<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1994
REGISTRATION NO. 33-54681
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
A. EXACT NAME OF TRUST:
NATIONAL MUNICIPAL TRUST
SERIES 172
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 ADDRESSES OF AGENT FOR SERVICE:
<TABLE>
<S> <C>
COPY TO:
LEE B. SPENCER, JR., ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
18,000 UNITS*, NATIONAL MUNICIPAL TRUST
SERIES 172
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
$18,720,000.00**
G. AMOUNT OF FILING FEE, COMPUTED AT ONE-TWENTY-NINTH OF 1 PERCENT OF THE
PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC:
$6,455.22***
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
/X/ CHECK BOX IF IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON
OCTOBER 13, 1994 IMMEDIATELY UPON FILING PURSUANT TO RULE 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Including 6,000 Units registered for purposes of resale by the Depositor.
** Estimated solely for the purpose of calculating the filing fee at a price of
$1,040 per Unit.
*** $500.28 of this amount was previously paid in connection with the
registration of 1,395 Units.
<PAGE>
NATIONAL MUNICIPAL TRUST
SERIES 172
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404(C) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- ---------------------------------------------
<S> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of Trust..........................................}
} Prospectus front cover
(b) Title of securities issued.............................}
2. Name and address of each depositor......................... Sponsor; Prospectus back cover
3. Name and address of trustee................................ Trustee
4. Name and address of each principal underwriter............. Sponsor
5. State of organization of trust............................. The Trust
6. Execution and termination of trust agreement............... Summary of Essential Information; The Trust;
Amendment and Termination of the Indenture
7. Changes of Name............................................}
}
8. Fiscal year................................................}
} *
9. Litigation.................................................}
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. (a) Registered or bearer securities........................}
}
} *
(b) Cumulative or distributive securities..................}
(c) Redemption............................................. Rights of Unit Holders--Redemption
(d) Conversion, transfer, etc.............................. Rights of Unit Holders--Redemption
(e) Periodic payment plan..................................}
}
} *
(f) Voting rights..........................................}
(g) Notice to certificateholders........................... The Trust; Rights of Unit Holders-- Reports
and Records; Sponsor-- Responsibility;
Sponsor--Resignation; Trustee--Resignation;
Amendment and Termination of the Indenture
(h) Consents required...................................... The Trust; Amendment and Termination of the
Indenture
(i) Other provisions....................................... Tax Status
11. Type of securities comprising units........................ Prospectus front cover; The Trust
12. Certain information regarding periodic payment *
certificates..........................................
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- ---------------------------------------------
<S> <C>
13. (a) Load, fees, expenses, etc.............................. Summary of Essential Information; Public
Offering of Units--Public Offering Price;
Public Offering of Units--Sponsor's and
Underwriter's Profits; Public Offering of
Units--Volume Discount; Public Offering of
Units--Employee Discount; Exchange Option;
Reinvestment Program; Expenses and Charges;
Sponsor--Responsibility
(b) Certain information regarding periodic payment *
certificates..........................................
(c) Certain percentages.................................... Summary of Essential Information; Public
Offering of Units--Public Offering Price;
Public Offering of Units--Profit of
Sponsor; Public Offering of Units--Volume
Discount; Public Offering of
Units--Employee Discount; Exchange Option
(d) Price differentials.................................... Public Offering of Units--Employee Discount
(e) Certain other fees, etc. payable by holders............ Rights of Unit Holders--Certificates
(f) Certain other profits receivable by depositor, The Trust--Objectives and Securities
principal underwriter, trustee or affiliated persons.. Selection; Rights of Unit Holders--
Redemption--Purchase by the Sponsor of
Units Tendered for Redemption
(g) Ratio of annual charges to income...................... *
14. Issuance of trust's securities............................. The Trust; Rights of Unit Holders--
Certificates
15. Receipt and handling of payments from purchasers........... *
16. Acquisition and disposition of underlying securities....... The Trust--Portfolio Summary; The
Trust--Objectives and 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--Distribution of
Interest and Principal; Rights of Unit
Holders--Reports and Records
(b) Reinvestment of distributions.......................... Reinvestment Programs
(c) Reserves or special funds.............................. Expenses and Charges; Rights of Unit
Holders--Distribution of Interest and
Principal
(d) Schedule of distributions.............................. *
19. Records, accounts and reports.............................. Rights of Unit Holders--Distributions of
Interest and Principal; Rights of Unit
Holders--Reports and Records
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
ii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- ---------------------------------------------
<S> <C>
20. Certain miscellaneous provisions of trust agreement........} Sponsor--Limitations on Liability;
(a) Amendment..............................................} Sponsor--Resignation;--
(b) Termination............................................} Trustee--Limitations on Liability;
(c) and (d) Trustee, removal and successor.................} Trustee--Resignation;
(e) and (f) Depositor, removal and successor...............} Amendment and Termination of the
Indenture
21. Loans to security holders.................................. *
22. Limitation on liability.................................... The Trust--Portfolio Summary; 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 Contents of Registration Statement--
of depositor.......................................... Part II
29. Companies controlling depositor............................ Sponsor
30. Persons controlling depositor..............................}
31. Payments by depositor for certain services rendered to }
trust.................................................} *
32. Payments by depositor for certain other services rendered }
to trust..............................................}
33. Remuneration of employees of depositor for certain services}
rendered to trust.....................................}
} *
34. Remuneration of other persons for certain services rendered}
to trust..............................................}
35. Distribution of trust's securities in states............... Public Offering of Units--Public Distribution
36. Suspension of sales of trust's securities..................}
}
} *
37. Revocation of authority to distribute......................}
38. (a) Method of distribution.................................}
}
} Public Offering of Units
(b) Underwriting agreements................................}
(c) Selling agreements.....................................}
39. (a) Organization of principal underwriter..................}
}
} Sponsor
(b) N.A.S.D. membership of principal underwriter...........}
40. Certain fees received by principal underwriter............. *
41. (a) Business of principal underwriter...................... Sponsor
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- ---------------------------------------------
<S> <C>
(b) Branch offices of principal underwriter................}
}
(c) Salesmen of principal underwriter......................}
*
42. Ownership of trust's securities by certain persons.........}
}
} *
43. Certain brokerage commissions removed by principal }
underwriter...........................................}
44. (a) Method of valuation.................................... Summary of Essential Information; Public
Offering of Units--Public Offering Price;
Public Offering of Units--Public
Distribution; Public Offering of Units--
Secondary Market
(b) Schedule as to offering price.......................... *
(c) Variation in offering price to certain persons......... Public Offering of Units--Public
Distribution; Public Offering of Units--
Volume Discount; Public Offering of
Units--Employee Discount; Exchange Option
45. Suspension of redemption rights............................ *
46. (a) Redemption Valuation................................... Summary of Essential Information; Rights of
Unit Holders--Redemption-- Computation of
Redemption Price per Unit
(b) Schedule as to redemption price........................ *
47. Maintenance of position in underlying securities........... Public Offering of Units--Secondary Market;
Rights of Unit Holders--
Redemption--Computation of Redemption Price
per Unit; Rights of Unit
Holders--Redemption--Purchase by the
Sponsor of Units Tendered for Redemption
IV. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Organization and regulation of trustee..................... Trustee
49. Fees and expenses of trustee............................... Expenses and Charges
50. Trustee's lien............................................. Expenses and Charges--Other Charges
V. INFORMATION CONCERNING INSURANCE OF
HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities................. The Trust--Insurance on the Securities in the
Portfolio of an Insured Trust
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
iv
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------------------------------------------------------- ---------------------------------------------
VI. POLICY OF REGISTRANT
<S> <C>
52. (a) Provisions of trust agreement with respect to Selection Prospectus front cover; The Trust--Portfolio
or elimination of underlying securities............... Summary; The Trust--Insurance on the
Securities in the Portfolio of an Insured
Trust; The Trust--Objectives and Securities
Selection; Sponsor--Responsibility
(b) Transactions involving elimination of underlying *
securities............................................
(c) Policy regarding substitution or elimination of Sponsor--Responsibility
underlying securities.................................
(d) Fundamental policy not otherwise covered............... *
53. Tax status of trust........................................ Prospectus front cover; Tax Status
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years...................}
}
55. }
56. Certain information regarding periodic payment }
certificates..........................................}
} *
57. }
58. }
59. Financial statements (Instruction 1(c) to Form S-6)........ Statement of Financial Condition of the Trust
</TABLE>
- ------------
* Inapplicable, answer negative or not required.
v
<PAGE>
PART A
- --------------------------------------------------------------------------------
[LOGO]
NATIONAL MUNICIPAL TRUST
SERIES 172
- --------------------------------------------------------------------------------
National Municipal Trust, Series 172 designated as the National Trust (the
'National Trust' or the 'Trust') is composed of interest-bearing municipal bonds
and contracts and funds for the purchase thereof (the 'Securities'). The
interest on these bonds, in the opinion of bond counsel to the issuing
governmental authorities is, under existing law, excludable from gross income
for Federal income tax purposes (except in certain instances depending on the
Unit Holder). The Prospectus indicates the extent to which interest income of
the Trust is subject to alternative minimum tax under the Internal Revenue Code
of 1986, as amended. See 'Schedule of Portfolio Securities' and 'Portfolio
Summary as of Date of Deposit'.
The objectives of the Trust are the providing of interest income which, in the
opinion of counsel is, under existing law, excludable from gross income for
Federal income tax purposes (except in certain instances depending on the Unit
Holder) through investment in a fixed portfolio consisting primarily of
investment grade long-term state, municipal and public authority debt
obligations, and the conservation of capital. There is, of course, no guarantee
that the Trust's objectives will be achieved. The value of the Units of the
Trust will fluctuate with the value of the portfolio of underlying Securities.
The Securities in the Trust are not insured by The Prudential Insurance Company
of America.
Minimum Purchase: 1 Unit.
PUBLIC OFFERING PRICE of the Units of the Trust during the initial public
offering period is equal to the aggregate offering side evaluation of the
underlying Securities in the Trust's Portfolio divided by the number of Units
outstanding in such Trust, plus a sales charge as set forth in the table herein.
(See Part B--'Public Offering of Units--Volume Discount.')
(continued on next page)
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
SPONSOR:
PRUDENTIAL SECURITIES [LOGO]
- --------------------------------------------------------------------------------
PLEASE READ AND RETAIN Prospectus dated
THIS PROSPECTUS FOR FUTURE REFERENCE October 13, 1994
<PAGE>
- --------------------------------------------------------------------------------
This Prospectus does not contain all of 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.
- --------------------------------------------------------------------------------
MONTHLY DISTRIBUTIONS of principal, premium, if any, and interest received
by the Trust will be made on or shortly after the twenty-fifth day of each month
to Unit Holders of record on the tenth day of such month, commencing with the
first distribution on the date indicated herein. In some cases distribution on a
semiannual basis may be available. (See Part B--'Rights of Unit
Holders--Distribution of Interest and Principal'). Alternatively, Unit Holders
may elect to have their distributions reinvested in the Reinvestment Program of
the Sponsor, as, if and when such program is available to Unit Holders. (See
Part B--'Reinvestment Program.')
THE SPONSOR, although not obligated to do so, presently intends to maintain
a secondary market for the Units in the Trust based on the aggregate bid side
evaluation of the underlying Securities, as more fully described under Part
B--'Public Offering of Units--Secondary Market.' If such a market is not
maintained, a Unit Holder may be able to dispose of his Units only through
redemption at prices based on the aggregate bid side evaluation of the
underlying Securities. (See Part B--'Rights of Unit
Holders--Redemption--Computation of Redemption Price per Unit.')
Subsequent to the Date of Deposit, the Sponsor may deposit additional
Securities in a trust (where additional Units are to be offered to the public).
(See Part B--'The Trust.')
RISK CONSIDERATIONS. 58.2% of the estimated annual income of the National
Trust is subject to alternative minimum tax under the Internal Revenue Code of
1986, as amended. An investment in Units of the Trust should be made with an
understanding of the risks which an investment in fixed rate long-term debt
obligations may entail, including the risk that the value of the Units will
decline with increases in interest rates. Subsequent to the Date of Deposit the
ratings of the Securities set forth in Part A--'Schedule of Portfolio
Securities' may have declined due to, among other factors, a decline in
creditworthiness of the issuer of said Securities.
PORTFOLIO SUMMARY AS OF DATE OF DEPOSIT
National Trust
The Portfolio contains 13 issues of Securities of issuers located in 13
states. All of the issues are payable from the income of specific projects or
authorities and are not supported by the issuer's power to levy taxes. Although
income to pay such Securities may be derived from more than one source, the
primary sources of such income and the percentage of issues deriving income from
such sources are as follows: airport facilities: 8.76%* of the Trust; health and
hospital facilities: 24.89%* of the Trust; housing facilities: 31.96%* of the
Trust; lease facilities: 8.58%* of the Trust; resource recovery facilities:
8.11%* of the Trust; utility facilities: 16.99%* of the Trust; miscellaneous:
.71%* of the Trust. The Trust is concentrated in housing facilities Securities.
The Portfolio also contains Securities representing 32.0%* of the Trust
(single-family housing securities) which are subject to the requirements of
Section 103A of the Internal Revenue Code of 1954, as amended, or Section 143 of
the Internal Revenue Code of 1986, as amended.
Two Securities in the Trust (representing 6.3%* of the Trust) have been
purchased on a 'when, as and if issued' or 'delayed delivery' basis with
delivery expected to take place 5 to 7 days after the first settlement date for
the purchase of Units. Accordingly, the delivery of such Securities may be
delayed or may not occur. Unit Holders who purchase Units prior to settlement of
such Securities will be 'at risk' with respect to such Securities (i.e., they
may derive either gain or loss from changes in the prices of such Securities)
from the date they commit to purchase such Units. However, interest on such
Securities will not begin accruing to the benefit of Unit Holders as tax-exempt
interest until such Securities' date of delivery.
Approximately 32.0%* of the Securities in the Trust also contain provisions
which require the issuer to redeem such obligations at par from unused proceeds
of the issue within a stated period which typically does not exceed three years
from the date of issuance of such Securities.
As of the Date of Deposit, 83.5%* of the Securities in the Trust are rated
by Standard & Poor's Corporation (15.0%* being rated AAA, 17.5%* being rated AA
and 51.0%* being rated A) and 16.5%* of the Securities in the Trust are rated by
Moody's Investors Service (16.5%* being rated A). For a description of the
meaning of the applicable rating symbols as published by Standard & Poor's and
Moody's, see Part B--'Bond Ratings'. It should be emphasized, however, that the
ratings of Standard &
- ------------------
* Percentages computed on the basis of the aggregate offering price of the
Securities in the Trust on the Date of Deposit.
A-1
<PAGE>
Poor's and Moody's represent their opinions as to the quality of the Securities
which they undertake to rate and that these ratings are general and are not
absolute standards of quality.
Seven Securities in the Trust have been issued with an 'original issue
discount'. (See Part B--'Tax Status'.)
Of these original issue discount bonds, approximately 2.92% of the
aggregate principal amount of the Securities in the Trust (although only .71%*
of the aggregate offering price of all Securities in the Trust on the Date of
Deposit) are zero coupon bonds (including bonds known as multiplier bonds, money
multiplier bonds, capital appreciation bonds, capital accumulator bonds,
compound interest bonds, and discount maturity payment bonds.)
Alternative Minimum Tax
The Sponsor's affiliate, The Prudential Investment Corporation, estimates
that 58.2% of the estimated annual income per Unit consists of interest on
private activity bonds, which interest is to be treated as a tax preference item
for alternative minimum tax purposes (see 'Tax Status' and 'Schedule of
Portfolio Securities').
UNDERWRITING ACCOUNT
The names of the Underwriters and the numbers of Units each has agreed to
purchase from the Underwriting Account are:
<TABLE>
<CAPTION>
UNITS
------
NATIONAL
UNDERWRITERS TRUST
- --------------------------------------------------------------------------------------------------- ------
<S> <C>
Prudential Securities Incorporated............................................................... 9,700
William R. Hough & Co.............................................................................. 500
Nathan & Lewis Securities, Inc..................................................................... 500
Gruntal & Co. Incorporated......................................................................... 250
Roosevelt & Cross, Inc. ........................................................................... 250
J.C. Bradford & Co................................................................................. 100
J.B. Hanauer & Co.................................................................................. 100
Legg Mason Wood Walker, Inc........................................................................ 100
Mabon Securities Corp.............................................................................. 100
McDonald & Company Securities...................................................................... 100
Oppenheimer & Co., Inc............................................................................. 100
Southwest Securities, Inc.......................................................................... 100
Wheat, First Securities, Inc....................................................................... 100
------
12,000
------
------
</TABLE>
- ------------------
* Percentages computed on the basis of the aggregate offering price of the
Securities in the Trust on the Date of Deposit.
A-2
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL MUNICIPAL TRUST
SERIES 172
AS OF OCTOBER 12, 1994+
<TABLE>
<S> <C>
FACE AMOUNT OF SECURITIES....................... $12,000,000.00
NUMBER OF UNITS................................. 12,000
FRACTIONAL UNDIVIDED INTEREST IN THE
TRUST REPRESENTED BY EACH UNIT................ 1/12,000th
PUBLIC OFFERING PRICE(1)
Aggregate offering side evaluation of
Securities in the Trust................... $11,502,642.00
Divided by 12,000 Units..................... $ 958.55
Plus sales charge of 4.75% of Public
Offering Price (4.987% of net amount
invested in Securities)++................. $ 47.80
-----------
Public Offering Price per Unit+++........... $ 1,006.35
-----------
-----------
SPONSOR'S INITIAL REPURCHASE PRICE PER UNIT
(based on offering side evaluation of
underlying Securities)........................ $ 958.55
-----------
-----------
REDEMPTION AND SPONSOR'S SECONDARY MARKET
REPURCHASE PRICE PER UNIT (based on bid side
evaluation of underlying Securities, $51.80
less than Public Offering Price per Unit;
$4.00 less than Sponsor's Initial Repurchase
Price per Unit)(2)............................ $ 954.55
-----------
-----------
MINIMUM PRINCIPAL DISTRIBUTION: No distribution need be made
from the Principal Account if the balance therein is less
than $5 per Unit.
SPONSOR'S ANNUAL PORTFOLIO SUPERVISION FEE: Maximum $.25 per
$1,000 face amount of underlying Securities.
PREMIUM AND DISCOUNT ISSUES IN PORTFOLIO
Face amount of Securities with offering side evaluation:
over par--33%; at par--0%; at a discount from par--67%
EVALUATOR'S FEE FOR EACH EVALUATION: $14 per evaluation of the
portfolio.
EVALUATION TIME: 4:00 P.M. New York time for primary market
transactions and 3:30 P.M. New York time for secondary
market transactions.
MANDATORY TERMINATION DATE: (5) The Trust will terminate on
the date of the maturity, redemption, sale or other
disposition of the last Security held in the Trust.
MINIMUM VALUE OF TRUST: The Trust may be terminated if the
value of the Trust is less than 40% of the face amount of
Securities deposited including supplemental deposits, if
any.
WEIGHTED AVERAGE LIFE TO MATURITY: 26.8 years
</TABLE>
<TABLE>
<CAPTION>
MONTHLY
-------
<S> <C>
CALCULATION OF ESTIMATED NET ANNUAL INCOME PER UNIT(4)
Estimated Annual Income per Unit*.............................................................................. $65.50
Less estimated annual expenses per Unit*....................................................................... $ 2.26
-------
Estimated Net Annual Income per Unit........................................................................... $63.24
-------
-------
Trustee's Annual Fee (including estimated expenses and Evaluator's Fee) per $1,000 principal amount of
Securities*....................................................................................................... $ 2.01
Daily Rate of Income Accrual per Unit............................................................................... $.1756
Estimated Current Return(3)(4)...................................................................................... 6.28 %
Estimated Long-Term Return(3)....................................................................................... 6.36 %
First distribution to be paid on November 25, 1994 to Holders of record on November 10, 1994........................ $ 3.51
CALCULATION OF SECOND AND FOLLOWING DISTRIBUTIONS:
Estimated Net Annual Income per Unit divided by 12............................................................. $ 5.27
Record Dates--tenth day of each month
Distribution Dates--twenty-fifth day of each month
</TABLE>
- ------------
* As a result of the 'when, as and if issued,' or 'delayed delivery' Securities
in the Trust, during the first year the Trustee's fee per Unit will be reduced
by $.07, the estimated annual income per Unit will be $65.43, the estimated
annual expenses per Unit will be $2.19, and the net annual income per Unit
will remain the same. The Trustee will be reimbursed by the Sponsor for the
reduction in its fee.
Footnotes: See Page A-4
A-3
<PAGE>
- ------------
+ The Date of Deposit. The Date of Deposit is the date on which the
Indenture was signed and the deposit of Securities with the Trustee was made.
++ 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 Bonds plus
a sales charge as set forth in Part B, 'Public Offering of Units--Volume
Discount.'
+++ This Public Offering Price is computed as of the Date of Deposit and
may vary from the Public Offering Price on the date of this Prospectus or any
subsequent date.
(1) No accrued interest will be added to the Public Offering Price in
connection with purchase of Units contracted for on October 13, 1994. With
respect to purchases contracted for after such date, accrued interest from
October 20, 1994, the first expected settlement date, to, but not including the
date of settlement (normally five business days after purchase) will be added to
the Public Offering Price.
(2) Upon redemption the price to be paid will include accrued interest.
(3) The Estimated Current Return is calculated by dividing the Estimated
Net Annual Income per Unit by the Public Offering Price per Unit. The Estimated
Net Annual Income per Unit will vary with changes in fees and expenses of the
Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of Bonds while the Public Offering Price will vary
with changes in the offering price of the underlying Bonds; therefore, there is
no assurance that the present Estimated Current Return indicated above will be
realized in the future. The Estimated Long-Term Return is calculated on a
pre-tax basis using a formula which (1) takes into consideration, and factors in
the relative weightings of, the market values, yields (which takes into account
the amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust and (2) takes into account the
expenses and sales charge associated with each Unit. Since the market values and
estimated retirements of the Bonds and the expenses of the Trust will change,
there is no assurance that the present Estimated Long-Term Return as indicated
above will be realized in the future. The after-tax Estimated Long-Term Return
will be lower to the extent of any taxation on the disposition of Bonds. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of the Estimated Long-Term Return reflects the estimated
date and amount of principal returned while the Estimated Current Return
calculations include only Net Annual Interest Income and Public Offering Price
as of the Date of Deposit. (A projected cash flow statement as of the Date of
Deposit is available upon request from the Trustee.)
(4) Does not include discount accretion on original issue discount or zero
coupon bonds.
(5) The actual date of termination of the Trust may be considerably
earlier. (See Part B, 'Amendment and Termination of the
Indenture--Termination.')
A-4
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL MUNICIPAL TRUST
SERIES 172
We have audited the accompanying statement of financial condition and
schedule of portfolio securities of the National Municipal Trust Series 172 as
of October 12, 1994. 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 an irrevocable letter of credit and contracts for the purchase
of securities, as shown in the statement of financial condition and schedule of
portfolio securities as of October 12, 1994, by correspondence with United
States Trust Company of New York, the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the statement of financial condition and schedule of
portfolio securities referred to above present fairly, in all material respects,
the financial condition of the National Municipal Trust Series 172 as of October
12, 1994 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
October 12, 1994
New York, New York
A-5
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL MUNICIPAL TRUST
SERIES 172
AS OF DATE OF DEPOSIT, OCTOBER 12, 1994
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed by an irrevocable letter of credit(a)................ $ 11,502,642.00
Accrued interest to Date of Deposit of underlying Securities(a)(b)................................................ 175,612.22
----------------
Total................................................................................................... $ 11,678,254.22
----------------
----------------
</TABLE>
LIABILITY AND INTEREST OF UNIT HOLDERS
<TABLE>
<S> <C>
Liability:
Accrued interest to Date of Deposit of underlying Securities(a)(b)........................................... $ 175,612.22
Interest of Unit Holders:
Units of fractional undivided interest outstanding:
Cost to investors(c).................................................................................... 12,076,200.00
Gross underwriting commissions(d)....................................................................... (573,558.00)
----------------
Total................................................................................................... $ 11,678,254.22
----------------
----------------
</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. The value is determined by the Evaluator
on the basis set forth under Part B--'Public Offering of Units--Public Offering
Price.' An irrevocable letter of credit covering Series 172 drawn on Mellon
Bank, N.A. in the amount of $14,000,000.00 has been deposited with the Trustee.
The amount of the letter of credit includes $11,435,158.50 (equal to the
Purchase Price to Sponsor) for the purchase of $12,000,000.00 face amount of
Securities pursuant to contracts to purchase Securities, plus $175,612.22
covering accrued interest thereon.
(b) The Trustee will advance an amount equal to the accrued interest on the
underlying Securities to the first expected settlement date (normally five
business days after purchase) and such amount will be distributed to the Sponsor
as the holder of record on such date as set forth under Part B--'Public Offering
of Units--Public Offering Price.'
(c) The aggregate Public Offering Price (exclusive of accrued interest) is
computed on the basis set forth under Part B-- 'Public Offering of Units--Public
Offering Price.'
(d) The aggregate sales charge of 4.75% of the Public Offering Price per
Unit is computed on the basis set forth under Part B--'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 control
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
Security included in the Trust's Schedule of Portfolio Securities on the basis
set forth in Part B--'Public Offering of Units--Public Offering Price.' Under
the Securities Act of 1933, as amended (the 'Act'), the Sponsor is deemed to be
an issuer of the Trust's Units. As such, the Sponsor has the responsibility of
an issuer under the Act with respect to financial statements of the Trust
included in the Registration Statement under the Act and amendments thereto.
A-6
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL MUNICIPAL TRUST
SERIES 172
ON DATE OF DEPOSIT, OCTOBER 12, 1994
<TABLE>
<CAPTION>
PORTFOLIO SECURITIES REPRESENTED AGGREGATE INTEREST DATES OF
NO. BY PURCHASE CONTRACTS(4)(5) RATING PRINCIPAL RATES MATURITY
- --------- -------------------------------------------------------- ------ -------------- -------- --------
<C> <S> <C> <C> <C> <C>
1. Regional Airport Improvement Corp., Facilities Lease A- $ 1,000,000.00 6.800% 1/01/27
Revenue Bonds, Issue of 1991, LAXFUEL Corporation, (Los
Angeles International Airport).(7)
2. State of Hawaii, Airports System Revenue Bonds, Second A- $ 1,000,000.00 7.000% 7/01/18
Series of 1991.(7)
3. Illinois Health Facilities Authority, Revenue Refunding A- $ 1,000,000.00 6.300% 8/01/13
And Improvement Bonds Series 1993A, (Swedish Covenant
Hospital).
4. Massachusetts Health and Educational Facilities A- $ 1,000,000.00 6.875% 10/01/22
Authority, Revenue Bonds, Jordan Hospital Issue, Series
C.
5. Northeast Maryland Waste Disposal Authority, Solid Waste A $ 1,000,000.00 6.300% 7/01/16
Revenue Bonds, (Montgomery County Resource Recovery
Project), Series 1993A.(7)
6. Maine State Housing Authority, Mortgage Purchase Bonds, AA- $ 1,000,000.00 6.875% 11/15/23
1994 Series C-2.(7)
7. North Carolina Eastern Municipal Power Agency, Power A- $ 1,000,000.00 6.400% 1/01/21
System Revenue Bonds, Series 1993 A.
8. Butler Area School District, (Butler County, AAA $ 350,000.00 0.000% 12/01/16
Pennsylvania), General Obligation Bonds, Series C of
1994.**
9. Rhode Island Housing And Mortgage Finance Company, AA+ $ 1,000,000.00 7.100% 10/01/23
Homeownership Opportunity Bonds, Series 3-C .(7)
10. Matagorda County Navigation District, Number One AAA $ 1,000,000.00 6.700% 3/01/27
(Texas), 6.70% Collateralized Revenue Refunding Bonds,
(Houston Lighting & Power Company Company Project),
Series 1992A. (AMBAC Insured)
11. Utah Housing Finance Agency, Single Family Mortgage AAA $ 650,000.00 6.850% 7/01/27
Bonds, 1994 Issue E, (Federally Insured or Guaranteed
Mortgage Loans).(7)**
12. Wisconsin Health and Educational Facilities Authority, A* $ 1,000,000.00 6.600% 8/15/22
Revenue Bonds, Series 1992, (Mercy Hospital of
Janesville, Wisconsin, Inc. Project).
13. West Virginia Housing Development Fund, Housing Finance A+ $ 1,000,000.00 7.200% 11/01/18
Bonds, 1992 Series C.(7)
--------------
$12,000,000.00
--------------
--------------
<CAPTION>
YIELD TO
OPTIONAL COST OF MATURITY
PORTFOLIO SINKING FUND REFUNDING SECURITIES ON DATE OF
NO. REDEMPTIONS(6) REDEMPTIONS(2) TO TRUST(3) DEPOSIT(1)
- --------- -------------- -------------- -------------- ----------
<C> <C> <C> <C> <C>
1. 1/01/23@100 1/01/02@102 $ 986,990.00 6.900%
2. 7/01/13@100 7/01/01@102 $ 1,007,500.00 6.882%+
3. 8/01/09@100 8/01/03@102 $ 927,290.00 7.000%
4. 10/01/03@100 10/01/02@102 $ 972,770.00 7.100%
5. 7/01/11@100 7/01/03@102 $ 932,830.00 6.900%
6. 11/15/16@100 10/04/04@102 $ 996,790.00 6.900%
7. 1/01/14@100 1/01/03@102 $ 951,230.00 6.800%
8. NONE NONE $ 81,378.50 6.706%
9. 4/01/03@100 10/01/01@102 $ 1,013,170.00 6.900%+
10. NONE 3/01/02@102 $ 1,003,350.00 6.650%+
11. 1/01/20 7/01/04@102 $ 645,703.50 6.900%
12. 8/15/12@100 8/15/02@102 $ 962,970.00 6.900%
13. 5/01/06@100 5/01/02@102 $ 1,020,670.00 6.900%+
--------------
$11,502,642.00
--------------
--------------
</TABLE>
- ------------
FOOTNOTES: SEE PAGE A-8
<PAGE>
- ------------
Notes to Portfolios
(1) Yield of Securities was computed on the basis of offering prices on the Date
of Deposit. Evaluation of Securities by the Evaluator is made on the basis
of the current offering side evaluation. The offering side evaluation is
greater than the current bid side evaluation of the Securities, which is the
basis on which Redemption Price per Unit is determined. (See Part B--'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit,'
herein). The aggregate value based on the bid side evaluation at the
Evaluation Time on the Date of Deposit was $11,454,642.00 which is
$48,000.00 lower than the aggregate Cost of Securities to Trust based on the
offering side evaluation of the Trust. On such date the bid side evaluation
of the Securities was lower than the offering side evaluation by 0.4% of the
aggregate face amount of the Securities in the Trust. Yield to Maturity on
Date of Deposit of Securities was computed on the basis of the offering side
evaluation at the Evaluation Time on the Date of Deposit. Percentages in
this column represent Yield to Maturity on Date of Deposit unless followed
by '+' which indicates yield to an earlier redemption date.
(2) There is shown under this heading the year in which each issue of Securities
initially is redeemable by the operation of optional call provisions and the
redemption price for that year; unless otherwise indicated, each issue
continues to be redeemable at declining prices thereafter but not below par.
Securities listed as non-callable, as well as Securities listed as callable,
may also be redeemable at par under certain circumstances from special
redemption payments. Such circumstances include redemptions by issuers
utilizing unexpended bond proceeds, proceeds of condemnation or sale of a
project, insurance proceeds from the destruction of a project or as a result
of other factors. Redemption of a bond at par will result in a loss to Unit
Holders to the extent that the value of the bonds at the time of purchase of
Units plus the sales charge allocated to such bond exceeds the amount paid
upon redemption.
(3) Offering prices of Securities are determined by the Evaluator on the basis
stated under Part B--'Public Offering of Units--Public Offering Price'
herein. The Profit to Sponsor on Deposit totals $67,483.50.
(4) The Contracts to purchase Securities were entered into from October 10,
1994 through October 12, 1994 with the final settlement date expected to be
October 27, 1994.
(5) Certain of the Securities may have been purchased from the Sponsor's
proprietary accounts or from affiliates.
(6) There is shown under this heading the first year in which an issue of
Securities is subject to scheduled sinking fund redemption and the
redemption price for that year.
(7) In the opinion of bond counsel to the issuing governmental authorities,
interest payments on these bonds will be a tax preference item for
individuals and corporations for alternative minimum tax purposes. Normally,
the bonds pay interest semiannually. The payment dates can generally be
determined based on the date of maturity, i.e., a bond maturing on 12/1 will
pay interest semiannually on 6/1 and 12/1 (see 'Tax Status').
* Moody's Investors Service rating.
** Represented by contracts to purchase Securities not expected to be settled by
the first expected settlement date for Units (when, as and if issued or
delayed delivery) with settlement on those Securities expected to take place
5 to 7 days after the first expected settlement date for the purchase of
Units.
A-8
<PAGE>
PROSPECTUS--PART B:
- --------------------------------------------------------------------------------
NOTE THAT PART B OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY
PART A.
- --------------------------------------------------------------------------------
NATIONAL MUNICIPAL TRUST
THE TRUST
Each Trust set forth in Part A is one of a series of similar but separate
unit investment trusts. Unless the context otherwise requires, each trust,
including each trust comprising a Multistate Series, a 'State Trust',
hereinafter will be referred to as the 'Trust' or the 'Trusts', and as the
context requires, for an insured Trust, the 'Insured Trust.' Each Trust 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'), United States Trust Company of New York (the 'Trustee') and Kenny
Information Systems, Inc. (the 'Evaluator'). On the Date of Deposit, debt
obligations and contracts and funds (represented by irrevocable letter(s) of
credit issued by major commercial bank(s)) for the purchase of such debt
obligations (collectively, the 'Securities') were deposited into the Trust and
evaluated at prices equal to the evaluation of such Securities on the offering
side of the market (which evaluation takes into account any insurance obtained
by the issuers or previous owners of the Securities) as determined by the
Evaluator as of the Date of Deposit. The Trustee then immediately delivered to
the Sponsor certificates of beneficial interest (the 'Certificates')
representing the units (the 'Units') comprising the entire ownership of each
Trust which Units the Sponsor, through this Prospectus, is offering for sale to
the public. The holders of Units (the 'Unit Holders' or 'Unit Holder', 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 Securities (the 'Redemption
Price') if they cannot be sold in the secondary market which the Sponsor,
although not obligated to do so, proposes to maintain. The Sponsor, Prudential
Securities Incorporated, is a wholly-owned, indirect subsidiary of The
Prudential Insurance Company of America. Each Trust has a mandatory termination
date set forth under Part A--'Summary of Essential Information', but may be
terminated substantially prior thereto upon the occurrence of certain events,
including a reduction in the value of the Trust below the value set forth under
Part A--'Summary of Essential Information'.
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 on 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.
During the 90-day period following the first deposit of Securities in the
Trust, the Sponsor may deposit in the Trust additional Securities which are
substantially similar to the initially deposited Securities (including, in each
case, Securities described in purchase contracts, together with cash or a letter
of credit to be used to effectuate their purchase) and cash, if required. Any
deposit made after the close of such 90-day period must exactly replicate the
Securities and any cash (other than cash distributable only to the Sponsor or to
Unit Holders who were Unit Holders prior to the date of deposit of the
additional Securities) held in the Trust immediately prior to the deposit.
Deposits made during the 90-day period following the first deposit of Securities
in the Trust shall similarly replicate as to identity of Security and proportion
of principal amount represented the Securities and any cash (other than cash
distributable only to the Sponsor or to Unit Holders who were Unit Holders prior
to the date of deposit) held in the Trust immediately prior to the deposit,
except that the additional Securities deposited need only be substantially
similar to (rather than identical with) those held in the Trust immediately
prior to the deposit and the proportionality requirements need be met only to
the extent practicable. Among other things, a failure to meet the
proportionality requirements due to establishment by the Sponsor of a minimum
amount of a particular Security to be included in a deposit or the fact that a
Security identical to a Security in the Trust immediately prior to the deposit
is not readily obtainable will be considered as justifying a variation in such
requirements.
The objectives of each Trust are the providing of interest income which, in
the opinion of counsel is, with certain exceptions, exempt from all Federal
income taxes under existing law through investment in a fixed portfolio of
Securities (the 'Portfolio') consisting primarily of investment grade long-term
(or intermediate term if so designated in Part A or with maturities as
designated in Part A) state, municipal and public authority ('Issuers') debt
obligations, and the conservation of capital. In addition, in the opinion of
counsel, interest income of each State Trust is exempt, to the extent indicated,
from state and any local income taxes in the State for which such State Trust is
named. The Securities in the Portfolio of each Trust were, as of the Date of
Deposit, rated in
- ------------------
* 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>
the category of BBB or better by Standard & Poor's Corporation, Baa or better by
Moody's Investors Service or BBB or better by Fitch Investors Service, Inc. or
if not rated had comparable credit characteristics in the opinion of The
Prudential Investment Corporation, the Sponsor's affiliate. There is, of course,
no guarantee that the Trust's objectives will be achieved. Subsequent to the
Date of Deposit, a Security in the Trust may cease to be rated or the rating
assigned may be reduced below the minimum requirements of such Trust for the
acquisition of Securities. Although such events may be considered by the Sponsor
in determining whether to direct the Trustee to dispose of the Security (see
'Sponsor-Responsibility', herein), such events do not automatically require the
elimination of such Security from the Portfolio. An investment in the Trust
should be made with an understanding of the risks which an investment in fixed
rate long-term debt obligations may entail, including the risk that the value of
the Units will decline with increases in interest rates.
On the Date of Deposit, a Unit of the Trust represented the fractional
undivided interest in the Securities and net income of such Trust set forth
under Part A--'Summary of Essential Information' in the ratio of 1 Unit for each
approximately $1,000 or $1,005 face amount of Securities initially deposited in
such Trust. If any Units are redeemed by the Trustee, the face amount of
Securities in the Trust will be reduced by an amount allocable to redeemed Units
and the fractional undivided interest in such Trust represented by each
unredeemed Unit will be increased. Units will remain outstanding until redeemed
upon tender to the Trustee by any Unit Holder (which may include the Sponsor) or
until the termination of the Trust pursuant to the Indenture.
Certain of the Securities in the Portfolio of the Trust are valued at
prices in excess of prices at which such Securities may be redeemed in the
future. (See Part A--'Schedule of Portfolio Securities' for information relating
to the particular series described therein on the Date of Deposit.) To the
extent that a Security is redeemed (or sold) at a price which is less than the
valuation of such Security on the date a Unit Holder acquired his Units, the
proceeds distributable to such Unit Holder in respect of such redemption (or
sale) will be less than that portion of the purchase price for such Units which
was attributable to such Security (representing a loss of capital to such Unit
Holder). Such proceeds, however, may be more or less than the valuation of such
Security at the time of such redemption (or sale). Similarly, certain of the
Securities in the Trust may be valued at a price in excess of their face value
at maturity (i.e., such Securities were valued at a premium above par). (See
Part A--'Schedule of Portfolio Securities' for information relating to the
particular series described therein on the Date of Deposit.) The proceeds
distributable to a Unit Holder upon the maturity of a Security which was valued
at a premium on the date he acquired his Units will be less than that portion of
the purchase price for such Units which was attributable to such Security
(representing a loss of capital to such Unit Holder).
The Portfolio of the Trust may consist of Securities the current market
value of some of which were below face value. A primary reason for the market
value of such Securities being less than face value at maturity is that the
interest coupons of such Securities are at lower rates than the current market
interest rate for comparably rated debt securities, even though at the time of
the issuance of such Securities the interest coupons thereon generally
represented then prevailing interest rates on comparably rated debt securities
then newly issued. The current yields (coupon interest income as a percentage of
market price, ignoring any original issue discount) of such Securities are lower
than the current yields (computed on the same basis) of comparably rated debt
securities of similar type newly issued at currently prevailing interest rates.
Securities selling at market discounts tend to increase in market value as they
approach maturity when the principal amount is payable. A market discount
tax-exempt Security held to maturity will have a larger portion of its total
return in the form of taxable income or gain and less in the form of tax-exempt
income than a comparable Security bearing interest at current market rates.
Under the provisions of the Internal Revenue Code in effect on the date of this
Prospectus, any gain attributable to market discount will not be recognized
until maturity, redemption or sale of the Securities or Units. The current yield
of such discounted securities carrying the same coupon interest rate and which
are otherwise comparable tends to be higher for securities with longer periods
to maturity than it is for those with shorter periods to maturity because the
market value of such securities with a longer period to maturity tends to be
less than the market value of such a bond with a shorter period to maturity. If
currently prevailing interest rates for newly issued and otherwise comparable
securities increase, the market discount of previously issued bonds will become
deeper and if such currently prevailing interest rates for newly issued
comparable securities decline, the market discount of previously issued
securities will be reduced, other things being equal. Market discount
attributable to interest rate changes does not indicate a lack of market
confidence in the issue.
PORTFOLIO SUMMARY
The Securities in the Portfolio of the Trust consist of Securities issued
by or on behalf of states, counties, municipalities or other political
subdivisions of the United States or issued by or on behalf of the Commonwealth
of Puerto Rico or possessions of the United States, or municipalities or other
political subdivisions thereof. The interest on such Securities is, with certain
exceptions, or upon their delivery will be, in each instance, in the opinion of
recognized bond counsel to the Issuer of such Securities or by ruling of the
Internal Revenue Service, exempt from all Federal income taxes under existing
law (but may be subject to state and local taxation). In the case of State
Trusts, the Securities are obligations of the specified state or counties,
municipalities, authorities or political subdivisions thereof or of the
Commonwealth of Puerto Rico or possessions of the United States, interest on
which will, in the opinion of recognized bond counsel to the issuing
governmental authorities, be exempt under existing law from Federal and the
specified state and local income taxes to the extent indicated. (See 'Tax
Status'.) Capital gains, if any, will be subject to Federal income tax and,
generally, to state and/or local income taxes.
B-2
<PAGE>
The Portfolio of the Trust may contain Securities that are general
obligations of governmental entities and/or bonds that are guaranteed by
governmental entities. (See Part A--'Portfolio Summary as of Date of Deposit'
for information relating to the particular series described therein.) Such
general obligations and guarantees are backed by the taxing power of the
respective entities. The ability of the issuer of a general obligation bond to
meet its obligation depends largely upon its economic condition. Many issuers
rely upon ad valorem real property taxes as a source of revenue. Proposals in
the form of state legislative or voter initiatives to limit ad valorem real
property taxes have been introduced in various states. It is not presently
possible to predict the impact of these or future proposals, if adopted, on
states, local governments or school districts or on their abilities to make
future payments of their outstanding debt obligations. The remaining issues are
payable from the income of specific projects or authorities and are not
supported by the issuer's power to levy taxes. This latter group of issues
contains Securities that are also supported by the moral obligations of
governmental entities. In the event of a deficiency in the debt service reserve
funds of moral obligation Securities, the governmental entity having the moral
commitment may (but is not legally obligated to) satisfy such deficiency.
However, in the event of a deficiency in the debt service reserve funds of
Securities not backed by such moral obligations, no such moral commitment of a
governmental entity exists.
The Portfolio of the Trust may contain zero coupon bond(s) (including bonds
known as multiplier bonds, money multiplier bonds, capital appreciation bonds,
capital accumulator bonds, compound interest bonds, and discount maturity
payment bonds) or one or more other Securities which were issued with an
'original issue discount'. 'Original issue discount' bonds are acquired at
prices which represent a discount from face amount, principally because such
bonds bear interest at rates which are lower than currently-prevailing market
rates. (See Part A--'Portfolio Summary as of Date of Deposit' for information
relating to the particular series described therein.) A discounted bond held to
maturity will have a larger portion of its total return in the form of capital
gain and less in the form of tax-exempt income than a comparable bond bearing
interest at current market rates. Zero coupon bonds do not provide for the
payment of any current interest and provide for payment at maturity at face
value unless sooner sold or redeemed. Zero coupon bonds may be subject to more
price volatility than conventional bonds, i.e., the market value of zero coupon
bonds is subject to greater fluctuation in response to changes in interest rates
than is the market value of bonds which pay interest currently. Zero coupon
bonds generally are subject to redemption at compound accreted value based on
par value at maturity. Because the issuer is not obligated to make current
interest payments, zero coupon bonds may be less likely to be redeemed than
coupon bonds issued at a similar interest rate. While some types of zero coupon
bonds, such as multipliers and capital appreciation bonds, define par as the
initial offering price rather than the maturity value, they share the basic zero
coupon bond features of (1) not paying interest on a semi-annual basis and (2)
providing for the reinvestment of the bond's semi-annual earnings at the bond's
stated yield to maturity. In addition, in the event the portfolio is valued at
less than the optional termination value, the Trust may terminate at a time when
the only Securities in the portfolio are zero coupon bonds. The sale of such
zero coupon bonds at such time may result in a loss to Unit Holders.
The Portfolio of the Trust may contain Securities of housing authorities
payable from revenues derived by state housing finance agencies or municipal
housing authorities from repayments on mortgage and home improvement loans made
by such agencies. (See Part A--'Portfolio Summary as of Date of Deposit' for
information relating to the particular series therein.) Since housing authority
obligations, which are not general obligations of a particular state, are
generally supported to a large extent by Federal housing subsidy programs, the
failure of a housing authority to meet the qualifications required for coverage
under the Federal programs, or any legal or administrative determination that
the coverage of such Federal programs is not available to a housing authority,
could result in a decrease or elimination of subsidies available for payment of
principal and interest on such housing authority's obligations. Weaknesses in
Federal housing subsidy programs and their administration may result in a
decrease in subsidies available for payment of principal and interest on housing
authority bonds. Repayment of housing loans and home improvement loans in a
timely manner is dependent on factors affecting the housing market generally and
upon the underwriting and management ability of the individual agencies (i.e.,
the initial soundness of the loan and the effective use of available remedies
should there be a default in loan payments). Economic developments, including
failure or inability to increase rentals, fluctuations in interest rates and
increasing construction and operating costs may also have an adverse impact on
revenues of housing authorities. In the case of some housing authorities,
inability to obtain additional financing could also reduce revenues available to
pay existing obligations.
The Portfolio of the Trust may contain Securities which are subject to the
requirements of Section 103A of the Internal Revenue Code of 1954, as amended,
(the '1954 Code'), or Section 143 of the Internal Revenue Code of 1986, as
amended (the '1986 Code' or the 'Code'). Sections 103A and 143 provide that
obligations issued to provide single family housing will be exempt from Federal
income taxation if all of the proceeds of the issue (exclusive of issuance costs
and a reasonably required reserve) are used to make or acquire loans which meet
requirements including certain requirements which must be satisfied after
issuance. If proceeds of the issue are not used to acquire such loans, the
issuer may be required to redeem all or a portion of such issue from such
uncommitted proceeds to maintain the issue's tax exemption. Bond counsel to each
such issuer has issued an opinion that the interest on such Securities was
exempt from Federal income tax at the time the Securities were issued. The
failure of the issuers of such Securities to meet certain ongoing compliance
requirements imposed by Sections 103A and 143 could render the interest on such
Securities subject to Federal income taxation, possibly from the date of their
issuance. If interest on such
B-3
<PAGE>
Securities in a Trust is deemed to be subject to Federal income taxation, the
loss of tax-exempt status can be expected to adversely affect the market value
of such Securities. In this event and under the terms of the Indenture the
Sponsor may direct the sale of such Securities. The sale of such Securities in
such circumstances is likely to result in a loss to the Trust.
The Portfolio of the Trust may include certain housing authority
obligations whose tax exemption depends upon qualification under Section
103(b)(4)(A) of the 1954 Code, or Section 142 of the 1986 Code, and appropriate
Treasury Regulations. Both Sections require that specified minimum percentages
of the units in each rental housing project financed by tax-exempt debt are to
be continuously occupied by low or moderate income tenants for specified
periods. Department of the Treasury Regulations issued under Section
103(b)(4)(A) of the 1954 Code provide that in order to prevent possible
retroactive Federal income taxation of interest on such Securities certain
conditions must be met. The regulations provide, however, that such retroactive
taxation will not occur if the issuer corrects any non-compliance occurring
after the issuance of the Securities within a reasonable period after such
non-compliance is first discovered or should have been discovered by the issuer.
Similar regulations are expected to be issued under 1986 Code Section 142. If
the interest on any of the Securities in the Trust that are housing securities
should ultimately be deemed to be taxable, the Sponsor may instruct the Trustee
to sell such Securities and, since they would be sold as taxable securities, it
is expected that such Securities would have to be sold at a substantial discount
from current market price of a comparable tax-exempt security.
The Portfolio of the Trust may contain Securities which contain provisions
which require the issuer to redeem such obligations at par from unused proceeds
of the issue within a stated period which typically does not exceed three years
from the date of issuance of such Securities. (See Part A--'Portfolio Summary as
of Date of Deposit' for information relating to the particular series described
therein.) In periods in which interest rates decline there may be increased
redemptions of housing securities pursuant to such redemption provisions. Such
an increase in redemptions may occur because conventional mortgage loans may
have become available at interest rates equal to or less than the interest rates
charged on the mortgage loans previously made available from the proceeds of
such housing securities. Therefore, some issuers of such housing securities may
have experienced insufficient demand to complete mortgage loan originations for
all of the money made available from such securities. In addition, mortgage
loans made with the proceeds of housing securities, in general, do not carry
prepayment penalties and therefore certain mortgage loans may be prepaid earlier
than their maturity dates. If the issuers of such housing securities are unable
to or choose not to reloan these monies, they will generally redeem housing
securities in an amount approximately equal to such prepayments. The Sponsor is
unable to predict at this time whether such redemptions will be made at a high
rate. The disposition of such Securities may result in a loss to the Trust.
The Portfolio of the Trust may contain Securities in the hospital
facilities category that are payable from revenues derived from hospitals and
health care facilities which, generally, were constructed or are being
constructed from the proceeds of such Securities. (See Part A--'Portfolio
Summary as of Date of Deposit' for information relating to the particular series
described therein.) The continuing availability of sufficient revenues is
dependent upon several factors affecting all such facilities generally,
including, among other factors, the ability of the facilities to provide the
services required by patients, changes in Medicare and Medicaid reimbursement
regulations, the success of efforts by the states and the Federal government to
limit the cost of health care, changes in contracts between health care
institutions and public or private insurers, the timely completion of the
construction of projects and achieving and maintaining projected rates of
utilization. Additionally, a major portion of hospital revenues typically is
derived from Federal or state programs such as Medicare and Medicaid and from
Blue Cross and other insurers. The future solvency of the Medicare trust fund is
periodically subject to question. Changes in the compensation and reimbursement
formulas of these governmental programs or in the rates of insurers may reduce
revenues available for the payment of principal of, or interest on, hospital
revenue bonds. Governmental legislation or regulations and other factors, such
as the inability to obtain sufficient malpractice insurance, may also adversely
impact upon the revenues or costs of hospitals and may also adversely affect the
ratings of hospital revenue bonds held in the Trust. Future actions by the
Federal government with respect to Medicare and by the Federal and State
governments with respect to Medicaid, reducing the total amount of funds
available for either or both of these programs or changing the reimbursement
regulations, or their interpretations, could adversely affect the amount of
reimbursement available to hospital facilities. A number of additional
legislative proposals concerning health care are typically under review by the
United States Congress at any given time. These proposals span a wide range of
topics, including cost control, national health insurance, incentives for
competition in the provision of health care services, tax incentives and
penalties related to health care insurance premiums and promotion of prepaid
health care plans. The Sponsor is unable to predict the effect of these
proposals, if enacted, on any of the Securities in the Portfolio of the Trust.
The Portfolio of the Trust may contain Securities in the power and electric
facilities category payable from revenues derived from power facilities, which
generally include revenues from the sale of electricity generated and
distributed by power agencies using hydro-electric, nuclear, fossil or other
power sources. (See Part A--'Portfolio Summary as of Date of Deposit' for
information relating to the particular series described therein.) The ability of
the issuers of such Securities to make payments of principal of, or interest on,
such obligations is dependent, among other things, upon the continuing ability
of such issuers to derive sufficient revenues from their operations to meet debt
service requirements. General problems of the power and electric utility
industry include difficulty in financing large construction programs during an
inflationary period, restrictions on operations and
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increased cost and delays attributable to environmental considerations,
uncertain technical and cost factors relating to the construction and operation
of nuclear power generating facilities, the difficulty of the capital markets in
absorbing utility debt and equity securities, the availability of fuel for
electric generation at reasonable prices, the steady rise in fuel costs and the
costs associated with conversion to alternate fuel sources such as coal. Some of
the issuers of Securities in the Portfolio may own or operate nuclear facilities
for electric generation. Additional considerations in the case of such issuers
include the problems associated with the use and disposal of radioactive
materials and wastes, and other problems associated with construction,
licensing, regulation and operation of such facilities. In addition, Federal,
state or municipal governmental authorities may from time to time impose
additional regulations or take other governmental action which might cause
delays in the licensing, construction or operation of nuclear power plants, or
the suspension of operation of such plants which have been or are being financed
by proceeds of certain of the Securities held in the Portfolio of the Trust.
Such delays, suspensions or other action may affect the payment of interest on,
or the repayment of the principal amount of, such Securities. On November 15,
1990 the President signed into law the Clean Air Act Amendments of 1990 which
provide for attainment and maintenance of health protective national ambient air
quality standards. The goal of the law is to cut acid rain pollutants by half,
sharply reduce urban smog and eliminate most of the toxic chemical emissions
from industrial plants by the turn of the century. As enacted, the law affects
nearly all electric power facilities that burn oil or coal. Greenhouse effect
bills and hazardous waste bills may further increase the cost of utility
service. The Sponsor is unable to predict the ultimate form that any such
regulations or other governmental action may take or when such legislation may
be enacted or the resulting impact on the Securities in the Portfolio of the
Trust.
The Portfolio of the Trust may contain Securities which are in the
industrial revenue facilities category. (See Part A-- 'Portfolio Summary as of
Date of Deposit' for information relating to the particular series described
therein.) Industrial Revenue Bonds ('IRBs') are tax-exempt securities issued by
states, municipalities or public authorities to finance the cost of acquiring,
constructing or improving various projects, including pollution control,
environmental improvement, industrial or special airport facilities. IRBs are
payable from the income of specific facilities or from payments made by private
corporations to the state authorities issuing such bonds. (See 'Tax Status of
Each Trust.')
The Portfolio of the Trust may contain Securities which are in the water
and sewer facilities category. (See Part A--'Portfolio Summary as of Date of
Deposit' for information relating to the particular series described therein.)
Bonds in the water and sewer facilities category include securities issued to
finance public water and sewer projects for water management and supply and
sewer control and securities issued by public issuers on behalf of private
corporations for such projects. These bonds are payable from the income of
specific facilities or from payments made by such private corporations to the
state authorities issuing such bonds. The income of such facilities is generated
from the payment of user fees. The ability of state and local water and sewer
authorities to meet their obligations may be affected by failure of
municipalities to utilize fully the facilities constructed by these authorities,
economic or population decline and resulting decline in revenue from user
charges, rising construction and maintenance costs and delays in construction of
facilities, impact of environmental requirements, the difficulty of obtaining or
discovering new supplies of fresh water, the effect of conservation programs and
the impact of 'no growth' zoning ordinances.
The Portfolio of the Trust may contain Securities which are in the revenue
obligations of universities and schools category. (See Part A--'Portfolio
Summary as of Date of Deposit' for information relating to the particular series
described therein.) The ability of universities and schools to meet their
obligations is dependent upon various factors, including the revenues, costs,
and enrollment levels of the institutions. In addition, their ability may be
affected by declines in enrollment and tuition revenue, the availability of
Federal, state and alumni financial support, the method and validity, under
state constitutions, of present systems of financing public education,
fluctuations in interest rates and construction costs, increased maintenance and
energy costs, failure or inability to raise tuition or room charges and adverse
results of endowment fund investments. Studies undertaken by public and private
groups differ with respect to statistics and projections for postsecondary
enrollment at educational institutions in the 1990s.
The Portfolio of the Trust may contain Securities in the pollution control
facilities category. (See Part A--'Portfolio Summary as of Date of Deposit' for
information relating to the particular series described therein.) Bonds in the
pollution control facilities category include securities issued to finance
public water, sewage or solid waste treatment facilities and securities issued
by a public issuer on behalf of a private corporation to provide facilities for
the treatment of air, water and solid waste pollution. These Securities are
payable from the income of specific facilities, state authorities or from
payments made by such private corporations.
The Portfolio of the Trust may contain Securities which are in the
redevelopment facilities category. (See Part A--'Portfolio Summary as of Date of
Deposit' for information relating to the particular series described therein.)
The purpose of redevelopment is to revitalize deteriorated and/or underdeveloped
areas within a community. As new construction progresses, property values
normally increase significantly and the ultimate result is a proportionate
increase in ad valorem property tax revenues. However, if, due to various
economic factors, the assessed valuation is reduced, such reduction may result
in insufficient tax revenues, which could in turn impair the ability of the
issuer to make payments of principal and/or interest on the bonds when due. A
reduction in property tax rates or delinquencies in the payment of property
taxes could have a similar adverse effect.
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The Portfolio of the Trust may contain Securities in the resource recovery
category. (See Part A--'Portfolio Summary as of Date of Deposit' for information
relating to the particular series described therein.) The issuers of such
Securities are municipalities or agencies or authorities thereof that have
allocated the proceeds of the issue towards the construction and operation of a
resource recovery facility operated by a corporate operator. Payments on the
bonds are dependent upon the creditworthiness of the corporate operator of the
particular project. The operation of such facilities typically depends upon the
delivery thereto of specified quantities of solid waste from which
refuse-derived fuel can be extracted and in turn converted into electricity or
steam by the facility. The operation of the facility may be limited or totally
curtailed from operating because of failure to comply with governmental
regulations concerning the environment, failure to obtain necessary
environmental permits, zoning permits and other municipal ordinances or
inability to maintain or renew such permits because of an inability to comply
with changes in government environmental regulations. If the resource recovery
facility is unable to operate or cannot operate at full capacity, the corporate
operator of such facility will be unable to generate revenues necessary to cover
payments on the resource recovery bonds. Furthermore, the corporate operator's
revenue is typically derived from the sale of the power generated by the
facility to a power agency or company under a power purchase agreement. The
continued flow and level of payments made by the corporate operator might
therefore depend upon the financial condition of the purchaser under such a
power agreement and the operator's continued ability to generate the minimum
amount of power required to be delivered thereunder. Such a purchaser may be
subject to the various general problems and risks associated with the power
industry and the regulatory environment in which it operates. A decline in price
of the extracted materials or the electricity or steam created by the facility
may also result in insufficient revenues generated by the corporate operator as
will an increase in its operating costs. Finally there may be technological
risks that become apparent in the long run that are not presently apparent
because of the relatively short history of these facilities which risks may
involve the successful construction or operation of such facilities.
The Portfolio of the Trust may contain Securities of issuers in the
transportation facilities category. Bonds in the transportation facilities
category may be used to finance capital projects in connection with bridges,
highways, airports, tunnels, bus terminals, ports or other property owned by
transportation authorities. These bonds are generally payable from the income of
the specific facilities, existing facilities or future sales of bonds. The risks
of an investment in such bonds include a deterioration of national and regional
economic conditions, including fuel availability and costs, labor and equipment
costs and the nature of governmental regulations with respect to transportation,
commerce, energy, safety and environmental protection. Revenue of toll
facilities may be affected by lower costs of alternative modes of transportation
or construction and operation in its vicinity of another transportation facility
which could alter established transportation patterns. Other risks include
reductions in various Federal programs and a shift in local demographic trends.
The Portfolio of the Trust may contain Securities which are in the special
tax bond category. (See Part A--'Portfolio Summary as of Date of Deposit' for
information relating to the particular series described therein.) Special tax
bonds are payable from and secured by the revenues derived by a municipality
from a particular tax. Special tax bonds are not secured by the general tax
revenues of the municipality and they do not represent general obligations of
the municipality. Therefore, the ability of the issuers of special tax bonds to
pay interest and/or principal on special tax bonds may be adversely affected by
the inability to collect all or part of the special tax due to various factors
including: a general decline in the local economy or population, inability or
failure to pay the special tax, failure to develop property backing certain
special tax bonds for reasons including prohibitions or restraints on
development such as failure to receive regulatory agency approval for
development and fluctuations in the real estate market, a decline in the value
of projects backing certain tax bonds, natural disasters or environmental
hazards.
The Portfolio of the Trust may contain Securities which are in the tax
allocation bond category. (See Part A--'Portfolio Summary as of Date of Deposit'
for information relating to the particular series described therein.) These
Securities are typically secured by incremental tax revenues collected on
property within the areas where redevelopment projects, financed by bond
proceeds are located ('project areas'). Such payments are expected to be made
from projected increases in tax revenues derived from higher assessed values of
property resulting from development in the particular project area and not from
an increase in tax rates. Special risk considerations include: reduction of, or
a less than anticipated increase in, taxable values of property in the project
area, caused either by economic factors beyond the Issuer's control (such as a
relocation out of the project area by one or more major property owners) or by
destruction of property due to natural or other disasters; successful appeals by
property owners of assessed valuations; substantial delinquencies in the payment
of property taxes; or imposition of any constitutional or legislative property
tax rate decrease.
The Portfolio of the Trust may contain Securities secured in whole or in
part by governmental payments, pursuant to a lease agreement, service contract,
installment sale or other agreement. (See Part A--'Portfolio Summary as of Date
of Deposit' for information relating to the particular series described
therein.) A governmental entity that enters into such an agreement cannot
obligate future governments to make payments thereunder, but generally has
covenanted to take such action as is necessary to include all such payments due
under such agreement in its annual budgets and to make the appropriations
therefor. However, a budgetary imbalance in future fiscal years could affect the
ability and willingness of the governing legislative body to appropriate, and
the availability of monies to make, the payments provided for under such
agreement. The failure of a governmental entity to
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meet its obligations under such an agreement could result in an insufficient
amount of funds to cover the debt service on the Securities.
The Portfolio of the Trust may contain Securities in the certificates of
participation category. (See Part A--'Portfolio Summary as of Date of Deposit'
for information relating to the particular series described therein.) Each
certificate represents an undivided and proportionate interest in lease or
installment purchase payments to be made by governmental entities (which are the
participants) to a third party for the use and possession or acquisition of a
particular project or equipment. Each payment is divided into an interest
portion and a principal portion, the interest portion of which constitutes
tax-exempt interest in the opinion of special counsel retained in connection
with the issue. The third party assigns its rights to the payments to a trustee
for the benefit of the certificate holders. The amounts paid to the trustee by
the participants are used to make the payments of principal and interest due
with respect to the certificates. The obligation of a participant to make the
payments does not constitute an obligation for which the participant is
obligated to levy or pledge any form of taxation.
The Portfolio of the Trust may contain obligations of issuers located in
the Commonwealth of Puerto Rico. (See Part A-- 'Portfolio Summary as of Date of
Deposit.') The ability of the issuers of such bonds to meet their obligations
may be affected by the economic and social problems facing Puerto Rico.
Unemployment in Puerto Rico remains high by United States standards. The
island's per capita personal income has been lower than in any state of the
United States. Transfer payments from the United States Government under various
social welfare programs (such as food stamps, social security and veterans'
benefits) contribute significantly to personal income.
The economy of Puerto Rico is closely integrated with that of the mainland
United States and is largely dependent for its development on U.S. policies and
programs that could be eliminated by the U.S. Congress. Aid for Puerto Rico's
economy has traditionally depended heavily on Federal programs which may not
always be available. An adverse effect on the Puerto Rican economy could result
from other U.S. policies, including a reduction of tax benefits for distilled
products, further reduction in transfer payment programs such as food stamps,
curtailment of military spending and policies which could lead to a stronger
dollar. During fiscal year 1991 approximately 87% of Puerto Rico's exports were
to the United States mainland, which was also the source of 68% of its imports.
Growth in the Puerto Rico economy in fiscal 1993 and fiscal 1994 will depend on
several factors including the state of the U.S. economy.
The Puerto Rican economy consists principally of manufacturing
(pharmaceuticals, scientific instruments, computers, microprocessors, medical
products, textiles and petrochemicals), agriculture (largely sugar), tourism and
the service sector (including finance, insurance, and real estate). Since Puerto
Rico is an island and is heavily dependent upon imports and exports, maritime
and air transportation are of basic importance to its economy. The manufacturing
and service sectors generate the largest portion of gross product. Most of the
island's manufacturing output is shipped to the mainland United States, which is
also the chief source of semi-finished manufactured articles on which further
manufacturing operations are performed in Puerto Rico. The finance, insurance
and real estate components of this sector have recently experienced the most
growth. The level of tourism is affected by various factors, including the
strength of the U.S. dollar. During periods when the dollar is strong, tourism
in foreign countries becomes relatively more attractive.
The government sector of the Commonwealth plays an important role in the
economy of the island. Since World War II, the economic importance of
agriculture for Puerto Rico, particularly in the dominance of sugar production,
has declined. Nevertheless, the Commonwealth-controlled sugar monopoly remains
an important economic factor and is largely dependent upon Federal maintenance
of sugar prices, the discontinuation of which could severely affect Puerto Rican
sugar production.
The Puerto Rican economy is affected by a number of Commonwealth and
Federal investment incentive programs. For example, Section 936 of the Internal
Revenue Code generally provides deferral of Federal income taxes for U.S.
companies operating on the island until profits are repatriated. No assessment
can be made as to whether or not Section 936 and other incentive programs will
be continued. It is expected that the elimination of Section 936, if it
occurred, would have a strongly negative impact on Puerto Rico's economy.
There have for many years been two major viewpoints in Puerto Rico with
respect to the island's relationship to the United States, one essentially
favoring the existing commonwealth status (but with modifications providing for
greater local autonomy), and the other favoring statehood. A third viewpoint
favors independence from the United States. The Sponsor cannot predict what
effect, if any, a change in the relationship between Puerto Rico and the United
States would have on the issuers' ability to meet their obligations.
Certain Securities in each Trust may be purchased by the Sponsor on a
'when, as and if issued' basis; that is, they may not yet be issued by their
governmental entities on the Date of Deposit (although such governmental
entities are committed to issue such Securities). Contracts relating to such
'when, as and if issued' Securities may not settle by the first settlement date
for Units. Moreover, the delivery of such Securities may be delayed or may not
occur. Unit Holders who purchase Units prior to settlement of such Securities
will be 'at risk' with respect to these Securities (i.e., they may derive either
gain or loss from changes in the prices of the Securities) from the date they
commit to purchase such Units. Interest on the Securities begins accruing to the
benefit of Unit
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Holders as municipal interest on the respective delivery dates of such
Securities. In order to provide level interest payments to Unit Holders where
the Trust purchases Securities which will settle after the settlement date for
Units, the Trustee will reduce its fee over a period of time in an amount equal
to the amount of interest that would have so accrued on such Securities between
the initial settlement date for the Units and the delivery date of any such
Securities as if such Securities had been delivered prior to purchase of the
Units. The reduction of the Trustee's fee eliminates the necessity of reducing
regular monthly interest distributions until such Securities are delivered. The
Trustee will be reimbursed for the reduction in its fee by the Sponsor. To the
extent that the delivery of such Securities is delayed beyond their respective
expected delivery dates, the Estimated Current Returns and Estimated Long-Term
Return for the first year may be lower than indicated in the 'Summary of
Essential Information' in Part A.
Each Trust consists of the Securities (or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts) listed under Part A--'Schedule of Portfolio
Securities' herein, as long as such Securities may continue to be held from time
to time in the Trust (including certain securities deposited in the Trust in
exchange or substitution for any Securities pursuant to the Indenture) together
with accrued and undistributed interest thereon and undistributed and uninvested
cash realized from the disposition of Securities. BECAUSE CERTAIN OF THE
SECURITIES FROM TIME TO TIME MAY BE REDEEMED OR WILL MATURE IN ACCORDANCE WITH
THEIR TERMS OR MAY BE SOLD UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN, NO
ASSURANCE CAN BE GIVEN THAT THE TRUST WILL RETAIN FOR ANY LENGTH OF TIME ITS
PRESENT SIZE AND COMPOSITION. THE TRUSTEE HAS NOT PARTICIPATED IN THE SELECTION
OF SECURITIES FOR THE TRUST, AND NEITHER THE SPONSOR NOR THE TRUSTEE WILL BE
LIABLE IN ANY WAY FOR ANY DEFAULT, FAILURE OR DEFECT IN ANY SECURITIES.
In the event that any contract for the purchase of any Security fails, the
Sponsor is authorized under the Indenture, subject to the conditions set forth
below, to instruct the Trustee to acquire other securities (the 'Replacement
Securities') for inclusion in the portfolio of a Trust. Any Replacement
Securities must be deposited not later than the earlier of (i) the first Monthly
Distribution Date of the Trust or (ii) 90 days after the Trust was established.
The cost and aggregate principal amount of the Replacement Securities may not
exceed the cost and aggregate principal amount of the Securities which they
replace. In addition, the Replacement Securities must (1) be tax-exempt bonds;
(2) have a fixed maturity date in the same category as the Security replaced;
(3) be purchased at a price that results in a yield to maturity and in a current
return, in each case as of the execution and delivery of the Indenture, which is
approximately equivalent to the yield to maturity and current return of the
Securities which they replace; (4) be purchased within twenty days after
delivery of notice of the failed contracts; (5) for an Insured Trust, be insured
either by insurance obtained by the issuer or under a Portfolio Insurance policy
obtained by a Trust and be eligible for Permanent Insurance and not cause the
Units of an Insured Trust to cease to be rated AAA by Standard & Poor's and (6)
for a trust which is not an insured trust, be rated by at least one national
rating organization in the same category as the Security which it replaces or
have, in the opinion of the Sponsor's affiliate, comparable credit
characteristics. Whenever a Replacement Security has been acquired for the
Trust, the Trustee will, within five days thereafter, notify all Unit Holders of
the acquisition of the Replacement Security.
In the event a contract to purchase Securities fails and Replacement
Securities are not acquired, the Trustee will, not later than the second Monthly
Distribution Date, distribute to Unit Holders the funds attributable to the
failed contract. The Sponsor will, in such a 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 Securities, the remaining
moneys will be distributed to Unit Holders not later than the second Monthly
Distribution Date. Moreover, the failed contract will reduce the Estimated Net
Annual Income per Unit, and may lower the Estimated Current Return and Estimated
Long-Term Return.
To the best knowledge of the Sponsor, there was no material litigation
pending as of the Date of Deposit in respect of any Securities which might
reasonably be expected to have a material adverse effect upon the Trust. At any
time after the Date of Deposit, litigation may be initiated on a variety of
grounds with respect to Securities in the Trust. Such litigation may affect the
validity of such Securities or the tax-free nature of the interest thereon.
Although the outcome of litigation of such nature cannot be predicted, opinions
of bond counsel are delivered with respect to each Security on the date of
issuance to the effect that such Security has been validly issued and that the
interest thereon is exempt from Federal income tax under then existing law. If
legal proceedings are instituted after the Date of Deposit seeking, among other
things, to restrain or enjoin the payment of principal or interest on any of the
Securities or attacking their validity or the authorization or existence of the
issuer, the Sponsor may, in accordance with the Indenture, direct the Trustee to
sell such Securities and distribute the proceeds of such sale to Unit Holders.
In addition, other factors may arise from time to time which potentially may
impair the ability of issuers to meet obligations undertaken with respect to
Securities (e.g., state legislative proposals or voter initiatives to limit ad
valorem real property taxes).
Under the Federal Bankruptcy Code, political subdivisions, public agencies
or other instrumentalities of any state (including municipalities) which are
insolvent or unable to meet their debts as they mature and which meet certain
other conditions may file a petition in Federal bankruptcy court. Generally, the
filing of such a petition operates as a stay of any proceeding to enforce a
claim against the debtor. The Federal Bankruptcy Code also requires the debtor
to file a plan for the adjustment of its debts which may modify or alter the
rights of creditors. Under such a plan the Federal bankruptcy court may permit
the debtor to issue certificates of indebtedness which have priority over
existing creditors and which could be secured. Any plan of adjustment confirmed
by the
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court must be approved by the requisite majorities of creditors of different
classes. If confirmed by the bankruptcy court, the plan would be binding upon
all creditors affected by it. The Sponsor is unable to predict the effect these
bankruptcy provisions may have on the Trust.
Most of the Securities are subject to redemption prior to their stated
maturity dates pursuant to optional refunding redemption and/or sinking fund
provisions. In general, optional refunding redemption provisions are more likely
to be exercised when the evaluation of a Security is at a premium over par than
when it is at a discount from par. Generally, the evaluation of Securities will
be at a premium over par when market interest rates fall below the coupon rate
on such Securities. In addition, certain Securities may be redeemed in whole or
in part other than by operation of the stated redemption or sinking fund
provisions under certain unusual or extraordinary circumstances specified in the
instruments setting forth the terms and provisions of such Securities. The
redemption of a Security at par may result in a loss to the Trust. See Part
A--'Schedule of Portfolio Securities' for those Securities in the Portfolio of a
Trust which as of the date of such schedule had an offering side evaluation in
excess of par. Certain Securities in the Portfolio may be subject to sinking
fund provisions during the life of a Trust. Such provisions are designed to
redeem a significant portion of an issue of Securities gradually over the life
of such issue. Particular bonds of an issue of Securities to be redeemed are
generally chosen by lot. The 'Schedule of Portfolio Securities' herein contains
a listing of the optional refunding and sinking fund redemption provisions, if
any, with respect to each of the Securities.
BECAUSE THE REDEMPTION PRICE AND THE SPONSOR'S REPURCHASE PRICE ARE BASED
ON BID PRICES FOR THE SECURITIES, THEY MAY BE LESS THAN THE PRICE PAID BY A UNIT
HOLDER PURCHASING IN THE PRIMARY MARKET (OFFERING PRICES ARE NORMALLY HIGHER
THAN BID PRICES). DUE TO FLUCTUATIONS IN THE MARKET PRICE OF THE SECURITIES IN
THE PORTFOLIO AND THE FACT THAT THE PUBLIC OFFERING PRICE INCLUDES A SALES
CHARGE, AMONG OTHER FACTORS, THE AMOUNT REALIZED BY A UNIT HOLDER UPON THE
REDEMPTION OR SALE OF UNITS MAY BE LESS THAN THE PRICE PAID FOR SUCH UNITS BY
THE HOLDER. (SEE 'RIGHTS OF UNIT HOLDERS--REDEMPTION--COMPUTATION OF REDEMPTION
PRICE PER UNIT', HEREIN.)
Unit Holders of a Trust not designated as Insured should omit the following
and continue with 'Objectives and Securities Selection'. All of the Securities
in any Series not identified as insured are not insured and the following
section 'Insurance on the Securities in the Portfolio of an Insured Trust' is
inapplicable to such Series.
INSURANCE ON THE SECURITIES IN THE PORTFOLIO OF AN INSURED TRUST
Certain of the Securities in an Insured Trust are insured to maturity by
AMBAC, CapMAC, ConnieLee, Cap. Gty., FSA, MBIA, MBIAC, BIGI + and/or Financial
Guaranty (the 'Insurance Companies') at the cost of the issuer of such Security
and the remainder of the Securities are insured by Financial Guaranty under a
Portfolio Insurance policy obtained by such Insured Trust (see Part
A--'Portfolio Summary as of Date of Deposit' for the percentage of the
Securities in a Trust insured by insurance obtained by the issuer and the
percentage for which a Trust purchased Portfolio Insurance). The respective
insurance policies are noncancellable and, except in the case of any Portfolio
Insurance, will continue in force so long as Securities are outstanding and the
insurers remain in business. The insurance policies guarantee the scheduled
payment of principal and interest on but do not guarantee the market value of
the Securities covered by each policy or the value of the Units. The value of
any insurance obtained by the issuer of a Security is reflected and included in
the market value of such Security. In the event the issuer of an insured
Security defaults in payment of interest or principal the insurance company
insuring the Security will be required to pay to the Trustee any interest or
principal payments due. Payment under the insurance policies is to be made in
respect of principal of and interest on Securities covered thereby which becomes
due for payment but is unpaid. Each such policy provides for payment of the
defaulted principal or interest due to a trustee or paying agent. In turn, such
trustee or paying agent will make payment to the bondholder (in this case, the
Trustee) upon presentation of satisfactory evidence of such bondholder's right
to receive such payment. The single premium for any insurance policy or policies
obtained by an issuer of Securities has been paid in advance by such issuer and
any such policy or policies are noncancellable and will continue in force so
long as the Securities so insured are outstanding. Insurance is not a substitute
for the basic credit of an issuer, but supplements the existing credit and
provides additional security. Contracts to purchase Securities are not covered
by insurance although Securities underlying such contracts are covered by
insurance upon physical delivery to the Trust.
- ------------------
+ Securities originally insured by BIGI have been reinsured by MBIAC pursuant
to reinsurance agreements.
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A description of each of the insurers follows:
AMBAC Indemnity Corporation
AMBAC Indemnity Corporation ('AMBAC Indemnity') is a Wisconsin-domiciled
stock insurance company, regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin. Such regulation, however, is no guarantee
that AMBAC Indemnity will be able to perform on its contracts of insurance in
the event a claim should be made thereunder at some time in the future. AMBAC
Indemnity is licensed to do business in 50 states, the District of Columbia and
the Commonwealth of Puerto Rico, with admitted assets of approximately
$2,060,000,000 (unaudited) and statutory capital of approximately $1,178,000,000
(unaudited) as of June 30, 1994. Statutory capital consists of statutory
contingency reserve and AMBAC Indemnity's policyholders' surplus. AMBAC
Indemnity is a wholly owned subsidiary of AMBAC, Inc., a 100% publicly-held
company. Moody's Investors Service, Inc. and Standard & Poor's Corporation have
both assigned a triple-A claims-paying ability rating to AMBAC Indemnity. The
address of the administrative offices of AMBAC Indemnity is One State Street
Plaza, New York, New York 10004.
Capital Markets Assurance Corporation
Capital Markets Assurance Corporation ('CapMAC') is a New York-domiciled
monoline stock insurance company which engages only in the business of financial
guarantee and surety insurance. CapMAC is licensed in 50 states in addition to
the District of Columbia, the Commonwealth of Puerto Rico and the territory of
Guam. CapMAC insures structured asset-backed, corporate, municipal and other
financial obligations in the U.S. and international markets. CapMAC also
provides financial guarantee reinsurance for structured asset-backed, corporate,
municipal and other financial obligations written by other major insurance
companies. Neither CapMAC Holdings Inc. nor any of its stockholders is obligated
to pay any claims under any surety bond issued by CapMAC or any debts of CapMAC
or to make additional capital contributions. CapMAC is wholly owned by CapMAC
Holdings Inc., a company that is owned by a group of institutional and other
investors, including CapMAC's management and employees. As of December 31, 1993
and 1992, CapMAC had statutory capital and surplus of approximately $146.4
million and $148.0 million, respectively. CapMAC's claims-paying ability is
rated triple-A by Moody's Investors Service, Inc., Standard & Poor's Corporation
and Duff & Phelps, Inc. The address of CapMAC is 885 Third Avenue, New York, New
York 10022.
Connie Lee Insurance Co.
Connie Lee Insurance Co. ('ConnieLee'), a Wisconsin stock insurance
company, is a wholly owned subsidiary of the College Construction Loan Insurance
Association, an insurance holding company authorized and established by Congress
as a private corporation under the laws of the District of Columbia. The
legislation establishing the company stipulated that it provide a mix of direct
insurance and reinsurance business to issuers incurring debt obligations for an
'educational facilities purpose.' The enabling legislation calls for ConnieLee
to provide credit enhancement services to colleges, universities, teaching
hospitals, and other educational institutions. As of June 30, 1994
policyholders' surplus (unaudited) was $105,010,000, stockholders' equity
(unaudited) was $142,913,000 and total assets (unaudited) were $227,149,000.
Standard & Poor's Corporation has rated the claims-paying ability of ConnieLee
'AAA'. The address of ConnieLee is 2445 M Street, N.W., Washington, D.C. 20037.
Capital Guaranty Insurance Company
Capital Guaranty Insurance Company ('Cap. Gty.'), a Maryland-domiciled
insurance company, which was incorporated in Maryland on June 25, 1986, and
commenced its operations in November 1986 is a wholly-owned subsidiary of
Capital Guaranty Corporation, a Maryland insurance holding company. As a result
of the recent initial public stock offering on October 6, 1993 of Cap. Gty.,
public stockholders now own 82.7% of Cap. Gty. The remaining 17.3% is held by
three original investors: Constellation Investments, Inc., an affiliate of
Baltimore Gas & Electric; Safeco Corporation; and Sibag Finance Corporation, an
affiliate of Sieman's A.G. Cap. Gty., a monoline financial guaranty insurer,
insures general obligation, tax supported and revenue bonds structured as
tax-exempt and taxable securities. Cap. Gty.'s insured portfolio currently
includes over $12.9 billion in net exposure outstanding. As of June 30, 1994,
the total statutory policyholders' surplus and contingency reserve of Cap. Gty.
was $89,917,075 (unaudited), and the total admitted assets were $286,825,253
(unaudited) as reported to the Insurance Department of the State of Maryland.
Cap. Gty.'s claims-paying ability is rated triple-A by Moody's Investors
Service, Inc. and Standard & Poor's Corporation. The address of Cap. Gty. is One
Market, San Francisco, California 94105.
Financial Security Assurance
Financial Security Assurance ('FSA') is a monoline insurance company
incorporated on March 16, 1984 under the laws of the State of New York.
Financial Security is a wholly owned subsidiary of Financial Security Assurance
Holdings Ltd. ('Holdings'), a New York Stock Exchange listed company. Holdings
is owned approximately 60.5% by U S WEST Capital Corporation ('U S WEST'), 7.6%
by Fund American Enterprises Holdings, Inc. ('Fund American'), and 7.4% by The
Tokio
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Marine and Fire Insurance Co., Ltd. ('Tokio Marine'). U S WEST is a subsidiary
of U S WEST, Inc., which operates businesses involved in communications, data
solutions, marketing services and capital assets, including the provision of
telephone services in 14 states in the western and mid-western United States.
Fund American is a financial services holding company whose principal operating
subsidiary is one of the nation's largest mortgage servicers. Tokio Marine is a
major Japanese property and casualty insurance company. U S WEST has announced
its intention to dispose of its remaining interest in Holdings as part of its
strategic plan to withdraw from businesses not directly involved in
telecommunications. Fund American has certain rights to acquire additional
shares of Holdings from U S WEST and Holdings. No shareholder of Holdings is
obligated to pay any debt of FSA or any claim under any insurance policy issued
by FSA or to make any additional contribution to the capital of FSA. FSA and its
two wholly owned subsidiaries are licensed to engage in financial guaranty
insurance business in all 50 states, the District of Columbia, Puerto Rico and
the United Kingdom.
FSA and its subsidiaries are engaged exclusively in the business of writing
financial guaranty insurance, principally in respect of securities offered in
domestic and foreign markets. FSA and its subsidiaries principally insure
asset-backed, collateralized and municipal securities. Financial Security
insures both newly issued securities sold in the primary market and outstanding
securities sold in the secondary market that satisfy Financial Security's
underwriting criteria.
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by FSA or either of its subsidiaries are reinsured among such
companies on an agreed-upon percentage substantially proportional to their
respective capital, surplus and reserves, subject to applicable statutory risk
limitations. In addition, FSA reinsures a portion of its liabilities under
certain of its financial guaranty insurance policies with other reinsurers under
various quota share treaties and on a transaction-by-transaction basis. Such
reinsurance is utilized by FSA as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
FSA's obligations under any financial guaranty insurance policy.
As of June 30, 1994, the unearned premium reserve of FSA was $206,026,000
(unaudited) and its total shareholder's equity was $530,024,000 (unaudited).
FSA's claims-paying ability is rated 'Aaa' by Moody's Investors Service, Inc.
and 'AAA' by Standard & Poor's Corporation. The principal executive offices of
Financial Security are located at 350 Park Avenue, New York New York 10022.
MBIA
The insurance companies comprising MBIA and their respective percentage
liabilities are as follows: The Aetna Casualty and Surety Company, thirty-three
percent (33%); Fireman's Fund Insurance Company, thirty percent (30%); The
Travelers Indemnity Company, fifteen percent (15%); Cigna Property and Casualty
Company, twelve percent (12%); and The Continental Insurance Company, ten
percent (10%). As a several obligor, each such insurance company will be
obligated only to the extent of its percentage of any claim under the MBIA
policy and will not be obligated to pay any unpaid obligation of any other
member of MBIA. Each insurance company's participation is backed by all of its
assets. However, each insurance company is a multiline insurer involved in
several lines of insurance other than municipal bond insurance, and the assets
of each insurance company also secure all of its other insurance policy and
surety bond obligations. The total New York statutory assets of the
participating insurance companies as of June 30, 1994 was $34,872,354,000, the
statutory liabilities were $28,955,229,000 and policyholder's surplus was
$5,917,125,000. Standard & Poor's Corporation rates all new issues insured by
MBIA 'AAA' and Moody's Investors Service rates all bond issues insured by MBIA
'Aaa'. The address of MBIA is 113 King Street, Armonk, New York 10504.
MBIAC
MBIAC (The Municipal Bond Investors Assurance Corporation) is the principal
operating subsidiary of MBIA, Inc. Neither MBIA, Inc. nor its shareholders are
obligated to pay the debts of or claims against MBIAC. MBIAC is a limited
liability corporation rather than a several liability association. MBIAC is
domiciled in the State of New York and licensed to do business in all 50 states,
the District of Columbia and the Commonwealth of Puerto Rico.
As of June 30, 1994, MBIAC had admitted assets (unaudited) of $3.3 billion,
total liabilities (unaudited) of $2.2 billion, and total capital and surplus
(unaudited) of $1.1 billion, determined in accordance with statutory accounting
practices prescribed or permitted by insurance regulatory authorities. Standard
& Poor's Corporation rates all new issues insured by MBIAC and Moody's Investors
Service rates all bond issues insured by MBIAC 'AAA' and 'Aaa', respectively.
The address of MBIAC is 113 King Street, Armonk, New York 10504.
Portfolio Insurance
In an effort to protect Unit Holders against delay in payment of interest
and against principal loss, insurance ('Portfolio Insurance') may be obtained by
an Insured Trust from Financial Guaranty for those Securities not insured by the
issuer, guaranteeing the scheduled payment of interest and principal in respect
of certain of the Securities deposited in and delivered to an Insured Trust. Any
Portfolio Insurance policy obtained by an Insured Trust will be noncancellable
and will continue in force so
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long as an Insured Trust is in existence and the securities described in the
policy continue to be held by an Insured Trust (see Part A--'Schedule of
Portfolio Securities') and Financial Guaranty remains in business. As a result
of any such Portfolio Insurance and any Insurance obtained by the issuer from
the Insurance Companies the Units of an Insured Trust were rated AAA by Standard
& Poor's Corporation as of the Date of Deposit. (See 'Bond Ratings'.) Portfolio
Insurance obtained by an Insured Trust is effective only while the Securities
thus insured are held in an Insured Trust.
Insurance is not a substitute for the basic credit of an issuer, but
supplements the existing credit and provides additional security therefor. If an
issue is accepted for insurance, a noncancellable policy for the scheduled
payment of interest and principal on the Security is issued by the Insurance
Company. A single premium is paid by the issuer for Securities insured by the
issuer. A monthly premium is paid by an Insured Trust for the Portfolio
Insurance obtained by such Insured Trust. Upon the sale of a Security from an
Insured Trust, the Trustee, pursuant to an irrevocable commitment of Financial
Guaranty, has the right to obtain permanent insurance (i.e., insurance to
maturity of the Security regardless of the identity of the holder thereof)
('Permanent Insurance') with respect to such Security upon the payment of a
single predetermined insurance premium from the proceeds of the sale of such
Security. An Insured Trust will obtain and pay a premium for the Permanent
Insurance upon the sale of a Security if the Sponsor determines that such sale
will result in a net realization greater than would the sale of such Security
without the purchase of such Permanent Insurance. Accordingly, any Security
covered by Portfolio Insurance in an Insured Trust is eligible to be sold on an
insured basis. The premium for any Permanent Insurance with respect to a
Security is determined based upon the insurability of such Security as of the
Date of Deposit and will not be increased or decreased thereafter. Standard &
Poor's Corporation and Moody's Investors Service have rated the claims-paying
ability of Financial Guaranty 'AAA' and 'Aaa', respectively.
Neither the Public Offering Price nor any evaluation of Units for purposes
of repurchases or redemptions reflects any element of value for any Portfolio
Insurance obtained and any Permanent Insurance obtainable by an Insured Trust
unless a Security is in default in payment of principal or interest or in
significant risk of such default. The value of any Permanent Insurance will be
equal to the difference between (i) the market value of defaulted Securities
assuming the exercise of the right to obtain Permanent Insurance (less the
insurance premium attributable to the purchase of Permanent Insurance) and (ii)
the market value of such defaulted Securities not covered by Permanent
Insurance. In addition, the Evaluator will consider the ability of Financial
Guaranty to meet its commitments under an Insured Trust's insurance policy,
including the commitments to issue Permanent Insurance.
Nonpayment of premiums on a Portfolio Insurance policy obtained by an
Insured Trust will not result in the cancellation of the insurance but will
permit Financial Guaranty to take action against the Insured Trust to recover
premium payments due it. Premium rates for each issue of Securities protected by
Portfolio Insurance obtained by an Insured Trust are fixed for the life of an
Insured Trust.
Under the provisions of a Financial Guaranty insurance policy, Financial
Guaranty unconditionally and irrevocably agrees to pay to Citibank, N.A., or its
successor, as its agent (the 'Fiscal Agent'), that portion of the principal of
and interest on a Security which shall become due for payment but shall be
unpaid by reason of nonpayment by the issuer of the Security and which has not
been paid by insurance of the Security obtained by the issuer. The term 'due for
payment' means, when referring to the principal of a Security, its stated
maturity date or the date on which it shall have been called for mandatory
sinking fund redemption and does not refer to any earlier date on which payment
is due by reason of call for redemption (other than by mandatory sinking fund
redemption), acceleration or other advancement of maturity. When used in
reference to interest on a Security, the term 'due for payment' means the stated
date for payment of interest. When, however, the interest on a Security shall
have been determined (as provided in the underlying documentation relating to
such Security) to be subject to Federal income taxation, the term 'due for
payment' also means, (i) when referring to the principal of such Security, the
date on which such Security has been called for mandatory redemption as a result
of such determination of taxability, and (ii) when referring to interest on such
Security, the accrued interest at the rate provided in such documentation to the
date on which such Security has been called for such mandatory redemption,
together with any applicable redemption premium.
Financial Guaranty will make any such payments to the Fiscal Agent on the
date such principal or interest becomes due for payment or on the business day
next following the day on which Financial Guaranty shall have received notice of
nonpayment, whichever is later. The Fiscal Agent will disburse to the Trustee
the face amount of principal and interest which is then due for payment but is
unpaid by reason of nonpayment by the issuer but only upon receipt by the Fiscal
Agent of (i) evidence of the Trustee's right to receive payment of the principal
or interest due for payment and (ii) evidence, including any appropriate
instruments of assignment, that all of the rights to payment of such principal
or interest due for payment shall thereupon vest in Financial Guaranty. Upon any
such disbursement, Financial Guaranty shall become the owner of the Security,
appurtenant coupon or right to payment of principal or interest on such
Security, and shall succeed to all of the Trustee's rights thereunder, including
the right to payment thereof.
In determining whether to insure bonds, Financial Guaranty applies its own
standards which are not necessarily the same as the criteria used in regard to
the selection of bonds by the Sponsor. Financial Guaranty's determination to
issue insurance with respect to a bond is made prior to or on the date of
deposit of a bond in an Insured Trust. Any Portfolio Insurance obtained by an
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Insured Trust covers certain Securities deposited in an Insured Trust and
physically delivered to the Trustee or a custodian for an Insured Trust in the
case of bearer bonds or registered in the name of the Trustee or its nominee or
delivered along with an assignment in the case of registered bonds, or
registered in the name of the Trustee or its nominee in the case of Securities
held in book-entry form. Contracts to purchase Securities are not covered by
insurance obtained by an Insured Trust although Securities underlying such
contracts are covered by insurance upon physical delivery to the Trust.
Insurance obtained by an Insured Trust or by the Security issuer does not
guarantee the market value of the Securities or the value of the Units. Any
Portfolio Insurance obtained by an Insured Trust is effective only as to
Securities owned by and held in such Insured Trust. In the event of a sale of
any such Security by the Trustee, the Portfolio Insurance terminates as to such
Security on the date of sale but the Trustee may exercise the right to obtain
Permanent Insurance with respect to the Security upon the payment of an
insurance premium from the proceeds of the sale of such Security. Except as
indicated below, Portfolio Insurance obtained by an Insured Trust has no effect
on the price or redemption value of Units. The Evaluator will attribute a value
to the Portfolio Insurance obtained by an Insured Trust (including the right to
obtain Permanent Insurance) for the purpose of computing the price or redemption
value of Units only if the Securities covered by such insurance are in default
in payment of principal or interest or, in the Sponsor's opinion, in significant
risk of such default. (See 'Public Offering of Units--Public Offering Price'.)
Insurance obtained by the issuer of a Security is effective so long as such
Security is outstanding. Such insurance may be considered to represent an
element of market value in regard to the Securities thus insured.
A contract of Portfolio Insurance relating to an Insured Trust and the
negotiations in respect thereof represent the only relationship between
Financial Guaranty and the Trust. Otherwise neither Financial Guaranty nor its
parent, FGIC Corporation, or any affiliate thereof has any significant
relationship, direct or indirect, with a Trust or the Sponsor, except that the
Sponsor has in the past and may from time to time in the future, in the normal
course of its business, participate as sole underwriter or as manager or as a
member of underwriting syndicates in the distribution of new issues of municipal
bonds in which the investors or the affiliates of FGIC Corporation have or will
be participants or for which a policy of insurance guaranteeing the scheduled
payment of interest and principal has been obtained from Financial Guaranty.
Neither an Insured Trust nor the Units nor the Portfolio is insured directly or
indirectly by FGIC Corporation.
The purpose of any Portfolio Insurance obtained by an Insured Trust is to
obtain a higher yield on the Securities in the Portfolio than would be available
if all the Securities in such Portfolio had the Standard & Poor's Corporation
'AAA', Moody's Investors Service 'Aaa' and/or Fitch Investors Service, Inc.
'AAA' rating(s) and, at the same time, to have the protection of Portfolio
Insurance with respect to scheduled payment of interest and principal on the
Securities. There is, of course, no certainty that such purpose will be
realized.
Financial Guaranty
Financial Guaranty Insurance Company ('Financial Guaranty') is a
wholly-owned subsidiary of FGIC Corporation (the 'Corporation'), a Delaware
holding company. Financial Guaranty, domiciled in the State of New York,
commenced its business of providing insurance and financial guarantees for a
variety of investment instruments in January, 1984. The Corporation is a
subsidiary of General Electric Capital Corporation. The Corporation and General
Electric Capital Corporation are not obligated to pay the debts of or the claims
against Financial Guaranty.
Financial Guaranty, in addition to providing insurance for the payment of
interest on and principal of municipal bonds and notes held in unit investment
trust portfolios, provides insurance for all or portions of new issues of
municipal bonds and notes and municipal bonds and notes held by mutual funds.
Financial Guaranty expects to provide other forms of financial guaranties in the
future. It is also authorized to write fire, property damage liability,
workmen's compensation and employer's liability and fidelity and surety
insurance. As of June 30, 1994, the total capital and surplus of Financial
Guaranty was approximately $850,000,000 as reported to the State of New York
Insurance Department. Although the Sponsor has not undertaken an independent
investigation of Financial Guaranty, the Sponsor is not aware that the
information herein is inaccurate or incomplete.
Financial Guaranty is currently licensed or otherwise authorized to provide
insurance in 49 states and the District of Columbia, files reports with state
insurance regulatory agencies and is subject to audit and review by such
authorities. Financial Guaranty is also subject to regulation by the State of
New York Insurance Department. Such regulation, however, is no guarantee that
Financial Guaranty will be able to perform on its commitments or contracts of
insurance in the event claims should be made thereunder at some time in the
future. Fitch Investors Service, Inc., Standard & Poor's Corporation and Moody's
Investors Service have rated the claims paying ability of Financial Guaranty
'AAA', 'AAA' and 'Aaa', respectively. The address of Financial Guaranty is 115
Broadway, New York, New York 10006.
The information relating to the above referenced insurers has been
furnished by publicly available sources including the respective issuers. The
financial information contained herein with respect to Financial Guaranty is
unaudited but appears in reports or other materials filed with state insurance
regulatory authorities and is subject to audit and review by such authorities.
No representation is made herein as to the accuracy or adequacy of such
information or as to the absence of material adverse changes
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in such information subsequent to the date thereof, but the Sponsor is not aware
that the information herein is inaccurate or incomplete.
Because the Securities in an Insured Trust are insured by the Insurance
Companies as to the scheduled payment of principal and interest and on the basis
of the financial condition and the method of operation of the Insurance
Companies, Standard & Poor's Corporation has assigned a 'AAA' investment rating
to Units of an Insured Trust. This is the highest rating assigned to securities
by Standard & Poor's Corporation. (See 'Bond Ratings'.) The obtaining of this
rating by an Insured Trust should not be construed as an approval of the
offering of the Units by Standard & Poor's Corporation or as a guarantee of the
market value of an Insured Trust or the Units. Standard & Poor's Corporation has
indicated that this rating is not a recommendation to buy, hold or sell Units
nor does it take into account the extent to which expenses of an Insured Trust
or sales by an Insured Trust of Securities for less than the purchase price paid
by an Insured Trust will reduce payment to Unit Holders of the interest and
principal required to be paid on the insured Securities. There is no guarantee
that the 'AAA' investment rating with respect to the Securities or Units will be
maintained.
OBJECTIVES AND SECURITIES SELECTION
The objectives of each Trust are the providing of interest income which, in
the opinion of counsel is, under existing law, excludable from gross income for
Federal income tax purposes through investment in a fixed portfolio consisting
primarily of investment grade long-term (or intermediate term if so designated
in Part A or with maturities as designated in Part A) state, municipal and
public authority debt obligations, and the conservation of capital. There is, of
course, no guarantee that a Trust's objectives will be achieved.
The Prudential Insurance Company of America, the indirect parent of the
Sponsor, or a division or subsidiary thereof (collectively, 'Prudential') has
selected and negotiated for the Securities purchased by the Sponsor. In
selecting Securities for a Trust, Prudential considered factors established by
the Sponsor including, among others, the following: (a) ratings as of the Date
of Deposit in the category of BBB or better by Standard & Poor's Corporation or
Baa or better by Moody's Investors Service or BBB or better by Fitch Investors
Service, Inc. (see 'Bond Ratings') or comparable credit characteristics in the
opinion of Prudential, (b) maturities or mandatory payment dates consistent with
the life of a Trust, (c) yields of the Securities relative to other securities
of comparable quality and maturity (d) the availability of, rating of the claims
paying ability of an insurer of, cost of insurance of the scheduled payment of
principal and interest, when due, on the Securities in an Insured Trust, and (e)
diversification of the Securities as to purpose and location of Issuer (purpose
only in the case of State Trusts).
Prudential, for selecting and negotiating the purchase of the Securities,
will receive from the Sponsor a fee based on the face amount of Securities
selected and a portion of the Sponsor's net profit on the Date of Deposit.
The Trust may contain Securities which were acquired through the Sponsor's
participation as sole underwriter or manager or as a member of the underwriting
syndicate for such Securities. (See Part A--'Portfolio Summary.') An underwriter
typically purchases securities, such as the Securities in each Trust, from the
issuer on a negotiated or competitive bid basis in order to market such
securities to investors at a profit.
The yields on Securities of the type deposited in each Trust are dependent
on a variety of factors, including interest rates, general conditions of the
municipal bond market, size of a particular offering, the maturity of the
obligation and rating of the issue. The ratings represent the opinions of the
rating organizations as to the quality of the securities which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, securities with the same maturity,
coupon and rating may have different yields, while securities of the same
maturity and coupon with different ratings may have the same yield.
ESTIMATED ANNUAL INCOME PER UNIT
On the Date of Deposit the Estimated Net Annual Income per Unit of the
Trust was the amount set forth above under Part A-- 'Summary of Essential
Information.' This figure is computed by dividing the aggregate net annual
interest income (i.e., less estimated annual fees and expenses of the Sponsor,
the Trustee, counsel and the Evaluator), ignoring any original issue discount,
by the number of Units outstanding. Thereafter, the net annual interest income
per Unit for the Trust will change whenever Securities mature, are redeemed or
are sold, or as the expenses of the Trust change. The fees of the Trustee, the
Sponsor, counsel and the Evaluator are subject to change without the consent of
Unit Holders, to the extent provided under 'Expenses and Charges.'
Interest on the Securities, less estimated expenses of the Trust, is
expected to accrue at the daily rate shown under Part A-- 'Summary of Essential
Information.' This rate will change as Securities mature, are redeemed or are
sold, or as the expenses of the Trust change.
The Public Offering Price will vary due to fluctuations in the offering
and/or bid prices of the Securities and the net annual interest income per Unit
may change as Securities mature, are redeemed or are sold or as the expenses of
the Trust change.
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TAX STATUS
In the opinion of bond counsel to the issuing governmental authorities,
interest income on the Securities comprising the Portfolio of the Trust is
(except in certain instances depending upon the Unit Holder, as described below)
exempt from Federal income tax under the provisions of the Internal Revenue Code
as in effect at the date of issuance. In the case of Securities issued at a time
when the 1954 Code was in effect, redesignation of the Code as the Internal
Revenue Code of 1986 (the 'Code' or the '1986 Code') has not adversely affected
the exemption from Federal income tax of interest income on such Securities.
Gain (exclusive of any earned original issue discount) realized on sale or
redemption of the Securities or on sale of a Unit is, however, includible in
gross income for Federal income tax purposes and for state and local income tax
purposes generally. (It should be noted in this connection that such gain does
not include any amounts received in respect of accrued interest.) Such gain may
be capital gain or ordinary income and if capital gain may be long or short-term
depending upon the facts and circumstances. Securities selling at market
discount tend to increase in market value as they approach maturity when the
principal amount is payable, thus increasing the potential for taxable gain on
their maturity, redemption or sale.
In the opinion of Messrs. Cahill Gordon & Reindel, special counsel for the
Sponsor, under existing law:
The Trust is not an association taxable as a corporation for Federal
income tax purposes, and interest on an underlying Security which is exempt
from Federal income tax under the Code when received by the Trust will
retain its status as tax exempt interest for Federal income tax purposes to
the Unit Holders.
Each Unit Holder will be considered the owner of a pro rata portion of
the Trust's assets under Sections 671-678 of the Code. Each Unit Holder
will be considered to have received a pro rata share of interest derived
from the Trust's assets when it is received by the Trust and each Unit
Holder will have a taxable event when an underlying Security is disposed of
(whether by sale, exchange, redemption, or payment at maturity) or when the
Unit Holder redeems or sells Units. The total tax cost of each Unit to a
Unit Holder is allocated among each of the underlying Securities (in
accordance with the proportion of the Trust's assets comprised by each
Security) in order to determine the Unit Holder's per Unit tax cost for
each Security, and the tax cost reduction requirements of the Code relating
to amortization of bond premium will apply separately to the per Unit tax
cost of each Security. Therefore, under some circumstances a Unit Holder
may realize taxable gains when Units are sold or redeemed for an amount
equal to or less than the Unit Holder's original cost.
When a contract to acquire an underlying Security is settled after the
Unit Holder's settlement date for a Unit, the Unit Holder's proportionate
share of the interest accrued on the underlying Security on the Security
settlement date will exceed the portion of the purchase price that was
allocable to interest accrued on the Unit settlement date. A Unit Holder
will not be subject to Federal income tax on the Unit Holder's
proportionate share of the interest which accrues during the period between
the Unit settlement date and the Security settlement date either when such
interest is received by the Trust or when it is distributed to the Unit
Holder.
Under the income tax laws of the State and City of New York, the
income of the Trust will be treated as the income of its Unit Holders.
If the proceeds received by the Trust upon the sale or redemption of an
underlying Security exceed a Unit Holder's adjusted tax cost allocable to the
Security disposed of, that Unit Holder will realize a taxable gain to the extent
of such excess. Conversely, if the proceeds received by the Trust upon the sale
or redemption of an underlying Security are less than a Unit Holder's adjusted
tax cost allocable to the Security disposed of, that Unit Holder will realize a
loss for tax purposes to the extent of such difference.
Any gain recognized on a sale or exchange of a Unit Holder's pro rata
interest in a Security, and not constituting a realization of accrued 'market
discount,' and any loss will be a capital gain or loss, except in the case of a
dealer or financial institution. Gain realized on the disposition of the
interest of a Unit Holder in a market discount Security is treated as ordinary
income to the extent the gain does not exceed the accrued market discount. A
Unit Holder has an interest in a market discount Security in a case in which the
tax cost for the Unit Holder's pro rata interest in the Security is less than
the stated redemption price thereof at maturity (or the issue price plus
original issue discount accrued up to the acquisition date, in the case of an
original issue discount Security). If the market discount is less than .25% of
the stated redemption price of the Security at maturity multiplied by the number
of complete years to maturity, the market discount shall be considered to be
zero. Any capital gain or loss arising from the disposition of a Unit Holder's
pro rata interest in a Security will be a long-term capital gain or loss if the
Unit Holder has held his or her Units and the Trust has held the Security for
more than one year. 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.
Opinions relating to the validity of the underlying Securities and the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the issuing governmental authorities. It is the view of The
Prudential Investment Corporation, which is an affiliate of the Sponsor, that
interest on the Securities will not be a tax preference item unless otherwise
indicated on the 'Schedule of Portfolio Securities' as Securities the interest
on which is in the opinion of bond counsel, treated as a tax
B-15
<PAGE>
preference item for alternative minimum tax purposes. See 'Schedule of Portfolio
Securities'. Neither the Sponsor nor its counsel have made any review of
proceedings relating to the issuance of underlying Securities or the bases for
bond counsel's opinions or the view of The Prudential Investment Corporation,
the Sponsor's affiliate. The Sponsor and its counsel are, however, aware of
nothing which would indicate to the contrary.
Furthermore, exemption of interest on a Security from regular income tax
requires that the issuer of the Security (or other user of the Security
proceeds) meet certain ongoing compliance requirements. Failure to meet these
requirements could result in loss of the exemption and such loss of exemption
could apply retroactively from the date of issuance. A Security may provide that
if a loss of exemption is determined to have occurred, the Security is
immediately due and payable; and, in the case of a secured Security, that the
security can be reached if the Security is not then paid. If such a loss of
exemption were to occur and the Security did not contain such an acceleration
clause, or if the acceleration did not in fact result in payment of the
Security, the affected Security would likely be sold as a taxable bond. Sale of
a Security as a taxable bond would likely result in a realization of proceeds
less than the cost of the Security.
In the case of certain of the underlying Securities comprising the
Portfolio of the Trust, the opinions of bond counsel indicate that although
interest on such underlying Securities is generally exempt from Federal income
tax, such underlying Securities are 'industrial development bonds' under the
1954 Code or 'private activity bonds' under the 1986 Code as those terms are
defined in the relevant Code provisions, and interest on such underlying
Securities will not be exempt from Federal income tax for any period during
which such underlying Securities are held by a 'substantial user' of the
facilities financed by the proceeds of such underlying Securities (or a 'related
person' to such a 'substantial user'). In the opinion of Messrs. Cahill Gordon &
Reindel, interest attributable to such underlying Securities (although not
subject to Federal income tax to the Trust), if received by the Trust for the
account of a Unit Holder who is such a 'substantial user' or 'related person,'
will be taxable (i.e., not tax exempt) to the same extent as if such underlying
Securities were held directly by the Unit Holder as owner. No investigation as
to the users or of the facilities financed by the underlying Securities has been
made by the Sponsor or its counsel. Investors should consult their tax counsel
for advice with respect to the effect of these provisions on their particular
tax situations.
In the case of an Insured Trust, assuming that the insurance policies and
any related agreements described in 'Insurance on the Securities in the
Portfolio of an Insured Trust' have been validly issued, are of standard form
with respect to subrogation and do not relieve the issuer of the Security of its
obligations thereunder, and provided that, at the time such policies are
purchased, the amounts paid for such policies are reasonable, customary and
consistent with the reasonable expectation that the issuer of the Securities,
rather than the insurer, will pay debt service on the Securities, Messrs. Cahill
Gordon & Reindel are of the opinion that proceeds received under the insurance
policies representing matured interest on a defaulted obligation will be
excludable from Federal gross income if, and to the same extent, such interest
would have been so excludable if paid by the issuer of such defaulted
obligation.
Persons in receipt of Social Security benefits should be aware that a
portion of such Social Security benefits may be includible in gross income. For
a taxpayer whose modified adjusted gross income plus one-half of his or her
Social Security benefits does not exceed $34,000 ($44,000 for married taxpayers
filing a joint return), the includible amount is the lesser of (i) one-half of
the Social Security benefits or (ii) one-half of the amount by which the sum of
'modified adjusted gross income' plus one-half of the Social Security benefits
exceeds $25,000 in the case of unmarried taxpayers and $32,000 in the case of
married taxpayers filing a joint return. All other taxpayers receiving Social
Security benefits are required to include up to 85% of their Social Security
benefits in income.
Modified adjusted gross income is adjusted gross income determined without
regard to certain otherwise allowable deductions and exclusions from gross
income, plus tax exempt interest on municipal obligations including interest on
the Securities. To the extent that Social Security benefits are includible in
gross income they will be treated as any other item of gross income and
therefore may be taxable.
Investors should also consult their tax counsel for advice with respect to
the effect, if any, on the tax cost of Units to a Unit Holder in cases in which
a contract to acquire a Security is settled after the settlement date for such
Units and the Unit Holder's proportionate share of the interest accrued on the
underlying Security on the Security settlement date will exceed the portion of
the purchase price allocable to interest accrued on the Unit settlement date. In
such cases, the Unit Holder may have an adjustment to the tax basis in the Units
for interest accruing on such Securities during the interval between purchase of
Units and delivery of Securities.
THE EXEMPTION OF INTEREST ON MUNICIPAL OBLIGATIONS FOR FEDERAL INCOME TAX
PURPOSES DOES NOT NECESSARILY RESULT IN EXEMPTION UNDER ANY OTHER FEDERAL TAX
LAW OR UNDER THE INCOME OR OTHER TAX LAWS OF ANY STATE OR CITY. THE LAWS OF THE
SEVERAL STATES VARY WITH RESPECT TO THE TAXATION OF SUCH OBLIGATIONS. (See
'Rights of Unit Holders--Reports and Records.')
State risk factors, including opinions of special State counsels with
respect to certain state tax aspects of an investment in Units of a State Trust,
are discussed in Part C if applicable.
B-16
<PAGE>
The Portfolio of the Trust may contain zero coupon bond(s) or one or more
other Securities which were originally issued at a discount ('original issue
discount'). In general, original issue discount can be defined as the difference
between the price at which a Security was issued and its stated redemption price
at maturity. If the original issue discount is less than .25% of the stated
redemption price of the Security at maturity multiplied by the number of
complete years to maturity, the original issue discount shall be considered to
be zero. In the case of a Security issued before September 4, 1982, original
issue discount is deemed to accrue (be 'earned') as tax-exempt interest ratably
over the period from the date of issuance of the Security to the date of
maturity and is apportioned among the original holder of the obligation and
subsequent purchasers in accordance with a ratio the numerator of which is the
number of calendar days the obligation was owned by the holder and the
denominator of which is the total number of calendar days from the date of
issuance of the obligation to its date of maturity. Gain or loss upon the
disposition of an original issue discount Security in a Portfolio is measured by
the difference between the amount realized upon disposition of and the amount
paid for such obligation. A holder is entitled, however, to exclude from gross
income that portion of such gain attributable to accrued interest and the
'earned' portion of original issue discount.
In the case of a Security issued after September 3, 1982, original issue
discount is deemed to accrue on a constant interest method which corresponds, in
general, to the economic accrual of interest (adjusted to eliminate
proportionately on an elapsed-time basis any excess of the amount paid for the
Security over the sum of the issue price and the accrued original issue discount
on the acquisition date). The tax basis in the Security is increased by the
amount of original issue discount that is deemed to accrue while the Security is
held. The difference between the amount realized on a disposition of the
Security (ex currently accrued interest) and the adjusted tax basis of the
Security will give rise to taxable gain or deductible loss upon a disposition of
the Security by the Trust (or a sale or redemption of Units by a Unit Holder).
The Code provides, generally, that adjustments to taxable income to produce
alternative minimum taxable income for corporations will include 75% of the
amount by which adjusted current earnings (which would include tax-exempt
interest) of the taxpayer exceeds the alternative minimum taxable income of the
taxpayer before any amount is added to alternative minimum taxable income
because of this adjustment.
For Federal income tax purposes, Trust expenses allocable to producing or
collecting Trust interest income are not deductible because the interest income
derived by the Trust is exempt from Federal income tax. A state or local income
tax may provide for a deduction for the portion of such Trust expenses
attributable to the production or collection of income derived by the Trust and
taxed by the state or locality. The effect on any such deductions of the Code
rules whereby investment expenses and other miscellaneous deductions are
deductible only to the extent in excess of 2% of adjusted gross income would
depend upon the law of the particular state or locality involved.
The Code also imposes an additional 12/100% ($12.00 per $10,000)
environmental tax on the alternative minimum taxable income (determined without
regard to any alternative tax net operating loss deduction) of a corporation in
excess of $2,000,000 for each taxable year beginning before January 1, 1996. The
environmental tax is an excise tax and is deductible for United States Federal
income tax purposes (but not for purposes of the environmental tax itself).
Although the environmental tax is based on alternative minimum taxable income,
the environmental tax must be paid in addition to any Federal income taxes
payable by the corporation.
From time to time proposals have been introduced before Congress the
purpose of which is to restrict or eliminate the Federal income tax exemption
for interest on securities similar to the Securities in the Trust or to require
treatment of such interest as a 'tax preference' for alternative minimum tax
purposes, and it can be expected that similar proposals may be introduced in the
future. The Trust and the Sponsor cannot predict what legislation, if any, in
respect of the tax status of interest on Securities may be proposed by the
Executive Branch or by members of Congress, nor can they predict which
proposals, if any, might be enacted or whether any legislation if enacted would
apply to the Securities in the Trust.
In addition, investors should be aware that no deduction is allowed for
Federal income tax purposes for interest on indebtedness incurred or continued
to purchase or carry Units in the Trust. Under rules used by the Internal
Revenue Service for determining when borrowed funds are considered used for the
purpose of purchasing or carrying particular assets, the purchase of Units may
be considered to have been made with borrowed funds even though the borrowed
funds are not directly traceable to the purchase of the Units.
All taxpayers are required to report for informational purposes on their
Federal income tax returns the amount of tax-exempt interest they receive.
Investors should consult their own tax advisors with respect to the
applicability of the foregoing general comments to their own particular
situations and as respects state and local tax consequences of an investment in
Units.
B-17
<PAGE>
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of Units during the initial public offering
period is computed by adding to the aggregate offering price of the Securities
in a Trust, any money in the Principal Account other than money required to
redeem tendered Units, dividing such sum by the number of Units outstanding, and
then adding a sales charge of 4.75% of the Public Offering Price in the case of
a trust composed of long term securities (4.987% of the net amount invested) or
a sales charge of 3.00% of the Public Offering Price in the case of an
Intermediate Term Trust (3.093% of the net amount invested) or such other sales
charge as is designated in Part A. For purchases settling after the first
settlement date (including purchases of Units created after the initial date of
deposit) a proportionate share of accrued and undistributed interest on the
Securities from such date to the settlement date for Units is also added to the
Public Offering Price. After the initial public offering period the Public
Offering Price of the Units will be determined by adding to the Evaluator's
determination of the aggregate bid price of the Securities per Unit a sales
charge as set forth under Volume Discount herein. A proportionate share of
accrued and undistributed interest on the Securities to the settlement date for
Units purchased and of cash on hand in the Trust is also added to the Public
Offering Price.
The Public Offering Price on the date of this Prospectus or any subsequent
date may vary from the Public Offering Price set forth in the Part A--'Summary
of Essential Information' in accordance with fluctuations in the evaluation of
the underlying Securities in the Trust.
The aggregate bid or offering prices of the Securities in the Trust, as is
appropriate, shall be determined for the Trust by the Evaluator as of the
Evaluation Time, in the following manner: (a) on the basis of current bid or
offering prices for the Securities as obtained from investment dealers or
brokers (including the Sponsor) who customarily deal in securities comparable to
those held in the Trust, (b) if there is no market for such securities and bid
or offering prices are not available, on the basis of prices for comparable
securities, (c) by determining the value of the Securities on the bid or
offering side of the market by appraisal, or (d) by any combination of the
above. Unless a Security covered by Portfolio Insurance is in default in payment
of principal or interest or in significant risk of such default, the Evaluator
will not attribute any value to the Portfolio Insurance obtained by an Insured
Trust or to an Insured Trust's right to secure Permanent Insurance with respect
to such Security in the event of a sale of such Security. The value of insurance
to maturity obtained by the issuer of a Security or by the Sponsor on the Date
of Deposit is reflected and included in the market value of such Security. With
respect to the initial evaluation of the offering prices of Securities which at
the Date of Deposit were subject to syndicate offering period pricing
restrictions, it is the practice of the Evaluator to determine such evaluation
on the basis of the syndicate offering price, unless factors cause the Evaluator
to conclude that such syndicate offering price does not then accurately reflect
the free market value of such Securities, in which case the Evaluator will also
take into account the other criteria described above for the purpose of making
its determination. The Public Offering Price will be effective for all sales of
Units made during the preceding 24-hour period. Following the initial public
offering period, determinations of the aggregate bid price of the Securities,
for purposes of secondary market transactions by the Sponsor and redemptions by
the Trustee, will be made each business day as of the Evaluation Time, effective
for all sales or redemptions made subsequent to the last preceding
determination. (See 'Rights of Unit Holders--Redemption'.) The difference
between the bid and offering prices of the Securities may be expected to average
approximately 1 1/2% of principal amount. In the case of actively traded
securities, the difference may be as little as 1/2 of 1%, and in the case of
inactively traded securities such difference will usually not exceed 3%. The
price at which Units may be repurchased by the Sponsor in the secondary market
could be less than the price paid by the Unit Holder. On the Date of Deposit the
aggregate current offering price of such Securities per Unit exceeded the bid
price of such Securities per Unit by the amount set forth under 'Summary of
Essential Information'. For information relating to the calculation of the
Redemption Price, which, like the Public Offering Price in the secondary market,
is based upon the aggregate bid price of the underlying Securities and which may
be expected to be less than the aggregate offering price, see 'Rights of Unit
Holders-- Redemption--Computation of Redemption Price per Unit'.
In an effort to reduce the amount of accrued interest which investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to the Trust the amount of accrued interest due on the Securities to the
first expected settlement date for Units. This accrued interest amount will be
paid to the Sponsor as the holder of record of all Units on such date.
Consequently, when the Sponsor sells Units of the Trust, the amount of accrued
interest to be added to the Public Offering Price of the Units purchased by an
investor will include only accrued interest from the settlement date for Units
purchased on the date of this Prospectus to, but not including, the date of
settlement of the investor's purchase (normally five business days after
purchase), less any distributions from the Interest Account. The Trustee will
recover its advancements to the Trust (without interest or other cost to the
Trust) from interest received on the Securities deposited in the Trust.
On the Date of Deposit, the Public Offering Price per Unit and the
Sponsor's Initial Repurchase Price per Unit (based on the offering side
evaluation of the Securities in a Trust) each exceeded the Redemption and
Sponsor's Secondary Market Repurchase Price per Unit (based upon the bid side
evaluation of the Securities in a Trust) by the amounts set forth in Part
A--'Summary of Essential Information,' herein.
B-18
<PAGE>
PUBLIC DISTRIBUTION
During the initial public offering period, Units will be distributed to the
public by the Sponsor and through dealers at the Public Offering Price,
calculated on each business day, plus accrued interest. The initial public
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 for up to four successive 30-day periods
as long as Units remain unsold. Upon the termination of the initial public
offering period, 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, plus accrued interest.
The underwriters of the Units are listed in Part A--'Underwriting Account.'
It is the Underwriters' intention to qualify Units for sale in the states and to
effect a public distribution of the Units solely through their own
organizations. However, Units may be sold through dealers who are members of the
National Association of Securities Dealers, Inc. at prices which represent a
concession or agency commission per Unit. In the State of Virginia, Units of a
State Trust will not be offered for sale. Sales to dealers will initially be
made at prices which include a concession per Unit as set forth below, but
subject to change from time to time at the discretion of the Sponsor. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
The dealer concession will be $33 per Unit in the primary market.
The dealer concession per Unit in the secondary market will generally be
65% of the sales charge per Unit. However, the Sponsor may negotiate a different
concession (either higher or lower) with dealers on a case-by-case basis.
Sales will be made only with respect to whole Units, and the Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units.
In addition, sales of Units may be made pursuant to distribution
arrangements with certain banks which are acting as agents for their customers.
These banks are making Units of the Trust available to their customers on an
agency basis. A portion of the sales charge paid by these customers is retained
by or remitted to the banks in amounts comparable to the aforementioned dealers'
concessions. The Glass-Steagall Act prohibits banks from underwriting certain
securities, including Units of the Trust; however, this Act does permit certain
agency transactions, and banking regulators have not indicated that these
particular agency transactions are impermissible under this Act. In Texas, any
bank making Units available must be registered as a broker-dealer in that State.
SECONDARY MARKET
While not obligated to do so, it is the Sponsor's present intention to
maintain a secondary market for Units of each Trust and to continuously offer to
repurchase Units from Unit Holders at the applicable Sponsor's Repurchase Price.
(See Part A-- 'Summary of Essential Information.') During the initial offering
period the Sponsor's Repurchase Price is computed by adding to the aggregate of
the offering prices of the Securities in a Trust, any money in the Principal
Account other than money required to redeem tendered Units, plus accrued
interest, deducting therefrom expenses of the Trustee, Evaluator, Sponsor and
counsel, and taxes, if any, and then dividing the resulting sum by the number of
Units outstanding, as of the date of such computation. Following the initial
public offering period, the Sponsor, although it is not obligated to do so,
presently intends to maintain a market for the Units of the Trust at prices
based upon each Unit's pro rata share of the aggregate value of the Securities
determined (by the Evaluator) on the basis of the bid side of the market. 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, plus accrued interest. Any profit or loss resulting from the resale of
such Units will belong to 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. In such event, Unit Holders (including the
Sponsor) may redeem their Units through the Trustee at the Redemption Price,
which is based upon the aggregate bid price of the Securities and which may be
expected to be less than the aggregate offering price. (See 'Rights of Unit
Holders--Redemption--Computation of Redemption Price per Unit.') If the Sponsor
repurchases Units in the secondary market at the 'Redemption Price,' it may
reoffer these Units in the secondary market at the 'Public Offering Price,' or
the Sponsor may tender Units so purchased to the Trustee for redemption. In no
event will the price offered by the Sponsor for the repurchase of Units be less
than the current Redemption Price for those Units. (See 'Rights of Unit
Holders--Redemption.')
SPONSOR'S AND UNDERWRITERS' PROFITS
The Sponsor receives a sales charge as set forth in the table below in the
primary market and in the secondary market. On the sale of Units to dealers, the
Sponsor will retain the difference between the dealer concession and the sales
charge. (See 'Public Distribution,' herein.) For their services, the
Underwriters other than the Sponsor received a concession of $23 per Unit for
each Trust.
The Sponsor may have also realized a book profit (or a loss) on the deposit
of the Securities in the Trust representing the difference between the cost of
the Securities to the Sponsor and the cost of the Securities to such Trust. (For
a description of such profit (or loss) and the amount of such difference, see
Part A--'Schedule of Portfolio Securities.') The Sponsor may realize profits or
sustain losses in respect of Securities which were acquired from the Sponsor or
from underwriting syndicates of which it
B-19
<PAGE>
was a member. (See Part A--'Portfolio Summary as of Date of Deposit.') An
underwriter or underwriting syndicate purchases bonds from the issuer on a
negotiated or competitive bid basis as principal with the motive of marketing
such bonds to investors at a profit. In addition, the Sponsor may realize
profits (or sustain losses) due to daily fluctuations in the offering prices of
the Securities 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 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 (based on the bid side evaluation of the
Securities in a Trust) and the prices at which the Sponsor resells such Units or
the prices at which the Sponsor redeems such Units (also based on the bid side
evaluation of the Securities in the Trust), as the case may be.
VOLUME DISCOUNT
Although under no obligation to do so, the Sponsor intends to permit volume
purchasers of Units to purchase Units at a reduced sales charge. The Sponsor may
at any time change the amount by which the sales charge is reduced, or
discontinue the discount altogether.
The sales charge per Unit will be reduced pursuant to the following
graduated scale for sales to any person of Units in the primary market as set
forth below:
<TABLE>
<CAPTION>
PRIMARY MARKET SALES
CHARGE
---------------------
PERCENT PERCENT
OF PUBLIC OF NET
OFFERING AMOUNT
NUMBER OF UNITS PRICE INVESTED
- ------------------------------------------------------- --------- ---------
<S> <C> <C>
less than 100 Units.................................... 4.75 % 4.987 %
100-249 Units.......................................... 4.25 % 4.439 %
250-499 Units.......................................... 4.00 % 4.167 %
500-749 Units.......................................... 3.50 % 3.627 %
750-999 Units.......................................... 3.25 % 3.359 %
1,000 Units or more.................................... 3.00 % 3.093 %
</TABLE>
SECONDARY MARKET SALES CHARGE
The sales charge per Unit in the secondary market will be computed by
multiplying the Evaluator's determination of the bid side evaluation of each
Security by a sales charge determined in accordance with the table set forth
below based upon the number of years remaining to the maturity of each such
Security, totalling all such calculations, and dividing this total by the number
of Units then outstanding. In calculating the date of maturity, a Security will
be considered to mature on its stated maturity date unless: (a) the Security has
been called for redemption or funds or securities have been placed in escrow to
redeem it on an earlier call date, in which case the call date will be deemed
the date on which such Security matures; or (b) the Security is subject to a
mandatory tender, in which case the mandatory tender date will be deemed the
date on which such Security matures.
<TABLE>
<CAPTION>
(AS (AS
PERCENT PERCENT
OF BID OF PUBLIC
SIDE OFFERING
TIME TO MATURITY EVALUATION) PRICE)
- ------------------------------------------------------- --------- ---------
<S> <C> <C>
Less than six months................................... 0 % 0 %
Six months to 1 year................................... 0.756 % 0.75 %
Over 1 year to 2 years................................. 1.523 % 1.50 %
Over 2 years to 4 years................................ 2.564 % 2.50 %
Over 4 years to 8 years................................ 3.627 % 3.50 %
Over 8 years to 15 years............................... 4.712 % 4.50 %
Over 15 years.......................................... 5.820 % 5.50 %
</TABLE>
The sales charge per Unit will be reduced pursuant to the following
graduated scale for sales to any person of at least 100 Units in the secondary
market.
<TABLE>
<CAPTION>
% OF
SALES
NUMBER OF UNITS CHARGE
- ----------------------------------------------------------------- ------------
<S> <C>
Less than 100 Units.............................................. 100 %
100-249 Units.................................................... 90 %
250-499 Units.................................................... 80 %
500-749 Units.................................................... 75 %
750-999 Units.................................................... 70 %
1,000 Units or More.............................................. 65 %
</TABLE>
B-20
<PAGE>
The respective reduced sales charges as shown on each of the above charts
will apply to all purchases of Units in any fourteen day period by the same
person in the amounts stated herein, and for this purpose, purchases of Units of
the 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, in the name of a
purchaser's child under the age of 21 or in the name of an entity controlled by
the purchaser are deemed for the purposes hereof to be acquired by the
purchaser. The reduced sales charges are also applicable to a trustee or other
fiduciary purchasing Units for a single trust estate or single fiduciary
account.
EMPLOYEE DISCOUNT
The Sponsor intends to permit employees of Prudential Securities
Incorporated and its subsidiaries and affiliates to purchase Units of the Trust
at a price equal to the offering side evaluation of the Securities in the Trust
divided by the number of Units outstanding plus a reduced sales charge of $5.00
per Unit, subject to a limit of 5% of the Units of a Trust at the discretion of
the Sponsor.
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of their Units of this series
of the National Municipal Trust for units of one or more of any other series in
the Prudential Securities Incorporated family of unit investment trusts or
certain 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 charges 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 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 the investment objective prior to the exercise of
this option.
This option will be available 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 resides. There is no assurance that a
market for units will in fact exist on any given date on which a Unit Holder
wishes to sell or exchange his units; thus there is no assurance that the
Exchange Option will be available to any Unit Holder. The Sponsor reserves the
right to modify, suspend or terminate this option at any time without further
notice to Unit Holders. In the event the Exchange Option is not available to a
Unit Holder at the time he wishes to exercise it, the Unit Holder will be
immediately notified and no action will be taken with respect to his units
without further instruction from the Unit Holder.
Exchanges will be effected in whole units only. If the proceeds from the
Units being surrendered are less than the cost of a whole number of units being
acquired, the exchanging Unit Holder will be permitted to add cash in an amount
to round up to the next highest number of whole units. When units held for less
than five months are exchanged for units with a higher regular sales charge, the
sales charge will be the greater of (a) the reduced sales charge or (b) the
difference between the sales charge paid in acquiring the units being exchanged
and the regular sales charge for the quantity of units being acquired,
determined as of the date of the exchange.
To exercise the Exchange Option, a Unit Holder should notify the Sponsor of
his desire to use the proceeds from the sale of his Units to purchase units of
one or more of the Exchange Trusts. If units of the applicable outstanding
series of the Exchange Trust are at that time available for sale, the Unit
Holder may select the series or group of series for which he desires his Units
to be exchanged. The Unit Holder will be provided with a current prospectus or
prospectuses relating to each series in which he indicates interest.
Units of the Exchange Trust trading in the secondary market maintained by
the Sponsor, if so maintained, will be sold to the Unit Holder at a price equal
to the aggregate bid side evaluation per unit of the securities in that
portfolio plus accrued interest and the applicable sales charge of $15 per unit.
Excess proceeds not used to acquire whole units will be paid to the exchanging
Unit Holder. Owners of units of any registered unit investment trust other than
National Municipal Trust 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. The
reduced sales charge for Units of any Exchange Trust acquired during the initial
offering period for such Units will be sold at a price equal to the offering
side evaluation per unit of the securities in the portfolio plus accrued
interest plus a reduced sales charge of $25 per unit. 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 of which units 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 4.75% 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
B-21
<PAGE>
per unit and an ordinary sales charge of 4.75%. 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
$3,989.50 [$3,800 for the units and $189.50 for the 4.75% sales charge (4.987%
of the net amount invested)].
TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange Option will generally
constitute a 'taxable event' under the Code, i.e., a Unit Holder will recognize
gain or loss at the time of exchange. However, an exchange of Units of this
series of the National Municipal Trust for units of any other series of Exchange
Trusts which are grantor trusts for U.S. federal income tax purposes will not
constitute a taxable event to the extent that the underlying securities in each
trust do not differ materially either in kind or in extent. Unit Holders are
urged to consult their own tax advisors as to the tax consequences to them of
exchanging Units in particular cases.
REINVESTMENT PROGRAM
Distributions of interest and principal, if any, are made to Unit Holders
monthly or semiannually. A Unit Holder will have the option of either receiving
his monthly or semiannual income check from the Trustee or reinvesting the
distribution in an open-end diversified management investment company offered by
the Sponsor or by one of the Underwriters whose investment objective is to
attain for investors the highest level of current income that is exempt from
Federal income taxes, consistent with liquidity and the preservation of capital.
Participation in any such fund is conditioned on such fund's 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.
Upon enrollment in the reinvestment program, the Trustee will direct monthly or
semiannual interest distributions and principal distributions, if any, to the
designated fund. This Reinvestment Program does not involve insured securities.
The appropriate prospectus will be sent to the Unit Holder. A Unit Holder's
election to participate in this 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
INITIAL EXPENSES
All expenses and charges incurred prior to or in the establishment of the
Trust including the cost of the initial preparation, printing and execution of
the Indenture and the Certificates, the initial fees of the Evaluator, initial
legal and auditing expenses, the cost of the preparation and printing of this
Prospectus and all other advertising and selling expenses, have been, or will
be, paid by the Sponsor or the Underwriters, if any.
FEES
The Portfolio supervision fee (the 'Supervision Fee') which is earned for
Portfolio supervisory services, is based upon the aggregate face amount of
Securities in the Trust at the beginning of each calendar year.
The Supervision Fee, which is not to exceed the amount (set forth in Part
A--'Summary of Essential Information') per $1,000 face amount of Securities in
the Trust, may exceed the actual costs of providing Portfolio supervisory
services for such Trust, but at no time will the total amount the Sponsor and/or
an affiliate thereof receive for Portfolio supervisory services rendered to all
series of National Municipal Trust and Prudential Unit Trusts in any calendar
year exceed the aggregate cost to it of supplying such services in such year.
For a description of the Portfolio supervisory services to be provided by the
Sponsor and/or an affiliate thereof, see 'Sponsor--Responsibility.' The
Supervision Fee will be paid to the Sponsor by the Trust. The Prudential
Insurance Company of America, the indirect parent of the Sponsor, or a division
or subsidiary thereof, has agreed to advise the Sponsor regarding the Sponsor's
Portfolio supervisory services and will be compensated by the Sponsor for such
advisory services.
For its service as Trustee under the Indenture, the Trustee receives an
annual fee in the amount set forth under Part A-- 'Summary of Essential
Information.'
For each evaluation of the Securities in a Trust, the Evaluator will
receive a fee in the amount set forth under Part A-- 'Summary of Essential
Information.'
The Supervision Fee accrues quarterly but is paid annually, and the
Trustee's fees and the Evaluator's fees are payable monthly on or before each
Distribution Date from the Interest Account, to the extent funds are available,
and thereafter from the Principal Account. Any of such fees may be increased
without approval of the Unit Holders in proportion to increases under the
classification 'All Services Less Rent' in the Consumer Price Index published by
the United States Department of Labor. The Trustee also receives benefits to the
extent that it holds funds on deposit in various non-interest bearing accounts
created under the Indenture.
B-22
<PAGE>
AUTHORIZATION FOR REINVESTMENT
NATIONAL MUNICIPAL TRUST SERIES
I hereby elect to participate in the Reinvestment Program to the extent
indicated below and do authorize United States Trust Company of New York,
Trustee, to direct distributions as indicated below to the Prudential Tax Free
Money Fund, Inc. where such amounts shall immediately be invested into shares of
the fund.
The foregoing authorization is subject in all respects to the terms and
conditions of participation set forth in the National Municipal Trust prospectus
and shall remain in effect until such time as I notify United States Trust
Company of New York to the contrary in writing.
(fold here)
- --------------------------------------------------------------------------------
Soc. Sec./Tax I.D. No.: ___________________________
Please reinvest all NMT series which
Series / / I/we own
Please list below the specific series
/ / I/we wish to reinvest
------------------------------------
------------------------------------
------------------------------------
Check One / / Reinvest Interest
/ / Reinvest Principal
/ / Reinvest Both Interest and Principal
Exact registration as it
appears on your Units:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Street address:
----------------------------------------------------
City, State, Zip Code:
----------------------------------------------------
Unit Holder Signature(s):
(all joint holders must
sign) Date:
---------------------------- --------------
<PAGE>
REINVESTMENT ADDRESS
US TRUST COMPANY
ATTN: DIVIDEND REINVESTMENT--DEPT. A
P.O. BOX 834
NEW YORK, N.Y. 10003
<PAGE>
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 a Trust and the
rights and interests of the Unit Holders, (e) indemnification of the Trustee for
any losses, liabilities or expenses incurred by it in the administration of a
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 so long as the Sponsor is maintaining a market for the Units.
The fees and expenses set forth herein for the Trust are payable out of
such Trust and when so paid by or owing to the Trustee are secured by a lien on
such Trust. If the balances in the Interest and Principal Accounts are
insufficient to provide for amounts payable by a Trust, the Trustee has the
power to sell Securities to pay such amounts. To the extent Securities are sold,
the size of such Trust will be reduced and the proportions of the types of
Securities will change. Such sales might be required at a time when Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized. Moreover, due to the minimum principal amount in which
Securities may be required to be sold, the proceeds of such sales may exceed the
amount necessary for the payment of such fees and expenses.
RIGHTS OF UNIT HOLDERS
CERTIFICATES
Ownership of Units is evidenced by registered certificates executed by the
Trustee and the Sponsor. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer.
Certificates may be issued in denominations of one Unit or any multiple
thereof. A Unit Holder may be required to pay $2.00 per certificate reissued or
transferred, and will be required to pay any governmental charge that may be
imposed in connection with each such transfer or interchange. For new
certificates issued to replace destroyed, stolen or lost certificates, the Unit
Holder must furnish indemnity satisfactory to the Trustee and must pay such
expenses as the Trustee may incur. Mutilated Certificates should be surrendered
to the Trustee for replacement.
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest and principal received by the Trust will be distributed on each
Distribution Date on a pro rata basis to Unit Holders of record as of the
preceding Record Date. All distributions will be net of applicable expenses,
funds required for the redemption of Units and, if applicable, reimbursements to
the Trustee for interest payments advanced to Unit Holders on previous monthly
Distribution Dates. (See 'Summary of Essential Information,' 'Expenses and
Charges' and 'Rights of Unit Holders-- Redemption.')
The Trustee will credit to the Interest Account all interest received by
the Trust, including that part of the proceeds of any disposition of Securities
which represents accrued interest. Other receipts will be credited to the
Principal Account. The pro rata share of the Interest Account and the pro rata
share of cash in the Principal Account represented by each Unit will be computed
by the Trustee each month as of the Record Date. (See 'Summary of Essential
Information' in Part A.) Proceeds received from the disposition of any of the
Securities subsequent to a Record Date and prior to the next succeeding
Distribution Date will be held in the Principal Account and will not be
distributed until the following Distribution Date. The distribution to Unit
Holders as of each Record Date will be made on the following Distribution Date
or shortly thereafter and shall consist of an amount substantially equal to
one-twelfth of such Unit Holders' pro rata share of the estimated annual income
to be credited to the Interest Account after deducting estimated expenses (the
'Interest Distribution') plus such Unit Holders' pro rata share of the cash
balance in the Principal Account computed as of the close of business on the
preceding Record Date. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the second
Distribution Date following their purchase of Units. No distribution need be
made from the Principal Account if the balance therein is less than an amount
sufficient to distribute $5.00 per Unit. The Interest Distribution per Unit
initially will be in the amount shown under 'Summary of Essential Information'
in Part A and will change as the income and expenses of the Trust change and as
Securities are exchanged, redeemed, paid down or sold.
B-23
<PAGE>
Normally, interest on the Securities in the Portfolio is paid on a
semiannual basis. Because interest is not received by a Trust at a constant rate
throughout the year, any Monthly Interest Distribution may be more or less than
the amount credited to the Interest Account as of the Record Date. In order to
eliminate fluctuations in monthly interest distributions resulting from such
variances the Trustee is required by the Indenture to advance such amounts as
may be necessary to provide monthly interest distributions of approximately
equal amounts. The Trustee will be reimbursed, without interest, for any such
advance from funds available from the Interest Account on the next ensuing
Record Date or Record Dates, as the case may be. If all or a portion of the
Securities for which advances have been made subsequently fail to pay interest
when due, the Trustee may recoup advances made by it in anticipation of receipt
of interest payments on such Securities by reducing the amount otherwise
distributable per Unit with respect to one or more Monthly Interest
Distributions. If units are redeemed subsequent to such advances by the Trustee,
but prior to receipt by the Trustee of actual notice of such failure to pay
interest, the amount of which was so advanced by the Trustee, each remaining
Unit Holder will be subject to a greater pro rata reduction in his Monthly
Interest Distribution than would have occurred absent such redemptions. Funds
which are available for future distributions, payments of expenses and
redemptions are in accounts which are non-interest bearing to Unit Holders and
are available for use by United States Trust Company of New York, pursuant to
normal banking procedures. In addition, because of the varying interest payment
dates of the Securities comprising the Trust's Portfolio, accrued interest at
any point in time will be greater than the amount of interest actually received
by the Trust and distributed to Unit Holders. This excess accrued but
undistributed amount (the 'accrued interest carryover') will be added to the
value of the Units on any purchase after the date of the Prospectus. See Part A,
'Summary of Essential Information' for the Accrued Net Interest Carryover for
the particular Trust described therein. If a Unit Holder sells all or a portion
of his Units a portion of his sale proceeds will be allocable to his
proportionate share of the accrued interest. Similarly, if a Unit Holder redeems
all or a portion of his Units, the Redemption Price per Unit which he is
entitled to receive from the Trustee will include accrued interest. (See 'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.')
Purchasers of Units who desire to receive distributions on a semi-annual
basis (if available) may elect to do so at the time of purchase during the
initial public offering period. Those indicating no choice will be deemed to
have chosen the monthly distribution plan. All Unit Holders, however, purchasing
Units during the initial public offering period and prior to the first Record
Date will receive the first distribution of interest. Thereafter, record dates
for monthly distributions will be the tenth day of each month, and record dates
for semi-annual distributions will be the tenth day of July and January.
The plan of distribution selected by a Unit Holder will remain in effect
until changed. Unit Holders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. In November of each year, the Trustee will furnish each Unit Holder a
card to be returned to the Trustee by December 20 of such year if the Unit
Holder desires to change such Unit Holder's plan of distribution. Unit Holders
desiring to change the plan of distribution in which they are participating may
so indicate on the card and return same, together with their Certificate to the
Trustee. If the card and Certificate are returned to the Trustee, the change
will become effective on December 21 of such year for the ensuing twelve months.
If the card and Certificate are not returned to the Trustee, the Unit Holder
will be deemed to have elected to continue with the same plan for the following
twelve months.
As of the tenth day of each month the Trustee will deduct from the Interest
Account and, to the extent funds are not sufficient therein, from the Principal
Account, amounts necessary to pay the expenses of the Trust. (See 'Expenses and
Charges.') The Trustee may also withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental charges
payable out of the Trust. Amounts so withdrawn shall not be considered a part of
a Trust's assets for purposes of determining the amount of distributions until
such time as the Trustee shall return all or any part of such amounts to the
appropriate account. In addition, the Trustee may withdraw from the Interest
Account and the Principal Account such amounts as may be necessary to cover
redemption of Units by the Trustee. (See 'Rights of Unit Holders--Redemption.')
The Trustee is also entitled to withdraw from the Interest Account, and, to the
extent funds are not sufficient therein, from the Principal Account, on one or
more record dates as may be appropriate, amounts sufficient to recoup advances
which the Trustee has made in anticipation of the receipt by the Trust of
interest in respect of Securities which subsequently fail to pay interest when
due.
In an effort to reduce the amount of accrued interest which investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to the Trust the amount of accrued interest due on the Securities
through the first expected settlement date. This accrued interest amount will be
paid to the Sponsor as the holder of record of all Units on such date.
Consequently, when the Sponsor sells Units after the date of the Prospectus, the
amount of accrued interest to be added to the Public Offering Price of the Units
purchased by an investor will include only accrued interest from the first
expected settlement date to, but not including, the date of settlement of the
investor's purchase (normally five business days after purchase), less any
distributions from the Interest Account. Since a person who contracts to
purchase Units on the date of the prospectus will settle such purchase on the
first expected settlement date of the Units, no accrued interest will be added
to the Public Offering Price. The Trustee will recover its advancements to the
Trust (without interest or other cost to the Trust) from interest received on
the Securities deposited in the Trust.
B-24
<PAGE>
REPORTS AND RECORDS
The Trustee shall furnish Unit Holders in connection with each distribution
a statement of the amount of interest, if any, and the amount of other receipts,
if any, which are being distributed, expressed in each case as a dollar amount
per Unit. In the event that the Issuer of any of the Securities fails to make
payment when due of any interest or principal and such failure results in a
change in the amount which would otherwise be distributed as a distribution, the
Trustee will, with the first such distribution following such failure, set forth
in an accompanying statement, the Issuer and the Securities, the amount of the
reduction in the distribution per Unit resulting from such failure, the
percentage of the aggregate face amount of Securities which such Security
represents and, to the extent then determined, information regarding any
disposition or legal action with respect to such Security. Within a reasonable
time after the end of each calendar year, the Trustee will furnish to each
person who at any time during the calendar year was a Unit Holder of record, a
statement: (1) as to the Interest Account: interest received (including amounts
representing interest received upon any disposition of Securities), and, if the
Issuers of the Securities are located in different states or possessions or in
the Commonwealth of Puerto Rico, the percentage of such interest by such states
or other jurisdictions, 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 of any Securities and the net proceeds received
therefrom (excluding any portion representing interest and any premium paid to
obtain Permanent Insurance), deductions for payments of applicable taxes and for
fees and expenses of the Trust and redemptions of Units, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each
Unit outstanding on the last business day of such calendar year; (3) a list of
the Securities held and the number of Units outstanding on the last business day
of such calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (5) amounts actually
distributed during such calendar year from the Interest 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. The accounts of the Trust shall be
audited not less frequently than annually by independent certified public
accountants designated by the Sponsor, and the report of such accountants will
be furnished by the Trustee to Unit Holders upon request.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee including records of the names and addresses of Unit
Holders, certificates issued or held, 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 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. 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' in Part A 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 first day after such date on which the New York Stock 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.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or, if the balance therein is insufficient, from the Principal Account.
All other amounts paid on redemption shall be withdrawn from the Principal
Account. The Trustee is empowered to sell Securities in order to make funds
available for redemption. Such sales, if required, could result in a sale of
Securities by the Trustee at a loss. To the extent Securities are sold, the size
and diversity of the Trust will be reduced.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than weekend and
holiday closings, or trading
B-25
<PAGE>
on that Exchange is restricted or during which (as determined by the Securities
and Exchange Commission by rule or regulation) an emergency exists as a result
of which disposal or evaluation of the underlying Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
has by order permitted. The Trustee is not liable to any person or in any way
for any loss or damage that may result from any such suspension or postponement.
Computation of Redemption Price per Unit
The Redemption Price per Unit of the Trust is determined by the Trustee on
the basis of the bid prices of the Securities in the Trust (or contracts for
Securities to be acquired by the Trust) as of the Evaluation Time on the date
any such determination is made. The Redemption Price per Unit is each Unit's pro
rata share, determined by the Trustee, of: (1) the aggregate value of the
Securities in the Trust (or contracts for securities to be acquired by the
Trust) on the bid side of the market (determined by the Evaluator as set forth
below), (2) cash on hand in the Trust, and accrued and unpaid interest on the
Securities as of the date of computation, less (a) amounts representing taxes or
governmental charges payable out of the Trust, (b) the accrued expenses of the
Trust, and (c) cash held for distribution to Unit Holders of record as of a date
prior to the evaluation. Accrued interest payable in respect of the Units from
the date of tender to, but not including, the fifth business day thereafter also
comprises a part of the Redemption Price per Unit. The Evaluator may determine
the value of the Securities in the Trust (1) on the basis of current bid prices
for the Securities, (2) if bid prices are not available for any Securities, on
the basis of current bid prices for comparable securities, (3) by appraisal, or
(4) by any combination of the above. In determining the Redemption Price per
Unit no value will be attributed to the Portfolio Insurance obtained by an
Insured Trust on a Security or to an Insured Trust's right to obtain Permanent
Insurance on such Security in the event of its sale of such Security, unless
such Security is in default in payment of principal or interest or in
significant risk of such default. Securities insured under a policy obtained by
the issuer thereof or by the Sponsor on the Date of Deposit are entitled to the
benefits of such insurance at all times and such benefits are reflected and
included in the market value of such Securities. (See 'The Trust--Insurance on
the Securities in the Portfolio of an Insured 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, will 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 not later than the day on which the
Units would otherwise have been redeemed by the Trustee. (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 lower Public Offering or Redemption Price subsequent to its
acquisition of such Units. (See 'Public Offering of Units--Profit of Sponsor.')
SPONSOR
Prudential Securities Incorporated 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 Incorporated, 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 Incorporated 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 Incorporated 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 Incorporated is distributor for Prudential Government
Securities Trust (Intermediate Term Series), The Target Portfolio Trust and for
Class B shares of The Blackrock Government Income Trust, Global Utility Fund,
Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund),
Prudential Adjustable Rate Securities Fund, Inc., Prudential California
Municipal Fund (California Series), Prudential Equity Fund, Prudential Equity
Income Fund, Prudential FlexiFund, Prudential Global Fund, Prudential Global
Genesis Fund, Prudential Global Natural Resources Fund, Prudential GNMA Fund,
Prudential Government Plus Fund, Prudential Growth Opportunity Fund, Prudential
High Yield Fund, Prudential IncomeVertible(Registered) Plus Fund, Inc.,
Prudential Intermediate Global Income Fund, Inc., Prudential Multi-Sector Fund,
Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund,
Prudential National Municipals Fund, Prudential Pacific Growth Fund, Inc.,
Prudential Short-Term Global Income Fund, Prudential Strategic Income Fund,
Prudential Total Return Fund, Prudential U.S. Government Fund and Prudential
Utility Fund.
B-26
<PAGE>
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 any action in good faith or for
errors in judgment or liable or responsible in any way for depreciation or loss
incurred by reason of the sale of any Securities, except in case of its own
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations and duties. (See 'Sponsor-- Responsibility.')
RESPONSIBILITY
The Trust is a unit investment trust and is not actively managed. The
Indenture, however, permits the Sponsor to direct the Trustee to dispose of any
Security in the Trust upon the happening of certain events, including without
limitation, the following:
1. Default in the payment of principal or interest on any Security when due
and payable,
2. Institution of legal proceedings seeking to restrain or enjoin the
payment of any Security or attacking their validity,
3. A breach of covenant or warranty which could adversely affect the
payment of debt service on the Security,
4. Default in the payment of principal or interest on any other outstanding
obligations of the same Issuer of any Security,
5. In the case of a Security that is a revenue bond, a fall in revenues,
based upon official reports, substantially below the estimated revenues
calculated to be necessary to pay principal and interest,
6. A decline in market price to such an extent, or such other market or
credit factor, as in the opinion of the Sponsor would make retention of
a Security detrimental to the Trust and to the interests of the Unit
Holders,
7. Refunding or refinancing of the Security, as set forth in the Indenture,
or
8. The loss of Federal income tax exemption with respect to interest on the
Security and,
in the case of an Insured Trust, a determination by the Sponsor that any
insurance that may be applicable to the Security cannot be relied upon to
maintain the interests of such Insured Trust to at least as great an extent as
such disposition. An Insured Trust will obtain and pay a premium for the
Permanent Insurance upon the sale of a Security if the Sponsor determines that
such sale and payment of premium will result in a net realization of such
Insured Trust greater than would the sale of such Security without the purchase
of such Permanent Insurance.
The Sponsor and/or an affiliate thereof intend to continuously monitor
developments affecting the Securities in each Trust in order to determine
whether the Trustee should be directed to dispose of any such Securities.
It is the responsibility of the Sponsor to instruct the Trustee to reject
any offer made by an Issuer of any of the Securities to issue new obligations in
exchange and substitution for any Security pursuant to a refunding or
refinancing plan, except that the Sponsor may instruct the Trustee to accept
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if the Issuer is in default with respect to such Security or in
the judgment of the Sponsor the Issuer will probably default in respect to such
Security in the foreseeable future.
Any obligations so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Indenture to the same extent
as Securities originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for any of the underlying
Securities, the Trustee is required to give notice thereof to each Unit Holder,
identifying the Securities eliminated and the Securities substituted therefor.
Except as stated in this and the preceding paragraph, the acquisition by the
Trust of any securities other than the Securities initially deposited and any
additional Securities supplementally deposited in the Trust (see 'The Trust'
herein), and/or a Replacement Security is prohibited.
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 if 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, or (2) terminate the
Trust. The Trustee will promptly notify Unit Holders of any such action.
B-27
<PAGE>
TRUSTEE
The Trustee is United States Trust Company of New York, with its principal
place of business at 114 West 47th Street, New York, New York 10036 and a unit
investment trust office at 770 Broadway, New York, New York 10003. United States
Trust Company of New York has, since its establishment in 1853, engaged
primarily in the management of trust and agency accounts for individuals and
corporations. The Trustee is a member of the New York Clearing House Association
and is subject to supervision and examination by the Superintendent of Banks of
the State of New York, the Federal Deposit Insurance Corporation and the Board
of Governors of the Federal Reserve System. In connection with the storage and
handling of certain Securities deposited in a 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 authority having
jurisdiction.
RESPONSIBILITY
For information relating to the responsibilities of the Trustee under the
Indenture, reference is 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 in the
event that the Sponsor determines that the Trustee has materially failed to
perform its duties under the Indenture and the interest of Unit Holders has been
substantially impaired as a result, and such failure has continued for a period
of sixty days following the Trustee's receipt of notice of such determination by
the Sponsor. 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 or, if appointed, has not 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.
EVALUATOR
The Evaluator is Kenny S&P Evaluation Services, a division of Kenny
Information Systems, 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, the Sponsor, or Unit
Holders for errors in judgment. But this provision shall not protect the
Evaluator in cases of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
RESPONSIBILITY
The Indenture requires the Evaluator to evaluate the Securities in a Trust
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 Securities on the basis of their offering or bid prices as
appropriate, see 'Public Offering of Units--Public Offering Price.'
B-28
<PAGE>
RESIGNATION
The Evaluator may resign or may be removed by the Sponsor, and in such
event, 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 a successor evaluator. If upon resignation of the
Evaluator no successor has accepted 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 Sponsor and the Trustee have the power to amend the Indenture without
the consent of any of the Unit Holders when such an amendment is: (1) to cure
any ambiguity or to correct or supplement any provision of the Indenture which
may be defective or inconsistent with any other provision contained therein, or
(2) to make such other provisions as shall not adversely affect the interests of
the Unit Holders; provided, that the Indenture may also be amended by the
Sponsor and the Trustee (or the performance of any of the provisions of the
Indenture may be waived) with the consent of Unit Holders owning 51% of the
Units of the Trust 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, however, shall the Indenture be amended to increase the number of Units
issuable thereunder, to permit the deposit or acquisition of securities or other
property either in addition to or in substitution for any of the Securities
initially deposited in the Trust, except for the substitution of certain
refunding securities for such Securities as initially provided in the Indenture,
or to provide the Trustee with the power to engage in business or 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 notify promptly 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
value of the Trust as shown on the last business day of June or December in any
year is less than 40% of the principal amount of the Securities initially
deposited therein supplemented by the deposit of additional Securities, if any.
However, in no event may the Trust continue beyond the Mandatory Termination
Date set forth under 'Summary of Essential Information in Part A.' In the event
of termination, written notice thereof will be sent by the Trustee to all Unit
Holders. Within a reasonable period after termination, the Trustee will sell any
Securities remaining in a Trust, and, after paying all expenses and charges
incurred by a Trust, will distribute to each Unit Holder, upon surrender for
cancellation of his Certificate for Units, his pro rata share of the balances
remaining in the Interest and Principal Accounts. The sale of 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. For this reason, among
others, the amount realized by a Unit Holder upon termination may be less than
the principal amount of Securities represented by the Units held by such Unit
Holder.
LEGAL OPINIONS
Certain legal matters in connection with the Units offered hereby have 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.
AUDITORS
The financial statements of the Trusts included in this Prospectus have
been audited by Deloitte & Touche LLP, certified public accountants, as stated
in their report appearing herein, and are included in reliance upon such report
given upon the authority of that firm as experts in accounting and auditing.
B-29
<PAGE>
BOND RATINGS+
ALL RATINGS EXCEPT THOSE IDENTIFIED OTHERWISE ARE BY STANDARD & POOR'S
CORPORATION.
STANDARD & POOR'S CORPORATION
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific debt
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished to Standard & Poor's
by the issuer and obtained by Standard & Poor's from other sources it considers
reliable. The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation; and
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal, and in the majority of instances they differ from AAA issues only in
small degrees.
A--Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse affects of
changes in circumstances and economic conditions than bonds in higher-rated
categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in the higher-rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from 'AA' to 'BBB' may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
Provisional Ratings: The letter 'p' following a rating indicates the rating
is provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while
addressing credit quality subsequent to completion, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion.
Accordingly, the investor should exercise his own judgment with respect to such
likelihood and risk.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (AAA, AA, A, BBB, commonly known as 'Investment Grade' ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states impose certain rating or other standards for
obligations eligible for investment by savings banks, trust companies, insurance
companies and fiduciaries generally.
Conditional rating(s), indicated by 'Con' are given to bonds for which the
continuance of the security rating is contingent upon Standard & Poor's receipt
of an executed copy of the escrow agreement or closing documentation confirming
investments and cash flows and/or the security rating is conditional upon the
issuance of insurance by the respective insurance company.
MOODY'S INVESTORS SERVICE
A brief description of the applicable Moody's Investors Service's rating
symbols and their meanings is as follows:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge.' Interest payments are protected by a large or by an exceptionally
stable margin and
- ------------------
+ As described by the rating agencies.
B-30
<PAGE>
principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. Aa bonds are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Those municipal bonds in the Aa, A and Baa groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa1,
A1 and Baa1. In addition, Moody's applies numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in its corporate bond
rating system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category. Although Industrial Revenue Bonds and Environmental
Control Revenue Bonds are tax-exempt issues, they are included in the corporate
bond rating system.
Conditional ratings, indicated by 'Con' are given to bonds for which the
security depends upon the completion of some act or the fulfillment of some
condition. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operating experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. A parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
FITCH INVESTORS SERVICE, INC.
A brief description of the applicable Fitch Investors Service, Inc. rating
symbols and their meanings is as follows:
AAA--Bonds which are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds which are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong although not quite as strong as bonds rated AAA.
A--Bonds which are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB--Bonds which are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that these bonds will fall
below investment grade is higher than for bonds with higher ratings.
Plus (+) Minus (-)--Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the 'AAA', 'DDD', 'DD' or 'D' categories.
Conditional--A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
- ------------------
NR--Not rated (credit characteristics comparable to A or better (BBB or better
in the case of an insured trust) in the opinion of the Sponsor's affiliate on
the Date of Deposit).
B-31
<PAGE>
FEDERAL TAX-FREE VS. TAXABLE INCOME FOR A TRUST
This table shows the approximate yields which taxable securities must earn in
various income brackets to produce, after Federal income tax, returns equivalent
to specified tax-exempt bond yields. The table is computed on the theory that
the taxpayer's highest bracket tax rate is applicable to the entire amount of
any increase or decrease in his taxable income resulting from a switch from
taxable to tax-exempt securities or vice versa. The table reflects the Federal
income tax rates and tax brackets for the 1994 taxable year under the Code as in
effect on the date of this Prospectus. Because the Federal rate brackets are
subject to adjustment based on changes in the Consumer Price Index, the taxable
equivalent yields for subsequent years may vary somewhat from those indicated in
the table. Use this table to find your tax bracket. Read the columns below to
determine the approximate taxable yield you would need to equal a return free of
Federal income tax.
1994 TAX YEAR
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
$22,750 $55,100 $115,000
TAXABLE INCOME BRACKET* UP TO TO TO TO OVER
SINGLE RETURN $22,750 $55,100 $115,000 $250,000 $250,000
- --------------------------------------------------------------------------------
$38,000 $91,850 $140,000
TAXABLE INCOME BRACKET* UP TO TO TO TO OVER
JOINT RETURN $38,000 $91,850 $140,000 $250,000 $250,000
- --------------------------------------------------------------------------------
FEDERAL TAX RATE 15% 28% 31% 36% 39.6%
- --------------------------------------------------------------------------------
TAX EXEMPT YIELD TAXABLE EQUIVALENT YIELD
4.00% 4.705 5.555 5.797 6.250 6.622
4.50 5.294 6.250 6.521 7.031 7.450
5.00 5.882 6.944 7.246 7.812 8.278
5.50 6.470 7.638 7.971 8.593 9.105
6.00 7.059 8.333 8.696 9.375 9.933
6.50 7.647 9.028 9.420 10.156 10.761
7.00 8.235 9.722 10.145 10.937 11.589
- --------------------------------------------------------------------------------
</TABLE>
* The income amount shown is income subject to Federal income tax reduced by
adjustments to income, exemptions, and itemized deductions or the standard
deduction. It is assumed that the investor is not subject to the alternative
minimum tax. Where applicable, investors should take into account the
provisions of the Code under which the benefit of certain itemized deductions
and the benefit of personal exemptions are limited in the case of higher
income individuals. Under the Code, individual taxpayers with adjusted gross
income in excess of a $111,800 threshold amount are subject to an overall
limitation on certain itemized deductions, requiring a reduction equal to the
lesser of (i) 3% of adjusted gross income in excess of the $111,800 threshold
amount or (ii) 80% of the amount of such itemized deductions otherwise
allowable. The benefit of each personal exemption is phased-out for married
taxpayers filing a joint return with adjusted gross income in excess of
$167,700 and for single taxpayers with adjusted gross income in excess of
$111,800. Personal exemptions are phased out at the rate of two percentage
points for each $2,500 (or fraction thereof) of adjusted gross income in
excess of the applicable threshold amount. The Federal tax brackets, the
threshold amounts at which itemized deductions are subject to reduction, and
the range over which personal exemptions are phased out will be adjusted for
inflation for each year after 1994.
B-32
<PAGE>
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THIS INVESTMENT COMPANY NOT CONTAINED
HEREIN; AND ANY INFORMATION OR REPRESENTATIONS 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus contains information concerning the Trusts and the
Sponsor, but does not contain all of the information set forth in the
registration statements and exhibits relating thereto, which the Trusts
have 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.
- --------------------------------------------------------------------------------
INDEX
- -------------------------------------------------------------------------------
Page
----
Risk Considerations.......................................... A- 1
Summary of Essential Information............................. A- 4
Independent Auditors' Report................................. A- 6
Statement of Financial Condition............................. A- 7
National Municipal Trust, The Trust.......................... B- 1
Portfolio Summary........................................ B- 2
Insurance on the Securities in the Portfolio
of an Insured Trust.................................... B- 9
Objectives and Securities Selection...................... B-14
Estimated Annual Income Per Unit......................... B-14
Tax Status................................................... B-15
Public Offering of Units..................................... B-18
Public Offering Price.................................... B-18
Public Distribution...................................... B-19
Secondary Market......................................... B-19
Sponsor's and Underwriters' Profits...................... B-19
Volume Discount.......................................... B-20
Employee Discount........................................ B-21
Exchange Option.............................................. B-21
Tax Consequences......................................... B-22
Reinvestment Program......................................... B-22
Expenses and Charges......................................... B-22
Initial Expenses......................................... B-22
Fees..................................................... B-22
Other Charges............................................ B-23
Rights of Unit Holders....................................... B-23
Certificates............................................. B-23
Distribution of Interest and Principal................... B-23
Reports and Records...................................... B-25
Redemption............................................... B-25
Sponsor...................................................... B-26
Limitations on Liability................................. B-27
Responsibility........................................... B-27
Resignation.............................................. B-27
Trustee...................................................... B-28
Limitations on Liability................................. B-28
Responsibility........................................... B-28
Resignation.............................................. B-28
Evaluator.................................................... B-28
Limitations on Liability................................. B-28
Responsibility........................................... B-28
Resignation.............................................. B-29
Amendment and Termination of the Indenture................... B-29
Amendment................................................ B-29
Termination.............................................. B-29
Legal Opinions............................................... B-29
Auditors..................................................... B-29
Bond Ratings................................................. B-30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NMT
- --------------------------------------------------------------------------------
SERIES 172
- --------------------------------------------------------------------------------
NATIONAL TRUST-12,000 UNITS
- --------------------------------------------------------------------------------
12,000 UNITS
in a diversified
PORTFOLIO of
municipal bonds
- --------------------------------------------------------------------------------
Sponsor
Prudential Securities Incorporated
One Seaport Plaza
199 Water Street
New York, New York 10292
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
ITEM A--BONDING ARRANGEMENTS
The employees of Prudential Securities Incorporated are covered under
Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of
$62,500,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Written consents of the following persons:
Cahill Gordon & Reindel (included in Exhibit 5)
Deloitte & Touche LLP
Kenny S&P Evaluation Services, a division of Kenny Information
Systems, Inc. (as Evaluator)
(included in Exhibit 23).
THE FOLLOWING EXHIBITS:
<TABLE>
<S> <C>
*** Ex-3.(i) -- Certificate of Incorporation of Prudential Securities Incorporated dated March 29, 1993.
*** Ex-3.(ii) -- Revised By-Laws of Prudential Securities Incorporated as amended through March 5, 1993.
**** Ex-4.a -- Trust Indenture and Agreement dated September 6, 1989.
* Ex-4.b -- Reference Trust Agreement dated October 12, 1994.
* Ex-5 -- Opinion of counsel as to the legality of the securities being registered.
* Ex-23 -- Consent of Kenny S&P Evaluation Services, a division of Kenny Information Systems, Inc. (as
Evaluator).
* Ex-24 -- Powers of Attorney executed by a majority of the Board of Directors of Prudential Securities
Incorporated.
* Ex-27 -- Financial Data Schedule.
***** Ex-99 -- Form of Agreement Among Underwriters.
Ex-99.1 -- Information as to Officers and Directors of Prudential Securities Incorporated is incorporated
by reference to Schedules A and D of Form BD filed by Prudential Securities Incorporated,
pursuant to Rules 15b1-1 and 15b3-1 under the Securities Exchange Act of 1934 (1934 Act File No.
8-16267).
** Ex-99.2 -- Affiliations of Sponsor with other investment companies.
** Ex-99.3 -- Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of $62,500,000.
**** Ex-99.4 -- Investment Advisory Agreement.
</TABLE>
- ------------
* Filed herewith.
** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Government Securities Equity
Trust Series 5, Registration No. 33-57992.
**** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Insured Series 43, Registration No. 33-29314.
***** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Series 169, Registration No. 33-53569.
II-1
<PAGE>
SIGNATURES
THE REGISTRANT, NATIONAL MUNICIPAL TRUST, SERIES 172 HEREBY IDENTIFIES
SERIES 152 OF THE NATIONAL MUNICIPAL TRUST FOR PURPOSES OF THE REPRESENTATIONS
REQUIRED BY RULE 487 AND REPRESENTS THE FOLLOWING:
(1) THAT PORTFOLIO SECURITIES DEPOSITED IN THE SERIES AS TO THE
SECURITIES OF WHICH THIS REGISTRATION STATEMENT IS BEING FILED DO NOT
DIFFER MATERIALLY IN TYPE OR QUALITY FROM THOSE DEPOSITED IN SUCH PREVIOUS
SERIES;
(2) THAT, EXCEPT TO THE EXTENT NECESSARY TO IDENTIFY THE SPECIFIC
PORTFOLIO SECURITIES DEPOSITED IN, AND TO PROVIDE ESSENTIAL FINANCIAL
INFORMATION FOR, THE SERIES WITH RESPECT TO THE SECURITIES OF WHICH THIS
REGISTRATION STATEMENT IS BEING FILED, THIS REGISTRATION STATEMENT DOES NOT
CONTAIN DISCLOSURES THAT DIFFER IN ANY MATERIAL RESPECT FROM THOSE
CONTAINED IN THE REGISTRATION STATEMENTS FOR SUCH PREVIOUS SERIES AS TO
WHICH THE EFFECTIVE DATES WERE DETERMINED BY THE COMMISSION OR THE STAFF;
AND
(3) THAT IT HAS COMPILED WITH RULE 460 UNDER THE SECURITIES ACT OF
1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
NATIONAL MUNICIPAL TRUST, SERIES 172 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 12TH DAY
OF OCTOBER, 1994.
NATIONAL MUNICIPAL TRUST
Series 172
(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
JOHN P. MURRAY
LELAND B. PATON
VINCENT T. PICA
RICHARD A. REDEKER
HARDWICK SIMMONS
LEE B. SPENCER, JR.
By /s/ KENNETH SWANKIE
---------------------------------
(KENNETH SWANKIE, FIRST VICE
PRESIDENT,
MANAGER--UNIT INVESTMENT TRUST
DEPARTMENT,
AS AUTHORIZED SIGNATORY FOR
PRUDENTIAL
SECURITIES INCORPORATED AND
ATTORNEY-IN-FACT FOR THE PERSONS
LISTED ABOVE)
- ------------
* Pursuant to Powers of Attorney filed herewith.
II-2
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to the use of its name in the Prospectus included in
this Registration Statement is contained in its opinion filed as Exhibit 5 to
this Registration Statement.
------------------------
II-3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated October 12, 1994, accompanying
the financial statements of the National Municipal Trust Series 172 included
herein and to the reference to our Firm as experts under the heading 'Auditors'
in the prospectus which is a part of this registration statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
October 12, 1994
New York, New York
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT INDEX PAGE
- --------------- ------------------------------------------------------------------------------------------ ---------
<S> <C> <C>
***Ex-3.(i) --Certificate of Incorporation of Prudential Securities Incorporated dated March 29, 1993.
***Ex-3.(ii) --Revised By-Laws of Prudential Securities Incorporated as amended through March 5, 1993.
****Ex-4.a --Trust Indenture and Agreement dated September 6, 1989.
*Ex-4.b --Reference Trust Agreement dated October 12, 1994.
*Ex-5 --Opinion of counsel as to the legality of the securities being registered.
*Ex-23 --Consent of Kenny S&P Evaluation Services, a division of Kenny Information Systems, Inc.
(as Evaluator).
*Ex-24 --Powers of Attorney executed by a majority of the Board of Directors of Prudential
Securities Incorporated.
*Ex-27 --Financial Data Schedule.
*****Ex-99 --Form of Agreement Among Underwriters
Ex-99.1 --Information as to Officers and Directors of Prudential Securities Incorporated is
incorporated by reference to Schedules A and D of Form BD filed by Prudential Securities
Incorporated, pursuant to Rules 15b1-1 and 15b3-1 under the Securities Exchange Act of
1934 (1934 Act File No. 8-16267).
**Ex-99.2 --Affiliations of Sponsor with other investment companies.
**Ex-99.3 --Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of $62,500,000.
****Ex-99.4 --Investment Advisory Agreement.
</TABLE>
- ------------------
* Filed herewith.
** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Government Securities Equity
Trust Series 5, Registration No. 33-57992.
**** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Insured Series 43, Registration No. 33-29314.
***** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust,
Series 169, Registration No. 33-53569.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
EXHIBITS
TO
AMENDMENT NO. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
NATIONAL MUNICIPAL TRUST
SERIES 172
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit 4.b
Executed in 7 Parts
Counterpart No. ( )
NATIONAL MUNICIPAL TRUST
SERIES 172
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated October 12, 1994
among Prudential Securities Incorporated, as Depositor, United
States Trust Company of New York, as Trustee, and Kenny
Information Systems, Inc., as Evaluator, sets forth certain
provisions in full and incorporates other provisions by
reference to the document entitled "National Municipal Trust,
Trust Indenture and Agreement" (the "Basic Agreement") dated
September 6, 1989, as amended. Such provisions as are
incorporated by reference constitute a single instrument (the
"Indenture").
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, and
the Evaluator agree as follows:
Part I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Basic Agreement are herein
incorporated by reference in their entirety and shall be deemed
to be a part of this instrument as fully and to the same extent
as though said provisions had been set forth in full in this
instrument except that the Basic Agreement is hereby amended in
the following manner:
A. Article I, entitled "Definitions" shall be amended to
add the following numbered paragraphs and renumber
the succeeding paragraphs accordingly:
"1. "Additional Bonds" shall mean such Bonds
(as defined herein) as are listed in schedules of
a Supplemental Reference Trust Agreement and which
are deposited in connection with an increase in
the number of Units initially specified in a
Reference Trust Agreement."
"2. "Additional Deposited Units" shall mean
such Deposited Units (as defined herein) as are
listed in schedules of a Supplemental Reference
Trust Agreement and which are deposited in
connection with an increase in the number of Units
initially specified in a Reference Trust
Agreement."
"3. "Additional Securities" shall mean such
Securities (as defined herein) as are listed in
schedules of a Supplemental Reference Trust
Agreement and which are deposited in connection
with an increase in the number of Units initially
specified in a Reference Trust Agreement.
"Additional Securities" may consist of "Additional
Bonds" and/or "Additional Deposited Units."
"4. "Additional Units" shall mean such Units
(as defined herein) as are issued in respect of
Additional Securities."
"(31) "Supplemental Reference Trust Agreement"
shall mean a document pursuant to which Additional
Units are deposited in connection with an increase in
the number of Units initially specified in a
Reference Trust Agreement."
and to insert the following language in renumbered
paragraph (6) defining "Bonds" after each reference
to Reference Trust Agreement:
"and Supplemental Reference Trust
Agreements"
and to replace the last word in renumbered paragraph
(6) defining "Bonds" with the word "relate"
and to insert the following language in renumbered
paragraph (10) defining "Contract Bonds" after the
reference to Reference Trust Agreement and
redesignate the subsequent clause accordingly:
"(ii) Bonds listed in schedules of
Supplemental Reference Trust Agreements"
and to add the following language to the end of
renumbered paragraph (27) defining "Securities":
"deposited in trust and listed on a
schedule attached to the Reference Trust
Agreement or on any schedule of a
Supplemental Reference Trust Agreement."
and to add the following language to the end of
renumbered paragraph (35) defining "Unit":
"hereof and increased by the number of
Additional Units created pursuant to
Section 2.05 hereof."
B. Article II, entitled "Deposit of Securities;
Acceptance of Trust; Issuance of Units; Form of
Certificates", shall be amended to add a new Section
2.05 entitled "Deposit of Additional Securities" to
read as follows:
"From time to time and in the discretion
of the Depositor, the Depositor may make
deposits of Additional Securities duly
endorsed in blank or accompanied by all
necessary instruments of assignment and
transfer in proper form (or contracts to
purchase Additional Securities and cash
or an irrevocable letter of credit in an
amount necessary to consummate the
purchase of any Additional Securities
pursuant to such contracts ("Additional
Contract Securities")) and Cash (as
defined below), if Cash is an asset of
the Trust immediately prior to the
supplemental deposit, provided that each
deposit of Additional Securities and
Cash, if any, deposited during the
90-day period following the first
deposit of Securities in the Trust shall
replicate, to the extent practicable as
hereinafter provided, the Securities
(including Contract Bonds) and shall
exactly replicate Cash (other than Cash
to be distributed only to the Sponsor or
in respect of Units issued and
outstanding prior to the deposit) held
in the Trust immediately prior to each
such deposit; and, provided further that
each deposit of Additional Securities
and Cash, if any, subsequent to such
90-day period shall exactly replicate
the Securities (including Contract
Bonds) and Cash (other than Cash to be
distributed only to the Sponsor or in
respect of Units issued and outstanding
prior to the deposit) held in the Trust
immediately prior to each such deposit.
For purposes of this Section 2.05 Cash
means cash on hand in the Trust and/or
cash receivable by the Trust as of the
date of the supplemental deposit in
respect of a coupon date which has
occurred on or before the date of such
supplemental deposit, reduced by
payables and accrued expenses on such
date, but shall not include cash
received on any Security which is
allocable to the amount paid to the Unit
Holders of record on the first
settlement date for the Trust.
Accordingly, for a deposit
subsequent to the 90-day period
following the first deposit of
Securities:
(l) Any Additional Bonds included
in a deposit shall be identical to Bonds
held in the Trust immediately prior to
the deposit and in face amounts such
that (i) the face amount of Additional
Bonds of a particular issue included in
a deposit divided by (ii) the aggregate
of the face amounts of all Additional
Bonds included in the deposit results in
a fraction which is the same as the
fraction resulting from division of
(iii) the aggregate face amount of the
Bonds of the same issue held in the
Trust divided by (iv) the aggregate face
amount of all Bonds held in the Trust
immediately prior to the deposit;
(2) Any deposit of Additional
Securities shall be accompanied by Cash
in an amount bearing the same ratio to
the aggregate face amount of all
Additional Bonds in the deposit as the
Cash held in the Trust immediately prior
to the deposit bears to the aggregate
face amount of all Bonds held in the
Trust immediately prior to the deposit,
exclusive of Cash held in the Trust and
designated for distribution only to the
Sponsor or with respect to Units issued
and outstanding prior to the deposit;
and
(3) Any Additional Deposited Units
included in a deposit shall be identical
with Deposited Units then held in the
Trust and shall be in numbers determined
by multiplying the number of Deposited
Units with respect to a particular prior
series of the National Municipal Trust
held in the Trust immediately prior to
the deposit by the fraction obtained by
dividing the face amount of all
Additional Bonds included in the deposit
by the face amount of all Bonds included
in the Trust immediately prior to the
deposit;
and for a deposit during the 90-day
period following the first deposit of
Securities in the Trust, the rules
stated in paragraphs (1), (2) and (3) of
this Section 2.05 shall apply except
that any Additional Securities
(including Additional Contract
Securities) need be only substantially
similar (rather than identical to)
Securities held in the Trust immediately
prior to the deposit and the
proportionality requirements need be met
only to the extent practicable. Without
limiting the generality of the phrase
"to the extent practicable", if the
Depositor specifies a minimum face
amount of a Bond or minimum number of
Deposited Units with respect to a
particular trust to be included in a
deposit and such minimum requirement
cannot be met or if a Security identical
to a Security held in the Trust is not
readily obtainable, substitution of
other substantially similar Securities
(including Securities of an issue
originally deposited) in order to meet
the foregoing proportionality
requirements shall be considered as a
meeting of such requirements "to the
extent practicable".
Each deposit of Additional Securities
shall be listed in and made in
accordance with a Supplementary Schedule
to the Reference Trust Agreement stating
the date of such deposit and the number
of Additional Units being issued
therefor. The execution by the
Depositor in connection with the deposit
of Additional Securities of a
Supplementary Schedule to the Reference
Trust Agreement shall constitute the
approval by the Depositor as
satisfactory in form and substance of
the contracts to be entered into or
assumed by the Trustee with regard to
any Additional Securities listed on such
Supplementary Schedule and authorization
to the Trustee on behalf of the Trust to
enter into or assume such contracts and
otherwise to carry out the terms and
provisions thereof or to take other
appropriate action in order to complete
the deposit of the Additional Securities
covered thereby into the Trust."
C. Article III, entitled "Administration of Trust", shall
be amended as follows:
(i) section 3.05 Distribution shall be
amended by replacing "$1.00" with
"$5.00" in the first and last sentences
of the third paragraph; and
(ii) section 3.14 Replacement Bond shall be
amended by deleting from part (vi) of
the second sentence the words "in the
category A or better" and inserting
after the word "organization" the words
"in the same category as the Contract
Bond which it replaces";
D. Article VI, entitled "Trustee", section 6.01 General
Definition of Trustee's Liabilities, Rights and
Duties shall be amended as follows:
(i) Section 6.01(g) shall be amended by deleting the
word "originally"
(ii) Section 6.01(g) shall be amended by inserting
the phrase "including supplemental deposits, if
any, of Securities in the Trust" after the first
reference to "Trust".
E. Article IX, entitled "Additional Covenants;
Miscellaneous Provisions", Section 9.01 Amendments
shall be amended as follows:
(i) To add the following phrase after the word
"Indenture" in (1):
"except as the result of the deposit of
Additional Securities, as herein
provided"
(ii) To add the following phrase after the word
"Bonds" in (2):
"except in the manner permitted by the
Indenture as in effect on the first
deposit of Securities".
F. Reference to Standard & Poor's Corporation in their
capacity as Evaluator is replaced by Kenny S&P
Evaluation Services, a division of Kenny Information
Systems, Inc., throughout the Basic Agreement.
G. Reference to Prudential-Bache Securities Inc. in
their capacity as Sponsor is replaced by Prudential
Securities Incorporated throughout the Basic
Agreement.
Part II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby
agreed to:
A. The Trust is denominated National Municipal
Trust, Series 172 (the "National Trust").
B. The interest-bearing obligations 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.
C. The term "Depositor" shall mean Prudential
Securities Incorporated.
D. The aggregate number of Units referred to in
Sections 2.03 and 9.01 of the Basic Agreement is 12,000.
E. A Unit is hereby declared initially equal to
1/12,000th.
F. The term "First Settlement Date" shall mean
October 20, 1994.
G. The term "Computation Date" shall mean
November 10, 1994.
H. The term first "Distribution Date" shall mean
November 25, 1994.
I. The term "Monthly Record Date" shall mean the
tenth day of each month commencing December 10, 1994.
J. The term "Monthly Distribution Date" shall mean
the twenty-fifth day of each month following a Monthly Record
Date commencing December 25, 1994.
K. The Trust will terminate on the date of
maturity, redemption, sale or other disposition of the last
Security held in the Trust.
L. The first distribution to Monthly Unit Holders
will be a distribution in the amount of $3.51.
M. For purposes of this Series -- National
Municipal Trust, Series 172 -- 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.
N. The Sponsor's Annual Portfolio Supervision Fee
shall be a maximum of $0.25 per $1,000 principal amount of
underlying Bonds.
O. The Trustee's Annual Fee as set forth in the
Indenture in Section 6.04 shall be $1.50 per $1,000 principal
amount of Bonds under the monthly distribution option.
[Signatures and acknowledgments on separate pages]
The Schedule of Portfolio Securities in Part A of the
prospectus included in this Registration Statement for Series
172 is hereby incorporated by reference herein as Schedule A
hereto.
Exhibit 5
[Letterhead of Cahill Gordon & Reindel]
October 12, 1994
Prudential Securities Incorporated
One Seaport Plaza
New York, New York 10292
Re: National Municipal Trust,
Series 172
Gentlemen:
We have acted as special counsel for you as Depositor
of the National Municipal Trust, Series 172 (the "Trust"), in
connection with the issuance under the Trust Indenture and
Agreement, dated September 6, 1989, as amended, and related
Reference Trust Agreement, dated October 12, 1994 (such Trust
Indenture and Agreement and Reference Trust Agreement
collectively referred to as the "Indenture"), among you, as
Depositor, United States Trust Company of New York, as Trustee,
and Kenny Information Systems, Inc., as Evaluator, of units of
fractional undivided interest in said Trust (the "Units")
comprising the Units of Series 172. In rendering our opinion
expressed below, we have relied in part upon the opinions and
representations of your officers and upon opinions of counsel
to Prudential Securities Incorporated.
Based upon the foregoing, we advise you that, in our
opinion, when the Indenture has been duly executed and
delivered on behalf of the Depositor and the Trustee and when
the certificate evidencing the Units has been duly executed and
delivered by the Depositor and the Trustee in accordance with
the Indenture, the Units will be legally issued, fully paid and
nonassessable by the Trust, and will constitute a valid and
binding obligations of the Trust and the Depositor in
accordance with their terms, except that enforceability of
certain provisions thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors generally and by general
equitable principles.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-54681)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and the related Prospectus.
Very truly yours,
Cahill Gordon & Reindel
Exhibit 23
[Letterhead of Kenny S&P Evaluation Services]
October 12, 1994
Prudential Securities Incorporated
1 New York Plaza
14th Floor
New York, NY 10292-2014
Re: National Municipal Trust
Series 172
Gentlemen:
We have examined Registration Statement File
No. 33-54681 for the above-captioned trust. We hereby
acknowledge that Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. is currently acting as the
evaluator for the trust. We hereby consent to the use in the
Registration Statement of the reference to Kenny S&P Evaluation
Services, a division of Kenny Information Systems, Inc. as
evaluator.
In addition, we hereby confirm that the ratings
indicated in the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated
in our KENNYBASE database as of the date of the Evaluation
Report.
You are hereby authorized to file a copy of this
letter with the Securities and Exchange Commission.
Sincerely,
John R. Fitzgerald
John R. Fitzgerald
Exhibit 24
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Alan D. Hogan
Alan D. Hogan
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ George A. Murray
George A. Murray
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ John P. Murray
John P. Murray
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Leland B. Paton
Leland B. Paton
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Vincent T. Pica
Vincent T. Pica
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Richard A. Redeker
Richard A. Redeker
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Hardwick Simmons
Hardwick Simmons
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
of Prudential Securities Incorporated, a Delaware corporation, hereby
constitutes and appoints, Kenneth Swankie, Richard R. Hoffmann, William W.
Huestis, W. David Hatton and Charles Moore and each of them (with full power
to each of them to act alone) his true and lawful attorney-in-fact and agent
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and affix his seal to and file one or more
Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto (including post-effective
amendments thereto), with all exhibits and any and all other documents
required to be filed with respect to any series of any unit investment
trusts of which the corporation is a sponsor or a co-sponsor with any
regulatory authority, federal or state, relating to the registration or
issuance of units of fractional undivided interest in one or more of said
unit investment trusts without limitation, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully for all intents and
purposes as he might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned director of Prudential
Securities Incorporated, has hereunto set his hand this 31st day of
August, 1994.
/s/ Lee B. Spencer, Jr.
Lee B. Spencer, Jr.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27
<ARTICLE>6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR NATIONAL MUNICIPAL TRUST SERIES 172 IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<SERIES>
<NAME> NATIONAL MUNICIPAL TRUST SERIES
<S> <C>
<NUMBER> 172
<MULTIPLIER> 1
<FISCAL-YEAR-END> OCT-12-1994
<PERIOD-START> OCT-12-1994
<PERIOD-END> OCT-12-1994
<PERIOD-TYPE> OTHER
<INVESTMENTS-AT-COST> 11,502,642
<INVESTMENTS-AT-VALUE> 11,502,642
<RECEIVABLES> 175,612
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,678,254
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,502,642
<SHARES-COMMON-STOCK> 12,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 11,678,254
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
