<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23, 1995
REGISTRATION NO. 33-56297
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
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:
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 8
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:
<TABLE>
<S> <C>
COPY TO:
LEE B. SPENCER, JR., ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
AN INDEFINITE NUMBER OF UNITS OF
GOVERNMENT SECURITIES
EQUITY TRUST
SERIES 8
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:
$500 (AS REQUIRED BY RULE 24F-2)*
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
/ / CHECK BOX IF IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON
FEBRUARY 23, 1995 IMMEDIATELY UPON FILING PURSUANT TO RULE 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* This amount was previously paid.
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 8
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
11. Type of securities comprising units........................ Prospectus front cover; The Trust
12. Certain information regarding periodic payment
certificates.......................................... *
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- --------------------------------------------
<S> <C>
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
(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
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
ii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- --------------------------------------------
<S> <C>
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
(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
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- --------------------------------------------
<S> <C>
(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 Units--Secondary Market;
Rights of Unit Holders--
Redemption--Computation of Redemption
Price per Unit; Rights of Unit
Holders--Redemption--Purchase by the
Sponsor of Units Tendered for Redemption
<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............................................ *
(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.
iv
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
[LOGO]
- --------------------------------------------------------------------------------
The objectives of the Trust are to attempt to obtain safety of capital through
investment in stripped United States Treasury issued notes or bonds paying no
current interest and to attempt to provide for capital appreciation through
investment in Class A shares of the Prudential Equity Fund, Inc. (the 'Fund'),
an open-end, diversified, registered management investment company. The
objective of the Fund is long-term growth of capital. The Fund will seek to
achieve this objective by investing primarily in common stocks of major,
established corporations which, in the opinion of the Fund's investment adviser,
are believed to be in sound financial condition and to have prospects of price
appreciation greater than broadly based stock indices. The Fund may invest up to
30% of its assets in foreign securities. The Fund may also invest in
derivatives, including options on stocks and stock indices and foreign currency
contracts and options. There can be no assurance that the Fund or the Trust will
achieve its objectives. Units of the Trust may be suited for purchase by
Individual Retirement Accounts, Keogh Plans and other tax-deferred retirement
plans.
- --------------------------------------------------------------------------------
SPONSOR:
PRUDENTIAL SECURITIES [LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PLEASE READ AND RETAIN Prospectus dated February 23, 1995
THIS PROSPECTUS FOR FUTURE REFERENCE.
<PAGE>
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information with respect to the
investment company set forth in its registration statement and exhibits relating
thereto which have been filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933 and the Investment Company Act
of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
THE TRUST
Government Securities Equity Trust Series 8 consists of one underlying unit
investment trust (the 'Trust' or 'GSET' as the context requires) composed of
stripped United States Treasury issued notes or bonds bearing no current
interest (the 'Treasury Obligations') and Class A shares ('Fund Shares') of the
Prudential Equity Fund, Inc. (the 'Fund'), an open-end, diversified, registered
management investment company, or contracts and funds for the purchase thereof
(the Treasury Obligations and the Fund Shares, collectively, the 'Securities').
The Trust contains Treasury Obligations maturing approximately 11.7 years
from the Date of Deposit and Fund Shares.
The objectives of the Trust are to attempt to obtain safety of capital
through investment in stripped United States Treasury issued notes or bonds
paying no current interest and to attempt to provide for capital appreciation
through investment in shares of the Fund. The objective of the Fund is long-term
growth of capital. The Fund will seek to achieve this objective by investing
primarily in common stocks of major, established corporations which, in the
opinion of the Fund's investment adviser, are believed to be in sound financial
condition and to have prospects of price appreciation greater than broadly based
stock indices. There can be no assurance that the Fund will achieve its
investment objective. The Fund may also invest in options on stocks and stock
indices. The Fund's purchase and sale of put and call options and related
short-term trading may result in a high portfolio turnover rate. The Fund may
also buy and sell futures and options on futures, forward foreign currency
exchange contracts, options on foreign currencies and futures contracts on
foreign currencies and options thereon pursuant to limits described herein.
These various hedging and income enhancement strategies, including the use of
derivatives, are considered speculative and may result in higher risks and costs
to the Fund. The Fund may invest up to 30% of its total assets in foreign
securities. Investing in securities of foreign companies and countries involves
certain risk considerations not typically associated with investing in
securities of domestic companies. In addition, the Fund may invest up to 5% of
its net assets in illiquid securities. There is, of course, no assurance that
the Trust's objectives will be achieved.
The Trust is structured to contain a sufficient amount of Treasury
Obligations to insure that an investor will receive, at the maturity of such
Trust, $15.00 per unit. However, an investor holding his Units to Trust maturity
may suffer a loss to the extent the investor's purchase cost of a Unit exceeds
$15.00 since the capital protection is limited to the aggregate maturity value
per Unit of Treasury Obligations. On the Date of Deposit, the Public Offering
Price, including the sales charge, will be $12.50 per Unit and consequently
had a Unit Holder purchased Units on such date such Unit Holder could have
anticipated realizing proceeds at maturity of the Treasury Obligations greater
than their initial investment of approximately $12.50 per Unit. An investor who
sells his Units prior to Trust maturity may suffer a loss to the extent that the
price he receives upon the sale of his Units is less than the purchase price of
his Units. The price paid for a Unit may differ from that set forth herein due
to changes in the value of the Securities in the portfolio subsequent to the
Date of Deposit. There is no assurance that a purchaser of Units on the date of
the Prospectus or subsequent to such date will receive, upon termination, the
purchase price per Unit. The Fund has not been structured to generate dividends
and therefore dividend distributions by the Trust are likely to be
insignificant. The maximization of dividend income is not an objective of the
Trust. The Trust is 'concentrated' in Fund Shares, so investors should be aware
that the potential for capital appreciation is directly related to the
investment performance of the Fund itself.
Subsequent to the Date of Deposit the Sponsor may, from time to time,
deposit additional Treasury Obligations and Fund Shares in the Trust while
maintaining the proportionate relationship between the maturity amount of the
Treasury Obligations and the number of Fund Shares immediately prior to such
deposit. Any additional Treasury Obligations added to the Trust will be United
States Treasury notes or bonds substantially identical to those then held in the
Trust.
THE FUND
The objective of the Fund is long-term growth of capital. The Fund seeks to
achieve this objective by investing primarily in common stocks of major,
established corporations which, in the opinion of the Fund's investment adviser,
are believed to be in sound financial condition and to have prospects of price
appreciation greater than broadly based stock indices. The Fund may also invest
in preferred stocks and bonds, which have either attached warrants or a
conversion privilege into common stocks. At times when economic conditions or
general levels of common stock prices are such that the investment adviser deems
it prudent to adopt a temporary defensive position by reducing or curtailing
investments in common stocks, a larger proportion of the Fund's assets than
usual may be invested in preferred stocks or short-term or long-term debt
instruments (either convertible or non-convertible). The shares of the Fund are
subject to the risks of common stock investment, and there can be no assurance
that the Fund will achieve its investment objective. The Fund may invest up to
30% of its assets in foreign securities, which involve additional risks.
A-1
<PAGE>
Such investment risks include future adverse political and economic
developments, possible seizure or nationalization of the company in whose
securities the Fund has invested, currency risk and possible establishment of
exchange controls or other foreign governmental laws that might adversely affect
the payment of dividends.
The Fund may also engage in various portfolio strategies, including
utilizing derivatives, to attempt to reduce certain risks of its investments and
to attempt to enhance income. These strategies include (1) the purchase and
writing (i.e., sale) of put options and call options on equity securities, (2)
the purchase and sale of put and call options on indices, (3) the purchase and
sale of exchange traded stock index futures and options thereon and (4) the
purchase and sale of options on foreign currencies and futures contracts on
foreign currencies and options thereon. The Fund may engage in these
transactions on securities or commodities exchanges or, in the case of equity,
stock index and foreign currency options, also in the over-the-counter market.
The Fund may also purchase and sell forward foreign currency exchange contracts.
The Fund's ability to use these strategies may be limited by market conditions,
regulatory limits and tax considerations and there can be no assurance that any
of these strategies will succeed. New financial products and risk management
techniques continue to be developed and the Fund may use these new investments
and techniques to the extent they are consistent with its investment objective
and policies.
Although the Fund will seek the objective of long-term growth of capital,
there can be no assurance it will be attained. The objective of the Fund may not
be changed without shareholder approval.
INVESTMENT RISKS
Investors should be aware of the risks which an investment in Units of the
Trust may entail. During the life of the Trust, the value of the portfolio
Securities and hence the Units will fluctuate and therefore the Public Offering
Price and Redemption Price per Unit may be more or less than the price paid by
the investor.
The value of the Treasury Obligations will fluctuate inversely with changes
in interest rates and the value of Fund Shares will vary as the value of the
underlying portfolio securities of the Fund increases or decreases. The Treasury
Obligations are subject to substantially greater price fluctuations during
periods of changing interest rates than securities of comparable quality which
make periodic interest payments. See 'The Trust--Stripped U.S. Treasury
Obligations.'
In addition, the Fund may invest in foreign securities and derivatives. See
'The Trust--Investment Policies and Restrictions of the Fund.' FOR ADDITIONAL
RISK FACTORS RELATING TO INVESTMENT IN THE FUND, SEE PAGES B-5 TO B-10 AND B-15
OF THIS PROSPECTUS.
Although the Trust is structured to return to an initial Unit Holder his
purchase cost of a Unit through the distribution of the Treasury Obligations'
maturity value on the mandatory termination date of the Trust, an investor will
have included the accrual of original issue discount on such Treasury
Obligations in income for federal income tax purposes and will have paid federal
income tax on such accrual. An investor holding his Units to Trust maturity may
suffer a loss to the extent the investor's purchase cost of a Unit exceeds
$15.00 since the capital protection is limited to the aggregate maturity value
per Unit of Treasury Obligations. Similarly, an investor who sells his Units
prior to Trust maturity may suffer a loss to the extent that the price he
receives upon the sale of his Units is less than the purchase price of his
Units.
DISTRIBUTIONS
Distributions, if any, of dividends, 12b-1 fee amounts received by the
Trust from the Sponsor in respect of Fund Shares (net of Trust expenses),
distributions of any net capital gains and net investment income received in
respect of Fund Shares, and proceeds of the sale of Fund Shares not used to
redeem Units will be made quarterly on or shortly after the Quarterly
Distribution Date to Unit Holders of record on the Quarterly Record Date
immediately preceding such Quarterly Distribution Date. No distribution will be
made if the amount available for distribution is less than $2.50 per 100 Units
(see 'Rights of Unit Holders--Distributions'). Alternatively, Unit Holders may
have their distributions reinvested (see 'Reinvestment of Trust Distributions').
Accrual of original issue discount on the Treasury Obligations will not be
distributed on a current basis, although Unit Holders will be subject to income
tax at ordinary income rates as if a current distribution of such amounts had
been made (see 'Tax Status of the Trust'). Upon termination of the Trust, the
Trustee will distribute, upon surrender of Units for cancellation, to each Unit
Holder, his pro rata share of such Trust's net assets including the proceeds of
Fund Shares sold unless a Unit Holder elects to receive Fund Shares pursuant to
an 'in kind' distribution of the number of Fund Shares attributable to his
Units, in the manner set forth under 'Amendment and Termination of the
Indenture--Termination.' Upon termination, a Unit Holder may invest the proceeds
from the Treasury Obligations in Fund Shares at such Shares' net asset value.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the initial offering period
is equal to the aggregate offering side evaluation of the underlying Treasury
Obligations and the net asset value of the Fund Shares (excluding any sales
charge), divided by the number of Units outstanding plus a sales charge equal to
5.00% of the Public Offering Price (5.263% of the net amount invested) per Unit.
A-2
<PAGE>
Any cash held by the Trust will be added to the Public Offering Price. After the
initial public offering period, the Public Offering Price of the Units is
computed by adding to the aggregate bid side evaluation of the Treasury
Obligations the aggregate net asset value of Fund Shares in the Trust, dividing
such sum by the number of Units outstanding and then adding a sales charge of
5.00% of the Public Offering Price (5.263% of the net amount invested). Any
money in the Income and Principal Accounts other than money required to redeem
tendered Units will be added to the Public Offering Price. The sales charge is
reduced on a graduated scale for sales involving at least 2,000 Units (see
'Public Offering of Units--Volume Discount'). The minimum purchase is 100 Units
except the minimum purchase is 20 Units in the case of Individual Retirement
Accounts, Keogh Plans and other tax-deferred retirement plans.
SECONDARY MARKET
The Sponsor, although not obligated to do so, presently intends to maintain
a secondary market to repurchase the Units based on the aggregate bid side
evaluation of the Treasury Obligations and the net asset value of the Fund
Shares. If such market is not maintained, a Unit Holder will be able to dispose
of his Units through redemption at prices based on the aggregate bid side
evaluation of the Treasury Obligations and the net asset value of the Fund
Shares (see 'Rights of Unit Holders--Redemption'). Market conditions may cause
such prices to be greater or less than the amount paid for Units and may result
in a loss to a Unit Holder upon the disposition of a Unit.
SPECIAL RISK CONSIDERATIONS
An investment in Units of the Trust should be made with an understanding of
the risks entailed in an investment in (i) the stripped United States Treasury
issued notes or bonds bearing no current interest (see 'The Trust--Stripped U.S.
Treasury Obligations' on pages B-2 and B-3) and (ii) a mutual fund which invests
in the type of securities in which the Fund invests (see 'The Trust--Investment
Policies and Restrictions of the Fund' on pages B-5 through B-12 and 'The
Trust--Fund Risk Factors' on page B-15). The Trust's objectives are to attempt
to obtain safety of capital through investment in the stripped United States
Treasury issued notes or bonds paying no current interest and to attempt to
provide for capital appreciation through an investment in Fund Shares. The Trust
is 'concentrated' in Fund Shares so investors should be aware that the potential
for capital appreciation is directly related to the investment performance of
the Fund itself. Additionally, changes in the price of the Treasury Obligations
and changes in the net asset value of the Fund Shares will affect the price of
the Trust's Units.
California Investors Only--Sales to individuals in California are
restricted to persons who have (i) annual income of at least $30,000 and a net
worth of at least $30,000, exclusive of home, home furnishings and automobiles
or (ii) net worth of at least $75,000, exclusive of home, home furnishings and
automobiles.
PORTFOLIO SUMMARY AS OF DATE OF DEPOSIT
$1,500,000.00 face amount of Treasury Obligations maturing on November 15,
2006 and Fund Shares were held in the Trust on the Date of Deposit. The
Treasury Obligations and the Fund Shares represented 52.9% and 47.1%,
respectively, of the total of the aggregate offering side evaluation of Treasury
Obligations in the Trust and the aggregate value of Fund Shares on the Date of
Deposit.
A-3
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
AS OF FEBRUARY 22, 1995+
<TABLE>
<S> <C>
AGGREGATE MATURITY VALUE OF TREASURY OBLIGATIONS
INITIALLY DEPOSITED.................................. $ 1,500,000.00
AGGREGATE NUMBER OF FUND SHARES INITIALLY DEPOSITED.... 40,130
INITIAL NUMBER OF UNITS................................ 100,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED
BY EACH UNIT......................................... 1/100,000th
PUBLIC OFFERING PRICE
Aggregate offering side evaluation of Treasury
Obligations in the Trust......................... $ 628,500.00
Aggregate value of Fund Shares++.................. 559,010.90
--------------
Total............................................. $ 1,187,510.90
--------------
--------------
Divided by 100,000 Units.......................... $ 11.875
Plus sales charge of 5.00% of Public Offering
Price (5.263% of net amount invested)*........... .625
--------------
Public Offering Price per Unit+++................. $ 12.500
--------------
--------------
</TABLE>
REDEMPTION AND SPONSOR'S REPURCHASE PRICE PER UNIT
(based on bid side evaluation of underlying Treasury
Obligations and net asset value of the Fund Shares,++
$.008 less than Public Offering Price per Unit)...... $ 11.867
QUARTERLY RECORD DATES: February 1, May 1, August 1, November 1.
QUARTERLY DISTRIBUTION DATES: February 15, May 15, August 15, November 15.
TRUSTEE'S ANNUAL FEE** (including estimated expenses
and Evaluator's fee) $1.67 per 100 Units outstanding.
EVALUATOR'S FEE FOR EACH EVALUATION OF TREASURY
OBLIGATIONS: $5.00
EVALUATION TIME: 4:15 P.M. New York Time (i.e. the
close of regular trading on the New York Stock
Exchange)
MANDATORY TERMINATION DATE: November 15, 2006
MINIMUM VALUE OF TRUST: The Trust may be terminated if
the value of Trust assets at any time is less than
40% of the aggregate maturity values of Treasury
Obligations calculated after the most recent deposit
of Treasury Obligations.
- ------------
+ 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.
++ Calculated by multiplying aggregate number of Fund Shares by the current net
asset value per share (excluding any sales load on the Fund Shares).
+++ This Public Offering Price is computed as of the Date of Deposit and may
vary from the Public Offering Price on the date of this Prospectus or any
subsequent date.
* Certain transactions are entitled to a reduced sales charge. (See 'Public
Offering of Units--Volume Discount.')
** Based on Trust size of 1,499,999 or fewer Units.
- ------------
For an explanation of the management fees paid by the Fund (as of December
31, 1994, 0.47% of Fund average net assets), see pages B-12 to B-13.
A-4
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
We have audited the Statement of Financial Condition and Schedule of
Portfolio Securities of the Government Securities Equity Trust Series 8 as of
February 22, 1995. These financial statements are the responsibility of the
Trustee and Sponsor (see note (d) to the statement of financial condition). Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 February 22, 1995, by correspondence with United States Trust
Company 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 statements referred to above present fairly,
in all material respects, the financial position of the Government Securities
Equity Trust Series 8 as of February 22, 1995, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 22, 1995
A-5
<PAGE>
STATEMENT OF FINANCIAL CONDITION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
AS OF DATE OF DEPOSIT, FEBRUARY 22, 1995
TRUST PROPERTY
Sponsor's Contracts to Purchase underlying Securities backed
by an irrevocable letter of credit(a)..................... $1,187,510.90
INTEREST OF UNIT HOLDERS
Units of fractional undivided interest outstanding:
Cost to investors(b)................................... $1,250,000.00
Gross underwriting commission(c)....................... (62,489.10)
-------------
Total............................................. $1,187,510.90
-------------
-------------
- ------------
(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
Mellon Bank, N.A. in the amount of $30,000,000.00 has been deposited with the
Trustee for the purchase of Securities pursuant to contracts to purchase such
Securities.
(b) The aggregate Public Offering Price is computed on the basis set forth
under 'Public Offering of Units--Public Offering Price.'
(c) The aggregate sales charge of 5.00% of the Public Offering Price per
Unit is computed on the basis set forth under 'Public Offering of Units--Public
Offering Price.'
(d) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the Trust and
is responsible for establishing and maintaining a system of internal controls
directly related to, and designed to provide reasonable assurance as to the
integrity and reliability of, financial reporting of the Trust. The Trustee is
also responsible for all estimates and accruals reflected in the Trust's
financial statements. The Evaluator determines the price for each underlying
Treasury Obligation included in the Trust's Schedule of Portfolio Securities on
the basis set forth in 'Public Offering of Units--Public Offering Price.' Under
the Securities Act of 1933, as amended (the 'Act'), the Sponsor is deemed to be
an issuer of the Trust's Units. As such, the Sponsor has the responsibility of
an issuer under the Act with respect to financial statements of the Trust
included in the Registration Statement under the Act and amendments thereto.
A-6
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
ON DATE OF DEPOSIT, FEBRUARY 22, 1995
<TABLE>
<CAPTION>
NAME OF
ISSUER AND COST OF
TITLE OF SECURITIES REPRESENTED BY SECURITIES
CONTRACTS TO PURCHASE (1) TO TRUST(2)
- ------------------------------------------------------------ -------------
<S> <C>
$1,500,000.00 Maturity Amount of Stripped United States
Treasury Obligations maturing on November 15, 2006 ....... $ 628,500.00
40,130 Class A shares of the Prudential Equity Fund, Inc.
($13.93 per Fund Share)................................... $ 559,010.90
-------------
$1,187,510.90
-------------
-------------
</TABLE>
- ------------
(1) The Treasury Obligations have been purchased at a discount from their
maturity value because there is no stated interest income thereon (such
securities are often referred to as zero coupon securities). Over the life of
the Treasury Obligations such discount accrues and upon maturity thereof the
holder receives 100% of the Treasury Obligation maturity amount.
Shares in the Fund have been valued at their net asset value as of the
Evaluation Time on the Date of Deposit. The Fund's investment manager is
Prudential Mutual Fund Management, Inc.
All Securities are represented by contracts to purchase such Securities.
The Securities are represented by regular way contracts for the performance of
which an irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Securities were entered into by the Sponsor on
February 22, 1995.
(2) Offering prices of Treasury Obligations are determined by the Evaluator
on the basis stated under 'Public Offering of Units--Public Offering Price'
herein. The offering side evaluation is greater than the current bid evaluation
of the Treasury Obligations, which is the basis on which Redemption Price per
Unit is determined (see: 'Rights of Unit Holders--Redemption--Computation of
Redemption Price per Unit' ). The aggregate value of the Treasury Obligations
based on the bid side evaluation of the Treasury Obligations on the Date of
Deposit was $627,645.00 (which is $855.00 lower than the aggregate
cost of the Treasury Obligations to the Trust based on the offering side
evaluation). The Profit to Sponsor on deposit totals $4,305.00.
A-7
<PAGE>
Each Investment Provides a Different Opportunity
[CHART No. 1 APPEARS HERE]
Source: "Stocks, Bonds, Bills, and Inflation--1994 Yearbook,(Trademark)"
Ibbotson Associates, annually updates work by Roger Ibbotson and Rex
Sinquefeld. Used with permission. This chart is for illustrative purposes only
and is not indicative of the past, present, or future performance of any GSET
portfolio.
Generally, stock returns are due to capital appreciation and reinvesting any
gains. Bond returns are due mainly to reinvesting interest. Also, stock prices
usually are more volatile than bond prices over the long-term.
SMALL STOCK returns for 1926-1980 are those of stocks comprising the 5th
quintile of the New York Stock Exchange. Thereafter, returns are those of the
Dimensional Fund Advisors (DFA) Small Company Fund.
COMMON STOCK returns are based on the S&P Composite Index, a market-weighted,
unmanaged index of 500 stocks (currently) in a variety of industries. It is
often used as a broad measure of stock market performance.
LONG-TERM GOVERNMENT BOND returns are measured using a constant one-bond
portfolio with a maturity of roughly 20 years.
TREASURY BILL returns are for a one-month bill. Treasuries are guaranteed by
the government as to the timely payment of principal and interest; equities are
not.
INFLATION is measured by the consumer price index (CPI).
The Historical Growth of Common Stocks,
Long-Term Government Bonds and Inflation.
[CHART No. 2 APPEARS HERE]
Source: Ibbotson Associates, Chicago. Stocks, Bonds, Bills & Inflation--1994
Yearbook. Used with permission. All rights reserved.
This chart is used for illustrative purposes only and is not intended to
represent the past, present, or future performance of the G/SET Series 8 Trust.
Common stocks represent the ownership of a corporation, while Treasury bonds and
bills are backed by the full faith and credit of the U.S. Government. In
the time period from 1926 to 1993, the following produced average annual
returns of: (1) 10.3%--Common stock total return is based on the
Standard & Poor's 500 Composite, a market-value weighted index made up of
500 of the largest stocks in the U.S. based upon their stock market value.
(2) 5.00%--Long-term government bonds represented by the annual total returns
of a series of 20-year government bonds. (3) 3.1%--Inflation is measured by
the Consumer Price Index for all Urban Consumers (CPI-U) since 1978; prior
to that by the CPI.
A-8
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 8
THE TRUST
The Government Securities Equity Trust Series 8 (the 'Trust' or 'GSET' as
the context requires) was created under the laws of the State of New York,
pursuant to a Trust Indenture and Agreement and a related Reference Trust
Agreement dated the Date of Deposit (collectively, the 'Indenture')* among
Prudential Securities Incorporated (the 'Sponsor' or 'Prudential Securities'),
United States Trust Company of New York (the 'Trustee') and Kenny Information
Systems, Inc. (the 'Evaluator'). The Sponsor is a wholly-owned, indirect
subsidiary of The Prudential Insurance Company of America.
The objectives of the Trust are to attempt to obtain safety of capital
through investment in stripped United States Treasury issued notes or bonds
paying no current interest (the 'Treasury Obligations') and to attempt to
provide for capital appreciation through investment in Class A shares ('Fund
Shares') of Prudential Equity Fund, Inc. (the 'Fund'), an open-end, diversified,
registered management investment company (the Treasury Obligations and Fund
Shares hereinafter, collectively, referred to as 'Securities'). The Fund's
investment objective is long-term growth of capital. The Fund seeks to achieve
this objective by investing primarily in common stocks of major, established
corporations which, in the opinion of the Fund's investment adviser, are
believed to be in sound financial condition and to have prospects of price
appreciation greater than broadly based stock indices. The Fund may also invest
in preferred stocks and bonds, which have either attached warrants or a
conversion privilege into common stocks and in options on stocks and stock
indices. The Fund may invest up to 30% of its assets in foreign securities.
There is of course no assurance that the Trust's or the Fund's objectives will
be achieved.
TRUST FORMATION
On the Date of Deposit, the Sponsor deposited with the Trustee the
underlying Securities or confirmations of contracts for the purchase of such
Securities at prices equal to the evaluation of the Treasury Obligations on the
offering side of the market on the Date of Deposit as determined by the
Evaluator and the net asset value of the Fund Shares (see 'Schedule of Portfolio
Securities'). The Trust was created simultaneously with the deposit of the
Securities with the Trustee and the execution of the Indenture. The Trustee then
immediately delivered to the Sponsor certificates of beneficial interest (the
'Certificates') representing the units (the 'Units') comprising the entire
ownership of the Trust. Through this Prospectus, the Sponsor is offering the
Units for sale to the Public. The holders of Units (the 'Unit Holder' or 'Unit
Holders' as the context requires) will have the right to have their Units
redeemed at a price based on the aggregate bid side evaluation of the Treasury
Obligations as determined by the Evaluator and the net asset value of the Fund
Shares (the 'Redemption Price'), if the Units cannot be sold in the secondary
market which the Sponsor, although not obligated to, presently intends to
maintain. The Trust has a mandatory termination date set forth under 'Summary of
Essential Information,' but may be terminated prior thereto upon the occurrence
of certain events (see 'Amendment and Termination of the
Indenture--Termination'), including a reduction in the value of the Trust below
the value set forth under 'Summary of Essential Information.'
With the deposit of the Securities in the Trust on the Date of Deposit, the
Sponsor established a proportionate relationship between the maturity amounts of
Treasury Obligations and the number of Fund Shares in the Portfolio. Subsequent
to the initial deposit of Securities on the Date of Deposit, the Sponsor may,
but is not obligated to, deposit additional Securities (including contracts
together with an irrevocable letter of credit for the purchase thereof) in the
Trust, to receive in exchange therefor additional Units and to offer such Units
to the public by means of this Prospectus. A subsequent deposit by the Sponsor
of Treasury Obligations and Fund Shares will maintain the proportionate
relationship between the maturity amount of Treasury Obligations and the number
of Fund Shares immediately prior to such deposit; the deposited Treasury
Obligations will be substantially identical to those held in the Trust
immediately prior to the subsequent deposit. Each Unit owned by each Unit Holder
will represent the same proportionate interest in the Trust. As additional Units
are issued by the Trust as a result of the deposit of additional Securities by
the Sponsor, the aggregate value of the Securities in the Trust will be
increased and the fractional undivided interest in the Trust represented by each
Unit will be decreased.
On the 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.' The Trust Portfolio has been structured so that a
Unit Holder will receive, at the Mandatory Termination Date of the Trust, an
amount per Unit at least equal to $15.00 even if the value of the Fund Shares
were to decline to zero. Of course, whether or not a Unit Holder makes a profit
or suffers a loss depends on whether his purchase price was less than or
exceeded $15.00 per Unit. A Unit Holder selling his Units prior to the Mandatory
Termination Date may suffer a
- ------------------
* Reference is hereby made to said Indenture and any statements contained herein
are qualified in their entirety by the provisions of said Indenture.
B-1
<PAGE>
loss to the extent the sale price of his Units is less than the purchase price.
Because certain of the Securities from time to time may be sold under
circumstances described herein and because additional Securities may be
deposited into the Trust from time to time, the Trust is not expected to retain
its present size and composition. If any Units are redeemed by the Trustee, the
number of Securities in the Trust will be reduced by an amount allocable to
redeemed Units and the fractional undivided interest in such Trust represented
by each unredeemed Unit will be increased. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unit Holder (which may include the
Sponsor) or until the termination of the Trust pursuant to the Indenture.
Notwithstanding the availability of the above-mentioned irrevocable
letter(s) of credit, it is expected that the Sponsor will pay for the Securities
as the contracts for their purchase become due. A substantial portion of such
contracts have not become due by the date of this Prospectus. To the extent
Units are sold prior to the settlement of such contracts, the Sponsor will
receive the purchase price of such Units prior to the time at which it pays for
Securities pursuant to such contracts and have the use of such funds during this
period.
Units will be sold 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 such price is set. If Units are not available or
are insufficient to fill the order (e.g., if demand for Units exceeds the Units
available for sale and the Sponsor is not yet able to create additional Units)
the investor's order will be rejected by the Sponsor. The number of Units
available may be insufficient to meet demand because of the Sponsor's inability
to or decision not to purchase and deposit Treasury Obligations of the required
type and/or Fund Shares in amounts sufficient to maintain the proportionate
relationship between maturity values of Treasury Obligations and numbers of Fund
Shares of the Fund 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
sufficient Units can be created. An investor will be deemed to place a new order
for that number of Units each day until that order is accepted. The investor's
order will then be executed, when Units are available, at the Public Offering
Price next calculated after such continuing order is accepted. The investor
will, of course, be able to revoke his 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, i.e., orders received first will be
filled first except that indications of interest prior to the effectiveness of
the registration of the offering of Trust Units which become orders upon
effectiveness will be accepted according to the order in which the indications
of interest were received.
On the Date of Deposit the Trust consisted of the Securities listed under
'Schedule of Portfolio Securities' or contracts to acquire such Securities
together with a letter of credit to provide the amount necessary to complete the
purchase of such Securities. Neither the Sponsor nor any affiliate of the
Sponsor will be liable in any way for any default, failure or defect in any
Securities.
SECURITIES SELECTION
In selecting Treasury Obligations for deposit in the Trust, the following
factors, among others, were considered by the Sponsor: (i) the prices and yields
of such securities and (ii) the maturities of such securities. In selecting the
Fund Shares for deposit in the Trust, the following factors, among others, were
considered by the Sponsor: (i) the historical performance of the Fund and (ii)
the nature of the underlying Fund portfolio.
The Trust consists of such of the Securities listed under 'Schedule of
Portfolio Securities' herein as may continue to be held from time to time in the
Trust, newly deposited Securities meeting requirements for creation of
additional Units and undistributed cash receipts from the Fund and proceeds
realized from the disposition of Securities.
STRIPPED U.S. TREASURY OBLIGATIONS
The Treasury Obligations in the portfolio consist of United States Treasury
Obligations which have been stripped by the United States Treasury of their
unmatured interest coupons or such stripped coupons or receipts or certificates
evidencing such obligations or coupons. The obligor with respect to the Treasury
Obligations is the United States Government. Such Treasury Obligations may
include certificates that represent rights to receive the payments that comprise
a U.S. Government bond.
U.S. Treasury bonds evidence the right to receive a fixed payment at a
future date from the U.S. Government, and are backed by the full faith and
credit of the U.S. Government. The Treasury Obligations can be purchased at a
deep discount because the buyer receives only the right to receive one fixed
payment at a specific date in the future and does not receive any periodic
interest payments. The effect of owning deep discount obligations which do not
make current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the life
of the discount obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income on such
obligations at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher rates
in the future. For this reason, the Treasury Obligations are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality which pay interest on a
current basis. Investors should be
B-2
<PAGE>
aware that income in respect of the accrual of original issue discount on the
Treasury Obligations, although not distributed on a current basis, will be
subject to income tax on a current basis at ordinary income tax rates (see 'Tax
Status of the Trust').
The following disclosure concerning the Fund and its affiliates has been
provided by Prudential Mutual Fund Management, Inc. While the Sponsor has not
independently verified this information, it has no reason to believe that such
information is not correct in all material respects. No representation is made
herein as to the accuracy or adequacy of such information.
PRUDENTIAL EQUITY FUND, INC.
The portfolio of the Trust also contains Class A shares (the 'Fund Shares')
of Prudential Equity Fund, Inc. (the 'Fund'). On June 30, 1994, the net assets
of the Fund were approximately $2,056,530,000. The manager of the Fund is
Prudential Mutual Fund Management, Inc. ('PMF'). The subadviser to the Fund is
The Prudential Investment Corporation ('PIC'), generally referred to throughout
this prospectus as the Fund's investment adviser.
The investment objective of the Fund is long-term growth of capital.
Providing current income is not an objective of the Fund. Any income produced is
expected to be minimal. An investor should not consider a purchase of Fund
Shares as equivalent to a complete investment program.
The State Street Bank and Trust Company (the 'Custodian') is the custodian
of the Fund's assets. Prudential Mutual Fund Services, Inc. (the 'Transfer and
Dividend Disbursing Agent') serves as the Fund's dividend disbursing and
transfer agent. The Fund's prospectus is available to persons interested in
purchasing Units of the Trust upon request.
GENERAL INFORMATION REGARDING THE FUND
The Fund intends normally to pay semi-annual dividends representing
substantially all of its net investment income (which includes, among other
items, dividends and interest), if any, and to distribute at least annually any
net realized capital gains. By so doing and meeting certain diversification of
assets and other requirements of the Internal Revenue Code of 1986, as amended
(the 'Code'), the Fund intends to qualify annually as a regulated investment
company under the Code. The status of the Fund as a regulated investment company
does not involve government supervision of management or of its investment
practices or policies. As a regulated investment company, the Fund generally
will be relieved of liability for United States federal income tax on that
portion of its net investment income and net realized capital gains which it
distributes to its Fund shareholders. Amounts not distributed on a timely basis
in accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To prevent application of the excise tax, the Fund
intends to make distributions in accordance with the calendar year distribution
requirement. Any dividend or distribution by the Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount of the
dividend or distribution (see 'Net Asset Value of the Fund Shares').
B-3
<PAGE>
FINANCIAL HIGHLIGHTS OF THE FUND
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)
The following financial highlights (with the exception of those for the six
months ended June 30, 1994) have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon was unqualified. The following
financial highlights contain selected data for a Class A share of common stock
of the Fund, total return, ratios to average net assets and other supplemental
data for the periods indicated. The information is based on data contained in
the financial statements.
<TABLE>
<CAPTION>
SIX
MONTHS JANUARY 22,
ENDED 1990+
JUNE 30, YEAR ENDED DECEMBER 31, THROUGH
1994 -------------------------------- DECEMBER 31,
(UNAUDITED) 1993 1992 1991 1990
---------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 13.80 $ 12.07 $ 11.39 $ 9.84 $ 11.25++
Income from investment
operations
Net investment income....... 0.11 0.23 0.24 0.27 .31
Net realized and unrealized
gain (loss) on investment
transactions............. (0.43) 2.42 1.30 2.09 (.15)++
Total from investment
operations............... (0.32) 2.65 1.54 2.36 .16++
Less distributions
Dividends from net
investment income........ -- (.22) (.23) (.24) (.35)
Distributions from net
realized capital gains... -- (.70) (.63) (.57) (1.22)
Total distributions...... (.92) (.86) (.81) (1.57)
-------- -------- -------- -------- ------------
Net asset value, end of
period...................... $ 13.48 $ 13.80 $ 12.07 $ 11.39 $ 9.84
Total Return#:................ (2.32%) 22.14% 13.65% 24.55% .29%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)....................... $242,796 $232,535 $136,834 $82,845 $ 30,264
Average net assets (000)...... $242,970 $190,778 $111,489 $57,845 $ 27,371
Ratios to average net assets:
Expenses, including
distribution fees...... .91% .91% .94% .97 1.01%*
Expenses, excluding
distribution fees...... .66% .71% .74% .77% .84%*
Net investment income.... 1.64% 1.71% 1.91% 2.36% 2.86%*
Portfolio turnover............ 5% 21% 22% 19% 76%
</TABLE>
- ------------------
* Annualized.
+ Commencement of offering of Class A shares.
++ Restated.
# Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
B-4
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS OF THE FUND
The Fund's investment objective is long-term growth of capital. The Fund
will seek to achieve this objective by investing primarily in common stocks of
major, established corporations which, in the opinion of the Fund's investment
adviser, are believed to be in sound financial condition and have prospects of
price appreciation greater than broadly based stock indices. The Fund may also
invest in preferred stocks and bonds, which have either attached warrants or a
conversion privilege into common stocks. At times when economic conditions or
general levels of common stock prices are such that the investment adviser deems
it prudent to adopt a defensive position by reducing or curtailing investments
in common stocks, a larger proportion of the Fund's assets than usual may be
invested in preferred stocks or short-term or long-term debt instruments (either
convertible or non-convertible). The shares of the Fund are subject to the risks
of common stock investment, and there can be no assurance that the Fund will
achieve its investment objective. The Fund may invest up to 30% of its assets in
foreign securities, which may involve additional risks. Such investment risks
include future adverse political and economic developments, possible seizure or
nationalization of the company in whose securities the Fund has invested and
possible establishment of exchange controls or other foreign governmental laws
that might adversely affect the payment of dividends.
HEDGING AND INCOME ENHANCEMENT STRATEGIES
The Fund may also engage in various portfolio strategies, including
utilizing derivatives, to reduce certain risks of its investments and to attempt
to enhance income. These strategies include (1) the purchase and writing (i.e.,
sale) of put options and call options on equity securities, (2) the purchase and
sale of put and call options on indices, (3) the purchase and sale of exchange
traded stock index futures and options thereon and (4) the purchase and sale of
options on foreign currencies and futures contracts on foreign currencies and
options thereon. The Fund may engage in these transactions on securities or
commodities exchanges or, in the case of equity, stock index and foreign
currency options, also in the over-the-counter market. The Fund may also
purchase and sell forward foreign currency exchange contracts. The Fund's
ability to use these strategies may be limited by market conditions, regulatory
limits and tax considerations and there can be no assurance that any of these
strategies will succeed. New financial products and risk management techniques
continue to be developed and the Fund may use these new investments and
techniques to the extent they are consistent with its investment objective and
policies.
OPTIONS TRANSACTIONS
Options on Equity Securities. The Fund intends to purchase and write
(i.e., sell) put and call options on equity securities that are traded on
securities exchanges, on NASDAQ ('NASDAQ options') or in the over-the-counter
market. A call option is a short-term contract (having a duration of nine months
or less) pursuant to which the purchaser, in return for a premium paid, has the
right to buy the security underlying the option at a specified exercise price at
any time during the term of the option or, in the case of a European-style
option, at the expiration of the option. The writer of the call option receives
a premium and has the obligation, if the option is exercised, to deliver the
underlying security against payment of the exercise price. A put option is a
similar contract which gives the purchaser, who pays a premium, the right to
sell the underlying security at a specified price during the term of the option.
The writer of the put, who receives the premium, has the obligation to buy the
underlying security upon exercise at the exercise price. The Fund will purchase
put options only when its investment adviser perceives significant short-term
risk, but substantial long-term appreciation, in the underlying security.
The Fund will write call options only if they are covered. A call option is
covered if the Fund holds on a share-for-share basis a call on the same security
as the call written by the Fund where the exercise price of the call held is
equal to or less than the exercise price of the call written or greater than the
exercise price of the call written if the difference is maintained by the Fund
in cash, Treasury bills or other high grade short-term obligations in a
segregated account with its Custodian. The premium paid by the purchaser of an
option will reflect, among other things, the relationship of the exercise price
to the market price and volatility of the underlying security, the remaining
term of the option, supply and demand and interest rates.
If the writer of an option wishes to terminate the obligation, he or she
may effect a 'closing purchase transaction.' This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be cancelled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she has been notified of the exercise of an option. Similarly, an
investor who is the holder of an option may liquidate his or her position by
effecting a 'closing sale transaction.' This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. To secure the obligation to deliver the underlying security in the
case of a call option, the writer of an exchange-traded option or a NASDAQ
option is required to pledge for the benefit of the broker the underlying
security or other assets in accordance with the rules of The Options Clearing
Corporation ('OCC'), an institution created to interpose itself between buyers
and sellers of options.
B-5
<PAGE>
Technically, the OCC assumes the other side of every purchase and sale
transaction on an exchange and, by doing so, guarantees the transaction.
In the case of OTC options, it is not possible to effect a closing
transaction in the same manner as exchange-traded options because a clearing
corporation is not interposed between the buyer and seller of the option. In
order to terminate the obligation represented by an OTC option, the Fund would
need to agree to the termination of the obligation represented by an OTC option
with the counterparty thereto. Any such cancellation, if agreed to, may require
the Fund to pay a premium to the counterparty. Alternatively, the Fund could
write an OTC put option in effect to close its position on an OTC call option or
write a call option to close its position on an OTC put option. However, the
Fund would remain exposed to each counterparty's credit risk on the call or put
option until such option is exercised or expires. There is no guarantee that the
Fund will be able to write put or call options, as the case may be, that will
effectively close an existing position.
The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the Fund.
The Fund may also purchase a 'protective put,' i.e., a put option acquired
for the purpose of protecting a portfolio security from a decline in market
value. In exchange for the premium paid for the put option, the Fund acquires
the right to sell the underlying security at the exercise price of the put
regardless of the extent to which the underlying security declines in value. The
loss to the Fund is limited to the premium paid for, and transaction costs in
connection with, the put plus the initial excess, if any, of the market price of
the underlying security over the exercise price. However, if the market price of
the security underlying the put rises, the profit the Fund realizes on the sale
of the security will be reduced by the premium paid for the put option less any
amount (net of transaction costs) for which the put may be sold. Similar
principles apply to the purchase of puts on stock indices, as described below.
Options on Stock Indices. The Fund may also purchase and write (i.e.,
sell) put and call options on stock indices traded on securities exchanges, on
NASDAQ or in the over-the-counter market. Options on stock indices are similar
to options on stock except that, rather than the right to take or make delivery
of stock at a specified price, an option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of the stock index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option. This amount of cash is equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars
times a specified multiple (the 'multiplier'). The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Unlike stock options, all settlements are in cash, and gain or loss depends on
price movements in the stock market generally (or in a particular industry or
segment of the market) rather than price movements in individual stocks.
The multiplier for an index option performs a function similar to the unit
of trading for a stock option. It determines the total dollar value per contract
of each point in the difference between the exercise price of an option and the
current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular stock, whether the Fund will
realize a gain or loss on the purchase or sale of an option on an index depends
upon movements in the level of stock prices in the stock market generally or in
an industry or market segment rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on indices would be
subject to the investment adviser's ability to predict correctly movements in
the direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks. The Fund's investment adviser currently uses these techniques
in conjunction with the management of other mutual funds.
Because exercises of index options are settled in cash, a call writer
cannot determine the amount of its settlement obligations in advance and, unlike
call writing on specific stocks, cannot provide in advance for, or cover, its
potential settlement obligations by acquiring and holding the underlying
securities. In addition, unless the Fund has other liquid assets which are
sufficient to satisfy the exercise of a call, the Fund would be required to
liquidate portfolio securities or borrow in order to satisfy the exercise.
The Fund's successful use of options on indices depends upon the investment
adviser's ability to predict the direction of the market and is subject to
various additional risks. The correlation between movements in the index and the
price of the securities being written against is imperfect and the risk from
imperfect correlation increases as the composition of the Fund's portfolio
diverges from the composition of the relevant index. Accordingly, a decrease in
the value of the securities being written against
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may not be wholly offset by a gain on the exercise of a stock index put option
held by the Fund. Likewise, if a stock index call option written by the Fund is
exercised, the Fund may incur a loss on the transaction which is not offset,
wholly or in part, by an increase in the value of the securities being written
against, which securities may, depending on market circumstances, decline in
value.
Option Position Limits. Transactions by the Fund in options on securities
and on stock indices will be subject to limitations, if any, established by each
of the exchanges, boards of trade or other trading facilities (including NASDAQ)
governing the maximum number of options in each class which may be written or
purchased by a single investor or group of investors acting in concert,
regardless of whether the options are written on the same or different
exchanges, boards of trade or other trading facilities or are held or written in
one or more accounts or through one or more brokers. Thus, the number of options
which the Fund may write or purchase may be affected by options written or
purchased by other investment advisory clients of the Fund's investment adviser.
An exchange, board of trade or other trading facility may order the liquidation
of positions found to be in excess of these limits, and it may impose certain
other sanctions.
Options on Foreign Currencies. The Fund is permitted to purchase and write
put and call options on foreign currencies and on futures contracts on foreign
currencies traded on securities exchanges or boards of trade (foreign and
domestic) for hedging purposes in a manner similar to that in which forward
foreign currency exchange contracts and futures contracts on foreign currencies
will be employed. Options on foreign currencies and on futures contracts on
foreign currencies are similar to options on stock, except that the Fund has the
right to take or make delivery of a specified amount of foreign currency, rather
than stock.
The Fund may purchase and write options to hedge the Fund's portfolio
securities denominated in foreign currencies. If there is a decline in the
dollar value of a foreign currency in which the Fund's portfolio securities are
denominated, the dollar value of such securities will decline even though the
foreign currency value remains the same. To hedge against the decline of the
foreign currency, the Fund may purchase put options on futures contracts on such
foreign currency. If the value of the foreign currency declines, the gain
realized on the put option would offset, in whole or in part, the adverse effect
such decline would have on the value of the portfolio securities. Alternatively,
the Fund may write a call option on a futures contract on the foreign currency.
If the value of the foreign currency declines, the option would not be exercised
and the decline in the value of the portfolio securities denominated in such
foreign currency would be offset in part by the premium the Fund received for
the option.
If, on the other hand, the investment adviser anticipates purchasing a
foreign security and also anticipates a rise in the value of such foreign
currency (thereby increasing the cost of such security), the Fund may purchase
call options on the foreign currency. The purchase of such options could offset,
at least partially, the effects of the adverse movements of the exchange rates.
Alternatively, the Fund could write a put option on the currency and, if the
exchange rates move as anticipated, the option would expire unexercised.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts to
protect the value of its portfolio against future changes in the level of
currency exchange rates. A forward contract on foreign currency is an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days agreed upon by the parties from the date of the contract at a
price set on the date of the contract. These contracts are traded in the
interbank market conducted directly between currency traders (typically large
commercial banks) and their customers. A forward contract generally has no
deposit requirements, and no commissions are charged for such trades.
The Fund may not use forward contracts to generate income, although the use
of such contracts may incidentally generate income. There is no limitation on
the value of forward contracts into which the Fund may enter. However, the
Fund's dealings in forward contracts will be limited to hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of a forward contract with respect to specific receivables or
payables of the Fund generally arising in connection with the purchase or sale
of its portfolio securities and accruals of interest or dividends receivable and
Fund expenses. Position hedging is the sale of a foreign currency with respect
to portfolio security positions denominated or quoted in that currency. The Fund
will not speculate in forward contracts. The Fund may not position hedge with
respect to a particular currency for an amount greater than the aggregate market
value (determined at the time of making any sale of a forward contract) of
securities held in its portfolio denominated or quoted in, or currently
convertible into, such currency.
When the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Fund anticipates the receipt in a
foreign currency of dividends or interest payments on a security which it holds,
the Fund may desire to 'lock in' the U.S. dollar price of the security or the
U.S. dollar equivalent of such dividend or interest payment, as the case may be.
By entering into a forward contract for a fixed amount of dollars for the
purchase or sale of the amount of foreign currency involved in the underlying
transaction, the Fund will be able to protect itself against possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date on
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which the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or received.
Additionally, when the investment adviser believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, the Fund may enter into a forward contract, for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of some
or all of the portfolio securities of the Fund denominated in such foreign
currency. Requirements under the Code for qualification as a regulated
investment company may limit the Fund's ability to engage in transactions in
forward contracts.
FUTURES TRANSACTIONS
Stock Index Futures. The Fund may use stock index futures traded on a
commodities exchange or board of trade for hedging, income enhancement and risk
reduction purposes.
A stock index futures contract is an agreement in which the writer (or
seller) of the contract agrees to deliver to the buyer an amount of cash equal
to a specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement is made. No physical delivery of the underlying stocks in
the index is made. When the futures contract is entered into, each party
deposits with a broker or in a segregated custodial account approximately 5% of
the contract amount, called the 'initial margin.' Subsequent payments to and
from the broker, called 'variation margin,' will be made on a daily basis as the
price of the underlying stock index fluctuates, making the long and short
positions in the futures contracts more or less valuable, a process known as
'marked to market.'
Options on Stock Index Futures. The Fund may also purchase and write
options on stock index futures for hedging, income enhancement and risk
reduction purposes. In the case of options on stock index futures, the holder of
the option pays a premium and receives the right, upon exercise of the option at
a specified price during the option period, to assume a position in a stock
index futures contract (a long position if the option is a call and a short
position if the option is a put). If the option is exercised by the holder
before the last trading day during the option period, the option writer delivers
the futures position, as well as any balance in the writer's futures margin
account, which represents the amount by which the market price of the stock
index futures contract at exercise exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on the stock index
future. If it is exercised on the last trading day, the option writer delivers
to the option holder cash in an amount equal to the difference between the
option exercise price and the closing level of the relevant index on the date
the option expires.
Futures Contracts on Foreign Currencies. The Fund is permitted to buy and
sell futures contracts on foreign currencies (futures contracts) such as the
European Currency Unit and purchase and write options thereon for hedging and
risk reduction purposes. A European Currency Unit is a basket of specified
amounts of the currencies of certain member states of the European Economic
Community, a Western European economic cooperative organization including, inter
alia, France, Germany, The Netherlands and the United Kingdom. The Fund will
engage in transactions in only those futures contracts and options thereon that
are traded on a commodities exchange or a board of trade. A 'sale' of a futures
contract on foreign currency means the assumption of a contractual obligation to
deliver the specified amount of foreign currency at a specified price in a
specified future month. A 'purchase' of a futures contract means the assumption
of a contractual obligation to acquire the currency called for by the contract
at a specified price in a specified future month. At the time a futures contract
is purchased or sold, the Fund must allocate cash or securities as a deposit
payment (initial margin). Thereafter, the futures contract is valued daily and
the payment of 'variation margin' may be required, resulting in the Fund's
paying or receiving cash that reflects any decline or increase, respectively, in
the contract's value, a process known as 'marked to market.'
Limitations on Purchases and Sales of Futures Contracts and Options
Thereon. Under the regulations of the Commodity Exchange Act, an investment
company registered under the Investment Company Act of 1940 (the 'Investment
Company Act') is excluded from the definition of 'commodity pool operator,'
subject to compliance with certain conditions. The exemption is conditioned upon
the Fund's purchasing and selling futures contracts and options thereon for bona
fide hedging transactions, except that the Fund may purchase and sell futures
contracts and options thereon for any other purpose to the extent that the
aggregate initial margin and option premiums do not exceed 5% of the liquidation
value of the Fund's total assets. The Fund intends to engage in futures
transactions and options thereon in accordance with the regulations of the
Commodity Futures Trading Commission. The Fund intends to purchase and sell
stock index futures and options thereon as a hedge against changes, resulting
from market conditions, in the value of securities which are held in the Fund's
portfolio or which the Fund intends to purchase. The Fund intends to purchase
and sell futures contracts on foreign currencies and options thereon as a hedge
against changes in the value of the currencies to which the Fund is subject or
to which the Fund expects to be subject in connection with future purchases. The
Fund also intends to purchase and sell stock index futures and options thereon
and futures contracts on foreign currencies and options thereon when they are
economically appropriate for the reduction of risks inherent in the ongoing
management of the Fund. The Fund also intends to purchase and sell stock index
futures and options thereon for income enhancement.
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<PAGE>
The Fund's successful use of futures contracts and options thereon depends
upon the investment adviser's ability to predict the direction of the market and
is subject to various additional risks. The correlation between movements in the
price of a futures contract and the price of the securities being hedged is
imperfect and there is a risk that the value of the securities being hedged may
increase or decrease at a greater rate than the related futures contract,
resulting in losses to the Fund. The use of these instruments will hedge only
the currency risks associated with investments in foreign securities, not market
risks. Certain futures exchanges or boards of trade have established daily
limits on the amount that the price of a futures contract or option thereon may
vary, either up or down, from the previous day's settlement price. These daily
limits may restrict the Fund's ability to purchase or sell certain futures
contracts or options thereon on any particular day. In addition, if the Fund
purchases futures to hedge against market advances before it can invest in
common stock in an advantageous manner and the market declines, the Fund might
create a loss on the futures contract. In addition, the ability of the Fund to
close out a futures position or an option depends on a liquid secondary market.
There is no assurance that liquid secondary markets will exist for any
particular futures contract or option thereon at any particular time.
The Fund's ability to enter into futures contracts and options thereon may
also be limited by the requirements of the Code for qualification as a regulated
investment company.
RISKS OF HEDGING AND INCOME ENHANCEMENT STRATEGIES
Participation in the options or futures market and in currency exchange
transactions involves investment risks and transaction costs to which the Fund
would not be subject absent the use of these strategies. If the investment
adviser's prediction of movements in the direction of the securities, foreign
currency and interest rate markets is inaccurate, the adverse consequences to
the Fund may leave the Fund in a worse position than if such strategies were not
used. Risks inherent in the use of options, foreign currency and futures
contracts and options on futures contracts include (1) dependence on the
investment adviser's ability to predict correctly movements in the direction of
interest rates, securities prices and currency markets; (2) imperfect
correlation between the price of options and futures contracts and options
thereon and movements in the prices of the securities or currencies being
hedged; (3) the fact that skills needed to use these strategies are different
from those needed to select portfolio securities; (4) the possible absence of a
liquid secondary market for any particular instrument at any time; (5) the
possible need to defer closing out certain hedged positions to avoid adverse tax
consequences; and (6) the possible inability of the Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do so,
or the possible need for the Fund to sell a portfolio security at a
disadvantageous time, due to the need for the Fund to maintain 'cover' or to
segregate securities in connection with hedging transactions.
OTHER INVESTMENTS AND POLICIES
Foreign Investments. The Fund may invest up to 30% of its total assets in
securities of foreign issuers. Investing in securities of foreign companies and
countries involves certain considerations and risks which are not typically
associated with investing in securities of domestic companies. Foreign companies
are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to U.S. companies.
There may also be less government supervision and regulation of foreign
securities exchanges, brokers and public companies than exists in the United
States. Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends and interest paid to the Fund by domestic
companies. There may be the possibility of expropriations, confiscatory
taxation, political, economic or social instability or diplomatic developments
which could affect assets of the Fund held in foreign countries. In addition, a
portfolio of foreign securities may be adversely affected by fluctuations in the
relative rates of exchange between the currencies of different nations and by
exchange control regulations.
There may be less publicly available information about foreign companies
and governments compared to reports and ratings published about U.S. companies.
Foreign securities markets have substantially less volume than, for example, the
New York Stock Exchange and securities of some foreign companies are less liquid
and more volatile than securities of comparable U.S. companies. Brokerage
commissions and other transaction costs of foreign securities exchanges are
generally higher than in the United States.
Repurchase Agreements. The Fund may on occasion enter into repurchase
agreements, whereby the seller of a security agrees to repurchase that security
from the Fund at a mutually agreed-upon time and price. The repurchase date is
usually quite short, possibly overnight or a few days, although it may extend
over a number of months. The resale price is in excess of the purchase price,
reflecting an agreed-upon rate of return effective for the period of time the
Fund's money is invested in the repurchase agreement. The Fund's repurchase
agreements will at all times be fully collateralized in an amount at least equal
to the purchase price, including accrued interest earned on the underlying
securities. The instruments held as collateral are valued daily, and if the
value of the instruments declines, the Fund will require additional collateral
in order to maintain its fully collateralized position. If the seller defaults
and the value of the collateral securing the repurchase agreement declines, the
Fund may incur a loss.
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The Fund participates in a joint repurchase account with other investment
companies managed by PMF pursuant to an order of the Securities and Exchange
Commission ('SEC').
When-Issued and Delayed Delivery Securities. The Fund may purchase or sell
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions arise when securities are purchased or sold by the Fund
with payment and delivery taking place as much as a month or more in the future
in order to secure what is considered to be an advantageous price and yield to
the Fund at the time of entering into the transaction. The Fund's Custodian will
maintain, in a segregated account of the Fund, cash, U.S. Government securities
or other liquid high-grade debt obligations having a value equal to or greater
than the Fund's purchase commitments; the Custodian will likewise segregate
securities sold on a delayed delivery basis. The securities so purchased are
subject to market fluctuation and no interest accrues to the purchaser during
the period between purchase and settlement. At the time of delivery of the
securities the value may be more or less than the purchase price and an increase
in the percentage of the Fund's assets committed to the purchase of securities
on a when-issued or delayed delivery basis may increase the volatility of the
Fund's net asset value.
Borrowing and Securities Lending. The Fund may borrow an amount equal to
no more than 20% of the value of its total assets (calculated when the loan is
made) for temporary, extraordinary or emergency purposes or for the clearance of
transactions. The Fund may pledge up to 20% of its total assets to secure these
borrowings.
The Fund does not presently intend to lend securities, except to the extent
that the entry into repurchase agreements may be considered securities lending.
Short Sales Against-the-Box. The Fund may make short sales of securities
or maintain a short position, provided that at all times when a short position
is open the Fund owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, an equal amount of the securities of the same issuer as the
securities sold short (a short sale 'against-the-box'), and that not more than
25% of the Fund's net assets (determined at the time of the short sale) may be
subject to such sales. Short sales will be made primarily to defer realization
of gain or loss for federal tax purposes; a gain or loss in the Fund's long
position will be offset by a gain or loss in its short position. The Fund does
not intend to have more than 5% of its net assets (determined at the time of the
short sale) subject to short sales against-the-box.
Illiquid Securities. The Fund may invest up to 5% of its net assets in
illiquid securities including repurchase agreements which have a maturity of
longer than seven days, securities with legal or contractual restrictions on
resale (restricted securities) and securities that are not readily marketable.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended, and privately placed commercial paper that
have a readily available market are not considered illiquid for purposes of this
limitation. The investment adviser will monitor the liquidity of such restricted
securities under the supervision of the Fund's Board of Directors. Repurchase
agreements subject to demand are deemed to have a maturity equal to the
applicable notice period.
The staff of the SEC has taken the position that purchased over-the-counter
options and the assets used as 'cover' for written over-the-counter options are
illiquid securities unless the Fund and the counterparty have provided for the
Fund, at the Fund's option, to unwind the OTC option. The exercise of such an
option ordinarily would involve the payment by the Fund of an amount designed to
reflect the counterparty's economic loss from an early termination, but does not
allow the Fund to treat the assets used as 'cover' as 'liquid.'
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A 'majority of the Fund's
outstanding voting securities' means the lesser of (1) 67% of the Fund's voting
shares represented at a meeting at which more than 50% of the outstanding voting
shares are present in person or represented by proxy, or (2) more than 50% of
the Fund's outstanding voting shares.
The Fund may not:
1. Purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result with respect
to 75% of the Fund's total assets, more than 5% of the Fund's total assets
(taken at current value) would then be invested in securities of a single
issuer.
2. Make short sales of securities except short sales against-the-box
(but the Fund may obtain such short-term credits as may be necessary for
the clearance of transactions).
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3. Concentrate its investments in any one industry (no more than 25%
of the Fund's total assets will be invested in any one industry).
4. Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow up to 20% of the value of its total assets
(calculated when the loan is made) for temporary, extraordinary or
emergency purposes or for the clearance of transactions. The Fund may
pledge up to 20% of the value of its total assets to secure such
borrowings. For the purpose of this restriction, obligations of the Fund to
Directors pursuant to deferred compensation arrangements, the purchase or
sale of securities on a when-issued or delayed delivery basis, the purchase
and sale of options, futures contracts and forward foreign currency
exchange contracts and collateral arrangements with respect to the purchase
and sale of options, futures contracts, options on futures contracts and
forward foreign currency exchange contracts are not deemed to be the
issuance of a senior security or a pledge of assets.
5. Purchase any security if as a result the Fund would then hold more
than 10% of the outstanding voting securities of any one issuer.
6. Purchase any security if as a result the Fund would then have more
than 5% of its total assets (taken at current value) invested in securities
of companies (including predecessors) less than three years old.
7. Buy or sell commodities or commodity contracts or real estate or
interests in real estate except that the Fund may purchase and sell stock
index futures contracts, options thereon and forward foreign currency
exchange contracts and securities which are secured by real estate and
securities of companies which invest or deal in real estate.
8. Act as underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
9. Make investments for the purpose of exercising control or
management.
10. Invest in securities of other investment companies, except by
purchases in the open market involving only customary brokerage commissions
and as a result of which not more than 10% of its total assets (taken at
current value) would be invested in such securities, or except as part of a
merger, consolidation or other acquisition.
11. Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the common stock of
companies which invest in or sponsor such programs.
12. Make loans, except through (i) repurchase agreements and (ii)
loans of portfolio securities (such loans being limited to 10% of the
Fund's total assets). (The purchase of a portion of an issue of securities
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.)
In order to comply with certain state 'blue sky' restrictions, the Fund
will not as a matter of operating policy:
1. Invest in oil, gas and mineral leases.
2. Purchase warrants if as a result the Fund would then have more
than 5% of its net assets (determined at the time of investment) invested
in warrants. Warrants will be valued at the lower of cost or market and
investments in warrants which are not listed on the New York Stock Exchange
or American Stock Exchange will be limited to 2% of the Fund's net assets
(determined at the time of investment). For the purpose of this limitation,
warrants acquired in units or attached to securities are deemed to be
without value.
3. Invest in securities of any issuer if, to the knowledge of the
Fund, any officer or Director of the Fund or PMF or the subadviser owns
more than 1/2 of 1% of the outstanding securities of such issuer, and such
officers and directors who own more than 1/2 of 1% own in the aggregate
more than 5% of the outstanding securities of such issuer.
4. Invest in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, or
securities of issuers which are restricted as to disposition, if more than
15% of its total assets would be invested in such securities. This
restriction shall not apply to mortgage-backed securities, asset-backed
securities or obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
5. Invest more than 5% of its total assets in securities of
unseasoned issuers, including their predecessors, which have been in
operation for less than three years, and in equity securities of issuers
which are not readily marketable.
The Fund may not purchase securities on margin, except for such short-term
credits as are necessary for the clearance of purchases and sales of portfolio
securities.
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Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Fund's assets, it is intended that if the percentage
limitation is met at the time the investment is made, a later change in
percentage resulting from changing total or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take prompt action
to reduce its borrowings, as required by applicable law.
NET ASSET VALUE OF THE FUND SHARES
The net asset value per share is the net worth of the Fund (assets,
including securities at value, minus liabilities) divided by the number of
shares outstanding. The value of investments listed on national securities
exchanges and NASDAQ equity securities is based on the last sale price as of the
close of the New York Stock Exchange (which is currently 4:00 P.M., New York
time) or, in the absence of recorded sales, at the average of readily available
closing bid and asked prices on such exchanges. Unlisted securities are valued
at the average of the quoted bid and asked prices in the over-the-counter
market. Securities or other assets for which market quotations are not readily
available are valued by appraisal at their fair value as determined in good
faith by PMF under procedures established by and under the general supervision
of the Fund's Board of Directors. Options on stocks and stock indices traded on
national securities exchanges are valued as of the close of options trading on
such exchanges (which is currently 4:10 P.M., New York time) and stock index
futures and options thereon, which are traded on commodities exchanges, are
valued at their last sale price as of the close of such commodities exchanges
(which is currently 4:15 P.M., New York time). If there were no sales on the
applicable options or commodities exchange, options on stocks and stock indices
and stock index futures and options thereon are valued at the average of the
quoted bid and asked prices as of the close of the respective exchange.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase was 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their term to maturity from date of purchase exceeded 60 days, unless this is
determined not to represent fair value by the Board of Directors. The Fund will
compute its net asset value once daily at 4:15 P.M., New York time, using the
prices obtained at the time indicated above on each day the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem Fund shares have been received or days on which changes in the value
of the Fund's portfolio securities do not affect the net asset value. The New
York Stock Exchange is closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
In the event that the New York Stock Exchange or the national securities
exchanges on which stock options are traded adopt different trading hours on
either a permanent or temporary basis, the Board of Directors of the Fund will
reconsider the time at which net asset value is computed. In addition, the Fund
may compute its net asset value as of any time permitted pursuant to any
exemption, order or statement of the SEC or its staff.
THE FUND'S INVESTMENT MANAGER
The Fund has a Board of Directors which, in addition to overseeing the
actions of PMF, PIC and the Distributor (as defined below), decides upon matters
of general policy. PMF conducts and supervises the daily business operations of
the Fund. PIC furnishes daily investment advisory services.
The manager of the Fund is Prudential Mutual Fund Management, Inc. ('PMF'),
a corporation located at One Seaport Plaza, New York, NY. PMF is an indirect
wholly owned subsidiary of The Prudential Insurance Company of America
('Prudential Insurance'). Through its subsidiaries, Prudential Insurance is
engaged in various aspects of the insurance and financial services industry.
For its services, PMF receives, pursuant to the Management Agreement with
the Fund (the 'Management Agreement'), a fee at an annual rate of .50 of 1% of
the Fund's average daily net assets up to and including $500 million, .475 of 1%
of the Fund's average daily net assets from $500 million to $1 billion and .45
of 1% of the Fund's average daily net assets in excess of $1 billion. The fee is
computed daily and payable monthly. The Management Agreement also provides that,
in the event the expenses of the Fund (including the fees of PMF, but excluding
interest, taxes, brokerage commissions, distribution fees and litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business) for any fiscal year exceed the lowest
applicable annual expense limitation established and enforced pursuant to the
statutes or regulations of any jurisdiction in which the Fund's shares are
qualified for offer and sale, the compensation due to PMF will be reduced by the
amount of such excess. Reductions in excess of the total compensation payable to
PMF will be paid by PMF to the Fund. No such reductions were required during the
fiscal year ended December 31, 1994. Currently, the Fund believes that the most
restrictive expense limitation of state securities commissions is 2.5% of the
Fund's average daily net assets up to $30 million, 2% of the next $70 million of
such assets and 1.5% of such assets in excess of $100 million.
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In connection with its management of the corporate affairs of the Fund, PMF
bears the following expenses:
(a) the salaries and expenses of all of its and the Fund's personnel
except the fees and expenses of Directors who are not affiliated persons of
PMF or PIC;
(b) all expenses incurred by PMF or by the Fund in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund as described below; and
(c) the costs and expenses payable to PIC pursuant to the subadvisory
agreement between PMF and PIC (the 'Subadvisory Agreement').
Under the terms of the Management Agreement, the Fund is responsible for
the payment of the following expenses: (a) the fees payable to PMF, (b) the fees
and expenses of Directors who are not affiliated persons of PMF or PIC, (c) the
fees and certain expenses of the Custodian and Transfer and Dividend Disbursing
Agent, including the cost of providing records to PMF in connection with its
obligation of maintaining required records of the Fund and of pricing the Fund's
shares, (d) the charges and expenses of legal counsel and independent
accountants for the Fund, (e) brokerage commissions and any issue or transfer
taxes chargeable to the Fund in connection with its securities transactions, (f)
all taxes and corporate fees payable by the Fund to governmental agencies, (g)
the fees of any trade associations of which the Fund may be a member, (h) the
cost of stock certificates representing shares of the Fund, (i) the cost of
fidelity and liability insurance, (j) the fees and expenses involved in
registering and maintaining registration of the Fund and of its shares with the
SEC and in registering the Fund and qualifying its shares under state securities
laws, including the preparation and printing of the Fund's registration
statements and prospectuses for such purposes, (k) allocable communications
expenses with respect to investor services and all expenses of shareholders' and
Directors' meetings and of preparing, printing and mailing reports, proxy
statements and prospectuses to shareholders in the amount necessary for
distribution to shareholders, (l) litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business and (m) distribution fees. The Management Agreement provides that PMF
will not be liable for any error of judgement or for any loss suffered by the
Fund in connection with the matters to which the Management Agreement relates,
except a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
PMF has entered into the Subadvisory Agreement with PIC. The Subadvisory
Agreement provides that PIC will furnish investment advisory services in
connection with the management of the Fund. In connection therewith, PIC is
obligated to keep certain books and records of the Fund. PMF continues to have
responsibility for all investment advisory services pursuant to the Management
Agreement and supervises PIC's performance of such services. PIC is reimbursed
by PMF for the reasonable costs and expenses incurred by PIC in furnishing those
services.
The current portfolio manager of the Fund is Thomas R. Jackson, a Managing
Director of Prudential Equity Management Associates, a unit of PIC. Mr. Jackson
has responsibility for daily portfolio management and securities selection for
the Fund. Mr. Jackson also serves as the portfolio manager of the Common Stock
Portfolio of the Prudential Series Fund, which is one of the investment options
in a Prudential Insurance variable life and annuity product. Mr. Jackson joined
PIC in 1990 and has over twenty-five years of professional equity investment
management experience. He was formerly co-chief investment officer of Red Oak
Advisers and Century Capital Associates, private money management firms, where
he managed pension and other accounts for institutions and individuals. He was
also with The Dreyfus Corporation where he managed and served as president of
the Dreyfus Fund. Mr. Jackson also managed an equity pension investment group at
Chase Manhattan Bank.
Mr. Jackson primarily utilizes a 'value' investing style in managing the
Fund. Value investing is a disciplined approach which attempts to identify
strong companies selling at a discount from their perceived true worth. Mr.
Jackson selects stocks for the Fund's portfolio at prices which in his view are
temporarily low relative to the company's earnings, assets, cash flow and
dividends.
THE FUND'S PLAN OF DISTRIBUTION
Under a Distribution and Service Plan (the 'Plan') adopted by the Fund
under Rule 12b-1 under the Investment Company Act and a distribution agreement
(the 'Distribution Agreement'), Prudential Mutual Fund Distributors, Inc. (the
'Distributor') incurs the expenses of distributing the Fund's Class A shares.
These expenses include commissions and account servicing fees paid to, or on
account of, financial advisers of Prudential Securities and representatives of
Pruco Securities Corporation, an affiliated broker-dealer, commissions and
account servicing fees paid to, or on account of, other broker-dealers or
financial institutions (other than national banks) which have entered into
agreements with the Distributor, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and indirect and overhead costs of
Prudential Securities associated with the sale of Fund shares, including lease,
utility, communications and sales promotion expenses.
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Under the Plan, the Fund is obligated to pay distribution and/or service
fees to the Distributor as compensation for its distribution and service
activities, not as reimbursement for specific expenses incurred. If the
Distributor's expenses exceed its distribution and service fees, the Fund will
not be obligated to pay any additional expenses. If the Distributor's expenses
are less than such distribution and service fees, it will retain its full fees
and realize a profit.
Under the Plan, the Fund may pay the Distributor for its
distribution-related activities with respect to Class A shares at an annual rate
of up to .30 of 1% of the average daily net assets of the Class A shares. The
Plan provides that (i) up to .25 of 1% of the average daily net assets of the
Class A shares may be used to pay for personal service and/or the maintenance of
shareholder accounts (service fee) and (ii) total distribution fees (including
the service fee of .25 of 1%) may not exceed .30 of 1% of the average daily net
assets of the Class A shares. The Distributor agreed to limit its
distribution-related fees payable under the Plan to .25 of 1% of the average
daily net assets of the Class A shares for the fiscal year ending December 31,
1994.
For the fiscal year ended December 31, 1993, the Distributor received
payments of $381,556 under the Plan. This amount was primarily expended for
payment of account servicing fees to financial advisers and other persons who
sell Class A shares. For the fiscal year ended December 31, 1993, the
Distributor also received approximately $2,373,000 in initial sales charges.
For the six months ended June 30, 1994, the Fund paid distribution expenses
of .25% of the average daily net assets of the Class A shares. The Fund records
all payments made under the Plan as expenses in the calculation of net
investment income.
The Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Directors of the Fund, including a
majority of the Directors who are not 'interested persons' of the Fund (as
defined in the Investment Company Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related to the
Plan (the 'Rule 12b-1 Directors'), vote annually to continue the Plan. The Plan
may be terminated at any time by vote of a majority of the Rule 12b-1 Directors
or of a majority of the outstanding Class A shares of the Fund. The Fund will
not be obligated to pay expenses incurred under the Plan if it is terminated or
not continued.
In addition to distribution and service fees paid by the Fund under the
Plan, PMF (or one of its affiliates) may make payments out of its own resources
to dealers and other persons who distribute shares of the Fund. Such payments
may be calculated by reference to the net asset value of shares sold by such
persons or otherwise.
The Distributor is subject to the rule of the National Association of
Securities Dealers, Inc. governing maximum sales charges.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Sponsor has agreed to pay to the Trust the 12b-1 fees it
receives from the Distributor with respect to Fund Shares held by the Trust.
Fund Shares held directly by an investor (other than the Trust) including Fund
Shares purchased pursuant to 'Reinvestment of Trust Distributions' will,
however, be subject to 12b-1 fees (see 'Reinvestment of Trust Distributions').
RISK OF INVESTMENT IN UNITS
The Securities and Exchange Commission issued an exemptive order pursuant
to which Fund Shares will be deposited by the Sponsor in the Trust. In the
application for such order, the Sponsor agreed to take certain steps to ensure
that the Trust's investment in Fund Shares is equitable to all parties and
particularly that the interests of the Unit Holders are protected. Accordingly,
any sales charges which would otherwise be applicable will be waived on Fund
Shares sold to the Trust. The Sponsor will receive a sales charge on all Units
sold. In addition, the Indenture requires the Trustee to vote all Fund Shares
held in the Trust in the same manner and ratio on all proposals as the vote of
owners of Fund Shares not held by the Trust.
The Fund's Shares may appreciate or depreciate in value (or pay dividends)
depending on the full range of economic and market influences affecting the
securities in which the Fund is invested and the success of the Fund's
management in anticipating or taking advantage of such opportunities as they may
occur. In addition, in the event of the inability of the investment adviser to
act and/or claims or actions against the Fund by regulatory agencies or other
persons or entities, the value of the Fund Shares may decline thereby causing a
decline in the value of Units. Termination of the Fund prior to the Termination
Date of the Trust may result in the termination of the Trust sooner than
anticipated. Prior to a purchase of Units, investors should determine that the
aforementioned risks are consistent with their investment objectives.
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FUND RISK FACTORS
All Fund investments involve risk and there can be no guarantee against
loss resulting from an investment in the Fund, nor can there be any assurance
that the Fund's investment objective will be attained. As with any investment in
securities, the value of, and income from, an investment in the Fund can
decrease as well as increase, depending on a variety of factors which may affect
the values and income generated by the Fund's portfolio securities, including
general economic conditions, market factors and currency exchange rates.
Additionally, investment decisions made by the Fund's investment adviser will
not always be profitable or prove to have been correct. The Fund is not intended
as a complete investment program.
The net asset value of the Fund's Shares, like the value of the Treasury
Obligations, will fluctuate over the life of the Trust and may be more or less
than the price paid therefor by the Trust. An investment in Units of the Trust
should be made with an understanding of the risks inherent in ownership of Fund
Shares. However, the Sponsor believes that, upon termination of the Trust on the
mandatory termination date, even if the Fund Shares are worthless, the Treasury
Obligations will provide sufficient cash at maturity to equal $15.00 per Unit.
Part of such cash will, however, represent the accrual of taxable original issue
discount on the Treasury Obligations.
A UNIT HOLDER PURCHASING A UNIT ON THE DATE OF THIS PROSPECTUS OR
THEREAFTER MAY RECEIVE TOTAL DISTRIBUTIONS, INCLUDING DISTRIBUTIONS MADE UPON
TERMINATION OF THE TRUST, THAT ARE LESS THAN THE AMOUNT PAID FOR A UNIT.
Sales of Securities in the Portfolio under certain permitted circumstances
may result in an accelerated termination of the Trust. It is also possible that,
in the absence of a secondary market for the Units or otherwise, redemptions of
Units may occur in sufficient numbers to reduce the portfolio to a size
resulting in such termination. In addition, the Trust may be terminated if the
net aggregate value of the Trust is less than 40% of the aggregate maturity
values of the Treasury Obligations calculated immediately after the most recent
deposit of Treasury Obligations in the Trust (see 'Amendment and
Termination--Termination'). Early termination of the Trust may have important
consequences to the Unit Holder; e.g., to the extent that Units were purchased
with a view to an investment of longer duration, the overall investment program
of the investor may require readjustment; or the overall return on investment
may be less than anticipated, and may result in a loss to a Unit Holder.
In the event of the early termination of the Trust, the Trustee will cause
the Fund Shares to be sold and the proceeds thereof distributed to the Unit
Holders in proportion to their respective interests therein, unless a Unit
Holder elects to receive Fund Shares 'in kind' (see 'Amendment and Termination
of the Indenture--Termination'). Proceeds from the sale of the Treasury
Obligations will be paid in cash.
In the event of a notice that any Treasury Obligation will not be delivered
('Failed Treasury Obligations'), the Sponsor is authorized under the Indenture
to direct the Trustee to acquire other Treasury Obligations ('Replacement
Treasury Obligations') within a period ending on the earlier of the first
distribution of cash to Trust Unit Holders or 90 days after the Date of Deposit.
The cost of the Replacement Treasury Obligations may not exceed the cost of the
Treasury Obligations which they replace. Any Replacement Treasury Obligation
deposited in the Trust will be substantially identical to every Treasury
Obligation then in the Trust. Whenever a Replacement Treasury Obligation has
been acquired for the Trust, the Trustee shall, within 5 days thereafter, notify
Unit Holders of the acquisition of the Replacement Treasury Obligation.
In the event a contract to purchase Securities fails and Replacement
Treasury Obligations are not acquired, the Trustee will distribute to Unit
Holders the funds attributable to the failed contract. The Sponsor will, in such
case, refund the sales charge applicable to the failed contract. If less than
all the funds attributable to a failed contract are applied to purchase
Replacement Treasury Obligations, the remaining money will be distributed to
Unit Holders.
The Trustee will have no power to vary the investments of the Trust, i.e.,
the Trustee will have no managerial power to take advantage of market variations
to improve a Unit Holder's investment but may dispose of Securities only under
limited circumstances (see 'Sponsor--Responsibility').
To the best of the Sponsor's knowledge there was no litigation pending as
of the Date of Deposit in respect of any Security which might reasonably be
expected to have a material adverse effect on the Trust. At any time after the
Date of Deposit, litigation may be instituted on a variety of grounds with
respect to the Securities. The Sponsor is unable to predict whether any such
litigation may be instituted, or if instituted, whether such litigation might
have a material adverse effect on the Trust.
THE UNITS
On the Date of Deposit, each Unit represented a fractional undivided
interest in the Securities and the net income of the Trust set forth under
'Summary of Essential Information.' Thereafter, if any Units are redeemed by the
Trustee, the amount of Securities in the Trust will be reduced by amounts
allocable to redeemed Units, and the fractional undivided interest represented
by each Unit in the balance will be increased, although the actual interest in
the Trust represented by each Unit will remain unchanged.
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<PAGE>
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unit Holder (which may include the Sponsor) or until the termination of the
Trust itself (see 'Rights of Unit Holders--Redemption' and 'Amendment and
Termination of the Indenture--Termination').
TAX STATUS OF THE TRUST
In the opinion of Messrs. Cahill Gordon & Reindel, counsel for the
Sponsor, under existing law:
The Trust is not an association taxable as a corporation for United
States federal income tax purposes and income of the Trust will be treated
as income of the Unit Holders in the manner set forth below. Each Unit
Holder will be considered the owner of a pro rata portion of each asset of
the Trust under the grantor trust rules of Sections 671-678 of the Internal
Revenue Code of 1986, as amended (the 'Code').
Each Unit Holder will be required to include in his gross income, as
determined for federal income tax purposes, original issue discount with
respect to his pro rata portion of the Treasury Obligations held by the
Trust at the same time and in the same manner as though the Unit Holder
were the direct owner of such pro rata portion. Each Unit Holder will be
considered to have received the distributions paid on his pro rata portion
of the Fund Shares held in the Trust (including such portion of such
distributions used to pay fees and expenses of the Trust) when such
distributions are received or deemed to be received by the Trust. An
individual Unit Holder who itemizes deductions will be entitled to an
itemized deduction for his pro rata share of fees and expenses paid by the
Trust as though such fees and expenses were paid directly by the Unit
Holder, but only to the extent that this amount together with the Unit
Holder's other miscellaneous deductions exceeds 2% of his adjusted gross
income. A corporate Unit Holder will not be subject to this 2% floor.
Each Unit Holder will have a taxable event when a Security is disposed
of (whether by sale, exchange, redemption, or payment at maturity) or when
the Unit Holder redeems or sells his Units. The total tax cost of each Unit
to a Unit Holder must be allocated among the assets held in the Trust in
proportion to the relative fair market values thereof on the date the Unit
Holder purchases his Units.
The tax basis of a Unit Holder with respect to his interest in a Treasury
Obligation will be increased by the amount of original issue discount thereon
properly included in the Unit Holder's gross income as determined for Federal
income tax purposes.
The amount of gain recognized by a Unit Holder on a disposition of Fund
Shares or Treasury Obligations by the Trust will be equal to the difference
between such Unit Holder's pro rata portion of the gross proceeds realized by
the Trust on the disposition and the Unit Holder's tax basis in his pro rata
portion of the Fund Shares or Treasury Obligations disposed of, determined as
described in the preceding paragraphs. Any such gain recognized on a sale or
exchange and any such loss will be capital gain or loss, except that gain or
loss recognized by a financial institution with respect to a Treasury Obligation
or by a dealer with respect to Fund Shares or Treasury Obligations will be
ordinary income or loss. Any capital gain or loss arising from the disposition
of a Unit Holder's pro rata interest in a Security will be long-term capital
gain or loss if the Unit Holder has held his Units and the Trust has held the
Security for more than one year. A capital loss due to sale or redemption of a
Unit Holder's interest with respect to Fund Shares held in the Trust will be
treated as a long-term capital loss to the extent of any long-term capital gains
derived by the Unit Holder from such interest if the Unit Holder has held such
interest for six months or less. The holding period for this purpose will be
determined by applying the rules of Sections 246(c)(3) and (4) of the Code.
Under the Code, net capital gain (i.e., the excess of net long-term capital gain
over net short-term capital loss) of individuals, estates and trusts is subject
to a maximum nominal tax rate of 28%. Such net capital gain may, however, result
in a disallowance of itemized deductions and/or affect a personal exemption
phase-out.
If the Unit Holder sells or redeems a Unit for cash he is deemed thereby to
have disposed of his entire pro rata interest in all Trust assets represented by
the Unit and will have taxable gain or loss measured by the difference between
his per Unit tax basis for such assets, as described above, and the amount
realized.
Each Unit Holder's interest in each Treasury Obligation is treated as an
interest in an original issue discount obligation. The original issue discount
on each Treasury Obligation will be taxed as ordinary income for Federal income
tax purposes and will be equal to the excess of the maturity value of the Unit
Holder's interest in the Treasury Obligation over its cost to the Unit Holder. A
Unit Holder will be required to include in gross income for each taxable year a
portion of this original issue discount and will be subject to income tax
thereon even though the income is not distributed. Original issue discount is
treated for Federal income tax purposes as income earned under a constant
interest formula which takes into account the semi-annual compounding of accrued
interest, resulting in an increasing amount of original issue discount accruing
in each year.
A Unit Holder who is neither a citizen nor a resident of the United States
and is not a United States domestic corporation (a 'foreign Unit Holder') will
not generally be subject to United States federal income taxes, including
withholding taxes, on his pro rata share of the original issue discount on the
Treasury Obligations held in the Trust, any gain from the sale or other
disposition of his, her or its pro rata interest in a Treasury Obligation or
Fund Share held in the Trust, any undistributed gain retained by the Fund
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and designated by the Fund to be taken into account by its shareholders or any
capital gain dividend received by the Trust from the Fund, which original issue
discount is not effectively connected with the conduct by the foreign Unit
Holder of a trade or business within the United States and which gain is either
(I) not from sources within the United States or (II) not so effectively
connected, provided that:
(a) with respect to original issue discount (i) the Treasury
Obligations are in registered form and were issued after July 18, 1984, and
(ii) the foreign Unit Holder is not a controlled foreign corporation
related (within the meaning of Section 864(d)(4) of the Code) to The
Prudential Insurance Company of America;
(b) with respect to any U.S.-source capital gain, the foreign Unit
Holder (if an individual) is not present in the United States for 183 days
or more during his or her taxable year in which the gain was realized and
so certifies; and
(c) the foreign Unit Holder provides the required certifications
regarding (i) his, her or its status, (ii) in the case of U.S.-source
income, the fact that the original issue discount or gain is not
effectively connected with the conduct by the foreign Unit Holder of a
trade or business within the United States, and (iii) if determined to be
required, the controlled foreign corporation matter mentioned in clause
(a)(ii) above.
Fund distributions paid to foreign Unit Holders either directly or through the
Trust and not constituting income effectively connected with the conduct of a
trade or business within the United States by the distributee will be subject to
United States federal withholding taxes at a 30% rate or a lesser rate
established by treaty unless the Fund distribution is a capital gain dividend.
Foreign Unit Holders should consult their own tax counsel with respect to United
States tax consequences of ownership of Units.
Each Unit Holder (other than a foreign Unit Holder who has properly
provided the certifications described in the preceding paragraph) will be
requested to provide the Unit Holder's taxpayer identification number to the
Trustee and to certify that the Unit Holder has not been notified that payments
to the Unit Holder are subject to back-up withholding. If the taxpayer
identification number and an appropriate certification are not provided when
requested, a 31% back-up withholding will apply.
The Fund has elected to qualify for and intends to remain qualified as a
regulated investment company under the Code and to meet applicable requirements
with respect to its gross income, diversification of holdings and distributions
so that the Fund (but not the Trust Unit Holders) will be relieved of Federal
income tax on the amounts distributed by the Fund to the Trust. Such
distributions may include taxable net investment income and net capital gain
from sales of securities held by the Fund. It is also possible for the Fund to
retain net capital gains for investment, in which event the Fund will be subject
to Federal income tax on the retained amount; but may, as a regulated investment
company, designate the retained amount as undistributed capital gains in a
notice to those persons who were its shareholders (including the Trust and thus
its Unit Holders) at the close of the Fund's taxable year.
If the Fund were to so retain any net capital gains for investment, its
shareholders (including Trust Unit Holders) (a) would be required to include in
gross income for tax purposes, as long-term capital gains, their proportionate
shares of the undistributed net capital gain of the Fund, and (b) would be
deemed to have paid their proportionate shares of the tax paid by the Fund on
the undistributed net capital gain so that the amount of tax deemed paid by each
such shareholder would be credited against the shareholder's United States
federal income tax liability and a refund could be claimed to the extent that
credits exceeded such liability. For United States federal income tax purposes,
the basis of shares of the Fund owned by a shareholder of the Fund (including a
Trust Unit Holder) would be increased by an amount equal to 65% of the amount of
undistributed capital gains required to be so included in computing such Fund
shareholder's long-term capital gains.
Capital gain distributions, if any, made by the Fund, as a regulated
investment company, are taxable as long-term capital gain, regardless of how
long the Fund shareholder (including a Trust Unit Holder) has held the Fund's
shares, and are not eligible for the dividends received deduction available to
corporations. Other dividend distributions by the Fund may, depending upon the
circumstances, be eligible for such dividends received deduction, in whole or in
part.
Generally, dividends paid by the Fund, as a regulated investment company,
are treated as received by the Trust, and thus its Unit Holders, in the taxable
year in which the distribution is made by the Fund; however, any dividend
declared by the Fund in October, November or December of any calendar year,
payable to shareholders of record on a specified date in such a month and
actually paid during January of the following year, will be treated as received
on December 31 of the preceding year.
Non-taxable Fund distributions reduce the Unit Holder's tax cost basis with
respect to his interest in Fund Shares held by the Trust and are treated as a
gain from the sale of such interest if and to the extent that such distributions
exceed the tax cost basis of the Unit Holder with respect to his interest in
Fund Shares held by the Trust.
Income received by the Fund may be subject to withholding and other taxes
imposed by foreign jurisdictions. In some instances, these taxes are limited by
treaty between the United States and the relevant foreign jurisdiction. Treaty
benefits may be available to the Fund to the same extent as they would be to
individual U.S. shareholders. However, in some situations the Fund
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<PAGE>
will be eligible for such benefits only if it can establish that a minimum
specified percentage of the capital of the Fund is owned directly or indirectly
by individual residents or citizens of the United States.
The Code places a floor of 2% of adjusted gross income on miscellaneous
itemized deductions, including investment expenses, of individuals (and estates
and trusts other than grantor trusts, to the extent provided in regulations).
The Code also directs the Secretary of the Treasury to issue regulations
prohibiting indirect deductions through a mutual fund or other pass-through
entity of amounts not allowable as a deduction under this rule if paid or
incurred directly by such an investor, but such regulations are not to apply to
indirect deductions through a 'publicly offered regulated investment company,'
which the Fund is believed to be. The 2% floor rule will, however, apply in any
event to investment expenses of the Trust, as opposed to the Fund, and affected
Unit Holders should aggregate such expenses with their other miscellaneous
deductions in applying the 2% rule.
The Fund will file its 1994 information returns as a 'publicly offered
regulated investment company.' The Trust cannot predict whether or not the Fund
will qualify as a 'publicly offered regulated investment company' for 1994 or
any later year. The term 'publicly offered regulated investment company' is
defined as meaning a regulated investment company the shares of which are
'continuously offered' or regularly traded on an established securities market
or 'held by or for no fewer than 500 persons at all times during the taxable
year.'
In addition, under the Code, the allowable amount of certain itemized
deductions claimed by individual taxpayers, including investment expenses, is
subject to an overall limitation applicable to individual taxpayers with
adjusted gross income in excess of a $114,700 threshold amount ($57,350 for a
married taxpayer filing separately). The $114,700 (or $57,350) threshold amount
will be indexed for inflation after 1995. The overall limitation reduces the
otherwise allowable amount of the affected itemized deductions by the lesser of
(i) 3% of the adjusted gross income in excess of the threshold amount or (ii)
80% of the amount of the otherwise allowable affected itemized deductions. The
other limitations contained in the Code on the deduction of itemized expenses,
including the 2% floor described above, are applied prior to this overall
limitation.
The Code also imposes a 4% excise tax on untaxed undistributed income of
regulated investment companies. If the Fund distributes in each calendar year an
amount equal to the sum of at least 98% of its ordinary income for such calendar
year and 98% of its capital gain net income for the 12 month period ended on
October 31 of each calendar year (or on December 31 if the Fund qualifies to so
elect and does so) and distributes an amount equal to the 2% balances not later
than the close of the succeeding calendar year, the Fund will not be subject to
this 4% excise tax. For purposes of this excise tax, any net long-term capital
gain in excess of net short-term capital loss retained by the Fund for any
fiscal year ending on or before the close of the calendar year but designated as
undistributed capital gains taxable to shareholders as described above is
treated as if distributed to the Fund's shareholders.
The Fund may invest in passive foreign investment companies, various
options and futures contracts and hedging transactions and may be subject to
foreign currency fluctuations, all of which have unique Federal income tax
consequences. Such investments and currency fluctuations may affect the
character, timing and amount of gain or ordinary income to be recognized by
persons holding Fund Shares.
Interest paid by a Unit Holder other than a corporation on indebtedness
properly allocable to Units will be deductible as investment interest to the
extent permitted by Section 163(d) of the Code.
As of the end of each calendar year, the Trustee will furnish to each Unit
Holder an annual statement containing information relating to the dividends
(including capital gain dividends) received or deemed received, rebated 12b-1
fees received from the Sponsor, discount accrued on the Securities, the gross
proceeds received by the Trust from the disposition of any Security (resulting
from redemption or payment at maturity of any Security or the sale by the Trust
of any Security), and the fees and expenses paid by the Trust.
The foregoing discussion relates only to United States federal income
taxes. Unit Holders may be subject to state, local or foreign taxation.
Investors should consult their tax counsel for advice with respect to their
own particular tax situations.
RETIREMENT PLANS
Units in the Trust may be suitable for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other qualified retirement plans.
Investors considering participation in any such plan should review the laws
specifically related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan.
B-18
<PAGE>
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the initial offering period
is computed by adding to the aggregate offering side evaluation of the Treasury
Obligations the aggregate net asset value of Fund Shares in the Trust, dividing
such sum by the number of Units outstanding and then adding a sales charge of
5.00% of the Public Offering Price (5.263% of the net amount invested). Money in
the Income and Principal Accounts other than money required to redeem previously
tendered Units will be added to the Public Offering Price.
After the initial public offering period, the Public Offering Price of the
Units will be computed by adding to the aggregate bid side evaluation of the
Treasury Obligations the aggregate net asset value of Fund Shares in the Trust,
dividing such sum by the number of Units outstanding and then adding a sales
charge of 5.00% of the Public Offering Price (5.263% of the net amount
invested). Money in the Income and Principal Accounts other than money required
to redeem previously tendered Units will be added to the Public Offering Price.
The Public Offering Price on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price as of the Date of
Deposit set forth in the 'Summary of Essential Information' in accordance with
fluctuations in the value of the Treasury Obligations and net asset value of the
Fund Shares in the Trust.
The Public Offering Price shall be determined for the Trust by the
Evaluator in the following manner: the aggregate value of the Units shall be
determined during the initial offering period on the basis of the offering
prices of the Treasury Obligations (determined by the Evaluator) and the net
asset value of the Fund Shares as determined by the Fund, and following the
initial offering period on the basis of the bid prices for the Treasury
Obligations (determined by the Evaluator) and the net asset value of the Fund
Shares as determined by the Fund.
On the Date of Deposit, the Public Offering Price per Unit (based on the
offering side evaluation of the Treasury Obligations and the net asset value of
Fund Shares in the Trust) exceeded the Redemption Price and the Sponsor's
Secondary Market Repurchase Price per Unit (each based upon the bid side
evaluation of the Treasury Obligations and the net asset value of Fund Shares in
the Trust) by the amounts set forth in 'Summary of Essential Information.'
PUBLIC DISTRIBUTION
During the initial public offering period (i) for Units issued on the Date
of Deposit and (ii) for additional Units issued after such 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
prior thereto, whereupon 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 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. Sales to dealers will be made at prices
which include a concession of 68% of the sales charge per Unit, but subject to
change from time to time at the discretion of the Sponsor (such price does not
include volume purchase discounts, which are available only to non-dealer
purchasers). The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
A dealer will receive a concession of the sales charge per Unit as set
forth under Volume Discount herein. Sales by a dealer will be aggregated with
the dealer receiving the greatest concession level for all Units sold by such
dealer up to a maximum of 75% of the sales load. In addition, a dealer who
purchases 40,000 or more Units on the initial date of the offering, for such
initial purchase only, will receive a dealer concession of 78% of the sales
charge.
SECONDARY MARKET
While not obligated to do so, it is the Sponsor's present intention to
maintain a secondary market for Units and to continuously offer to repurchase
Units from Unit Holders at the applicable Sponsor's Repurchase Price (see
'Summary of Essential Information'). The Sponsor's Repurchase Price is computed
by adding to the aggregate of the bid side evaluation of the Treasury
Obligations the net asset value of Fund Shares in the Trust, and cash on hand in
the Trust and dividends receivable on Fund Shares (other than cash deposited by
the Sponsor for the purchase of Securities) deducting therefrom amounts required
to redeem previously tendered Units and amounts required for distribution to
Unit Holders of record as of a date prior to the evaluation, accrued expenses of
the Trustee, Evaluator, and counsel, taxes and governmental charges, if any, and
any Reserve Account and then dividing the resulting sum by the number of Units
outstanding, as of the date of such computation. There is no sales charge
B-19
<PAGE>
incurred when a Unit Holder sells Units back to the Sponsor. Any Units
repurchased by the Sponsor at the Sponsor's Repurchase Price may be reoffered to
the public by the Sponsor at the then current Public Offering Price. Any profit
or loss resulting from the resale of such Units will be for the account of the
Sponsor.
If the supply of Units exceeds demand (or for any other business reason),
the Sponsor may, at any time, occasionally, from time to time, or permanently,
discontinue the repurchase of Units of this Series at the Sponsor's Repurchase
Price, without notice. In such event, although under no obligation to do so, the
Sponsor may, as a service to Unit Holders, offer to repurchase Units at the
'Redemption Price,' a price based on the current bid prices for the Treasury
Obligations and the net asset value of the Fund Shares. Alternatively, Unit
Holders may redeem their Units through the Trustee.
PROFIT OF SPONSOR
The Sponsor receives a sales charge on the Units as indicated herein in the
chart below under 'Volume Discount.' The Distributor will reimburse the Sponsor
for expenses incurred by the Sponsor in connection with the creation of the
Trust and the offering of Units of the Trust. On the sale of Units to dealers,
the Sponsor will retain the difference between the dealer concession and the
sales charge (see 'Public Distribution').
The Sponsor may have also realized a profit (or sustained a loss) on the
deposit of the Treasury Obligations in the Trust representing the difference
between the cost of the Treasury Obligations to the Sponsor and the cost of the
Treasury Obligations to the Trust. The Sponsor will deposit all Fund Shares into
the Trust at net asset value. (For a description of such profit (or loss) and
the amount of such difference, see 'Schedule of Portfolio Securities.') During
the initial offering period, to the extent additional Units continue to be
issued and offered for sale to the public, the Sponsor may realize additional
profit (or sustain a loss) due to daily fluctuations in the offering prices of
the Treasury Obligations and in the net asset value of the Fund Shares in the
Trust and thus in the Public Offering Price of Units received by the Sponsor.
Cash, if any, received by the Sponsor from the Unit Holders prior to the
settlement date for purchase of Units or prior to the payment for Securities
upon their delivery may be used in the Sponsor's business to the extent
permitted by applicable regulations and may be of benefit to the Sponsor.
The Sponsor may also realize profits (or sustain losses) while maintaining
a secondary market in the Units, in the amount of any difference between the
prices at which the Sponsor buys Units and the prices 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 upon prior notice to Unit Holders change the amount by which the
sales charge is reduced, or may discontinue the discount altogether.
The sales charges for the Trust in the primary and secondary market will be
reduced pursuant to the following graduated scale for sales to any person of at
least 2,000 Units.
<TABLE>
<CAPTION>
SALES CHARGE
PRIMARY AND SECONDARY MARKET
----------------------------------
PERCENT
OF PERCENT
PUBLIC OF NET
OFFERING AMOUNT DEALER
NUMBER OF UNITS PRICE INVESTED CONCESSION
- ---------------------------------------- -------- -------- ----------
<S> <C> <C> <C>
Less than 2,000 Units................... 5.00% 5.263% 65%
2,000-7,999 Units....................... 4.75% 4.986% 65%
8,000-19,999 Units...................... 4.25% 4.358% 70%
20,000-39,999 Units..................... 3.75% 3.896% 73%
40,000-79,999 Units..................... 3.00% 3.092% 75%
80,000 Units or more.................... 2.00% 2.041% 75%
</TABLE>
The reduced sales charges as shown on the chart above will apply to such
purchases of Units in any fourteen-day period which qualify for the volume
discount by the same person, including a 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 the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed for the purposes hereof to be
registered in the name of the purchaser. 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 based on the offering side evaluation of
the Treasury Obligations and the net asset value of Fund Shares in the Trust
plus a reduced sales charge of $5.00 per 100 Units, subject to a limit of 5% of
the Units.
B-20
<PAGE>
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of their Units of this Series
of the Government Securities Equity Trust for units of one or more of any other
series in the Prudential Securities Incorporated family of unit investment
trusts (except Series of Government Securities Equity Trust) or for any units of
any additional trusts that may from time to time be made available for such
exchange by the Sponsor (collectively referred to as the 'Exchange Trusts').
Such units may be acquired at prices based on reduced sales charges per unit.
The purpose of such reduced sales charge is to permit the Sponsor to pass on to
the Unit Holder who wishes to exchange Units the cost savings resulting from
such exchange of Units. The cost savings result from reductions in the time and
expense related to advice, financial planning and operational expense required
for the Exchange Option.
Exchange Trusts may have different investment objectives; a Unit Holder
should read the prospectus for the applicable Exchange Trust carefully to
determine its investment objective prior to exercise of this option.
This option will be available provided the Sponsor maintains a secondary
market in both the Units of this Series and units of the applicable Exchange
Trust and provided that 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 it is the Sponsor's present intention to maintain a
secondary market for the units of all such trusts, there is no obligation on its
part to do so. Therefore, there is no assurance that a market for units will in
fact exist on any given date on which a Unit Holder wishes to sell or exchange
his Units; thus there is no assurance that the Exchange Option will be available
to any Unit Holder. The Sponsor reserves the right to modify, suspend or
terminate this option at any time without further notice to Unit Holders. In the
event the Exchange Option is not available to a Unit Holder at the time he
wishes to exercise it, the Unit Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction from
the Unit Holder.
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.
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 evaluation price per unit of the securities in that portfolio and the
applicable sales charge of $15 per unit of the Exchange Trust. 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 plus a reduced sales charge of $25 per Exchange
Trust unit. The reduced sales charge for a unit holder of an Exchange Trust
exchanging into this series of Government Securities Equity Trust will be $.23
per Unit for Units purchased in the secondary market and $.37 per Unit for Units
purchased during the initial offering period. Exchange transactions will be
effected only in whole units; thus, any proceeds not used to acquire whole units
will be paid to the exchanging Unit Holder unless the Unit Holder adds the
amount of cash necessary to purchase one additional whole Exchange Trust unit.
Owners of units 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. To exercise this option, the owner should notify his retail broker. He
will be given a prospectus of each series in which he indicates 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 $1,100 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, i.e., a Unit Holder will recognize gain or loss
at the time of the exchange except that upon an exchange of Units of this Series
of the Government Securities Equity Trust for units of any other series of the
Exchange Trusts which are grantor trusts for United States federal income tax
purposes the Internal Revenue Service may seek to disallow any loss incurred
upon such exchange to the extent that the underlying securities in each trust
are substantially identical and the purchase of units of an Exchange Trust takes
place less than thirty-one days after the sale of the Units. Unit Holders are
advised to consult their own tax advisors as to the tax consequences of
B-21
<PAGE>
exchanging Units in their particular case. In particular, Unit Holders who
exchange Units of this Series of the Government Securities Equity Trust for
units of any other series of Exchange Trusts within 91 days of acquisition of
the Units should consult their tax advisors as to the possible application of
Section 852(f) of the Code to the exchange.
REINVESTMENT OF TRUST DISTRIBUTIONS
Distributions by the Trust, if any, of dividend income received by the
Trust, 12b-1 fee amounts paid by the Sponsor, distributions of any net capital
gains received in respect of Fund Shares and proceeds of the sale of Fund Shares
not used to redeem Units will be made quarterly on or shortly after the
Quarterly Distribution Date to Unit Holders of record on the Quarterly Record
Date immediately preceding such Quarterly Distribution Date. A Unit Holder will
receive such amounts in cash unless such Unit Holder directs United States Trust
Company of New York, acting as distribution agent, to invest such amounts on
behalf of the participating Unit Holder in Fund Shares at such shares' net asset
value, which shares will be subject to 12b-1 expenses. Investment in Fund Shares
is conditioned upon their lawful qualification for sale in the jurisdiction in
which the Unit Holder resides. There can be no assurance, however, that such
qualification will be obtained.
The appropriate prospectus will be sent to the Unit Holder. A Unit Holder's
election to participate in a reinvestment program will apply to all Units of the
Trust owned by such Unit Holder. The Unit Holder should read the prospectus for
the reinvestment program carefully before deciding to participate.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses and charges incurred prior to or in the establishment of the
Trust were incurred by the Sponsor and the Distributor.
FEES
The Trustee will receive for its services under the Indenture an annual fee
in the amount set forth in the 'Summary of Essential Information.'
For each evaluation of the Treasury Obligations in the Trust, the Evaluator
shall receive a fee as set forth in the 'Summary of Essential Information.'
The Trustee's fees and the Evaluator's fees are payable quarterly on or
before each Distribution Date from the Income Account, to the extent funds are
available therein and thereafter from the Principal Account. Any of such fees
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. The Trustee also receives
benefits to the extent that it holds funds on deposit in various non-interest
bearing accounts created under the Agreement.
OTHER CHARGES
The following additional charges are or may be incurred by the Trust as
more fully described in the Indenture: (a) fees of the Trustee for extraordinary
services, (b) expenses of the Trustee (including legal and auditing expenses)
and of counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trust and
the rights and interests of the Unit Holders, (e) indemnification of the Trustee
for any loss, liability or expenses incurred by it in the administration of the
Trust without gross negligence, bad faith, willful misfeasance or willful
misconduct on its part or reckless disregard of its obligations and duties, (f)
indemnification of the Sponsor for any losses, liabilities and expenses incurred
in acting as Sponsor or Depositor under the Indenture without gross negligence,
bad faith, willful misfeasance or willful misconduct or reckless disregard of
its obligations and duties, (g) expenditures incurred in contacting Unit Holders
upon termination of the Trust and (h) 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 subsequent to initial registration so long as the Sponsor is maintaining a
market for the Units. The accounts of the Trust will be audited not less
frequently than annually by independent public accountants selected by the
Sponsor. The cost of such audit will be an expense of the Trust.
The fees and expenses set forth herein are payable out of the Trust and
when paid by or owing to the Trustee are secured by a lien on the Trust. If the
cash dividend, capital gains distributions and 12b-1 fee payments made by the
Sponsor to the Trust are insufficient to provide for amounts payable by the
Trust, the Trustee has the power to sell Fund Shares (not Treasury Obligations)
to pay such amounts. To the extent Fund Shares are sold, the size of the Trust
will be reduced and the proportions of the types of Securities will change. Such
sales might be required at a time when Fund Shares would not otherwise be sold
and might result in lower prices than might otherwise be realized. Moreover, due
to the minimum amount in which Fund Shares may be required to be sold, the
proceeds of such sales may exceed the amount necessary for the payment of such
fees and expenses. If the cash dividends, capital gains distributions and 12b-1
fee payments made by the Sponsor to the Trust and proceeds of Fund Shares sold
after deducting the ordinary expenses are insufficient to pay the extraordinary
expenses of the Trust, the Trustee has the power to sell Treasury Obligations to
pay such extraordinary expenses.
B-22
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
REINVESTMENT APPLICATION
I/We hereby authorize and direct United States Trust Company of New York to
apply all distributions that I/we have
elected to be reinvested as a registered unitholder(s) of a Government
Securities Equity Trust Series towards the purchase
of additional shares of the Prudential Equity Fund, Inc.
I/WE HOLD GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
(This Series can only reinvest into the Prudential Equity Fund, Inc.)
The authorization shall continue in effect until written notice of revocation is
given by the certificate holder or his personal representatives.
Name(s) in Which Unit Trust is Registered
................................................................................
Social Security or Tax Identification Number
................................................................................
Signature DATE
................................................................................
Signature of Joint Tenant (if any) DATE
................................................................................
My/Our Brokerage Firm Is:
..................................................
My/Our Account Number Is:
..................................................
Forward application to: United States Trust Company of New York
P.O. Box 888 -- Cooper Station
New York, NY 10276
<PAGE>
[This page intentionally left blank]
<PAGE>
RIGHTS OF UNIT HOLDERS
CERTIFICATES
Ownership of Units is evidenced by registered certificates executed by the
Trustee and the Sponsor. Certificates are transferable or interchangeable upon
presentation at the corporate trust office of the Trustee, properly endorsed or
accompanied by an instrument of transfer satisfactory to the Trustee and
executed by the Unit Holder or his authorized attorney, together with the
payment of $2.00, if required by the Trustee (not currently required), or such
other amount as may be determined by the Trustee and approved by the Sponsor,
and any other tax or governmental charge imposed upon the transfer of
Certificates. The Trustee will replace any mutilated, lost, stolen or destroyed
Certificate upon proper identification, satisfactory indemnity and payment of
charges incurred. Any mutilated Certificate must be presented to the Trustee
before any substitute Certificate will be issued.
CERTAIN LIMITATIONS
The death or incapacity of any Unit Holder will not operate to terminate
the Trust nor entitle the legal representatives or heirs of such Unit Holder to
claim an accounting or to take any other action or proceeding in any court for a
partition or winding up of the Trust.
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 (see 'Administration of the Trust--Amendment' and 'Administration of
the Trust--Termination'). Unit Holders shall have no right to control the
operation or administration of the Trust in any manner.
DISTRIBUTIONS
The terms of the Treasury Obligations do not provide for periodic payment
to the holders thereof of the annual accrual of discount. To the extent that
dividends, distributions and/or 12b-1 fee payments from the Sponsor become
payable with respect to the Fund Shares held in the Trust, the Trustee will
collect such amounts as they become payable and credit such amounts to a
separate Income Account created pursuant to the Indenture. All other moneys
received by the Trustee with respect to the Fund Shares shall be credited to the
Principal Account. Quarterly distributions to each Unit Holder of record as of
the immediately preceding Quarterly Record Date will be made on the next
following Quarterly Distribution Date and shall consist of an amount
substantially equal to such Unit Holder's pro rata share of the distributable
cash balances in the Income Account and the Principal Account, if any, computed
as of the close of business on such Quarterly Record Date. No quarterly
distribution will be made if the amount available for distribution is less than
$2.50 per 100 Units, except that, no less than once a year, on a Quarterly
Distribution Date, the Trustee shall distribute the entire cash balances in the
Principal and Income Accounts. All funds collected or received will be held by
the Trustee in trust without interest to Unit Holders as part of the Trust until
required to be disbursed in accordance with the provisions of the Indenture.
Such funds will be segregated by separate recordation on the trust ledger of the
Trustee so long as such practice preserves a valid preference of Unit Holders
under the bankruptcy laws of the United States, or if such preference is not
preserved, the Trustee shall handle such funds in such other manner as shall
constitute the segregation and holding thereof in trust within the meaning of
the Investment Company Act of 1940, as the same may be from time to time
amended. To the extent permitted by the Indenture and applicable banking
regulations, such funds are available for use by the Trustee pursuant to normal
banking procedures.
The Trustee is authorized by the Indenture to withdraw from the Principal
Account to the extent funds are not sufficient in the Income Account such
amounts as it deems necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of the Trust, which amounts will be
credited to a separate Reserve Account. If the Trustee determines that the
amount in the Reserve Account is greater than the amount necessary for payment
of any taxes or other governmental charges, it will promptly recredit the excess
to the Account from which it was withdrawn. In addition, the Trustee may
withdraw from the Income Account, to the extent available, that portion of the
Redemption Price which represents income.
The balance paid on any redemption, including income, if any, shall be
withdrawn from the Principal Account of the Trust to the extent that funds are
available. If such available balance is insufficient, the Trustee is empowered
to sell Securities in order to provide moneys for redemption of Units tendered
(see 'Rights of Unit Holders--Redemption').
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:
dividends and other cash amounts received, deductions for payment of applicable
taxes and for fees and expenses of the Trust, redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount
B-23
<PAGE>
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (2) as to the Principal Account: the dates of
disposition and identity of any Securities and the net proceeds received
therefrom, deductions for payments of applicable taxes and for fees and expenses
of the Trust and redemptions of Units, and 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) a list of the Securities held and
the number of Units outstanding on the last business day of such calendar year;
(4) the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; (5) amounts actually distributed during such calendar
year from the Income Account and from the Principal Account, separately stated,
expressed both as total dollar amounts and as dollar amounts representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; and (6) an annual report of original issue discount accrual.
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.
REDEMPTION
Tender of Units
Units may be tendered to the Trustee for redemption at its unit investment
trust office at 770 Broadway, New York, New York 10003, upon delivery of a
request for redemption and the Certificates for the Units requested to be
redeemed and payment of any relevant tax. At the present time there are no
specific taxes related to the redemption of the Units. No redemption fee will be
charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
cancelled.
Certificates for Units to be redeemed must be properly endorsed or
accompanied by a written instrument of transfer, although redemptions without
the necessity of Certificate presentation will be effected for record Unit
Holders for whom Certificates have not been issued. Unit Holders must sign
exactly as their name appears on the face of the Certificate with the 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 or other financial
institution acceptable to the Trustee, if any. 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, the
Unit Holder will be entitled to receive in cash 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' on the date of tender (see
'Redemption--Computation of Redemption Price per Unit'). The 'date of tender' is
deemed to be the date on which Units are received by the Trustee, except that as
regards Units received after the Evaluation Time, the date of tender is the next
day on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
There is no sales charge incurred when a Unit Holder tenders his Units to
the Trustee for redemption. All amounts paid on redemption representing income
will be withdrawn from the Income Account to the extent moneys are available;
all other amounts will be paid from the Principal Account. The Trustee is
required by the Indenture to sell Fund Shares and Treasury Obligations, to the
extent possible in the same ratio as the ratio of Fund Shares and Treasury
Obligations then held in the Trust, in order to provide moneys for redemption of
Units tendered. To the extent Securities are sold, the size of the Trust will be
reduced. Such sales could result in a loss to the Trust. The redemption of a
Unit for cash will constitute a taxable event for the Unit Holder under the Code
(see 'Tax Status of the Trust').
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 bid in the
secondary market, the Sponsor, prior to the close of business on the second
succeeding business day, may purchase any Units tendered to the Trustee for
redemption at the price so bid by making payment therefor to the Unit Holder 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., the Unit
Holder 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 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 subsequent to its
acquisition of such Units (see 'Public Offering of Units--Profit of Sponsor').
B-24
<PAGE>
Computation of Redemption Price per Unit
The Redemption Price per Unit is determined as of the Evaluation Time on
the date any such determination is made. The Redemption Price is each Unit's pro
rata share, determined by the Trustee, of the sum of:
(1) the aggregate bid side evaluation of the Treasury Obligations in
the Trust, as determined by the Evaluator, and the net asset value of the
Fund Shares in the Trust determined as of the Evaluation Time set forth in
the 'Summary of Essential Information'; and
(2) cash on hand in the Trust and dividends receivable on Fund Shares
(other than cash deposited by the Sponsor for the purchase of Securities);
less amounts representing (a) accrued taxes and governmental charges payable out
of the Trust, (b) the accrued expenses of the Trust, and (c) cash held with
respect to previously tendered Units or for distribution to Unit Holders of
record as of a date prior to the evaluation, and (d) any Reserve Account
('Redemption Price').
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 and 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 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.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION PRICE
While the Public Offering Price of Units during the initial offering period
is determined on the basis of the current offering prices of the Treasury
Obligations and the net asset value of Fund Shares, the Public Offering Price of
Units in the secondary market and the Redemption Price of Units are determined
on the basis of the current bid prices of the Treasury Obligations and the net
asset value of the Fund Shares. On the Date of Deposit, the Public Offering
Price (which includes a sales charge) exceeded the Redemption Price by the
amount indicated under 'Summary of Essential Information.' The bid prices for
the Securities are expected to be less than the offering prices. The amount
realized by a Unit Holder upon any redemption of Units may be less than the
price paid by him for such Units.
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.
Prudential Securities is distributor for Prudential Government Securities
Trust (Intermediate Term Series), The Target Portfolio Trust, and for Class B
shares of Prudential Adjustable Rate Securities Fund, Inc., and for Class B and
C shares of The Blackrock Government Income Trust, Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund),
Prudential Allocation Fund, Prudential California Municipal Fund (California
Income Series and California Series), Prudential Diversified Bond Fund, Inc.,
Prudential Europe Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential
Equity Income Fund, Prudential Global Fund, Inc., Prudential Global Genesis
Fund, Inc., Prudential Global Natural Resources Fund, Inc., Prudential GNMA
Fund, Inc., Prudential Government Income Fund, Inc., Prudential Growth
Opportunity Fund, Inc., Prudential High Yield Fund, Inc., Prudential
Income Vertible(Registered) Fund, Inc., Prudential Intermediate Global Income
Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund,
Prudential Municipal Series Fund (except Connecticut Money Market Series,
Massachusetts Money Market Series, New York Money Market Series and New Jersey
Money Market Series), Prudential National Municipals Fund, Inc., Prudential
Pacific Growth Fund, Inc., Prudential Short-Term Global Income Fund, Inc.,
Prudential Strategist Fund, Inc., Prudential Structured Maturity Fund, Inc.,
Prudential U.S. Government Fund and Prudential Utility Fund, Inc.
On October 21, 1993, Prudential Securities entered into an omnibus
settlement with the Securities and Exchange Commission (the 'SEC'), state
securities regulators (with the exception of the Texas Securities Commissioner
who joined the settlement on January 18, 1994) and the National Association
of Securities Dealers, Inc. (the 'NASD') to resolve allegations that from 1980
B-25
<PAGE>
through 1990 Prudential Securities sold certain limited partnership interests in
violation of securities laws to persons for whom such securities were not
suitable and misrepresented the safety, potential returns and liquidity of these
investments. Without admitting or denying the allegations asserted against it,
Prudential Securities consented to the entry of an SEC Administrative Order
which stated that Prudential Securities conduct violated the federal securities
laws, directed Prudential Securities to cease and desist from violating the
federal securities laws, pay civil penalties, and adopt certain remedial
measures to address the violations.
Pursuant to the terms of the SEC settlement, Prudential Securities agreed
to the imposition of $10,000,000 civil penalty, established a settlement fund in
the amount of $300,000,000 and procedures to resolve legitimate claims for
compensatory damages by purchasers of the partnership interests. Prudential
Securities settlement with the state securities regulators included an agreement
to pay a penalty of $500,000 per jurisdiction. Prudential Securities consented
to a censure and to the payment of a $5,000,000 fine in settling the NASD
action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that Prudential
Securities committed fraud in connection with the sale of certain limited
partnership interests in violation of federal securities laws. An agreement was
simultaneously filed to defer prosecution of these charges for a period of three
years from the signing of the agreement, provided that Prudential Securities
complies with the terms of the agreement. If, upon completion of the three year
period, Prudential Securities has complied with the terms of the agreement, no
prosecution will be instituted by the United States for the offenses charged in
the complaint. If on the other hand, during the course of the three year period,
Prudential Securities violates the terms of the agreement, the U.S. Attorney can
then elect to pursue these charges. Under the terms of the agreement, Prudential
Securities agreed, among other things, to pay an additional $300,000,000 into
the fund established by the SEC to pay restitution to investors who purchased
certain Prudential Securities limited partnership interests.
LIMITATIONS ON LIABILITY
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Indenture, but will be under no liability to Unit
Holders for taking any action or refraining from taking any action in good faith
or for errors in judgment and will not be responsible in any way for any
default, failure or defect in any Security or for depreciation or loss incurred
by reason of the sale of any Securities, except in cases of willful misfeasance,
bad faith, gross negligence or reckless disregard for its obligations and duties
(see 'Sponsor--Responsibility').
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 in the Trust for the purpose of redeeming Units tendered for
redemption and to dispose of Fund Shares to pay Trust expenses.
The proceeds resulting from the disposition of any Security in the Trust
will be distributed as set forth under 'Rights of Unit Holders--Distributions'
to the extent such proceeds are not utilized for the purpose of redeeming Units
or paying Trust expenses.
RESIGNATION
If at any time the Sponsor shall resign under the Indenture or shall fail
to perform or be incapable of performing its duties thereunder or shall become
bankrupt or its affairs are taken over by public authorities, the Indenture
directs the Trustee to either (1) appoint a successor Sponsor or Sponsors at
rates of compensation deemed reasonable by the Trustee not exceeding amounts
prescribed by the Securities and Exchange Commission, (2) act as Sponsor itself
without terminating the Trust or (3) terminate the Trust. The Trustee will
promptly notify Unit Holders of any such action.
TRUSTEE
The Trustee is United States Trust Company of New York, with its principal
place of business at 114 West 47th Street, New York, New York 10036 and a unit
investment trust office at 770 Broadway, New York, New York 10003. United States
Trust Company of New York has, since its establishment in 1853, engaged
primarily in the management of trust and agency accounts for individuals and
corporations. The Trustee 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. In connection with the storage and
handling of certain Securities deposited in the Trust, the Trustee may use the
services of The Depository Trust Company. These services may include safekeeping
of the Securities and coupon-clipping, computer book-entry transfer and
institutional delivery services. The Depository Trust Company is
B-26
<PAGE>
a limited purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System and a clearing agency
registered under the Securities Exchange Act of 1934.
LIMITATIONS ON LIABILITY
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the disposition of any moneys, Securities or
Certificates or in respect of any evaluation or for any action taken in good
faith reliance on prima facie properly executed documents except in cases of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties. In addition, the Indenture provides that the Trustee
shall not be personally liable for any taxes or other governmental charges
imposed upon or in respect of 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 such sale of Fund
Shares or by reason of the failure of the Sponsor to give directions to the
Trustee.
Additionally, 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. Fund Shares will be sold first unless the Sponsor is
able to sell Treasury Obligations and Fund Shares in the proportionate
relationship between the maturity values of the Treasury Obligations and the
number of Fund Shares.
Amounts received by the Trust upon the sale of any Security under the
conditions set forth above 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 Quarterly Record
Date next prior to a Quarterly 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
other reason that the Sponsor determines to be in the best interest of the Unit
Holders. Such resignation or removal shall become effective upon the acceptance
of appointment by the successor trustee. If upon resignation of a trustee no
successor has been appointed and has accepted the appointment within thirty days
after notification, the retiring trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of a
trustee becomes effective only when the successor trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor trustee. A successor trustee has the same rights and duties as the
original trustee except to the extent, if any, that the Indenture is modified as
permitted by its terms.
EVALUATOR
The Evaluator is Kenny S&P Evaluation Services, a division of J.J. Kenny
Co., Inc., with main offices located at 65 Broadway, New York, New York 10006.
LIMITATIONS ON LIABILITY
The Trustee, Sponsor and Unit Holders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Indenture shall be made in good faith
upon the basis of the best information available to it; provided, however, that
the Evaluator shall be under no liability to the Trustee, Sponsor or Unit
Holders for errors in judgment. The Evaluator shall, however, be liable for its
own willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Indenture.
RESPONSIBILITY
The Indenture requires the Evaluator to evaluate the Treasury Obligations
on the basis of their bid prices on the last business day of June and December
in each year, on the day on which any Unit is tendered for redemption and on any
other day such evaluation is desired by the Trustee or is requested by the
Sponsor. For information relating to the responsibility of the Evaluator to
evaluate the Treasury Obligations, see 'Public Offering of Units--Public
Offering Price.'
B-27
<PAGE>
RESIGNATION
The Evaluator may resign or may be removed by the Sponsor, and the Sponsor
is to use its best efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment by the
successor Evaluator. If upon resignation of the Evaluator no successor accepts
appointment within thirty days after notice of resignation, the Evaluator may
apply to a court of competent jurisdiction for the appointment of a successor.
AMENDMENT AND TERMINATION OF THE INDENTURE
AMENDMENT
The Indenture may be amended by the Trustee and the Sponsor without the
consent of Unit Holders (a) to cure any ambiguity or to correct or supplement
any provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the Securities and Exchange Commission
or any successor governmental agency, and (c) to make such other provisions as
shall not adversely affect the interest of the Unit Holders; provided that the
Indenture may also be amended by the Sponsor and the Trustee with the consent of
Unit Holders evidencing 51% of the Units at the time outstanding for the
purposes of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of Unit Holders. In no event shall the Indenture be amended so as to increase
the number of Units issuable thereunder except as the result of the additional
deposits of Securities, to permit the deposit of Securities after the Date of
Deposit except in accordance with the terms and conditions of the Indenture as
initially adopted, to permit any other acquisition of securities or other
property by the Trustee either in addition to or in substitution for any of the
Securities on hand in the Trust or to permit the Trustee to vary the investment
of the 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 so as to adversely affect the characterization of the
Trust as a grantor trust for Federal income tax purposes. In the event of any
amendment, the Trustee is obligated to promptly notify all Unit Holders of the
substance of such amendment.
TERMINATION
The Trust may be terminated at any time by the consent of the holders of
51% of the Units or by the Trustee upon the direction of the Sponsor when the
aggregate net value of all Trust assets as shown by an evaluation made as
described under 'Evaluator--Responsibility' is less than 40% of the aggregate
maturity values of the Treasury Obligations deposited in the Trust on the Date
of Deposit and subsequent thereto calculated after the most recent deposit of
Treasury Obligations in the Trust or if there has been a material change in the
Fund's objectives or if Replacement Treasury Obligations are not acquired.
However, in no event may the Trust continue beyond the Mandatory Termination
Date set forth under 'Summary of Essential Information.' In the event of
termination, written notice thereof will be sent by the Trustee to all Unit
Holders.
Within a reasonable period after termination, the Trustee will sell any
Securities remaining in the Trust (other than Fund Shares for which an in kind
distribution has been requested) and, after paying all expenses and charges
incurred by the Trust, will distribute to each Unit Holder, upon surrender for
cancellation of his Certificate for Units, his pro rata share of: (i) the amount
realized upon disposition of the Fund Shares unless the Unit Holder notifies the
Trustee in writing of his preference for distribution 'in kind,' (ii) the amount
realized upon the disposition or maturity of the Treasury Obligations and (iii)
any other assets of the Trust. A Unit Holder may invest the proceeds of the
Treasury Obligations in Fund Shares at such shares' net asset value, which shall
be subject to 12b-1 expenses. The sale of the Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time and, therefore, the amount realized by
a Unit Holder on termination may be less than the principal amount of Treasury
Obligations represented by the Units held by such Unit Holder.
TAX IMPACT OF IN KIND DISTRIBUTION UPON TERMINATION
Under the position taken by the Internal Revenue Service in Revenue Ruling
90-7, a distribution by the Trustee to a Unit Holder (or to his agent) of his
pro rata share of the Fund Shares in kind upon termination of the Trust will not
be a taxable event to the Unit Holder. Such Unit Holder's basis for Fund Shares
so distributed (other than any Fund Shares purchased with his pro rata share of
the proceeds of Treasury Obligations) will be equal to his basis for the same
Fund Shares (previously represented by his Units) prior to such distribution and
his holding period for such Fund Shares will be the shorter of the period during
which he held his Units and the period for which the Securities were held in the
Trust. A Unit Holder will have a taxable gain or loss, which will be a capital
gain or loss except in the case of a dealer or a financial institution, when the
Unit Holder disposes of such Securities in a taxable transfer.
B-28
<PAGE>
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Messrs.
Cahill Gordon & Reindel, a partnership including a professional corporation, 80
Pine Street, New York, New York 10005, as special counsel for the Sponsor.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Portfolio Securities
of the Government Securities Equity Trust included in this Prospectus have been
audited by Deloitte & Touche LLP, certified public accountants, as stated in
their report appearing herein, and are included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
B-29
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THIS INVESTMENT COMPANY NOT CONTAINED IN THIS
PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. 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.
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Essential Information...................................... A- 4
Independent Auditors' Report.......................................... A- 5
Statement of Financial Condition...................................... A- 6
Schedule of Portfolio Securities...................................... A- 7
The Trust............................................................. B- 1
Trust Formation................................................... B- 1
Securities Selection.............................................. B- 2
Stripped U.S. Treasury Obligations................................ B- 2
Prudential Equity Fund, Inc....................................... B- 3
General Information Regarding the Fund............................ B- 3
Investment Policies and Restrictions of the Fund.................. B- 5
Net Asset Value of the Fund Shares................................ B-12
The Fund's Investment Manager..................................... B-12
The Fund's Plan of Distribution................................... B-13
Risk of Investment in Units....................................... B-14
Fund Risk Factors................................................. B-15
The Units......................................................... B-15
Tax Status of the Trust............................................... B-16
Retirement Plans...................................................... B-18
Public Offering of Units.............................................. B-19
Public Offering Price............................................. B-19
Public Distribution............................................... B-19
Secondary Market.................................................. B-19
Profit of Sponsor................................................. B-20
Volume Discount................................................... B-20
Employee Discount................................................. B-20
Exchange Option....................................................... B-21
Federal Income Tax Consequences................................... B-21
Reinvestment of Trust Distributions................................... B-22
Expenses and Charges.................................................. B-22
Initial Expenses.................................................. B-22
Fees.............................................................. B-22
Other Charges..................................................... B-22
Rights of Unit Holders................................................ B-23
Certificates...................................................... B-23
Certain Limitations............................................... B-23
Distributions..................................................... B-23
Reports and Records............................................... B-23
Redemption........................................................ B-24
Comparison of Public Offering Price and Redemption
Price............................................................. B-25
Sponsor............................................................... B-25
Limitations on Liability.......................................... B-26
Responsibility.................................................... B-26
Resignation....................................................... B-26
Trustee............................................................... B-26
Limitations on Liability.......................................... B-27
Responsibility.................................................... B-27
Resignation....................................................... B-27
Evaluator............................................................. B-27
Limitations on Liability.......................................... B-27
Responsibility.................................................... B-27
Resignation....................................................... B-28
Amendment and Termination of the Indenture............................ B-28
Amendment......................................................... B-28
Termination....................................................... B-28
Tax Impact of In Kind Distribution Upon Termination............... B-28
Legal Opinions........................................................ B-29
Independent Auditors.................................................. B-29
</TABLE>
[LOGO]
SPONSOR
-------
PRUDENTIAL SECURITIES INCORPORATED
ONE SEAPORT PLAZA
199 WATER STREET
NEW YORK, NEW YORK 10292
TRUSTEE
-------
UNITED STATES TRUST
COMPANY OF NEW YORK
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
EVALUATOR
---------
KENNY S&P EVALUATION SERVICES,
A DIVISION OF
J.J. KENNY CO., INC.
65 BROADWAY
NEW YORK, NEW YORK 10006
FUND SHARES
---- ------
PRUDENTIAL EQUITY FUND, INC.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material
omitted from this EDGAR filing due to ASCII-incompatibility and
cross-references this material to the location of each occurrence in the
text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
------------------------ ---------------------
Each Investment Provides a Folio page A-8
Different Opportunity Chart No. 1
This chart shows in graph form,
the growth of $1 invested on
12/31/25 to 12/31/93 for Small
Stocks ($2,757), Common Stocks
($800), Long-Term Bonds ($28),
Treasury Bills ($12) and
Inflation ($8).
The Historical Growth of Folio page A-8
Common Stocks, Long-Term Chart No. 2
Government Bonds and Inflation.
This chart shows in graph form
the growth of $1 invested at the
end of 1973 to the end of 1993 for
Common Stocks (about $11), Long-Term
Government Bonds (about $7) and
Inflation (CPI) (about $3).
<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.*
Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. (as
Evaluator).
THE FOLLOWING EXHIBITS:
<TABLE>
<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 March 5, 1993.
**** Ex-4.a -- Trust Indenture and Agreement dated May 16, 1989.
* Ex-4.b -- Reference Trust Agreement dated February 22, 1995.
* Ex-5 -- Opinion of counsel as to the legality of the securities being registered.
* Ex-23 -- Consent of Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. (as Evaluator).
***** Ex-24 -- Powers of Attorney executed by a majority of the Board of Directors of Prudential Securities
Incorporated.
* Ex-27 -- Financial Data Schedule
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. 8-16267).
** 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.
</TABLE>
- ------------
* Filed herewith.
** 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 Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** 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 Government Securities Equity
Trust Series 5, Registration No. 33-57992.
**** 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 Government Securities Equity
Trust Series 1, Registration No. 33-25710.
***** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust
Series 172, Registration No. 33-54681.
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
GOVERNMENT SECURITIES EQUITY TRUST SERIES 8, HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK ON THE
22ND DAY OF FEBRUARY, 1995.
GOVERNMENT SECURITIES EQUITY TRUST
Series 8
(Registrant)
By PRUDENTIAL SECURITIES
INCORPORATED
(Depositor)
By /s/ KENNETH SWANKIE
------------------------------
Kenneth Swankie
First Vice President,
Manager--Unit Investment
Trust Department
By the following persons,* who
constitute a majority of the Board
of Directors of Prudential
Securities Incorporated
ALAN D. HOGAN
GEORGE A. MURRAY
JOHN P. MURRAY
LELAND B. PATON
VINCENT T. PICA
RICHARD REDEKER
HARDWICK SIMMONS
LEE B. SPENCER, JR.
By /s/ KENNETH SWANKIE
----------------------------------
(KENNETH SWANKIE, FIRST VICE
PRESIDENT, MANAGER--UNIT
INVESTMENT TRUST DEPARTMENT,
AS AUTHORIZED SIGNATORY FOR
PRUDENTIAL SECURITIES
INCORPORATED AND ATTORNEY-IN-FACT
FOR THE PERSONS LISTED ABOVE)
- ------------
* Pursuant to Powers of Attorney previously filed.
II-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 of our report dated February 22, 1995, accompanying
the financial statements of the Government Securities Equity Trust Series 8,
included herein and to the reference to our Firm as experts under the heading
'Auditors' in the prospectus which is a part of this registration statement.
DELOITTE & TOUCHE LLP
New York, New York
February 22, 1995
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT INDEX PAGE NO.
- -------------- ------------------------------------------------------------ --------
<S> <C> <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 March 5,1993.
****Ex-4.a --Trust Indenture and Agreement dated May 16, 1989.
*Ex-4.b --Reference Trust Agreement dated April 20, 1994.
*Ex-5 --Opinion of counsel as to the legality of the securities
being registered.
*Ex-23 --Consent of Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. (as Evaluator).
*****Ex-24 --Powers of Attorney executed by a majority of the Board of
Directors of Prudential Securities Incorporated.
*Ex-27 --Financial Data Schedule.
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. 8-16267).
**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.
</TABLE>
- ------------
* Filed herewith.
** 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 Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** 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 Government Securities Equity
Trust Series 5, Registration No. 33-57992.
**** 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 Government Securities Equity
Trust Series 1, Registration No. 33-25710.
***** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Series 172, Registration No. 33-54681.
EX-4.B
Executed in 7 Parts
Counterpart No. ( )
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 8
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated February 22,
1995 among Prudential Securities Incorporated, as Depositor,
United States Trust Company of New York, as Trustee, and Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc., as
Evaluator, sets forth certain provisions in full and
incorporates other provisions by reference to the document
entitled "Government Securities Equity Trust, Trust Indenture
and Agreement" (the "Basic Agreement") dated May 16, 1989.
Such provisions as are incorporated by reference constitute a
single instrument (the "Indenture").
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, and
the Evaluator agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Basic Agreement are herein
incorporated by reference in their entirety and shall be deemed
to be a part of this instrument as fully and to the same extent
as though said provisions had been set forth in full in this
instrument except that the Basic Agreement is hereby amended in
the following manner:
(a) Reference to Standard & Poor's Corporation in its
capacity as Evaluator is replaced by Kenny S&P
Evaluation Services, a division of J.J. Kenny Co.,
Inc., throughout the Basic Agreement.
(b) Reference to Prudential-Bache Securities Inc. in its
capacity as Depositor is replaced by Prudential
Securities Incorporated throughout the Basic
Agreement.
(c) All references to "4:15 p.m." and "4:15 p.m. New York
Time" will be replaced by "the Evaluation Time" (as
defined in Article I, Section 1.01, paragraph (8))
throughout the Basic Agreement.
(d) Article II, entitled "Administration of Trust",
Section 2.05 Deposit of Additional Securities shall
be amended by adding the following sentence after the
third sentence:
"The parties hereto agree that a Supplementary
Schedule to the Reference Trust Agreement may be
delivered by telecopier and that such delivery shall
have the same force and effect as the delivery of an
original executed document."
(e) Article III, entitled "Administration of Trust",
Section 3.04 Reserve Account shall be amended by
adding "(a)" at the beginning of the first sentence
and by adding the following paragraph:
"(b) The Trustee also shall be entitled from
time to time to withdraw from the cash on deposit in
the Principal Account such amounts as it and the
Depositor shall jointly deem necessary to establish a
reserve for any applicable expenses that may be or
become payable out of the Trust. Such amounts so
withdrawn shall be credited to a separate account
which shall be known as the "Reserve Expense
Account". The Trustee shall not be required to
distribute to the Unit Holders any of the amounts in
the Reserve Expense Account; provided, however, that
if it shall, in its sole discretion, determine that
such amounts are no longer necessary to reserve for
payment of any applicable expenses, then it shall
promptly deposit such amounts in the account from
which withdrawn or if the Trust shall have terminated
or shall be in the process of termination, the
Trustee shall distribute the same in accordance with
Section 9.03 to each Unit Holder according to such
Holder's interest in the Reserve Expense Account."
(f) Article VI, entitled "Trustee", Section 6.04
Compensation shall be amended by deleting the
following sentence from the text:
"In the event the proceeds of such sale are
insufficient to pay ordinary expenses of the Trust,
such deficit shall be paid by the distributor of Fund
Shares without right to reimbursement for such
amounts paid"
(g) Article IX, entitled "Additional Covenants;
Miscellaneous Provisions", Section 9.03 Termination
shall be amended by adding the words "and any amounts
which the Trustee and Depositor have jointly agreed
to deposit in the Reserve Expense Account" after the
words "other governmental charges" in paragraph
(a)(iii), and by adding the words ", Reserve Expense"
after the word "Reserve" in the paragraph immediately
following paragraph (e)."
(h) The last sentence of the second paragraph of Section
3.05 is amended to add the following after the word
"Date":
"and, if so directed by the Depositor, on one
additional date in December following receipt by the
Trustee of a November or December distribution on the
Fund Shares, such date to be designated by the
Depositor, to Unit Holders of record on a date
designated by the Depositor"
* * * * *
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are
hereby agreed to:
(a) The Trust is denominated Government
Securities Equity Trust Series 8.
(b) The term "Fund" shall mean shares ("Fund
Shares") of the Prudential Equity Fund, Inc.
(c) The contracts for the purchase of Treasury
Obligations and Fund Shares listed in Schedule A
hereto are those which, subject to the terms of this
Indenture, have been or are to be deposited in trust
under this Indenture as of the date hereof.
(d) The term "Depositor" shall mean Prudential
Securities Incorporated.
(e) The aggregate number of Units referred to
in Sections 2.03 and 9.01 of the Basic Agreement is
100,000 as of the date hereof.
(f) A Unit of the Trust is hereby declared
initially equal to 1/100,000th of the Trust.
(g) The term "First Settlement Date" shall mean
March 2, 1995.
(h) The terms "Quarterly Computation Date" and
"Quarterly Record Date" shall mean February 1, May 1,
August 1 and November 1.
(i) The term "Quarterly Distribution Date"
shall mean February 15, May 15, August 15 and
November 15.
(j) The term "Termination Date" shall mean
November 15, 2006.
(k) The Trustee's Annual Fee shall be: $0.60
(per 100 Units) for 5,000,000 and above units
outstanding; $0.75 (per 100 Units) for 3,000,000 -
4,999,999 units outstanding; $0.90 (per 100 Units)
for 1,500,000 - 2,999,999 units outstanding; $1.00
(per 100 Units) for 1,499,999 and below units
outstanding. In calculating the Trustee's Annual
Fee, the fee applicable to the number of units
outstanding shall apply to all units outstanding.
(l) For purposes of this Series -- Government
Securities Equity Trust Series 8 -- the form of
Certificate set forth in this Indenture shall be
appropriately modified to reflect the title of this
Series and such of the Special Terms and Conditions
of Trust set forth herein as may be appropriate.
[Signatures and acknowledgments on separate pages]
The Schedule of Portfolio Securities in Part A of the prospectus included in
this Registration Statement for Government Securities Equity Trust Series 8 is
hereby incorporated by reference herein as Schedule A hereto.
Exhibit 5
[Letterhead of Cahill Gordon & Reindel]
February 22, 1995
(212) 701-3000
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
Re: Government Securities
Equity Trust Series 8
Gentlemen:
We have acted as special counsel for you as
Depositor of the Government Securities Equity Trust
Series 8 (the "Trust"), in connection with the issuance
under the Trust Indenture and Agreement, dated May 16,
1989, and related Reference Trust Agreement, dated
February 22, 1995 (such Trust Indenture and Agreement and
Reference Trust Agreement collectively referred to as the
"Indenture"), among you, as Depositor, United States Trust
Company of New York, as Trustee, and Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as
Evaluator, of units of fractional undivided interest
in said Trust (the "Units") comprising the Units of
Government Securities Equity Trust Series 8.
In rendering our opinion expressed below, we have relied in
part upon the opinions and representations of your officers
and upon opinions of counsel to Prudential Securities
Incorporated.
Based upon the foregoing, we advise you that, in
our opinion, when the Indenture has been duly executed and
delivered on behalf of the Depositor and the Trustee and
when the certificate evidencing the Units has been duly
executed and delivered by the Depositor and the Trustee in
accordance with the Indenture, the Units will be legally
issued, fully paid and nonassessable by the Trust, and will
constitute valid and binding obligations of the Trust and
the Depositor in accordance with their terms, except that
enforceability of certain provisions thereof may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors
generally and by general equitable principles.
We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement (File
No. 33-56297) relating to the Units referred to above and
to the use of our name and to the reference to our firm in
said Registration Statement and the related Prospectus.
Very truly yours,
Cahill Gordon & Reindel
Exhibit 23
[Letterhead of Kenny S&P Evaluation Services]
February 22, 1995
Prudential Securities Incorporated
One New York Plaza - 14th Flr.
New York, NY 10292-2014
RE: Government Securities Equity Trust
Series 8
Amendment No. 2
Gentlemen:
We have examined Registration Statement File No.
33-56297 for the above-captioned trust. We hereby
acknowledge that Kenny S&P Evaluation Services, a division
of J.J. Kenny Co., Inc., is currently acting as the
evaluator for the trust. We hereby consent to the use in
the Registration Statement of the reference to Kenny S&P
Evaluation Services, a division of J.J. Kenny Co., Inc., as
evaluator.
You are hereby authorized to file a copy of this
letter with the Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
Frank A. Ciccotto
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR GOVERNMENT SECURITIES EQUITY TRUST SERIES 8 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<SERIES>
<NAME> GOVERNMENT SECURITIES EQUITY TRUST SERIES 8
<S> <C>
<NUMBER> 8
<MULTIPLIER> 1
<FISCAL-YEAR-END> FEB-22-1995
<PERIOD-START> FEB-22-1995
<PERIOD-END> FEB-22-1995
<PERIOD-TYPE> OTHER
<INVESTMENTS-AT-COST> 1,187,511
<INVESTMENTS-AT-VALUE> 1,187,511
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,187,511
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,187,511
<SHARES-COMMON-STOCK> 100,000
<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> 0
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<NET-ASSETS> 1,187,511
<DIVIDEND-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 100,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
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<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
