<PAGE>
As filed with the Securities and Exchange Commission on September 14, 1994
Registration No. 33-
___________________________________________________________________________
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
_____________________
A. Exact Name of Trust:
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
B. Name of depositor:
PRUDENTIAL SECURITIES INCORPORATED
C. Complete address of depositor's principal executive office:
One Seaport Plaza
199 Water Street
New York, New York 10292
D. Name and complete address of agent for service:
Copy to:
LEE B. SPENCER, JR., ESQ. KENNETH W. ORCE, ESQ.
PRUDENTIAL SECURITIES INCORPORATED CAHILL GORDON & REINDEL
One Seaport Plaza 80 Pine Street
199 Water Street New York, New York 10005
New York, New York 10292
E. Title and amount of securities being registered:
An indefinite number of Units of NATIONAL EQUITY TRUST SELECT
FIVE PORTFOLIO SERIES 1
Pursuant to Rule 24f-2 promulgated under
the Investment Company Act of 1940 as amended.
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
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Indefinite
G. Amount of filing fee:
$500 (as required by Rule 24f-2)
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date
of the registration statement.
__
/__/ Check box if it is proposed that this filing will become effective
on , 1994 immediately upon filing pursuant to Rule 487.
___________________________________________________________________________
___________________________________________________________________________
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall hereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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NATIONAL EQUITY TRUST SELECT FIVE PORTFOLIO SERIES 1
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading In Prospectus
I. Organization and General Information
1. (a) Name of Trust..................... Prospectus front cover
(b) Title of securities issued........ Prospectus front cover
2. Name and address of each depositor.... Sponsor, Prospectus back cover
3. Name and address of trustee........... Trustee
4. Name and address of each principal
underwriter......................... Sponsor
5. State of organization of trust........ The Trust
6. Execution and termination of trust
agreement........................... Summary of Essential
Information; The Trust;
Amendment and Termination of
the Indenture - Termination
7. Changes of Name....................... *
8. Fiscal year........................... *
9. Litigation............................ *
II. General Description of the Trust and
Securities of the Trust
10. (a) Registered or bearer securities... *
(b) Cumulative or distributive
securities........................ *
________________
* Inapplicable, answer negative or not required.
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(c) Redemption........................ Rights of Unit Holders --
Redemption
(d) Conversion, transfer, etc......... Rights of Unit Holders --
Redemption
(e) Periodic payment plan............. *
(f) Voting rights..................... *
(g) Notice to certificateholders...... The Trust; Rights of Unit
Holders -- Reports and
Records; Sponsor --
Responsibility; Sponsor --
Resignation; Trustee --
Resignation; Amendment and
Termination of the Indenture
(h) Consents required................. The Trust; Amendment and
Termination of the Indenture
(i) Other provisions.................. Tax Status
11. Type of securities comprising units... Prospectus front cover; The
Trust
12. Certain information regarding
periodic payment certificates....... *
13. (a) Load, fees, expenses, etc......... Summary of Essential
Information; Public Offering
of Units -- Public Offering
Price; Public Offering of
Units -- Profit of Sponsor;
Public Offering of Units --
Volume Discount; Public
Offering of Units -- Employee
Discount; Exchange Option;
Reinvestment Program;
Expenses and Charges
(b) Certain information regarding
periodic payment certificates... *
(c) Certain percentages............... Summary of Essential
Information; Public Offering
of Units -- Public Offering
Price; Public Offering of
Units -- Profit of Sponsor;
Public Offering of Units --
Volume Discount; Public
Offering of Units -- Employee
Discount; Exchange Option
(d) Price differentials............... Public Offering of Units --
Employee Discount
________________
* Inapplicable, answer negative or not required.
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(e) Certain other fees, etc.
payable by holders.............. Rights of Unit Holders --
Certificates
(f) Certain other profits
receivable by depositor,
principal underwriter, trustee
or affiliated persons........... Rights of Unit Holders --
Redemption -- Purchase by the
Sponsor of Units Tendered for
Redemption
(g) Ratio of annual charges to
income.......................... *
14. Issuance of trust's securities........ The Trust; Rights of Unit
Holders -- Certificates
15. Receipt and handling of payments
from purchasers....................... *
16. Acquisition and disposition of
underlying securities................. The Trust -- Trust Formation;
The Trusts -- Securities
Selection; Rights of Unit
Holders -- Redemption;
Sponsor -- Responsibility
17. Withdrawal or redemption.............. Rights of Unit Holders --
Redemption
18. (a) Receipt, custody and
disposition of income........... Rights of Unit Holders --
Distributions; Rights of Unit
Holders -- Reports and
Records
(b) Reinvestment of distributions..... Reinvestment Program
(c) Reserves or special funds......... Expenses and Charges; Rights of
Unit Holders -- Distributions
(d) Schedule of distributions......... *
19. Records, accounts and reports......... Rights of Unit Holders --
Distributions; Rights of Unit
Holders -- Reports and
Records
20. Certain miscellaneous provisions
________________
* Inapplicable, answer negative or not required.
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of trust agreement.................. Sponsor -- Limitations on
Liability;
(a) Amendment......................... Sponsor -- Resignation;
(b) Termination....................... Trustee -- Limitations on
Liability;
(c) and (d) Trustee, removal and
successor......................... Trustee -- Resignation;
(e) and (f) Depositor, removal and
successor......................... Amendment and Termination of
the Indenture
21. Loans to security holders............. *
22. Limitation on liability............... The Trust; Sponsor --
Limitations on Liability;
Trustee -- Limitations on
Liability; Evaluator --
Limitations on Liability
23. Bonding arrangements.................. Additional Information --
Item A
24. Other material provisions of
trust agreement..................... *
III. Organization, Personnel and
Affiliated Persons of Depositor
25. Organization of depositor............. Sponsor
26. Fees received by depositor............ *
27. Business of depositor................. Sponsor
28. Certain information as to
officials and affiliated
persons of depositor................ Contents of Registration
Statement -- Part II
29. Companies controlling depositor....... Sponsor
30. Persons controlling depositor......... *
31. Payments by depositor for certain
services rendered to trust.......... *
32. Payments by depositor for
________________
* Inapplicable, answer negative or not required.
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<PAGE>
certain other services rendered
to trust............................ *
33. Remuneration of employees of
depositor for certain services
rendered to trust................... *
34. Remuneration of other persons
for certain services rendered
to trust............................ *
35. Distribution of trust's securities
in states........................... Public Offering of Units --
Public Distribution
36. Suspension of sales of trust's
securities.......................... *
37. Revocation of authority to
distribute.......................... *
38. (a) Method of distribution............ Public Offering of Units
(b) Underwriting agreements........... Public Offering of Units
(c) Selling agreements................ Public Offering of Units
39. (a) Organization of principal
underwriter..................... Sponsor
(b) N.A.S.D. membership of
principal underwriter........... Sponsor
40. Certain fees received by
principal underwriter............... *
41. (a) Business of principal
underwriter..................... Sponsor
(b) Branch offices of principal
underwriter..................... Sponsor
(c) Salesmen of principal
underwriter..................... *
42. Ownership of trust's securities by
certain persons..................... *
43. Certain brokerage commissions
received by principal underwriter... *
________________
* Inapplicable, answer negative or not required.
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44. (a) Method of valuation............... Summary of Essential
Information; Public Offering
of Units -- Public Offering
Price; Public Offering of
Units -- Public Distribution;
Public Offering of Units --
Secondary Markets
(b) Schedule as to offering price..... *
(c) Variation in offering price
to certain persons.............. Public Offering of Units --
Public Distribution; Public
Offering of Units -- Volume
Discount; Public Offering of
Units -- Employee Discount;
Exchange Option
45. Suspension of redemption rights....... *
46. (a) Redemption Valuation.............. Summary of Essential
Information; Rights of Unit
Holders -- Redemption -
Computation of Redemption
Price per Unit
(b) Schedule as to redemption
price........................... *
47. Maintenance of position in
underlying securities............... Public Offering of Unit --
Secondary Market; Rights of
Unit Holders -- Redemption --
Computation of Redemption
Price per Unit; Rights of
Unit Holders -- Redemption --
Purchase by the Sponsor of
Units Tendered for Redemption
IV. Information Concerning
the Trustee or Custodian
48. Organization and regulation
of trustee.......................... Trustee
49. Fees and expenses of trustee.......... Expenses and Charges
50. Trustee's lien........................ Expenses and Charges -- Other
Charges
________________
* Inapplicable, answer negative or not required.
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V. Information Concerning Insurance of
Holders of Securities
51. Insurance of holders of trust's
securities.......................... *
VI. Policy of Registrant
52. (a) Provisions of trust agreement
with respect to selection
or elimination of underlying
securities...................... Prospectus front cover; The
Trust -- Trust Formation; The
Trust -- Objectives and
Securities Selection; Sponsor
-- Responsibility
(b) Transactions involving
elimination of underlying
securities...................... *
(c) Policy regarding substitution
or elimination of underlying
securities...................... Sponsor -- Responsibility
(d) Fundamental policy not other-
wise covered.................... *
53. Tax status of trust................... Prospectus front cover; Tax
Status
VII. Financial and Statistical Information
54. Trust's securities during last
ten years........................... *
55.
56. Certain information regarding
periodic payment certificates....... *
57.
58.
59. Financial statements
(Instruction 1(c) to Form S-6)...... Statement of Financial
Condition
________________
* Inapplicable, answer negative or not required.
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Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers to
buy them be accepted prior to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any
State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such state.
Subject to Completion Dated September 14, 1994
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
[LOGO]
_______________________________________________________________
_______________________________________________________________
The objective of the Trust is total return through an
investment for approximately one year in a portfolio consisting
of the five lowest dollar price per share common stocks of the
ten common stocks in the Dow Jones Industrial Average having
the highest dividend yields on , 1994. Dow Jones and
Company Inc. has not participated in any way in the creation of
the Trust or in the selection of stocks included in the Trust
and has not approved any information included herein relating
thereto. The value of the Units of the Trust will fluctuate
with the value of the portfolio of underlying Securities.
Units of the Trust may be suited for purchase by Individual
Retirement Accounts, Keogh Plans and other tax-deferred
retirement plans.
Unit Holders may elect, prior to the Termination Date
(approximately one year after the creation of the Trust), the
following options: (1) receiving their pro rata share of the
underlying Securities in kind, (2) receiving cash upon the
liquidation of their pro rata share of the underlying
Securities and, if offered, (3) investing the amount of cash
they would have received upon the liquidation of their pro rata
share of the underlying Securities in units of a new trust (if
one is offered).
The minimum purchase is $1,000 except that the minimum purchase
in connection with an Individual Retirement Account (IRA) or
other tax-deferred retirement plan is $250.
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_______________________________________________________________
_______________________________________________________________
Sponsor:
Prudential Securities [LOGO]
_______________________________________________________________
_______________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_______________________________________________________________
Please Read and Retain This Prospectus dated , 1994
Prospectus for Future Reference
<PAGE>
_______________________________________________________________
This Prospectus does not contain all the information with
respect to the investment company set forth in its registration
statement and exhibits relating thereto which have been filed
with the Securities and Exchange Commission, Washington, D.C.
under the Securities Act of 1933 and the Investment Company Act
of 1940, and to which reference is hereby made.
_______________________________________________________________
The NATIONAL EQUITY TRUST, Select Five Portfolio Series 1 (the
"Trust") is composed of common stock issued by the five
companies whose common stocks are the five lowest dollar price
per share common stocks of the ten common stocks in the Dow
Jones Industrial Average having the highest dividend yield on
, 1994, and contracts and funds for the purchase
thereof (the "Securities" or "Security," as the context
requires) and/or cash (or a letter of credit in lieu of cash)
with instructions to the Trustee to purchase Securities.
Subsequent to the Date of Deposit, the Sponsor may, but is not
obligated to, deposit additional Securities, contracts to
purchase additional Securities together with a letter of credit
and/or cash (or a letter of credit in lieu of cash) with
instructions to purchase additional Securities maintaining to
the extent practicable the proportionate relationship of the
number of shares of each Security in the portfolio of the Trust
immediately prior to such deposit thereby creating additional
Units which Units the Sponsor intends to offer by means of this
Prospectus. (See Part B -- "The Trust".)
THE OBJECTIVE of the Trust is total return through an
investment for approximately one year in a portfolio of the
five lowest dollar price per share common stocks of the ten
common stocks in the Dow Jones Industrial Average having the
highest dividend yield on , 1994. (See "Summary of
Essential Information" for the Termination Date of the Trust.)
There can be no assurance that such objective can be realized.
The factors affecting the value of the Securities are those
factors that have an impact upon the value of equity securities
in general and particularly those factors that affect the
economic and financial condition of each issuer of a Security
in particular.
DISTRIBUTIONS of dividends received (net of expenses)
and return of capital, if any, by the Trust will be made
quarterly on or shortly after the Quarterly Distribution Date
to Unit Holders of record on the Record Date immediately
preceding such Quarterly Distribution Date. (See Part B --
"Rights of Unit Holders -- Distributions.")
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PUBLIC OFFERING PRICE of the Units of the Trust
during the initial offering period is equal to the value of the
underlying Securities in the Trust's portfolio divided by the
number of Units outstanding in the Trust, plus a sales charge
as set forth in the table herein. A proportionate share of
amounts, if any, in the Income Account is also added to the
Public Offering Price. (See Part B -- "Public Offering of
Units -- Public Offering Price -- Volume Discount.")
THE SPONSOR, although not obligated to do so,
presently intends to maintain a secondary market for the Units
in the Trust as more fully described under Part B -- "Public
Offering of Units -- Secondary Market." If such a market is
not maintained, a Unit Holder will be able to dispose of his
Units only by tendering his Units to the Trustee for
redemption. (See Part B -- "Rights of Unit Holders --
Redemption -- Computation of Redemption Price per Unit.")
TERMINATION OPTIONS-- A Unit Holder who so elects by
notifying the Trustee prior to the Termination Date of the
Trust, approximately one year after the Date of Deposit of the
Trust (see "Summary of Essential Information"), will have his
Units redeemed in kind on such date by distribution of the Unit
Holder's pro rata share of the Securities on such date to the
Distribution Agent who will act as agent for such Unit Holder
and the Securities will be disposed of on behalf of such Unit
Holder in accordance with one or more of the following three
options as elected by such Unit Holder:
1. to have such underlying Securities distributed
in kind no later than the business day next following the
Termination Date. Unit Holders subsequently selling such
distributed Securities will incur brokerage costs when
disposing of such Securities;
2. to receive the Unit Holder's pro rata share of
the cash received by the Distribution Agent (less expenses)
upon the sale by the Distribution Agent of the underlying
Securities attributable to Unit Holders electing this option
over a period not to exceed 20 business days immediately
following the Termination Date. Amounts received by the
Distribution Agent over such 20 business day period
representing the proceeds of the underlying Securities sold
will be held by the Trustee in accounts which are non-interest
bearing to Unit Holders and which are available for use by the
Trustee pursuant to normal banking procedures and will be
distributed to Unit Holders upon the settlement of the trade
for the last Security to be sold; and/or, if offered,
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3. to invest the proceeds from the sale of the
underlying Securities attributable to Unit Holders electing
this option, as received by the Distribution Agent upon the
sale of such underlying Securities over a period not to exceed
20 business days immediately following the Termination Date, in
units of a subsequent series of National Equity Trust as
designated by the Sponsor (the "New Series). The Units of a
New Series will be purchased by the Unit Holder upon the
settlement of the trade for the last Security to be sold. Such
purchaser will be entitled to a reduced sales load upon the
purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the
terms of the Trust described in this Prospectus, and that
similar options in a subsequent series of the Trust will occur
in each New Series of the Trust approximately one year after
that New Series' creation. The availability of this option
does not constitute a solicitation of an offer to purchase
Units of a New Series or any other security. A Unit Holder's
election to participate in this option will be treated as an
indication of interest only. At any time prior to the purchase
by the Unit Holder of units of a New Series, such Unit Holder
may change his investment strategy and receive, in cash, the
proceeds of the sale of the Securities.
Under each option a Unit Holder will receive the
Redemption Price per Unit (net asset value) determined as of
the Evaluation Time on the Termination Date. If the Sponsor
effects the sales of underlying Securities for the Distribution
Agent in the case of the second and third option over a period
not to exceed 20 business days immediately following the
Termination Date, the Sponsor will effect such sales free of
brokerage commissions. If the Sponsor does not effect such
sales, the proceeds of any such sales will be reduced by any
applicable brokerage commissions. The sale arrangement is one
in which United States Trust Company will be selling the
Securities as agent for the Unit Holder and is separate from
the Trust which terminates on the Termination Date. The
Sponsor, on behalf of the Distribution Agent if the Sponsor
effects such sales, or the Distribution Agent if the Sponsor
does not, will, unless prevented by unusual and unforeseen
circumstances, such as, among other reasons, a suspension in
trading of a Security, the close of a stock exchange, outbreak
of hostilities and collapse of the economy, sell on each
business day during the 20 business day period at least a
number of shares of each Security which then remains in the
portfolio equal to the number of such shares in the portfolio
at the beginning of such day multiplied by a fraction the
numerator of which is one and the denominator of which is the
number of days remaining in the 20 business day sales period.
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The proceeds of sale will not be distributed by the
Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 20 business day period.
Since, as of the Termination Date, the Unit Holder's interest
in the Trust will have been distributed to the Distribution
Agent as agent for the Unit Holder such Units will have been
cancelled and will have ceased to exist.
Depending on the amount of proceeds to be invested in
Units of the New Series and the number of other orders for
Units in the New Series, the Sponsor may purchase a large
amount of securities for the New Series in a short period of
time. The Sponsor's buying of securities may tend to raise the
market prices of these Securities. The actual market impact of
the Sponsor's purchases, however, is currently unpredictable
because the actual amount of securities to be purchased and the
supply and price of those securities is unknown. A similar
problem may occur in connection with the Sponsor's sales of
Securities during the 20 business day period following the
Termination Date; depending on the number of sales required,
the prices of and demand for Securities, the Sponsor's sales
may tend to depress the market prices and thus reduce the
proceeds to be credited to Unit Holders. The Sponsor believes
that the sale of underlying Securities over a 20 business day
period as described above is in the best interest of Unit
Holders and may mitigate the negative market price consequences
stemming from the trading of large amounts of Securities. The
Sponsor, in implementing such sales of Securities on behalf of
the Distribution Agent, will seek to maximize the sales
proceeds and will act in the best interest of the Unit Holder.
The proceeds of the sale of the Securities will be in an amount
equal to amounts realized upon the sale of the Securities over
the 20 business day period. There can be no assurance,
however, that any adverse price consequences of heavy trading
will be mitigated.
Unit Holders who do not elect as set forth above will
have their Units redeemed on the Termination date and be deemed
to have elected to receive the cash proceeds from the sale of
such Unit Holder's pro rata share of the underlying Securities
(option number 2).
RISK FACTORS. Since the Trust portfolio consists
primarily of common stock, an investment in Units of the Trust
should be made with an understanding of the risks inherent in
any investment in common stocks. The risks of investing in
common stock include risks associated with the rights to
receive payments from the issuer which are generally inferior
to creditors of, or holders of debt obligations or preferred
A-4
<PAGE>
stocks issued by, the issuer. Holders of common stock have a
right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or
provided for. By contrast, holders of preferred stocks have
the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must
be paid before any dividends are paid on common stock and any
cumulative preferred stock dividend which has been omitted is
added to future dividends payable to the holders of such
cumulative preferred stock. Preferred stocks are also entitled
to rights on liquidation which are senior to those of common
stocks. For these reasons, preferred stocks generally entail
less risk than common stocks. Moreover, common stock does not
represent an obligation of the issuer and therefore does not
offer any assurance of income or provide the degree of
protection of capital debt securities. The issuance of debt
securities or even preferred stock by an issuer will create
prior claims for payment of principal, interest and dividends
which could adversely affect that ability and inclination of
the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of
the issuer upon liquidation or bankruptcy. Further, unlike
debt securities which typically have a stated principal amount
payable at maturity (which value will be subject to market
fluctuations prior thereto), common stock has neither a fixed
principal amount nor a maturity and have values which are
subject to market fluctuations for as long as the common stock
remains outstanding. The value of the common stock in the
Trust thus may be expected to fluctuate over the life of the
Trust to values higher or lower than those prevailing on the
Date of Deposit.
The value of the Units will fluctuate depending on
all the factors that have an impact on the economy and the
equity markets. These factors similarly impact on the ability
of an issuer to pay dividends. The Trust is not a "managed"
registered investment company and Securities will not be sold
by the Trustee as a result of ordinary market fluctuations.
SPECIAL CHARACTERISTICS OF THE TRUST
Securities Selection. The Trust Portfolio consists
of the five lowest dollar price per share common stocks of the
ten common stocks in the Dow Jones Industrial Average ("DJIA")
having the highest dividend yield as of the Date of Deposit.
Dow Jones and Company Inc. ("Dow Jones") has not participated
A-5
<PAGE>
in any way in the creation of the Trust or in the selection of
the stocks included in the Trust and has not approved any of
the information herein relating thereto. The yield for each
stock was calculated by annualizing the last quarterly ordinary
dividend declared and dividing the annualized dividend by the
market value of the stock. Such formula (an objective
determination) served as the basis for the Sponsor's selection
of the ten stocks in the Dow Jones Industrial Average having
the highest dividend yield (the "Select Ten"). The five lowest
dollar price per share stocks from among the Select Ten were
then selected (the "Select Five"). The Securities were
selected irrespective of any buy or sell recommendation by the
Sponsor.
Investors should note that the above criteria were
applied to the Securities selected for inclusion in the Trust
Portfolio as of the Date of Deposit. Subsequent to the Date of
Deposit, the Securities may no longer rank among the five
lowest dollar price per share common stocks of the ten common
stocks in the DJIA having the highest dividend yield, the
yields on the Securities in the portfolio may change or the
Securities may no longer be included in the DJIA. However, the
Sponsor may, on and subsequent to the Date of Deposit, deposit
additional Securities and/or contracts to purchase additional
Securities together with a letter of credit which reflect the
Portfolio as of the Date of Deposit, subject to permitted
adjustments, and/or cash (or a letter of credit in lieu of
cash) with instructions to purchase additional Securities and
sell such additional Units created. The original proportionate
relationship between the number of shares of each Security in
the Trust will be adjusted to reflect the occurrence of a stock
dividend, a stock split, merger, reorganization or a similar
event which affects the capital structure of the issuer of a
Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer
at the time of such event and adjust the proportionate
relationship accordingly to all future subsequent deposits. If
the Trust receives the securities of another issuer as the
result of a merger or reorganization of, or a spin-off, or
split-up by the issuer of a Security included in the original
portfolio, the Trust may under certain circumstances hold those
securities as if they were one of the Securities initially
deposited and adjust the proportionate relationship accordingly
for all future subsequent deposits. The sale of additional
Units and the sale of Units in the secondary market may
continue even though the Securities would no longer be chosen
for deposit into the Trust if the selection process were to be
made at such later time.
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The Dow Jones Industrial Average Stocks
The first DJIA, consisting of 12 stocks, was
published in The Wall Street Journal in 1896. The list grew to
20 stocks in 1916 and to 30 stocks on October 1, 1928. Taking
into account a number of names changes, 9 of the original
companies are still in the DJIA today. For two periods of 17
consecutive years each, there were no changes to the list:
March 14, 1939-July 1956 and June 1, 1959-August 6, 1976.
Current List
Allied Signal Procter & Gamble
J.P. Morgan & Co. Incorporated American Express
Minnesota Mining International Paper
Du Pont Philip Morris
Eastman Kodak United Technologies
Goodyear Sears Roebuck & Company
Bethlehem Steel Exxon
IBM Texaco
General Electric Coca-Cola
General Motors Union Carbide
McDonald's Walt Disney
Chevron AT&T
Caterpillar Westinghouse Electric
Boeing Woolworth
Merck Aluminum Co. of America
The Dow Jones Industrial Average is comprised of 30
common stocks chosen by the editors of The Wall Street Journal
as representative of the broad market and of American industry.
The companies are major factors in their industries and their
stocks are widely held by individuals and institutional
investors.
Changes in the components are made entirely by the
editors of The Wall Street Journal without consultation with
the companies, the stock exchange or any official agency. For
the sake of continuity, such changes are made rarely. Most
substitutions have been the result of mergers, but from time to
time changes may be made to achieve a better representation.
Notwithstanding the foregoing, Dow Jones expressly reserves the
right to change the components of the Dow Jones Industrial
Average at any time for any reason.
The following table shows the actual performance of
the Dow Jones Industrial Average, the Select Ten and the Select
Five in each of the past twenty years as of the date indicated
for each of such years. Such annual returns do not take into
A-7
<PAGE>
account commissions, sales charges, expenses or taxes. As
demonstrated by the table, the Select Five outperformed both
the Select Ten and the DJIA in most of the 20 years.
Year Ended ________COMPARISON OF TOTAL RETURNS(1)_________
__12/31/__ DJIA(2) Select Ten Select Five
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
______________________________________
(1) Total Return represents the sum of the percentage change
in market value of each group of stocks between the first
trading day of a period and the last trading day of a
period and the total dividends paid on each group of
stocks during the period divided by the opening market
value of each group of stocks as of the first trading day
of a period. Total return does not take into
consideration any sales charges, commissions, expenses or
taxes.
(2) An index of 30 stocks compiled by Dow Jones.
The total return figures shown above are not
guarantees of future performance and should not be used as a
predictor of returns to be expected in connection with the
Portfolio. Such total return figures do not reflect sales
charges, commissions, expenses or taxes. As indicated in the
above table, the Select Five underperformed the Select Ten and
the DJIA in certain years and there can be no assurance that
A-8
<PAGE>
the portfolio of the Trust will outperform the Select Ten or
the DJIA over the life of the Trust.
A-9
<PAGE>
PORTFOLIO SUMMARY AS OF DATE OF DEPOSIT
The Portfolio contains 5 issues of Securities all of
which are traded on the New York Stock Exchange. The
Securities are representative of industry groups as follows:
%*; : %*; : %*; : %*; : %*.
The Portfolio of the Trust is concentrated in
Securities issued by companies deriving a substantial portion
of their income from the sale of oil and related products. In
addition to the general risks associated with investment in
common stocks, investment in the oil industry may pose
additional risks including the impact of the following on the
value of Securities of oil companies: changes in demand for oil
products, increased competition among oil companies, a
substantial increase in the price of oil, a drop in production
of oil, a decline in the supply of oil, price controls on oil
and oil products, an oil embargo, the political situation in
oil-producing countries, domestic and foreign government taxes
or controls on the oil industry, domestic and foreign
environmental regulations affecting the oil industries' ability
to operate necessitating substantial expenditures by the oil
companies, the cost of cleanup and litigation costs relating to
oil spills and other environmental damage caused by an oil
company, volatility of oil prices and the development of
alternate sources of fuel. Each of the above may affect the
value of the Securities in the Portfolio. The Sponsor cannot
predict the impact the above-stated risks may have on the
Securities in the Portfolio over the life of the Trust.
_________________________
* Percentages computed on the basis of the aggregate net
asset value of the Securities in the Trust on the Date of
Deposit.
A-10
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
As of , 1994*
AGGREGATE VALUE OF SECURITIES .................... $
NUMBER OF UNITS ..................................
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST
REPRESENTED BY EACH UNIT ....................... 1/ th
Aggregate ask side value of Securities
in the Trust .............................. $
Divided by Units ..................... $
Plus sales charge of % of Public
Offering Price %** of net
amount invested in Securities) ............ $
Public Offering Price per Unit*** ........... $
Plus the amount per Unit in the
Income Account ............................ $ ---
Total .................................. $
SPONSOR'S INITIAL REPURCHASE PRICE PER
UNIT*** ........................................ $
(based on asked side evaluation of
Securities in the Trust)
REDEMPTION AND SPONSOR'S SECONDARY MARKET
REPURCHASE AND REOFFER PRICE PER UNIT*** ....... $
(based on bid side evaluation of
underlying Securities, $ less than
Public Offering Price per Unit; $
less than Sponsor's Initial Repurchase
Price per Unit)
RECORD DATES: The fifteenth day of January, April, July and
October.
QUARTERLY DISTRIBUTION DATES: the fifteenth of January, April,
July, and October, or as soon thereafter as possible.
MINIMUM PRINCIPAL DISTRIBUTION: No distribution need be made
from the Principal Account if the balance therein is less than
$.01 per Unit.
TRUSTEE'S FEE AND ESTIMATED EXPENSES: $ per Unit
EVALUATION TIME: 4:00 P.M. New York Time
NOTIFICATION DATE: , 1995
TERMINATION DATE: , 1995+
SPONSOR'S PROFIT (LOSS) ON DEPOSIT: $
MINIMUM VALUE OF TRUST: The Indenture may be terminated if the
value of the Trust is less than 40% of the value of the
Securities calculated after the last deposit of Securities.
A-11
<PAGE>
____________________
* The Date of Deposit. The Date of Deposit is the date on
which the Trust Indenture and Agreement was signed and the
initial deposit of Securities with the Trustee was made.
** The sales charge will be reduced for volume purchases and
by approximately 25% every quarter but in no event shall
the sales load be less than 1%. See "Public Offering Price
-- Volume Discount."
*** This price is computed as of the Date of Deposit and may
vary from such price on the date of this Prospectus or any
subsequent date.
+ The Trust may be terminated prior to the Termination Date.
See Part B -- "Amendment and Termination of the Indenture
-- Termination."
A-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL EQUITY TRUST SELECT FIVE PORTFOLIO SERIES 1
We have audited the Statement of Financial Condition
and Schedule of Portfolio Securities of the National Equity
Trust Select Five Portfolio Series 1 as of , 1994.
These financial statements are the responsibility of the
Trustee and Sponsor (see note (d) to the statement of financial
condition). Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
the irrevocable letter of credit for the purchase of
securities, as shown in the Statement of Financial Condition
and Schedule of Portfolio Securities as of ,
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 financial statements referred to
above present fairly, in all material respects, the financial
position of National Equity Trust Select Five Portfolio Series
1 as of , 1994, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
New York, N.Y.
, 1994
A-13
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
As of Date of Deposit, , 1994
TRUST PROPERTY
Sponsor's Contracts to Purchase underlying
Securities backed by an irrevocable
letter of credit(a).......................... $
INTEREST OF UNIT HOLDERS
Units of fractional undivided interest
outstanding:
Cost to investors(b)...................... $
Gross underwriting commission(c).......... ____________
Total................................... $
(a) The aggregate value of the Securities
represented by Contracts to Purchase listed under "Schedule of
Portfolio Securities" included herein and their cost to the
Trust are the same. An irrevocable letter of credit drawn on
Mellon Bank, N.A. in the amount of $ has been
deposited with the Trustee for the purchase of Securities
pursuant to contracts to purchase such Securities.
(b) The aggregate Public Offering Price is computed
on the basis set forth under "Public Offering of Units --
Public Offering Price."
(c) The aggregate sales charge of % of the
Public Offering Price per Unit is computed on the basis set
forth under "Public Offering of Units -- Public Offering
Price."
(d) The Trustee has custody of and responsibility
for all accounting and financial books, records, financial
statements and related data of the Trust and is responsible for
establishing and maintaining a system of internal controls
directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial
reporting of the Trust. The Trustee is also responsible for
all estimates and accruals reflected in the Trust's financial
statements. The Trustee determines the price for each
underlying Security included in the Trust's Schedule of
Portfolio Securities on the basis set forth in "Public Offering
of Units -- Public Offering Price." Under the Securities Act of
1933, as amended (the "Act"), the Sponsor is deemed to be an
issuer of the Trust's Units. As such, the Sponsor has the
responsibility of an issuer under the Act with respect to
financial statements of the Trust included in the Registration
Statement under the Act and amendments thereto.
A-14
<PAGE>
<TABLE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
On Date of Deposit, , 1995
<CAPTION>
Propor- Percent-
Current tionate age of
Annual Relation- Aggregate
Cost of
Dividend Number ship Market Price Per
Securities
Portfolio Per of Between No. Value Share to To
No. Name of Issuer Share<F1> Shares of Shares of Trust Trust
Trust<F2>
<C> <S> <C> <C> <C> <C> <C> <C>
1.
2.
3.
4.
5.
_____ _______ _______
___________
100% 100.00% $
</TABLE>
_____________________
<F1> Based on the latest quarterly or semiannual declaration. There can be
no assurance that future dividend payments, if any, will be maintained on an
amount equal to the dividend listed above.
<F2> The Securities were acquired by the Sponsor on , 1994. All
Securities are represented entirely by contracts to purchase. Valuation of
Securities by the Trustee was made on the basis of the closing sale price on
the New York Stock Exchange on , 1994. The aggregate purchase
price to the Sponsor for the Securities deposited in the Trust is $ .
A-15<PAGE>
PROSPECTUS -- PART B:
_______________________________________________________________
Note that Part B of this Prospectus may not be distributed
unless accompanied by Part A.
_______________________________________________________________
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
THE TRUST
National Equity Trust, Select Five Portfolio Series 1
(the "Trust") is one of a series of similar but separate unit
investment trusts created by the Sponsor. The 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"),* between Prudential Securities Incorporated (the
"Sponsor") and United States Trust Company of New York (the
"Trustee"). On the Date of Deposit, the Sponsor deposited with
the Trustee equity securities and/or contracts and funds
(represented by irrevocable letter(s) of credit issued by major
commercial bank(s)) for the purchase of such equity securities
(collectively, the "Securities" or, singularly, the "Security,"
as the context requires) at prices which reflect the value of
the Securities as of the close of the market as of the Date of
Deposit and/or cash (or a letter of credit in lieu of cash)
with instructions to the Trustee to purchase such Securities
(see Schedule of Portfolio Securities). The Trustee then
immediately delivered to the Sponsor the units (the "Units")
comprising the entire ownership of the Trust as of the Date of
Deposit which Units the Sponsor, through this Prospectus, is
offering for sale to the public. Each such Unit represented on
the initial Date of Deposit an identical number and type of
shares in identical issuers.
The objective of the Trust is total return through an
investment for approximately one year in a portfolio of the
five lowest dollar price per share common stocks of the ten
common stocks in the Dow Jones Industrial Average having the
highest dividend yield as of a date on or shortly before the
Date of Deposit (the "Select Five"). There can be no assurance
that such objective can be realized. The factors affecting the
_________________________
* 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>
value of the Securities are those factors that have an impact
upon the value of equity securities in general and those
factors that affect the economic and financial condition of
each issuer of a Security in particular.
Subsequent to the initial deposit of Securities on
the Date of Deposit, the Sponsor may, but is not obligated to,
deposit from time to time additional Securities (including
contracts together with an irrevocable letter of credit for the
purchase thereof) and/or cash (or a letter of credit in lieu of
cash) with instructions to the Trustee to purchase additional
Securities in the Trust, to receive in exchange therefor
additional Units, and to offer such Units to the public by
means of this Prospectus. Any such additional deposits during
the 90 day period subsequent to the Date of Deposit will be in
amounts which maintain, to the extent practicable, the original
proportionate relationship between the number of shares of each
Security in the Portfolio. It may not be possible to maintain
the exact original proportionate relationship because of, among
other reasons, purchase requirements, price changes or
unavailability of Securities. In connection with the deposit
by the Sponsor of cash (or a letter of credit in lieu of cash)
with instructions to purchase additional Securities in order to
create Additional Units, to the extent that the price of a
Security fluctuates between the time the cash is deposited and
the time the cash is used to purchase the Security, Units may
represent more or less of that Security and more or less of
other Securities in the Portfolio of the trust. In addition,
the brokerage fees incurred in purchasing Securities with such
deposited cash will be borne by the Trust. Any Unit Holder who
purchased Units prior to the purchase of Securities with such
deposited cash would experience dilution as a result of any
such brokerage fees. Any cash deposited with instruction to
purchase Securities not used to purchase Securities and any
interest not used to pay Trust expenses will be distributed to
Unit Holders on the earlier of the first Distribution Date or
90 days after the Date of Deposit. Additional Units may be
continuously offered for sale to the public by means of this
Prospectus. Subsequent to the 90 day period following the Date
of Deposit any deposit of additional Securities and cash must
exactly replicate the portfolio immediately prior to such
deposit. The Sponsor may acquire large volumes of additional
Securities for deposit into the Trust over a short period of
time. Such acquisitions may tend to raise the market prices of
these Securities. The Sponsor cannot currently predict the
actual market impact of the Sponsor's purchases of additional
Securities, because the actual volume of Securities to be
purchased and the supply and price of such Securities is not
known. As additional Units are issued by the Trust as a result
B-2
<PAGE>
of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be
increased and the fractional undivided interest in the Trust
represented by each Unit will be decreased.
The Sponsor may deposit additional Securities and may
continue to sell Units of the Trust even though one or more of
the Securities no longer remains among the Select Five on the
date of deposit of the additional Securities.
Notwithstanding the availability of the
above-mentioned irrevocable letter(s) of credit, it is expected
that the Sponsor will pay for the Securities as the contracts
for their purchase become due. A substantial portion of such
contracts have not become due by the date of this Prospectus.
To the extent Units are sold prior to the settlement of such
contracts, the Sponsor will receive the purchase price of such
Units prior to the time at which it pays for Securities
pursuant to such contracts and have the use of such funds
during this period.
Units will be sold to investors at the Public
Offering Price next computed after receipt of the investor's
order to purchase Units, if Units are available to fill orders
on the day that that price is set. If Units are not available
or are insufficient to fill the order, the investor's order
will be rejected by the Sponsor. The number of Units available
may be insufficient to meet demand because of the Sponsor's
inability to or decision not to purchase and deposit underlying
Securities in amounts sufficient to maintain the proportionate
numbers of shares of each Security as required to create
additional Units. The Sponsor may, if unable to accept orders
on any given day, offer to execute the order as soon as
sufficient Units can be created. An investor who agrees to
this will be deemed to place a new order for that number of
Units each day until that order is accepted. The investor's
order will then be executed, when Units are available, at the
Public Offering Price next calculated after such continuing
order is accepted. The investor will, of course, be able to
revoke his purchase offer at any time prior to acceptance by
the Sponsor. The Sponsor will execute orders to purchase in
the order it determines that they are received, i.e., orders
received first will be filled first, except that indications of
interest prior to the effectiveness of the registration of the
offering of Trust Units which become orders upon effectiveness
will be accepted according to the order in which the
indications of interest were received.
B-3
<PAGE>
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 net asset value
(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. The Trust has
a mandatory termination date set forth under Part A -- "Summary
of Essential Information," but may be terminated prior thereto
upon the occurrence of certain events (see "Amendment and
Termination of the Indenture -- Termination"), including a
reduction in the value of the Trust below the value set forth
under Part A -- "Summary of Essential Information."
On the Date of Deposit, a Unit represented the
fractional undivided interest in the Securities set forth under
Part A -- "Summary of Essential Information" in the ratio of 1
Unit for each approximately $ net asset value of
Securities initially deposited in such Trust. If any Units are
redeemed by the Trustee, the number of Securities in the Trust
will be reduced by an amount allocable to redeemed Units and
the fractional undivided interest in such Trust represented by
each unredeemed Unit will be increased. Units will remain
outstanding until redeemed upon tender to the Trustee by any
Unit Holder (which may include the Sponsor) or until the
termination of the Trust pursuant to the Indenture.
Portfolio Summary
Since the Trust consists of common stocks, an
investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common
stock. The risks of investing in common stock include risks
associated with the rights to receive payments from the issuer
which are generally inferior to creditors of, or holders of
debt obligations or preferred stocks issued by, the issuer.
Holders of common stock have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board
of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of
preferred stocks have the right to receive dividends at a fixed
rate when and as declared by the issuer's board of directors,
normally on a cumulative basis. Dividends on cumulative
preferred stock must be paid before any dividends are paid on
common stock and any cumulative preferred stock dividend which
has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks
B-4
<PAGE>
are also entitled to rights on liquidation which are senior to
those of common stock. For these reasons, preferred stocks
generally entail less risk than common stock. Moreover, common
stock does not represent an obligation of the issuer and
therefore does not offer any assurance of income or provide the
degree of protection of capital debt securities. The issuance
of debt securities or even preferred stock by an issuer will
create prior claims for payment of principal, interest and
dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with
respect to assets of the issuer upon liquidation or bankruptcy.
Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be
subject to market fluctuations prior thereto), common stock has
neither a fixed principal amount nor a maturity and has a value
which is subject to market fluctuations for as long as the
common stock remains outstanding. The value of the common
stocks in the Trust thus may be expected to fluctuate over the
life of the Trust to values higher or lower than those
prevailing on the Date of Deposit.
The value of the Units will fluctuate depending on
all the factors that have an impact on the economy and the
equity markets. These factors similarly impact on the ability
of an issuer to distribute dividends. There is no assurance
that any dividends will be declared or paid in the future on
the Securities. The Trust is not a "managed" registered
investment company and Securities will not be sold by the
Trustee as a result of ordinary market fluctuations. The
Sponsor may direct the disposition by the Trustee of Securities
only upon the occurrence of certain events. (See "Sponsor --
Responsibility.")
The Trust consists of the Securities (and/or
contracts to purchase such Securities together with an
irrevocable letter or letters of credit for the purchase of
such contracts and/or cash (or a letter of credit in lieu of
cash) with instructions to purchase such Securities) listed
under Part A -- "Schedule of Portfolio Securities" herein, and
the Securities deposited upon the creation of additional Units
as set forth above and substitute Securities acquired by the
Trust as long as such Securities may continue to be held from
time to time in the Trust together with uninvested cash
realized from the disposition of Securities. Neither the
Sponsor nor the Trustee will be liable in any way for any
default, failure or defect in any Securities.
B-5
<PAGE>
All of the Securities are publicly traded on the New
York Stock Exchange. The contracts to purchase Securities
deposited initially in the Trust are expected to settle in five
business days, in the ordinary manner for such Securities.
Settlement of the contracts for Securities is thus expected to
take place prior to the settlement of Units purchased on the
date of this prospectus.
TAX STATUS OF THE TRUST
In the opinion of Cahill Gordon & Reindel, special
counsel for the Sponsor, under existing Federal income tax law:
The Trust is not an association taxable as a
corporation for Federal income tax purposes, and income
received by the Trust will be treated as income of the
Unit Holders in the manner set forth below.
Each Unit Holder will be considered the owner of a
pro rata portion of each asset in the Trust under the
grantor trust rules of Sections 671-678 of the Internal
Revenue Code of 1986, as amended (the "Code"). A Unit
Holder should determine the tax cost for each asset
represented by the Holder's Units by allocating the total
cost for such Units among the assets in the Trust
represented by the Units in proportion to the relative
fair market values thereof on the date the Unit Holder
purchases such Units.
A Unit Holder will be considered to have received all
of the dividends paid on the Holder's pro rata portion of
each Security when such dividends are received by the
Trust. In the case of corporate Unit Holder, such
dividends will qualify for the 70% dividends received
deduction for corporations to the same extent as though
the dividend paying stock were held directly by the
corporate Unit Holder. An individual Unit Holder who
itemizes deductions will be entitled to an itemized
deduction for the Holder's pro rata share of fees and
expenses paid by the Trust as though such fees and
expenses were paid directly by the Unit Holder, but only
to the extent that this amount together with the Unit
Holder's miscellaneous deductions exceeds 2% of the
Holder's adjusted gross income. A corporate Unit Holder
will not be subject to this 2% floor.
Under the position taken by the Internal Revenue
Service in Revenue Ruling 90-7, a distribution by the
Trustee to a Unit Holder (or to the Holder's agent) of
B-6
<PAGE>
such Holder's pro rata share of the Securities in kind
upon redemption or termination of the Trust will not be a
taxable event to the Unit Holder. Such Unit Holder's
basis for Securities so distributed will be equal to the
Holder's basis for the same Securities (previously
represented by the Holder's Units) prior to such
distribution and the holding period for such Securities
will be the shorter of the period during which the Unit
Holder held the Units and the period for which the
Securities were held in the Trust. A Unit Holder will
have a taxable gain or loss, which will be a capital gain
or loss except in the case of a dealer, when the Unit
Holder disposes of such Securities in a taxable transfer.
Under the income tax laws of the State and City of
New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as
the income of the 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. 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.
Each Unit Holder should consult his, her or its tax
advisor with respect to the application of the above general
information to his, her or its own personal situation.
RETIREMENT PLANS
Units of the Trust may be suited for purchase by
Individual Retirement Accounts and pension plans or profit
sharing and other qualified retirement plans. Investors
considering participation in any such plan should review
specific tax laws and pending legislation relating thereto and
should consult their attorneys or tax advisors with respect to
the establishment and maintenance of any such plan.
B-7
<PAGE>
PUBLIC OFFERING OF UNITS
Public Offering Price
The Public Offering Price of the Units during the
initial public offering period and thereafter is computed by
determining the value (as set forth below) of the Securities in
the Trust, dividing such sum by the number of Units outstanding
and then adding a sales charge as set forth in the table under
"Volume Discount," herein. A proportionate share of money in
the Income and Principal Accounts and amounts receivable in
respect of stocks trading ex-dividend other than money required
to redeem previously tendered Units or money required to be
distributed to Unit Holder on a Distribution Date will be added
to the Public Offering Price. (See "Rights of Unit Holders --
Distributions.")
The Public Offering Price on the date of this
Prospectus or on any subsequent date will vary from the Public
Offering Price as of the Date of Deposit set forth in the
"Summary of Essential Information" in accordance with
fluctuations in the value of the Securities in the Trust.
The aggregate value of the Securities is determined
in good faith by the Trustee on each "Business Day" as defined
in the Indenture in the following manner: the evaluation is
generally based on the closing trade prices on the New York
Stock Exchange as of the Evaluation Time (unless the Trustee
deems these prices inappropriate as a basis for valuation) or,
B-8
<PAGE>
if there is no closing trade price at that time on that
exchange, at the mean between the closing bid and asked prices.
If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange, the
evaluation shall generally be based on the current bid price on
the over-the-counter market (unless the Trustee deems these
prices inappropriate as a basis for evaluation). If current
bid or closing prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the
Securities on the bid side of the market or by such other
appraisal deemed appropriate by the Trustee, (c) on the basis
of the last trade price of the Security or (d) by any
combination of the above, each as of the Evaluation Time.
Public Distribution
During the initial public offering period (i) for
Units issued on the Date of Deposit and (ii) for additional
Units issued after such date in respect of additional deposits
of Securities, Units will be distributed to the public by the
Sponsor and through dealers at the Public Offering Price,
calculated on each business day. The initial offering period
is 30 days unless all Units are sold prior thereto, whereupon
the initial public offering period will terminate. The initial
public offering period may be extended by the Sponsor so long
as additional deposits are being made or Units remain unsold.
Upon termination of the initial offering period, in each case,
unsold Units or Units acquired by the Sponsor in the secondary
market referred to below may be offered to the public by this
Prospectus at the then current Public Offering Price calculated
daily.
The Sponsor intends to qualify Units in states
selected by the Sponsor for sale by the Sponsor and through
dealers who are members of the National Association of
Securities Dealers, Inc. Sales to dealers will be made at
prices which include a concession of % per Unit, but subject
to change from time to time at the discretion of the Sponsor
(such price does not include volume purchase discounts, which
are available only to non-dealer purchasers). The Sponsor
reserves the right to reject, in whole or in part, any order
for the purchase of Units.
A dealer will receive a concession of % of the
sales charge per Unit upon a sale to such dealer of or
more Units and such dealer will continue to receive a
concession of % on all other purchases from the Sponsor
during the initial offering period. In addition, a dealer who
B-9
<PAGE>
purchases or more Units on the initial date of the
offering, for such initial purchase only, will receive a dealer
concession of % of the sales charge.
Secondary Market
While not obligated to do so, it is the Sponsor's
present intention to maintain a secondary market for Units of
the Trust and to offer continuously to repurchase Units from
Unit Holders at the Sponsor's Repurchase Price which price,
subject to change at any time, will be computed by adding
(a) the aggregate value as of the Evaluation Time of Securities
in the Trust, (b) amounts in the Trust including dividends
receivable on stocks trading ex-dividend and (c) all other
assets in the Trust; deducting therefrom the sum of (x) taxes
or other governmental charges against the Trust not previously
deducted, (y) accrued fees and expenses of the Trustee
(including legal and auditing expenses) and counsel and certain
other expenses and (z) amounts for distribution to Unit Holders
of record as of a date prior to the evaluation; and dividing
the result of such computation by the number of Units
outstanding as of the date thereof. The Sponsor, of course,
does not in any way guarantee the enforceability, marketability
or price of any Securities in the Portfolio or of the Units.
There is no sales charge incurred when a Unit Holder sells
Units back to the Sponsor. Any Units repurchased by the
Sponsor may be reoffered to the public by the Sponsor at the
then current Public Offering Price. The Sponsor will become
the owner of Units repurchased as of the trade date. 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 wishing to
dispose of their Units may redeem their Units through the
Trustee. (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.") The Sponsor may, of
course, redeem any Units that it has purchased in the secondary
market to the extent that it determines that it is undesirable
to continue to hold such Units in its inventory. Factors which
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the Sponsor will consider in making such a determination will
include the number of units of all series of unit trusts which
it has in its inventory, the saleability of such units and its
estimate of the time required to sell such units and general
market conditions.
Profit of Sponsor
The Sponsor receives a sales charge as set forth in
the table below in the primary market and secondary market.
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 the Trust. (For the amount
of such difference on the initial deposit, see Part A --
"Summary of Essential Information.") The Sponsor may also
realize profits or sustain losses in respect of Securities
which were acquired from the Sponsor or from underwriting
syndicates of which it was a member. (See Part A -- "Portfolio
Summary as of the Date of Deposit.") An underwriter or
underwriting syndicate purchases common stock from the issuer
on a negotiated or competitive bid basis as principal with the
motive of marketing such common stock to investors at a profit.
In addition, the Sponsor may realize profits (or sustain
losses) due to daily fluctuations in the value 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 Securities may be used in the Sponsor's
business to the extent permitted by applicable regulations and
may be of benefit to the Sponsor.
The Sponsor may also realize profits (or sustain
losses) while maintaining a secondary market in the Units, in
the amount of any difference between the prices at which the
Sponsor buys Units and the prices at which the Sponsor resells
such Units or the prices at which the Sponsor redeems such
Units, as the case may be.
Volume Discount
Although under no obligation to do so, the Sponsor
intends to permit volume purchasers of Units to purchase Units
at a reduced sales charge. The Sponsor may at any time upon
prior notice to Unit Holders change the amount by which the
sales charge is reduced, or may discontinue the discount
altogether.
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The sales charges for the Trust in the primary and
secondary market will be reduced pursuant to the following
graduated scale for sales to any person of at least [ ]
Units.
_______Primary Market______ ______Secondary Market_____
Percent of Percent of Percent of Percent of
Public Offering Net Amount Public Offering Net Amount
Price Invested Price Invested
Purchases
___Units % % % %
___Units % % % %
___Units % % % %
Over
___Units % % % %
The reduced sales charges as shown on the chart above
will apply to such purchases of Units in any fourteen-day
period which qualify for the volume discount by the same
person, including a partnership or corporation, other than a
dealer, in the amounts stated herein, and for this purpose,
purchases of Units of this Trust will be aggregated with
concurrent purchases of Units of any other trust that may be
offered by the Sponsor.
Units held in the name of the purchaser's spouse, 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 in the name of the
purchaser. The reduced sales charges are also applicable to a
trustee or other fiduciary, including a partnership or
corporation, purchasing Units for a single trust estate or
single fiduciary account.
Employee Discount
The Sponsor intends, at the discretion of the
Sponsor, to permit employees of Prudential Securities
Incorporated and its subsidiaries and affiliates to purchase
Units of the Trust at a price equal to the net asset value of
the Securities in the Trust divided by the number of Units
outstanding plus a reduced sales charge of $5.00 per [ ]
Units, subject to a limit of 5% of the Units.
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of
their Units of this Series of the National Equity Trust for
units of one or more of any other series in the Prudential
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Securities Incorporated family of unit investment trusts or for
any units of any additional trusts that may from time to time
be made available for such exchange by the Sponsor
(collectively referred to as the "Exchange Trusts"). Such
units may be acquired at prices based on reduced sales charges
per unit. The purpose of such reduced sales charge is to
permit the Sponsor to pass on to the Unit Holder who wishes to
exchange Units the cost savings resulting from such exchange of
Units. The cost savings result from reductions in the time and
expense related to advice, financial planning and operational
expense required for the Exchange Option.
Exchange Trusts may have different investment
objectives; a Unit Holder should read the prospectus for the
applicable Exchange Trust carefully to determine its investment
objective prior to exercise of this option.
This option will be available provided the Sponsor
maintains a secondary market in both the Units of this Series
and units of the applicable Exchange Trust and provided that
units of the applicable Exchange Trust are available for sale
and are lawfully qualified for sale in the jurisdiction in
which the Unit Holder is a resident. While it is the Sponsor's
present intention to maintain a secondary market for the units
of all such trusts, there is no obligation on its part to do
so. Therefore, there is no assurance that a market for units
will in fact exist on any given date on which a Unit Holder
wishes to sell or exchange his Units; thus there is no
assurance that the Exchange Option will be available to any
Unit Holder. The Sponsor reserves the right to modify, suspend
or terminate this option at any time without further notice to
Unit Holders. In the event the Exchange Option is not
available to a Unit Holder at the time he wishes to exercise
it, the Unit Holder will be immediately notified and no action
will be taken with respect to his Units without further
instruction from the Unit Holder.
To exercise the Exchange Option, a Unit Holder should
notify the Sponsor of his desire to exchange his Units for one
or more units of the Exchange Trusts. If units of the
applicable outstanding series of the Exchange Trust are at that
time available for sale, the Unit Holder may select the series
or group of series for which he desires his Units to be
exchanged. The Unit Holder will be provided with a current
prospectus or prospectuses relating to each series in which he
indicates interest.
Units of the Exchange Trust trading in the secondary
market maintained by the Sponsor, if so maintained, will be
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sold to the Unit Holder at a price equal to the aggregate bid
side evaluation per unit of the securities in that portfolio
and the applicable sales charge of $15 per unit of the Exchange
Trust for a trust with a 1 unit minimum purchase. The reduced
sales charge for units of any Exchange Trust acquired during
the initial offering period for such units will result in a
price for such units equal to the offering side evaluation per
unit of the securities in the Exchange Trust's portfolio plus
accrued interest plus a reduced sales charge of $25 per
Exchange Trust unit. Exchange transactions will be effected
only in whole units; thus, any proceeds not used to acquire
whole units will be paid to the exchanging Unit Holder unless
the Unit Holder adds the amount of cash necessary to purchase
one additional whole Exchange Trust unit.
Owners of units of any registered unit investment
trust, other than Prudential Securities Incorporated sponsored
trusts, which was initially offered at a minimum applicable
sales charge of 3.0% of the public offering price exclusive of
any applicable sales charge discounts, may elect to apply the
cash proceeds of sale or redemption of those units directly to
acquire units of any Exchange Trust trading in the secondary
market at the reduced sales charge of $20 per Unit, subject to
the terms and conditions applicable to the Exchange Option.
Units of any Exchange Trust acquired during the initial
offering period for such units may be sold at a price equal to
the ask side evaluation per unit of the securities in the
Portfolio plus a reduced sales charge of $25 per unit. To
exercise this option, the owner should notify his retail
broker. He will be given a prospectus of each series in which
he indicates interest, units of which are available. The
Sponsor reserves the right to modify, suspend or terminate the
option at any time without further notice, including the right
to increase the reduced sales charge applicable to this option
(but not in excess of $5 more per unit than the corresponding
fee then charged for a unit of an Exchange Trust which is being
exchanged).
For example, assume that a Unit Holder, who has three
units of a Trust with a 4.25% sales charge and a current price
of $1,100 per unit, sells his units and exchanges the proceeds
for units of a series of an Exchange Trust with a current price
of $950 per unit and an ordinary sales charge of 4.25%. The
proceeds from the Unit Holder's units will aggregate $3,300.
Since only whole units of an Exchange Trust may be purchased
under the Exchange Option, the Holder would be able to acquire
four units in the Exchange Trust for a total cost of $3,860
($3,800 for units and $60 for the $15 per unit sales charge) by
adding an extra $560 in cash. Were the Unit Holder to acquire
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the same number of units at the same time in the regular
secondary market maintained by the Sponsor, the price would be
$3,968.68 [$3,800 for the units and $168.68 for the 4.25% sales
charge (4.439% of the net amount invested)].
Federal Income Tax Consequences
An exchange of Units pursuant to the Exchange Option
will generally constitute a "taxable event" under the Code,
i.e., a Unit Holder will recognize gain or loss at the time of
the exchange. However, an exchange of Units of this Series of
the National Equity Trust for units of any other series of the
Exchange Trusts which are grantor trusts for United States
federal income tax purposes will not constitute a taxable event
to the extent that the underlying securities in each trust do
not differ materially in kind or extent. Unit Holders are
advised to consult their own tax advisors as to the tax
consequences of exchanging Units in their particular case.
REINVESTMENT PROGRAM
Unit Holders may elect to have the distributions with
respect to their Units automatically reinvested in additional
Units of the Trust without a sales charge. The Unit Holder may
participate in the Trust's reinvestment program (the "Program")
by filing with the Trustee a written notice of election. The
Unit Holder's completed notice of election to participate in
the Program must be received by the Trustee at least ten days
prior to the Record Date applicable to any distribution in
order for the Program to be in effect as to such distribution.
Elections may be modified or revoked on similar notice.
Such distributions, to the extent reinvested in the
Trust, will be used by the Trustee at the direction of the
Sponsor in one or both of the following manners. (i) The
distributions may be used by the Trustee to purchase Units of
this Series of the Trust held in the Sponsor's inventory. The
purchase price payable by the Trustee for each of such Units
will be equal to the applicable Trust evaluation per Unit on
(or as soon as possible after) the close of business on the
Distribution Date. The Units so purchased by the Trustee will
be issued or credited to the accounts of Unit Holders
participating in the Program (ii) If there are no Units in the
Sponsor's inventory, the Sponsor may purchase additional
Securities for deposit into the Trust (as described in Part B,
"The Trust"). The additional Securities with any necessary
cash will be deposited by the Sponsor with the Trustee in
exchange for new Units. The distributions may then be used by
the Trustee to purchase the new Units from the Sponsor. The
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price for such new Units will be the applicable Trust
evaluation per Unit on (or as soon as possible after) the close
of business on the Distribution Date. (See "Public Offering of
Units - Public Offering Price.") The Units so purchased by the
Trustee will be issued or credited to the accounts of Unit
Holders participating in the Program. The Sponsor may
terminate the Program if it does not have sufficient Units in
its inventory or if it is no longer deemed practical to create
additional Units.
No fractional Units will be issued under any
circumstances. If, after the maximum number of full Units has
been issued or credited at the applicable price, there remains
a portion of the distribution which is not sufficient to
purchase a full Unit at such price, the Trustee will distribute
such cash to Unit Holders. The cost of administering the
reinvestment program will be borne by the Trust and thus will
be borne indirectly by all Unit Holders.
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<PAGE>
AUTHORIZATION FOR REINVESTMENT
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
I hereby elect to participate in the Reinvestment Program and
do authorize United States Trust Company of New York, Trustee,
to immediately invest all distributions during the life of the
Trust into Units of the Trust.
The foregoing authorization is subject in all respects to the
terms and conditions of participation set forth in the National
Equity Trust Select Five Portfolio Series 1 prospectus and
shall remain in effect until such time as I notify United
States Trust Company of New York to the contrary in writing.
____________________________________________________________
Soc. Sec./Tax I.D. No.: _________________
Exact registration as it
appears on your Units: ________________________________
________________________________
________________________________
________________________________
Street address: ________________________________
City, State, Zip Code ________________________________
Unit Holder Signature(s): ________________ Date: _________
(all joint holders must sign)
____________________________________________________________
REINVESTMENT ADDRESS
US Trust Company
Attn: Dividend Reinvestment - Dept. A
P.O. Box 834
New York, N.Y. 10003
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TERMINATION OPTIONS
A Unit Holder who so elects by notifying the Sponsor
prior to the Termination Date (see Part A-"Summary of Essential
Information") will have his Units redeemed in kind on such
Termination Date by distribution of the Unit Holder's pro rata
share of the Securities to the Distribution Agent which will
act on behalf of and as agent for the Unit Holder and the
distributed Securities will be disposed of on behalf of such
Unit Holder in accordance with one or more of the following
three options as elected by such Unit Holder:
1. to have such underlying Securities distributed
in kind no later than the business day next following the
Termination Date. Unit Holders subsequently selling such
distributed Securities will incur brokerage costs when
disposing of such Securities;
2. to receive the Unit Holder's pro rata share of
the cash received by the Distribution Agent (less
expenses) upon the sale by the Distribution Agent of the
underlying Securities attributable to Unit Holders
electing this option over a period not to exceed 20
business days immediately following the Termination Date.
Amounts received by the Distribution Agent over such 20
business day period representing the proceeds of the
underlying Securities sold will be held by the
Distribution Agent in accounts which are non-interest
bearing to Unit Holders and which are available for use by
the Distribution Agent pursuant to normal banking
procedures and will be distributed to Unit Holders upon
the settlement of the trade for the last Security to be
sold; and/or, if offered,
3. to invest the proceeds from the sale of the
underlying Securities attributable to Unit Holders
electing this option, as received by the Distribution
Agent upon the sale of such underlying Securities over a
period not to exceed 20 business days immediately
following the Termination Date, in units of a subsequent
series of Prudential Equity Trust Shares (the "New
Series"). The Units of a New Series will be purchased by
the Unit Holder upon the settlement of the trade for the
last Security to be sold. Such purchaser will be entitled
to a reduced sales load upon the purchase of units of the
New Series. It is expected that the terms of the New
Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar
options in a subsequent series of the Trust will occur in
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each new series of the Trust approximately one year after
that new series' creation. The availability of this
option does not constitute a solicitation of an offer to
purchase Units of a New Series or any other security. A
Unit Holder's election to participate in this option will
be treated as an indication of interest only. At any time
prior to the purchase by the Unit Holder of units of a New
Series such Unit Holder may change his investment strategy
and receive, in cash, the proceeds of the sale of the
Securities.
Under each option a Unit Holder will receive the
Redemption Price per Unit (net asset value) determined as of
the Evaluation Time on the Termination Date. If the Sponsor
effects the sales of underlying securities for the Distribution
Agent in the case of the second and third option over a period
not to exceed 20 business days immediately following the
Termination Date, the Sponsor will effect such sales free of
brokerage commissions. If the Sponsor does not effect such
sales, the proceeds of any such sales of Securities will be
reduced by any applicable commissions. The sale arrangement is
one in which United States Trust Company will be selling the
Securities as agent for the Unit Holder and is separate from
the Trust which terminates on the Termination Date. The
Sponsor, on behalf of the Distribution Agent if the Sponsor
effects such sales, or the Distribution Agent if the Sponsor
does not, will, unless prevented by unusual and unforeseen
circumstances, such as, among other reasons, a suspension in
trading of a Security, the close of a stock exchange, outbreak
of hostilities and collapse of the economy, sell on each
business day during the 20 business day period at least a
number of shares of each Security which then remains in the
portfolio (based on the number of shares of each issue in the
portfolio) multiplied by a fraction the numerator of which is
one and the denominator of which is the number of days
remaining in the 20 business day sales period. The proceeds of
sale will not be distributed by the Distribution Agent until
the settlement of the trade upon the sale of the last Security
during the 20 business day period. Since, as of the
Termination Date, the Unit Holder's interest in the Trust will
have been distributed to the Distribution Agent as agent for
the Unit Holder such Units will have been cancelled and will
have ceased to exist.
Depending on the amount of proceeds to be invested in
Units of the New Series and the amount of other orders for
Units in the New Series, the Sponsor may purchase a large
amount of securities for the New Series in a short period of
time. The Sponsor's buying of securities may tend to raise the
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market prices of these securities. The actual market impact of
the Sponsor's purchases, however, is currently unpredictable
because the actual amount of securities to be purchased and the
supply and price of those securities is unknown. A similar
problem may occur in connection with the Distribution Agent's
sales of Securities during the 20 business day period
immediately following the Termination Date; depending on the
number of sales required, the price of and demand for
Securities, the Trustee's sales may tend to depress the market
prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying
Securities over a 20 business day period as described above is
in the best interest of a Unit Holder and may mitigate the
negative market price consequences stemming from the trading of
large amounts of Securities. The Sponsor, in implementing such
sales of securities on behalf of the Distribution Agent, will
seek to maximize the sales proceeds and will act in the best
interest of the Unit Holder. The proceeds of the sale of the
Securities will be in an amount equal to amounts realized upon
the sale of the Securities over the 20 business day period.
There can be no assurance, however, that any adverse price
consequences of heavy trading will be mitigated.
Unit Holders who do not elect as set forth above will
have their Units redeemed on the Termination Date and be deemed
to have elected to receive the cash proceeds from the sale of
such Unit Holder's pro rata share of the underlying Securities
(option number 2).
It should also be noted that Unit Holders will
realize taxable capital gains or losses on the liquidation of
the Securities representing their Units, but, due to the
procedures for investing in the New Series, no cash would be
distributed at that time to pay any taxes.
The Sponsor may for any reason, in its sole
discretion, decide not to sponsor any subsequent series of the
Trust, without penalty or incurring liability to any Unit
Holder. If the Sponsor so decides, the Sponsor will notify the
Trustee of that decision, and the Trustee will notify the Unit
Holders before the Termination Date. All Unit Holders will
then elect either option 1 or option 2.
By electing to reinvest in the New Series, the Unit
Holder indicates his interest in having his terminating
distribution from the Trust invested only in the New Series
created next following termination of the Trust; the Sponsor
expects, however, that a similar reinvestment program will be
offered with respect to all subsequent series of the Trust,
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thus giving Unit Holders a yearly opportunity to elect to
"rollover" their terminating distributions into a New Series.
The availability of the reinvestment privilege does not
constitute a solicitation of offers to purchase units of a New
Series or any other security. A Unit Holder's election to
participate in the reinvestment program will be treated as an
indication of interest only. The Sponsor intends to coordinate
the date of deposit of a future series so that the terminating
trust will terminate contemporaneously with the creation of a
New Series.
The Sponsor reserves the right to modify, suspend or
terminate the reinvestment privilege at any time.
EXPENSES AND CHARGES
Initial Expenses
All expenses and charges incurred prior to or in the
establishment of a Trust including the cost of the initial
preparation, printing and execution of the Indenture, 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 Sponsor's fee (the "Supervisory Fee"), earned for
portfolio supervisory services, is based upon the largest
number of Units outstanding during the life of the Trust. The
Supervision Fee is as set forth in Part A, "Summary of
Essential Information" and may exceed the actual costs of
providing portfolio supervisory services for this Trust, but at
no time will the total amount the Sponsor receives for
portfolio supervisory services rendered to all series of the
National Equity Trust in any calendar year exceed the aggregate
cost to it of supplying such services in such year. 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." The Trustee's
fee accrues monthly and is payable quarterly on or before each
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Distribution Date from the Income Account, to the extent funds
are available and thereafter from the Principal Account. Such
fee may be increased without approval of the Unit Holders in
proportion to increases under the classification "All Services
Less Rent" in the Consumer Price Index published by the United
States Department of Labor but such fee will not be increased
in excess of increases in the Trustee's costs. The Trustee
also receives benefits to the extent that it holds funds on
deposit in various non-interest bearing accounts created under
the Indenture.
Other Charges
The following additional charges are or may be
incurred by the Trust as more fully described in the Indenture:
(a) fees of the Trustee for extraordinary services, (b)
expenses of the Trustee (including legal and auditing expenses)
and of counsel designated by the Sponsor, (c) various
governmental charges, (d) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and
interests of the Unit Holders, (e) indemnification of the
Trustee for any losses, liabilities or expenses incurred by it
in the administration of the Trust without gross negligence,
bad faith, willful misfeasance or willful misconduct on its
part or reckless disregard of its obligations and duties, (f)
indemnification of the Sponsor for any losses, liabilities and
expenses incurred in acting as Sponsor or Depositor under the
Indenture without gross negligence, bad faith, willful
misfeasance or willful misconduct or reckless disregard of its
obligations and duties, (g) expenditures incurred in contacting
Unit Holders upon termination of the Trust and (h) to the
extent then lawful, expenses (including legal, auditing and
printing expenses) of maintaining registration or qualification
of the Units and/or the Trust under Federal or State securities
laws so long as the Sponsor is maintaining a market for the
Units.
The fees and expenses set forth herein are payable
out of the Trust and when paid by or owing to the Trustee are
secured by a lien on the property of the Trust. If the balance
in the Income and Principal Accounts are insufficient to
provide for amounts payable by the 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 various Securities in the Trust may
change. Such sales might be required at a time such as to
result in lower prices than might otherwise be realized.
Moreover, due to the minimum proceeds of sale of a Security the
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proceeds of such sales may exceed the amount necessary for the
payment of such fees and expenses.
RIGHTS OF UNIT HOLDERS
Ownership of Units
Unit Holders are required to hold their Units in
uncertificated form. The Trustee will credit a Unit Holder's
account with the number of Units held by the Unit Holder.
Units are transferable only on the records of the Trustee upon
presentation of evidence satisfactory to the Trustee for each
transfer and any sums payable for taxes or other governmental
charges imposed upon these transactions and compliance with the
formalities necessary to redeem Units.
Certain Limitations
The death or incapacity of any Unit Holder will not
operate to terminate the Trust nor entitle the legal
representatives or heirs of such Unit Holder to claim an
accounting or to take any other action or proceeding in any
court for a partition or winding up of the Trust.
No Unit Holder shall have the right to vote except
with respect to removal of the Trustee or amendment and
termination of the Trust as prescribed in the Indenture (see
"Administration of the Trust -- Amendment" and "Administration
of the Trust -- Termination"). Unit Holders shall have no
right to control the operation or administration of the Trust
in any manner.
Distributions
Cash amounts received by the Trust will be
distributed as set forth below on a pro rata basis to Unit
Holders of record as of the preceding Record Date. All
distributions will be net of applicable expenses and funds
required for the redemption of Units. (See "Summary of
Essential Information," "Expenses and Charges" and "Rights of
Unit Holders -- Redemption.") Because the expenses of the
Trust may exceed the dividend income received by the Trust
there can be no assurance that there will be any amounts
available for distribution to Unit Holders. See "Expenses and
Charges -- Other Charges."
The Trustee will credit to the Income Account all
cash dividends received by and payable to the Trust. Other
cash receipts will be credited to the Principal Account. The
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pro rata share of the Income Account and the pro rata share of
cash in the Principal Account represented by each Unit will be
computed by the Trustee as of the Record Date. (See "Summary
of Essential Information" in Part A.) Proceeds received from
the disposition of any of the Securities not used to redeem
Units or pay Trust expenses will be distributed on the fifth
business day following the receipt of such proceeds to Unit
Holders of record on the business day following the receipt of
such proceeds by the Trustee. The distribution to Unit Holders
as of each Record Date will be made on the following
Distribution Date or shortly thereafter (approximately 15 days
after the Record Date) and shall consist of an amount equal to
such Unit Holders' pro rata share of the income credited to the
Income Account after deducting estimated expenses (the "Income
Distribution"). 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 $[ ] per 100 Units. 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.
As of each Distribution Date the Trustee will deduct
from the Income Account and, to the extent funds are not
sufficient therein, from the Principal Account, amounts
necessary to pay the expenses of the Trust. (See "Expenses and
Charges.") The Trustee may also withdraw from 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 Income 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.")
Reports and Records
With each distribution, the Trustee will furnish to
the Unit Holders a statement of the amount of dividends and
other receipts, if any, distributed, expressed in each case as
a dollar amount per Unit.
B-24
<PAGE>
Within a reasonable time after the end of each
calendar year, the Trustee will furnish to each person who was
a Unit Holder of record at any time during the calendar year a
statement setting forth: (1) as to the Income Account:
dividends and other cash amounts received, deductions for
payment of applicable taxes and for fees and expenses of the
Trust, redemptions of Units, and the balance remaining after
such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such
calendar year; (2) as to the Principal Account: the dates of
disposition and identity of any Securities and the net proceeds
received therefrom, deductions for payments of applicable taxes
and for fees and expenses of the Trust 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 Income
Account and from the Principal Account, separately stated,
expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding on the
last business day of such calendar year. 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, a current list of Securities in the portfolio and a
copy of the Indenture.
Redemption
Tender of Units
Units may be tendered to the Trustee for redemption
at its unit investment trust office at 770 Broadway, New York,
New York 10003, upon delivery of a request for redemption and
the Certificates for the Units requested to be redeemed and
payment of any relevant tax. No redemption fee will be charged
B-25
<PAGE>
by the Sponsor or the Trustee. Units redeemed by the Trustee
will be cancelled.
Unit Holders must have their 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, a Unit Holder (including the
Sponsor) will be entitled to receive in kind an amount for each
Unit tendered equal to the Redemption Price per Unit computed
as of the Evaluation Time set forth in the "Summary of
Essential Information" in Part A on the date of tender (see
"Redemption -- Computation of Redemption Price per Unit"). The
"date of tender" is deemed to be the date on which Units are
received by the Trustee, except that as regards Units received
after the Evaluation Time, the date of tender is the next day
on which 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.
The Trustee will redeem Units in kind. A Unit Holder
will be able (except during a period described below), not
later than the seventh calendar day following such tender (or
if the seventh calendar day is not a business day on the first
business day prior thereto), to receive in kind an amount per
Unit equal to the Redemption Price per Unit as determined as of
the day of tender. In kind distributions (the "In Kind
Distribution") will take the form of whole shares of
Securities. Cash will be distributed in lieu of fractional
shares and will be distributed in cash. The cash and the whole
shares will aggregate an amount equal to the Redemption Price
per Unit.
Distributions in kind on redemption of Units shall be
held by United States Trust Company of New York, as the
Distribution Agent, whom each Unit Holder shall be deemed to
have designated as his agent upon purchase of a Unit, for the
account, and for disposition in accordance with the
instructions of, the tendering Unit Holder as follows:
(a) If the tendering Unit Holder requests cash
payment, the Distribution Agent shall sell the In Kind
B-26
<PAGE>
Distribution as of the close of business on the date of
tender or as soon thereafter as possible and remit to the
Unit Holder not later than seven calendar days thereafter
the net proceeds of sale, after deducting brokerage
commissions and transfer taxes, if any, on the sale. The
Distribution Agent may sell the Securities through the
Sponsor, and the Sponsor may charge brokerage commissions
on those sales. Since these proceeds will be net of
brokerage commissions, Unit Holders who wish to receive
cash for their Units should always offer them for sale to
the Sponsor in the secondary market before seeking
redemption by the Trustee. The Trustee may offer Units
tendered to it for redemption and cash liquidation to the
Sponsor on behalf of any Unit Holder, to obtain this more
favorable price for the Unit Holder.
(b) If the tendering Unit Holder requests
distribution in kind, the Trustee shall sell any portion
of the In Kind Distribution represented by fractional
interests in shares in accordance with the foregoing and
distribute the net cash proceeds plus any other
distributable cash to the tendering Unit Holder together
with certificates representing whole shares of each of the
Securities comprising the In Kind Distribution. (In a
case in which the Unit Holder requests a distribution in
kind, the Trustee may, in lieu of distributing Securities
in kind to the Unit Holder, offer the Sponsor the
opportunity to acquire the tendered Units in exchange for
the number of shares of each Security and cash which the
Unit Holder is otherwise entitled to receive from the
Trust. The federal income tax consequences to the Unit
Holder would be identical in either case.)
Any amounts paid on redemption representing income
received will be withdrawn from the Income Account to the
extent funds are available. In addition, in implementing the
redemption procedures described above, the Trustee and the
Distribution Agent shall make any adjustments necessary to
reflect differences between the Redemption Price of the Units
and the value of the In Kind Distribution in whole shares as of
the date of tender. To the extent that Units are redeemed, the
size of the Trust will be reduced.
The right of redemption may be suspended and payment
of the Redemption Price per Unit postponed for more than seven
calendar days following a tender of Units for redemption for
any period during which the New York Stock Exchange is closed,
other than for weekend and holiday closing, or trading on that
Exchange is restricted or during which (as determined by the
B-27
<PAGE>
Securities and Exchange Commission) an emergency exists as a
result of which disposal or evaluation of the Securities is not
reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
Neither the Trustee nor the Sponsor is liable to any person or
in any way for any loss or damage that may result from any such
suspension or postponement.
Purchase by the Sponsor of Units
Tendered for Redemption_________
The Indenture requires that the Trustee notify the
Sponsor of any tender of Units for redemption. So long as the
Sponsor is maintaining a secondary market for Units, the
Sponsor, prior to the close of business on the day of tender,
may purchase any Units tendered to the Trustee for redemption
by making payment therefor to the Unit Holder in an amount not
less than the Redemption Price and not later than the day on
which the Units would otherwise have been redeemed by the
Trustee, i.e., the Unit Holder will receive the Redemption
Price from the Sponsor within 7 days of the date of tender (see
"Public Offering of Units -- Secondary Market"). Units held by
the Sponsor may be tendered to the Trustee for redemption as
any other Units. The offering price of any Units resold by the
Sponsor will be the Public Offering Price determined in the
manner provided in this Prospectus (see "Public Offering of
Units -- Public Offering Price"). Any profit resulting from
the resale of such Units will belong to the Sponsor, which
likewise will bear any loss resulting from a reduction in the
offering or redemption price subsequent to its acquisition of
such Units (see "Public Offering of Units -- Profit of
Sponsor").
Computation of Redemption Price per Unit
The Redemption Price per Unit of the Trust is
determined by the Trustee 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,
(2) cash on hand in the Trust including dividends receivable on
stocks trading ex-dividend as of the date of computation and
(3) any other assets of the Trust, less (a) amounts
representing taxes or governmental charges payable out of a
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.
B-28
<PAGE>
The aggregate value of the Securities is determined
in good faith by the Trustee in the following manner: the
evaluation is generally based on the closing trade prices as of
the Evaluation Time on the New York Stock Exchange (unless the
Trustee deems these prices inappropriate as a basis for
valuation) or, if there is no closing trade price on that
exchange, at the mean between the closing bid and asked prices.
If the Securities are not so listed or, if so listed and the
principal market therefor is other than on that exchange, the
evaluation shall generally be based on the current bid price on
the over-the-counter market (unless the Trustee deems these
prices inappropriate as a basis for evaluation). If current
bid or closing prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the
Securities on the bid side of the market or by such other
appraisal deemed appropriate by the Trustee, (c) on the basis
of the last trade price of the Security or (d) by any
combination of the above, each as of the Evaluation Time.
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 Security Fund, Inc.,
Prudential California Municipal Fund (California Series),
Prudential Equity Fund, Prudential Equity Income Fund,
B-29
<PAGE>
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\ Plus Fund, Inc., Prudential
Intermediate Global Income Fund, Inc., Prudential MultiSector
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.
Limitations on Liability
The Sponsor is liable for the performance of its
obligations arising from its responsibilities under the
Indenture, but will be under no liability to Unit Holders for
taking any action or refraining from taking any action in good
faith or for errors in judgment or be liable or responsible in
any way for any default, failure or defect in any Security or
for depreciation or loss incurred by reason of the sale of any
Securities, except in cases of willful misfeasance, bad faith,
gross negligence or reckless disregard for its obligations and
duties (see "Sponsor -- Responsibility").
Responsibility
The Trust is not a managed registered investment
company. Securities will not be sold by the Trustee to take
advantage of ordinary market fluctuations.
Although the Sponsor and Trustee do not presently
intend to dispose of Securities, the Indenture permits the
Sponsor to direct the Trustee to dispose of any Security upon
the happening of certain events, including, without limitation,
default under certain documents or other occurrences, including
legal actions which might adversely affect future declaration
and payment of dividends, institution of certain legal
proceedings, and a decline in market price to such an extent,
or such other adverse market or credit factor, as in the
opinion of the Sponsor would make retention of a Security
detrimental to the Trust and to the interests of the Unit
Holders. The Sponsor may instruct the Trustee to tender a
Security for cash or sell the Security on the open market when
in its opinion it is in the best interest of the Unit Holders
to do so in the event of a public tender offer or merger or
acquisition announcement.
B-30
<PAGE>
The Sponsor and/or an affiliate thereof intend to
continuously monitor developments affecting the Securities in
the Trust in order to determine whether the Trustee should be
directed to dispose of any such Securities.
It is the responsibility of the Sponsor to instruct
the Trustee to reject any offer made by an issuer of any of the
Securities to issue new securities in exchange and substitution
for any Security pursuant to a recapitalization or
reorganization, except that the Sponsor may instruct the
Trustee to accept such an offer or to take any other action
with respect thereto as the Sponsor may deem proper if the
Issuer failed to declare or pay or the Sponsor anticipates such
issuer will fail to pay or declare anticipated dividends with
respect thereto. If the Trust receives the securities of
another issuer as the result of a merger or reorganization of,
or a spin-off, or split-up by the issuer of a Security included
in the original portfolio, the Trust may under certain
circumstances hold those securities as if they were one of the
Securities initially deposited and adjust the proportionate
relationship accordingly for all future subsequent deposits.
Any securities so received in exchange or
substitution will be held by the Trustee subject to the terms
and conditions of the Indenture to the same extent as
Securities originally deposited thereunder. Within five days
after the deposit of securities in exchange or substitution for
any of the underlying Securities, the Trustee is required to
give notice thereof to each Unit Holder, identifying the
Securities eliminated and the Securities substituted therefor.
Except as otherwise set forth in the Prospectus, the
acquisition by the Trust of any securities other than the
Securities initially deposited is prohibited.
The proceeds resulting from the disposition of any
Security in the Trust will be distributed as set forth under
"Rights of Unit Holders -- Distributions" to the extent such
proceeds are not utilized for the purpose of redeeming Units or
paying Trust expenses.
Resignation
If at any time the Sponsor shall resign under the
Indenture or shall fail to perform or be incapable of
performing its duties thereunder or shall become bankrupt or
its affairs are taken over by public authorities, the Indenture
directs the Trustee to either (1) appoint a successor Sponsor
or Sponsors at rates of compensation deemed reasonable by the
Trustee not exceeding amounts prescribed by the Securities and
B-31
<PAGE>
Exchange Commission, (2) act as Sponsor itself without
terminating the Trust or (3) terminate the Trust. The Trustee
will promptly notify Unit Holders of any such action.
TRUSTEE
The Trustee is United States Trust Company of New
York, with its principal place of business at 114 West 47th
Street, New York, New York 10036 and a unit investment trust
office at 770 Broadway, New York, New York 10003. United
States Trust Company has, since its establishment in 1853,
engaged primarily in the management of trust and agency
accounts for individuals and corporations. The Trustee is a
member of the New York Clearing House Association and is
subject to supervision and examination by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance
Corporation and the Board of Governors of the Federal Reserve
System. In connection with the storage and handling of certain
Securities deposited in the Trust, the Trustee may use the
services of The Depository Trust Company. These services may
include safekeeping of the Securities and coupon-clipping,
computer book-entry transfer and institutional delivery
services. The Depository Trust Company is 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 in respect of any
evaluation or for any action taken in good faith reliance on
prima facie properly executed documents except in cases of
willful misfeasance, bad faith, gross negligence or reckless
disregard for its obligations and duties. In addition, the
Indenture provides that the Trustee shall not be personally
liable for any taxes or other governmental charges imposed upon
or in respect of the Trust which the Trustee may be required to
pay under current or future laws of the United States or any
other taxing authority having jurisdiction.
Responsibility
The Trustee shall not be liable for any default,
failure or defect in any Security or for any depreciation or
loss by reason of any such sale of Securities or by reason of
the failure of the Sponsor to give directions to the Trustee.
B-32
<PAGE>
Additionally, the Trustee may sell Securities
designated by the Sponsor, or if not so directed, in its own
discretion, for the purpose of redeeming Units tendered for
redemption.
Amounts received by the Trust upon the sale of any
Security under the conditions set forth above will be deposited
in the Principal Account when received and to the extent not
used for the redemption of Units will be distributable by the
Trustee to Unit Holders of record on the Record Date next prior
to a Distribution Date.
For information relating to the responsibilities of
the Trustee under the Indenture, reference is also made to the
material set forth under "Rights of Unit Holders" and "Sponsor
- -- Resignation."
Resignation
By executing an instrument in writing and filing the
same with the Sponsor, the Trustee and any successor may
resign. In such an event the Sponsor is obligated to appoint a
successor trustee as soon as possible. If the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, the Sponsor may remove the
Trustee and appoint a successor as provided in the Indenture.
The Sponsor may also remove the Trustee for any other reason
that the Sponsor determines to be in the best interest of the
Unit Holders. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor
trustee. If upon resignation of a trustee no successor has
been appointed and has accepted the appointment within thirty
days after notification, the retiring trustee may apply to a
court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes
effective only when the successor trustee accepts its
appointment as such or when a court of competent jurisdiction
appoints a successor trustee. A successor trustee has the same
rights and duties as the original trustee except to the extent,
if any, that the Indenture is modified as permitted by its
terms.
AMENDMENT AND TERMINATION OF THE INDENTURE
Amendment
The Indenture may be amended by the Trustee and the
Sponsor without the consent of Unit Holders (a) to cure any
ambiguity or to correct or supplement any provision thereof
B-33
<PAGE>
which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the Securities and
Exchange Commission or any successor governmental agency, and
(c) to make such other provisions as shall not adversely affect
the interest of the Unit Holders; provided that the Indenture
may also be amended by the Sponsor and the Trustee (or the
performance of any of the provisions of the Indenture may be
waived) with the consent of Unit Holders evidencing 51% of the
Units at the time outstanding for the purposes of adding any
provisions to or changing in any manner or eliminating any of
the provisions of the Indenture or of modifying in any manner
the rights of Unit Holders. In no event shall the Indenture be
amended so as to increase the number of Units issuable
thereunder except as the result of the additional deposits of
Securities, to permit the deposit of Securities after the Date
of Deposit except in accordance with the terms and conditions
of the Indenture as initially adopted, to permit any other
acquisition of securities or other property by the Trustee
either in addition to or in substitution for any of the
Securities on hand in the Trust or to permit the Trustee to
vary the investment of the Unit Holders or to empower the
Trustee to engage in business or to engage in investment
activities not specifically authorized in the Indenture as
originally adopted; or so as to adversely affect the
characterization of the Trust as a grantor trust for Federal
income tax purposes. In the event of any amendment requiring
the consent of Unit Holders, the Trustee is obligated to
promptly notify all Unit Holders of the substance of such
amendment.
Termination
The Trust may be terminated at any time by the
consent of the holders of 51% of the Units or by the Trustee
upon the direction of the Sponsor when the aggregate net value
of all Trust assets is less than 40% of the Securities
deposited in the Trust on the Date of Deposit and subsequent
thereto. However, in no event may the Trust continue beyond
the Termination Date set forth under "Summary of Essential
Information" in Part A. In the event of termination, written
notice thereof will be sent by the Trustee to all Unit Holders.
Within a reasonable period after termination, the
Trustee will sell any Securities remaining in the Trust and,
after paying all expenses and charges incurred by a Trust, will
distribute to each Unit Holder his pro rata share of the
balances remaining in the Income and Principal Accounts. The
sale of the Securities in the Trust upon termination may result
in a lower amount than might otherwise be realized if such sale
B-34
<PAGE>
were not required at such time and, therefore, the amount
realized by a Unit Holder on termination may be less than the
amount represented by the Units held by such Unit Holder
immediately prior to such sale.
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.
INDEPENDENT AUDITORS
The financial statements 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-35
<PAGE>
No person is authorized to give any information or to make any
representations with respect to this investment company not contained in this
Prospectus; and any information or representation not contained herein must not
be relied upon as having been authorized. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
NATIONAL EQUITY TRUST
Select Five Portfolio Series 1
Table of Contents Page
Summary of Essential Information A-9
Independent Auditors' Report A-11
Statement of Financial Condition A-12
Schedule of Portfolio Securities A-14 [LOGO]
The Trust B-1
Portfolio Summary B-4
Tax Status of the Trust B-5
Retirement Plans B-7
Public Offering of Units B-8 Sponsor
Public Offering Price B-8
Public Distribution B-9 Prudential Securities
Incorporated
Secondary Market B-10
Profit of Sponsor B-11 One Seaport Plaza
Volume Discount B-12 199 Water Street
Employee Discount B-12 New York, New York 10292
Exchange Option B-13
Federal Income Tax Consequences B-15
Reinvestment Program B-15
Termination Options B-18 Trustee
Expenses and Charges B-21
Initial Expenses B-21 United States Trust
Fees B-21 Company of New York
Other Charges B-22
Rights of Unit Holders B-22 114 West 47th Street
Ownership of Units B-22 New York, New York 10036
Certain Limitations B-23
<PAGE>
Distributions B-23
Reports and Records B-24
Redemption B-25
Sponsor B-29
Limitations on Liability B-30
Responsibility B-30
Resignation B-31
Trustee B-32
Limitations on Liability B-32
Responsibility B-32
Resignation B-33
Amendment and Termination of the Indenture B-33
Amendment B-33
Termination B-34
Legal Opinions B-35
Independent Auditors B-35
<PAGE>
PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
Item A-Bonding Arrangements
The employees of Prudential Securities Incorporated
are covered under Broker's Blanket Policies, Standard Form No.
14 in the aggregate amount of $62,500,000.
Item B-Contents of Registration Statement
This Registration Statement on Form S-6 comprises the
following papers and documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Written consents of the following persons:
Cahill Gordon & Reindel (included in
Exhibit 5).
Deloitte & Touche LLP.**
The following Exhibits:
****Ex-3.(i) - Certificate of Incorporation of
Prudential Securities Incorporated dated
March 29, 1993.
****Ex-3.(ii) - Revised By-Laws of Prudential Securities
Incorporated as amended through March 5,
1993.
*****Ex-4.a - Trust Indenture and Agreement dated May
5, 1987.
*Ex-4.b - Draft of Reference Trust Agreement.
**Ex-5 - Opinion of counsel as to the legality of
the securities being registered.
******Ex-24 - Powers of Attorney executed by a majority
of the Board of Directors of Prudential
Securities Incorporated.
**Ex-27.1 - Financial Data Schedule.
Ex-99.1 - Information as to Officers and Directors
of Prudential Securities Incorporated is
incorporated by reference to Schedules A
and D of Form BD filed by Prudential
Securities Incorporated, pursuant to
Rules 15b1-1 and 15b3-1 under the
Securities Exchange Act of 1934 (1934 Act
File No. 8-16267).
***Ex-99.2 - Affiliations of Sponsor with other
investment companies.
II-1
<PAGE>
***Ex-99.3 - Broker's Blanket Policies, Standard Form
No. 14 in the aggregate amount of
$62,500,000.
__________________________
* Filed herewith.
** To be filed by Amendment.
*** 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
Prudential Unit Trusts, Prudential Equity Trust
Shares Series 1, Registration No. 33-12218.
****** Incorporated by reference to exhibits of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
National Municipal Trust Series 164,
Registration No. 33-66108.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant, National Equity Trust Select Five
Portfolio Series 1, 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 14th day of September, 1994.
NATIONAL EQUITY TRUST SELECT FIVE
PORTFOLIO SERIES 1
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By /s/ RICHARD R. HOFFMANN______________
Richard R. Hoffmann
First Vice President
By the following persons,* who constitute a
majority of the Board of Directors of
Prudential Securities Incorporated
ALAN D. HOGAN
GEORGE A. MURRAY
JOHN P. MURRAY
LELAND B. PATON
RICHARD REDEKER
HARDWICK SIMMONS
By /s/ RICHARD R. HOFFMANN______________
(Richard R. Hoffmann, First Vice
President, As Authorized Signatory for
Prudential Securities Incorporated and
Attorney-in-Fact for the persons listed
above)
_________________
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of
its name in the Prospectus included in this Registration
Statement will be contained in its opinion to be filed as
Exhibit 5 to this Registration Statement.
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To be filed by Amendment.
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Index
****Ex-3.(i) - Certificate of Incorporation of Prudential
Securities Incorporated dated March 29,
1993.
****Ex-3.(ii) - Revised By-Laws of Prudential Securities
Incorporated as amended through March 5,
1993.
*****Ex-4.a - Trust Indenture and Agreement dated May 5,
1987.
*Ex-4.b - Draft of Reference Trust Agreement.
**Ex-5 - Opinion of counsel as to the legality of
the securities being registered.
******Ex-24 - Powers of Attorney executed by a majority
of the Board of Directors of Prudential
Securities Incorporated.
**Ex-27.1 - Financial Data Schedule.
Ex-99.1 - Information as to Officers and Directors of
Prudential Securities Incorporated is
incorporated by reference to Schedules A
and D of Form BD filed by Prudential
Securities Incorporated, pursuant to Rules
15b1-1 and 15b3-1 under the Securities
Exchange Act of 1934 (1934 Act File No.
8-16267).
***Ex-99.2 - Affiliations of Sponsor with other invest-
ment companies.
***Ex-99.3 - Broker's Blanket Policies, Standard Form
No. 14 in the aggregate amount of
$62,500,000
__________________________
* Filed herewith.
** To be filed by Amendment.
*** 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.
<PAGE>
***** 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, Prudential Equity Trust
Shares Series 1, Registration No. 33-12218.
****** Incorporated by reference to exhibits of same
designation filed with the Securities and Exchange
Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of
National Municipal Trust Series 164,
Registration No. 33-66108.
<PAGE>
<PAGE>
EX-4.B
[DRAFT] Executed in Parts
Counterpart No. ( )
NATIONAL EQUITY TRUST
SELECT FIVE PORTFOLIO SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated , 1994
among Prudential Securities Incorporated, as Depositor, and
United States Trust Company of New York, as Trustee, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Prudential Unit Trusts,
Prudential Equity Trust Shares, Trust Indenture and Agreement"
(the "Basic Agreement") dated May 5, 1987. 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 and the Trustee
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Basic Agreement are herein
incorporated by reference in their entirety and shall be deemed
to be a part of this instrument as fully and to the same extent
as though said provisions had been set forth in full in this
instrument except that the Basic Agreement is hereby amended in
the following manner:
(a) Reference to Prudential-Bache Securities Inc. in its
capacity as Depositor is replaced by Prudential
Securities Incorporated throughout the Basic
Agreement.
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(b) Article II, entitled "Administration of Trust,"
Section 2.05 Deposit of Additional Securities shall
be amended by adding the following sentence after the
third sentence:
"The parties hereto agree that a Supplementary
Schedule to the Reference Trust Agreement may be
delivered by telecopier and that such delivery shall
have the same force and effect as the delivery of an
original executed document."
* * * * *
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are
hereby agreed to:
(a) The Trust is denominated Select Five
Portfolio Series 1.
(c) The contracts for the purchase of common
stock listed in Schedule A hereto are those which,
subject to the terms of this Indenture, have been or
are to be deposited in trust under this Indenture as
of the date hereof.
(d) The term "Depositor" shall mean Prudential
Securities Incorporated.
(e) The aggregate number of Units referred to
in Sections 2.03 and 9.01 of the Basic Agreement is
as of the date hereof.
(f) A Unit of the Trust is hereby declared
initially equal to 1/ th of the Trust.
(g) The term "First Settlement Date" shall mean
, 1994.
(h) The terms "Quarterly Computation Date" and
"Quarterly Record Date" shall mean January 1,
April 1, July 1 and October 1.
<PAGE>
(i) The term "Quarterly Distribution Date"
shall mean January 15, April 15, July 15 and
October 15.
(j) The term "Termination Date" shall mean
, 199 .
(k) The Trustee's Annual Fee shall be: $0.
(per 100 Units) for 5,000,000 and above units
outstanding; $0. (per 100 Units) for 3,000,000 -
4,999,999 units outstanding; $0. (per 100 Units)
for 1,500,000 - 2,999,999 units outstanding; $
(per 100 Units) for 1,499,999 and below units
outstanding. In calculating the Trustee's Annual
Fee, the fee applicable to the number of units
outstanding shall apply to all units outstanding.
[Signatures and acknowledgments on separate pages]
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