMICONDUCTOR INDEX TRUST
We have audited the accompanying Statement of Financial Condition,
including Schedule of Portfolio Securities, of the National Equity Trust Forbes
Semiconductor Index Trust as of , 2000. This financial statement is
the responsibility of the Trustee. Our responsibility is to express an opinion
on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of the irrevocable letter of
credit for the purchase of securities, as shown in the Statement of Financial
Condition and Schedule of Portfolio Securities as of , 2000, by
correspondence with The Bank of New York, the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of the National Equity Trust
Forbes Semiconductor Index Trust as of , 2000, in accordance with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
, 2000
A-7
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
AS OF DATE OF DEPOSIT, , 2000
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed
by an irrevocable letter of credit(a)(e).................. $
-----------
Total.................................................. $
===========
LIABILITIES AND INTEREST OF UNIT HOLDERS
Liabilities--
Payment of deferred portion of sales charge(b)......... $
Reimbursement to Sponsor for organization costs(e).....
-----------
Subtotal...............................................
-----------
Interest of Holders--
Units of fractional undivided interest outstanding:
Cost to investors(c)..............................
Less: Gross underwriting commission(d)............
Less: Organization costs(e).......................
-----------
Net amount applicable to investors..........................
-----------
Total........................................ $
===========
</TABLE>
------------------
(a) The aggregate value of the Securities represented by Contracts to
Purchase listed under "Schedule of Portfolio Securities" included herein and
their cost to the Trust are the same. An irrevocable letter of credit drawn on
Standard Chartered Bank in the amount of $ million dollars has been deposited
with the Trustee for the purchase of Securities pursuant to contracts to
purchase such Securities.
(b) Represents the aggregate amount of mandatory distributions of $1.75 per
1,000 Units per month payable on the 1st day of each month from 2000
through 2001. Distributions will be made to an account maintained by the
Trustee from which the Holders' Deferred Sales Charge obligation to the Sponsor
will be satisfied. If Units are redeemed before 1, 2001, the remaining
portion of the distribution applicable to those Units will be transferred to
that account on the redemption date except that if Units are redeemed before the
Second Year Commencement Date the second year DSC of $17.50 will be waived and
if Units are redeemed before the Third Year Commencement Date the third year DSC
of $17.50 will be waived.
(c) The aggregate Public Offering Price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) The aggregate maximum sales charge of 6.5% of the Public Offering Price
per Unit is computed on the basis set forth under "Public Offering of
Units--Public Offering Price."
(e) A portion of the Public Offering Price consists of Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trust. The Sponsor will be reimbursed for the organization
costs at the close of the initial offering period.
A-8
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
ON DATE OF DEPOSIT, , 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE PRICE COST OF
NUMBER MARKET PER STOCKS
PORTFOLIO OF VALUE SHARE TO TO
NO. NAME OF ISSUER SHARES OF TRUST TRUST TRUST(1)
--------- ------------------------------------------ ------ ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
</TABLE>
------------------
(1) The Securities were acquired by the Sponsor on , 2000. All Securities
are represented entirely by contracts to purchase. Valuation of Securities
by the Trustee was made on the basis of the closing prices of the Securities
at the Evaluation Time on , 2000. The aggregate purchase price to the
Sponsor for the Securities deposited in the Trust is $ .
The Sponsor may have acted as an underwriter, manager or co-manager of a
public offering of the Securities in the Trust during the last three years.
Affiliates of the Sponsor may serve as specialists in the Securities in this
Trust on one or more stock exchanges and may have a long or short position in
any of these stocks or in options on any of these stocks, and may be on the
opposite side of public orders executed on the floor of an exchange where the
Securities are listed. An officer, director or employee of the Sponsor may be an
officer or director of one or more of the issuers of the Securities in the
Trust. The Sponsor may trade for its own account as an odd-lot dealer, market
maker, block positioner and/or arbitrageur in any of the Securities or related
options. The Sponsor, its affiliates, directors, elected officers, employees and
employee benefits programs may have either a long or short position in any
Security or related option.
A-9
<PAGE>
PROSPECTUS--PART B:
--------------------------------------------------------------------------------
Note that Part B of this Prospectus may not be distributed unless accompanied by
Part A.
--------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
INTRODUCTION
Prudential Securities Incorporated (the "Sponsor") and The Bank of New York
(the "Trustee") signed a Trust Indenture and Agreement ("Trust Agreement") and a
related Reference Trust Agreement that created this series of the National
Equity Trust Forbes Semiconductor Index Trust under the laws of the State of New
York. The Sponsor, Prudential Securities Incorporated, is a wholly-owned,
indirect subsidiary of The Prudential Insurance Company of America. The
objective of the Trust is capital appreciation through an investment for
approximately three years in a portfolio of the stocks comprising the Forbes
Semiconductor Index.
THE TRUST
SUMMARY DESCRIPTION OF THE PORTFOLIO
On the Date of Deposit, the Sponsor deposited the Securities with the
Trustee. The Trust may also contain contracts and funds for the purchase of the
Securities and/or cash (or a letter of credit instead of cash) with instructions
to the Trustee to purchase Securities (see "Schedule of Portfolio Securities" in
Part A). The Trustee then immediately delivered to the Sponsor the units (the
"Units") comprising the entire ownership of the Trust as of the Date of Deposit.
The Sponsor, through this Prospectus, is offering the Units to the public.
The Trust consists of:
(1) the Securities listed under "Schedule of Portfolio Securities" as may
continue to be held from time to time in the Trust and
(2) any additional Securities and/or cash that the Trust acquires and holds
pursuant to the provisions of the Indenture and
(3) uninvested cash realized from the disposition of Securities.
Because the Trust may sell certain Securities or reduce their percentage
under certain circumstances, and because the Trust may acquire additional
Securities, the Trust is not expected to retain for any length of time its
present size and exact composition. See: "Sponsor--Responsibility."
The Trust is not a "managed" registered investment company and Securities
will not be sold by the Trustee as a result of ordinary market fluctuations.
Securities will be sold in connection with redemptions of Units, if Securities
are removed from the Index, to align the portfolio of the Trust with the
securities weightings in the Index, for regulated investment company tax
compliance purposes and to pay Trust fees, costs and expenses including the DSC.
Neither the Trustee nor the Sponsor has the authority to manage the Trust's
assets in an attempt to take advantage of various market conditions to increase
the Trust's net asset value. Further, the Sponsor may direct the disposition by
the Trustee of Securities only upon the occurrence of certain events. (See
"Sponsor--Responsibility.")
The Trustee will adjust the composition of the Portfolio from time to time,
to the extent practicable, to conform to changes in the composition of the
Index. Pursuant to the provisions of the Trust Agreement, the Trustee will make
conforming changes to the Trust's portfolio in order to correlate the Securities
in the Trust with the securities comprising the Index. While other Index changes
may lead to adjustments in the Trust's portfolio, the most common changes are
likely to occur as a result of changes in the securities included in the Index.
The Trust Agreement sets forth the method of adjustments which may occur
thereunder as a result of corporate actions to the Index, such as changes in the
identity of the component stocks. For example, in the event of an Index change
(in which the common stock of one issuer held in the Index is replaced by the
common stock of another), the Trustee may sell all shares of the Security held
in the Trust corresponding to the old Index security and use the proceeds of
such sale to purchase replacement Securities corresponding to the new Index
security.
All adjustments to the Portfolio held by the Trustee shall be made by the
Trustee as set forth in the Trust Agreement and shall be non-discretionary. All
portfolio adjustments will be made unless such adjustments would cause the Trust
to lose its status as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. Additionally, the Trustee is required to adjust the
composition of the portfolio of the Trust at any time if it is necessary to
insure the continued qualification of the Trust as a regulated investment
company. The adjustments are intended to conform the composition of the
portfolio, to the extent practicable, to the composition of the Index. Such
adjustments are based upon the Index as it is currently determined by Forbes. To
the extent that the method of determining the Index is changed by Forbes in a
manner that would affect the adjustments provided for in the Trust Agreement,
the Trustee and the Sponsor shall have the right to amend the Trust Agreement,
without the consent of the Unit
B-1
<PAGE>
Holders, to conform the adjustments provided in this Prospectus and in the Trust
Agreement to such changes so that the objective of tracking the Index is
maintained.
There is no assurance that the Trust will declare or pay any dividends in
the future on the Securities initially deposited or to be deposited subsequently
in the Trust. Neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in the Securities. Dividend income is not an
objective of the Trust.
RISK FACTORS
MARKET RISKS
There can be no assurance that the objective of the Trust will be met
because the Securities may rise or fall in value, or pay dividends, depending on
the full range of economic and market influences affecting:
o the financial condition of issuers
o the prices of equity securities in general, and
o the stocks that this Trust buys in particular.
If you invest in Units of the Trust, you should understand the risks
inherent in an investment in common stock. The risks of investing in stock
include:
o the risk that the financial condition of one or more of the issuers of
the Securities may worsen;
o the risk that the issuer may reduce or eliminate a dividend;
o the risk that the general condition of the stock market may weaken; and
o the risk that the value of Units will decline as the market value of the
Securities decreases.
The Sponsor can not predict the direction or scope of any of these factors.
See the risks described in Part A of the Prospectus as well as those set forth
below.
FLUCTUATING SECURITY VALUE
Stocks are susceptible to general stock market movements and to volatile
and unpredictable increases and decreases in value as market confidence in and
perceptions of the issuers change from time to time. Investors base these
perceptions upon such factors as:
o expectations regarding domestic and foreign economic, monetary and fiscal
policies,
o inflation and interest rates,
o currency exchange rates, economic expansion or contraction, and
o global or regional political, economic and banking conditions.
The Sponsor cannot predict the direction or scope of any of these factors.
Additionally, stock markets have recently been at historically high levels and
we cannot give any assurance that these levels will continue. Therefore we can
give no assurance that the Trust will achieve its objective over its three-year
life. The Trust is not designed to be a complete equity investment program.
PAYMENT RISKS
There are certain payment risks involved in owning common stocks. Risks
include those arising from the fact that holders of common and preferred stocks
have rights to receive payments from the issuers of those stocks. These rights
are generally inferior to those of creditors of, or holders of debt obligations
issued by, such issuers. Furthermore, the rights of holders of common stocks are
inferior to the rights of holders of preferred stocks. Holders of common stocks
of the type held in the Portfolio have a right to receive dividends only when,
as and if, and in the amounts, declared by the issuer's board of directors.
Holders of common stocks such as those in the Portfolio also have a right to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for.
By contrast, holders of preferred stocks have the right to receive
dividends at a fixed rate when and as declared by the issuer's board of
directors. This rate is normally on a cumulative basis. Holders of preferred
stocks do not ordinarily participate in other amounts available for distribution
by the issuing corporation. Issuing corporations must pay cumulative preferred
stock dividends before common stock dividends.
Any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of such cumulative preferred stock. Preferred
stocks also have rights on liquidation which are senior to those of common
stocks. For these reasons, preferred stocks entail less risk than common stocks.
However, neither preferred nor common stocks represent an obligation or
liability of the issuer. Therefore, they do not offer any assurance of income or
provide the degree of protection of capital of debt securities.
B-2
<PAGE>
The issuance of debt securities, as compared with both preferred and common
stock, will create prior claims for payment of principal and interest in the
case of debt securities. The issuance of preferred stock, as compared with
common stock, will create prior claims for payment of dividends and liquidation
preferences in the case of preferred stock. These prior claims could adversely
affect (l) the ability and inclination of the issuer to declare or pay dividends
on its common stock or (2) the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. Further, common stocks lack
a fixed principal amount and a maturity date but have values which are subject
to market fluctuations for as long as the common stocks remain outstanding.
Common stocks are thus unlike debt securities which typically have a stated
principal amount payable at maturity; the amount payable will be subject to
market fluctuations before the payment is made. Common stocks also differ from
preferred stocks which typically have a liquidation preference and which may
have stated optional or mandatory redemption provisions. Additionally, market
timing and volume trading will also affect the underlying value of Securities,
including the Sponsor's buying of additional Securities and the Trust's selling
of Securities during the Liquidation Period.
The value of the Units will fluctuate depending on all the factors that
have an impact on the economy and the equity markets. These factors similarly
impact on the ability of an issuer to distribute dividends. There is no
assurance that any dividends will be declared or paid in the future on the
Securities. The Sponsor may direct the Trustee to dispose of Securities only
upon the occurrence of certain events. (See "Sponsor--Responsibility"). However,
the Trustee will not dispose of Securities solely as a result of normal
fluctuations in market value.
The Sponsor may deposit additional Securities and may continue to sell
Units of the Trust even if the Sponsor has a sell recommendation on the
Security.
EARLY TERMINATION
The Trust has a mandatory termination date set forth under Part A--"Summary
of Essential Information," but may be terminated earlier if certain events occur
(see "Termination"), including a reduction in the value of the Trust below the
value set forth under Part A--"Summary of Essential Information."
LITIGATION
The Sponsor does not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in the Portfolio. In addition, at any time after the
initial date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. Future litigation,
legislation, regulation or deregulation may have a material adverse effect on
the Portfolio and may impair the ability of the issuers of the Securities to
achieve their business goals.
UNIT CREATION
DEPOSIT OF SECURITIES
On the date that the Trust was created, the Sponsor deposited with the
Trustee certain Securities and contracts and funds (represented by irrevocable
letter(s) of credit issued by major commercial bank(s)) for the purchase of the
Securities. The Securities were deposited at prices equal to their market value
as determined by the Trustee. The Sponsor may also deposit cash or a letter of
credit and instruct the Trustee to purchase Securities. The Sponsor created the
Trust simultaneously with the deposit of the Securities with the Trustee and the
execution of the Indenture and the Reference Trust Agreement. The Trustee then
immediately recorded the Sponsor as owner of the Units comprising the entire
ownership of the Trust.
Through this Prospectus, the Sponsor is offering the Units, including
Additional Units, as defined below, for sale to the public. The holders of Units
(the "Unit Holders" the "Unitholders" or the "Unit Holder," as the context
requires) will have the right to have their Units redeemed at a price based on
the market value of the Securities if they cannot be sold in the secondary
market which the Sponsor, although not obligated to, proposes to maintain. A
secondary market for Units is a market where Units are bought and sold after
their original issue. In addition, the Sponsor may offer for sale, through this
Prospectus, Units which the Sponsor may have repurchased in the secondary market
or upon the tender by a Unit Holder of Units for redemption. The Trustee has not
participated in the selection of Securities for the Trust. The Sponsor or the
Trustee will not be liable in any way for any default, failure or defect in any
Securities.
With the deposit of the Securities in the Trust on the Initial Date of
Deposit, the Sponsor established a proportionate relationship between the number
of shares of each Security in the Portfolio. You may find the original
proportionate relationships on the Initial Date of Deposit in the "Schedule of
Portfolio Securities." The original proportionate relationships are subject to
adjustment under certain limited circumstances. See: "Sponsor--Responsibility."
Under the Indenture and Agreement, the Sponsor can deposit additional Securities
and contracts to purchase additional Securities together with a letter of credit
and/or cash or a letter of credit instead of cash. The Sponsor may then give
instructions to the Trustee to purchase additional Securities in order
B-3
<PAGE>
to create additional Units ("Additional Units"). Any such additional deposits
will consist of securities of the same issuers as those already in the Trust or
such other securities as are needed for the Trust portfolio to match, to the
extent practicable, the stocks in the Index. The proportionate relationship will
change if Securities are sold or bought for compliance with the regulated
investment company rules, if proceeds from a Security are invested in securities
added to the Index, as a result of actions by the issuers of the Securities such
as stock splits and mergers and if the weighting of the stock in the Index
changes.
Since the Sponsor deposits cash or a letter of credit in lieu of cash and
gives instructions to the Trustee to purchase additional Securities to create
Additional Units, Units, including previously issued Units, may represent more
or less of that Security and more or less of other Securities in the Portfolio
of the Trust. This is because the price of a Security fluctuates between the
time the cash is deposited and the time the cash is used to purchase the
Security.
This Prospectus may be used to continuously offer additional Units for sale to
the public.
The Sponsor may acquire large volumes of additional Securities for deposit
into the Trust over a short period of time. These acquisitions may tend to raise
the market prices of these Securities. To minimize the risk of price
fluctuations when purchasing Securities, the Trust may purchase Securities at
the closing price as of the Evaluation Time. To do so, the Trust may enter into
trades with unaffiliated broker/dealers for the purchase of large quantities of
shares. These trades will be entered into at an increased commission cost which
the Trust will bear. See "Summary of Essential Information." The Sponsor cannot
currently predict the actual market impact of the Sponsor's purchases of
additional Securities because it does not know the actual volume of Securities
to be purchased and the supply and price of the Securities.
Units will be sold by the Sponsor to investors at the Public Offering Price
next computed after receipt of the investor's order to purchase Units, if Units
are available to fill orders on the day that that price is set. If Units are not
available or are insufficient to fill the order, the Sponsor will reject the
investor's order. The number of Units available may be insufficient to meet
demand. This may be because of the Sponsor's inability to or decision not to
purchase and deposit underlying Securities in amounts sufficient to maintain the
proportionate numbers of shares of each Security as required to create
additional Units. The Sponsor may, if unable to accept orders on any given day,
offer to execute the order as soon as enough Units can be created. You will be
deemed to have placed a new order for that number of Units each day until that
order is accepted. The Sponsor will execute your order, when Units are
available, at the Public Offering Price next calculated after the Sponsor
accepts your continuing order. You will, of course, be able to revoke your
purchase offer at any time prior to acceptance by the Sponsor. The Sponsor will
execute orders to purchase in the order it determines that they are received.
The Sponsor will first fill orders received first. However, the Sponsor will
accept indications of interest before the effectiveness of the registration of
the offering of Trust Units which become orders upon effectiveness according to
the order in which the Sponsor receives the indications of interest.
On the Initial Date of Deposit, each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set forth under
"Summary of Essential Information." Thereafter, if you redeem any Units, the
amount of Securities in the Trust will decline and the fractional undivided
interest represented by each remaining Unit in the balance of the Trust will
increase. However, if the Trust issues Additional Units, the aggregate value of
the Securities in the Trust will increase by amounts allocable to such
Additional Units and the fractional undivided interest in the Trust will fall.
Units will remain outstanding until you or any Unit Holder, including the
Sponsor, redeem them upon tender to the Trustee, or until the termination of the
Trust on the terms specified in the Indenture and Agreement.
All of the Securities are publicly traded. The contracts to purchase
Securities deposited initially in the Trust are expected to settle in the
ordinary manner for such Securities. Settlement of the contracts for Securities
is thus expected to take place prior to the settlement of Units purchased on the
date of this Prospectus. To the extent the Sponsor receives the purchase price
of the Units before it pays for the Securities it will benefit from the use of
the cash during this period.
TAX STATUS OF THE TRUST
The following summarizes the material U.S. federal income tax consequences
of holding Units. This discussion is based upon laws, regulations, rulings and
decisions currently in effect, all of which are subject to change, retroactively
or prospectively. It assumes that the investor is not a dealer, financial
institution, insurance company, partnership or other passthrough entity or other
investor with special circumstances or subject to special rules.
Investors should consult their own tax advisor about their particular
circumstances, including any U.S. federal estate or gift tax consequences and
any tax consequences under applicable state, local or foreign tax law.
This discussion only addresses holders of Units who are U.S. persons, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"). Foreign
investors (including nonresident alien individuals and foreign corporations) not
engaged in U.S. trade or business will generally be subject to 30% withholding
tax (or lower applicable treaty rate) on dividend distributions by the Portfolio
(other than capital gain dividends).
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<PAGE>
TAXATION OF THE TRUST
The Trust intends to qualify for and elect the special tax treatment
applicable to "regulated investment companies" under Section 851-855 of the
Code. If the Trust qualifies as a regulated investment company it will not be
subject to U.S. federal income tax on the portion of its taxable income
(including any net capital gain, i.e., the excess of its net long-term capital
gain over its net short-term capital loss) it distributes to investors in a
timely manner. In addition, the Trust will not be subject to the 4% excise tax
on certain undistributed income to the extent it distributes (or is treated as
having distributed) to investors in a timely manner at least 98% of its taxable
income (including any net capital gain).
DISTRIBUTIONS
Distributions to investors of the Trust's dividend and interest income and
net short-term capital gain in any year will generally be taxable as ordinary
income to investors to the extent of the Trust's taxable income (other than
taxable income attributable to its net capital gain) for that year.
Distributions in excess of the Trust's taxable income will be treated as a
return of capital and will reduce the investor's basis in his Units and, to the
extent that such distributions exceed his basis, will be treated as a gain from
the sale of his Units as discussed below.
Distributions that are taxable as ordinary income to investors will
constitute dividends for U.S. federal income tax purposes. Certain corporate
investors will be eligible for the 70% dividends-received deduction to the
extent that the distributions are appropriately designated by the Trust and are
attributable to eligible dividends received by the Trust from domestic issuers
with respect to whose Securities the Trust satisfies the requirements for the
dividends-received deduction. Depending upon the particular corporate investor's
circumstances, additional limitations on the availability of the
dividends-received deduction may be applicable. Investors are urged to consult
their own tax advisors in this regard.
Any dividends received by the Trust from foreign issuers will in most cases
be subject to foreign withholding taxes, which will generally be reduced, though
not eliminated, by treaties between the United States and the relevant foreign
country. Investors are not expected to be eligible for foreign tax credits with
respect to these withholding taxes.
Distributions of the Trust's net capital gain that are designated as
capital gain dividends by the Trust will be taxable to investors as long-term
capital gain, regardless of the time the investor has held his Units. It is
anticipated that substantially all of the distributions of the Trust's net
capital gains will be designated as capital gain dividends.
UNDISTRIBUTED NET CAPITAL GAINS
In general, to the extent the Trust elects to retain and pay tax on any net
capital gains in a given taxable year, an investor owning Units on the last day
of such taxable year will include in income the investor's pro rata share of the
undistributed net capital gains and will be treated as having paid a pro rata
share of any taxes (which share of taxes may be allowed as a credit or a refund
as the case may be) paid by the Trust in respect of such income. In such event
the tax basis of the investor's Units will be increased by the excess of the
investor's share of the undistributed net capital gains over the taxes deemed
paid by the investor.
GAIN OR LOSS ON DISTRIBUTION
An investor will generally recognize capital gain or loss when the investor
disposes of his Units (by sale, redemption or otherwise). In the case of a
distribution of Securities to an investor upon redemption of his Units, gain or
loss will generally be recognized in an amount equal to the difference between
the investor's tax basis in his Units and the fair market value of the
Securities received in redemption. Any such capital gain or loss will be
long-term if the Unit is held for more than one year and short-term if held one
year or less. Net capital gain may be taxed at a lower rate than ordinary income
for certain individuals and other non-corporate taxpayers. Any capital loss on
the sale or redemption of a Unit that an investor has held for six months or
less will be a long-term capital loss to the extent of any capital gain
dividends previously distributed to the investor by the Trust. The deduction of
capital loss is subject to limitations. Investors should consult their tax
advisors regarding these matters.
The investor's basis in his Units will be equal to the cost of his Units,
including the initial sales charge. The proceeds received by an investor upon
the termination of the Trust or the redemption of the Units will reflect
deduction of deferred sales charges. The relevant tax reporting forms received
by investors will reflect the actual amounts paid to them, net of such deferred
sales charges. Accordingly, investors should not increase their basis in their
Units by these deferred sales charges.
Investors will be taxed in the manner described above regardless of whether
distributions from the Trust are actually paid to the investor or are
reinvested. The U.S. federal tax status of each year's distributions will be
reported to investors and to the Internal Revenue Service. The Trust intends to
report to each investor, no later than January 31, the amount of distributions
to that investor.
You should consult your tax advisor with respect to the application of the
above general information to your own personal situation.
B-5
<PAGE>
RETIREMENT PLANS
Units of the Trust may be suited for purchase by Individual Retirement
Accounts and pension plans or profit sharing and other qualified retirement
plans. If you are considering participation in any such plan you should review
specific tax laws and pending legislation relating to the plan and should
consult attorneys or tax advisors with respect to the establishment and
maintenance of any such plan.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is calculated on each business day
by the following formula: the aggregate market value of the portfolio Securities
and other Trust assets, as determined by the Trustee, next computed after
receipt of a purchase order is reduced by Trust liabilities and then divided by
the number of Units outstanding. The sales charge shown in the table in the
Volume Discount section is added to the net asset value per Unit. The Units
outstanding may be split to create greater or fewer units (a reverse split). The
Sponsor will add to the Public Offering Price commissions and any other
transactional costs, if any, in connection with the deposit of additional
Securities or contracts to purchase additional Securities for the creation of
Additional Units. After the Initial Date of Deposit, the Sponsor will add to the
Public Offering Price a proportionate share of amounts in the Income Account and
Principal Account and amounts receivable in respect of stocks trading
ex-dividend, other than money required to be distributed to Unit Holders on a
distribution date and money required to redeem tendered Units. In the event a
stock is trading ex-dividend at the time of deposit of additional Securities,
the Sponsor will add to the Public Offering Price an amount equal to the
dividend that would be received if such stock were to receive a dividend. The
Public Offering Price per Unit is calculated to five decimal places and rounded
up or down to three decimal places. The Public Offering Price on any particular
date will vary from the Public Offering Price on the Initial Date of Deposit,
set forth in the "Summary of Essential Information" in accordance with:
o fluctuations in the aggregate market value of the Securities
o the amount of available cash on hand in the Trust
o the amount of Trust fees, expenses and liabilities.
A portion of the Public Offering Price also consists of cash or securities
in an amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trust. These costs include:
o the cost of the preparation of documents relating to the Trust
o federal and state registration fees
o the initial fees and expenses of the Trustee
o legal expenses
o any other out-of-pocket expenses.
The Sponsor will receive the estimated organization costs as of the close
of the initial offering period.
As more fully described in the Indenture, the Trustee determines the
aggregate market value of the Securities based on the closing price of the
Securities on the day it makes the valuation as described under "Rights of Unit
Holders--Computation of Redemption Price per Unit." If there are no such
reported prices, the Trustee takes into account the same factors referred to
under "Rights of Unit Holders--Computation of Redemption Price per Unit."
Determinations are effective for transactions effected after the last preceding
determination.
SALES CHARGE
The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. To compute the Initial Sales Charge, deduct the Deferred Sales Charge of
$17.50 per 1,000 Units from the total sales charge. The Initial Sales Charge
that a Unit Holder pays may be more or less than the Initial Sales Charge on the
Initial Date of Deposit because of the fluctuation of the value of the
Securities from that on the Initial Date of Deposit. The Deferred Sales Charge
will initially be $17.50 per 1,000 Units but will decline each month by one
tenth. Unit Holders holding Units on the Second Year Commencement Date will be
charged an additional Deferred Sales Charge of $17.50 per 1,000 Units, payable
at the rate of $1.75 per 1,000 Units for the first 10 months in the second year
of the Trust (the total deferred sales charge for such Unit Holders will be
$35.00 per 1,000 Units--the Initial Sales Charge and the Deferred Sales Charge
payable over 2 years of $35.00 will equal approximately 4.5% of the initial
Public Offering Price). Unit Holders holding Units on the Third Year
Commencement Date will be charged an additional Deferred Sales Charge of $17.50
per 1,000 Units, payable at the rate of $1.75 per 1,000 Units for the first 10
months in the third year of the Trust (the total deferred sales charge for such
Unit Holders will be $52.50 per 1,000 Units--the Initial Sales Charge and the
Deferred Sales Charge payable over 3 years of $52.50 will equal approximately
6.25% of the initial Public Offering Price). The Deferred Sales Charge will be
paid through monthly payments of $1.75 per 1,000 Units per month commencing on
the first Deferred Sales Charge
B-6
<PAGE>
Payment Date shown on the Summary of Essential Information. If the Unit price
exceeds $1.00 per Unit, the Deferred Sales Charge will be less than 1.75%; if
the Unit price is less than $1 per Unit, the Deferred Sales Charge will exceed
1.75%. To the extent that the entire Deferred Sales Charge relating to your
Units has not been paid at the time of repurchase, redemption or exchange of the
Units, any unpaid amount will be deducted from the sale, redemption or exchange
proceeds or in calculating an in kind distribution.
For purchases of Units with a value of $50,000 or more, we will reduce the
Initial Sales Charge on a graduated basis as shown below under "Volume
Discount." If you acquire Units of the Trust pursuant to an exchange of units of
a different unit investment trust you will not have to pay an initial sales
charge at the time of the exchange. However, these Units acquired will be
subject to the Deferred Sales Charge.
PUBLIC DISTRIBUTION
During the initial public offering period (i) for Units issued on the Date
of Deposit and (ii) for additional Units issued after that date in respect of
additional deposits of Securities, Units will be distributed to the public by
the Sponsor and through dealers at the Public Offering Price, calculated on each
business day. The initial offering period is 90 days unless all Units are sold
beforehand in which case the initial public offering period will terminate. The
initial public offering period may be extended by the Sponsor so long as
additional deposits are being made or Units remain unsold. Upon termination of
the initial offering period, in each case, unsold Units or Units acquired by the
Sponsor in the secondary market referred to below may be offered to the public
by this Prospectus at the then current Public Offering Price calculated daily.
The Sponsor directly and through dealers will distribute to the public, at
the Public Offering Price determined as provided above, Units issued on the
Initial Date of Deposit and Additional Units issued in respect of additional
deposits of Securities. The Sponsor will sell Units to dealers at prices which
reflect the concession listed in the Volume Discount section. They may offer to
the public unsold Units or Units acquired by the Sponsor in the secondary market
referred to below, by this Prospectus at the then current Public Offering Price
determined as provided above.
B-7
<PAGE>
The Sponsor intends to qualify Units in states selected by the Sponsor for
sale by the Sponsor and through dealers who are members of the National
Association of Securities Dealers, Inc. The Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units.
In addition, sales of Units may be made pursuant to distribution
arrangements with certain banks. These banks are subject to regulation by the
Office of the Comptroller of the Currency and are acting as agents for their
customers. A portion of the sales charge that these customers pay is retained by
or remitted to these banks in an amount equal to the amount customarily received
by an agent for acting in that capacity in connection with the purchase of
Units.
SECONDARY MARKET
While not obligated to do so, the Sponsor presently intends to maintain a
secondary market for Units. If the Sponsor maintains the market it will offer to
repurchase Units from Unit Holders at the Sponsor's Repurchase Price. The
Sponsor computes the Repurchase Price in the same manner as the Redemption Price
is calculated. The Sponsor, of course, does not in any way guarantee the
enforceability, marketability or price of any Securities in the Portfolio or of
the Units.
In addition, after the initial offering period, the Sponsor's Repurchase
Price will be reduced to reflect the estimated costs of liquidating the
Securities to meet redemption requests. The only sales charge incurred when a
Unit Holder sells Units back to the Sponsor is the payment of the unpaid portion
of the Deferred Sales Charge. The Sponsor may reoffer to the public any Units
repurchased by the Sponsor at the Sponsor's Repurchase Price. The reoffering
price will be the then current Public Offering Price. The Sponsor will bear any
profit or loss resulting from the resale of these Units.
The Sponsor may temporarily or permanently discontinue the repurchase of
Units of this series at the Sponsor's Repurchase Price if the supply of Units
exceeds demand or for any other business reason. In such event, although under
no obligation to do so, the Sponsor may, as a service to you, offer to
repurchase Units at the "Redemption Price." You may redeem your Units through
the Trustee.
The Sponsor may, of course, redeem any Units that it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold these Units in its inventory. Factors which the Sponsor will
consider in making this determination will include the number of units of all
series of unit trusts which it has in its inventory, the saleability of these
units and its estimate of the time required to sell these units and general
market conditions.
PROFIT OF SPONSOR
The Sponsor receives a sales charge on Units sold to the public and to
dealers. The Sponsor may have also realized a profit or sustained a loss on the
deposit of the Securities in the Trust. This profit or loss represents the
difference between the cost of the Securities to the Sponsor and the cost of the
Securities to the Trust. For a description of this profit or loss and the amount
of such difference on the Initial Date of Deposit see "Summary of Essential
Information" and "Schedule of Portfolio Securities." The Sponsor may realize a
similar profit or loss in connection with each additional deposit of Securities.
In addition, the Sponsor may have acted as a broker in transactions relating to
the purchase of Securities for deposit in the Trust. During the initial public
offering period the Sponsor may realize additional profit or sustain a loss due
to daily fluctuations in the prices of the Securities in the Trust and thus in
the Public Offering Price of Units the Sponsor receives. If the Sponsor receives
cash from the Unit Holders before the settlement date for the purchase of Units
or before the payment for Securities upon their delivery, the Sponsor may use
the cash in the Sponsor's business and may benefit from the use of the cash.
The Sponsor may also realize a profit through receipt of the Creation and
Development Fee. This fee compensates the Sponsor for the creation and
development of the Trust's objective and policies, Portfolio composition and
size and selection of service providers and information services. No portion of
the Creation and Development Fee is applied to the payment of distribution
expenses or as compensation for sales efforts.
The Sponsor may also realize profits or sustain losses while maintaining a
secondary market in the Units. These profits or losses are the amount of any
difference between the prices at which the Sponsor buys Units and the prices,
including a sales charge, at which the Sponsor resells such Units or the prices
at which the Sponsor redeems such Units, as the case may be.
VOLUME DISCOUNT
Although under no obligation to do so, the Sponsor intends to permit volume
purchasers of Units to purchase Units at a reduced sales charge. The Sponsor may
at any time change the amount by which the sales charge is reduced. The Sponsor
may also discontinue the discount altogether.
The sales charge for the Trust in the primary market will be reduced
pursuant to the following graduated scale for sales to any person of Units with
a value of $50,000 or more. The sales charge in the secondary market, which will
decline as shown on the following graduated scale, consists of an Initial Sales
Charge and the remaining portions of the Deferred Sales Charge. In the
B-8
<PAGE>
primary market and secondary market, as the remaining portion of the DSC
declines, the Initial Sales Charge will increase so that for example, in the
first year of the Trust the sales charge before any volume discount will be
2.75% of the Public Offering Price.
<TABLE>
<CAPTION>
SECONDARY MARKET
PRIMARY MARKET DEALER CONCESSION INITIAL SALES CHARGE ADDITIONAL
-------------------------------------------- ----------------- --------------------------- SECOND YEAR
PERCENT OF PERCENT OF DEFERRED PERCENT OF PERCENT OF PERCENT OF DEFERRED
PUBLIC OFFERING NET AMOUNT SALES CHARGE PUBLIC OFFERING PUBLIC OFFERING NET AMOUNT SALES CHARGE
PURCHASES PRICE INVESTED PER 1,000 UNITS PRICE PRICE INVESTED PER 1,000 UNITS
--------- --------------- ---------- --------------- ----------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than $50,000.... 2.75% 2.778% $ 17.50 2.10% 1.00% 1.010% $ 17.50
$50,000-$99,999...... 2.50% 2.519% 17.50 1.90% 0.75% 0.756% 17.50
$100,000-$249,999.... 2.00% 2.005% 17.50 1.40% 0.50% 0.503% 17.50
$250,000 or more..... * * 17.50 1.20% 0.25% 0.251% 17.50
<CAPTION>
ADDITIONAL
THIRD YEAR
DEFERRED
SALES CHARGE
PURCHASES PER 1,000 UNITS
--------------------- ---------------
<S> <C>
Less than $50,000.... $ 17.50
$50,000-$99,999...... 17.50
$100,000-$249,999.... 17.50
$250,000 or more..... 17.50
</TABLE>
------------------
* Deferred Sales Charge only.
The reduced sales charges as shown on the chart above will apply to all
purchases of Units in any fifteen-day period which qualify for the volume
discount by the same person, partnership or corporation, other than a dealer, in
the amounts stated herein, and for this purpose, purchases of Units of this
Trust will be aggregated with concurrent purchases of units of any other trust
that may be offered by the Sponsor.
Units held in the name of your spouse or in the name of your child under
the age 21 or in the name of an entity controlled by you are deemed for the
purposes hereof to be acquired in your name. The reduced sales charges are also
applicable to a trustee or other fiduciary, including a partnership or
corporation purchasing Units for a single trust estate or single fiduciary
account.
EMPLOYEE DISCOUNT
The Sponsor intends, at the discretion of the Sponsor, to permit employees
of Prudential Securities Incorporated and its subsidiaries and affiliates and
Forbes to purchase Units of the Trust at a price equal to the net asset value of
the Securities in the Trust divided by the number of Units outstanding plus a
reduced sales charge equal to the Deferred Sales Charge per Unit, subject to a
limit of 5% of the Units.
RIGHTS OF UNIT HOLDERS
OWNERSHIP OF UNITS
You are required to hold your Units in uncertificated form. The Trustee
will credit your account with the number of Units you hold. Units are
transferable only on the records of the Trustee upon presentation of evidence
satisfactory to the Trustee for each transfer. Any sums payable for taxes or
other governmental charges imposed upon these transactions must be paid by you
and you must comply with the formalities necessary to redeem Units.
CERTAIN LIMITATIONS
The death or incapacity of any Unit Holder will not operate to terminate
the Trust. Your death or incapacity will not entitle your legal representatives
or heirs to claim an accounting or to take any other action or proceeding in any
court for a partition or winding up of the Trust.
VOTING OF THE PORTFOLIO SECURITIES
No Unit Holder shall have the right to vote except with respect to removal
of the Trustee or amendment and termination of the Trust as prescribed in the
Indenture. Unit Holders have no right to control the operation or administration
of the Trust in any manner.
DISTRIBUTION
Whenever regulatory or tax purposes require or wherever the Sponsor
directs, the Trustee may make special distributions on special distribution
dates to Unit Holders of record on special record dates that the Trustee
declares. Distributions for the account of beneficial owners of Units registered
in "street name" that the Sponsor holds will be made to the investment account
of such beneficial owners maintained with the Sponsor.
The Trustee credits dividends payable to the Trust as a holder of record of
its Securities to an Income Account, as of the date on which the Trust is
entitled to receive those dividends. The Trustee credits to a Principal Account
other receipts, including (1) return of investment and gain and (2) amounts
received upon the sale, pursuant to the Indenture and Agreement, of rights to
purchase other Securities distributed in respect of the Securities in the
Portfolio. The Trustee will hold proceeds it receives from the disposition of
any of the Securities which are not used for redemption of Units in the
Principal Account until it distributes those
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<PAGE>
proceeds on the distribution date following receipt of them. If securities will
be acquired by the Trust to match additions to the Index or to cause the
portfolio of the Trust to match, as closely as practicable, the securities in
the Index, the proceeds held by the Trust will be used to acquire securities and
will not be distributed to Unit Holders. Even though no cash is distributed, any
capital gains used to purchase additional securities may have tax consequences
to Unit Holders. (See "Tax Status of the Trust.") The Trustee does not need to
make a distribution from the Principal Account if the balance therein is less
than $1.00 per 1,000 Units outstanding. Funds the Trustee holds in the various
accounts created under the Indenture are non-interest bearing to Unit Holders.
The Trustee receives the benefit of holding such funds which are interest
bearing to it.
The Trustee will deduct from the Income Account and, to the extent funds
are not sufficient therein, from the Principal Account, amounts necessary to pay
the expenses of the Trust. (See "Expenses and Charges.") It is anticipated that
Trust income will be less than Trust expenses and that Securities will be sold
to pay Trust expenses. If, however, there is sufficient income, distributions
will be made quarterly. The Trustee may also withdraw from these accounts, from
time to time, the amounts, if any, as it deems necessary to establish a reserve
for any taxes or other governmental charges payable out of the Trust. Amounts so
withdrawn shall not be considered a part of a Trust's assets for purposes of
determining the amount of distributions until such time as the Trustee shall
return all or any part of those amounts to the appropriate account. In addition,
the Trustee may withdraw from the Income Account and the Principal Account those
amounts as may be necessary to cover redemption of Units by the Trustee. (See
"Rights of Unit Holders.")
It is anticipated that Securities will be sold to pay the deferred sales
charge on each Deferred Sales Charge Payment Date.
The Trustee will follow a policy that it will place Securities acquisition
or disposition transactions with a broker or dealer only if it expects to obtain
favorable prices and executions of orders. In connection with the brokerage
transactions, the Sponsor may act as broker and receive commissions if the
Trustee expects to obtain the most favorable prices and execution. In placing
Securities transactions, the Trustee will not consider the furnishing of
statistical and research information to the Trustee by any of the securities
dealers through which the Trustee executes transactions.
TENDER OF UNITS FOR REDEMPTION
Units may be tendered to the Trustee for redemption at its unit investment
trust office at 101 Barclay Street, New York, New York 10286, upon delivery of a
request for redemption and payment of any relevant tax. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
cancelled.
You must have your signature guaranteed by an officer of a national bank or
trust company or by a member firm of either the New York, Midwest or Pacific
Stock Exchanges. In certain instances the Trustee may require additional
documents such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
Within seven calendar days following such tender, or if the seventh
calendar day is not a business day, on the first business day prior thereto, you
will be entitled to receive in kind an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time set forth in
the "Summary of Essential Information" in Part A on the date of tender (see
"Rights of Unit Holders--Computation of Redemption Price per Unit"). The "date
of tender" is deemed to be the day on which Units are received by the Trustee.
For Units received after the Evaluation Time, the date of tender is the next day
on which the New York Stock Exchange is open for trading, and these Units will
be deemed to have been tendered to the Trustee on that day for redemption at the
Redemption Price computed on that day.
The Trustee will redeem Units in kind. You will be able (except during a
period described below), not later than the seventh calendar day following the
tender of Units (or if the seventh calendar day is not a business day on the
first business day prior thereto), to receive in kind an amount per Unit equal
to the Redemption Price per Unit as determined as of the day of tender. In kind
distributions (the "In Kind Distribution") will take the form of whole shares of
Securities. Cash will be distributed instead of fractional shares. The cash and
the whole shares will aggregate an amount equal to the Redemption Price per
Unit.
Distributions in kind on redemption of Units shall be held by The Bank of
New York, as Distribution Agent, whom you shall be deemed to have designated as
your agent upon purchase of a Unit, for the account of, and for disposition in
accordance with the instructions of, the Unit Holder as follows:
o The Distribution Agent shall sell the In Kind Distribution as of the
close of business on the date of tender or as soon thereafter as possible
and remit to you no later than seven days thereafter the net proceeds of
sale, after deducting brokerage commissions and transfer taxes, if any,
on the sale unless you request a distribution of the Securities as set
forth in the paragraph below. The Distribution Agent may sell the
Securities through the Sponsor, and the Sponsor may charge brokerage
commissions on those sales.
o If you request distribution in kind and tender Units with a value in
excess of $125,000, the Trustee shall sell any portion of the In Kind
Distribution represented by fractional interests in shares in accordance
with the foregoing and distribute the net cash proceeds plus any
distributable cash to you together with certificates representing whole
shares of each of the
B-10
<PAGE>
Securities comprising the In Kind Distribution. (In a case in which you
request a distribution in kind, the Trustee may, instead of distributing
Securities in kind to you, offer the Sponsor the opportunity to acquire
the tendered Units in exchange for the number of shares of each Security
and cash which you are otherwise entitled to receive from the Trust. The
federal income tax consequences to you would be identical in either
case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available. In
addition, in implementing the redemption procedures described above, the Trustee
and the Distribution Agent shall make any adjustments necessary to reflect
differences between the Redemption Price of the Units and the value of the In
Kind Distribution in whole shares as of the date of tender. To the extent that
Units are redeemed, the size of the Trust will be reduced.
The right of redemption may be suspended and payment of the Redemption
Price per Unit postponed for more than seven calendar days following a tender of
Units for redemption for any period during which the New York Stock Exchange is
closed, other than for weekend or holiday closing, or trading on that Exchange
is restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which a disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Neither the Trustee nor
the Sponsor is liable to any person or in any way for any loss or damage that
may result from any such suspension or postponement.
PURCHASE BY THE SPONSOR OF UNITS TENDERED FOR REDEMPTION
The Indenture requires that the Trustee notify the Sponsor of any tender of
Units for redemption. So long as the Sponsor is maintaining a secondary market
for Units, the Sponsor, before the close of business on the day of tender, may
purchase any Units tendered to the Trustee for redemption by making payment for
the Units in an amount not less than the Redemption Price and not later than the
day on which the Units would otherwise have been redeemed by the Trustee, i.e.,
you will receive the Redemption Price from the Sponsor within 7 days of the date
of tender (see "Public Offering of Units--Secondary Market"). Units held by the
Sponsor may be tendered to the Trustee for redemption as any other Units. The
offering price of any Units resold by the Sponsor will be the Public Offering
Price determined in the manner provided in this Prospectus (see "Public Offering
of Units--Public Offering Price"). Any profit resulting from the resale of such
Units will belong to the Sponsor, which likewise will bear any loss resulting
from a reduction in the offering or redemption price after its acquisition of
those Units (see "Public Offering of Units--Profit of Sponsor").
COMPUTATION OF REDEMPTION PRICE PER UNIT
The Redemption Price per Unit of the Trust is determined by the Trustee as
of the Evaluation Time on the date any such determination is made. The Trust
Evaluation per Unit is determined as of the Evaluation Time stated under
"Summary of Essential Information." The Redemption Price per Unit is your pro
rata share, determined by the Trustee, of:
o the aggregate value of the Securities in the Trust,
o cash on hand in the Trust including dividends receivable on stocks
trading ex-dividend as of the date of computation and
o any other assets of the Trust, less
o amounts representing taxes and governmental charges payable out of the
Trust,
o liabilities of the Trust,
o the accrued but unpaid expenses of the Trust and accrued Deferred Sales
Charges and the Deferred Sales Charge balance, and
o cash held for distribution to Unit Holders of record as of the date prior
to the evaluation.
The Trustee shall determine the aggregate value of the Securities in good
faith in the following manner:
o the evaluation is generally based on the closing prices as of the
Evaluation Time on the exchange where the stock is listed if that is the
stock's primary market or in the over the counter market or, if
unavailable, based on the bid prices at that time (unless the Trustee
deems these prices inappropriate as a basis for valuation).
If the current closing or bid price is unavailable, the Trustee shall use
any of the following methods which the Trustee deems appropriate to value
Securities:
o on the basis of current bid prices for comparable securities,
o by appraising the value of the Securities on the bid side of the market
or by such other appraisal deemed appropriate by the Trustee,
o on the basis of the last trade price of the Security or
o by any combination of the above, each as of the Evaluation Time.
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EXCHANGE OPTION
You may elect to exchange any or all of your Units of this Series of the
National Equity Trust for units of one or more of any other Series in the
Prudential Securities Incorporated family of unit investment trusts or for any
units of any additional trusts that may from time to time be made available by
the Sponsor (the "Exchange Trusts").
This exchange is implemented by a sale of Units and a purchase of the units
of an Exchange Trust. You may acquire these units at prices based on a reduced
sales charge per unit. The purpose of such reduced sales charge is to permit the
Sponsor to pass on to the Holder who wishes to exchange units the cost savings
resulting from such exchange. The cost savings result from reductions in time
and expense related to advice, financial planning and operational expense
required for the Exchange Option.
Each Exchange Trust has different investment objectives. You should read
the Prospectus for the applicable Exchange Trust carefully to determine the
investment objective before exercise of this option.
This option will be available provided that (1) the Sponsor maintains a
secondary market in units of the applicable Exchange Trust and (2) units of the
applicable Exchange Trust are available for sale and are lawfully qualified for
sale in the jurisdiction in which the Unit Holder is a resident. While the
Sponsor presently intends to maintain a secondary market for the units of
Exchange Trusts, there is no obligation on its part to do so. Therefore, we do
not promise that a market for units will in fact exist on any given date in
which you wish to sell or exchange Units. Thus, we do not promise that the
Exchange Option will be available to any Unit Holder. The Sponsor reserves the
right to modify, suspend or terminate this option. The Sponsor will give sixty
days notice before the date of the termination of or a material amendment to the
Exchange Option. However, the Sponsor will not have to give notice in certain
circumstances approved by the Securities and Exchange Commission. In the event
the Exchange Option is not available to you at the time you wish to exercise
such option, we will immediately notify you and we will not take any action with
respect to your tendered Units without further instruction from you.
To exercise the Exchange Option, a Unit Holder should notify the Sponsor of
his desire to exchange his Units for one or more units of the Exchange Trusts.
Upon the exchange of Units of the Trust, any Deferred Sales Charge balance will
be deducted from the exchange proceeds. If units of the applicable outstanding
series of the Exchange Trust are at that time available for sale, the Unit
Holder may select the series or group of series for which he desires his Units
to be exchanged. The Unit Holder will be provided with a current prospectus or
prospectuses relating to each series in which he indicates interest.
Units of the Exchange Trust trading in the secondary market maintained by
the Sponsor, if so maintained, will be sold to the Unit Holder at a price equal
to the aggregate bid side evaluation per unit of the securities in that
portfolio and the applicable sales charge of $15 per unit of the Exchange Trust
for a trust with a 1 unit minimum purchase. The reduced sales charge for units
of any Exchange Trust acquired during the initial offering period for such units
will result in a price for such units equal to the offering side evaluation per
unit of the securities in the Exchange Trust's portfolio plus accrued interest,
if any, plus a reduced sales charge of $25 per Exchange Trust unit.
You may make exchanges in whole units only. We will return any excess
proceeds from the surrender of your Units. Alternatively, you may make up any
difference between (1) the amount representing the Units being submitted for
exchange (2) and the amount representing the units being acquired up to the next
highest number of whole units.
Unit Holders of any registered unit investment trust, other than Prudential
Securities Incorporated sponsored trusts, which was initially offered at a
minimum applicable sales charge of 3.0% of the public offering price exclusive
of any applicable sales charge discounts, may elect to apply the cash proceeds
of sale or redemption of those units directly to acquire units of any Exchange
Trust trading in the secondary market at the reduced sales charge of $20 per
Unit, subject to the terms and conditions applicable to the Exchange Option.
Units of any Exchange Trust acquired during the initial offering period for such
units may be sold at a price equal to the ask side evaluation per unit of the
securities in the Portfolio plus a reduced sales charge of $25 per unit. To
exercise this option, you should notify your retail broker. You will be given a
prospectus of each series in which you indicate interest, units of which are
available. The Sponsor reserves the right to modify, suspend or terminate the
option at any time without further notice, including the right to increase the
reduced sales charge applicable to this option (but not in excess of $5 more per
unit than the corresponding fee then charged for a unit of an Exchange Trust
which is being exchanged).
For example, assume that a Unit Holder, who has three units of a Trust with
a 4.25% sales charge and a current price of $1,000 per unit, sells his units and
exchanges the proceeds for units of a series of an Exchange Trust with a current
price of $950 per unit and an ordinary sales charge of 4.25%. The proceeds from
the Unit Holder's units will aggregate $3,300. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Holder would be
able to acquire four units in the Exchange Trust for a total cost of $3,860
($3,800 for units and $60 for the $15 per unit sales charge) by adding an extra
$560 in cash. Were the Unit Holder to acquire the same number of units at the
same time in the regular secondary market maintained by the Sponsor, the price
would be $3,968.68 [$3,800 for the units and $168.68 for the 4.25% sales charge
(4.439% of the net amount invested)].
B-12
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EXPENSES AND CHARGES
ORGANIZATION COSTS
You and the other unit holders will bear all or a portion of the
organization costs and charges incurred in connection with the establishment of
the Trust. These costs and charges will include:
o the cost of the preparation, printing and execution of the Indenture,
Registration Statement and other documents relating to the Trust
o Federal and State registration fees and costs
o the initial fees and expenses of the Trustee
o legal and auditing expenses.
The Sponsor will pay advertising and selling expenses at no cost to the
Trust.
TRUST FEES AND EXPENSES
The Trust fees and expenses are estimated in Part A. If the actual expenses
exceed the estimate, the actual amount will be charged to the Trust. The
Sponsor's fee (the "Supervisory Fee"), earned for portfolio supervisory
services, is based upon the largest number of Units outstanding during the life
of the Trust. The Sponsor's fee as set forth in "Summary of Essential
Information" may exceed the actual costs of providing portfolio supervisory
services for this Trust. At no time will the total amount the Sponsor receives
for portfolio supervisory services rendered to all series of the National Equity
Trust in any calendar year exceed the aggregate cost to it of supplying such
services in such year.
Under the Indenture and Agreement, for its services as Trustee and
evaluator, the Trustee receives an annual fee in the amount set forth in
"Summary of Essential Information." The Trustee's fee and the Trust expenses
accrue daily and are payable quarterly from the Income Account, to the extent
funds are available, and thereafter from the Principal Account. Such Trustee's
fee may be increased without approval of the Unit Holders in proportion to
increases under the classification "All Services Less Rent" in the Consumer
Price Index published by the United States Department of Labor but such fee will
not be increased in excess of increases in the Trustee's costs. In addition to
the Trustee's fee, the Trustee receives income to the extent that it holds funds
on deposit in various accounts which are non-interest bearing to Unit Holders
created under the Indenture.
The Trust will pay a license fee to Forbes pursuant to a license agreement
which permits the use of the Forbes name and the Forbes Semiconductor Index as
the basis for the Trust Portfolio. The license fee will be paid quarterly and
will fluctuate based on the value of the Securities during each quarter. The
license fee payable by the Trust may exceed the estimated license fee included
in Other Operating Expenses in the Fee Table.
CREATION AND DEVELOPMENT FEE
The Sponsor may also realize a profit through receipt of the Creation and
Development Fee. This fee compensates the Sponsor for the creation and
development of the Trust including determining the Trust's objective and
policies, Portfolio composition and size and selection of service providers and
information services and for providing other similar administrative and
ministerial functions. The fee is 0.25% per annum collected monthly of the net
asset value and in no event will the Sponsor collect over the life of the Trust
a fee of more than 1.00% of a Unit Holder's initial investment. No portion of
the Creation and Development Fee is applied to the payment of distribution
expenses or as compensation for sales efforts.
OTHER CHARGES
The Trust does or may incur the following additional charges as more fully
described in the Indenture and Agreement:
o fees of the Trustee for extraordinary services
o expenses of the Trustee, including legal and auditing expenses, and of
counsel that the Sponsor designated
o various governmental charges
o expenses and costs of any action the Trustee takes to protect the Trust
and the rights and interests of the Unit Holders
B-13
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o indemnification of the Trustee for any loss, liability or expenses it
incurred in the administration of the Trust without negligence, bad
faith, willful malfeasance or willful misconduct on its part or reckless
disregard of its obligations and duties
o indemnification of the Sponsor for any losses, liabilities and expenses
incurred in acting as Sponsor or Depositor under the Agreement without
gross negligence, bad faith, willful malfeasance or willful misconduct or
reckless disregard of its obligations and duties
o expenditures incurred in contacting Unit Holders upon termination of the
Trust, and
o to the extent then lawful, expenses (including legal, auditing and
printing expenses and Federal and State registration fees) of registering
Additional Units and of maintaining registration or qualification of the
Units and/or the Trust under Federal or State securities laws so long as
the Sponsor is maintaining a market for the Units.
PAYMENT
The fees and expenses set forth herein are payable out of the Trust. When
the Trustee pays them or when they are owed to the Trustee, they are secured by
a lien on the Trust. Dividends on the Securities are not expected to be
sufficient to pay the estimated expenses of the Trust. If the balances in the
Income and Principal Account are insufficient to provide for amounts payable by
the Trust, the Trustee has the power to sell Securities to pay those amounts. To
the extent that the Trustee sells Securities, the size of the Trust will decline
and the proportions of the Securities may change. Such sales might be required
at a time when Securities would not otherwise be sold. These sales might result
in lower prices than might otherwise be realized. Moreover, due to the minimum
lot size in which Securities may be required to be sold, the proceeds of such
sales may exceed the amount necessary for the payment of such fees and expenses.
ADMINISTRATION OF THE TRUST
FORBES LICENSE AGREEMENT
The Trust is not sponsored, endorsed, sold or promoted by Forbes. Forbes
makes no representation or warranty, express or implied, to the Unit Holders of
the Trust or any member of the public regarding the advisability of investing in
securities generally or in the Units particularly. Forbes' only relationship to
the Trust is the licensing of certain trademarks and trade names of Forbes and
of the Forbes Semiconductor Index which is determined, composed and calculated
by Forbes without regard to the Trust. Forbes has no obligation to take the
needs of the Trust or the Unit Holders into consideration in determining,
composing or calculating the Forbes Semiconductor Index. Forbes is not
responsible for and has not participated in the determination of the timing of,
prices at, or quantities of the Trust to be issued or in the determination or
calculation of the equation by which the Units are to be converted into cash.
Forbes has no obligation or liability in connection with the administration,
marketing or trading of the Trust.
Forbes does not guarantee the accuracy and/or the completeness of the
Forbes Semiconductor Index or any data included therein and Forbes shall have no
liability for any errors, omissions, or interruptions therein. Forbes makes no
warranty, express or implied, as to the results to be obtained by the Trust,
Unit Holders, or any other person or entity from the use of the Forbes
Semiconductor Index or any data included therein. Forbes makes no express or
implied warranties, and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to the Forbes Semiconductor
Index or any data included therein. Without limiting any of the foregoing, in no
event shall Forbes have any liability for any lost profits or indirect,
punitive, special or consequential damages (including lost profits), even if
notified of the possibility of such damages.
REPORTS AND RECORDS
With each distribution, the Trustee will furnish to the Unit Holders a
statement of the amount of dividends and other receipts, if any, distributed,
expressed in each case as a dollar amount per Unit.
Within a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who was a Unit Holder of record at any time during
the calendar year a statement setting forth:
1. As to the Income Account:
o dividends and other cash amounts received
o deductions for payment of applicable taxes and for fees and expenses
of the Trust and for redemptions of Units
B-14
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o the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year;
2. As to the Principal Account:
o the dates of disposition and identity of any Securities and the net
proceeds received therefrom
o deductions for payments of applicable taxes, for fees and expenses
of the Trust, for portions of the Deferred Sales Charge and amounts
necessary to redeem Units, and
o the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year;
3. And the following information:
o a list of the Securities held as of the last business day of the
calendar year;
o the number of Units outstanding as of the last business day of such
calendar year;
o the Redemption Price Unit based on the last Evaluation made during
such calendar year; and
o the amounts actually distributed during such calendar year from the
Income and Principal Accounts, separately stated, expressed both as
total dollar amounts and as dollar amounts per Unit outstanding on
the Record Dates for such distributions.
The accounts of the Trust will be audited not less frequently than annually
by independent certified public accountants designated by the Sponsor, and the
report of such accountants will be furnished by the Trustee to Unit Holders upon
request.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of Unit
Holders, a current list of Securities in the Portfolio and a copy of the
Indenture.
B-15
<PAGE>
AMENDMENT
The Trustee and the Sponsor or their respective successors may amend the
Indenture and Agreement from time to time without the consent of any of the Unit
Holders
o to cure any ambiguity or to correct or supplement any provision contained
therein which may be defective or inconsistent with any other provision
contained therein;
o to change any provision thereof as the Securities and Exchange Commission
or any successor governmental agency exercising similar authority may
require;
o to conform the method of adjustment of the portfolio of the Trust to the
method of adjustment of the Index by Forbes.
o to make such other provision in regard to matters or questions arising
thereunder as shall not adversely affect the interest of the Unit
Holders.
The parties to the Indenture and Agreement may also amend that document
from time to time or they may waive the performance of any of the provisions of
the Indenture and Agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture and
Agreement or of modifying in any manner the rights of the Unit Holders, if the
express written consent of Holders of Units evidencing 51% of the Units at the
time outstanding under the Indenture and Agreement is obtained. No party,
however, may amend the Indenture and Agreement, or waive any provision thereof,
so as to increase the number of Units issuable in respect of the Trust above the
aggregate number specified in Part 2 of the Agreement or such lesser amount as
may be outstanding at any time during the term of the Indenture except as the
result of the deposit of additional Securities, as therein provided, or reduce
the relative interest in the Trust of any Unit Holder without his consent,
permit the deposit or acquisition thereunder of securities or other property
either in addition to or in substitution for any of the Securities except in the
manner permitted by the Trust Indenture as in effect on the date of the first
deposit of Securities or to empower the Trustee to engage in business or to
engage in investment activities not specifically authorized in the Indenture as
originally adopted. In the event of any amendment requiring the consent of Unit
Holders, the Trustee is obligated to promptly notify all Unit Holders of the
substance of this amendment.
TERMINATION
The Trust may be terminated at any time by the consent of the holders of
51% of the Units or by the Trustee upon the direction of the Sponsor when the
aggregate net value of all Trust assets is less than 40% of the Securities
deposited in the Trust on the Date of Deposit and subsequent thereto. However,
in no event may the Trust continue beyond the Termination Date set forth under
"Summary of Essential Information" in Part A. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit Holders.
TERMINATION OPTIONS
The Trust will terminate on the Termination Date set forth in the Summary
of Essential Information, approximately three years after the Date of Deposit
(unless terminated earlier as set forth above). A Unit Holder's Units will be
redeemed in kind on the Termination Date by distribution of the Unit Holder's
pro rata share of the Securities and any cash in the Portfolio of the Trust on
that date to the Distribution Agent who will act as agent for that Unit Holder.
SECURITIES DISPOSITION OPTIONS--A Unit Holder who so elects by notifying
the Trustee prior to the Termination Date of the Trust will have the Securities
received on the Termination Date disposed of on behalf of a Unit Holder by the
Distribution Agent in accordance with one or more of the following three options
as elected by a Unit Holder:
1. to have such underlying Securities distributed in kind no later
than the business day next following the Termination Date. Unit Holders
will incur brokerage costs when selling those Securities;
2. to receive the Unit Holder's pro rata share of the cash received
by the Distribution Agent (less expenses) upon the sale by the Distribution
Agent of the underlying Securities attributable to Unit Holders electing
this option over a period not to exceed 10 business days commencing on the
Termination Date. Amounts received by the Distribution Agent over such 10
business day period representing the proceeds of the underlying Securities
sold will be held by The Bank of New York in accounts which are
non-interest bearing to Unit Holders and which are available for use by The
Bank of New York pursuant to normal banking procedures and will be
distributed to Unit Holders within 5 business days after the settlement of
the trade for the last Security to be sold; and
3. to invest the proceeds from the sale of the underlying Securities
attributable to Unit Holders electing this option, as received by the
Distribution Agent upon the sale of those underlying Securities over a
period not to exceed 10 business days commencing on the Termination Date,
in units of a subsequent series of National Equity Trust as designated by
the Sponsor
B-16
<PAGE>
(the "New Series") if the New Series is offered at such time. The Units of
a New Series will be purchased by the Unit Holder upon the settlement of
the trade for the last Security to be sold. Such purchaser will be entitled
to a reduced sales load upon the purchase of units of the New Series. It is
expected that the terms of the New Series will be substantially the same as
the terms of the Trust described in this Prospectus, and that similar
options in a subsequent series of the Trust will occur in each New Series
of the Trust approximately three years after that New Series' creation. The
availability of this option does not constitute a solicitation of an offer
to purchase units of a New Series or any other security. A Unit Holder's
election to participate in this option will be treated as an indication of
interest only. At any time before the purchase by the Unit Holder of units
of a New Series, the Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities.
Unit Holders who do not elect as set forth above will have their Units
redeemed on the Termination Date and be deemed to have elected to receive the
cash proceeds from the sale of the Unit Holder's pro rata share of the
underlying Securities (option 2).
Under each option a Unit Holder will receive the Redemption Price per Unit
(net asset value) determined as of the Evaluation Time on the Termination Date.
The Distribution Agent will sell the underlying Securities in the case of the
second and third option over a period not to exceed 10 business days commencing
on the Termination Date. The proceeds of any such sales will be reduced by any
applicable brokerage commissions. The sale arrangement is one in which The Bank
of New York will be selling the Securities as agent for the Unit Holder and is
separate from the Trust which terminates on the Termination Date. The proceeds
of those sales may be more or less than the value of the Securities on the
Termination Date. The Sponsor, on behalf of the Distribution Agent if the
Sponsor effects those sales, or the Distribution Agent if the Sponsor does not,
will, unless prevented by unusual or unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, sell on each
business day during the 10 business day period at least a number of shares of
each Security which then remains in the Portfolio equal to the number of those
shares in the Portfolio at the beginning of that day multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 10 business day sales period. The proceeds of sale will not be
distributed by the Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 10 business day period.
Depending on the amount of proceeds to be invested in units of the new
series and the number of other orders for units in the new series, the Sponsor
may purchase a large amount of securities for the new series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 10
business day period commencing on the Termination Date; depending on the number
of sales required, the prices of, and demand for Securities, such sales may tend
to depress the market prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying Securities over a 10
business day period as described above is in the best interest of Unit Holders
and may mitigate the negative market price consequences stemming from the
trading of large amounts of Securities. The Sponsor, in implementing such sales
of Securities on behalf of the Distribution Agent, will seek to maximize the
sales proceeds and will act in the best interest of the Unit Holder. The
proceeds of the sale of the Securities will be in an amount equal to amounts
realized upon the sale of the Securities over the 10 business day period. There
can be no assurance, however, that any adverse price consequences of heavy
trading will be mitigated.
It should also be noted that Unit Holders will realize taxable capital
gains or losses on the liquidation of the Securities representing their Units,
but, due to the procedures for investing in the New Series, no cash would be
distributed at that time to pay any taxes.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unit Holder. The Sponsor may offer a subsequent trust but not
within a short time period subsequent to the termination of the Trust and,
consequently, such trust may not accommodate a "rollover" from the Trust. If the
Sponsor so decides, the Sponsor will notify the Trustee of that decision, and
the Trustee will notify the Unit Holders before the Termination Date. All Unit
Holders will then elect either option 1 or option 2.
By electing to reinvest in the new series, the Unit Holder indicates his
interest in having his termination distribution from the Trust invested only in
the new series created next following termination of the Trust; the Sponsor
expects, however, that a similar reinvestment program will be offered with
respect to all subsequent series of the Trust, thus giving Unit Holders an
opportunity to elect to "rollover" their termination distributions into a new
series. The availability of the reinvestment privilege does not constitute a
solicitation of offers to purchase units of a new series or any other security.
A Unit Holder's election to participate in the reinvestment program will be
treated as an indication of interest only.
The Sponsor reserves the right to modify, suspend or terminate the rollover
privilege at any time.
B-17
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RESIGNATION, REMOVAL AND LIABILITY
TRUSTEE
The Trustee is The Bank of New York. It is a New York bank with its
principal executive office located on 101 Barclay Street, New York, New York
10286. The Trustee is organized under the laws of the State of New York, is a
member of the New York Clearing House Association and is subject to supervision
and examination by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System. Unit Holders should direct inquiries regarding distributions,
address changes and other matters related to the administration of the Trust to
the Trustee at Unit Investment Trust Division, P.O. Box 974, Wall Street
Station, New York, New York 10268-0974.
LIMITATIONS ON LIABILITY
The Trustee shall not be liable or responsible in any way for:
o depreciation or loss incurred by reason of the disposition of any moneys
or Securities; or
o in respect of any evaluation or for any action taken in good faith
reliance on prima facie properly executed documents.
The Trustee, however, shall be liable for willful misfeasance, bad faith or
negligence in the performance of its duties. The Trustee shall also be liable by
reason of its reckless disregard of its obligations and duties under the
Indenture and Agreement. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon the Trust which the Trustee may
be required to pay under current or future laws of the United States or any
other taxing authority having jurisdiction.
RESPONSIBILITY
The Trustee shall not be liable for any default, failure or defect in any
Security or for any depreciation or loss by reason of any sale of Securities or
by reason of the failure of the Sponsor to give directions to the Trustee.
The Trustee may sell Securities designated by the Sponsor, or if not so
directed, in its own discretion, for the purpose of redeeming Units tendered for
redemption.
Amounts received by the Trust upon the sale of any Security under the
conditions set forth below will be deposited in the Principal Account when
received and to the extent not used for the redemption of Units or to purchase
Securities will be distributable by the Trustee to Unit Holders of record on the
record date next prior to a distribution date as declared by the Trustee.
For information relating to the responsibilities of the Trustee under the
Indenture, reference is also made to the material set forth under "Rights of
Unit Holders" and "Sponsor-Resignation."
RESIGNATION
By executing an instrument in writing and filing the same with the Sponsor,
the Trustee and any successor may resign. In such an event the Sponsor is
obligated to appoint a successor trustee as soon as possible. If the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Indenture. The Sponsor may also remove the Trustee for any
reason, either with or without cause. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor trustee. If upon
resignation of a trustee no successor has been appointed and has accepted the
appointment within thirty days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only when the
successor trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee. A successor trustee has the same
rights and duties as the original trustee except to the extent, if any, that the
Indenture is modified as permitted by its terms.
SPONSOR
Prudential Securities Incorporated ("Prudential Securities") is a Delaware
corporation and is engaged in the underwriting, securities and commodities
brokerage business and is a member of the New York Stock Exchange, Inc., other
major securities exchanges and commodity exchanges and the National Association
of Securities Dealers, Inc. Prudential Securities, a wholly-owned subsidiary of
Prudential Securities Group Inc. and an indirect wholly-owned subsidiary of The
Prudential Insurance Company of America, is engaged in the investment advisory
business. Prudential Securities has acted as principal underwriter and managing
underwriter of other investment companies. In addition to participating as a
member of various selling groups or as an agent of other investment companies,
Prudential Securities executes orders on behalf of investment companies for the
purchase and sale of securities of such companies and sells securities to such
companies in its capacity as a broker or dealer in securities.
B-18
<PAGE>
LIMITATIONS ON LIABILITY
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Indenture. The Sponsor shall be under no
liability to the Trust or to Unit Holders for taking any action or for
refraining from any action in good faith or for errors in judgment. Likewise,
the Sponsor shall not be liable or responsible in any way for any default,
failure or defect in any Security or for depreciation or loss incurred by reason
of the disposition of any Security. The Sponsor will, however, be liable for
(1) its own willful misfeasance, (2) willful misconduct, (3) bad faith, (4)
gross negligence or (5) reckless disregard of its duties and obligations under
the Agreement.
RESPONSIBILITY
The Trust is not a managed registered investment company. Securities will
not be sold by the Trustee to take advantage of ordinary market fluctuations.
The Sponsor may direct the Trustee to dispose of Securities and either to
acquire other Securities through the use of proceeds of such disposition in
order to make such changes in the Portfolio or to distribute the proceeds of
such disposition to Unit Holders (i) as may be necessary to reflect any
additions to or deletions from the Index, (ii) as may be necessary to establish
a closer correlation between the weightings of the Securities in the portfolio
of the Trust and their weightings in the Index, (iii) as may be required for
purposes of distributing to Unit Holders at least annually their pro rata share
of net realized capital gains or as the Sponsor may otherwise determine or
(iv) as may be required to maintain the qualification of the Trust as a
regulated investment company for Federal income tax purposes or by applicable
law or to pay the Deferred Sales Charge. The Sponsor may direct the Trustee to
sell any property (other than cash) or any Securities received by the Trust as a
result of any recapitalization, reorganization, merger, payment of a dividend or
other similar transaction entered into by any of the companies included in the
Index and may direct the Trustee to invest the proceeds of any such sale in
additional Securities. In accordance with the Trust Indenture, the Trustee will
purchase and sell Securities in a manner that maintains, to the extent
practicable, the same proportionate relationship among the Securities in the
Trust as exists among the stocks in the Index.
Failure to declare or pay dividends, institution of materially adverse
legal proceedings, defaults materially and adversely affecting future
declaration or payment of dividends, or the occurrence of other materially
adverse credit factors will not be a basis for the disposition of a Security
unless such Security is eliminated from the Index.
The Sponsor and/or an affiliate thereof intend to continuously monitor
developments affecting the Securities in the Trust in order to determine whether
the Trustee should be directed to dispose of any such Securities.
If the Trust receives the securities of another issuer as the result of a
merger or reorganization of, or a spin-off, or split-up by the issuer of a
Security included in the original Portfolio, the Trust may under certain
circumstances hold those securities as if they were one of the Securities
initially deposited and adjust the proportionate relationship accordingly for
all future subsequent deposits.
Any securities so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Indenture to the same extent
as Securities originally deposited thereunder. Within five days after the
deposit of securities in exchange or substitution for any of the underlying
Securities, the Trustee is required to give notice thereof to each Unit Holder,
identifying the Securities eliminated and the Securities substituted therefor.
The proceeds resulting from the disposition of any Security in the Trust
will be distributed as set forth under "Rights of Unit Holders--Distribution" to
the extent such proceeds are not utilized for the purpose of acquiring
Securities, redeeming Units or paying Trust expenses.
RESIGNATION
If at any time the Sponsor shall resign under the Indenture or shall fail
to perform or be incapable of performing its duties thereunder or shall become
bankrupt or its affairs are taken over by public authorities, the Indenture
directs the Trustee to either (1) appoint a successor Sponsor or Sponsors at
rates of compensation deemed reasonable by the Trustee not exceeding amounts
prescribed by the Securities and Exchange Commission, (2) act as Sponsor itself
without terminating the Trust or (3) terminate the Trust. The Trustee will
promptly notify Unit Holders of any such action.
CODE OF ETHICS
The Sponsor in connection with the Trust has adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on Trust portfolio transactions. Persons subject to the
code of ethics are permitted to invest in securities including securities that
may be held by the Trust. The goal of the code is to prevent fraud, deception or
misconduct against the Trust and to provide reasonable standards of conduct. See
the back cover of the Prospectus for information on obtaining a copy of the code
of ethics.
B-19
<PAGE>
LEGAL OPINIONS
Certain legal matters in connection with the Units offered hereby have been
passed upon by Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, as special counsel for the Sponsor.
INDEPENDENT AUDITORS
The financial statement included in this Prospectus has been audited by
Deloitte & Touche LLP, certified public accountants, as stated in their report
appearing herein, and is included in reliance upon such report given upon the
authority of that firm as experts in accounting and auditing.
B-20
<PAGE>
--------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO REPRESENT TO YOU OR PROVIDE TO YOU INFORMATION
THAT IS DIFFERENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
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------------------------------------------------------
NATIONAL EQUITY TRUST
FORBES SEMICONDUCTOR INDEX TRUST
[LOGO]
------------------------------------------------------
SPONSOR
PRUDENTIAL SECURITIES INCORPORATED
ONE SEAPORT PLAZA
199 WATER STREET
NEW YORK, NEW YORK 10292
TRUSTEE
THE BANK OF NEW YORK
101 BARCLAY STREET
NEW YORK, NEW YORK 10286
This Prospectus does not contain complete
information about the investment company filed
with the Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no. 333- )
and
o Investment Company Act of 1940 (file
no. 811-5046).
Information about the Trust can be reviewed and
copied at the Public Reference Room of the
Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549-6009.
CALL: 1-202-942-8090 for information about the Public
Reference Room
VISIT: the EDGAR database of the SEC's website at
http://www.sec.gov for reports and other
information about the Trust. Copies may be
obtained, after paying a duplicating fee,
by writing the Commission or by electronic
request to [email protected].
--------------------------------------------------------------------------------
UTS903 09/00
<PAGE>
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
Item A -- Bonding Arrangements
The employees of Prudential Securities Incorporated are covered
under Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount
of $62,500,000.
Item B -- Contents of Registration Statement
This Registration Statement on Form S-6 comprises the following
papers and documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Written consents of the following persons:
Cahill Gordon & Reindel (included in Exhibit 5).
(2) Deloitte & Touche LLP
The following Exhibits:
(5) Ex-3.(i) - Certificate of Incorporation of Prudential
Securities Incorporated dated March 29, 1993.
(4) Ex-3.(ii) - Revised By-Laws of Prudential Securities
Incorporated as amended through September 28,
1998.
(2) Ex-4.a - Trust Indenture and Agreement and Distribution
Agency Agreement, dated , 2000.
(1) Ex-4.b - Draft of Reference Trust Agreement.
(2) Ex-5 - Opinion of counsel as to the legality of the
securities being registered.
(3) Ex-24 - Powers of Attorney executed by a majority of the
Board of Directors of Prudential Securities
Incorporated.
II-1
<PAGE>
(5) Ex-99.1 - Information as to Officers and Directors of
Prudential Securities Incorporated is
incorporated by reference to Schedules A and D
of Form BD filed by Prudential Securities
Incorporated pursuant to Rules 15b1-1 and
15b3-1 under the Securities Exchange Act of
1934 (1934 Act File No. 8-27154).
(5) Ex-99.2 - Affiliations of Sponsor with other investment
companies.
(5) Ex-99.3 - Broker's Blanket Policies, Standard Form No. 14
in the aggregate amount of $62,500,000.
(7) Ex-99.A(11) - Code of Ethics
--------------------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated by reference to exhibit of same designation filed with
the Securities and Exchange Commission as an exhibit to the
Registration Statement under the Securities Act of 1933 of National
Municipal Trust, Series 172, Registration No. 33-54681 (filed October
13, 1994), National Equity Trust, Top Ten Portfolio Series 3,
Registration No. 333-15919 (filed January 31, 1997), National Equity
Trust, Low Five Portfolio Series 17, Registration No. 333-44543
(filed January 20, 1998) and National Equity Trust, Top Ten Portfolio
Series 215, Registration No. 333-43704 (filed August 14, 2000).
(4) Incorporated by reference to exhibit of same designation filed with
the Securities and Exchange Commission as an exhibit to the
Registration Statement under the Securities Act of 1933 of National
Municipal Trust, Series 186, Registration No. 33-54697 (filed August
9, 1996) and National Equity Trust, S&P 500 Strategy Trust Series 2,
Registration No. 333-39521 (filed October 14, 1998).
(5) Incorporated by reference to exhibit of same designation filed with
the Securities and Exchange Commission as an exhibit to the
Registration Statement under the Securities Act of 1933 of National
Equity Trust, Low Five Portfolio Series 31, Registration No. 333-96071
(filed February 3, 2000).
(6) Incorporated by reference to exhibit of same designation filed with
the Securities and Exchange Commission as an exhibit to the
Registration Statement under the Securities Act of 1933 of National
Equity Trust, OTC Growth Trust Series 5, Registration No. 333-94591
(filed February 4, 2000).
(7) Incorporated by reference to exhibit of same designation filed with
the Securities and Exchange Commission as an exhibit to the
Registration Statement under the Securities Act of 1933 of National
Equity Trust, Low Five Portfolio Series 32, Registration No. 333-33450
(filed May 4, 2000).
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
National Equity Trust, Forbes Semiconductor Index Trust, has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of New York, and State of New York on the 11th day
of September, 2000.
NATIONAL EQUITY TRUST
Forbes Semiconductor Index Trust
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons*, who constitute
a majority of the Board of Directors of
Prudential Securities Incorporated
A. Laurence Norton, Jr.
David. R. Odenath
Vincent T. Pica II
James D. Price
Hardwick Simmons
Judith Y. Vance
By /s/ Kenneth Swankie
(Kenneth Swankie,
Senior Vice President,
Manager-Unit Investment Trust
Department,
As authorized signatory for
Prudential Securities
Incorporated and
Attorney-in-Fact for the
persons listed above)
--------------------
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of its name in the
Prospectus included in this Registration Statement will be contained in its
opinion to be filed as Exhibit 5 to this Registration Statement.
-----------------------
CONSENT OF INDEPENDENT AUDITORS
[to be filed by Amendment]
II-4
