<PAGE>
As filed with the Securities and Exchange Commission on January 11, 2001
Registration No. 333-48994
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
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
TOP TEN PORTFOLIO SERIES 27
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:
Noah D. Sorkin, Esq. Copy to:
Prudential Securities Incorporated Kenneth W. Orce, Esq.
One Seaport Plaza Cahill Gordon & Reindel
199 Water Street 80 Pine Street
New York, New York 10292 New York, New York 10005
E. Title and amount of securities being registered:
An indefinite number of Units of
NATIONAL EQUITY TRUST TOP TEN PORTFOLIO SERIES 27
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.
|X| Check box if it is proposed that this filing will become effective on
January 11, 2001 immediately upon filing pursuant to Rule 487.
==============================================================================
<PAGE>
NATIONAL EQUITY TRUST TOP TEN PORTFOLIO SERIES 27
CROSS-REFERENCE SHEET
Pursuant to Rule 404 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)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading In Prospectus
------------ ---------------------
I. Organization and General Information
<S> <C>
1. (a) Name of Trust ................................... Prospectus front cover
(b) Title of securities issued....................... Prospectus front cover
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-Termination
7. Changes of Name ..................................... *
8. Fiscal year ......................................... *
9. Litigation .......................................... *
<CAPTION>
II. General Description of the Trust and Securities of the Trust
<S> <C>
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
</TABLE>
---------------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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--Profit of Sponsor; Public Offering of
Units--Volume Discount; Public Offering of
Units--Employee Discount; Exchange Option;
Reinvestment Program; Expenses and Charges
(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 underwriter, trustee or affiliated
persons.......................................... 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 underlying
securities .......................................... The Trust--Trust Formation; The Trusts--Securities
Selection; Rights of Unit Holders--Redemption;
Sponsor--Responsibility
17. Withdrawal or redemption ............................ Rights of Unit Holders--Redemption
18. (a) Receipt, custody and disposition of income....... Rights of Unit Holders--Distributions; Rights of
Unit Holders--Reports and Records
(b) Reinvestment of distributions.................... Reinvestment Program
(c) Reserves or special funds........................ Expenses and Charges; Rights of Unit Holders--
Distributions
(d) Schedule of distributions........................ *
19. Records, accounts and reports ....................... Rights of Unit Holders--Distributions; Rights of
Unit Holders--Reports and Records
20. Certain miscellaneous provisions
of trust agreement................................. Sponsor--Limitations on Liability;
</TABLE>
---------------
* Inapplicable, answer negative or not required.
ii
<PAGE>
<TABLE>
<S> <C>
(a) Amendment........................................ Sponsor--Resignation;
(b) Termination...................................... Trustee--Limitations on Liability;
(c) and (d) Trustee, removal and successor........... Trustee--Resignation;
(e) and (f) Depositor, removal and successor......... Amendment and Termination of the Indenture
21. Loans to security holders ........................... *
22. Limitation on liability ............................. The Trust; Sponsor--Limitations on Liability;
Trustee--Limitations on Liability; Evaluator--
Limitations on Liability
23. Bonding arrangements ................................ Additional Information--Item A
24. Other material provisions of trust agreement ........ *
<CAPTION>
III. Organization, Personnel and Affiliated Persons of Depositor
<S> <C>
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
36. Suspension of sales of trust's securities ........... *
37. Revocation of authority to distribute ............... *
38. (a) Method of distribution........................... Public Offering of Units
(b) Underwriting agreements.......................... Public Offering of Units
(c) Selling agreements............................... Public Offering of Units
39. (a) Organization of principal underwriter............ 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
</TABLE>
---------------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(b) Branch offices of principal underwriter.......... Sponsor
(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 Markets
(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 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 Unit--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
<CAPTION>
IV. Information Concerning the Trustee or Custodian
<S> <C>
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
<CAPTION>
V. Information Concerning Insurance of Holders of Securities
<S> <C>
51. Insurance of holders of trust's securities .......... *
<CAPTION>
VI. Policy of Registrant
<S> <C>
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying
securities....................................... Prospectus front cover; The Trust--Trust Formation;
The Trust--Objectives and Securities Selection;
Sponsor--Responsibility
(b) Transactions involving elimination of underlying
securities....................................... *
</TABLE>
---------------
* Inapplicable, answer negative or not required.
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(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
<CAPTION>
VII. Financial and Statistical Information
<S> <C>
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
</TABLE>
---------------
* Inapplicable, answer negative or not required.
v
<PAGE>
NATIONAL EQUITY TRUST
TOP TEN PORTFOLIO SERIES 27
[LOGO - TOP 10 STRATEGY]
--------------------------------------------------------------------------------
The objective of the Trust is total return (capital appreciation and
dividends). The Trust will invest in a portfolio consisting of the ten common
stocks in the Dow Jones Industrial Average having the highest dividend yields
on January 9, 2001.
--------------------------------------------------------------------------------
Sponsor: [LOGO] PRUDENTIAL
SECURITIES
Please Read and Retain
This Prospectus for Future Reference.
Prospectus dated January 11, 2001
--------------------------------------------------------------------------------
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
Top Ten Portfolio Series 27
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-10
Statement of Financial Condition .................................... A-11
Schedule of Portfolio Securities .................................... A-12
The Trust ........................................................... B-1
Objective .......................................................... B-1
Security Selection ................................................. B-1
Summary Description of the Portfolio ............................... B-1
Risk Factors ........................................................ B-2
Unit Creation ....................................................... B-3
Tax Status of the Trust ............................................. B-5
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-7
Profit of Sponsor .................................................. B-7
Volume Discount .................................................... B-8
Employee Discount .................................................. B-8
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
Federal Income Tax Consequences .................................... B-12
Reinvestment Program ................................................ B-13
Expenses and Charges ................................................ B-13
Organization Costs ................................................. B-13
Trust Fees and Expenses ............................................ B-13
Creation and Development Fee ....................................... B-14
Other Charges ...................................................... B-14
Payment ............................................................ B-14
Administration of the Trust ......................................... B-14
Reports and Records ................................................ B-14
Amendment ........................................................... B-15
Termination ......................................................... B-16
Termination Options ................................................ B-16
Trustee ............................................................. B-18
Limitations on Liability ........................................... B-18
Responsibility ..................................................... B-18
Resignation ........................................................ B-18
Sponsor ............................................................. B-19
Limitations on Liability ........................................... B-19
Resignation ........................................................ B-20
Code of Ethics ..................................................... B-20
Legal Opinions ...................................................... B-20
Independent Auditors ................................................ B-20
</TABLE>
<PAGE>
OBJECTIVE--The objective of the National Equity Trust, Top Ten Portfolio
Series 27 (the Trust) is total return through an investment for approximately
one year in a portfolio of the ten common stocks in the Dow Jones Industrial
Average* having the highest dividend yields on January 9, 2001. Total return
includes:
o capital appreciation: the value per Unit of the Securities in the
Portfolio of the Trust at the termination of the Trust less the value per
Unit of the Securities in the Portfolio of the Trust at the commencement of
the Trust plus
o income: the dividends paid on the Securities during the life of the
Trust.
STRATEGY--The Trust Portfolio consists of common stock issued by the ten
companies whose common stocks are the ten common stocks in the Dow Jones
Industrial Average having the highest dividend yields on January 9, 2001 (the
"Securities" or "Security" or "Top Ten", as the context requires). The Sponsor
calculated the yield for each stock by annualizing the last quarterly ordinary
dividend declared and dividing the annualized dividend by the market value of
the stock. This formula (an objective determination) served as the basis for
the Sponsor's selection of the ten stocks in the Dow Jones Industrial Average
having the highest dividend yields (the "Ten Highest-Yielding Stocks").
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.
The Portfolio, as of the initial Date of Deposit, contains 10 issues of
Securities, all of which are traded on the New York Stock Exchange, in the
following industry groups:
o Chemicals, Plastics, Fibers: 10.04%;
o Tobacco: 10.09%;
o Paper: 9.98%;
o Agricultural and Construction Equipment: 9.94%;
o Banking and Finance: 10.00%;
o Consumer/Industrial Products: 10.07%;
o Photographic: 9.96%;
o Automobile Manufacturing: 9.98%;
o Telecommunication: 9.99%;
o Petroleum Refining: 9.95%.
The percentages were computed on the basis of the aggregate net asset value
of the Securities in the Trust on the initial Date of Deposit and are subject
to change.
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 yield on a stock may decline, the dividend on a stock may be reduced
and the price of a stock 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 those
factors that affect the economic and financial condition of each issuer of a
Security in particular. You should note that the above criteria were applied
to the Securities selected for inclusion in the Trust Portfolio as of January
9, 2001. After that date:
o the Securities may no longer rank among the common stocks in the DJIA
having the highest dividend yields,
o the yields on the Securities in the Portfolio may change, and
o the Securities may no longer be included in the DJIA.
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 common stock in the Trust thus 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 only ten stocks.
----------
* Dow Jones & Company, Inc. ("Dow Jones") has not participated in any way in
the creation of the Trust or in the selection of the stocks included in the
Trust and has not approved any of the information in this Prospectus.
A-1
<PAGE>
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 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.
LITIGATION AND LEGISLATION--Philip Morris Companies common stock represents
approximately 10% of the value of the Portfolio. Pending legal proceedings
against Philip Morris cover a wide range of matters including product
liability and consumer protection. Damages claimed in many of the smoking and
health cases alleging personal injury (both individual and class actions), and
in health cost recovery cases brought by governments, unions and similar
entities seeking reimbursement for health care expenditures, aggregate many
billions of dollars.
Proposed legislation would have a significantly adverse impact on the
company and its stockholders, among others.
The management of the company is unable to make a meaningful estimate of the
amount or range of loss that could result from an unfavorable outcome of
pending litigation. The present legislative and litigation environment is
substantially uncertain, and it is possible that the company's business,
volume, results of operations, cash flows or financial position could be
materially affected by an unfavorable outcome or settlement of certain pending
litigation. The company believes that its cigarette shipments may be
materially adversely affected by price increases related to the tobacco
litigation settlements and, if enacted, by increased excise taxes or other
tobacco legislation. The company believes that the settlement agreements that
it entered into with many States and other jurisdictions may materially
adversely affect its business, volume, results of operations, cash flows or
financial position in future years.
The Sponsor cannot predict the outcome of the litigation pending against
Philip Morris or how the current uncertainty concerning regulatory and
legislative measures will ultimately be resolved. The Sponsor cannot predict
whether these and other possible developments will have a material effect on
the price of Philip Morris stock over the term of the Portfolio, which could
in turn adversely affect Unit prices. A substantial decline in the price of
Philip Morris stock may result in a substantial decline in the value of a
Unit.
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."
<TABLE>
<CAPTION>
Amount per
1,000 Units
with a value of
Unit Holder Sales Charges $1,000
------------------------ ------
<S> <C> <C> <C>
Maximum Sales Charge ............................................ $27.50 2.75%*
Creation and Development Fee (maximum) (.25% per year)(d) ....... $ 5.00 0.50%
Maximum Sales Charges (including Creation and Development Fee) .. 3.25%
*Initial Sales Charge paid at purchase (as a percentage of
offering price) ............................................. $10.00 1.00%(a)
DSC paid in installments (as a percentage of Initial Offering
Price)...................................................... $17.50 1.75%(b)
Initial Sales Charge and DSC ................................. 2.75%
======
Organizational Costs and Expenses(c) ............................ $ 3.50
======
Annual Trust Operating Expenses (as a percentage of average net
assets)
Annual Trustee's Fee ........................................... $ 0.90 0.090%
Other Operating Expenses (including Portfolio Supervision,
Bookkeeping and Administrative Fees) ............................ $ 0.34 0.034%
------ -----
Total(e).. .................................................. $ 1.24 0.124%
====== =====
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for Period:
-------------------
1 3
year years(f)
---- --------
<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 0.474% and a 5% annual
return on the investment throughout the periods ................................. $347 $880
</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") ($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 so that the total of the DSC
and the Initial Sales Charge will equal 2.75%.
(b) The actual fee is $1.75 per month per 1,000 Units, irrespective of
purchase or redemption price, payable each month for 10 months of each
one-year Portfolio. If you sell, exchange or redeem Units before all of
these deductions have been made, the balance of the Deferred Sales Charge
will be deducted from the Unit proceeds. If the Unit price exceeds $1 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%.
(c) Investors will bear all or a portion of the costs incurred in organizing
the Trust. 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. This fee is a
charge of .25% per year during the life 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 0.50% of a Unit
Holder's initial investment. If you sell or redeem Units, no additional
Creation and Development Fee will be charged on those Units. 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.
(f) Although each Trust has a term of only approximately one year and is a
unit investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees and expenses, assuming the
principal amount and distributions are rolled over each year into a New
Series subject only to the Deferred Sales Charge.
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL EQUITY TRUST
TOP TEN PORTFOLIO SERIES 27
AS OF JANUARY 10, 2001*
<TABLE>
<S> <C>
AGGREGATE VALUE OF SECURITIES .......................................................... $123,749.81
NUMBER OF UNITS............ ............................................................ 125,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY EACH UNIT .................... 1/125,000th
Value of Securities in the Trust (per 1,000 Units) .................................... $ 986.50
Plus value of Securities for organization costs (per 1,000 Units)** ................... $ 3.50
-----------
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)................................................................ $ 972.50
</TABLE>
RECORD DATES: The tenth day of May 2001, August 2001, November 2001 and
February 2002.
QUARTERLY DISTRIBUTION DATES: The twenty-fifth day of May 2001, August 2001,
November 2001, and February 2002 or as soon thereafter as possible.
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: $.99 per 1,000 Units+
CREATION AND DEVELOPMENT FEE: $2.50 per 1,000 Units.
SPONSOR'S PORTFOLIO SUPERVISION FEE+: Maximum of $.25 per 1,000 Units.
EVALUATION TIME: 4:00 P.M. New York Time
TERMINATION DATE: February 14, 2002++
SPONSOR'S GAIN ON DEPOSIT: $1,424.75
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
April 1, 2001.
MINIMUM PURCHASE: $250.00.
---------------
* 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.
** $3.50 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 ($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 Initial Sales Charge is $10 per
1,000 Units or 1% of the 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.
***** This price is computed as of the Date of Deposit. This price may vary on
the date of this Prospectus or any subsequent date.
(Footnotes continued on next page)
A-4
<PAGE>
(Footnotes continued from previous page)
****** 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 $1.74 per 1,000 Units.
+ See: "Expenses and Charges" herein. The fee accrues daily and is payable
on each Distribution Date. Estimated dividends from the Securities, based
on the last dividends actually paid, are expected by the Sponsor to be
sufficient to pay the estimated expenses 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 $1.74 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.
A-5
<PAGE>
The Dow Jones Industrial Average Stocks
The Dow Jones Industrial Average is the property of Dow Jones & Company,
Inc., which has not participated in any way in the creation of the Trust or in
the selection of stocks included in the Trust, and has not approved any
information in this Prospectus.
Current List
Honeywell
J. P. Morgan Chase & Co.
Minnesota Mining
Du Pont
Eastman Kodak
Intel Corp.
IBM
General Electric
General Motors
Hewlett-Packard Co.
McDonald's
Microsoft Corp.
Caterpillar
Boeing
Merck
Procter & Gamble
American Express
International Paper
Johnson & Johnson
Philip Morris
United Technologies
Home Depot Inc.
Exxon Mobil Corp.
Citigroup
Coca-Cola
SBC Communications Inc.
Walt Disney
AT&T
Wal-Mart Stores Inc.
Aluminum Co. of America
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on
October 1, 1928. One of the original companies is still in the DJIA today.
The Dow Jones Industrial Average is comprised of 30 common stocks chosen by
the editors of The Wall Street Journal, published by Dow Jones & Company,
Inc., as representative of the broad market and of American industry. The
companies are major factors in their industries and their stocks are widely
held by individuals and institutional investors.
Changes in the components are made entirely by the editors of
The Wall Street Journal without consultation with the Sponsor, the stock ex-
change or any official agency. For the sake of continuity, such changes are
made rarely. Most substitutions have been the result of mergers, but from time
to time changes may be made to achieve a better representation. Notwithstanding
the foregoing, the components of the Dow Jones Industrial Average may be chan-
ged by Dow Jones & Company, Inc. at any time for any reason.
A-6
<PAGE>
Past Performance of Prior Top Ten Portfolio Series Trusts
Total Return(1)
<TABLE>
<CAPTION>
Series Term Trust Return
------ ---- ------------
<S> <C> <C>
Top Ten Portfolio Series 1 September 24, 1996--October 24, 1997 33.38%
Top Ten Portfolio Series 2 December 3, 1996--January 5, 1998 21.65
Top Ten Portfolio Series 3 January 31, 1997--March 3, 1998 21.16
Top Ten Portfolio Series 4 March 19, 1997--April 20, 1998 31.48
Top Ten Portfolio Series 5 June 3, 1997--July 8, 1998 14.58
Top Ten Portfolio Series 6 August 5, 1997--September 9, 1998 3.15
Top Ten Portfolio Series 7 October 1, 1997--November 4, 1998 3.93
Top Ten Portfolio Series 8 December 8, 1997--January 12, 1999 11.64
Top Ten Portfolio Series 9 February 5, 1998--March 11, 1999 9.26
Top Ten Portfolio Series 10 March 26, 1998--May 4, 1999 11.72
Top Ten Portfolio Series 11 June 11, 1998--July 15, 1999 11.93
Top Ten Portfolio Series 12 August 13, 1998--September 16, 1999 12.53
Top Ten Portfolio Series 13 October 8, 1998--November 11, 1999 11.71
Top Ten Portfolio Series 14 December 17, 1998--January 26, 2000 0-0.53
Top Ten Portfolio Series 15 February 11, 1999--March 16, 2000 0-7.36
Top Ten Portfolio Series 16 April 8, 1999--May 12, 2000 -10.26
Top Ten Portfolio Series 17 June 17, 1999--July 25, 2000 -23.84
Top Ten Portfolio Series 18 August 19, 1999--September 20, 2000 -15.41
Top Ten Portfolio Series 19 October 14, 1999--November 20, 2000 -8.84
Top Ten Portfolio Series 20 October 28, 1999--November 21, 2000 -6.20
</TABLE>
---------------
(1) Capital appreciation (the difference between the initial unit price and
the price received on termination of the trust divided by the initial unit
price) and dividend yield (dividends paid less ongoing trust expenses
divided by the initial unit price), reflects deduction of the full sales
charge per year, brokerage commissions and ongoing expenses but not taxes.
Past performance of a series is no guarantee of future results of any
series.
Hypothetical Strategy Stock Performance Information
The following table shows the actual performance of the Dow Jones Industrial
Average and the hypothetical performance of the Ten Highest-Yielding Stocks in
each of the past twenty-five years as of the date indicated for each of such
years. The table shows historical application of the strategy.
COMPARISON OF TOTAL RETURNS(1)
(Figures for the Ten Highest-Yielding Stocks reflect
sales charges and trust expenses)
<TABLE>
<CAPTION>
Year Ended Ten Highest- Year Ended Ten Highest-
12/31/ DJIA(2) Yielding Stocks 12/31/ DJIA(2) Yielding Stocks
------ ------- --------------- ---------- ------- --------------
<S> <C> <C> <C> <C> <C>
1976 22.72% 31.04% 1988 15.95% 21.99%
1977 -12.71 -4.30 1989 31.71 23.90
1978 2.69 -2.43 1990 -0.57 -10.12
1979 10.52 10.44 1991 23.93 32.54
1980 21.41 24.68 1992 7.35 5.30
1981 0-3.40 4.97 1993 16.71 24.37
1982 25.79 23.49 1994 4.93 1.60
1983 25.68 36.36 1995 36.20 33.93
1984 1.06 3.88 1996 28.57 25.51
1985 32.78 26.89 1997 24.78 19.07
1986 26.91 32.24 1998 18.00 8.08
1987 6.02 3.52 1999 27.01 1.01
2000 -4.74 3.11
</TABLE>
---------------
(1) Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period (stocks are
selected as of the last business day of the previous period) and the last
trading day of a period and the total dividends paid on each group of
stocks during the period divided by the opening market value of each group
of stocks as of the first trading day of a period. Total return does not
take into consideration any commissions or taxes. For the Ten Highest-
Yielding Stocks, the table assumes an initial sales charge of 1% and a
deferred sales charge of 1.75% in the first year and 1.75% each year
thereafter and an annual expense of $8.00 per $1,000.
(Footnotes continued on next page)
A-7
<PAGE>
(Footnotes continued from previous page)
(2) An index of 30 stocks compiled by Dow Jones & Company, Inc.
The total return figures shown above are not guarantees of future
performance and should not be used as a predictor of returns to be expected
in connection with the Portfolio. As indicated in the above table, the
stocks in the Ten Highest-Yielding Stocks underperformed the DJIA in certain
years and there can be no assurance that the Portfolio of the Trust will
outperform the DJIA over the life of the Trust.
The chart below shows past performance of the DJIA and the Ten Highest-
Yielding Stocks (but not the Trust) and should not be considered indicative of
future results. From January 1976 through December 2000 the average annual
total return for the DJIA was 14.784% and the average annual total return for
the Ten Highest-Yielding Stocks was 14.419%. The chart reflects a hypothetical
assumption that $10,000 was invested on January 1, 1976 and the investment
strategy followed for 25 years. For the Dow Jones Industrial Average the chart
assumes that all dividends during a year are reinvested at the end of that
year and does not reflect sales charges, commissions, expenses or taxes. For
the Ten Highest-Yielding Stocks, the chart assumes an initial sales charge
rate of 1% and a deferred rate of 1.75% in the first year and 1.75% in each of
the subsequent years and an estimated annual expense rate of $80.00 per
$10,000 invested (the chart assumes that dividends and appreciation are
reinvested at the beginning of the following year). There can be no assurance
that the Trust will outperform the DJIA over its approximately one-year life
or over consecutive rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 VALUE OF $10,000
INVESTED ON INVESTED ON
JANUARY 1, 1976 JANUARY 1, 1976
------------------------------ -------------------------------
Ten Highest- Ten Highest-
Year Ended Yielding Year Ended Yielding
12/31/ DJIA Stocks 12/31/ DJIA Stocks
------ ---- ------ ------ ---- ------
<S> <C> <C> <C> <C> <C>
1976 $12,272 $13,104 1988 $ 47,191 $ 65,556
1977 10,712 12,541 1989 62,155 81,224
1978 11,000 12,236 1990 61,801 73,004
1979 12,158 13,513 1991 76,590 96,759
1980 14,761 16,848 1992 82,219 101,888
1981 14,259 17,686 1993 95,958 126,718
1982 17,936 21,840 1994 100,689 128,745
1983 22,542 29,781 1995 137,138 172,428
1984 22,781 30,937 1996 176,319 216,415
1985 30,249 39,256 1997 220,010 257,685
1986 38,388 51,911 1998 259,612 278,506
1987 40,669 53,739 1999 329,734 281,319
2000 314,104 290,068
</TABLE>
Past performance of any series may not be indicative of results of future
series. Trust performance may be compared to the performance on the same basis
of the DJIA, the S&P 500 Composite Price Stock Index, the Hang Seng Index, the
Financial Times Industrial Ordinary Share Index and the ten highest yielding
stocks in each of the Hang Seng Index and Financial Times Industrial Ordinary
Share Index, or performance data from publications such as Morningstar
Publications, Inc. This performance may also be compared for various periods
with an investment in short-term U.S. Treasury securities; however, the
investor should bear in mind that Treasury securities are fixed income
obligations, having the highest credit characteristics, while equity
securities involve greater risk.
A-8
<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 but
which does not affect the Trust's percentage ownership of the common stock
equity of such issuer at the time of such event and adjust the proportionate
relationship accordingly for all future subsequent deposits. 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.
The sale of additional Units and the sale of Units in the secondary market
may continue even though the Securities would no longer be chosen for deposit
into the Trust if the selection process were to be made at that later time.
DISTRIBUTION: The Trustee will distribute dividends received by the Trust
(net of expenses) and return of capital, if any, on or shortly after each
Quarterly Distribution Date to Unit Holders of record on the Record Date
immediately before that Quarterly Distribution Date. (See Part B--"Rights of
Unit Holders--Distributions.") We cannot assure that there will be any amounts
available for distribution to Unit Holders because the expenses of the Trust
may exceed the dividend income received by the Trust.
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 Top Ten Portfolio Series, upon
purchase of Units of the Trust, will be subject only to the Deferred Sales
Charge on those Units. Any investor may acquire Units by an in-kind deposit of
securities which replicates proportionately the portfolio of the Trust and cash,
if any, in the Trust. You are obligated to pay any remaining Deferred Sales
Charge if you exchange or sell Units to the Sponsor before the last Deferred
Sales Charge Deduction Date.
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.
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 four 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)
o Receipt of units in a new trust through an in-kind exchange (you may
benefit from the tax deferred rollover feature).
Please see the Termination Options section for additional information about
each option and for information about how the Trust will terminate.
A-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL EQUITY TRUST TOP TEN PORTFOLIO SERIES 27
We have audited the accompanying Statement of Financial Condition, including
Schedule of Portfolio Securities, of the National Equity Trust Top Ten
Portfolio Series 27 as of January 10, 2001. 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
January 10, 2001, 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
Top Ten Portfolio Series 27 as of January 10, 2001, in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
January 10, 2001
A-10
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL EQUITY TRUST TOP TEN PORTFOLIO SERIES 27
As of Date of Deposit, January 10, 2001
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed by an irrevocable
letter of credit(a)(e) ................................................... $ 123,749.81
--------------
Total .................................................................... $ 123,749.81
==============
</TABLE>
LIABILITIES AND INTEREST OF UNIT HOLDERS
<TABLE>
<S> <C>
Liabilities--
Payment of deferred portion of sales charge(b) ............................ $ 2,187.50
Reimbursement to Sponsor for organization costs(e) ........................ 437.50
--------------
Subtotal .................................................................. 2,625.00
--------------
Interest of Holders--
Units of fractional undivided interest outstanding:
Cost to investors(c) .................................................... 125,000.00
Less: Gross underwriting commission(d) .................................. (3,437.69)
Less: Organization costs(e) ............................................. (437.50)
--------------
Net amount applicable to investors ........................................... 121,124.81
--------------
Total ................................................................ $ 123,749.81
==============
</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 $2 million 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 April,
2001 through January, 2002. 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
January 1, 2002, the remaining portion of the distribution applicable to
those Units will be transferred to that account on the redemption date.
(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 2.75% 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-11
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL EQUITY TRUST TOP TEN PORTFOLIO SERIES 27
On Date of Deposit, January 10, 2001
<TABLE>
<CAPTION>
Current Percentage of
Annual Aggregate Price Cost of
Dividend Number Market Per Stocks
Portfolio Per of Value Share to To
No. Name of Issuer Share(1) Shares of Trust Trust Trust(2)
--------- ------------------------------------- ----------- --------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
1. Caterpillar Inc. $1.36 273 9.94% $ 45.0625 $ 12,302.06
2. Dupont (E.I.) DeNemours Co. $1.40 265 10.04% $ 46.8750 $ 12,421.88
3. Eastman Kodak Co. $1.76 297 9.96% $ 41.5000 $ 12,325.50
4. Exxon Mobil Corp. $1.76 152 9.95% $ 81.0000 $ 12,312.00
5. General Motors Corp. $2.00 234 9.98% $ 52.7500 $ 12,343.50
6. International Paper Co. $1.00 324 9.98% $ 38.1250 $ 12,352.50
7. J.P. Morgan Chase & Company $1.28 243 10.00% $ 50.9375 $ 12,377.80
8. Minnesota Mining & Manufacturing Co. $2.32 111 10.07% $ 112.3125 $ 12,466.69
9. Philip Morris Companies, Inc. $2.12 283 10.09% $ 44.1250 $ 12,487.38
10. SBC Communications Inc. $1.02 236 9.99% $ 52.3750 $ 12,360.50
-------------
$ 123,749.81
=============
</TABLE>
---------------
(1) Based on the latest quarterly or semiannual declaration. There can be no
assurance that future dividend payments, if any, will be maintained in an
amount equal to the dividend listed above.
(2) The Securities were acquired by the Sponsor on January 10, 2001. All
Securities are represented entirely by contracts to purchase. Valuation of
Securities by the Trustee was made on the basis of the closing sale price
on the New York Stock Exchange on January 10, 2001. The aggregate purchase
price to the Sponsor for the Securities deposited in the Trust is
$122,325.06.
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-12
<PAGE>
PROSPECTUS--PART B:
--------------------------------------------------------------------------------
Note that Part B of this Prospectus may not be distributed unless accompanied
by Part A.
--------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
TOP TEN PORTFOLIO SERIES 27
INTRODUCTION
Prudential Securities Incorporated (the "Sponsor") and The Bank of New York
(the "Trustee") signed a Trust Indenture and Agreement and a related Reference
Trust Agreement that created this series of the National Equity Trust Top Ten
Portfolio Series 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
total return through an investment for approximately one year in a portfolio
of the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yields as of the date of or shortly before the Date of
Deposit (the "Top Ten").
THE TRUST
Objective
The objective of the Trust is total return through an investment in a
portfolio of the Top Ten (the "Securities" or "Security," as the context
requires). Total Return includes:
o capital appreciation--the value per Unit of the Securities in the
Portfolio of the Trust at the termination of the Trust less the value per
Unit of the Securities in the Portfolio of the Trust at the commencement
of the Trust
o income--dividends paid on the Securities during the life of the Trust.
Security Selection
The yield for each stock was calculated by the Sponsor by annualizing the
last quarterly ordinary dividend declared and dividing the annualized dividend
by the market value of the stock. This formula (an objective determination)
served as the basis for the Sponsor's selection of the ten stocks in the Dow
Jones Industrial Average having the highest dividend yields (the "Ten Highest-
Yielding Stocks").
Summary Description of the Portfolio
On the Date of Deposit, the Sponsor deposited with the Trustee common stock
issued by the ten companies whose common stocks are the ten common stocks in
the Dow Jones Industrial Average having the highest dividend yields. 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.
Therefore, 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.")
B-1
<PAGE>
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.
RISK FACTORS
Market Risk
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 common
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
Common 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 one-year
life. We can likewise give no assurance that future portfolios selected using
the same methodology as the Trust during consecutive one-year periods will
meet their objectives. 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
B-2
<PAGE>
liability of the issuer. Therefore, they do not offer any assurance of income
or provide the degree of protection of capital of debt securities.
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 though one or more of the Securities no longer remains among
the Top Ten on the date of sale or the date of deposit of the additional
Securities and even if the Security is no longer in the DJIA or the Sponsor
has a sell recommendation on the Security.
Defered Sales Charge
It is anticipated that Securities generally will not be sold to pay the
Deferred Sales Charge until after the last Deferred Sales Charge Deduction
Date. Unit holders will be at risk with respect to changes in the market value
of Securities between the accrual of each monthly deferred sales charge and
the actual sale of Securities to satisfy the payment of the Deferred Sales
Charge.
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
Except as set forth above, 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. At any time after the initial date of deposit, litigation may
be initiated on a variety of grounds, or legislation may be enacted, which may
have a material adverse effect on 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
B-3
<PAGE>
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 in lieu of cash. The
Sponsor may then give instructions to the Trustee to purchase additional
Securities in order to create additional Units. Any such additional deposits
made in the 90 day period following the creation of the Trust will consist of
securities of the same issuers as those already in the Trust. These deposits
will be in amounts which maintain, to the extent practicable, the original
proportionate relationship between the number of shares of each Security and
any cash in the Portfolio. It may not be possible to maintain the exact
original proportionate relationship because of price changes or other reasons.
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.
The Trustee may hold any cash deposited with instructions to purchase
Securities in an interest bearing account. Any interest earned on such cash
will be the property of the Trust. Unit Holders will receive, as a
distribution on the earlier of (1) the first Distribution Date or (2) 90 days
after the Initial Date of Deposit:
o any cash deposited with instruction to purchase Securities that is not
used to purchase Securities, and
o any interest not used to pay Trust expenses.
This Prospectus may be used to continuously offer additional Units for sale
to the public. After the 90 day period following the Initial Date of Deposit
any deposit of additional Securities and cash must replicate the portfolio
exactly as it was immediately before that deposit.
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 on the New York Stock Exchange.
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. The Sponsor will
receive the purchase price of the Units before it pays for the Securities and
will benefit from the use of the cash during this period.
B-4
<PAGE>
TAX STATUS OF THE TRUST
In the opinion of Cahill Gordon & Reindel, special counsel for the Sponsor,
under existing Federal income tax law:
The Trust is not an association taxable as a corporation for Federal income
tax purposes. Income received by the Trust will be treated as income of the
Unit Holders in the manner set forth below.
Under the grantor trust rules of Sections 671-678 of the Internal Revenue
Code of 1986, as amended, each Unit Holder will be considered to be the owner
of a pro rata portion of each asset in the Trust. The total tax cost of each
Unit purchased solely for cash will equal the cost of Units, including the
Initial Sales Charge. A Unit Holder should determine the tax cost for each
asset represented by the Unit Holder's Units purchased solely for cash by
allocating the total cost for such Units, including the Initial Sales Charge,
among the assets in the Trust represented by the Units in proportion to the
relative fair market values thereof on the date the Unit Holder purchases such
Units.
The proceeds actually received by a Unit Holder upon termination of the
Trust or redemption of Units will be net of the Deferred Sales Charge, the
Creation and Development Fee and the charge for organizational expenses. The
relevant tax reporting forms sent to Unit Holders will also reflect the actual
amounts paid to them after deduction for the Deferred Sales Charge, the charge
for organizational expenses and the Creation and Development Fee. Accordingly,
you should not increase the total cost for your Units by the amount of the
Deferred Sales Charge, the charge for organizational expenses or the Creation
and Development Fee.
You as a Unit Holder will be considered to have received all of the
dividends paid on your pro rata portion of each Security when the Trust
receives such dividends including the portion of such dividend used to pay
ongoing expenses. In the case of a corporate Unit Holder, such dividends will
qualify for the 70% dividends received reduction for corporations to the same
extent as if the corporate Unit Holder held the dividend-paying stock
directly. You as an individual Unit Holder who itemizes deductions will be
entitled to an itemized deduction for your pro rata share of fees and expenses
paid by the Trust as if you paid such fees and expenses directly. You are
entitled to this deduction only to the extent that this amount together with
your other miscellaneous deductions exceed 2% of your adjusted gross income. A
corporate Unit Holder will not be subject to this 2% floor.
Under the position taken by the Internal Revenue Service in Revenue Ruling
90-7, a distribution by the Trustee to you or to your agent of your pro rata
share of the Securities in kind upon redemption or termination of the Trust
will not be a taxable event to you. Your basis for Securities so distributed
will be equal to your basis for the same Securities, previously represented by
your Units, before such distribution. The holding period for such Securities
will include the period during which you held the Units. You will have a
taxable gain or loss, which will be a capital gain or loss except in the case
of a dealer, when you dispose of such Securities in a taxable transfer.
Under the income tax laws of the State and City of New York, the Trust is
not an association taxable as a corporation. These tax laws will treat the
income of the Trust as the income of the Unit Holders.
You will not be taxed upon the receipt in kind from the Terminating Trust
and the deposit in the New Trust of the Duplicated Stocks. Your basis in such
Duplicated Stocks will be your basis in such Duplicated Stocks prior to the
distribution from the Terminating Trust. The holding period of such Duplicated
Stocks will include the period during which you held the Units. To the extent
the Distribution Agent sells Securities received in kind on your behalf, you
will have a taxable gain or loss, which will be a capital gain or loss except
in the case of a dealer. Your basis in non-Duplicated Stocks will equal the
purchase price paid by the Distribution Agent.
If the proceeds that the Distribution Agent or the Trustee receives upon the
sale of an underlying Security exceed your adjusted tax cost allocable to the
Security disposed of, you will realize a taxable gain to the extent of such
excess. Conversely, if the proceeds that the Distribution Agent or the Trustee
receives upon the sale of an underlying Security are less than your adjusted
tax cost allocable to the Security disposed of, you will realize a loss for
tax purposes to the extent of such difference. However, upon reinvestment of
proceeds in a New Series in connection with an exchange or non In-Kind
Rollover, the Internal Revenue Service may seek to disallow such loss to the
extent that (l) the underlying securities in each trust are substantially
identical and (2) the purchase of units of the New Series takes place less
than thirty-one days after the sale of the underlying Security. Under the
Internal Revenue Code, capital gain of individuals, estates and trusts from
Securities held for more than one year is subject to a maximum nominal tax
rate of 20%. Such capital gain may, however, result in a disallowance of
itemized deductions and/or affect a personal exemption phase-out. The capital
gain rate of 20% will be unavailable to you with respect to those Securities
which you have held for less than a year and a day at the time of sale. This
includes sales occasioned by mandatory or early termination of the Trust or
exchange or rollover of Units.
From time to time Congress considers proposals to reduce the rate of the
dividends received deduction. This type of legislation, if enacted into law,
would reduce the after-tax return to investors who can take advantage of the
deduction.
Foreign Unit Holders (including nonresident alien individuals, foreign
corporations, and foreign partnerships) not engaged in a U.S. trade or
business generally will be subject to a 30% withholding tax (or lower
applicable treaty rate) on dividend distributions.
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 closing prices 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. 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
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%. The Initial Sales Charge, Deferred Sales Charge and Creation and
Development Fee will not exceed 3.25% of the Initial Offering Price. 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.
B-6
<PAGE>
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." Unit Holders investing the proceeds of distribution from a previous
terminating Series of National Equity Trust Top Ten Portfolio Series, upon
purchase of Units of the Trust, will be subject only to the Deferred Sales
Charge on such Units. 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 30 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.
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." 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
B-7
<PAGE>
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.
<TABLE>
<CAPTION>
Secondary Market
Primary Market Dealer Concession Initial Sales Chage
--------------------------------------------------- ----------------- -------------------------------
Percent of Percent of Deferred Percent of Percent of Percent of
Public Offering Net Amount Sales Charge Public Offering Public Offering Net Amount
Purchases Price Invested per 1,000 Units Price Price Invested
--------------------------- --------------- ---------- ------------ --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000 ......... 2.75% 2.778% $ 17.50 2.10% 1.00% 1.010%
$50,000-$99,999 ........... 2.50% 2.519% 17.50 1.90% 0.75% 0.756%
$100,000-$249,999 ......... 2.00% 2.005% 17.50 1.40% 0.50% 0.503%
$250,000 or more .......... * * 17.50 1.20% 0.25% 0.251%
</TABLE>
---------------
* Deferred Sales Charge only.
The reduced sales charges as shown on the chart above will apply to all
purchases of Units in any fourteen-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 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.
B-8
<PAGE>
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
Cash amounts received by the Trust will be distributed as set forth below on
a pro rata basis to Unit Holders of record as of the preceding Record Date.
All distributions will be net of applicable expenses and funds required for
the redemption of Units. Because the expenses of the Trust may exceed the
dividend income received by the Trust there can be no assurance that there
will be any amounts available for distribution to Unit Holders.
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. 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.
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 Trust will distribute (1) an amount approximately equal
to the dividend income per Unit, after deducting estimated expenses, if any,
plus (2) your pro rata share of the distributable cash balance of the
Principal Account to you as a Unit Holder as of a Record Date on the next
following Distribution Date or shortly thereafter. Persons who purchase Units
between a Record Date and a Distribution Date will receive their first
distribution on the second Distribution Date following their purchase of
Units. The Record Dates and the Distribution Dates are set forth in Part A of
this Prospectus. See "Summary of Essential Information."
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 proceeds on the Distribution Date following
receipt of them. 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.
As of each Distribution Date 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.") 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 the deferred sales charge will reduce the Principal
Account and that amounts in the Principal Account will be sufficient to cover
the cost of the deferred sales charge. Distributions of amounts necessary to
pay the deferred portion of the sales charge will be made to an account
maintained by the Trustee for purposes of satisfying Unit Holders' deferred
sales charge obligations. Although the Sponsor has the right to collect the
deferred sales charge monthly, in order to keep Unit Holders as fully invested
as possible, it is anticipated that no Securities will be sold to pay the
deferred sales charge to the Sponsor until after the Termination Date set
forth in the Summary of Essential Information.
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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 it 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 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.
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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 trade prices as of the
Evaluation Time on the New York Stock Exchange (unless the Trustee deems
these prices inappropriate as a basis for valuation) or,
o if there is no closing trade price on that exchange, at the mean between
the closing bid and asked prices. If the Securities are not so listed or,
if so listed and the principal market therefor is other than on that
exchange, the evaluation shall generally be based on the current bid price
on the over-the-counter market (unless the Trustee deems these prices
inappropriate as a basis for evaluation).
If current bid or closing prices are 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").
Such an 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)].
Federal Income Tax Consequences
An exchange of Units pursuant to the Exchange Option will constitute a
"taxable event" under the Code. You will recognize a gain or loss at the time
of exchange. However, if you exchange Units for units of any series of the
Exchange Trusts which are
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grantor trusts for U.S. federal income tax purposes, the Internal Revenue
Service may seek to disallow any loss incurred upon such exchange to the
extent that (1) the underlying securities in each Trust are substantially
identical and (2) the purchase of the units of an Exchange Trust takes place
less than thirty-one days after the sale of the Units. You are advised to
consult your own tax advisor as to the tax consequences of exchanging Units in
your particular case.
REINVESTMENT PROGRAM
You may elect to automatically reinvest the distributions with respect to
your Units in additional Units of the Trust. A Unit Holder holding Units in
"street name" may participate in the Trust's reinvestment program by
contacting his broker, dealer or financial institution. You may participate in
the Trust's reinvestment program by filing with the Trustee a written notice
of election. The Trustee must receive your completed notice of election to
participate in the Program at least ten days before the Record Date applicable
to any distribution in order for the Program to be in effect as to that
distribution. You may modify or revoke elections on similar notice.
The Trustee will use such distributions, to the extent reinvested in the
Trust, at the direction of the Sponsor in one or both of the following
manners:
(1) The Trustee may use the distributions to purchase Units of this
Series of the Trust in the Sponsor's inventory. The purchase price payable
by the Trustee for each of such Units will be equal to the applicable Trust
evaluation per Unit on or as soon as possible after the close of business
on the Distribution Date. The Trustee will issue or credit the Units
purchased to the accounts of Unit Holders participating in the Program.
(2) If there are no Units in the Sponsor's inventory, the Sponsor may
purchase additional Securities for deposit into the Trust as described
above in Part B. The Sponsor will deposit the additional Securities with
any necessary cash with the Trustee in exchange for new Units. The Trustee
may then use the distributions to purchase the new Units from the Sponsor.
The price for such new Units will be the applicable Trust evaluation per
Unit on or as soon as possible after the close of business on the
Distribution Date. See "Public Offering of Units-Public Offering Price."
A reinvestment unit will be charged the remaining deferred sales charge but
the purchase price of the reinvestment unit will be credited by the amount of
the remaining deferred sales charge at the time of reinvestment.
The Units purchased by the Trustee will be issued or credited to the
accounts of Unit Holders who participate in the Program. The Sponsor may
terminate the Program if it does not have sufficient Units in its inventory or
if it is no longer practical to create additional Units. The cost of
administrating the reinvestment program will be borne by the Trust and thus
will be borne indirectly by all Unit Holders.
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
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on or before each Distribution Date 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.
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 0.50% 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. Securities will be
sold to generate the cash needed to pay the fee.
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
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) 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 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
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
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o deductions for payment of applicable taxes and for fees and expenses of
the Trust and for redemptions of Units
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 may 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.
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 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 (1) 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, (2) 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 permit the Trustee
to vary the investment of Unit Holders or to empower the Trustee to engage in
business or to engage in investment activities not specifically authorized in
the Indenture as originally adopted or (3) adversely affect the
characterization of the Trust as a grantor trust for federal income tax
purposes. 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.
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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.
Section 17(a) of the Investment Company Act of 1940 restricts purchases and
sales between affiliates of registered investment companies and those
companies. Pursuant to an exemptive order, each terminating Top Ten Portfolio
Series can sell securities to the next Series if those securities continue to
be included in the Top Ten by remaining among the ten highest dividend-
yielding securities in the DJIA. The exemption will enable each Series to
eliminate commission costs on these transactions. The price for those
securities will be the closing sale price on the sale date on the exchange
where the securities are principally traded, as certified and confirmed by the
Trustee of each Series.
Termination Options
The Trust will terminate on the Termination Date set forth in the Summary of
Essential Information, approximately one year 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 four
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;
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 (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 one year 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; and
4. Termination Option--In-Kind Exchange
Unitholders desiring to exchange their interests in Units of a
terminating series of National Equity Trust Top Ten Portfolio Series
("Terminating Trust") for units of the Trust ("New Trust") may do so by so
advising their account executive. Such exchange will be effected by an in-
kind redemption from the Terminating Trust and subsequent in-kind deposit
with the Trustee of the New Trust, as follows:
The number and types of securities constituting a unit of the New
Trust will be deposited on behalf of a Unitholder in connection with the
creation of a unit by the Trustee. Certain of the stocks contained in
the Terminating Trust are likely to be included in the portfolio of the
New Trust ("Duplicated Stocks"). A Unitholder in the Terminating Trust
electing to receive his interest in the Terminating Trust in-kind and
desiring to purchase units in the New Trust by an in-kind contribution
to the New Trust would direct that The Bank of New York act as agent
(the "Agent") for a Unitholder to carry out the transactions necessary
to consummate the in-kind deposit. The Agent would be authorized to
receive the
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Unitholder's in-kind distribution from the Terminating Trust and to
assemble and deposit, on the Unitholder's behalf, the package of stocks
needed to make up a unit in the New Trust. Such assembly and deposit
would include an in-kind contribution to the New Trust of an appropriate
amount of the Unitholder's interest in Duplicated Stocks. Securities
distributed in-kind from the Terminating Trust not required to make up a
unit in the New Trust would be sold by the Agent with the cash proceeds
of each sale utilized by the Agent to purchase the stocks, other than
the Duplicated Stocks, necessary to constitute a unit of the New Trust.
The proceeds of those sales will be reduced and the cost of those
purchases will be increased by any applicable brokerage commissions. If
additional cash is needed to purchase stocks, that cash would be paid to
the Agent by the Unitholder. Any cash not used to make up a unit in the
New Trust would be distributed to the Unitholder. Fractional interests
received from the Terminating Trust will be sold by the Agent with the
cash proceeds of that sale used to purchase securities for deposit in
the New Trust or, if not so utilized, distributed to the Unitholder.
Upon receipt of the in-kind deposit, the Trustee will issue the
appropriate number of units in the New Trust to the Unitholder on whose
behalf the Agent acted. Units acquired pursuant to an in-kind deposit
into a New Trust by a Unitholder of a Terminating Trust will not be
subject to an Initial Sales Charge but only subject to a Deferred Sales
Charge.
The ability to purchase units of the New Trust by the deposit of
securities in-kind will also be offered to persons who were not
Unitholders in a prior Trust and any such person may contribute whole
shares in-kind to a New Trust. Such person will be required to pay the
Initial Sales Charge to the Sponsor in connection with the in-kind
purchase of units, which units will be subject to a Deferred Sales
Charge.
The receipt in-kind from the Terminating Trust and the deposit in the
New Trust of the Duplicated Stocks will not be a taxable event to a
Unitholder. (See Part B--"Tax Status of the Trust.")
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
B-17
<PAGE>
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. There can be no assurance
that any rollover or exchange from one series to another will achieve the
desired tax result. The Sponsor is not a tax advisor and each Unit Holder
should consult his, her or its tax advisor with regard to any gains or losses
on the stock in the Trust and the tax treatment thereof.
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 a
yearly 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 intends
to coordinate the date of deposit of a future series so that the terminating
trust will terminate within a few weeks of the creation of a New Trust.
The Sponsor reserves the right to modify, suspend or terminate the
reinvestment privilege at any time.
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 at 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 will be
distributable by the Trustee to Unit Holders of record on the Record Date next
prior to a Distribution Date.
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
B-18
<PAGE>
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.
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) bad faith, (3) gross
negligence or (4) 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.
Although the Sponsor and Trustee do not presently intend to dispose of
Securities, the Indenture permits the Sponsor to direct the Trustee to dispose
of any Security upon the happening of certain events, including, without
limitation, default under certain documents or other occurrences, including
legal actions which might adversely affect future declaration and payment of
dividends, institution of certain legal proceedings, and a decline in market
price to such an extent, or such other adverse market or credit factor, as in
the opinion of the Sponsor would make retention of a Security detrimental to
the Trust and to the interests of the Unit Holders or if required to pay the
Deferred Sales Charge. The Sponsor may instruct the Trustee to tender a
Security for cash or sell the Security on the open market when in its opinion
it is in the best interest of the Unit Holders to do so in the event of a
public tender offer or merger or acquisition announcement.
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.
It is the responsibility of the Sponsor to instruct the Trustee to reject
any offer made by an issuer of any of the Securities to issue new securities
in exchange and substitution for any Security pursuant to a recapitalization
or reorganization, except that the Sponsor may instruct the Trustee to accept
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if the issuer failed to declare or pay or the Sponsor
anticipates such issuer will fail to pay or declare anticipated dividends with
respect thereto. 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. Except as otherwise set forth in the Prospectus, the
acquisition by the Trust of any securities other than the Securities initially
deposited is prohibited.
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 redeeming
Units or paying Trust expenses.
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<PAGE>
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.
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.
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<PAGE>
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<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.
--------------------------------------------------------------------------------
---------------------
NATIONAL EQUITY TRUST
Top Ten Portfolio Series 27
[LOGO - TOP 10 STRATEGY]
---------------------
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. 333-48994) 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: 1-800-SEC-0330 for information about the Public
Reference Room
Visit: 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].
--------------------------------------------------------------------------------
UTS103 01/01
<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).
*Deloitte & Touche LLP.
The following Exhibits:
<TABLE>
<CAPTION>
<S> <C>
*****Ex- 3.(i) -- Certificate of Incorporation of
Prudential Securities Incorporated dated
March 29, 1993.
***Ex- 3.(ii) -- Revised By-Laws of Prudential Securities
Incorporated as amended through September
28, 1998.
****Ex- 4.a -- Trust Indenture and Agreement and
Distribution Agency Agreement dated
February 2, 2000.
*Ex- 4.b -- Reference Trust Agreement dated
January 10, 2001.
*Ex- 5 -- Opinion of counsel as to the legality of
the securities being registered.
**Ex-24 -- Powers of Attorney executed by a majority
of the Board of Directors of Prudential
Securities Incorporated.
*****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).
*****Ex-99.2 -- Affiliations of Sponsor with other
investment companies.
*****Ex-99.3 -- Broker's Blanket Policies, Standard Form
No. 14 in the aggregate amount of
$62,500,000.
******Ex-99.A(11) -- Code of Ethics.
</TABLE>
----------------
* Filed herewith.
** Incorporated by reference to exhibits 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), National Equity Trust, Top Ten Portfolio Series 215,
Registration No. 333-43704 (filed August 14, 2000), National Equity
Trust, Unique Opportunities Trust, Registration No. 333-43926 (filed
October 12, 2000) and National Equity Trust, Low Five Portfolio
Series 35, Registration No. 333-46232 (filed November 16, 2000).
*** 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).
**** 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. 333-95491 (filed February 3,
2000).
***** 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).
****** 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-1
<PAGE>
SIGNATURES
The registrant, National Equity Trust, Top Ten Portfolio Series 27 hereby
identifies Series 23 of the Low Five Portfolio Series and Series 1 of the Top
Ten Series for purposes of the representations required by rule 487 and
represents the following:
(1) That portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;
(2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those contained
in the registration statements for such previous series as to which the
effective dates were determined by the Commission or the staff; and
(3) That it has complied with rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the registrant,
National Equity Trust, Top Ten Portfolio Series 27, 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 January 10,
2001.
NATIONAL EQUITY TRUST
TOP TEN PORTFOLIO SERIES 27
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By: /s/ RICHARD R. HOFFMANN
---------------------------------------
Richard R. Hoffmann
First Vice President
By the following persons,* who constitute a majority of the
Board of Directors of Prudential Securities Incorporated
William H. Anderson
Kathy A. Jones
John M. Liftin
A. Laurence Norton, Jr.
David R. Odenath
James D. Price
Judith Y. Vance
By: /s/ RICHARD R. HOFFMANN
---------------------------------------
Richard R. Hoffmann
First Vice President
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-2
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of its name in the
Prospectus included in this Registration Statement is contained in its opinion
filed as Exhibit 5 to this Registration Statement.
II-3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-48994 on Form S-6 of our report dated January 10, 2001, appearing in the
Prospectus, which is part of this Registration Statement for the National
Equity Trust Top Ten Portfolio Series 27. We consent to the reference to our
Firm as experts under the heading "Independent Auditors" in the Prospectus
which is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
January 10, 2001
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Index
------- -------------
<S> <C>
*****Ex- 3.(i) -- Certificate of Incorporation of
Prudential Securities Incorporated dated
March 29, 1993.
***Ex- 3.(ii) -- Revised By-Laws of Prudential Securities
Incorporated as amended through September
28, 1998.
****Ex- 4.a -- Trust Indenture and Agreement and
Distribution Agency Agreement dated
February 2, 2000.
*Ex- 4.b -- Reference Trust Agreement dated
January 10, 2001.
*Ex- 5 -- Opinion of counsel as to the legality of
the securities being registered.
**Ex-24 -- Powers of Attorney executed by a majority
of the Board of Directors of Prudential
Securities Incorporated.
*****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).
*****Ex-99.2 -- Affiliations of Sponsor with other
investment companies.
*****Ex-99.3 -- Broker's Blanket Policies, Standard Form
No. 14 in the aggregate amount of
$62,500,000.
******Ex-99.A(11) -- Code of Ethics.
</TABLE>
-----------
* Filed herewith.
** Incorporated by reference to exhibits 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
(January 20, 1998), National Equity Trust, Top Ten Portfolio Series
215, Registration No. 333-43704 (filed August 14, 2000), National
Equity Trust, Unique Opportunities Trust, Registration No. 333-43926
(filed October 12, 2000) and National Equity Trust, Low Five Portfolio
Series 35, Registration No. 333-46232 (filed November 16, 2000).
*** 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).
**** 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. 333-95491 (filed February 3,
2000).
***** 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).
****** 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).
