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As filed with the Securities and Exchange Commission on December 11, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
_____________________
A. Exact Name of Trust:
GOVERNMENT SECURITIES
EQUITY TRUST SERIES 9
B. Name of depositor:
PRUDENTIAL SECURITIES INCORPORATED
C. Complete address of depositor's principal executive office:
One Seaport Plaza
199 Water Street
New York, New York 10292
D. Name and complete address of agent for service:
Copy to:
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
E. Title and amount of securities being registered:
An indefinite number of Units of GOVERNMENT SECURITIES
EQUITY TRUST SERIES 9
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 immediately upon filing pursuant to Rule 487.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall hereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
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)
Form N-8B-2 Form S-6
Item Number Heading In Prospectus
I. Organization and General Information
1. (a) Name of Trust..................... Prospectus front cover
(b) Title of securities issued........ 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............................ *
II. General Description of the Trust and
Securities of the Trust
10. (a) Registered or bearer securities... *
(b) Cumulative or distributive
securities........................ *
________________
* Inapplicable, answer negative or not required.
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(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....... *
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 Pro-
gram; 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
________________
* Inapplicable, answer negative or not required.
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(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
________________
* Inapplicable, answer negative or not required.
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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
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..................... *
III. Organization, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor............. Sponsor
26. Fees received by depositor............ *
27. Business of depositor................. Sponsor
28. Certain information as to
officials and affiliated
persons of depositor................ Contents of Registration
Statement -- Part II
29. Companies controlling depositor....... Sponsor
30. Persons controlling depositor......... *
31. Payments by depositor for certain
services rendered to trust.......... *
32. Payments by depositor for
________________
* Inapplicable, answer negative or not required.
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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... *
________________
* Inapplicable, answer negative or not required.
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44. (a) Method of valuation............... Summary of Essential
Information; Public Offering
of Units -- Public Offering
Price; Public Offering of
Units -- Public Distribu-
tion; Offering of Units --
Secondary Markets
(b) Schedule as to offering price..... *
(c) Variation in offering price
to certain persons.............. Public Offering of Units --
Public Distribution; Public
Offering of Units -- Volume
Discount; Public Offering of
Units -- Employee Discount;
Exchange Option
45. Suspension of redemption rights....... *
46. (a) Redemption Valuation.............. Summary of Essential
Information; Rights of Unit
Holders -- Redemption -
Computation of Redemption
Price per Unit
(b) Schedule as to redemption
price........................... *
47. Maintenance of position in
underlying securities............... Public Offering of Unit --
Secondary Market; Rights of
Unit Holders -- Redemption
-- Computation of Redemption
Price per Unit; Rights of
Unit Holders -- Redemption
-- Purchase by the Sponsor
of Units Tendered for
Redemption
IV. Information Concerning
the Trustee or Custodian
48. Organization and regulation
of trustee.......................... Trustee
49. Fees and expenses of trustee.......... Expenses and Charges
50. Trustee's lien........................ Expenses and Charges -- Other
Charges
________________
* Inapplicable, answer negative or not required.
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V. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's
securities.......................... *
VI. Policy of Registrant
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 other-
wise covered.................... *
53. Tax status of trust................... Prospectus front cover; Tax
Status
VII. Financial and Statistical Information
54. Trust's securities during last
ten years........................... *
55.
56. Certain information regarding
periodic payment certificates....... *
57.
58.
59. Financial statements
(Instruction 1(c) to Form S-6)...... Statement of Financial
Condition
________________
* Inapplicable, answer negative or not required.
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Subject to Completion Dated December 11, 1995
GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
[LOGO]
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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 Alliance Technology Fund, Inc., an open-end,
diversified, registered management investment company.
The investment objective of the Alliance Technology Fund (the 'Fund') is growth
of capital. The Fund invests for capital appreciation and only incidentally for
current income. The Fund may seek income by writing listed call options. The
Fund will seek to achieve its objective by investing primarily in securities of
companies expected to benefit from technological advances and improvements
(i.e., companies that use technology extensively in the development of new or
improved products or processes). The Fund will normally have at least 80% of its
assets invested in the securities of these companies. The Fund normally will
have substantially all its assets invested in equity securities, but it also
invests in debt securities offering an opportunity for price appreciation. The
Fund will invest in listed and unlisted securities and U.S. and foreign
securities, but it will not purchase a foreign security if as a result 10% or
more of the Fund's total assets would be invested in foreign securities. The
Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies. The Fund may also:
(i) write and purchase exchange-listed call options and purchase listed put
options, including exchange-traded index put options; (ii) invest up to 10% of
its total assets in warrants; (iii) invest in restricted securities and in other
assets having no ready market if as a result no more than 10% of the Fund's net
assets are invested in such securities and assets; (iv) lend portfolio
securities equal in value to not more than 30% of the Fund's total assets; and
(v) invest up to 10% of its total assets in foreign securities. 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.
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SPONSOR: PRUDENTIAL SECURITIES [LOGO]
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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.
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PLEASE READ AND RETAIN Prospectus dated January, 1996
THIS PROSPECTUS FOR FUTURE REFERENCE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY THEM BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.
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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.
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THE TRUST
Government Securities Equity Trust Series 9 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 shares of Class A common stock ('Fund
Shares') of the Alliance Technology 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 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 growth of
capital. There is, of course, no assurance that the objectives of the Fund or
the Trust 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, $ 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
$ 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 up-front sales charge, if any, will be $ 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 $ 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 investment objective of the Fund is to emphasize growth of capital, and
investments will be made based upon their potential for capital appreciation.
Therefore, current income will be incidental to the objective of capital growth.
However, subject to certain limitations, the Fund may seek to earn income
through the writing of listed call options. In seeking to achieve its objective,
the Fund will invest primarily in securities of companies which are expected to
benefit from technological advances and improvements (i.e., companies which use
technology extensively in the development of new or improved products or
processes). The Fund will have at least 80% of its assets invested in the
securities of such companies except when the Fund assumes a temporary defensive
position. There can be, of course, no assurance that the Fund's investment
objective will be achieved, and the nature of the Fund's investment objective
and policies may involve a somewhat greater degree of risk than would be present
in a more conservative investment approach. See 'The Trust--Fund Risk Factors'
on page B-12.
The Fund expects under normal circumstances to have substantially all of
its assets invested in equity securities (common stocks or securities
convertible into common stocks or rights or warrants to subscribe for or
purchase common stocks). When business or financial conditions warrant, the Fund
may take a defensive position and invest without limit in investment grade debt
securities or preferred stocks or hold its assets in cash. The Fund at times may
also invest in debt securities and preferred stocks offering an opportunity for
price appreciation (e.g., convertible debt securities).
The Fund will invest in listed and unlisted securities and U.S. and foreign
securities, but it will not purchase a foreign security if as a result 10% or
more of the Fund's total assets would be invested in foreign securities.
The Fund's policy is to invest in any company and industry and in any type
of security with potential for capital appreciation. It invests in well-known
and established companies and in new and unseasoned companies.
Critical factors which will be considered in the selection of securities
will include the economic and political outlook, the value of individual
securities relative to other investment alternatives, trends in the determinants
of corporate profits, and management capability and practices. Generally
speaking, disposal of a security will be based upon factors such as (i) actual
or potential deterioration of the issuer's earning power which the Fund believes
may adversely affect the price of its securities, (ii)
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increases in the price level of the security or of securities generally which
the Fund believes are not fully warranted by the issuer's earning power, and
(iii) changes in the relative opportunities offered by various securities.
Companies in which the Fund will invest include those whose processes,
products or services are anticipated by Alliance Capital Management L.P., the
Fund's investment adviser (the 'Investment Adviser'), to be significantly
benefited by the utilization or commercial application of scientific discoveries
or developments in such fields as, for example, aerospace, aerodynamics,
astrophysics, biochemistry, chemistry, communications, computers, conservation,
electricity, electronics (including radio, television and other media), energy
(including development, production and service activities), geology, health
care, mechanical engineering, medicine, metallurgy, nuclear physics,
oceanography and plant physiology.
The Fund will endeavor to invest in companies where the expected benefits
to be derived from the utilization of technology will significantly enhance the
prospects of the company as a whole (including, in the case of a conglomerate,
affiliated companies). The Fund's investment objective permits the Fund to seek
securities having potential for capital appreciation in a variety of industries.
Certain of the companies in which the Fund invests may allocate greater
than usual amounts to research and product development. The securities of such
companies may experience above-average price movements associated with the
perceived prospects of success of the research and development programs. In
addition, companies in which the Fund invests could be adversely affected by
lack of commercial acceptance of a new product or products or by technological
change and obsolescence.
Although the Fund will seek the objective of long-term growth of capital,
there can be no assurance it will be attained. The investment policies of the
Fund are not 'fundamental policies' and may, therefore, be changed by the Board
of Directors without a Fund shareholder vote. However, the Fund will not change
its investment policies without contemporaneous written notice to its
shareholders. The Fund's investment objective, as well as the Fund's 80%
investment policy described herein, 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. See 'The
Trust--Fund Risk Factors' on page B-12. 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--General Information Regarding the Fund--Additional Investment
Policies and Practices--Fundamental Investment Policies.' FOR ADDITIONAL RISK
FACTORS RELATING TO INVESTMENT IN THE FUND, SEE PAGES B-5 TO B-9 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
$ 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 by purchasing Fund Shares directly from the
Fund at net asset value (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 by purchasing Fund Shares directly from the
Fund at net asset value.
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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 the applicable sales
charge. (See Part B--'Public Offering of Units--Public Offering Price.') The
total sales charge consists of an Initial Sales Charge of up to 1% and a
Deferred Sales Charge of $ , the total of which is equal to % of the
Public Offering Price ( % of the net amount invested) per Unit. The Initial
Sales Charge is computed by deducting the Deferred Sales Charge ($ per
Units) ('DSC') from the aggregate sales charge; thus, on the date of the Summary
of Essential Information, the Initial Sales Charge is $ per Units or % of
the Public Offering Price. The Initial Sales Charge will vary with changes in
the aggregate sales charge and is deducted from the purchase price of a Unit at
the time of purchase and paid to the Sponsor. The Initial Sales Charge will be
reduced on a graduated basis on purchases of $ or more. The Deferred Sales
Charge is paid through reduction of the net asset value of the Trust by $ per
Units quarterly on each Deferred Sales Charge Deduction Date commencing on
the first Deferred Sales Charge Deduction Date shown on the Summary of Essential
Information. If a Unit Holder exchanges, redeems or sells his Units to the
Sponsor prior to the last Deferred Sales Charge Deduction Date, the Unit Holder
is obligated to pay any remaining Deferred Sales Charge. Any cash held by the
Trust will be added to the Public Offering Price. After the initial public
offering period, in the secondary market 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
% of the Public Offering Price ( % of the net amount invested). The
Upfront Sales Charge for a secondary market purchase will equal the difference
between such total secondary market sales charge and any unpaid DSC remaining at
the time of purchase. 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 Units (see 'Public Offering of Units--Volume Discount'). The minimum
purchase is 100 Units except the minimum purchase is 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'). The Sponsor's Repurchase
Price, like the Redemption Price, will reflect the deduction from the value of
the underlying Securities of any unpaid amount of the Deferred Sales Charge.
Investors should note that the Deferred Sales Charge of $ per Units will
be deducted from the net asset value on the first of each quarter commencing on
the first Deferred Sales Charge Deduction Date shown on the Summary of Essential
Information, and to the extent the entire Deferred Sales Charge has not been so
deducted or paid at the time of redemption of the Units, the remainder will be
deducted from the proceeds of redemption or in calculating an in-kind
redemption. 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 page B-2) and (ii) a mutual fund which invests in the
type of securities in which the Fund invests (see 'The Trust--Additional
Investment Policies and Practices' on pages B- through B- and 'The Trust--Fund
Risk Factors' on page B- ). 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
$ face amount of Treasury Obligations maturing on
, and Fund Shares were held in the Trust on the Date of
Deposit. The Treasury Obligations and the Fund Shares represented % and
%, 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 9
AS OF JANUARY , 1996*
<TABLE>
<S> <C>
AGGREGATE MATURITY VALUE OF TREASURY OBLIGATIONS
INITIALLY DEPOSITED.................................. $
AGGREGATE NUMBER OF FUND SHARES INITIALLY DEPOSITED....
INITIAL NUMBER OF UNITS................................
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED
BY EACH UNIT.........................................
Aggregate offering side evaluation of Treasury
Obligations in the Trust......................... $
Aggregate value of Fund Shares**.................. $
--------------
Aggregate value of Securities in the Trust***..... $
Divided by Units........................... $
Plus maximum sales charge of 5.00% of Public
Offering Price, 5.263% of net amount invested in
Securities****................................... $
Less Deferred Sales Charge per Unit...............
--------------
Public Offering Price per Unit*****............... $
--------------
--------------
REDEMPTION AND SPONSOR'S SECONDARY MARKET REPURCHASE
PRICE PER UNIT******
(based on the bid side evaluation of underlying
Treasury Obligations and net asset value of the Fund
Shares less then Deferred Sales Charge per Unit
$ less than the Public Offering Price per
Unit)................................................ $
QUARTERLY RECORD DATES:
QUARTERLY DISTRIBUTION DATES:
,
or as soon thereafter as possible.
MINIMUM PRINCIPAL DISTRIBUTION: No distribution need be
made from the Principal Account if the balance
therein is less than $1.00 per Units.
TRUSTEE'S ANNUAL FEE AND ESTIMATED EXPENSES (including
Evaluator's fee): $ per Units.+
ORGANIZATIONAL EXPENSES: $ per Unit.+++
SPONSOR'S PORTFOLIO SUPERVISION FEE+: Maximum of $0.25
per 1,000 Units.
EVALUATOR'S FEE FOR EACH EVALUATION OF TREASURY
OBLIGATIONS: $
EVALUATION TIME: 4:00 P.M. New York Time or close of
regular trading on the New York Stock Exchange
MANDATORY TERMINATION DATE: ++
SPONSOR'S GAIN/LOSS ON DEPOSIT: $
MINIMUM VALUE OF TRUST: The Indenture may be terminated
if the value of the Trust is less than 40% of the
aggregate maturity values of Treasury Obligations
calculated after the most recent deposit of Treasury
Obligations.
DEFERRED SALES CHARGE DEDUCTION DATES: The 1st day of
each quarter commencing , 1996 through
, 1998.
</TABLE>
- ------------
* The Date of Deposit. The Date of Deposit is the date on which the Trust
Indenture and Agreement was signed and the initial deposit of Securities
with the Trustee was made.
** Calculated by multiplying aggregate Fund Shares by the current net asset
value per share (excluding any sales load on the Fund Shares).
*** After deduction of the Deferred Sales Charge then payable (zero on the
date of this Summary of Essential Information).
**** The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred
Sales Charge ($ per Units) from the aggregate sales charge (a
maximum of % of the Public Offering Price; thus on the date of this
Summary of Essential Information, the maximum Initial Sales Charge is $
per Units or % of the Public Offering Price. The Upfront Sales
Charge is calculated based on the total sales charge at the time of
purchase and added to the net asset value of a Unit and, therefore, may
vary based on changes in the valuation of the Securities. The Initial
Sales Charge is included in the purchase price at the time of purchase
and is reduced on a graduated basis on purchases of $50,000 or more (see
Part B-- 'Public Offering of Units--Volume Discount'). The Deferred Sales
Charge is paid through reduction of the net asset value of the Trust by
$ per Units on each Deferred Sales Charge Deduction Date through
the sale of Fund Shares. After the initial offering period, Units may be
available for purchase from the Sponsor at a price based upon the bid
side evaluation of the Treasury Obligations plus the net asset value of
Fund Shares plus a sales charge as set forth in Part B, 'Public Offering
of Units--Volume Discount.' The total sales charge consists, after the
initial offering period, of a sales charge based on the bid side
evaluation of the
A-4
<PAGE>
Treasury Obligations plus the net asset value of Fund Shares calculated
as set forth in Part B--Public Offering of Units-- Secondary Market Sales
Charge. The Upfront Sales Charge for a secondary market purchase will
equal the difference between such total secondary market sales charge and
any unpaid DSC remaining at the time of purchase. If a Unit Holder
exchanges, redeems or sells his Units to the Sponsor prior to the last
Deferred Sales Charge Deduction Date, the Unit Holder is obligated to pay
any remaining Deferred Sales Charge, the amount of which will reduce the
disposition proceeds.
***** The price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date.
****** This price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date. Reflects
deductions for remaining Deferred Sales Charge payments ($ per
Units initially).
+ See: 'Expenses and Charges' herein. The fee and the organizational costs
accrue quarterly and are payable on each Distribution Date. Estimated
distributions from the Fund on the Fund Shares are expected by the
Sponsor to be sufficient to pay the estimated expenses of the Trust.
++ The Trust may be terminated prior to the Termination Date. See Part
B--'Amendment and Termination of the Indenture--Termination.'
+++ See Fee Table and Part B--'Expenses and Charges--Expenses.'
For an explanation of the management fees paid by the Fund (as of December
, 1995, % of Fund average net assets), see page B- .
A-5
<PAGE>
FEE TABLE
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Part B-- 'Public Offering of
Units' and 'Expenses and Charges.' Although the Trust is a unit investment trust
rather than a mutual fund, this information is presented to permit a comparison
of fees and an understanding of the costs and expenses that you pay.
<TABLE>
<CAPTION>
AMOUNT PER
UNIT HOLDER TRANSACTION EXPENSES UNITS
- ------------------------------------------------------- --------------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a
percentage of offering price)........................ 1.00%(a) $
Deferred Sales Charge per Year (as a percentage of
original purchase price)............................. 4.00%(b)
------- -------
Total............................................. 5.00% $
------- -------
------- -------
Annual Trust Operating Expenses (as a percentage of
average net assets)
Trustee's Fee.......................................... % $
Organizational Expenses(c)............................. % $
Other Operating Expenses (including Portfolio
Supervision, Bookkeeping and Administrative Fees).... % $
------- -------
Total............................................. % $
------- -------
------- -------
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
CUMULATIVE
EXPENSES PAID FOR
PERIOD:
------------------------------
1 3
YEAR YEARS
-------------- --------------
<S> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, assuming the Trust's operating
expense ratio of 0. % and a 5% annual return on the
investment throughout the periods.................... $ $
</TABLE>
The Example assumes a reinvestment of all dividends and distributions into
units of the Trust (a reinvestment option different from that offered by the
Trust) and utilizes a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF
RETURN; THE ACTUAL EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN
THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE.
- ------------------
(a) The Maximum Initial Sales Charge is actually the difference between 5.00%
and the Deferred Sales Charge ($ per Units) and would exceed 1% if
the Public Offering Price exceeds $1,000 per Units.
(b) The actual fee is $ per quarter per Units, irrespective of purchase
or redemption price, deducted in each of the first 12 quarters of the Trust.
If a Holder sells, exchanges or redeems Units before all of these deductions
have been made, the balance of the Deferred Sales Charge will be deducted
from the Unit proceeds. If Unit price exceeds $ per Unit, the Deferred Sales
Charge will be less than %; if Unit price is less than $ per Unit, the
Deferred Sales Charge will exceed %.
(c) Includes all or a portion of the cost of the preparation, printing and
execution of the Indenture, Registration Statement and other documents
relating to the Trust, federal and state registration fees and costs, the
initial fees and expenses of the Trustee, legal and auditing expenses and
other out of pocket expenses. See 'Expenses and Charges' herein. The
organizational costs will be amortized over a period of five years and are
payable on each Distribution Date.
A-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
We have audited the Statement of Financial Condition and Schedule of
Portfolio Securities of the Government Securities Equity Trust Series 9 as of
, 1996. These financial statements are the responsibility of the
Trustee and Sponsor (see note (e) 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 , 1996, by correspondence with The Chase Manhattan
Bank, N.A., 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 9 as of , 1996, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
, 1996
A-7
<PAGE>
STATEMENT OF FINANCIAL CONDITION
GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
AS OF DATE OF DEPOSIT, , 1996
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed
by an irrevocable letter of credit(a)..................... $
Organizational Costs(f).....................................
-------------
Total............................................. $
-------------
-------------
LIABILITY AND INTEREST OF UNIT HOLDERS
Liability:
Payment of deferred portion of sales charge(b)......... $
Accrued Liability(f)...................................
-------------
Subtotal............................................... $
-------------
Interest of Holders:
Units of fractional undivided interest outstanding:
Cost to investors(c)................................... $
Gross underwriting commission(d)....................... ( )
-------------
Net amount applicable to investors..........................
-------------
Total............................................. $
-------------
-------------
</TABLE>
- ------------
(a) The aggregate value of the Securities represented by Contracts to
Purchase listed under 'Schedule of Portfolio Securities' included herein and
their cost to the Trust are the same. An irrevocable letter of credit drawn on
Mellon Bank, N.A. in the amount of $ has been deposited with the
Trustee for the purchase of Securities pursuant to contracts to purchase such
Securities.
(b) Represents the aggregate amount of mandatory distributions of $ per
Units per quarter payable on the 1st day of each quarter commencing on
1996 through 1998. Distributions will be made to an account
maintained by the Trustee from which the Holders' Deferred Sales Charge
obligation to the Sponsor will be satisfied. If Units are redeemed prior to
1, 1998, the remaining portion of the distribution applicable to such
Units will be transferred to such account on the redemption date.
(c) The aggregate Public Offering Price is computed on the basis set forth
under 'Public Offering of Units--Public Offering Price.'
(d) The aggregate maximum sales charge of % of the Public Offering
Price per Unit is computed on the basis set forth under 'Public Offering of
Units--Public Offering Price.'
(e) 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.
(f) Organizational costs borne by the Trust have been deferred and will be
amortized over a period of five years. Organizational costs have been estimated
based on a Trust with projected total assets of $ million. To the extent the
assets of the Trust are fewer or greater, the estimate may vary.
A-8
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
ON DATE OF DEPOSIT, , 1996
<TABLE>
<CAPTION>
NAME OF
ISSUER AND COST OF
TITLE OF SECURITIES REPRESENTED BY SECURITIES
CONTRACTS TO PURCHASE (1) TO TRUST(2)
- ------------------------------------------------------------ -------------
<S> <C>
$ Maturity Amount of Stripped United States
Treasury Obligations maturing on .........................
Class A shares of the Alliance Technology Fund, Inc....... $
($ per Fund Share).................................... $
-------------
$
-------------
-------------
</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
Alliance Capital Management L.P.
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
, 1996.
(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 $ (which is $ 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 $ .
A-9
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 9
THE TRUST
The Government Securities Equity Trust Series 9 (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'),
The Chase Manhattan Bank (National Association) (the 'Trustee') and Kenny S&P
Evaluation Services, a division of J.J. Kenny Co., 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 shares of Class A common
stock ('Fund Shares') of Alliance Technology Fund, Inc. (the 'Fund'), an
open-end, diversified, registered management investment company (the Treasury
Obligations and Fund Shares hereinafter, collectively, referred to as
'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 $ 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 $ per Unit. A Unit Holder selling his Units prior to the Mandatory
Termination Date may suffer a 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
- ------------------
* 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>
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 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').
B-2
<PAGE>
The following disclosure concerning the Fund and its affiliates has been
provided by Alliance Fund Distributors, Inc., the Fund's principal underwriter.
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.
ALLIANCE TECHNOLOGY FUND, INC.
The portfolio of the Trust also contains Class A shares (the 'Fund Shares')
of Alliance Technology Fund, Inc. On November 30, 1995, the net assets of the
Fund were approximately $ . The investment adviser of the Fund is
Alliance Capital Management L.P. (the 'Investment Adviser'). The Fund's
principal underwriter is Alliance Fund Distributors, Inc. ('AFD').
The Fund intends for each taxable year to qualify to be taxed as a
'regulated investment company' under the Internal Revenue Code of 1986, as
amended (the 'Code'). Such qualification relieves the Fund of Federal income tax
liability on the part of its investment company taxable income and net realized
capital gains which it timely distributes to its shareholders. Such
qualification does not, of course, involve governmental supervision of
management or investment practices or policies. Unit Holders should consult
their own counsel for a complete understanding of the requirements the Fund must
meet to qualify to be taxed as a 'regulated investment company.'
It is the present policy of the Fund to distribute to shareholders all net
investment income and to distribute realized capital gains. However, there is no
fixed dividend rate and there can be no assurance that the Fund will pay any
dividends or realize any capital gains. The amount of any dividend or
distribution paid on shares of the Fund must necessarily depend upon the
realization of income and capital gains from the Fund's investments.
The Fund intends to declare and distribute dividends in the amounts and at
the times necessary to avoid the application of the 4% Federal excise tax
imposed on certain undistributed income of regulated investment companies.
The State Street Bank and Trust Company (the 'Custodian') is the custodian
of the Fund's assets. Alliance 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
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 have, except as noted otherwise, been
audited by Ernst & Young LLP, independent accountants, whose report thereon was
unqualified. The following financial highlights contain selected data for a Fund
Share, total investment 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>
NET NET
REALIZED INCREASE
AND (DECREASE) NET
NET ASSET NET UNREALIZED IN NET DIVIDENDS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAIN (LOSS) ASSET FROM NET FROM NET TOTAL VALUE
BEGINNING INCOME ON VALUE FROM INVESTMENT REALIZED DIVIDENDS AND END OF
FISCAL YEAR OR PERIOD OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS PERIOD
- ------------------------- --------- ---------- ----------- ---------- ---------- ------------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/1/94 to 5/31/95+++... $ 31.98 $ (.11) $ 7.94 $ 7.83 $ 0.00 $ (3.17) $ (3.17) $36.64
1/1/94 to 11/30/94**.... 26.12 (.32) 6.18 5.86 0.00 0.00 0.00 31.98
Year ended 12/31/93..... 28.20 (.29) 6.39 6.10 0.00 (8.18) (8.18) 26.12
Year ended 12/31/92..... 26.38 (.22)(b) 4.31 4.09 0.00 (2.27) (2.27) 28.20
Year ended 12/31/91..... 19.44 (.02) 10.57 10.55 0.00 (3.61) (3.61) 26.38
Year ended 12/31/90..... 21.57 (.03) (.56) (.59) 0.00 (1.54) (1.54) 19.44
Year ended 12/31/89..... 20.35 0.00 1.22 1.22 0.00 0.00 0.00 21.57
Year ended 12/31/88..... 20.22 (.03) .16 .13 0.00 0.00 0.00 20.35
Year ended 12/31/87..... 23.11 (.10) 4.54 4.44 0.00 (7.33) (7.33) 20.22
Year ended 12/31/86..... 20.64 (.14) 2.62 2.48 (.01) 0.00 (.01) 23.11
Year ended 12/31/85..... 16.52 .02 4.30 4.32 (.20) 0.00 (.20) 20.64
<CAPTION>
NET RATIO OF
TOTAL ASSETS RATIO OF NET
INVESTMENT AT END EXPENSES INVESTMENT
RETURN OF TO INCOME
BASED ON PERIOD AVERAGE (LOSS) TO PORTFOLIO
NET ASSET (000'S NET AVERAGE TURNOVER
FISCAL YEAR OR PERIOD VALUE (A) OMITTED) ASSETS NET ASSETS RATE
- ------------------------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
12/1/94 to 5/31/95+++... 27.21% $255,131 1.59%* (.65)%* 23%
1/1/94 to 11/30/94**.... 22.43 202,929 1.66* (1.22)* 55
Year ended 12/31/93..... 21.63 173,732 1.73 (1.32) 64
Year ended 12/31/92..... 15.50 173,566 1.61 (.90) 73
Year ended 12/31/91..... 54.24 191,693 1.71 (.20) 134
Year ended 12/31/90..... (3.08) 131,843 1.77 (.18) 147
Year ended 12/31/89..... 6.00 141,730 1.66 .02 139
Year ended 12/31/88..... 0.64 169,856 1.42(c) (.16)(c) 139
Year ended 12/31/87..... 19.16 167,608 1.31(c) (.56)(c) 248
Year ended 12/31/86..... 12.03 147,733 1.13(c) (.57)(c) 141
Year ended 12/31/85..... 26.24 147,114 1.14(c) .07 (c) 259
</TABLE>
- ------------------
+++ Unaudited.
* Annualized.
** Reflects a change in fiscal year end.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment returns calculated for periods of
less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of expenses assumed and/or waived/reimbursed.
If the Fund had borne all expenses, the expense ratios would have been
1.43%, 1.40%, 1.59% and 1.73% for the periods ended in 1985, 1986, 1987, and
1988, respectively; and the investment income ratios would have been (.23)% for
1985, (.85)% for 1986, (.84)% for 1987, and (.46)% for 1988.
B-4
<PAGE>
ADDITIONAL INVESTMENT POLICIES AND PRACTICES OF THE FUND
Options. In seeking to attain its investment goal of capital appreciation,
the Fund may supplement customary investment practices by writing and purchasing
call options listed on one or more national securities exchanges and purchasing
listed put options, including put options on market indices. Upon payment of a
premium, a put option gives the buyer of such option the right to deliver a
specified number of shares of a stock to the writer of the option on or before a
fixed date, at a predetermined price. A call option gives the purchaser of the
option, upon payment of a premium, the right to call upon the writer to deliver
a specified number of shares of a specified stock on or before a fixed date, at
a predetermined price, usually the market price at the time the contract is
negotiated.
The writing of call options will involve a potential loss of opportunity to
sell securities at higher prices. In exchange for the premium received, the
writer of a fully collateralized call option assumes the full downside risk of
the securities subject to such option. In addition, the writer of the call gives
up the gain possibility of the stock protecting the call. Generally the
opportunity for profit from the writing of options is higher, and consequently
the risks are greater, when the stocks involved are lower priced or volatile, or
both. While an option that has been written is in force, the maximum profit that
may be derived from the optioned stock is the premium less brokerage commissions
and fees. The actual return earned by the Fund from writing a call option
depends on factors such as the amount of the transaction costs and whether or
not the option is exercised. Option premiums vary widely depending primarily on
supply and demand.
Writing and purchasing options are highly specialized activities and entail
greater than ordinary investment risks. If an option purchased by the Fund is
not sold and is permitted to expire without being exercised, its premium would
be lost by the Fund. When calls written by the Fund are exercised, the Fund will
be obligated to sell stocks below the current market price.
The Fund will not write a call unless the Fund at all times during the
option period owns either (a) the optioned securities, or securities convertible
into or carrying rights to acquire the optioned securities, or (b) an offsetting
call option on the same securities. It is the Fund's policy not to write a call
option if the premium to be received by the Fund in connection with such option
would not produce an annualized return of at least 15% of the then current
market value of the securities subject to option (without giving effect to
commissions, stock transfer taxes and other expenses of the Fund which are
deducted from premium receipts). The actual return earned by the Fund from
writing a call depends on factors such as the amount of the transaction costs
and whether or not the option is exercised. Calls written by the Fund will
ordinarily be sold either on a national securities exchange or through put and
call dealers, most, if not all, of whom are members of a national securities
exchange on which options are traded, and will in such cases be endorsed or
guaranteed by a member of a national securities exchange or qualified
broker-dealer, which may be Donaldson, Lufkin & Jenrette Securities Corporation,
an affiliate of the Investment Adviser. The endorsing or guaranteeing firm
requires that the option writer (in this case the Fund) maintain a margin
account containing either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.
In purchasing a call option, the Fund would be in a position to realize a
gain if, during the option period, the price of the security increased over the
strike price by an amount in excess of the premium paid and commissions payable
on exercise. It would realize a loss if the price of the security declined or
remained the same or did not increase over the strike price during the period by
more than the amount of the premium and commissions payable on exercise. By
purchasing a put option, the Fund would be in a position to realize a gain if,
during the option period, the price of the security declined below the strike
price by an amount in excess of the premium paid and commissions payable on
exercise. It would realize a loss if the price of the security increased or
remained the same or did not decrease below the strike price during that period
by more than the amount of the premium and commissions payable on exercise. If a
put or call option purchased by the Fund were permitted to expire without being
sold or exercised, its premium would represent a realized loss to the Fund.
If the Fund desires to sell a particular security from its portfolio on
which it has written an option, the Fund seeks to effect a 'closing purchase
transaction' prior to, or concurrently with, the sale of the security. A closing
purchase transaction is a transaction in which an investor who is obligated as a
writer of an option terminates his obligation by purchasing an option of the
same series as the option previously written. (Such a purchase does not result
in the ownership of an option.) The Fund may enter into a closing purchase
transaction to realize a profit on a previously written option or to enable the
Fund to write another option on the underlying security with either a different
exercise price or expiration date or both. The Fund realizes a profit or loss
from a closing purchase transaction if the cost of the transaction is less or
more than the premium received from the writing of the option. The Fund may not,
however, effect a closing purchase transaction with respect to an option after
it has been notified of the exercise of such option.
The Fund may dispose of an option which it has purchased by entering into a
'closing sale transaction' with the writer of the option. A closing sale
transaction terminates the obligation of the writer of the option and does not
result in the ownership of an option. The Fund realizes a profit or loss from a
closing sale transaction if the premium received from the transaction is more
than or less than the cost of the option.
B-5
<PAGE>
The Fund will not write a call option if, as a result, the aggregate of the
Fund's portfolio securities subject to outstanding call options (valued at the
lower of the option price or market value of such securities) would exceed 15%
of the Fund's total assets. The Fund will not sell any call option if such sale
would result in more than 10% of the Fund's assets being committed to call
options written by the Fund which, at the time of sale by the Fund, have a
remaining term of more than 100 days. The aggregate cost of all outstanding
options purchased and held by the Fund will at no time exceed 10% of the Fund's
total assets.
Options on Market Indices. Options on securities indices are similar to
options on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in the case of a
call) or less than (in the case of a put) the exercise price of the option.
Through the purchase of listed index options, the Fund could achieve many
of the same objectives as through the use of options on individual securities.
Price movements in the Fund's portfolio securities probably will not correlate
perfectly with movements in the level of the index and, therefore, the Fund
would bear a risk of loss on index options purchased by it if favorable price
movements of the hedged portfolio securities do not equal or exceed losses on
the options or if adverse price movements of the hedged portfolio securities are
greater than gains realized from the options.
Warrants. The Fund may invest up to 10% of its total assets in warrants.
The Fund will invest in warrants only if the underlying equity securities
themselves are deemed appropriate by the Investment Adviser for inclusion in the
Fund's portfolio. Warrants entitle the holder to buy equity securities at a
specific price for a specific period of time. Warrants may be considered more
speculative than certain other types of investments in that they do not entitle
a holder to dividends or voting rights with respect to the underlying securities
nor do they represent any rights in the assets of the issuing company. The value
of a warrant does not necessarily change with the value of the underlying
security, although the value of a warrant may decline because of a decrease in
the value of the underlying security, the passage of time or a change in
perception as to the potential of the underlying security, or any combination
thereof. If the market price of the underlying security is below the exercise
price set forth in the warrant on the expiration date, the warrant will expire
worthless. Moreover, a warrant ceases to have value if it is not exercised prior
to the expiration date.
Convertible Securities. Prior to conversion, convertible securities have
the same general characteristics as non-convertible debt securities, which
provide a stable stream of income with generally higher yields than those of
equity securities of the same or similar issuers. The price of a convertible
security will normally vary with changes in the price of the underlying stock,
although the higher yield tends to make the convertible security less volatile
than the underlying common stock. As with debt securities, the market value of
convertible securities tends to decline as interest rates increase and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price of
the underlying common stock. Convertible debt securities that are rated Baa or
lower by Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable
unrated securities as determined by the Investment Adviser may share some or all
of the risks of non-convertible debt securities with those ratings. See
'Additional Investment Policies and Practices--Securities Ratings' on page B-8.
Foreign Securities. Investing in securities of non-United States companies
which are generally denominated in foreign currencies involves certain
considerations comprising both risk and opportunity not typically associated
with investing in United States companies. These considerations include changes
in exchange rates and exchange control regulation, political and social
instability, expropriation, imposition of foreign taxes, less liquid markets and
less available information than are generally the case in the United States,
higher transaction costs, less government supervision of exchanges and brokers
and issuers, difficulty in enforcing contractual obligations, lack of uniform
accounting and auditing standards and greater price volatility. Additional risks
may be incurred in investing in particular countries. The Fund will not purchase
a foreign security if such purchase at the time thereof would cause 10% or more
of the value of the Fund's total assets to be invested in foreign securities.
The securities markets of many foreign countries are relatively small, with
the majority of market capitalization and trading volume concentrated in a
limited number of companies representing a small number of industries.
Consequently, to the extent the Fund's investment portfolio includes such
securities it may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of United States
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties. These problems are particularly severe in India, where settlement
is through physical delivery, and, where, currently, a severe shortage of vault
capacity exists among custodial banks, although efforts are being undertaken to
alleviate the shortage. Certain foreign countries require governmental approval
prior to investments by foreign persons or limit investment by foreign persons
to only a specified percentage of an issuer's outstanding securities or a
specific class of securities which may have less advantageous terms (including
price) than securities of the company available for purchase by nationals. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of the Fund. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from certain of the countries is controlled under regulations,
B-6
<PAGE>
including in some cases the need for certain advance government notification or
authority, and if a deterioration occurs in a country's balance of payments, the
country could impose temporary restrictions on foreign capital remittances.
The Fund could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. Investing in local
markets may require the Fund to adopt special procedures, which may involve
additional costs to the Fund. The liquidity of the Fund's investments in any
country in which any of these factors exists could be affected and the
Investment Adviser will monitor the effect of any such factor or factors on the
Fund's investments. Furthermore, transaction costs including brokerage
commissions for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the U.S.
Issuers of securities in foreign jurisdictions are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as insider trading rules, restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The reporting, accounting and
auditing standards of foreign countries may differ, in some cases significantly,
from U.S. standards in important respects and less information may be available
to investors in foreign securities than to investors in U.S. securities.
Substantially less information is publicly available about certain non-U.S.
issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign country or the
Fund's investments in such country. In the event of expropriation,
nationalization or other confiscation, the Fund could lose its entire investment
in the country involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.
Restricted Securities. The Fund may invest in restricted securities and in
other assets having no ready market if such purchases at the time thereof would
not cause more than 10% of the value of the Fund's net assets to be invested in
all such restricted or not readily marketable assets. Restricted securities may
be sold only in privately negotiated transactions, in a public offering with
respect to which a registration statement is in effect under the Securities Act
of 1933 (the '1933 Act') or pursuant to Rules 144 or 144A promulgated under such
Act. Where registration is required, the Fund may be obligated to pay all or
part of the registration expense, and a considerable period may elapse between
the time of the decision to sell and the time the Fund may be permitted to sell
a security under an effective registration statement. If during such a period
adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted securities
will be valued in such manner as the Board of Directors of the Fund, in good
faith, deems appropriate to reflect their fair market value.
Lending of Portfolio Securities. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible loss of
rights in the collateral should the borrower fail financially. In determining
whether to lend securities to a particular borrower, the Investment Adviser will
consider all relevant facts and circumstances, including the creditworthiness of
the borrower. While securities are on loan, the borrower will pay the Fund any
income earned thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an agreed upon amount
of income from a borrower who has delivered equivalent collateral. Loaned
securities must be secured continuously by collateral consisting of cash, cash
equivalents or United States Treasury Bills maintained in an amount at least
equal to the market value of the securities loaned. The Fund will have the right
to regain record ownership of loaned securities or equivalent securities at any
time in order to exercise ownership rights such as voting rights, subscription
rights and rights to dividends, interest or distributions. The Fund may pay
reasonable finders', administrative and custodial fees in connection with a
loan. The Fund will not lend its portfolio securities to any officer, director,
employee or affiliate of the Fund or the Investment Adviser.
Portfolio Turnover. The investment activities described above are likely
to result in the Fund engaging in a considerable amount of trading of securities
held for less than one year. Accordingly, it can be expected that the Fund will
have a higher turnover rate than might be expected from investment companies
which invest substantially all of their funds on a long-term basis.
Correspondingly heavier brokerage commission expenses can be expected to be
borne by the Fund. Management anticipates that the Fund's annual rate of
portfolio turnover will not be in excess of 100% in future years. A 100% annual
turnover rate would occur, for example, if all the stocks in the Fund's
portfolio were replaced once in a period of one year. The annual portfolio
turnover rates of securities of the Fund for the fiscal period ended May 31,
1995, November 30, 1994 and for the fiscal year ended December 31, 1993 were
23%, 55% and 64%, respectively.
Within this basic framework, the policy of the Fund is to invest in any
company and industry and in any type of security which are believed to offer
possibilities for capital appreciation. Investments may be made in well-known
and established companies as well as in new and unseasoned companies. Since
securities fluctuate in value due to general economic conditions, corporate
earnings and many other factors, the shares of the Fund will increase or
decrease in value accordingly, and there can be no assurance that the Fund will
achieve its investment goal or be successful.
B-7
<PAGE>
Securities Ratings. The ratings of securities by S&P, Moody's, Duff &
Phelps and Fitch are a generally accepted barometer of credit risk. They are,
however, subject to certain limitations from an investor's standpoint. The
rating of an issuer is heavily weighted by past developments and does not
necessarily reflect probable future conditions. There is frequently a lag
between the time a rating is assigned and the time it is updated. In addition,
there may be varying degrees of difference in credit risk of securities within
each rating category.
Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are
considered to be of the highest quality; capacity to pay interest and repay
principal is extremely strong. Securities rated Aa by Moody's and AA by S&P,
Duff & Phelps and Fitch are considered to be high quality; capacity to repay
principal is considered very strong, although elements may exist that make risks
appear somewhat larger than exist with securities rated Aaa or AAA. Securities
rated A are considered by Moody's to possess adequate factors giving security to
principal and interest. S&P, Duff & Phelps and Fitch consider such securities to
have a strong capacity to pay interest and repay principal. Such securities are
more susceptible to adverse changes in economic conditions and circumstances
than higher-rated securities.
Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are
considered to have an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics and share
some of the same characteristics as lower-rated securities. Sustained periods of
deteriorating economic conditions or of rising interest rates are more likely to
lead to a weakening in the issuer's capacity to pay interest and repay principal
than in the case of higher-rated securities. Securities rated Ba by Moody's and
BB by S&P, Duff & Phelps and Fitch are considered to have speculative
characteristics with respect to capacity to pay interest and repay principal
over time; their future cannot be considered as well-assured. Securities rated B
by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly
speculative characteristics with respect to capacity to pay interest and repay
principal. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are
of poor standing and there is a present danger with respect to payment of
principal or interest. Securities rated Ca by Moody's and CC by S&P and Fitch
are minimally protected, and default in payment of principal or interest is
probable. Securities rated C by Moody's, S&P and Fitch are in imminent default
in payment of principal or interest and have extremely poor prospects of ever
attaining any real investment standing. Securities rated D by S&P and Fitch are
in default. The issuer of securities rated DD by Duff & Phelps is under an order
of liquidation.
Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities,
i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps
or Fitch, are subject to greater risk of loss of principal and interest than
higher-rated securities. They are also generally considered to be subject to
greater market risk than higher-rated securities, and the capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition,
lower-rated securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities, although the market values
of securities rated below investment grade and comparable unrated securities
tend to react less to fluctuations in interest rate levels than do those of
higher-rated securities.
The market for lower-rated securities may be thinner and less active than
that for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, the Fund may experience difficulty
in valuing such securities and, in turn, the Fund's assets. In addition, adverse
publicity and investor perceptions about lower-rated securities, whether or not
factual, may tend to impair their market value and liquidity.
The Investment Adviser will try to reduce the risk inherent in investment
in lower-rated securities through credit analysis, diversification and attention
to current developments and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will not occur. Since
the risk of default is higher for lower-rated securities, the Investment
Adviser's research and credit analysis are a correspondingly more important
aspect of its program for managing the Fund's securities than would be the case
if the Fund did not invest in lower-rated securities.
In seeking to achieve the Fund's investment objective, there will be times,
such as during periods of rising interest rates, when depreciation and
realization of capital losses on securities in the Fund's portfolio will be
unavoidable. Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider fluctuations in yield
and market values than higher-rated securities under certain market conditions.
Such fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the net asset value of the
Fund.
Defensive Position. For temporary defensive purposes, the Fund may invest
in certain types of short-term, liquid, high grade debt securities. These
securities may include U.S. Government securities, qualifying bank deposits,
money market instruments, prime commercial paper, other types of short-term debt
securities including notes and bonds and short-term, foreign-currency
denominated securities of the type mentioned above issued by foreign
governmental entities, companies and supranational organizations.
B-8
<PAGE>
Future Developments. The Fund may, following written notice to its
shareholders, take advantage of other investment practices that are not
currently contemplated for use by the Fund or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.
FUNDAMENTAL INVESTMENT POLICIES
The following restrictions may not be changed without approval of a
majority of the outstanding voting securities of the Fund, which means the vote
of (i) 67% or more of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented or (ii) more than 50% of the
outstanding shares, whichever is less.
To maintain portfolio diversification and reduce investment risk, as a
matter of fundamental policy, the Fund may not:
(i) with respect to 75% of its total assets, have such assets
represented by other than: (a) cash and cash items, (b) securities issued
or guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities, or (c) securities of any one issuer (other
than the U.S. Government and its agencies or instrumentalities) not greater
in value than 5% of the Fund's total assets, and not more than 10% of the
outstanding voting securities of such issuer;
(ii) purchase the securities of any one issuer, other than the U.S.
Government and its agencies or instrumentalities, if immediately after and
as a result of such purchase (a) the value of the holdings of the Fund in
the securities of such issuer exceeds 25% of the value of the Fund's total
assets, or (b) the Fund owns more than 25% of the outstanding securities of
any one class of securities of such issuer;
(iii) concentrate its investments in any one industry, but the Fund
has reserved the right to invest up to 25% of its total assets in a
particular industry;
(iv) invest in the securities of any issuer which has a record of less
than three years of continuous operation (including the operation of any
predecessor) if such purchase at the time thereof would cause 10% or more
of the value of the total assets of the Fund to be invested in the
securities of such issuer or issuers;
(v) make short sales of securities or maintain a short position or
write put options;
(vi) mortgage, pledge or hypothecate or otherwise encumber its assets,
except as may be necessary in connection with permissible borrowings
mentioned in investment restriction (xiv) listed below;
(vii) purchase the securities of any other investment company or
investment trust, except when such purchase is part of a merger,
consolidation or acquisition of assets;
(viii) purchase or sell real property (including limited partnership
interests but excluding readily marketable interests in real estate
investment trusts or readily marketable securities of companies which
invest in real estate) commodities or commodity contracts;
(ix) purchase participations or other direct interests in oil, gas, or
other mineral exploration or development programs;
(x) participate on a joint or joint and several basis in any
securities trading account;
(xi) invest in companies for the purpose of exercising control;
(xii) purchase securities on margin, but it may obtain such short-term
credits from banks as may be necessary for the clearance of purchases and
sales of securities;
(xiii) make loans of its assets to any other person, which shall not
be considered as including the purchase of portion of an issue of
publicly-distributed debt securities; except that the Fund may purchase
non-publicly distributed securities subject to the limitations applicable
to restricted or not readily marketable securities and except for the
lending of portfolio securities in certain circumstances;
(xiv) borrow money except for the short-term credits from banks
referred to in paragraph (xii) above and except for temporary or emergency
purposes and then only from banks and in an aggregate amount not exceeding
5% of the value of its total assets at the time any borrowing is made.
Money borrowed by the Fund will be repaid before the Fund makes any
additional investments;
(xv) act as an underwriter of securities of other issuers, except that
the Fund may acquire restricted or not readily marketable securities under
circumstances where, if sold, the Fund might be deemed to be an underwriter
for purposes of the Securities Act of 1933 (the Fund will not invest more
than 10% of its net assets in aggregate in restricted securities and not
readily marketable securities); and
(xvi) purchase or retain the securities of any issuer if, to the
knowledge of the Fund's management, those officers and directors of the
Fund, and those employees of the Investment Adviser, who each owns
beneficially more than one-half of 1% of the outstanding securities of such
issuer together own more than 5% of the securities of such issuer.
B-9
<PAGE>
Whenever any investment policy or restriction states a minimum or maximum
percentage of the Fund's assets which may be invested in any security or other
asset, it is intended that such minimum or maximum percentage limitation be
determined immediately after and as a result of the Fund's acquisition of such
security or other asset. Accordingly, any later increase or decrease in
percentage beyond the specified limitations resulting from a change in values or
net assets will not be considered a violation of this percentage limitation. In
the event that the aggregate of restricted and not readily marketable securities
exceeds 10% of the Fund's net assets, the management of the Fund will consider
whether action should be taken to reduce the percentage of such securities.
The Fund is also subject to other restrictions under the Investment Company
Act of 1940, as amended (the 'Act'), including restrictions on transactions with
affiliated persons. The registration of the Fund under the Act, however, does
not involve any supervision by any Federal or other agency of the Fund's
management or investment practices or policies. In connection with the
qualification or registration of the Fund's shares for sale under the securities
laws of certain states, the Fund has agreed, in addition to the foregoing
investment restrictions, that it will not invest in the securities of any issuer
which has a record of less than three years of continuous operation (including
the operation of any predecessor) if such purchase at the time thereof would
cause more than 5% of the value of the Fund's total assets to be invested in the
securities of such issuer or issuers. The Fund may not purchase or sell real
property (including limited partnership interests but excluding readily
marketable interests in real estate investment trusts, or readily marketable
securities of companies which invest in real estate) commodities or commodity
contracts. In addition, the Fund may not invest in mineral leases.
NET ASSET VALUE OF THE FUND SHARES
The net asset value of Fund Shares is calculated by dividing the value of
the Fund's net assets allocable to Fund Shares by the outstanding number of Fund
Shares. Shares are valued each day the New York Stock Exchange (the 'Exchange')
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in the Fund are valued at their current market value determined
on the basis of market quotations or, if such quotations are not readily
available, such other methods as the Fund's Directors believe would accurately
reflect fair market value.
For purposes of the net asset value computation, readily marketable
portfolio securities listed on the Exchange are valued at the last sale price
reflected on the consolidated tape at the close of regular trading on the
Exchange on the business day as of which such value is being determined. If
there has been no sale on such day, the securities are valued at the mean of the
closing bid and asked prices on such day. If no bid or asked prices are quoted
on such day, then the security is valued by such method as the Board of
Directors of the Fund shall determine in good faith to reflect its fair market
value.
Readily marketable securities not listed on the Exchange but listed on
other national securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. ('NASDAQ') and
National List ('List') are valued in like manner. Portfolio securities traded on
more than one national securities exchange are valued at the last sale price on
the business day as of which such value is being determined as reflected on the
tape at the close of the exchange representing the principal market for such
securities.
Readily marketable securities traded only in the over-the-counter market,
excluding those admitted to trading on the List, are valued at the mean of the
current bid and asked prices as reported by NASDAQ or, in the case of securities
not quoted on NASDAQ, the National Quotation Bureau or such other comparable
sources as the Board of Directors of the Fund deems appropriate to reflect their
fair market value.
United States Government obligations and other debt instruments having 60
days or less remaining until maturity are stated at amortized cost if their
original maturity was 60 days or less, or by amortizing their fair value as of
the 61st day prior to maturity if their original term to maturity exceeded 60
days, (unless in either case the Board of Directors determines that this method
does not represent fair value). All other assets of the Fund, including
restricted and not readily marketable securities, are valued in such manner as
the Board of Directors of the Fund in good faith deems appropriate to reflect
their fair market value.
THE FUND'S INVESTMENT MANAGER
Alliance Capital Management L.P., a New York Stock Exchange listed company,
has been retained under an investment advisory agreement (the 'Advisory
Agreement') to provide investment advice and, in general, to conduct the
management and investment program of the Fund under the supervision and control
of the Fund's Board of Directors.
The Investment Adviser provides office space, investment advisory,
administrative and clerical services, and order placement facilities for the
Fund and pays all compensation of Directors and officers of the Fund who are
affiliated persons of the Investment Adviser.
Under its Advisory Agreement, the Fund pays a quarterly fee to the
Investment Adviser on the first business day of January, April, July and October
equal to 1/4 of 1% (approximately 1% on an annual basis) of the aggregate net
asset value of the Fund at the
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<PAGE>
end of the previous quarter. Such advisory fee is higher than that paid by most
other investment companies, although the Investment Adviser believes the fee is
comparable to those paid by other open-end investment companies of similar size
and investment orientation.
The Investment Adviser is, under the Advisory Agreement, responsible for
any expenses incurred by the Fund in promoting the sale of Fund shares (other
than the portion of the promotional expenses borne by the Fund in accordance
with an effective plan pursuant to Rule 12b-1 under the 1940 Act, and the costs
of printing and mailing Fund prospectuses and other reports to shareholders and
all expenses and fees related to proxy solicitations and registrations and
filings with the Securities and Exchange Commission and with state regulatory
authorities).
The Fund has, under the Advisory Agreement, assumed the obligation for
payment of all of its other expenses. As to the obtaining of services other than
those specifically provided to the Fund by the Investment Adviser, the Fund may
employ its own personnel. For such services, it also may utilize personnel
employed by the Investment Adviser or its affiliates and, in such event, the
services will be provided to the Fund at cost and the payments therefor must be
specifically approved by the Fund's Board of Directors. The Fund paid to the
Investment Adviser a total of $143,023 in respect of such services during the
fiscal period ended November 30, 1994.
The Advisory Agreement provides that the Investment Adviser will reimburse
the Fund for its expenses (exclusive of interest, taxes, brokerage, distribution
services fees pursuant to a Rule 12b-1 plan and other expenditures which are
capitalized in accordance with generally accepted accounting principles, and
extraordinary expenses) which in any year exceed the limits prescribed by any
state in which the Fund's shares are qualified for sale. The Fund may not
qualify its shares for sale in every state. The Fund believes that presently the
most restrictive expense ratio limitations imposed by any state in which the
Fund has qualified its shares for sale is 2.5% of the first $30 million of the
Fund's average net assets, 2.0% of the next $70 million of its average net
assets and 1.5% of its average net assets in excess of $100 million. To
determine whether payment is due the Fund, the expenses of the Fund are
annualized on a monthly basis. Payment of the advisory fee will be reduced or
postponed, if necessary, with any adjustments made after the end of the year.
For the fiscal period ended November 30, 1994 and for the fiscal years
ended December 31, 1993 and 1992 the Investment Adviser received from the Fund
advisory fees of $1,794,378, $1,746,156 and $1,594,876, respectively. For the
fiscal period ended November 30, 1994 and for the fiscal years ended December
31, 1993 and 1992 no reimbursements were required.
The following table lists the person or persons who are primarily
responsible for the day-to-day management of the Fund's portfolio, the length of
time that each person has been primarily responsible, and each person's
principal occupation during the past five years.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
EMPLOYEE; YEAR; TITLE THE PAST FIVE YEARS
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Peter Anastos since 1992--Senior Vice President of Associated with the Investment Adviser
Alliance Capital Management Corp.
Gerald T. Malone since 1992--Vice President of Associated with the Investment Adviser since 1992;
Alliance Capital Management Corp. prior thereto associated with College Retirement
Equities Fund
</TABLE>
THE FUND'S PLAN OF DISTRIBUTION
The Fund has entered into a Distribution Services Agreement (the
'Agreement') with Alliance Fund Distributors, Inc., the Fund's principal
underwriter ('AFD') to permit the Fund to directly or indirectly pay expenses
associated with the distribution of its shares in accordance with a plan of
distribution which is included in the Agreement and has been duly adopted and
approved in accordance with Rule 12b-1 adopted by the Securities and Exchange
Commission under the Act (the 'Plan').
Pursuant to its Plan, the Fund pays to AFD a Rule 12b-1 distribution
services fee, which may not exceed an annual rate of .30% of the Fund's
aggregate average daily net assets attributable to the Fund Shares. The Plan
provides that a portion of the distribution services fee in an amount not to
exceed .25% of the aggregate average daily net assets of the Fund attributable
to Fund Shares constitutes a service fee used for personal service and/or the
maintenance of shareholder accounts.
The Plan provides that AFD will use the distribution services fee received
from the Fund in its entirety for payments (i) to compensate broker-dealers or
other persons for providing distribution assistance, (ii) to otherwise promote
the sale of shares of the Fund, and (iii) to compensate broker-dealers,
depository institutions and other financial intermediaries for providing
administrative, accounting and other services with respect to the Fund's
shareholders. In this regard, some payments under the Plan are used to
compensate financial intermediaries with trail or maintenance commissions in an
amount equal to .25%, annualized, with respect to Fund Shares of the assets
maintained in the Fund by their customers. The Plan also provides that the
Investment Adviser may use its own resources to finance the distribution of the
Fund's shares.
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<PAGE>
The Fund is not obligated under the Plan to pay any distribution services
fee in excess of the amounts set forth above. With respect to Fund Shares,
distribution expenses accrued by AFD in one fiscal year may not be paid from
distribution services fees received from the Fund in subsequent fiscal years.
The Plan is in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75%
and .25%, respectively, of the average annual net assets attributable to that
class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.
Under the Agreement, the Treasurer of the Fund reports the amounts expended
under the Plan and the purposes for which such expenditures were made to the
Directors of the Fund on a quarterly basis. Also, the Agreement provides that
the selection and nomination of Directors who are not interested persons of the
Fund (as defined in the Act) are committed to the discretion of such
disinterested Directors then in office.
During the Fund's fiscal period ended November 30, 1994, the Fund paid
distribution services fees for expenditures under the Agreement to AFD with
respect to Fund Shares in amounts aggregating $408,075, which constituted .30 of
1% of the average daily net assets attributable to the Fund Shares during the
period. Of the $408,075 paid by the Fund and the Investment Adviser under the
Agreement, $27,079 was spent on advertising, $22,906 on the printing and mailing
of prospectuses for persons other than current shareholders, $244,270 for
compensation to broker-dealers (including $77,982 to AFD), $17,293 for
compensation to sales personnel and $96,527 was spent on due diligence, travel,
entertainment, occupancy, communications, taxes, depreciation and other
promotional expenses.
FUND RISK FACTORS
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.
The price of the Fund Shares will fluctuate as the daily prices of the
individual securities in which it invests fluctuate, so that Fund Shares, when
redeemed, may be worth more or less than their original cost. With respect to
investments in foreign currency denominated securities, these fluctuations may
be magnified by changes in foreign exchange rates. Investment in the Fund
involves risks not associated with funds that invest solely in securities of
U.S. issuers. While the Fund invests principally in common stocks and other
equity securities, in order to achieve its investment objective the Fund may at
times use certain types of investment derivatives, such as options, futures,
forwards and swaps. These involve risks different from, and, in certain cases,
greater than, the risks presented by more traditional investments.
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.
RISK OF INVESTMENT IN UNITS
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 and Treasury Obligations. 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 $ per Unit. Part of such cash will, however, represent the
accrual of taxable original issue discount on the Treasury Obligations.
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.
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.
B-12
<PAGE>
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. 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. The
proceeds received by a Unit Holder upon termination of the Trust or
redemption of Units will reflect the actual amounts paid to them, net of
the Deferred Sales Charge. The relevant tax reporting forms sent to Unit
Holders will reflect
B-13
<PAGE>
the actual amount paid to them net of the Deferred Sales Charge.
Accordingly, Unit Holders should not increase the total cost for their
Units by the amount of the Deferred Sales Charge.
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
(including the Initial Sales Charge) 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 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.
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<PAGE>
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 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 1995 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 1995 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
B-15
<PAGE>
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 write call
options and may be subject to foreign currency fluctuations, all of which have
unique Federal income tax consequences. Such investments, options 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 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.
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 as
set forth in the table under 'Volume Discount', herein. In order to enable
purchasers of Units on the date of this Prospectus to purchase Units at a Public
Offering Price of $ per Unit, the Units outstanding as of the
Evaluation Time on the date of this Prospectus (all of which are held by the
Sponsor) may be split (or split in reverse). 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 as set forth in the table under 'Volume Discount', herein. 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.
The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($ per 1,000 Units) from the aggregate sales charge; thus on the date
of the Summary of Essential Information, the maximum Initial Sales Charge, % of
the Public Offering Price, is $ per Units. The Initial Sales Charge is
added to the purchase price at the time of purchase. The Deferred Sales Charge
will initially be $ per Units. The Deferred Sales Charge will be paid
through quarterly deductions of $ per Units resulting from the sale of
Fund Shares commencing on the first Deferred Sales Charge Deduction Date as
shown in the Summary of Essential Information. To the extent the entire Deferred
Sales Charge has not been so deducted at the time of repurchase, redemption or
exchange of the Units, any unpaid amount will be deducted from the proceeds or
in calculating an in kind distribution. For purchases of Units with a value of
$ or more, the Initial Sales Charge is reduced on a graduated basis as shown
below under 'Volume Discount.' Unit Holders acquiring Units of the Trust
pursuant to an exchange of units of a different unit investment trust will be
subject to a reduced Sales Charge which may include an initial sales charge at
the time of the exchange and a Deferred Sales Charge.
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
B-16
<PAGE>
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 less
the Deferred Sales Charge) 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 total 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 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, any
Deferred Sales Charge balance 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 incurred when a Unit Holder sells Units
back to the Sponsor other than the payment of any Deferred Sales Charge balance
payable. 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 Sponsor will receive payments from AFD
based on the amount of Units sold. 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.
B-17
<PAGE>
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 charge for the Trust in the primary market will be reduced
pursuant to the following graduated scale for sales to any person of Units with
a value of $ or more. The sales charge in the secondary market consists of
an Initial Sales Charge which will be reduced pursuant to the following
graduated scale and the remaining portions of the Deferred Sales Charge.
<TABLE>
<CAPTION>
PRIMARY MARKET SECONDARY MARKET
------------------------------------------------ -----------------------------
PERCENT OF PERCENT OF DEFERRED PERCENT OF PERCENT OF
PUBLIC OFFERING NET AMOUNT SALES CHARGE PUBLIC OFFERING NET AMOUNT
PURCHASES PRICE INVESTED PER 1,000 UNITS PRICE INVESTED
- ------------------------------------------- --------------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Less than $ .......................... % % $ % %
$ -$ ............................. % % % %
$ -$ ........................ % % % %
$ or more........................... * * % %
<CAPTION>
DEALER
PURCHASES CONCESSION
- ------------------------------------------- ----------
<S> <C>
Less than $ .......................... %
$ -$ ............................. %
$ -$ ........................ %
$ or more........................... %
</TABLE>
- ------------------
* Deferred Sales Charge only.
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 equal to the Deferred Sales Charge per Unit, subject
to a limit of 5% of the Units.
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
case of Units subject to a DSC, sixty days' notice will be given prior to the
date of the termination of, or material amendment to, the Exchange Option except
that no notice need be given under certain circumstances). 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.
B-18
<PAGE>
To exercise the Exchange Option, a Unit Holder should notify the Sponsor of
his desire to exchange his Units for one or more units of the Exchange Trusts.
Upon the exchange of Units of the Trust, any Deferred Sales Charge balance will
be deducted from the exchange proceeds. If units of the applicable outstanding
series of the Exchange Trust are at that time available for sale, the Unit
Holder may select the series or group of series for which he desires his Units
to be exchanged. The Unit Holder will be provided with a current prospectus or
prospectuses relating to each series in which he indicates interest.
Units of the Exchange Trust trading in the secondary market maintained by
the Sponsor, if so maintained, will be sold to the Unit Holder at a price equal
to the 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
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, net of Trust expenses, 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
The Chase Manhattan Bank (National Association), 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
- ------------------
* In the case of Units subject to a DSC, the exchange sales charge will be the
remaining DSC if greater than the applicable reduced sales charge ($15, $20 or
$25) or if the remaining DSC is less than applicable reduced sales charge, the
Unit will be subject to the remaining DSC and the sales charge payable at the
time of the exchange will be the difference between the amount of the reduced
sales charge and the remaining DSC.
B-19
<PAGE>
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 Fund carefully before deciding to participate.
EXPENSES AND CHARGES
EXPENSES
All or a portion of the Organizational expenses and charges incurred in
connection with the establishment of the Trust including the cost of the
preparation, printing and execution of the Indenture, Registration Statement and
other documents relating to the Trust, Federal and State registration fees and
costs, the initial fees and expenses of the Trustee, legal and auditing expenses
and other out-of-pocket expenses, will be paid by the Trust. Historically, the
costs of establishing unit investment trusts have been borne by a trust's
sponsor. Advertising and selling expenses will be paid by the Sponsor and the
underwriters, if any, at no cost to the Trust.
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, Evaluator's fees and Trust expenses accrue monthly and
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 but such fees will not be increased in excess of increases in the
Trustee's costs. 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-20
<PAGE>
GOVERNMENT SECURITIES EQUITY TRUST
REINVESTMENT APPLICATION
I/We hereby authorize and direct The Chase Manhattan Bank (National Association)
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 Class A shares of the Alliance Technology Fund, Inc.
I/WE HOLD GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
(This Series can only reinvest into Class A shares of the Alliance Technology
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:
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Forward application to: The Chase Manhattan Bank (National Association)
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 pay the expenses of the Trust. (see 'Expenses
and Charges'). The Trustee may also withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of a Trust's assets for purposes of determining
the amount of distributions until such time as the Trustee shall return all or
any part of such amounts to the appropriate account. 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').
It is anticipated that the net asset value per Unit will be reduced
quarterly by the quarterly payment of the deferred sales charge. Distributions
of amounts necessary to pay the deferred portion of the sales charge will be
made to an account maintained by the Trustee for purposes of satisfying Unit
Holders' deferred sales charge obligations. Fund Shares will be sold to pay the
deferred sales charge to the Sponsor on each Deferred Sales Charge Deduction
Date set forth in the Summary of Essential Information.
B-21
<PAGE>
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 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, for payment of the Deferred Sales
Charge 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, however, any unpaid DSC will reduce the redemption
proceeds. 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
B-22
<PAGE>
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').
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, (d) any Deferred Sales Charge
balance and (e) 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
IncomeVertible(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,
B-23
<PAGE>
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
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 and the Deferred
Sales Charge.
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.
B-24
<PAGE>
TRUSTEE
The Trustee is The Chase Manhattan Bank (National Association), a national
banking association with its principal executive office located at 1 Chase
Manhattan Plaza, New York, New York 10081 and its unit investment trust office
at 770 Broadway, New York, New York 10003. The Trustee is subject to supervision
by the Comptroller of the Currency, 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 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 or for payment
of the DSC 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.
B-25
<PAGE>
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.'
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
B-26
<PAGE>
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.
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-27
<PAGE>
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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 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Essential Information...................................... A- 4
Independent Auditors' Report.......................................... A- 7
Statement of Financial Condition...................................... A- 8
Schedule of Portfolio Securities...................................... A- 9
The Trust............................................................. B- 1
Trust Formation................................................... B- 1
Securities Selection.............................................. B- 2
Stripped U.S. Treasury Obligations................................ B- 2
Alliance Technology Fund, Inc..................................... B- 3
General Information Regarding the Fund............................ B- 3
Additional Investment Policies and Practices...................... B- 5
Fundamental Investment Policies................................... B- 9
Net Asset Value of the Fund Shares................................ B-10
The Fund's Investment Manager..................................... B-10
The Fund's Plan of Distribution................................... B-11
Fund Risk Factors................................................. B-12
Risk of Investment in Units....................................... B-12
The Units......................................................... B-13
Tax Status of the Trust............................................... B-13
Retirement Plans...................................................... B-16
Public Offering of Units.............................................. B-16
Public Offering Price............................................. B-16
Public Distribution............................................... B-17
Secondary Market.................................................. B-17
Profit of Sponsor................................................. B-17
Volume Discount................................................... B-18
Employee Discount................................................. B-18
Exchange Option....................................................... B-18
Federal Income Tax Consequences................................... B-19
Reinvestment of Trust Distributions................................... B-19
Expenses and Charges.................................................. B-20
Expenses.......................................................... B-20
Fees.............................................................. B-20
Other Charges..................................................... B-20
Rights of Unit Holders................................................ B-21
Certificates...................................................... B-21
Certain Limitations............................................... B-21
Distributions..................................................... B-21
Reports and Records............................................... B-22
Redemption........................................................ B-22
Comparison of Public Offering Price and Redemption
Price............................................................. B-23
Sponsor............................................................... B-23
Limitations on Liability.......................................... B-24
Responsibility.................................................... B-24
Resignation....................................................... B-24
Trustee............................................................... B-25
Limitations on Liability.......................................... B-25
Responsibility.................................................... B-25
Resignation....................................................... B-25
Evaluator............................................................. B-25
Limitations on Liability.......................................... B-25
Responsibility.................................................... B-26
Resignation....................................................... B-26
Amendment and Termination of the Indenture............................ B-26
Amendment......................................................... B-26
Termination....................................................... B-26
Tax Impact of In Kind Distribution Upon Termination............... B-26
Legal Opinions........................................................ B-27
Independent Auditors.................................................. B-27
</TABLE>
[LOGO]
SPONSOR
PRUDENTIAL SECURITIES INCORPORATED
ONE SEAPORT PLAZA
199 WATER STREET
NEW YORK, NEW YORK 10292
TRUSTEE
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
1 CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10081
EVALUATOR
KENNY S&P EVALUATION SERVICES,
A DIVISION OF
J.J. KENNY CO., INC.
65 BROADWAY
NEW YORK, NEW YORK 10006
FUND SHARES
ALLIANCE TECHNOLOGY FUND, INC.
- --------------------------------------------------------------------------------
<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.(2)
Kenny S&P Evaluation Services, a division
of J.J. Kenny Co., Inc. (as
Evaluator)(included in Exhibit 23).
The following Exhibits:
(4) Ex-3.(i) - Certificate of Incorporation of
Prudential Securities Incorporated dated
March 29, 1993.
(4) Ex-3.(ii) - Revised By-Laws of Prudential Securities
Incorporated as amended through March 5,
1993.
(5) Ex-4.a - Trust Indenture and Agreement dated May
16, 1989.
(1) Ex-4.b - Draft of Reference Trust Agreement.
(2) Ex-5 - Opinion of counsel as to the legality of
the securities being registered.
(2) Ex-23 - Consent of Kenny S&P Evaluation Services,
a division of J.J. Kenny Co., Inc. (as Evaluator).
(6) Ex-24 - Powers of Attorney executed by a majority
of the Board of Directors of Prudential
Securities Incorporated.
(2) 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
II-1
<PAGE>
Rules 15b1-1 and 15b3-1 under the
Securities Exchange Act of 1934 (1934 Act
File No. 8-16267).
(3) Ex-99.2 - Affiliations of Sponsor with other
investment companies.
(3) Ex-99.3 - Broker's Blanket Policies, Standard Form
No. 14 in the aggregate amount of
$62,500,000.
(1) Ex-99.4 Agreement among Prudential Securities Incorporated,
Alliance Capital Management L.P., Alliance Fund
Distributors, Inc. and Alliance Technology Fund, Inc.
__________________________
(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated by reference to exhibit of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
Prudential Unit Trusts, Insured Tax-Exempt Series 1,
Registration No. 2-89263.
(4) Incorporated by reference to exhibit of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
Government Securities Equity Trust Series 5,
Registration No. 33-57992.
(5) Incorporated by reference to exhibit of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
Government Securities Equity Trust Series 1,
Registration No. 33-25710.
(6) Incorporated by reference to exhibits of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
National Municipal Trust Series 172, Registration No.
33-54681.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant, Government Securities Equity Trust Series
9, 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 11th day of December, 1995.
GOVERNMENT SECURITIES EQUITY TRUST SERIES 9
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By the following persons,* who constitute a
majority of the Board of Directors of
Prudential Securities Incorporated
ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
VINCENT T. PICA
RICHARD A. REDEKER
HARDWICK SIMMONS
LEE B. SPENCER, JR.
By /s/ KENNETH SWANKIE
(Kenneth Swankie
Senior Vice President,
Manager - Unit Investment Trust
Department, As Authorized Signatory for
Prudential Securities Incorporated and
Attorney-in-Fact for the persons listed
above)
_________________
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of
its name in the Prospectus included in this Registration
Statement is contained in its opinion filed as Exhibit 5 to
this Registration Statement.
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To be filed by Amendment
II-5
<PAGE>
EX-4.B
Executed in 7 Parts
Counterpart No. ( )
GOVERNMENT SECURITIES EQUITY TRUST
SERIES 9
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated January , 1996
among Prudential Securities Incorporated, as Depositor, The
Chase Manhattan Bank (National Association), 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:
<PAGE>
-2-
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. Reference to United States Trust Company of New York
in its capacity as Trustee is replaced by The Chase
Manhattan Bank (National Association) throughout the
Basic Agreement.
D. Article I, entitled "Definitions", Section 1.01 shall
be amended to add the following numbered paragraphs
and renumber the succeeding paragraphs accordingly:
"(7) "Deferred Sales Charge" shall mean any
deferred sales charge payable in accordance with the
provisions of Section 3.12 hereof, as set forth in
the Prospectus for a Trust."
"(18) Supplemental Reference Trust Agreement"
shall mean a document pursuant to which Additional
Units are deposited in conection with an increase in
the number of Units initially specified in a
Reference Trust Agreement."
and to insert the following language in paragraph (6)
defining "Contract Securities" after the reference to
Reference Trust Agreement and redesignate the
subsequent clause accordingly:
"(ii) Securities listed in schedules of
Supplemental Reference Trust Agreements"
Renumbered paragraph (9) "Evaluation Time" shall be
amended by replacing "4:15 P.M. New York Time" with
"as of the close of regular trading on the New York
Stock Exchange (ordinarily 4:00 P.M. New York Time)"
and 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
(9)) throughout the Basic Agreement.
Renumbered paragraph (22) defining "Trustee" shall be
amended as follows:
<PAGE>
-3-
"Trustee shall mean The Chase Manhattan Bank
(National Association), or any successor trustee
appointed as hereinafter provided."
E. Article II, entitled "Deposit of Securities;
Acceptance of Trust; Issuance of Units; Form of
Certificates" shall be amended as follows:
(i) Section 2.03 Issue of Units shall be amended to
add the following language at the end thereof:
"The number of Units may be increased through a
split of the Units or decreased through a
reverse split thereof, as directed by the
Depositor, on any day on which the Depositor is
the only Unit Holder, which revised number of
Units shall be recorded by the Trustee on its
books."
(ii) 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."
F. Article III, entitled "Administration of Trust" shall
be amended as follows:
(i) The first part of the first sentence of Section
3.01 Initial Costs shall be amended to
substitute the following language before the
phrase "provided, however":
"With respect to the Trust, the cost of the
preparation and printing of the Certificates,
Indenture, Registration Statement and other
documents relating to the Trust, Federal and
State registration fees and costs, the initial
fees and expenses of the Trustee and Evaluator,
legal and auditing expenses and other out-of-
pocket organizational expenses, to the extent
not borne by the Depositor, shall be paid by the
Trust;"
Section 3.01 shall be further amended to add the
following language:
<PAGE>
-4-
"To the extent the funds in the Interest and
Principal Accounts of the Trust shall be
insufficient to pay the expenses borne by the
Trust specified in this Section 3.01, the
Trustee shall advance out of its own funds and
cause to be deposited and credited to the
Interest Account such amount as may be required
to permit payment of such expenses. The Trustee
shall be reimbursed for such advance in the
manner provided in Section 3.05 at the rate of
accrual set forth in the next sentence, and the
provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust
expenses including, without limitation, the lien
in favor of the Trustee therefor, shall apply to
the payment of expenses made pursuant to this
Section. For purposes of calculation of
distributions under Section 3.05 and the
addition provided in clause (4) of Section 5.01,
the expenses borne by the Trust pursuant to this
Section shall be deemed to accrue at a daily
rate over the time period specified for their
amortization provided in the Prospectus;
provided, however, that nothing herein shall be
deemed to prevent, and the Trustee shall be
entitled to, full reimbursement for any advances
made pursuant to this Section no later than the
termination of the Trust; The Depositor will
provide the Trustee with a written estimate of
organizational expenses upon which the Trustee
shall be entitled to rely unless and until a
revised written estimate of such expenses is
delivered to the Trustee by the depositor, in
which event the Trustee shall make appropriate
adjustments to Unit Value and the evaluation of
the Trust pursuant to Section 5.01, and to the
accrual of such expenses of purposes of
calculating distributions."
(ii) 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
<PAGE>
-5-
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."
(iii) 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"
(iv) Section 3.05 shall be further amended to add the
following paragraph after the end thereof: "On
each Deferred Sales Charge payment date set
forth in the prospectus for a Trust, the Trustee
shall pay the account created pursuant to
Section 3.15 the amount of the Deferred Sales
Charge payable on each such date as stated in
the prospectus for a Trust. Such amount shall
be withdrawn from the Principal Account and the
Income Account from the amounts therein
designated for such purpose or otherwise
deducted from such accounts."
(v) Sections 3.06 A(3) and 3.06B(3) shall be amended
by adding the following: "and any Deferred
Sales Charge paid".
(vi) Section 3.08 shall be amended by adding the
following at the end thereof: "In order to pay
the Deferred Sales Charge, the Trustee shall
sell or liquidate such an amount of Securities
at such time and from time to time and in such
<PAGE>
-6-
manner as the Depositor shall direct such that
the proceeds of such sale or liquidation shall
be sufficient to pay the amount required to be
paid to the Depositor pursuant to the Deferred
Sales Charge program as set forth in the
prospectus for a Trust."
G. Section 3.12 shall be added as follows:
Section 3.12. Deferred Sales Charge. If the
Reference Trust Agreement and prospectus for a Trust
specifies a Deferred Sales Charge, the Trustee shall,
on the dates specified in and as permitted by the
prospectus, withdraw from the Income Account or from
the Principal Account, as directed by the Depositor,
an amount per Unit specified in the prospectus and
credit such amount to a special, non-Trust account
maintained at the Trustee out of which the Deferred
Sales Charge will be distributed to the Depositor.
If the balances in the Income and Principal Accounts
are insufficient to make any such withdrawal, the
Trustee shall, as directed by the Depositor, either
advance funds in an amount equal to the proposed
withdrawal and be entitled to reimbursement of such
advance upon the deposit of additional monies in the
Income Account or the Principal Account, sell
Securities and credit the proceeds thereof to such
special Depositor's Account or credit Securities in
kind to such special Depositor's Account. Such
directions shall identify the Securities, if any, to
be sold or distributed in kind and shall contain, if
the Trustee is directed by the Depositor to sell a
Security, instructions as to execution of such sales.
If a Unit Holder redeems Units prior to full payment
of the Deferred Sales Charge, the Trustee shall, if
so provided in the Reference Trust Agreement and
prospectus, on the Redemption Date, withhold from the
Redemption Price payment to such Unit Holder an
amount equal to the unpaid portion of the Deferred
Sales Charge as such amount is certified by the
Depositor to the Trustee prior to the Redemption
Date, upon which certification the Trustee shall be
entitled to rely, and distribute such amount to such
special Depositor's Account or, if the Depositor
shall purchase such Unit pursuant to the terms of
Section 5.02 hereof, the Depositor shall pay the
Redemption Price for such Unit less the unpaid
portion of the Deferred Sales Charge. The Depositor
may at any time instruct the Trustee to distribute to
<PAGE>
-7-
the Depositor cash or Securities previously credited
to the special Depositor's Account.
H. Article V, entitled "Trust Evaluation; Redemption,
Purchase, Transfer, Interchange or Replacement of
Certificates," Section 5.01 Trust Evaluation shall be
amended as follows:
(i) the second sentence of the first paragraph of
Section 5.01 shall be amended by deleting the
word "and" appearing immediately prior to
subsection (3) of such sentence and inserting
the following at the end of such sentence: ",
and (4) amounts representing organizational
expenses paid less amounts representing accrued
organizational expenses of a Trust."
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee
that there will be no further deposits of
Additional Securities pursuant to section 2.05,
the Depositor shall provide the Trustee with
written estimates of (i) the total
organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the
total number of Units to be issued in conneciton
with the initial deposit and all anticipated
deposits of Additional Securities. For purposes
of calculating the value of the Trust and Unit
Value, the Trustee shall treat all such
anticipated expenses as having been paid and all
liabilities therefor as having been incurred,
and all Units as having been issued, in each
case on the date of the Reference Trust
Agreement, and, in connection with each such
calculation, shall take into account a pro rata
portion of such expense and liability based on
the actual number of Units issued as of the date
of such calculation. In the event the Trustee
is informed by the Depositor of a revision in
its estimate of total expenses or total Units
and upon the conclusion of the deposit of
Additional Securities, the Trustee shall base
calculations made thereafter on such revised
estimates or actual expenses, respectively, but
such adjustment shall not affect calculations
made prior thereto and no adjustment shall be
made in respect thereof.
<PAGE>
-8-
I. 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"
J. 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)."
* * * * *
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 9.
(b) The term "Fund" shall mean shares ("Fund
Shares") of the Alliance Technology 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
______ as of the date hereof.
<PAGE>
-9-
(f) A Unit of the Trust is hereby declared
initially equal to 1/_____th of the Trust.
(g) The term "First Settlement Date" shall mean
______________, 1996.
(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
__________________.
(k) The Trustee's Annual Fee shall be: $
(per 100 Units) for 5,000,000 and above units
outstanding; $ (per 100 Units) for 3,000,000 -
4,999,999 units outstanding; $ (per 100 Units)
for 1,500,000 - 2,999,999 units outstanding; $
(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 9 -- 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.
(m) The Units of the Trust shall be subject to
a deferred Sales Charge.
[Signatures and acknowledgments on separate pages]
<PAGE>
AGREEMENT
THIS AGREEMENT, made this 11th day of December, 1995,
by and among, Prudential Securities Incorporated (the "Spon-
sor"), Alliance Capital Management L.P. ("ACM") (with respect
only to certain provisions identified on the signature page
hereto), Alliance Fund Distributors, Inc. ("AFD") and Alliance
Technology Fund, Inc., an open-end, diversified management
investment company for which AFD acts as principal underwriter.
WHEREAS, the Sponsor proposes to organize and sponsor
unit investment trusts to be known as Government Securities
Equity Trust ("GSET") or such other name as the Sponsor shall
determine (the "Trust"); and AFD proposes to offer Class A
shares (the "Mutual Fund Shares"), for deposit in the Trust, of
Alliance Technology Fund, Inc. (the "Fund") (it being under-
stood that the Sponsor, AFD and ACM may negotiate similar
arrangements with other investment companies managed by ACM in
the future) and to offer Mutual Fund Shares for inclusion in
the respective portfolios of successive series of the Trust
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual under-
takings and agreements of the parties contained herein, the
parties hereby agree as follows:
1. Condition Precedent. If the Staff of the Secu-
rities and Exchange Commission (the "Commission") shall
request, require or advise, or should the Sponsor otherwise
deem it appropriate, that an order be obtained from the Commis-
sion in connection with the creation of the Trust or the offer-
ing of units of the Trust, the obligations of the parties
hereto are subject to the Sponsor obtaining, at its own cost
and expense, exemptive relief from the Commission for operation
of the Trust, based upon an Application to the Securities and
Exchange Commission for an Exemptive Order pursuant to Sections
6(c), 17(d) and Rule 17(d)(1) and pursuant to such other sec-
tions of the Investment Company Act of 1940 (the "1940 Act") as
deemed necessary by the Sponsor (the "Application"), including
as applicants for such order the Trust, the Sponsor, AFD, ACM
and the Fund and/or such other affiliates or entities as the
Commission may require or as may otherwise be appropriate, and
to request relief from such other sections of the 1940 Act as
mutually agreed upon by the parties or as requested by the
staff of the Commission. AFD, ACM and the Fund, if named as
applicants in such Application, shall be permitted to review
<PAGE>
-2-
and comment on, and shall be required to each consent to the filing of,
and, upon approval, to execute, such Application. If the Staff does not
require an order or if an order is otherwise deemed by the Sponsor as not
necessary, the parties will rely on an opinion of counsel to the Sponsor,
which opinion may refer to the position of the Staff contained in a letter
issued to Equity Securities Trust, Series 4 dated January 19, 1994, to the
effect that the Trust is registered under the 1940 Act and that the sale of
units therefrom and the deposit of Mutual Fund Shares and zero coupon
obligations in the Trust shall not constitute a violation of the 1940 Act,
including Section 12 of the 1940 Act.
2. Creation of the Trust: Obligations of the Sponsor. In
connection with the creation of the Trust, the Sponsor shall perform all
the ordinary and regular duties of a sponsor of a unit investment trust,
including, but not limited to:
a. Filing with the Commission a Notification of Registration
on Form N-8A and a Registration Statement on Form N-8B-2 for the
Trust under the 1940 Act and for each series, a registration
statement on Form S-6 ("Registration Statement"), containing a
prospectus, for registration of the units of a series of the Trust
under the Securities Act of 1933, as well as other documents
necessary to complete registration requirements under applicable
federal securities laws; and preparing and filing all documents
necessary to comply with registration requirements of the Blue Sky
authorities of various states;
b. The selection of a trustee, auditors, and an evaluator
for the Trust; and execution and delivery of a Trust Indenture and
Agreement (the "Indenture") and all other documents necessary for the
creation and operation of the Trust. Only the Sponsor, except to the
extent restricted by the Indenture, shall have the authority to
replace any of the above parties;
c. Selection of securities for inclusion in the portfolio of
the first series created after the date of the Agreement and each
subsequent series of the Trust, including the purchase and inclusion
of Mutual Fund Shares, the number of such shares of such Fund to be
determined by the Sponsor in its sole discretion;
<PAGE>
-3-
d. Determination of the size of each series, subject to
applicable regulatory limitations, if any, and the frequency and
timing of offering of such series;
e. Paying certain expenses of the Trust related to sales and
promotional activities, legal costs and administrative expenses, as
provided for in Section 6.b hereof and receiving reimbursement from
the Trust of all or a portion of such expenses; and
f. Although not obligated to do so, to maintain a market for
units of the Trust.
3. Creation of the Trust: Obligations of AFD, ACM and the
Fund. In connection with the creation of the Trust:
a. AFD and the Fund agree to provide, at their own expense,
as appropriate, for inclusion in the Registration Statement on
Form S-6 and Form N-8B-2 (collectively referred to hereinafter as the
"Registration Statements") for each series of the Trust, any and all
information regarding the Fund, the Mutual Fund Shares, ACM, AFD, and
their respective affiliates as may be reasonably requested by the
Sponsor as necessary to make each Registration Statement accurate and
complete as to all material matters (it being understood that the
Fund's obligations pursuant to this Section 3(a) shall relate only to
information regarding the Fund and the Mutual Fund Shares);
b. AFD and ACM agree to use their best efforts to cooperate
with, and to cause their affiliates to cooperate with, and assist the
Sponsor in obtaining any exemptive relief necessary to create and
register the Trust and in the creation of each series of the Trust
and the advertisement, marketing and sale of units of each such
series; and
c. AFD agrees to pay certain amounts to the Sponsor of the
Trust as provided for in Section 6.b hereof.
4. Exclusive Dealing; Termination. ACM and AFD agree that
the Trust will constitute an exclusive arrangement among them and the
Sponsor and that neither ACM, AFD nor any of their respective affiliates
will enter into an agreement or in any way act with an entity not a party
to this Agreement to create, market, otherwise promote or permit Mutual
Fund Shares to be included in a potentially competitive unit investment
<PAGE>
-4-
trust or other product consisting of zero coupon treasury bonds and mutual
fund shares of any entity for a period of six (6) months from the date of
this Agreement. For purposes of this Section 4, a unit investment trust or
other product shall not be deemed to be competitive if it is marketed and
sold solely outside the United States. Any party may, upon the delivery of
forty-five (45) days written notice to other parties, (i) terminate the
provisions of this Agreement which provide for exclusive dealing or
(ii) terminate the entire Agreement, in either case, the termination to be
effective on the later of the forty-fifth day after delivery of such notice
or six months after the date of this Agreement, provided, however, that in
the case of (i), the parties may agree to continue to do business pursuant
to this Agreement on a non-exclusive basis. The termination of this
Agreement pursuant to this Section 4 shall in no way affect the rights and
responsibilities of the parties with respect to any series of the Trust
previously created pursuant to this Agreement.
In the event of the termination of this Agreement, the parties
agree that all expenses incurred in connection with the creation of a
Trust, regardless of whether or not an Indenture for such Trust was
executed or units of such Trust were offered for sale, shall be borne by
the parties in accordance with the provisions of Section 6.b hereof. If,
after the effective date of this Agreement, the Sponsor is unable or
unwilling to consummate the transaction contemplated by this Agreement, AFD
agrees to pay the Sponsor the amount set forth in Section 6.(b)(v) hereof.
Payment shall be made within seven (7) Business Days after the sending of
written notice to the party from whom payment is sought and shall be made
by check drawn on a New York clearing house bank or by wire transfer,
provided that the parties shall notify each other of the method of payment
to be used prior to the payment date. Anything in this Section 4 to the
contrary notwithstanding, this Agreement does not in any way restrict the
ability of the Sponsor to offer and/or sell competing products and/or other
unit investment trusts.
5. Sale of Mutual Fund Shares to the Trust. As long as this
Agreement remains in effect with respect to the sale of Mutual Fund Shares
to the Trust:
a. AFD and the Fund agree to make available to the Sponsor,
from time to time, as requested by the Sponsor, information regarding
the size of the Fund in order to enable the Sponsor to comply with
terms and conditions of
<PAGE>
-5-
any exemptive order issued by the Commission concerning limitations
on the number of Mutual Fund Shares to be included in each series;
b. AFD and the Fund agree to waive or cause to be waived any
and all sales loads and sales fees on the sale of Mutual Fund Shares
to the Trust and to waive, or cause to be waived, any sale loads or
sale fees on purchase of Mutual Fund Shares by unitholders with the
proceeds of distributions received from the Trust; and
c. AFD agrees that, on the date(s) of deposit of Mutual Fund
Shares into the portfolio (each, a "Date of Deposit") for each series
of the Trust, it will enter into and deliver to the Trust or to the
Sponsor a contract for sale of Mutual Fund Shares, in such amounts
as the Sponsor shall request, such request to be made within a rea-
sonable period of time prior to each Date of Deposit; and, if
requested by the Sponsor, to enter into supplemental contracts for
the sale of Mutual Fund Shares to the Trust subsequent to the Date of
Deposit, as the Sponsor, in its sole discretion, may determine.
d. AFD and the Fund agree to comply with such conditions as
may be imposed by the Commission on it in connection with an
Application to the Commission, if any.
6. Continuing Obligations. During the life of the Trust,
the parties hereto shall have the following obligations:
a. (i) The Sponsor, AFD and the Fund shall mutually agree
upon the designation of shares for inclusion in each series of the
Trust. The Sponsor shall determine the procedures for the marketing
and sales of units of each series of the Trust. The Sponsor will
allow the sale of units of the Trust through unaffiliated dealers and
will offer such dealers sales load concessions, both as it may
determine in its sole discretion.
(ii) The names "Prudential Securities Incorporated" and
Government Securities Equity Trust ("GSET") or such other name as the
parties hereto shall mutually determine or any name or title derived
therefrom or intended to be similar thereto and the logo for the
Trust and any logo customarily used by the Sponsor or any of its
affiliates shall be the sole property of the Sponsor. The Fund, ACM
and AFD shall have no right to use said names or logos in
<PAGE>
-6-
any manner, for any product without the prior written permission of
the Sponsor. The name of the Fund or any name or title derived
therefrom or intended to be similar thereto and any logo customarily
used by any Alliance entity or Alliance Fund shall be the sole
property of the particular Alliance entity or Fund. The Sponsor
shall have no rights to use said names or logos in any manner for any
product without the prior written permission of such entity or Fund
other than in connection with the Trust.
b. The Sponsor and AFD agree as follows:
(i) Upon the sale by the Sponsor of units with an
aggregate public offering price, net of the redemption price of units
redeemed, as set forth in the Schedule below, AFD agrees to pay to
the Sponsor the payment due under the Schedule, such amount to be
paid within thirty (30) business days after notice is given that such
event has occurred;
Schedule
Total Net Unit Sales Payment Due
$ 10,000,000 $20,000
$ 20,000,000 $20,000
$ 30,000,000 $20,000
$ 40,000,000 $20,000
$ 50,000,000 $20,000
$ 75,000,000 $50,000
$100,000,000 $50,000
(ii) The Sponsor will bear the expenses related to
(x) preparation and printing of the initial and subsequent prospectus
and (y) all advertising, marketing, sales and promotional material
for the Trust. AFD will bear the expenses related to prospectuses
and all advertising, marketing, sales and promotional material
relating solely to the Fund and which in no way reference the Trust,
the Units or the Sponsor which material and/or prospectuses may be
used by the Sponsor as part of promotional material for the Trust (it
being understood that nothing in this Section 6(b)(ii) shall be
deemed to supercede any contract or agreement between AFD and the
Fund concerning the payment of such expenses);
<PAGE>
-7-
(iii) The Sponsor shall bear all costs incurred in
connection with the creation, maintenance and operation of the Trust,
to the extent not paid for by the Trust, including legal fees and
expenses, auditing costs and evaluator's fees and federal and state
securities laws filing fees; and
(iv) The Sponsor shall be responsible for all its costs
and expenses associated with the administration of the Trust,
including the cost of maintaining a secondary market in units of the
Trust, except for those costs and expenses incurred as a result of
actions of AFD, affiliates thereof or the Fund which costs shall be
payable by AFD, provided, however, that AFD shall consent to the
incurrence of such costs, such consent not to be unreasonably
withheld. To the extent that such costs and expenses incurred as a
result of actions of AFD, affiliates thereof or the Fund are incurred
by the Sponsor at a time when costs and expenses would otherwise be
incurred, AFD shall reimburse the Sponsor only for the incremental
costs and expenses incurred by the Sponsor arising as a result of the
actions of AFD, the Fund or affiliates thereof. Notwithstanding the
foregoing, the Sponsor shall not be responsible for the costs of AFD
or affiliates incurred in connection with activities of its
"wholesalers" including salaries and travel and entertainment
expenses of such entities and individuals.
(v) In the event the Sponsor is unable or unwilling to
consummate the transaction contemplated hereby resulting from actions
taken or failed to be taken by ACM, AFD, the Fund or affiliates
thereof, AFD agrees to reimburse the Sponsor for its costs incurred
relating to the Trust but such reimbursement shall not exceed
$200,000. In the event the Sponsor is unable or unwilling to
consummate the transaction contemplated hereby resulting from events
relating to ACM, AFD, the Fund or affiliates thereof or other market
events, AFD agrees to reimburse the Sponsor for one-half of the
Sponsor's costs incurred relating to the Trust but such reimbursement
shall not exceed $100,000. In the event the Sponsor is unable or
unwilling to consummate the transaction contemplated hereby for
reasons not relating to actions taken or failed to be taken or other
events relating to ACM, AFD, the Fund or affiliates thereof, neither
AFD, ACM nor the Fund shall have any obligation to reimburse the
Sponsor for any expenses incurred by the Sponsor.
<PAGE>
-8-
c. This Agreement shall not prevent AFD and its
"wholesalers" from promoting any investment products to sales
representatives of the Sponsor provided promotion of such products
has been approved by Prudential Securities Incorporated.
d. The Fund agrees to calculate its net asset value per
share of the Mutual Fund Shares daily on the basis of their net asset
value as of the close of regular trading on the New York Stock
Exchange (ordinarily 4:00 p.m. New York time) and every day that the
Fund computes its net asset value per Class A share it shall, as
promptly as reasonably practical, supply such net asset value per
share to the evaluator of the Trust, provided, that the name and
address of such person shall be designated to the Fund by the
Sponsor.
e. ACM, AFD and the Fund will use their best efforts to
comply with all applicable regulatory and disclosure requirements
under the federal securities laws concerning the Fund.
f. No advertising material containing the name of ACM, AFD
or the Fund will be used by the Sponsor in connection with the Trust
without the written consent of such entity. Similarly, no
advertising material containing the name of the Sponsor or any of its
affiliates or funds or trusts will be used by ACM or AFD or the Fund
or affiliates thereof without the Sponsor's written consent.
g. AFD and the Fund agree, at their own expense, as
appropriate, to provide the Sponsor, from time to time, any
information consistent with that originally provided pursuant to
Section 3.a hereof as may be necessary in order to update the
information concerning ACM, AFD, affiliates thereof, the Fund and the
Mutual Fund Shares contained in the Registration Statement on Form
S-6 and any post-effective amendments or supplements thereto and
related prospectus and advertisements.
h. AFD will provide the Sponsor from time to time with all
information in its possession concerning the sale of units of the
Trust that may be necessary in order for the Sponsor to comply with
applicable Blue Sky requirements in the various states.
<PAGE>
-9-
i. In connection with investment in Fund shares, if any, by
unit holders of the Trust of distributions received from the Trust,
AFD agrees to deliver the amount of Mutual Fund Shares necessary to
satisfy such investment requests by Trust unit holders and, the Fund
agrees to waive any and all sales loads and fees which would other-
wise be paid or payable upon a purchase or disposition of such Mutual
Fund Shares. Notwithstanding the termination of this Agreement, the
Fund agrees not to terminate Trust unit holders' accounts created in
connection with the investment of Trust distributions should such
accounts be smaller than the minimum fund account size during the
life of the Trust.
j. AFD and the Fund and their affiliates agree to keep
confidential the names and identification of all Trust unit holders
participating in the reinvestment of Trust distributions in Fund
shares, to make no use of such names or identification, not to
solicit in any manner such Trust unit holders, and not to sell,
assign, convey or otherwise transfer such list of Trust unit holders
without the prior written approval of the Sponsor provided however
that routine shareholder communications made by AFD or the Fund shall
be permitted.
k. AFD agrees to pay to the Trust for as long as such series
remains outstanding, the 12b-1 fees (not including any service fee)
received with respect to the Mutual Fund Shares contained in each
series of the Trust. Such rebate shall be made to the Trust on the
payment date of such fees.
l. The Sponsor agrees that upon the exchange of units of the
Trust by a unit holder for units of any other series of Government
Securities Equity Trust, any uncollected deferred sales charge on
units of the Trust will reduce the amount payable to such exchanging
unit holder.
7. Indemnifications. a. AFD agrees to indemnify and hold
harmless the Sponsor from and against any and all losses, claims, damages
and liabilities of the Sponsor and expenses related thereto arising from or
relating to this Agreement, as follows:
(i) Any untrue statement or alleged untrue statement of a
material fact contained in the prospectus of the Fund
<PAGE>
-10-
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(ii) Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, prospectus or
sales literature of a particular series of the Trust or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon or in conformity with information furnished to the
Sponsor by ACM, AFD or the Fund for use in the Trust's Registration
Statement, prospectus or sales literature, or any amendment or sup-
plement thereto;
(iii) Any action of ACM, mutual AFD or the Fund which is illegal
or which constitutes a breach of this Agreement;
(iv) AFD's and the Fund's failure to provide, on a
timely basis, accurate net asset value determinations relating to the
Mutual Funds Shares as provided for in Section 6.d hereof;
(v) The inability, as a result of its or its affiliates
own acts or omissions, of ACM and its affiliates to continue to act
as investment adviser to the Fund, or in any other capacity presently
contemplated with respect to the Fund or the Trust, for any reason
whatsoever, including but not limited to sanctions imposed upon ACM
or any of its affiliates by the Commission pursuant to provisions of
the Investment Advisers Act or other applicable federal securities
laws; and
(vi) The voluntary or involuntary termination and liquidation
of the Fund except where such termination is accompanied by the
creation of a successor fund with substantially similar investment
objectives and policies as the Fund.
If any action is brought against the Sponsor alleging claims
described in subsections (i) through (vi) hereof, the Sponsor shall
promptly notify AFD in writing of the institution of such action and AFD
shall assume the defense of such action,
<PAGE>
-11-
including the employment of counsel and payment of expenses. The Sponsor
shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Sponsor
unless (1) the employment of such counsel shall have been authorized in
writing by AFD in connection with the defense of such action, or (2) AFD
shall not have employed counsel agreeable to the Sponsor to have charge of
the defense of such action or (3) the Sponsor shall have concluded that
there are defenses available to it which are different from or additional
to those available to AFD (in which case AFD shall not have the right to
direct the defense of such action on behalf of the Sponsor), in any of
which three events such fees and expenses shall be borne by AFD (it being
understood, however, that AFD shall not be liable for the expenses of more
than one separate counsel in any one action or series of related actions in
the same jurisdiction representing the Sponsor). Anything in this
paragraph to the contrary notwithstanding, AFD shall not be liable for any
settlement of such claim or action effected without its written consent.
b. The Sponsor agrees to indemnify and hold harmless the Fund,
ACM and AFD from and against any and all losses, claims, damages and
liabilities of the Fund, ACM or AFD and expenses relating thereto arising
from or related to this Agreement as follows:
(i) Any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the prospectus of
a particular series of the Trust or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except to the extent that such
an untrue statement or alleged untrue statement or alleged omission was
made in reliance upon and in conformity with information furnished to the
Sponsor by ACM, AFD, the Fund, any other Alliance entity or affiliate or a
party unrelated to the Sponsor for use in the Registration Statement or the
prospectus, or any amendment or supplement thereto;
(ii) Any action of the Sponsor in connection with consummation
of the transactions contemplated by this Agreement which is illegal or
which constitutes a material breach of this Agreement or of the trust
indenture.
If any action is brought against ACM, AFD or the Fund alleging
claims described in subsections (i) and (ii) hereof, ACM or AFD or the
Fund shall promptly notify the Sponsor in
<PAGE>
-12-
writing of the institution of such action and the Sponsor shall assume the
defense of such action, including the employment of counsel and payment of
expenses. ACM or AFD or the Fund shall have the right to employ their own
counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of ACM or AFD or the Fund unless (1) the employment of
such counsel shall have been authorized in writing by the Sponsor in
connection with the defense of such action, or (2) the Sponsor shall not
have employed counsel agreeable to ACM and AFD to have charge of the
defense of such action or (3) ACM or AFD or the Fund shall have reasonably
concluded that there are defenses available to them which are different
from or additional to those available to the Sponsor (in which case the
Sponsor shall not have the right to direct the defense of such action on
behalf of ACM or AFD or the Fund), in any of which three events such fees
and expenses shall be borne by the Sponsor (it being understood, however,
that the Sponsor shall not be liable for the expenses of more than one
separate counsel in any one action or series of related actions in the same
jurisdiction representing ACM or AFD or the Fund). Anything in this
paragraph to the contrary notwithstanding, the Sponsor shall not be liable
for any settlement of any such claim of action effected without its written
consent.
c. If the indemnification provided for in this Section 7 is
unavailable to the indemnified party under subsections a(i), a(ii) or b(i)
of this Section 7 in respect of any losses, expenses, liabilities or claims
referred to therein, then each party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnified party on one hand and the
indemnifying party on the other from the offering of the Units of the Trust
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the indemnified party on one hand and of the indemnifying party on
the other in connection with the statements or omissions that resulted in
such losses, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative fault of the indemnified party on
the one hand and of the indemnifying party on the other shall be determined
by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the indemnified party or by the
<PAGE>
-13-
indemnifying party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any claim or action.
8. Representations and Warranties of ACM, AFD and the Fund.
ACM, AFD and the Fund hereby represent and warrant, respectively, to the
Sponsor that (it being understood that the representations and warranties
of the Fund contained in this Section 8 shall apply only with respect to
matters relating to the Fund or the Mutual Fund Shares):
a. The Fund is a diversified, open-end management investment
company validly existing and in good standing under the laws of the
State of Maryland and properly registered under the 1940 Act; ACM is
a limited partnership duly organized, validly existing and in good
standing under the laws of Delaware and AFD is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. Each of the Fund, ACM and AFD is qualified to
do business in each jurisdiction where it is legally required to be,
except where failure to qualify is not material;
b. Each of ACM, AFD and the Fund has full power, authority
and legal right to execute and deliver this Agreement and have each
authorized the execution and delivery of this Agreement and the
performance thereof and such Agreement is legally binding on each
such entity;
c. There is no provision of any existing contract, agreement
or indenture binding on ACM or AFD or the Fund or to which either of
them is a party, which would be contravened by the execution and
delivery on the part of either of them of this Agreement or by the
performance or observance of any of the terms thereof;
d. The officers executing and delivering this Agreement and
all documents and certificates connected therewith have proper
authority therefor and no consent of the holders of any obligations
of ACM, AFD or the Fund is required for the due execution, delivery
or performance of this Agreement; and
<PAGE>
-14-
e. To the best of their knowledge and belief, no consent,
authorization or approval of any governmental agency or commission or
any other public or quasi-public body is necessary to the due
execution and performance by the Fund, ACM or AFD of this Agreement,
the validity or enforceability hereof or the consummation of the
transactions contemplated hereby.
9. Representations and Warranties of the Sponsor.
The Sponsor hereby represents and warrants to ACM, AFD and the Fund that:
a. The Sponsor is a corporation, duly formed, existing and
in good standing under the laws of the State of Delaware, and is duly
qualified to do business as a foreign corporation in each
jurisdiction where it is legally required to be except where failure
to qualify is not material;
b. The Sponsor has full corporate power, authority and legal
right to execute and deliver this Agreement and to perform and
observe the terms thereof;
c. There is no provision of any existing contract, agreement
or indenture binding on the Sponsor or to which it is a party which
would be contravened by the execution and delivery on the part of the
Sponsor of this Agreement or by the performance or observance of any
of the terms thereof;
d. The officers executing and delivering this Agreement and
all documents and certificates connected therewith have proper
authority therefor and no consent of the holders of any obligations
of the Sponsor is required for the due execution, delivery or
performance of this Agreement; and
e. No consent, authorization or approval of any governmental
agency or commission or any other public or quasi-public body is
necessary for the due execution and performance by the Sponsor of
this Agreement, the validity or enforceability thereof or the
consummation of the transactions contemplated thereby, other than the
registration of the Trust under the 1940 Act, the registration of
Units of the Trust under the Securities Act of 1933 and the approval
of the Blue Sky authorities of the various states.
<PAGE>
-15-
10. Miscellaneous.
a. In cases where the approval of the Board of Directors of
the Fund is required in order for the transactions contemplated by
this Agreement to be effectuated, AFD agrees to use its best efforts
to recommend and obtain such approval. Anything in this Agreement to
the contrary notwithstanding, the Fund shall not be held liable for
any breach of representation or warranty of ACM or AFD, or the
failure of ACM or AFD to perform any obligation of ACM or AFD
pursuant to this Agreement.
b. (i) As a condition precedent to the effectiveness of
this Agreement, counsel for each of AFD and ACM and the Fund shall
deliver opinions to the Sponsor as to the matters set forth in
sections 8.a through 8.e hereof as well as such other matters as the
Sponsor may reasonably request.
(ii) Counsel for the Sponsor shall deliver an opinion to AFD
and the Fund as to the matters set forth in Sections 9.a through 9.e
hereof as well as to such matters as AFD may reasonably request.
c. As a condition precedent to the effectiveness of this
Agreement, ACM, AFD and the Fund agree to provide such documents for
review by the Sponsor or its counsel, as counsel for the Sponsor may
reasonably request. Following completion of the due diligence review
of such documents, the Sponsor shall be permitted, in its sole dis-
cretion, for a period of up to seven days, to terminate this
Agreement upon written notice to the other parties.
d. The indemnity agreements and the representations and
warranties contained herein shall remain operative and in full force
and effect regardless of the termination or expiration of this
Agreement.
e. In addition to the termination of this Agreement provided
for in Section 4 hereof, the Sponsor may terminate this Agreement at
its discretion upon written notice if the Board of Directors and/or
the shareholders, as the case may be, of the Fund, shares of which
have been deposited in any series of the Trust, approve material
changes in the investment objectives or basic characteristics of such
fund, the determination as to materiality being in the sole
discretion of the Sponsor; provided, however,
<PAGE>
-16-
that the respective rights and responsibilities of the Sponsor, ACM,
AFD and the Fund with the respect to any series of the Trust already
created pursuant to this Agreement shall be as described in this
Agreement. AFD and the Fund agree to notify the Sponsor in writing
on a timely basis of any changes made in investment objectives or
other characteristics of any of its affiliated mutual funds shares of
which have been deposited in any series of the Trust.
f. This Agreement may not be changed orally, but only by an
agreement in writing and signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
g. Neither the Sponsor, ACM, AFD nor the Fund may assign,
convey or transfer (by way of merger, sale, gift or otherwise) its
rights or obligations under this Agreement, without the express prior
written permission of the other parties. In the event that a party
does purport to assign its rights hereunder without the prior written
permission of the other parties, the purported assignment shall be
deemed to have terminated this Agreement unilaterally.
h. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.
i. The parties hereto covenant and agree that they will
execute any further instruments and they will perform any acts which
are or may become necessary to effectuate and carry out this
Agreement.
j. Nothing in this Agreement shall be construed to create an
agency, partnership, joint trading or other similar relationship
between the parties hereto.
k. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and all of
which together shall constitute one and same instrument.
<PAGE>
-17-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Kenneth Swankie
Kenneth Swankie
Title: Senior Vice President
ALLIANCE FUND DISTRIBUTORS, INC.
By: /s/ Geoffrey L. Hyde
Geoffrey L. Hyde
Title: Senior Vice President
ALLIANCE TECHNOLOGY FUND INC.
By:
Title: Secretary
ALLIANCE CAPITAL MANAGEMENT
L.P.
By: Alliance Capital Management Corporation,
its General Partner
By: /s/ John D. Carifa
John D. Carifa
Title: President
Agreed and Accepted with respect
to Sections 1, 3(b), 4, 6(a)(ii),
6(e), 6(f), 7(b), 7(c), 8, 10(c)
and 10(g)
