Executed in 6 Parts
Counterpart No. ( )
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 204
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated May 13, 1998 among Pru-
dential Securities Incorporated, as Depositor and The Chase Manhattan
Bank, as Trustee, sets forth certain provisions in full and incorpo-
rates other provisions by reference to the document entitled "National
Equity Trust Low Five Portfolio Series, Trust Indenture and Agreement"
(the "Basic Agreement") dated April 25, 1995. Such provisions as are
set forth in full herein and such provisions as are incorporated by
reference constitute a single instrument (the "Indenture").
WITNESSETH THAT:
In consideration of the premises and of the mutual agree-
ments herein contained, the Depositor and the Trustee agree as fol-
lows:
Part I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provi-
sions contained in the Basic Agreement are herein incorporated by ref-
erence in their entirety and shall be deemed to be a part of this in-
strument as fully and to the same extent as though said provisions had
been set forth in full in this instrument except that the Basic Agree-
ment is hereby amended in the following manner:
A. Article I, entitled "Definitions", paragraph 22, shall be
amended as follows:
"Trustee shall mean The Chase Manhattan Bank
or any successor trustee appointed as
hereinafter provided."
-2-
B. Article II, entitled "Deposit of Securities; Acceptance of
Trust", shall be amended as follows:
The second sentence of Section 2.03 Issue of Units
shall be amended by deleting the words "on any day on
which the Depositor is the only Unit Holder."
C. Article III, entitled "Administration of Trust", shall be
amended as follows:
(i) The first part of the first sentence of Section
3.01 Initial Costs shall be amended to substitute
the following language before the phrase
"provided, however":
"With respect to the Trust, the cost of the
preparation and printing of the Indenture, Regis-
tration Statement and other documents relating to
the Trust, Federal and State registration fees
and costs, the initial fees and expenses of the
Trustee, legal and auditing expenses and other
out-of-pocket organizational expenses, to the ex-
tent not borne by the Depositor, shall be paid by
the Trust;"
Section 3.01 shall be further amended to add the
following language:
"To the extent the funds in the Income and Prin-
cipal Accounts of the Trust shall be insufficient
to pay the expenses borne by the Trust specified
in this Section 3.01, the Trustee shall advance
out of its own funds and cause to be deposited
and credited to the Income Account such amount as
may be required to permit payment of such ex-
penses. The Trustee shall be reimbursed for such
advance on each Record Date from funds on hand in
the Income Account or, to the extent funds are
not available in such Account, from the Principal
Account in the amount deemed to have accrued as
of such Record Date as provided in the following
sentence (less prior payments on account of such
advances, if any), and the provisions of Sec-
tion 6.04 with respect to the reimbursement of
disbursements for Trust expenses, including,
-3-
without limitation, the lien in favor of the
Trustee therefor and the authority to sell Secu-
rities as needed to fund such reimbursement,
shall apply to the payment of expenses and the
amounts advanced pursuant to this Section. For
the purposes of the preceding sentence and the
addition provided in clause (a)(3) of Section
5.01, the expenses borne by the Trust pursuant to
this Section shall be deemed to have been paid on
the date of the Reference Trust Agreement and to
accrue at a daily rate over the time period
specified for their amortization provided in the
Prospectus; provided, however, that nothing
herein shall be deemed to prevent, and the Trus-
tee shall be entitled to, full reimbursement for
any advances made pursuant to this Section no
later than the termination of the Trust. For
purposes of calculating the accrual of organiza-
tional expenses under this Section 3.01, the
Trustee shall rely on the written estimates of
such expenses provided by the Depositor pursuant
to Section 5.01."
(ii) The third paragraph of Section 3.05 Distribution
shall be amended to add the following sentence at
the end thereof:
"The Trustee shall make a special distribution of
the cash balance in the Income and Principal ac-
counts available for such distribution to Unit
Holders of record on such dates as the Depositor
shall direct."
(iii) The second to the last paragraph of Section 3.08
Sale of Securities shall be amended to replace
the word "equal" with the following phrase: "be
sufficient to pay."
D. Article V, entitled "Trust Evaluation, Redemption, Transfer
of Units," Section 5.01 Trust Evaluation shall be amended as
follows:
(i) the second sentence of the first paragraph of
Section 5.01 shall be amended by deleting the
word "and" appearing at the end of subsection
(a)(2) of such sentence and inserting the follow-
ing after "(a)(3)": "amounts representing organ-
izational expenses paid from the Trust less
-4-
amounts representing accrued organizational ex-
penses of the Trust, and (a)(4)."
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee
that there will be no further deposits of Addi-
tional Securities pursuant to section 3.06, the
Depositor shall provide the Trustee with written
estimates of (i) the total organizational expenses
to be borne by the Trust pursuant to Section 3.01
and (ii) the total number of Units to be issued in
connection with the initial deposit and all an-
ticipated deposits of Additional Securities. For
purposes of calculating the value of the Trust and
Unit Value, the Trustee shall treat all such an-
ticipated expenses as having been paid and all li-
abilities therefor as having been incurred, and
all Units as having been issued, in each case on
the date of the Reference Trust Agreement, and, in
connection with each such calculation, shall take
into account a pro rata portion of such expense
and liability based on the actual number of Units
issued as of the date of such calculation. In the
event the Trustee is informed by the Depositor of
a revision in its estimate of total expenses or
total Units and upon the conclusion of the deposit
of Additional Securities, the Trustee shall base
calculations made thereafter on such revised esti-
mates or actual expenses, respectively, but such
adjustment shall not affect calculations made
prior thereto and no adjustment shall be made in
respect thereof.
(iii) The second paragraph of Section 5.01 shall be
amended by replacing "(a)(3)" with "(a)(4)" in
the first line.
-5-
E. Reference to United States Trust Company of New York in its
capacity as Trustee is replaced by the Chase Manhattan Bank
throughout the Basic Agreement.
Part II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Trust is denominated National Equity Trust, Low
Five Portfolio Series 204.
B. The Units of the Trust shall be subject to a deferred
sales charge.
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 Sec-
tions 2.03 and 9.01 of the Basic Agreement is 250,000 as of
the date hereof.
F. A Unit of the Trust is hereby declared initially equal
to 1/250,000th of the Trust.
G. The term "First Settlement Date" shall mean
May 19, 1998.
H. The terms "Computation Day" and "Record Date" shall
mean quarterly on the tenth day of August, November, February,
and May commencing August 10, 1998.
I. The term "Distribution Date" shall mean quarterly on
the twenty-fifth day of August, November, February and May
commencing August 25, 1998 or as soon thereafter as possible.
J. The term "Termination Date" shall mean May 16, 2000.
-6-
K. The Trustee's Annual Fee shall be $.79 (per 1,000
Units) for 100,000,000 and above units outstanding; $0.85 (per
1,000 Units) for 50,000,000 - 99,999,999 units outstanding; $0.91
(per 1,000 Units) for 49,999,999 and below units outstanding. In
calculating the Trustee's annual fee, the fee applicable to the
number of units outstanding shall apply to all units outstanding.
L. The Depositor's Portfolio supervisory service fee shall
be $0.25 per 1,000 Units.
[Signatures and acknowledgments on separate pages]
The Schedule of Portfolio Securities in Part A of the pro-
spectus included in this Registration Statement for National
Equity Trust, Low Five Portfolio Series 204 is hereby incor-
porated by reference herein as Schedule A hereto.
