Filed Pursuant to Rule 424(b)(5)
                                                Registration No. 33-61383

PROSPECTUS SUPPLEMENT
(To Prospectus dated May 24, 1996)

[LOGO]                            $163,000,000
                             NEW PLAN REALTY TRUST
                               MEDIUM-TERM NOTES
                  DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
                               -----------------
  New Plan Realty Trust ("New Plan" or the "Trust") may offer from time to
time up to $163,000,000 aggregate initial offering price, or the equivalent
thereof in one or more foreign or composite currencies, of its Medium-Term
Notes Due Nine Months or More from Date of Issue (the "Notes"). Such aggregate
initial offering price is subject to reduction as a result of the sale by the
Trust of other Offered Securities described in the accompanying Prospectus.
Each Note will mature on any day nine months or more from the date of issue,
as specified in the applicable pricing supplement hereto (each, a "Pricing
Supplement"), and may be subject to redemption at the option of the Trust or
repayment at the option of the Holder thereof, in each case, in whole or in
part, prior to its Stated Maturity Date, as specified in the applicable
Pricing Supplement. In addition, each Note may be denominated and/or payable
in United States dollars or a foreign or composite currency, as specified in
the applicable Pricing Supplement. The Notes, other than Foreign Currency
Notes, will be issued in minimum denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement, while Foreign Currency Notes will be issued in the minimum
denominations specified in the applicable Pricing Supplement.

  Unless otherwise specified in the applicable Pricing Supplement, Notes will
bear interest at fixed rates ("Fixed Rate Notes") or at floating rates
("Floating Rate Notes"). The applicable Pricing Supplement will specify
whether a Floating Rate Note is a Regular Floating Rate Note, a Floating
Rate/Fixed Rate Note or an Inverse Floating Rate Note and whether the rate of
interest thereon is determined by reference to one or more of the CD Rate, the
CMT Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each, an
"Interest Rate Basis"), or any other interest rate basis or formula, as
adjusted by any Spread and/or Spread Multiplier. Interest on each Floating
Rate Note will accrue from its date of issue and, unless otherwise specified
in the applicable Pricing Supplement, will be payable monthly, quarterly,
semiannually or annually in arrears, as specified in the applicable Pricing
Supplement, and on the Maturity Date. Unless otherwise specified in the
applicable Pricing Supplement, the rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semiannually or annually, as
specified in the applicable Pricing Supplement. Interest on each Fixed Rate
Note will accrue from its date of issue and will be payable in arrears as
specified in the applicable Pricing Supplement and on the Maturity Date. Notes
may also be issued that do not bear any interest currently or that bear
interest at a below market rate. See "Description of Notes."

  The interest rate, or formula for the determination of the interest rate,
applicable to each Note and the other variable terms thereof will be
established by the Trust on the date of issue of such Note and will be
specified in the applicable Pricing Supplement. Interest rates or formulas and
other terms of Notes are subject to change by the Trust, but no change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Trust.

  Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or in certificated form (a "Certificated Note"), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the "Global Securities") deposited
with or on behalf of The Depository Trust Company (the "Depositary") and
registered in the name of the Depositary or the Depositary's nominee.
Interests in the Global Securities will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary (with
respect to its participants) and the Depositary's participants (with respect
to beneficial owners).
                               -----------------
  SEE "RISK FACTORS" ON PAGE S-2 FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED HEREBY.
                               -----------------
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 SUPPLEMENT, THE
    PROSPECTUS  OR  ANY  SUPPLEMENT  HERETO.  ANY  REPRESENTATION  TO  THE
                        CONTRARY IS A CRIMINAL OFFENSE.
 
 THE ATTORNEY GENERAL OF THE STATE OF NEW  YORK HAS NOT PASSED ON OR  ENDORSED
  THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
                             CONTRARY IS UNLAWFUL.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------


                     Price to     Agents' Discounts          Proceeds to
                    Public(1)   and Commissions(1)(2)        Trust(1)(3)
- -------------------------------------------------------------------------------
                                             
Per Note..........     100%          .125%-.750%           99.875%-99.250%
- -------------------------------------------------------------------------------
Total(4).......... $163,000,000  $203,750-$1,222,500  $162,796,250-$161,777,500

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch,
    Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated and
    Smith Barney Inc. (the "Agents") may purchase the Notes, as principal,
    from the Trust, for resale to investors and other purchasers at varying
    prices relating to prevailing market prices at the time of resale as
    determined by the applicable Agent, or, if so specified in the applicable
    Pricing Supplement, for resale at a fixed offering price. Unless otherwise
    specified in the applicable Pricing Supplement, any Note sold to an Agent
    as principal will be purchased by such Agent at a price equal to 100% of
    the principal amount thereof less a percentage of the principal amount
    equal to the commission applicable to an agency sale (as described below)
    of a Note of identical maturity. If agreed to by the Trust and an Agent,
    such Agent may utilize its reasonable efforts on an agency basis to
    solicit offers to purchase the Notes at 100% of the principal amount
    thereof, unless otherwise specified in the applicable Pricing Supplement.
    The Trust will pay a commission to the applicable Agent, ranging from
    .125% to .750% of the principal amount of any Note, depending upon its
    stated maturity, sold through such Agent. Commissions with respect to
    Notes with stated maturities in excess of 30 years that are sold through
    such Agent will be negotiated between the Trust and an Agent at the time
    of such sale. See "Plan of Distribution."
(2) The Trust has agreed to indemnify the Agents against, and to provide
    contribution with respect to, certain liabilities, including liabilities
    under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Before deducting expenses payable by the Trust estimated at $250,000.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
                               -----------------
  The Notes are being offered on a continuous basis by the Trust to or through
the Agents. Unless otherwise specified in the applicable Pricing Supplement,
the Notes will not be listed on any securities exchange and there can be no
assurance that the Notes offered hereby will be sold or that there will be a
secondary market for the Notes or that there will be liquidity in such market
if one develops. The Trust reserves the right to cancel or modify the offer
made hereby without notice. The Trust or an Agent, if it solicits the offer on
an agency basis, may reject any offer to purchase Notes in whole or in part.
See "Plan of Distribution."
                               -----------------
 
LEHMAN BROTHERS
                   MERRILL LYNCH & CO.
                                      MORGAN STANLEY & CO.
                                                  INCORPORATED
                                                              SMITH BARNEY INC.
 
            The date of this Prospectus Supplement is May 24, 1996.

 
  IN CONNECTION WITH THE OFFERING OF NOTES PURCHASED BY AN AGENT AS PRINCIPAL
ON A FIXED PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH NOTES AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                              ------------------
 
                                 RISK FACTORS
 
  THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL OF THE RISKS OF AN
INVESTMENT IN NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE
IN OR DETERMINED BY REFERENCE TO A CURRENCY OR COMPOSITE CURRENCY OTHER THAN
UNITED STATES DOLLARS OR TO ONE OR MORE INTEREST RATE, CURRENCY OR OTHER
INDICES OR FORMULAS. THE TRUST AND THE AGENTS DISCLAIM ANY RESPONSIBILITY TO
ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR AS THEY CHANGE FROM TIME TO TIME. EACH PROSPECTIVE
INVESTOR SHOULD CONSULT HIS OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED OR PAYABLE IN OR DETERMINED BY
REFERENCE TO A CURRENCY OR COMPOSITE CURRENCY OTHER THAN UNITED STATES DOLLARS
OR TO ONE OR MORE INTEREST RATE, CURRENCY OR OTHER INDICES OR FORMULAS. SUCH
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED
WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS OR TRANSACTIONS INVOLVING THE
APPLICABLE INTEREST RATE INDEX OR CURRENCY INDEX OR OTHER INDICES OR FORMULAS.
 
STRUCTURE RISKS
 
  An investment in Notes indexed, as to principal, premium, if any, and/or
interest, to one or more currencies or composite currencies (including
exchange rates and swap indices between currencies or composite currencies),
commodities, interest rates or other indices or formulas, either directly or
inversely, entails significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. Such
risks include, without limitation, the possibility that any such index or
formula may be subject to significant changes, that the resulting interest
rate will be less than that payable on a conventional fixed rate or floating
rate debt security issued by the Trust at the same time, that the repayment of
principal and/or premium, if any, can occur at times other than that expected
by the investor, and that the investor could lose all or a substantial portion
of principal and/or premium, if any, payable on the Maturity Date (as
hereinafter defined). Such risks depend on a number of interrelated factors,
including economic, financial and political events, over which the Trust has
no control. Additionally, if the formula used to determine the amount of
principal, premium, if any, and/or interest payable with respect to such Notes
contains a multiplier or leverage factor, the effect of any change in the
applicable index or indices or formula or formulas will be magnified. In
recent years, values of certain indices and formulas have been highly volatile
and such volatility may continue or increase in the future. Fluctuations in
the value of any particular index or formula that have occurred in the past
are not necessarily indicative, however, of fluctuations that may occur in the
future.
 
  The secondary market for Notes will be affected by a number of factors
independent of the creditworthiness of the Trust and the value of the
applicable index or indices or formula or formulas, including the complexity
and volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest in respect of such Notes, the time
remaining to the maturity of such Notes, the outstanding amount of such Notes,
any redemption features of such Notes, the amount of other debt securities
linked to such index or formula and the level, direction and volatility of
market interest rates generally. Such factors also will affect the market
value of such Notes. In addition, certain Notes may be designed for specific
investment objectives or strategies and, therefore, may have a more limited
secondary market and experience more price volatility than
 
                                      S-2

 
conventional debt securities. Investors may not be able to sell such Notes
readily or at prices that will enable investors to realize their anticipated
yield.
 
  Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Trust may be expected to redeem such Notes when
prevailing interest rates are relatively low, an investor might not be able to
reinvest the redemption proceeds at an effective interest rate as high as the
interest rate on such Notes.
 
  The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the liquidity of
such market if one develops. See "Plan of Distribution."
 
  No investor should purchase Notes unless such investor understands and is
able to bear the risk that such Notes may not be readily saleable, that the
value of Notes will fluctuate over time and that such fluctuations may be
significant.
 
CREDIT RATINGS
 
  The credit ratings assigned to the Trust's medium-term note program may not
reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of such Notes in light of their
particular circumstances.
 
EXCHANGE RATES AND EXCHANGE CONTROLS
 
  An investment in Foreign Currency Notes (as hereinafter defined) entails
significant risks that are not associated with a similar investment in a debt
security denominated and payable in United States dollars. Such risks include,
without limitation, the possibility of significant changes in the rate of
exchange between the United States dollar and the applicable foreign currency
or composite currency and the possibility of the imposition or modification of
exchange controls by the applicable governments or monetary authorities. Such
risks generally depend on factors over which the Trust has no control, such as
economic, financial and political events and the supply and demand for the
applicable currencies or composite currencies. In addition, if the formula
used to determine the amount of principal, premium, if any, and/or interest
payable with respect to Foreign Currency Notes contains a multiplier or
leverage factor, the effect of any change in the applicable currencies or
composite currencies will be magnified. In recent years, rates of exchange
between the United States dollar and foreign currencies or composite
currencies have been highly volatile and such volatility may continue or
increase in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations
that may occur in the future. Depreciation of the foreign currency or
composite currency in which a Foreign Currency Note is payable against the
United States dollar would result in a decrease in the United States dollar-
equivalent yield of such Foreign Currency Note, in the United States dollar-
equivalent value of the principal and premium, if any, payable on the Maturity
Date of such Foreign Currency Note, and, generally, in the United States
dollar-equivalent market value of such Foreign Currency Note.
 
  Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest on, a
Foreign Currency Note is due, which could affect exchange rates as well as the
availability of the foreign currency or composite currency in which such
payment is to be made on such date. Even if there are no exchange controls, it
is possible that the foreign currency or composite currency in which a payment
in respect of any particular Foreign Currency Note is to be made would not be
available on the applicable payment date due to other circumstances beyond the
control of the Trust. In such cases, the Trust will be entitled to satisfy its
obligations in respect of such Foreign Currency Note in United States dollars.
See "Special Provisions Relating to Foreign Currency Notes--Payment Currency."
 
                                      S-3

 
                             DESCRIPTION OF NOTES
 
  Notes will be issued as a series of Debt Securities (as hereinafter defined)
under an Indenture, dated as of March 29, 1995, as amended, supplemented or
modified from time to time (the "Indenture"), between the Trust and State
Street Bank and Trust Company (as successor to The First National Bank of
Boston), as trustee (the "Trustee"). The Indenture is subject to, and governed
by, the Trust Indenture Act of 1939, as amended. The following summary of
certain provisions of the Notes and the Indenture does not purport to be
complete and is qualified in its entirety by reference to the actual
provisions of the Notes and the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to them in the accompanying
Prospectus, the Notes or the Indenture, as the case may be. The term "Debt
Securities," as used in this Prospectus Supplement, refers to all debt
securities, including the Notes, issued and issuable from time to time under
the Indenture. The following description of Notes will apply to each Note
offered hereby unless otherwise specified in the applicable Pricing
Supplement.
 
GENERAL
 
  The Notes will be unsecured obligations of the Trust and will rank pari
passu with all other unsecured and unsubordinated indebtedness of the Trust
from time to time outstanding. The Notes are effectively subordinated to
mortgages and other secured indebtedness of the Trust (approximately $44.8
million at April 30, 1996), which encumber certain assets of the Trust.
 
  The Indenture does not limit the aggregate initial offering price of Debt
Securities that may be issued thereunder and Debt Securities may be issued
thereunder from time to time in one or more series up to the aggregate initial
offering price from time to time authorized by the Trust for each series. The
Trust may, from time to time, without the consent of the Holders of the Notes,
provide for the issuance of Notes or other Debt Securities under the Indenture
in addition to the $163,000,000 aggregate initial offering price of Notes
offered hereby.
 
  The Notes are currently limited to up to $163,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies. The Notes will be offered on a continuous basis and will mature on
any day nine months or more from their dates of issue (each, a "Stated
Maturity Date"), as specified in the applicable Pricing Supplement. Unless
otherwise specified in the applicable Pricing Supplement, interest-bearing
Notes will either be Fixed Rate Notes or Floating Rate Notes, as specified in
the applicable Pricing Supplement. Notes may also be issued that do not bear
any interest currently or that bear interest at a below market rate.
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest will be made in, United States dollars. The Notes also may be
denominated in, and payments of principal, premium, if any, and/or interest
may be made in, one or more foreign currencies or composite currencies
("Foreign Currency Notes"). See "Special Provisions Relating to Foreign
Currency Notes--Payment of Principal, Premium, if any, and Interest." The
currency or composite currency in which a Note is denominated, whether United
States dollars or otherwise, is herein referred to as the "Specified
Currency." References herein to "United States dollars," "U.S. dollars" and
"U.S. $" are to the lawful currency of the United States of America (the
"United States").
 
  Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At
the present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies or composite
currencies and vice versa, and commercial banks do not generally offer non-
United States dollar checking or savings account facilities in the United
States. Each applicable Agent is prepared to arrange for the conversion of
United States dollars into the applicable Specified Currency to enable the
purchaser to pay for the related Foreign Currency Note, provided that a
request is made to such Agent on or prior to the fifth Business Day (as
hereinafter defined) preceding the date of delivery of such Foreign Currency
Note, or by such other day as determined by such Agent. Each such
 
                                      S-4

 
conversion will be made by an Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchaser of each such Foreign Currency Note.
See "Special Provisions Relating to Foreign Currency Notes."
 
  Interest rates offered by the Trust with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of Notes
purchased in any single transaction. Interest rates or formulas and other
terms of Notes are subject to change by the Trust from time to time, but no
such change will affect any Note already issued or as to which an offer to
purchase has been accepted by the Trust.
 
  Each Note will be issued in fully registered form as a Book-Entry Note or a
Certificated Note. The authorized denominations of each Note other than a
Foreign Currency Note will be $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement, while the authorized
denominations of each Foreign Currency Note will be specified in the
applicable Pricing Supplement.
 
  Payments of principal of, and premium, if any, and interest on, Book-Entry
Notes will be made by the Trust through the Trustee to the Depositary. See "--
Book-Entry Notes." In the case of Certificated Notes, payment of principal and
premium, if any, due on the Stated Maturity Date or any prior date on which
the principal, or an installment of principal, of each Certificated Note
becomes due and payable, whether by the declaration of acceleration, notice of
redemption at the option of the Trust, notice of the Holder's option to elect
repayment or otherwise (the Stated Maturity Date or such prior date, as the
case may be, is herein referred to as the "Maturity Date" with respect to the
principal of the applicable Note repayable on such date) will be made in
immediately available funds upon presentation and surrender thereof (or, in
the case of any repayment on an Optional Repayment Date, upon presentation and
surrender thereof and a duly completed election form in accordance with the
provisions described below) at the office or agency maintained by the Trust
for such purpose in the Borough of Manhattan, The City of New York. Such
office or agency is maintained currently by the Trustee at 61 Broadway, New
York, New York 10006. Payment of interest due on the Maturity Date of each
Certificated Note will be made to the person to whom payment of the principal
and premium, if any, shall be made. Payment of interest due on each
Certificated Note on any Interest Payment Date (as hereinafter defined) other
than the Maturity Date will be made at the office or agency referred to above
maintained by the Trust for such purpose or, at the option of the Trust, may
be made by check mailed to the address of the Holder entitled thereto as such
address shall appear in the Security Register of the Trust. Notwithstanding
the foregoing, a Holder of $10,000,000 (or, if the applicable Specified
Currency is other than United States dollars, the equivalent thereof in such
Specified Currency) or more in aggregate principal amount of Notes (whether
having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity
Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less
than 15 days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder. For special payment terms applicable to Foreign Currency Notes,
see "Special Provisions Relating to Foreign Currency Notes--Payment of
Principal, Premium, if any, and Interest."
 
  As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in The City of New York; provided, however, that with respect to
Foreign Currency Notes, such day is also not a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in the Principal Financial Center (as hereinafter defined) of the
country issuing the Specified Currency (or if the Specfied Currency is
European Currency Units ("ECU"), such day is not a day that appears as an ECU
non-settlement day on the display designated as "ISDE" on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association)
or, if ECU non-settlement days do not appear on that page (and are not so
designated), is not a day on which payments in ECU cannot be settled in the
international interbank market); provided, further, that, with respect to
Notes as to which LIBOR is an applicable Interest Rate Basis, such day is also
a London Business Day (as hereinafter defined). "London Business Day" means
any day (i) if the Index Currency (as hereinafter defined) is other than ECU,
on which dealings in such Index Currency are
 
                                      S-5

 
transacted in the London interbank market or (ii) if the Index Currency is
ECU, that does not appear as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so
designated by the ECU Banking Association, or, if ECU non-settlement days do
not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market).
 
  "Principal Financial Center" means the capital city of the country issuing
the Specified Currency or, solely with respect to the calculation of LIBOR,
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECU, the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
 
  Book-Entry Notes may be transferred or exchanged only through the
Depositary. See "--Book-Entry Notes." Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by the
Trust for such purpose in the Borough of Manhattan, The City of New York. No
service charge will be made by the Trust or the Trustee for any such
registration of transfer or exchange of Notes, but the Trust may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith (other than exchanges pursuant to the
Indenture not involving any transfer).
 
  Notwithstanding any provisions described in this Prospectus Supplement to
the contrary, if a Note specifies that an Addendum is attached thereto or that
"Other/Additional Provisions" apply, such Note will be subject to the terms
specified in such Addendum or "Other/Additional Provisions," as the case may
be, and will be described in the applicable Pricing Supplement.
 
  The defeasance and covenant defeasance provisions of the Indenture described
under "Description of Debt Securities--Discharge, Defeasance and Covenant
Defeasance" in the accompanying Prospectus will apply to the Notes.
 
REDEMPTION AT THE OPTION OF THE TRUST
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The applicable Pricing Supplement
will indicate if the Notes will be redeemable prior to the Stated Maturity
Date and the terms on which such Notes will be redeemable at the option of the
Trust. If so specified, the Notes will be subject to redemption at the option
of the Trust on any date on and after the applicable Initial Redemption Date
in whole or from time to time in part in increments of $1,000 or such other
minimum denomination specified in such Pricing Supplement (provided that any
remaining principal amount thereof shall be at least $1,000 or such minimum
denomination), at the applicable Redemption Price (as hereinafter defined),
together with unpaid interest accrued to the date of redemption, on notice
given not more than 60 nor less than 30 calendar days prior to the date of
redemption and in accordance with the provisions of the Indenture. "Redemption
Price," with respect to a Note, means an amount equal to the Initial
Redemption Percentage specified in the applicable Pricing Supplement (as
adjusted by the Annual Redemption Percentage Reduction, if applicable)
multiplied by the unpaid principal amount to be redeemed. The Initial
Redemption Percentage, if any, applicable to a Note shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the
applicable Annual Redemption Percentage Reduction, if any, until the
Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed. See also "--Original Issue Discount Notes."
 
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASES BY THE TRUST
 
  The applicable Pricing Supplement will indicate if the Notes will be
repayable at the option of the Holders thereof on a date specified prior to
the applicable Maturity Date and, unless otherwise specified in the Pricing
Supplement, such Notes shall be repayable at a price equal to 100% of the
principal amount thereof, together with unpaid interest accrued to the date of
repayment.
 
  In order for such a Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the repayment date (i) such Note with
the form entitled "Option to Elect Repayment" on the reverse of such Note duly
completed or (ii) a telegram, telex, facsimile transmission, or a letter from
a member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust
 
                                      S-6

 
company in the United States setting forth the name of the Holder of such
Note, the principal amount of such Note, the principal amount of such Note to
be repaid, the certificate number or a description of the tenor and terms of
such Note, a statement that the option to elect repayment is being exercised
thereby, and a guarantee that such Note to be repaid, together with the duly
completed form entitled "Option to Elect Repayment" on the reverse of such
Note, will be received by the Trustee not later than the fifth Business Day
after the date of such telegram, telex, facsimile transmission or letter;
however, such telegram, telex, facsimile transmission or letter shall only be
effective if such Note and duly completed form are received by the Trustee by
such fifth Business Day. Unless otherwise specified in the applicable Pricing
Supplement, exercise of the repayment option by the Holder of a Note will be
irrevocable. The repayment option may be exercised by the Holder of a Note for
less than the entire principal amount of the Note, but in that event, the
principal amount of the Note remaining outstanding after repayment must be in
an authorized denomination.
 
  If a Note is represented by a Global Security, the Depositary's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's
nominee will timely exercise a right to repayment with respect to a particular
Note, the Beneficial Owner of such Note must instruct the broker or other
Direct Participant (as hereinafter defined) or Indirect Participant (as
hereinafter defined) through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different deadlines for accepting instructions from their customers.
Accordingly, each Beneficial Owner should consult the broker or other Direct
Participant or Indirect Participant through which it holds an interest in a
Note in order to ascertain the deadline by which such an instruction must be
given in order for timely notice to be delivered to the Depositary.
 
  If applicable, the Trust will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and any other securities laws or regulations in connection with any such
repayment.
 
  The Trust may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by the Trust may, at the discretion of
the Trust, be held, resold or surrendered to the Trustee for cancellation.
 
INTEREST
 
 General
 
  Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate
per annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly
made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest payments in respect of Fixed Rate Notes and
Floating Rate Notes will equal the amount of interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made
available for payment with respect to the applicable Note) to but excluding
the applicable Interest Payment Date or the Maturity Date, as the case may be
(each, an "Interest Period").
 
  Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless
otherwise specified in the applicable Pricing Supplement, the first payment of
interest on any such Note originally issued between a Record Date (as
hereinafter defined) and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Record Date to
the Holder on such next succeeding Record Date. Unless otherwise specified in
the applicable Pricing Supplement, a "Record Date" shall be the fifteenth
calendar day (whether or not a Business Day) immediately preceding the related
Interest Payment Date.
 
                                      S-7

 
 Fixed Rate Notes
 
  Interest on Fixed Rate Notes will be payable in arrears as specified in the
applicable Pricing Supplement and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, interest on Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
 
  If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls
on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day with the same force and effect as if made on the date such payment was
due, and no interest will accrue on such payment for the period from and after
such Interest Payment Date or the Maturity Date, as the case may be, to the
date of such payment on the next succeeding Business Day.
 
 Floating Rate Notes
 
  Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing
Supplement will specify certain terms with respect to which each Floating Rate
Note is being delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," the Fixed Rate Commencement Date, if applicable, Fixed
Interest Rate, if applicable, Interest Rate Basis or Bases, Initial Interest
Rate, if any, Initial Interest Reset Date, Interest Reset Period and Dates,
Interest Payment Period and Dates, Index Maturity, Maximum Interest Rate
and/or Minimum Interest Rate, if any, and Spread and/or Spread Multiplier, if
any, as such terms are defined below. If one or more of the applicable
Interest Rate Bases is LIBOR or the CMT Rate, the applicable Pricing
Supplement will specify the Index Currency, if any, and Designated LIBOR Page
or the Designated CMT Maturity Index and Designated CMT Telerate Page,
respectively, as such terms are defined below.
 
  The interest rate borne by the Floating Rate Notes will be determined as
follows:
 
    (i) Unless such Floating Rate Note is designated as a "Floating
  Rate/Fixed Rate Note," or an "Inverse Floating Rate Note" or as having an
  Addendum attached or having "Other/Additional Provisions" apply relating to
  a different interest rate formula, such Floating Rate Note will be
  designated as a "Regular Floating Rate Note" and, except as described below
  or in the applicable Pricing Supplement, will bear interest at the rate
  determined by reference to the applicable Interest Rate Basis or Bases (a)
  plus or minus the applicable Spread, if any, and/or (b) multiplied by the
  applicable Spread Multiplier, if any. Commencing on the Initial Interest
  Reset Date, the rate at which interest on such Regular Floating Rate Note
  shall be payable shall be reset as of each Interest Reset Date; provided,
  however, that the interest rate in effect for the period, if any, from the
  date of issue to the Initial Interest Reset Date will be the Initial
  Interest Rate.
 
    (ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
  Rate Note," then, except as described below or in the applicable Pricing
  Supplement, such Floating Rate Note will bear interest at the rate
  determined by reference to the applicable Interest Rate Basis or Bases (a)
  plus or minus the applicable Spread, if any, and/or (b) multiplied by the
  applicable Spread Multiplier, if any. Commencing on the Initial Interest
  Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
  Note shall be payable shall be reset as of each Interest Reset Date;
  provided, however, that (y) the interest rate in effect for the period, if
  any, from the date of issue to the Initial Interest Reset Date will be the
  Initial Interest Rate and (z) the interest rate in effect for the period
  commencing on the Fixed Rate Commencement Date to the Maturity Date shall
  be the Fixed Interest Rate, if such rate is specified in the applicable
  Pricing Supplement or, if no such Fixed Interest Rate is specified, the
  interest rate in effect thereon on the day immediately preceding the Fixed
  Rate Commencement Date.
 
    (iii) If such Floating Rate Note is designated as an "Inverse Floating
  Rate Note," then, except as described below or in the applicable Pricing
  Supplement, such Floating Rate Note will bear interest at the Fixed
  Interest Rate minus the rate determined by reference to the applicable
  Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
  any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
  provided, however, that, unless otherwise specified in the applicable
  Pricing Supplement, the interest
 
                                      S-8

 
  rate thereon will not be less than zero. Commencing on the Initial Interest
  Reset Date, the rate at which interest on such Inverse Floating Rate Note
  shall be payable shall be reset as of each Interest Reset Date; provided,
  however, that the interest rate in effect for the period, if any, from the
  date of issue to the Initial Interest Reset Date will be the Initial
  Interest Rate.
 
  The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest
Rate Basis or Bases will be multiplied to determine the applicable interest
rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related
Interest Rate Basis or Bases will be calculated.
 
  Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Pricing Supplement, the interest rate in effect on each day
shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as hereinafter defined)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.
 
  Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds
Rate, (vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such
other Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect on a Floating Rate Note for the period, if any, from the date of issue
to the Initial Interest Reset Date will be the Initial Interest Rate;
provided, further, that with respect to a Floating Rate/Fixed Rate Note the
interest rate in effect for the period commencing on the Fixed Rate
Commencement Date to the Maturity Date shall be the Fixed Interest Rate, if
such rate is specified in the applicable Pricing Supplement or, if no such
Fixed Interest Rate is specified, the interest rate in effect thereon on the
day immediately preceding the Fixed Rate Commencement Date.
 
  The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case
of Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly,
the Wednesday of each week (with the exception of weekly reset Floating Rate
Notes as to which the Treasury Rate is an applicable Interest Rate Basis,
which will reset the Tuesday of each week, except as described below); (iii)
monthly, the third Wednesday of each month (with the exception of monthly
reset Floating Rate Notes as to which the Eleventh District Cost of Funds Rate
is an applicable Interest Rate Basis, which will reset on the first calendar
day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year; (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement; provided, however, that, with respect to Floating Rate/Fixed Rate
Notes, the rate of interest thereon will not reset after the applicable Fixed
Rate Commencement Date. If any Interest Reset Date for any Floating Rate Note
would otherwise be a day that is not a Business Day, such Interest Reset Date
will be postponed to the next succeeding Business Day, except that in the case
of a Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis
and such Business Day falls in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day. In
addition, in the case of a Floating Rate Note as to which the Treasury Rate is
an applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will
be postponed to the next succeeding Business Day.
 
 
                                      S-9

 
  The interest rate applicable to each Interest Reset Period commencing on the
related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date
(as hereinafter defined), except with respect to LIBOR and the Eleventh
District Cost of Funds Rate, which will be calculated on such Interest
Determination Date. The "Interest Determination Date" with respect to the CD
Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate and the
Prime Rate will be the second Business Day immediately preceding the
applicable Interest Reset Date; the "Interest Determination Date" with respect
to the Eleventh District Cost of Funds Rate will be the last working day of
the month immediately preceding the applicable Interest Reset Date on which
the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco")
publishes the Index (as hereinafter defined); and the "Interest Determination
Date" with respect to LIBOR will be the second London Business Day immediately
preceding the applicable Interest Reset Date, unless the Index Currency is
British pounds sterling, in which case the "Interest Determination Date" will
be the applicable Interest Reset Date. With respect to the Treasury Rate, the
"Interest Determination Date" will be the day in the week in which the
applicable Interest Reset Date falls on which day Treasury Bills (as
hereinafter defined) are normally auctioned (Treasury Bills are normally sold
at an auction held on Monday of each week, unless that day is a legal holiday,
in which case the auction is normally held on the following Tuesday, except
that such auction may be held on the preceding Friday); provided, however,
that if an auction is held on the Friday of the week preceding the applicable
Interest Reset Date, the Interest Determination Date will be such preceding
Friday. The "Interest Determination Date" pertaining to a Floating Rate Note
the interest rate of which is determined by reference to two or more Interest
Rate Bases will be the most recent Business Day which is at least two Business
Days prior to the applicable Interest Reset Date for such Floating Rate Note
on which each Interest Rate Basis is determinable. Each Interest Rate Basis
will be determined as of such date, and the applicable interest rate will take
effect on the applicable Interest Reset Date.
 
  A Floating Rate Note may also have either or both of the following: (i) a
Maximum Interest Rate, or ceiling, that may accrue during any Interest Period
and (ii) a Minimum Interest Rate, or floor, that may accrue during any
Interest Period. In addition to any Maximum Interest Rate that may apply to
any Floating Rate Note, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same
may be modified by United States law of general application.
 
  Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or the third Wednesday
of March, June, September and December of each year, as specified in the
applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, on the Maturity Date. If any Interest
Payment Date other than the Maturity Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
such Business Day falls in the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding Business Day. If the Maturity
Date of a Floating Rate Note falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and interest will be made on
the next succeeding Business Day with the same force and effect as if made on
the date such payment was due, and no interest will accrue on such payment for
the period from and after the Maturity Date to the date of such payment on the
next succeeding Business Day.
 
  All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
 .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded,
in the case of United States dollars, to the nearest cent or, in the case of a
foreign currency or composite currency, to the nearest unit (with one-half
cent or unit being rounded upwards).
 
                                     S-10

 
  With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year in the case of Floating Rate Notes for which an applicable
Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise
specified in the applicable Pricing Supplement, the interest factor for
Floating Rate Notes for which the interest rate is calculated with reference
to two or more Interest Rate Bases will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases applied as
specified in the applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, State
Street Bank and Trust Company will be the "Calculation Agent" with respect to
any Floating Rate Note. Upon request of the Holder of any Floating Rate Note,
the Calculation Agent will disclose the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next succeeding Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after
such Interest Determination Date, or, if such day is not a Business Day, the
next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be.
 
  Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
 
  CD Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date
for negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates
of deposit of the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New
York City time, on such CD Rate Interest Determination Date, of three leading
nonbank dealers in negotiable United States dollar certificates of deposit in
The City of New York (which may include any of the Agents or their affiliates)
selected by the Calculation Agent for negotiable United States dollar
certificates of deposit of major United States money center banks in the
market for negotiable United States dollar certificates of deposit with a
remaining maturity closest to the Index Maturity specified in the applicable
Pricing Supplement in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
 
  CMT Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to
a Floating Rate Note for which the interest rate is determined with reference
to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed
on the Designated CMT Telerate Page under the caption ". . . Treasury Constant
Maturities. . . Federal Reserve
 
                                     S-11

 
Board Release H.15. . . Mondays Approximately 3:45 P.M.," under the column for
the Designated CMT Maturity Index for (i) if the Designated CMT Telerate Page
is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the weekly or monthly average, as
specified in the applicable Pricing Supplement, for the week or the month, as
applicable, ended immediately preceding the week or month, as applicable, in
which the related CMT Rate Interest Determination Date occurs. If such rate is
no longer displayed on the relevant page or is not displayed by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT Rate for such
CMT Rate Interest Determination Date will be such treasury constant maturity
rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published or is not published by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate
on such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest
Determination Date with respect to such Interest Reset Date as may then be
published by either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated
CMT Telerate Page and published in the relevant H.15(519). If such information
is not provided by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include any of the
Agents or their affiliates) selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent is unable to obtain three such Treasury Note quotations, the CMT Rate on
such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date of three
Reference Dealers in The City of New York (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or,
in the event of equality, one of the highest) and the lowest quotation (or, in
the event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100,000,000. If
three or four (and not five) of such Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean of the
offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three Reference
Dealers so selected by the Calculation Agent are quoting as mentioned herein,
the CMT Rate determined as of such CMT Rate Interest Determination Date will
be the CMT Rate in effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the Calculation Agent will obtain quotations for the Treasury
Note with the shorter remaining term to maturity and will use such quotations
to calculate the CMT Rate as set forth above.
 
  "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on that service
(or any successor service) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)) for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519). If no such page is specified in
the applicable Pricing Supplement, the Designated CMT Telerate Page shall be
7052, for the most recent week.
 
  "Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either one, two, three, five, seven, 10, 20 or 30
years) specified in the applicable Pricing Supplement with respect
 
                                     S-12

 
to which the CMT Rate will be calculated. If no such maturity is specified in
the applicable Pricing Supplement, the Designated CMT Maturity Index shall be
two years.
 
  Commercial Paper Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as
hereinafter defined) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Commercial Paper." In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the Commercial
Paper Rate on such Commercial Paper Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates at approximately 11:00 A.M., New York
City time, on such Commercial Paper Rate Interest Determination Date of three
leading dealers of commercial paper in The City of New York (which may include
any of the Agents or their affiliates) selected by the Calculation Agent for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating organization;
provided, however, that if the dealers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate
determined as of such Commercial Paper Rate Interest Determination Date will
be the Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
 
  "Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
 
                                         
                                         D X 360 
                  Money Market Yield = ------------ X 100
                                       360 - (D X M) 
                                         
 
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
 
  Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate
Note for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 as of 11:00
A.M., San Francisco time, on such Eleventh District Cost of Funds Rate
Interest Determination Date. If such rate does not appear on Telerate Page
7058 on such Eleventh District Cost of Funds Rate Interest Determination Date
then the Eleventh District Cost of Funds Rate on such Eleventh District Cost
of Funds Rate Interest Determination Date shall be the monthly weighted
average cost of funds paid by member institutions of the Eleventh Federal Home
Loan Bank District that was most recently announced (the "Index") by the FHLB
of San Francisco as such cost of funds for the calendar month immediately
preceding such Eleventh District Cost of Funds Rate Interest Determination
Date. If the FHLB of San Francisco fails to announce the Index on or prior to
such Eleventh District Cost of Funds Rate Interest Determination Date for the
calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date, the Eleventh District Cost of Funds Rate
determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date will be the Eleventh District Cost of Funds Rate in effect
on such Eleventh District Cost of Funds Rate Interest Determination Date.
 
                                     S-13

 
  Federal Funds Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Federal Funds Rate (a "Federal Funds
Rate Interest Determination Date"), the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include any
of the Agents or their affiliates) selected by the Calculation Agent prior to
9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Federal Funds Rate Interest Determination
Date will be the Federal Funds Rate in effect on such Federal Funds Rate
Interest Determination Date.
 
  LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
 
    (i) With respect to any Interest Determination Date relating to a
  Floating Rate Note for which the interest rate is determined with reference
  to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
  if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
  arithmetic mean of the offered rates (unless the Designated LIBOR Page by
  its terms provides only for a single rate, in which case such single rate
  shall be used) for deposits in the Index Currency having the Index Maturity
  specified in such Pricing Supplement, commencing on the applicable Interest
  Reset Date, that appear (or, if only a single rate is required as
  aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
  time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Telerate"
  is specified in the applicable Pricing Supplement or if neither "LIBOR
  Reuters" nor "LIBOR Telerate" is specified in the applicable Pricing
  Supplement as the method for calculating LIBOR, the rate for deposits in
  the Index Currency having the Index Maturity specified in such Pricing
  Supplement, commencing on such Interest Reset Date, that appears on the
  Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
  Determination Date. If fewer than two such offered rates appear, or if no
  such rate appears, as applicable, LIBOR on such LIBOR Interest
  Determination Date will be determined in accordance with the provisions
  described in clause (ii) below.
 
    (ii) With respect to a LIBOR Interest Determination Date on which fewer
  than two offered rates appear, or no rate appears, as the case may be, on
  the Designated LIBOR Page as specified in clause (i) above, the Calculation
  Agent will request the principal London offices of each of four major
  reference banks in the London interbank market, as selected by the
  Calculation Agent, to provide the Calculation Agent with its offered
  quotation for deposits in the Index Currency for the period of the Index
  Maturity specified in the applicable Pricing Supplement, commencing on the
  applicable Interest Reset Date, to prime banks in the London interbank
  market at approximately 11:00 A.M., London time, on such LIBOR Interest
  Determination Date and in a principal amount that is representative for a
  single transaction in such Index Currency in such market at such time. If
  at least two such quotations are so provided, then LIBOR on such LIBOR
  Interest Determination Date will be the arithmetic mean of such quotations.
  If fewer than two such quotations are so provided, then LIBOR on such LIBOR
  Interest Determination Date will be the arithmetic mean of the rates quoted
  at approximately 11:00 A.M., in the applicable Principal Financial Center,
  on such LIBOR Interest Determination Date by three major banks in such
  Principal Financial Center selected by the Calculation Agent for loans in
  the Index Currency to leading European banks, having the Index Maturity
  specified in the applicable Pricing Supplement and in a principal amount
  that is representative for a single transaction in such Index Currency in
  such market at such time; provided, however, that if the banks so selected
  by the Calculation Agent are not quoting as mentioned in this sentence,
  LIBOR determined as of
 
                                     S-14

 
  such LIBOR Interest Determination Date will be LIBOR in effect on such
  LIBOR Interest Determination Date.
 
  "Index Currency" means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no
such currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
 
  "Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service (or any
successor service)) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified in the applicable Pricing Supplement as the
method for calculating LIBOR, the display on the Dow Jones Telerate Service
(or any successor service) on the page specified in such Pricing Supplement
(or any other page as may replace such page on such service (or any successor
service)) for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency.
 
  Prime Rate. Unless otherwise specified in the applicable Pricing Supplement,
"Prime Rate" means, with respect to any Interest Determination Date relating
to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as is published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time,
on the related Calculation Date, then the Prime Rate shall be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 Page (as hereinafter defined) as such bank's prime
rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Prime Rate Interest Determination Date, then the Prime
Rate shall be the arithmetic mean of the prime rates quoted on the basis of
the actual number of days in the year divided by a 360-day year as of the
close of business on such Prime Rate Interest Determination Date by four major
money center banks in The City of New York selected by the Calculation Agent.
If fewer than four such quotations are so provided, then the Prime Rate shall
be the arithmetic mean of four prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of
the United States, or any State thereof, each having total equity capital of
at least $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
 
  "Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor
service) or such other page as may replace the USPRIME1 Page on the Reuter
Monitor Money Rates Service (or any successor service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
 
  Treasury Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified in the
applicable Pricing Supplement, as such rate is published in H.15(519) under
the heading "Treasury bills-auction average (investment)" or, if not
 
                                     S-15

 
published by 3:00 P.M., New York City time, on the related Calculation Date,
the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the Auction of
Treasury Bills having the Index Maturity specified in the applicable Pricing
Supplement are not reported as provided by 3:00 P.M., New York City time, on
the related Calculation Date, or if no such Auction is held, then the Treasury
Rate will be calculated by the Calculation Agent and will be a yield to
maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of
the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include any of
the Agents or their affiliates) selected by the Calculation Agent, for the
issue of Treasury Bills with a remaining maturity closest to the Index
Maturity specified in the applicable Pricing Supplement; provided, however,
that if the dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of such Treasury
Rate Interest Determination Date will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
 
AMORTIZING NOTES
 
  The Trust may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal
amount thereof. Further information concerning additional terms and provisions
of Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing
Notes.
 
ORIGINAL ISSUE DISCOUNT NOTES
 
  The Trust may offer Notes ("Discount Notes") from time to time that have an
Issue Price (as specified in the applicable Pricing Supplement) that is less
than 100% of the principal amount thereof (i.e., par). Discount Notes may not
bear any interest currently or may bear interest at a rate that is below
market rates at the time of issuance. The difference between the Issue Price
of a Discount Note and par is referred to herein as the "Discount." In the
event of redemption, repayment or acceleration of maturity of a Discount Note,
the amount payable to the Holder of such Discount Note will be equal to the
sum of: (i) the Issue Price (increased by any accruals of Discount) and, in
the event of any redemption of such Discount Note (if applicable), multiplied
by the Initial Redemption Percentage specified in the applicable Pricing
Supplement (as adjusted by the Annual Redemption Percentage Reduction, if
applicable); and (ii) any unpaid interest on such Discount Note accrued from
the date of issue to the date of such redemption, repayment or acceleration of
maturity.
 
  Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for a
Discount Note, such Discount will be accrued using a constant yield method.
The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the Initial Period (as
hereinafter defined), corresponds to the shortest period between Interest
Payment Dates for the applicable Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable
to such Discount Note and an assumption that the maturity of such Discount
Note will not be accelerated. If the period from the date of issue to the
initial Interest Payment Date for a Discount Note (the "Initial Period") is
shorter than the compounding period for such Discount Note, a proportionate
amount of the yield for an entire compounding period will be accrued. If the
Initial Period is longer than the compounding period, then such period will be
divided into a regular compounding period and a short period with the short
period being treated as provided in the preceding sentence. The accrual of the
applicable Discount may differ from the accrual of original issue discount for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"),
certain Discount Notes may not be treated as having original issue discount
within the meaning of the
 
                                     S-16

 
Code, and Notes other than Discount Notes may be treated as issued with
original issue discount for federal income tax purposes. See "Certain United
States Federal Income Tax Considerations" herein.
 
INDEXED NOTES
 
  Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
designated currencies (including a composite currency such as the ECU)
relative to an indexed currency or to such other price(s) or exchange rate(s)
("Indexed Notes"), as specified in the applicable Pricing Supplement. In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the
amount of principal, premium, if any, and/or interest payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and any material tax considerations associated with an investment
in Indexed Notes will be specified in the applicable Pricing Supplement. See
also "Risk Factors."
 
BOOK-ENTRY NOTES
 
  The Trust has established a depositary arrangement with The Depository Trust
Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
 
  Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest at the same rate or pursuant to the same formula and
having the same date of issue, Specified Currency, Interest Payment Dates,
Stated Maturity Date, redemption provisions (if any), repayment provisions (if
any) and other terms will be represented by a single Global Security. Each
Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the Depositary and will be registered in the name of the Depositary
or a nominee of the Depositary. No Global Security may be transferred except
as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
 
  So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures
of the Depositary and, if such Beneficial Owner is not a Participant (as
hereinafter defined), on the procedures of the Participant through which such
Beneficial Owner owns its interest in order to exercise any rights of a Holder
under such Global Security or the Indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security representing
Book-Entry Notes.
 
  Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Certificated
Notes of like tenor and terms and of differing authorized denominations
aggregating a like principal amount, only if (i) the Depositary notifies the
Trust that it is unwilling or unable to continue as Depositary for the Global
Securities or the Depositary ceases to be a clearing agency registered under
the Exchange Act (if so required by applicable law or regulation) and, in each
case, a successor Depositary is not appointed by the Trust within 90 days
after the Trust receives such notice or becomes aware of such unwillingness,
inability or ineligibility, (ii) the Trust in its sole discretion determines
that the Global Securities shall be exchangeable for Certificated Notes or
(iii) there shall have occurred and be continuing an Event of Default under
the Indenture with respect to the Notes and Beneficial Owners representing a
majority in
 
                                     S-17

 
aggregate principal amount of the Book-Entry Notes represented by Global
Securities advise the Depositary to cease acting as depositary. Upon any such
exchange, the Certificated Notes shall be registered in the names of the
Beneficial Owners of the Global Security or Securities representing Book-Entry
Notes, which names shall be provided by the Depositary's relevant Participants
(as identified by the Depositary) to the Trustee.
 
  The information below concerning the Depositary and the Depositary's system
has been obtained from the Depositary, and neither the Trust nor any Agent
assumes any responsibility for the accuracy thereof.
 
    The Depositary will act as securities depository for the Book-Entry
  Notes. The Book-Entry Notes will be issued as fully registered securities
  registered in the name of Cede & Co. (the Depositary's partnership
  nominee). One fully registered Global Security will be issued for each
  issue of Book-Entry Notes, each in the aggregate principal amount of such
  issue, and will be deposited with the Depositary. If, however, the
  aggregate principal amount of any issue exceeds $200,000,000, one Global
  Security will be issued with respect to each $200,000,000 of principal
  amount and an additional Global Security will be issued with respect to any
  remaining principal amount of such issue.
 
    The Depositary is a limited-purpose trust company organized under the New
  York Banking Law, a "banking organization" within the meaning of the New
  York Banking Law, a member of the Federal Reserve System, a "clearing
  corporation" within the meaning of the New York Uniform Commercial Code,
  and a "clearing agency" registered pursuant to the provisions of Section
  17A of the Exchange Act. The Depositary holds securities that its
  participants ("Participants") deposit with the Depositary. The Depositary
  also facilitates the settlement among Participants of securities
  transactions, such as transfers and pledges, in deposited securities
  through electronic computerized book-entry changes in Participants'
  accounts, thereby eliminating the need for physical movement of securities
  certificates. Direct Participants of the Depositary ("Direct Participants")
  include securities brokers and dealers (including the Agents), banks, trust
  companies, clearing corporations and certain other organizations. The
  Depositary is owned by a number of its Direct Participants and by the New
  York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
  National Association of Securities Dealers, Inc. Access to the Depositary's
  system is also available to others such as securities brokers and dealers,
  banks and trust companies that clear through or maintain a custodial
  relationship with a Direct Participant, either directly or indirectly
  ("Indirect Participants"). The rules applicable to the Depositary and its
  Participants are on file with the Securities and Exchange Commission.
 
    Purchases of Book-Entry Notes under the Depositary's system must be made
  by or through Direct Participants, which will receive a credit for such
  Book-Entry Notes on the Depositary's records. The ownership interest of
  each actual purchaser of each Book-Entry Note represented by a Global
  Security ("Beneficial Owner") is in turn to be recorded on the Direct
  Participants' and Indirect Participants' records. Beneficial Owners will
  not receive written confirmation from the Depositary of their purchase, but
  Beneficial Owners are expected to receive written confirmations providing
  details of the transaction, as well as periodic statements of their
  holdings, from the Direct Participants or Indirect Participants through
  which such Beneficial Owner entered into the transaction. Transfers of
  ownership interests in a Global Security representing Book-Entry Notes are
  to be accomplished by entries made on the books of Participants acting on
  behalf of Beneficial Owners. Beneficial Owners of a Global Security
  representing Book-Entry Notes will not receive Certificated Notes
  representing their ownership interests therein, except in the event that
  use of the book-entry system for such Book-Entry Notes is discontinued.
 
    To facilitate subsequent transfers, all Global Securities representing
  Book-Entry Notes which are deposited with, or on behalf of, the Depositary
  are registered in the name of the Depositary's partnership nominee, Cede &
  Co. The deposit of Global Securities with, or on behalf of, the Depositary
  and their registration in the name of Cede & Co. effect no change in
  beneficial ownership. The Depositary has no knowledge of the actual
  Beneficial Owners of the Global Securities representing the Book-Entry
  Notes; the Depositary's records reflect only the identity of the Direct
  Participants to whose accounts such Book-Entry Notes are credited, which
  may or may not be the Beneficial Owners. The Participants will remain
  responsible for keeping account of their holdings on behalf of their
  customers.
 
                                     S-18

 
    Conveyance of notices and other communications by the Depositary to
  Direct Participants, by Direct Participants to Indirect Participants, and
  by Direct Participants and Indirect Participants to Beneficial Owners will
  be governed by arrangements among them, subject to any statutory or
  regulatory requirements as may be in effect from time to time.
 
    Neither the Depositary nor Cede & Co. will consent or vote with respect
  to the Global Securities representing the Book-Entry Notes. Under its usual
  procedures, the Depositary mails an Omnibus Proxy to the Trust as soon as
  possible after the applicable record date. The Omnibus Proxy assigns Cede &
  Co.'s consenting or voting rights to those Direct Participants to whose
  accounts the Book-Entry Notes are credited on the applicable record date
  (identified in a listing attached to the Omnibus Proxy).
 
    Principal, premium, if any, and/or interest payments on Global Securities
  representing the Book-Entry Notes will be made to the Depositary. The
  Depositary's practice is to credit Direct Participants' accounts on the
  applicable payment date in accordance with their respective holdings shown
  on the Depositary's records unless the Depositary has reason to believe
  that it will not receive payment on such date. Payments by Participants to
  Beneficial Owners will be governed by standing instructions and customary
  practices, as is the case with securities held for the accounts of
  customers in bearer form or registered in "street name," and will be the
  responsibility of such Participant and not of the Depositary, the Trustee
  or the Trust, subject to any statutory or regulatory requirements as may be
  in effect from time to time. Payment of principal, premium, if any, and/or
  interest to the Depositary is the responsibility of the Trust or the
  Trustee, disbursement of such payments to Direct Participants shall be the
  responsibility of the Depositary, and disbursement of such payments to the
  Beneficial Owners shall be the responsibility of Direct Participants and
  Indirect Participants.
 
    If applicable, redemption notices shall be sent to Cede & Co. If less
  than all of the Book-Entry Notes within an issue are being redeemed, the
  Depositary's practice is to determine by lot the amount of the interest of
  each Direct Participant in such issue to be redeemed.
 
    A Beneficial Owner shall give notice of any option to elect to have its
  Book-Entry Notes repaid by the Trust, through its Participant, to the
  Trustee, and shall effect delivery of such Book-Entry Notes by causing the
  Direct Participant to transfer the Participant's interest in the Global
  Security or Securities representing such Book-Entry Notes, on the
  Depositary's records, to the Trustee. The requirement for physical delivery
  of Book-Entry Notes in connection with a demand for repayment will be
  deemed satisfied when the ownership rights in the Global Security or
  Securities representing such Book-Entry Notes are transferred by Direct
  Participants on the Depositary's records.
 
    The Depositary may discontinue providing its services as securities
  depository with respect to the Book-Entry Notes at any time by giving
  reasonable notice to the Trust or the Trustee. Under such circumstances, in
  the event that a successor securities depository is not obtained,
  Certificated Notes are required to be printed and delivered.
 
    The Trust may decide to discontinue use of the system of book-entry
  transfers through the Depositary (or a successor securities depository). In
  that event, Certificated Notes will be printed and delivered.
 
             SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
 
GENERAL
 
  Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing
the applicable currency. The information set forth in this Prospectus
Supplement is directed to prospective purchasers who are United States
residents and, with respect to Foreign Currency Notes, is by necessity
incomplete. The Trust disclaims any responsibility to advise prospective
purchasers who are residents of countries other than the United States with
respect to any matters that may affect the purchase, holding or receipt of
payments of principal of, and premium, if any, and interest on, the Foreign
Currency Notes. Such persons should consult their own financial and legal
advisors with regard to such matters. See "Risk Factors--Exchange Rates and
Exchange Controls."
 
                                     S-19

 
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
 
  Unless otherwise specified in the applicable Pricing Supplement, the Trust
is obligated to make payments of principal of, and premium, if any, and
interest on, Foreign Currency Notes in the applicable Specified Currency (or,
if such Specified Currency is not at the time of such payment legal tender for
the payment of public and private debts, in such other coin or currency of the
country which issued such Specified Currency as at the time of such payment is
legal tender for the payment of such debts). Any such amounts payable by the
Trust in a foreign currency or composite currency will, unless otherwise
specified in the applicable Pricing Supplement, be converted by the exchange
rate agent named in the applicable Pricing Supplement (the "Exchange Rate
Agent") into United States dollars for payment to Holders. However, the Holder
of a Foreign Currency Note may elect to receive such amounts in the applicable
foreign currency or composite currency as hereinafter described.
 
  Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New
York received by the Exchange Rate Agent at approximately 11:00 A.M., New York
City time, on the second Business Day preceding the applicable payment date
from three recognized foreign exchange dealers (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the
Trust for the purchase by the quoting dealer of the Specified Currency for
United States dollars for settlement on such payment date in the aggregate
amount of such Specified Currency payable to all Holders of Foreign Currency
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the Holders of such Foreign Currency Notes by deductions from
such payments. If three such bid quotations are not available, payments will
be made in the Specified Currency.
 
  A Holder of a Foreign Currency Note may elect to receive all or a specified
portion of any payment of the principal of, and premium, if any, and/or
interest on, such Foreign Currency Note in the Specified Currency by
submitting a written request for such payment to the Trustee at its corporate
trust office in The City of New York on or prior to the applicable Record Date
or at least fifteen calendar days prior to the Maturity Date, as the case may
be. Such written request may be mailed or hand delivered or sent by cable,
telex or other form of facsimile transmission. A Holder of a Foreign Currency
Note may elect to receive all or a specified portion of all future payments in
the Specified Currency in respect of such principal, premium, if any, and/or
interest and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, but
written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least fifteen calendar days prior to
the Maturity Date, as the case may be. Holders of Foreign Currency Notes whose
Notes are to be held in the name of a broker or nominee should contact such
broker or nominee to determine whether and how an election to receive payments
in the Specified Currency may be made.
 
  Payments of the principal of, and premium, if any, and/or interest on,
Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in
United States dollars. See "Description of Notes--General." Payments of
interest on Foreign Currency Notes which are to be made in the Specified
Currency on an Interest Payment Date other than the Maturity Date will be made
by check mailed to the address of the Holders of such Foreign Currency Notes
as they appear in the Security Register, subject to the right to receive such
interest payments by wire transfer of immediately available funds under
certain circumstances described under "Description of Notes--General."
Payments of principal of, and premium, if any, and/or interest on, Foreign
Currency Notes which are to be made in the Specified Currency on the Maturity
Date will be made by wire transfer of immediately available funds to an
account with a bank designated at least fifteen calendar days prior to the
Maturity Date by each Holder thereof, provided that such bank has appropriate
facilities therefor and that the applicable Foreign Currency Note is presented
and surrendered at the principal corporate trust office of the Trustee in time
for the Trustee to make such payments in such funds in accordance with its
normal procedures.
 
  Unless otherwise specified in the applicable Pricing Supplement, a
Beneficial Owner of a Global Security or Securities representing Book-Entry
Notes payable in a Specified Currency other than United States dollars
 
                                     S-20

 
which elects to receive payments of principal, premium, if any, and/or
interest in such Specified Currency must notify the Participant through which
it owns its interest on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity Date, as the case may be, of such
Beneficial Owner's election. Such Participant must notify the Depositary of
such election on or prior to the third Business Day after such Record Date or
at least twelve calendar days prior to the Maturity Date, as the case may be,
and the Depositary will notify the Trustee of such election on or prior to the
fifth Business Day after such Record Date or at least ten calendar days prior
to the Maturity Date, as the case may be. If complete instructions are
received by the Participant from the Beneficial Owner and forwarded by the
Participant to the Depositary, and by the Depositary to the Trustee, on or
prior to such dates, then such Beneficial Owner will receive payments in the
applicable Specified Currency.
 
PAYMENT CURRENCY
 
  If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest due to the
imposition of exchange controls or other circumstances beyond the control of
the Trust, the Trust will be entitled to satisfy its obligations to the Holder
of such Foreign Currency Note by making such payment in United States dollars
on the basis of the Market Exchange Rate (as hereinafter defined) on the
second Business Day prior to such payment or, if such Market Exchange Rate is
not then available, on the basis of the most recently available Market
Exchange Rate or as otherwise specified in the applicable Pricing Supplement.
 
  If payment in respect of a Foreign Currency Note is required to be made in
any composite currency (e.g., ECU), and such composite currency is unavailable
due to the imposition of exchange controls or other circumstances beyond the
control of the Trust, the Trust will be entitled to satisfy its obligations to
the Holder of such Foreign Currency Note by making such payment in United
States dollars. The amount of each payment in United States dollars shall be
computed by the Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the "Component Currencies"
and each, a "Component Currency") shall be the currency amounts that were
components of the composite currency as of the last day on which the composite
currency was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar
equivalents of the Component Currencies. The United States dollar equivalent
of each of the Component Currencies shall be determined by the Exchange Rate
Agent on the basis of the most recently available Market Exchange Rate for
each such Component Currency, or as otherwise specified in the applicable
Pricing Supplement.
 
  If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
 
  The "Market Exchange Rate" for a Specified Currency other than United States
dollars means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York. Any payment made in United States dollars under such circumstances
where the required payment is in a Specified Currency other than United States
dollars will not constitute an Event of Default under the Indenture with
respect to the Notes.
 
                                     S-21

 
  All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
 
GOVERNING LAW; JUDGMENTS
 
  The Notes will be governed by and construed in accordance with the laws of
the State of New York. Under current New York law, a state court in the State
of New York rendering a judgment on a Foreign Currency Note would be required
to render such judgment in the Specified Currency, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the
date of entry of the judgment. The holders of such Notes would be subject to
exchange rate fluctuations occurring thereafter. It is not certain, however,
that a non-New York state court would follow the same rules with respect to
such conversions.
 
            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
  The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, tax-exempt organizations, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a "straddle" for
tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with Holders other than original purchasers
(except where otherwise specifically noted). BECAUSE THE EXACT PRICING AND
OTHER TERMS OF THE NOTES WILL VARY, NO ASSURANCE CAN BE GIVEN THAT THE
CONSIDERATIONS DESCRIBED BELOW WILL APPLY TO A PARTICULAR ISSUANCE OF NOTES.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE
OWNERSHIP OF PARTICULAR NOTES (WHERE APPLICABLE) WILL BE SUMMARIZED IN THE
PRICING SUPPLEMENT RELATING TO SUCH NOTES. PERSONS CONSIDERING THE PURCHASE OF
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF
UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION AS WELL AS
ANY CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
 
  As used herein, the term "U.S. Holder" means a Beneficial Owner of a Note
that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a Beneficial Owner of a Note that is
not a U.S. Holder.
 
U.S. HOLDERS
 
  Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular
method of tax accounting).
 
  Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue
discount. The following summary is based upon final Treasury regulations (the
"OID
 
                                     S-22

 
Regulations") released by the Internal Revenue Service ("IRS") on January 27,
1994 under the original issue discount provisions of the Code.
 
  For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a
Note providing for the payment of any amount other than qualified stated
interest (as hereinafter defined) prior to maturity, multiplied by the
weighted average maturity of such Note). The issue price of each Note in an
issue of Notes equals the first price at which a substantial amount of such
Notes has been sold (ignoring sales to bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers). The stated redemption price at maturity of a Note is
the sum of all payments provided by the Note other than "qualified stated
interest" payments. The term "qualified stated interest" generally means
stated interest that is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually at a single fixed rate.
In addition, under the OID Regulations, if a Note bears interest for one or
more accrual periods at a rate below the rate applicable for the remaining
term of such Note (e.g., Notes with teaser rates or interest holidays), and if
the greater of either the resulting foregone interest on such Note or any
"true" discount on such Note (i.e., the excess of the Note's stated principal
amount over its issue price) equals or exceeds a specified de minimis amount,
then a portion, or in some circumstances all, of the stated interest on the
Note would be treated as original issue discount rather than qualified stated
interest.
 
  Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S.
Holder's regular method of tax accounting. In general, the amount of original
issue discount included in income by the initial U.S. Holder of a Discount
Note is the sum of the daily portions of original issue discount with respect
to such Discount Note for each day during the taxable year (or portion of the
taxable year) on which such U.S. Holder held such Discount Note. The "daily
portion" of original issue discount on any Discount Note is determined by
allocating to each day in any accrual period a ratable portion of the original
issue discount allocable to that accrual period. An "accrual period" may be of
any length and the accrual periods may vary in length over the term of the
Discount Note, provided that each accrual period is no longer than one year
and each scheduled payment of principal or interest occurs either on the final
day of an accrual period or on the first day of an accrual period. The amount
of original issue discount allocable to each accrual period is generally equal
to the difference between (i) the product of the Discount Note's adjusted
issue price at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period
and appropriately adjusted to take into account the length of the particular
accrual period) and (ii) the amount of any qualified stated interest payments
allocable to such accrual period. The "adjusted issue price" of a Discount
Note at the beginning of any accrual period is the sum of the issue price of
the Discount Note plus the amount of original issue discount allocable to all
prior accrual periods minus the amount of any prior payments on the Discount
Note that were not qualified stated interest payments. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts
of original issue discount in successive accrual periods. These same rules
apply to any Note that is not otherwise a Discount Note, but nonetheless has
been issued with original issue discount.
 
  A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal
to the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder
must include in its gross income with respect to such Discount Note for any
taxable year (or portion thereof in which the U.S. Holder holds the Discount
Note) will be reduced (but not below zero)
 
                                     S-23

 
by the portion of the acquisition premium properly allocable to the period.
These same rules apply to any Note that is not otherwise a Discount Note, but
nonetheless has been issued with original issue discount.
 
  Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the
total noncontingent principal payments due under the Variable Note by more
than a specified de minimis amount and (b) it provides for stated interest,
paid or compounded at least annually, at current values of (i) one or more
qualified floating rates, (ii) a single fixed rate and one or more qualified
floating rates, (iii) a single objective rate, or (iv) a single fixed rate and
a single objective rate that is a qualified inverse floating rate.
 
  A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple
that is greater than zero but not more than 1.35 will constitute a qualified
floating rate. A variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than zero but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, two or more qualified
floating rates that can reasonably be expected to have approximately the same
values throughout the term of the Variable Note (e.g., two or more qualified
floating rates with values within 25 basis points of each other as determined
on the Variable Note's issue date) will be treated as a single qualified
floating rate. Notwithstanding the foregoing, a variable rate that would
otherwise constitute a qualified floating rate but which is subject to one or
more restrictions such as a maximum numerical limitation (i.e., a cap) or a
minimum numerical limitation (i.e., a floor) may, under certain circumstances,
fail to be treated as a qualified floating rate under the OID Regulations
unless such cap or floor is fixed throughout the term of the Note. An
"objective rate" is a rate that is not itself a qualified floating rate but
which is determined using a single fixed formula and which is based upon (i)
one or more qualified floating rates, (ii) one or more rates where each rate
would be a qualified floating rate for a debt instrument denominated in a
currency other than the currency in which the Variable Note is denominated,
(iii) either the yield or changes in the price of one or more items of
actively traded personal property (other than stock or debt of the issuer or a
related party) or (iv) a combination of objective rates. The OID Regulations
also provide that other variable interest rates may be treated as objective
rates if so designated by the IRS in the future. Despite the foregoing, a
variable rate of interest on a Variable Note will not constitute an objective
rate if it is reasonably expected that the average value of such rate during
the first half of the Variable Note's term will be either significantly less
than or significantly greater than the average value of the rate during the
final half of the Variable Note's term. A "qualified inverse floating rate" is
any objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Variable Note provides for
stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
 
  If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price
below the Note's stated principal amount) in excess of a specified de minimis
amount. Original issue discount on such a Variable Note arising from "true"
discount
 
                                     S-24

 
is allocated to an accrual period using the constant yield method described
above by assuming that the variable rate is a fixed rate equal to (i) in the
case of a qualified floating rate or qualified inverse floating rate, the
value as of the issue date, of the qualified floating rate or qualified
inverse floating rate, or (ii) in the case of an objective rate (other than a
qualified inverse floating rate), a fixed rate that reflects the yield that is
reasonably expected for the Variable Note.
 
  In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed
rate that reflects the yield that is reasonably expected for the Variable
Note. In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Variable Note as of the
Variable Note's issue date is approximately the same as the fair market value
of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Variable Note is then
converted into an "equivalent" fixed rate debt instrument in the manner
described above.
 
  Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest are determined for the "equivalent"
fixed rate debt instrument by applying the general original issue discount
rules to the "equivalent" fixed rate debt instrument and a U.S. Holder of the
Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Variable Note during the accrual period.
 
  U.S. Holders should be aware that on December 15, 1994, the IRS released
proposed amendments to the OID Regulations which would broaden the definition
of an objective rate and would further clarify certain other provisions
contained in the OID Regulations. If ultimately adopted, these amendments to
the OID Regulations would be effective for debt instruments issued 60 days or
more after the date on which such proposed amendments are finalized.
 
  If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On December 15, 1994 the IRS released
proposed Treasury regulations dealing with the treatment of contingent payment
obligations (the "Proposed Regulations"). The Proposed Regulations supersede
certain previously proposed Treasury regulations originally published on April
8, 1986 dealing with contingent payment obligations, and are not proposed to
be effective for debt instruments issued prior to the date that is 60 days
after the date on which the Proposed Regulations are finalized.
Notwithstanding the effective date of the Proposed Regulations, because the
Proposed Regulations represent the best indication of the current view of the
Treasury Department with respect to the Federal income tax treatment of
contingent payment obligations, the Trust intends to take the position (absent
any express authority to the contrary and unless otherwise indicated) that the
rules set forth in the Proposed Regulations will control the tax treatment of
any Variable Note that is treated as a contingent payment obligation, and the
following discussion assumes such treatment. There can be no assurance,
however, that the final Treasury
 
                                     S-25

 
Regulations regarding contingent payment obligations will not differ
materially from the Proposed Regulations. Accordingly, the ultimate Federal
income tax treatment of any Variable Note that is treated as a contingent
payment obligation may differ from that described herein.
 
  Generally, if a Variable Note is treated as a contingent payment obligation,
interest payments thereon will be treated as "contingent interest" payments.
Under the Proposed Regulations, any contingent interest payments on a Variable
Note would be includible in income in a taxable year whether or not the amount
of any payment is fixed or determinable in that year. The amount of interest
included in income in any particular accrual period would be determined by
estimating a projected payment schedule (as determined under the Proposed
Regulations) for the Variable Note and applying daily accrual rules similar to
those for accruing original issue discount on Notes issued with original issue
discount (as discussed above). If the actual amount of contingent interest
payments is not equal to the projected amount, an adjustment to income at the
time of the payment must be made to reflect the difference.
 
  Certain of the Notes (i) may be redeemable at the option of the Trust prior
to their stated maturity (a "call option") and/or (ii) may be repayable at the
option of the Holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such
features should consult their own tax advisors, since the original issue
discount consequences will depend, in part, on the particular terms and
features of the purchased Notes.
 
  U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
 
  Short-Term Notes. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, a cash method U.S. Holder is not required to accrue such
original issue discount unless the U.S. Holder elects to do so. If such an
election is not made, any gain recognized by the U.S. Holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or
upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions
otherwise allowable to the U.S. Holder for interest on borrowings allocable to
the Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other Holders including banks
and dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
 
  Market Discount. If a U.S. Holder purchases a Note, other than a Note issued
with original issue discount, for an amount that is less than its issue price
(or, in the case of a subsequent purchaser, its stated redemption price at
maturity) or, in the case of a Note issued with original issue discount, for
an amount that is less than its adjusted issue price as of the purchase date,
such U.S. Holder will be treated as having purchased such Note at a "market
discount," unless such market discount is less than a specified de minimis
amount.
 
  Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Note issued with original
issue discount, any payment that is part of its "revised issue price") on, or
any gain realized on the sale, exchange, retirement or other disposition of, a
Note as ordinary income to the extent of the lesser of (i) the amount of such
payment or realized gain or (ii) the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the Maturity
Date of the Note, unless the U.S. Holder elects to accrue market discount on
the basis of a constant interest rate.
 
                                     S-26

 
  A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note
or certain earlier dispositions, because a current deduction is only allowed
to the extent the interest expense exceeds an allocable portion of market
discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or a constant interest rate
basis), in which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the Note and upon the receipt
of certain cash payments and regarding the deferral of interest deductions
will not apply. Generally, such currently included market discount is treated
as ordinary interest for United States Federal income tax purposes. Such an
election will apply to all debt instruments acquired by the U.S. Holder on or
after the first day of the taxable year to which such election applies and may
be revoked only with the consent of the IRS.
 
  Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be
considered to have purchased the Note with "amortizable bond premium" equal in
amount to such excess. A U.S. Holder may elect to amortize such premium using
a constant yield method over the remaining term of the Note and may offset
interest otherwise required to be included in respect of the Note during any
taxable year by the amortized amount of such excess for the taxable year.
However, if the Note may be optionally redeemed after the U.S. Holder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the Note. Any election to amortize
bond premium applies to all taxable debt obligations then owned and thereafter
acquired by the U.S. Holder and may be revoked only with the consent of the
IRS.
 
  Disposition of a Note. Except as discussed above, upon the sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest)
and such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's
adjusted tax basis in a Note generally will equal such U.S. Holder's initial
investment in the Note increased by any original issue discount included in
income (and accrued market discount, if any, if the U.S. Holder has included
such market discount in income) and decreased by the amount of any payments,
other than qualified stated interest payments, received and amortizable bond
premium taken with respect to such Note. Such gain or loss generally will be
long-term capital gain or loss if the Note were held for more than one year.
 
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
 
  As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
 
  Cash Method. A U.S. Holder who uses the cash method of accounting for United
States Federal income tax purposes and who receives a payment of interest on a
Note (other than original issue discount or market discount) will be required
to include in income the U.S. dollar value of the Foreign Currency payment
(determined on the date such payment is received) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
 
  Accrual Method. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the
U.S. dollar value of the amount of interest income (including original issue
discount or market discount and reduced by amortizable bond premium to the
extent applicable) that has accrued and is otherwise required to be taken into
account with respect to a Note during an accrual period. The U.S. dollar value
of such accrued income will be determined by translating such income at the
average rate of exchange for the accrual period or, with respect to an accrual
period that spans two taxable years, at the average rate for the partial
period within the taxable year. A U.S. Holder may elect, however, to translate
such accrued interest income using the rate of exchange on the last day of the
accrual period or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within
 
                                     S-27

 
five business days of the date of receipt of the accrued interest, a U.S.
Holder may translate such interest using the rate of exchange on the date of
receipt. The above election will apply to other debt obligations held by the
U.S. Holder and may not be changed without the consent of the IRS. A U.S.
Holder should consult a tax advisor before making the above election. A U.S.
Holder will recognize exchange gain or loss (which will be treated as ordinary
income or loss) with respect to accrued interest income on the date such
income is received. The amount of ordinary income or loss recognized will
equal the difference, if any, between the U.S. dollar value of the Foreign
Currency payment received (determined on the date such payment is received) in
respect of such accrual period and the U.S. dollar value of interest income
that has accrued during such accrual period (as determined above).
 
  Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss
in an amount equal to the difference, if any, between such U.S. Holder's tax
basis in the Foreign Currency and the U.S. dollar fair market value of the
Foreign Currency used to purchase the Note, determined on the date of
purchase.
 
  Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income)
and will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year.
To the extent the amount realized represents accrued but unpaid interest,
however, such amounts must be taken into account as interest income, with
exchange gain or loss computed as described in "Payments of Interest in a
Foreign Currency" above. If a U.S. Holder receives Foreign Currency on such a
sale, exchange or retirement, the amount realized will be based on the U.S.
dollar value of the Foreign Currency on the date the payment is received or
the Note is disposed of (or deemed disposed of in the case of a taxable
exchange of the Note for a new Note). In the case of a Note that is
denominated in Foreign Currency and is traded on an established securities
market, a cash basis U.S. Holder (or, upon election, an accrual basis U.S.
Holder) will determine the U.S. dollar value of the amount realized by
translating the Foreign Currency payment at the spot rate of exchange on the
settlement date of the sale. A U.S. Holder's adjusted tax basis in a Note will
equal the cost of the Note to such Holder, increased by the amounts of any
market discount or original issue discount previously included in income by
the Holder with respect to such Note and reduced by any amortized acquisition
or other premium and any principal payments received by the Holder. A U.S.
Holder's tax basis in a Note, and the amount of any subsequent adjustments to
such Holder's tax basis, will be the U.S. dollar value of the Foreign Currency
amount paid for such Note, or of the Foreign Currency amount of the
adjustment, determined on the date of such purchase or adjustment.
 
  Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain
or loss attributable to fluctuations in exchange rates will equal the
difference between the U.S. dollar value of the Foreign Currency principal
amount of the Note, determined on the date such payment is received or the
Note is disposed of, and the U.S. dollar value of the Foreign Currency
principal amount of the Note, determined on the date the U.S. Holder acquired
the Note. Such Foreign Currency gain or loss will be recognized only to the
extent of the total gain or loss realized by the U.S. Holder on the sale,
exchange or retirement of the Note.
 
  Original Issue Discount. In the case of a Note issued with original issue
discount or Short-Term Note, (i) original issue discount is determined in
units of the Foreign Currency, (ii) accrued original issue discount is
translated into U.S. dollars as described in "Payments of Interest in a
Foreign Currency--Accrual Method" above and (iii) the amount of Foreign
Currency gain or loss on the accrued original issue discount is determined by
comparing the amount of income received attributable to the discount (either
upon payment, maturity or an earlier disposition), as translated into U.S.
dollars at the rate of exchange on the date of such receipt, with the amount
of original issue discount accrued, as translated above.
 
  Premium and Market Discount. In the case of a Note with market discount, (i)
market discount is determined in units of the Foreign Currency, (ii) accrued
market discount taken into account upon the receipt of
 
                                     S-28

 
any partial principal payment or upon the sale, exchange, retirement or other
disposition of the Note (other than accrued market discount required to be
taken into account currently) is translated into U.S. dollars at the exchange
rate on such disposition date (and no part of such accrued market discount is
treated as exchange gain or loss) and (iii) accrued market discount currently
includible in income by a U.S. Holder for any accrual period is translated
into U.S. dollars on the basis of the average exchange rate in effect during
such accrual period, and the exchange gain or loss is determined upon the
receipt of any partial principal payment or upon the sale, exchange,
retirement or other disposition of the Note in the manner described in
"Payments of Interest in a Foreign Currency--Accrual Method" above with
respect to computation of exchange gain or loss on accrued interest.
 
  With respect to a Note issued with amortizable bond premium, such premium is
determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder
should recognize exchange gain or loss equal to the difference between the
U.S. dollar value of the bond premium amortized with respect to a period,
determined on the date the interest attributable to such period is received,
and the U.S. dollar value of the bond premium determined on the date of the
acquisition of the Note.
 
  Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement
of a Note equal to the U.S. dollar value of such Foreign Currency, determined
at the time the interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Foreign Currency (including its exchange for U.S. dollars or
its use to purchase Notes) will be ordinary income or loss.
 
NON-U.S. HOLDERS
 
  A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a Note, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of the Trust, a controlled foreign
corporation related to the Trust or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the Beneficial
Owner of the Note under penalties of perjury, (ii) certifies that such owner
is not a U.S. Holder and (iii) provides the name and address of the Beneficial
Owner. The statement may be made on an IRS Form W-8 or a substantially similar
form, and the Beneficial Owner must inform the Withholding Agent of any change
in the information on the statement within 30 days of such change. If a Note
is held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement
to the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by
the Beneficial Owner to the organization or institution. The Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
Holders thereof.
 
  Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
 
  The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Trust
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
 
 
                                     S-29

 
BACKUP WITHHOLDING
 
  Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an
exemption. Compliance with the identification procedures described in the
preceding section would establish an exemption from backup withholding for
those non-U.S. Holders who are not exempt recipients.
 
  In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-
U.S. Holder (and certain other conditions are met). Such a sale must also be
reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its non-
U.S. status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
 
  Any amounts withheld under the backup withholding rules from a payment to a
Beneficial Owner would be allowed as a refund or a credit against such
Beneficial Owner's United States Federal income tax provided the required
information is furnished to the IRS.
 
                             PLAN OF DISTRIBUTION
 
  The Notes are being offered on a continuous basis for sale by the Trust to
or through Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated
and Smith Barney Inc. (the "Agents"). The Agents may purchase Notes, as
principal, from the Trust from time to time for resale to investors and other
purchasers at varying prices relating to prevailing market prices at the time
of resale as determined by the applicable Agent(s), or, if so specified in the
applicable Pricing Supplement, for resale at a fixed offering price. If agreed
to by the Trust and an Agent, such Agent may also utilize its reasonable
efforts on an agency basis to solicit offers to purchase the Notes at 100% of
the principal amount thereof, unless otherwise specified in the applicable
Pricing Supplement. The Trust will pay a commission to an Agent, ranging from
 .125% to .750% of the principal amount of each Note, depending upon its stated
maturity, sold through such Agent. Commissions with respect to Notes with
stated maturities in excess of 30 years that are sold through an Agent will be
negotiated between the Trust and such Agent at the time of such sale.
 
  Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the Trust as
principal to other dealers for resale to investors and other purchasers, and
may allow all or any portion of the discount received in connection with such
purchase from the Trust to such dealers. After the initial offering of Notes,
the offering price (in the case of Notes to be resold on a fixed price basis),
the concession and the discount may be changed.
 
  The Trust has reserved the right to sell the Notes directly to investors,
and may solicit and accept offers to purchase Notes directly from investors
from time to time on its own behalf. In certain instances, the Trust may offer
Notes to or through additional agents named in the applicable Pricing
Supplement.
 
  The Trust reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether
placed directly with the Trust or through the Agents). Each Agent will
 
                                     S-30

 
have the right, in its discretion reasonably exercised, to reject in whole or
in part any offer to purchase Notes received by it on an agency basis.
 
  Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date
of settlement. See "Description of Notes--General".
 
  Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time
to time purchase and sell Notes in the secondary market, but the Agents are
not obligated to do so, and there can be no assurance that there will be a
secondary market for the Notes or that there will be liquidity in the
secondary market if one develops. From time to time, the Agents may make a
market in the Notes, but the Agents are not obligated to do so and may
discontinue any market-making activity at any time.
 
  The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Trust has
agreed to indemnify the Agents against certain liabilities (including
liabilities under the Securities Act), or to contribute to payments the Agents
may be required to make in respect thereof. The Trust has agreed to reimburse
the Agents for certain other expenses.
 
  In the ordinary course of their respective businesses, the Agents and their
affiliates may engage in investment and commercial banking transactions with
the Trust and certain of its affiliates.
 
  Concurrently with the offering of Notes described herein, the Trust may
issue other Offered Securities described in the accompanying Prospectus.
 
                                     S-31

 
PROSPECTUS
                                 $163,725,000
 
                             NEW PLAN REALTY TRUST
 
                      DEBT SECURITIES, PREFERRED SHARES,
             DEPOSITARY SHARES, COMMON SHARES, WARRANTS AND RIGHTS
 
  New Plan Realty Trust ("New Plan" or the "Trust") may from time to time
offer in one or more series its (i) unsecured debt securities, which may be
either senior debt securities ("Senior Securities") or subordinated debt
securities ("Subordinated Securities," and together with Senior Securities,
the "Debt Securities"), (ii) preferred shares of beneficial interest, par
value $1.00 per share ("Preferred Shares"), (iii) Preferred Shares represented
by depositary shares ("Depositary Shares"), (iv) common shares of beneficial
interest without par value ("Common Shares"), (v) warrants to purchase Debt
Securities, Preferred Shares or Common Shares (collectively, "Warrants"), or
(vi) rights to purchase Common Shares ("Rights"), with an aggregate initial
public offering price of up to $163,725,000 on terms to be determined at the
time of offering. Debt Securities, Preferred Shares, Depositary Shares, Common
Shares, Warrants and Rights (collectively, the "Offered Securities") may be
offered, separately or together, in separate series in amounts, at prices and
on terms to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
 
  The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, ranking, currency,
form (which may be registered or bearer, or certificated or global),
authorized denominations, maturity, rate (or manner of calculation thereof)
and time of payment of interest, terms for redemption at the option of the
Trust or repayment at the option of the Holder, terms for sinking fund
payments, terms for conversion into Preferred Shares or Common Shares, and any
initial public offering price; (ii) in the case of Preferred Shares, the
specific title and stated value, any dividend, liquidation, redemption,
conversion, voting and other terms and conditions, and any initial public
offering price; (iii) in the case of Depositary Shares, the fractional share
of a Preferred Share represented by each such Depositary Share; (iv) in the
case of Common Shares, any initial public offering price; (v) in the case of
Warrants, the number and terms thereof, the designation and the number of
securities issuable upon their exercise, the exercise price, the terms of the
offering and sale thereof and, where applicable, the duration and
detachability thereof; and (vi) in the case of Rights, the duration, exercise
price and transferability thereof. In addition, such specific terms may
include limitations on direct or beneficial ownership and restrictions on
transfer of certain types of Offered Securities, in each case as may be
appropriate to preserve the status of the Trust as a real estate investment
trust ("REIT") for federal income tax purposes.
 
  The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by such Prospectus Supplement.
 
  The Offered Securities may be offered directly, through agents designated
from time to time by the Trust, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
                               ----------------
 
  THESE SECURITIES HAVE NOT  BEEN APPROVED OR  DISAPPROVED BY THE SECURITIES
    AND EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION NORHAS 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.
 
                               ----------------
 
        THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
          OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
                         TO THE CONTRARY IS UNLAWFUL.
 
                               ----------------
 
                 The date of this Prospectus is May 24, 1996.

 
                             AVAILABLE INFORMATION
 
  The Trust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Trust with the Commission in
accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Common Shares are listed on the New York Stock Exchange and similar
information concerning the Trust can be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
  The Trust has filed with the Commission a registration statement (the
"Registration Statement") (of which this Prospectus is a part) under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Securities. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Trust and the Offered Securities, reference is hereby made to
the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The documents listed below have been filed by the Trust under the Exchange
Act with the Commission and are incorporated herein by reference:
 
    1. The Trust's Annual Report on Form 10-K for the year ended July 31,
  1995, filed October 6, 1995 pursuant to the Exchange Act.
 
    2. The Trust's Quarterly Reports on Form 10-Q for the three-month periods
  ended October 31, 1995 and January 31, 1996, filed on December 7, 1995 and
  March 8, 1996, respectively, pursuant to the Exchange Act.
 
    3. The Trust's Reports on Form 8-K dated July 25, 1995, filed July 25,
  1995 pursuant to the Exchange Act, and on Form 8-K/A relating thereto dated
  August 9, 1995, filed August 9, 1995 pursuant to the Exchange Act.
 
    4. The Trust's Reports on Form 8-K dated October 20, 1995, filed October
  20, 1995 pursuant to the Exchange Act, and on Form 8-K/A relating thereto
  dated November 9, 1995, December 22, 1995 and March 19, 1996, filed
  November 9, 1995, December 22, 1995 and March 19, 1996, respectively,
  pursuant to the Exchange Act.
 
    5. The Trust's Report on Form 8-K dated March 25, 1996, filed March 25,
  1996 pursuant to the Exchange Act.
 
    6. The Trust's Report on Form 8-K dated May 24, 1996, filed May 24, 1996
  pursuant to the Exchange Act.
 
    7. Item 1 of the Trust's registration statement on Form 8-A, as amended,
  filed May 19, 1986 pursuant to Section 12 of the Exchange Act.
 
                                       2

 
  All documents filed by the Trust pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing such documents.
 
  Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein (or in the applicable Prospectus Supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
 
  Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Requests should be
directed to New Plan Realty Trust, Attention: Ronald Frankel, 1120 Avenue of
the Americas, New York, New York 10036; (212) 869-3000.
 
                                   THE TRUST
 
  New Plan, one of the largest publicly traded real estate investment trusts
in the United States based on the aggregate market value of its outstanding
Common Shares, is a self-administered and self-managed equity real estate
investment trust which primarily owns shopping centers and garden apartment
communities. The Trust's present equity investments consist principally of 111
shopping centers, with approximately 15,455,000 gross rentable square feet,
five factory outlet centers with approximately 1,559,000 gross rentable square
feet and 28 garden apartment communities containing 6,025 apartment units. In
addition, the Trust is currently developing a sixth factory outlet center in
Jackson Township, New Jersey. Phase I of the center is expected to contain
approximately 195,000 gross rentable square feet. The Trust has also
contracted to purchase four garden apartment communities having an aggregate
of 753 units and has contracted to sell two shopping centers having an
aggregate of approximately 188,000 gross rentable square feet. The Trust's
properties are located in 21 states. Since the organization of the corporate
predecessor of the Trust in 1962, the Trust and its predecessor have been
directed by members of the Newman family. The Newman family has been active in
real estate ownership and management since 1926.
 
  The Trust has paid regular and uninterrupted cash distributions on its
Common Shares since it commenced operations as a real estate investment trust
in 1972. These distributions, which are paid quarterly, have increased from
$0.19 per Common Share in fiscal 1973 to $1.355 per Common Share in fiscal
1995. Since inception, each distribution has either been equal to or greater
than the distribution preceding it, and the distributions have been increased
in each of the last 68 consecutive quarters. The Trust intends to continue to
declare quarterly distributions on its Common Shares.
 
  The Trust invests its assets in income-producing real estate, with a primary
emphasis on shopping centers, including factory outlet centers, and garden
apartment communities. The Trust's primary investment strategy is to identify
and purchase well-located shopping centers, including factory outlet centers,
and garden apartments usually at a significant discount to replacement cost.
The Trust seeks to achieve income growth through a program of expansion,
renovation, leasing, re-leasing and improving the tenant mix of its shopping
centers and factory outlets. The Trust minimizes development risks by
generally purchasing existing income-producing properties.
 
  The Trust, a Massachusetts business trust, maintains its executive offices
at 1120 Avenue of the Americas, New York, New York 10036, and its telephone
number is (212) 869-3000.
 
                                       3

 
                      RATIOS OF EARNINGS TO FIXED CHARGES
 
  The following table sets forth the historical ratios of earnings to fixed
charges of the Trust for the periods indicated:


                                                                                     SIX MONTHS
                                                                                        ENDED
                                                                                     JANUARY 31,
         1990       1991         1992         1993         1994         1995            1996
         ----       ----         ----         ----         ----         ----         -----------
                                                                   
         16.3       19.0         28.5         23.6         17.0         8.1              4.7

 
  To date, the Trust has not issued any preferred shares; therefore, the
ratios of earnings to combined fixed charges and preferred share dividends are
unchanged from the ratios presented in this section. For purposes of computing
these ratios, earnings have been calculated by adding fixed charges (excluding
capitalized interest) to income (loss) before income taxes and extraordinary
items. Fixed charges consist of interest costs, whether expensed or
capitalized, the interest component of rental expense, if any, and
amortization of debt discounts and issue costs, whether expensed or
capitalized.
 
                                USE OF PROCEEDS
 
  Unless otherwise described in the applicable Prospectus Supplement, the
Trust intends to use the net proceeds from the sale of the Offered Securities
for working capital and general trust purposes, which may include the
acquisition of shopping centers, factory outlet centers and garden apartment
communities as suitable opportunities arise, the expansion and improvement of
certain properties owned or to be owned by the Trust, and the repayment of
certain indebtedness outstanding at such time.
 
                        DESCRIPTION OF DEBT SECURITIES
 
  The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities being offered and the extent to which
such general provisions may apply will be described in a Prospectus Supplement
relating to such Debt Securities.
 
  The Senior Securities are to be issued under an Indenture, dated as of March
29, 1995, as amended or supplemented from time to time (the "Senior Securities
Indenture"), between the Trust and State Street Bank and Trust Company (as
successor to The First National Bank of Boston), as trustee (the "Senior
Securities Trustee") and the Subordinated Securities are to be issued under an
Indenture, as amended or supplemented from time to time (the "Subordinated
Securities Indenture"), between the Trust and a trustee to be selected by the
Trust (the "Subordinated Securities Trustee"). The Senior Securities Indenture
and the Subordinated Securities Indenture are referred to herein individually
as the "Indenture" and collectively as the "Indentures," and the Senior
Securities Trustee and the Subordinated Securities Trustee are referred to
herein individually as the "Trustee" and collectively as the "Trustees." The
Senior Securities Indenture and a form of the Subordinated Securities
Indenture have been filed as exhibits to the Registration Statement of which
this Prospectus is a part and will be available for inspection, respectively,
at the corporate trust office of the Senior Securities Trustee and at the
corporate trust office of the Subordinated Securities Trustee or as described
above under "Available Information." The Senior Securities Indenture is, and
the Subordinated Securities Indenture will be, subject to and governed by the
Trust Indenture Act of 1939, as amended (the "TIA"). The description of the
Subordinated Securities Indenture set forth below assumes that the Trust has
entered into the Subordinated Securities Indenture. The Trust will execute the
Subordinated Securities Indenture when and if the Trust issues Subordinated
Securities. The statements made hereunder relating to the Indentures and the
Debt Securities to be issued thereunder are summaries of certain provisions
thereof and do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Indentures
and such Debt Securities. Unless otherwise specified, all section references
appearing herein are to sections of the Indentures, and capitalized terms used
but not defined herein shall have the meanings set forth in the Indentures.
 
                                       4

 
GENERAL
 
  The Debt Securities will be direct, unsecured obligations of the Trust.
Senior Securities will rank pari passu with certain other senior debt of the
Company that may be outstanding from time to time and will rank senior to all
Subordinated Securities that may be outstanding from time to time.
Subordinated Securities will be subordinated in right of payment to the prior
payment in full of the Senior Debt of the Company, as described under
"Subordination."
 
  Each Indenture provides that the Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Trustees of the Trust or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one
series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series (Section 301 of each Indenture).
 
  Each Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
either Indenture may resign or be removed with respect to one or more series
of Debt Securities, and a successor Trustee may be appointed to act with
respect to such series (Section 608 of each Indenture). In the event that two
or more persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee (Section 609 of each Indenture) thereunder, and, except as
otherwise indicated herein, any action described herein to be taken by the
Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the applicable Indenture.
 
  Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
 
    (1) the title of such Debt Securities;
 
    (2) the classification of such Debt Securities as Senior Securities or
  Subordinated Securities;
 
    (3) the aggregate principal amount of such Debt Securities and any limit
  on such aggregate principal amount;
 
    (4) the percentage of the principal amount at which such Debt Securities
  will be issued and, if other than the principal amount thereof, the portion
  of the principal amount thereof payable upon declaration of acceleration of
  the maturity thereof, or (if applicable) the portion of the principal
  amount of such Debt Securities which is convertible into Common Shares or
  Preferred Shares, or the method by which any such portion shall be
  determined;
 
    (5) if convertible, in connection with the preservation of the Trust's
  status as a REIT, any applicable limitations on the ownership or
  transferability of the Common Shares or Preferred Shares into which such
  Debt Securities are convertible;
 
    (6) the date or dates, or the method for determining such date or dates,
  on which the principal of such Debt Securities will be payable;
 
    (7) the rate or rates (which may be fixed or variable), or the method by
  which such rate or rates shall be determined, at which such Debt Securities
  will bear interest, if any;
 
    (8) the date or dates, or the method for determining such date or dates,
  from which any such interest will accrue, the Interest Payment Dates on
  which any such interest will be payable, the Regular Record Dates for such
  Interest Payment Dates, or the method by which such dates shall be
  determined, the Person to whom such interest shall be payable, and the
  basis upon which interest shall be calculated if other than that of a 360-
  day year of twelve 30-day months;
 
                                       5

 
    (9) the place or places where the principal of (and premium, if any) and
  interest, if any, on such Debt Securities will be payable, such Debt
  Securities may be surrendered for conversion or registration of transfer or
  exchange and notices or demands to or upon the Trust in respect of such
  Debt Securities and the applicable Indenture may be served;
 
    (10) the period or periods within which, the price or prices at which and
  the terms and conditions upon which such Debt Securities may be redeemed,
  in whole or in part, at the option of the Trust, if the Trust is to have
  such an option;
 
    (11) the obligation, if any, of the Trust to redeem, repay or purchase
  such Debt Securities pursuant to any sinking fund or analogous provision or
  at the option of a Holder thereof, and the period or periods within which,
  the price or prices at which and the terms and conditions upon which such
  Debt Securities will be redeemed, repaid or purchased, in whole or in part,
  pursuant to such obligation;
 
    (12) if other than U.S. dollars, the currency or currencies in which such
  Debt Securities are denominated and payable, which may be a foreign
  currency or units of two or more foreign currencies or a composite currency
  or currencies, and the terms and conditions relating thereto;
 
    (13) whether the amount of payments of principal of (and premium, if any)
  or interest, if any, on such Debt Securities may be determined with
  reference to an index, formula or other method (which index, formula or
  other method may, but need not be, based on a currency, currencies,
  currency unit or units or composite currency or currencies) and the manner
  in which such amounts shall be determined;
 
    (14) whether such Debt Securities will be issued in the form of one or
  more global securities and whether such global securities are to be
  issuable in a temporary global form or permanent global form;
 
    (15) any additions to, modifications of or deletions from the terms of
  such Debt Securities with respect to the Events of Default or covenants set
  forth in the applicable Indenture;
 
    (16) whether such Debt Securities will be issued in certificated or book-
  entry form;
 
    (17) whether such Debt Securities will be in registered or bearer form
  and, if in registered form, the denominations thereof if other than $1,000
  and any integral multiple thereof and, if in bearer form, the denominations
  thereof and the terms and conditions relating thereto;
 
    (18) the applicability, if any, of the defeasance and covenant defeasance
  provisions of Article XIV of the applicable Indenture;
 
    (19) if such Debt Securities are to be issued upon the exercise of
  Warrants, the time, manner and place for such Debt Securities to be
  authenticated and delivered;
 
    (20) the terms, if any, upon which such Debt Securities may be
  convertible into Common Shares or Preferred Shares of the Trust and the
  terms and conditions upon which such conversion will be effected,
  including, without limitation, the initial conversion price or rate and the
  conversion period;
 
    (21) whether and under what circumstances the Trust will pay Additional
  Amounts as contemplated in the applicable Indenture on such Debt Securities
  in respect of any tax, assessment or governmental charge and, if so,
  whether the Trust will have the option to redeem such Debt Securities in
  lieu of making such payment;
 
    (22) the name of the applicable Trustee and the address of its corporate
  trust office; and
 
    (23) any other terms of such Debt Securities not inconsistent with the
  provisions of the applicable Indenture (Section 301).
 
  The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special U.S. federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
 
                                       6

 
  Except as set forth below under "Certain Covenants--Senior Securities
Indenture Limitations on Incurrence of Debt," neither Indenture contains any
other provisions that would limit the ability of the Trust to incur
indebtedness or that would afford Holders of Debt Securities protection in the
event of a highly leveraged or similar transaction involving the Trust or in
the event of a change of control. However, restrictions on ownership and
transfers of the Trust's Common Shares and Preferred Shares are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Preferred Shares" and "Description of
Common Shares." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the Events of Default or covenants of the Trust that are described below,
including any addition of a covenant or other provision providing event risk
or similar protection.
 
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
 
  Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302 of each Indenture).
 
  Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the applicable
Trustee, provided that, at the option of the Trust, payment of interest may be
made by check mailed to the address of the Person entitled thereto as it
appears in the Security Register or by wire transfer of funds to such Person
at an account maintained within the United States (Sections 301, 305, 306, 307
and 1002 of each Indenture).
 
  Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof shall be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described
in the applicable Indenture (Section 307 of each Indenture).
 
  Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer thereof at the corporate trust office
of the applicable Trustee. Every Debt Security surrendered for conversion,
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Trust may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305 of each Indenture). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Trust with respect to any series of
Debt Securities, the Trust may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Trust will be required to maintain a
transfer agent in each Place of Payment for such series. The Trust may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002 of each Indenture).
 
  Neither the Trust nor any Trustee shall be required to (i) issue, register
the transfer of or exchange Debt Securities of any series during a period
beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business
on the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed
in part; or (iii) issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305 of each Indenture).
 
                                       7

 
MERGER, CONSOLIDATION OR SALE
 
  The Trust may merge with or into, consolidate with, or sell, lease or convey
all or substantially all of its assets to, any other trust or corporation,
provided that (a) either the Trust shall be the continuing trust or
corporation, or the successor trust or corporation (if other than the Trust)
formed by or resulting from any such merger or consolidation or which shall
have received the transfer of such assets shall expressly assume payment of
the principal of (and premium, if any) and interest on all of the Debt
Securities and the due and punctual performance and observance of all of the
covenants and conditions contained in the Indentures; (b) immediately after
giving effect to such transaction and treating any indebtedness which becomes
an obligation of the Trust or any Subsidiary as a result thereof as having
been incurred by the Trust or such Subsidiary at the time of such transaction,
no Event of Default under the Indentures, and no event which, after notice or
the lapse of time, or both, would become such an Event of Default, shall have
occurred and be continuing; and (c) an officer's certificate and legal opinion
covering such conditions shall be delivered to the Trustees (Sections 801 and
803 of each Indenture).
 
CERTAIN COVENANTS
 
  Senior Securities Indenture Limitations on Incurrence of Debt. The Trust
will not, and will not permit any Subsidiary to, incur any Debt (as defined
below) if, immediately after giving effect to the incurrence of such
additional Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Debt of the Trust and its Subsidiaries on
a consolidated basis determined in accordance with generally accepted
accounting principles is greater than 65% of the sum of (i) the Trust's Total
Assets (as defined below) as of the end of the fiscal quarter covered in the
Trust's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Debt, (ii) the purchase price of any real estate
assets or mortgages receivable acquired by the Trust or any Subsidiary since
the end of such fiscal quarter, including those obtained in connection with
the incurrence of such additional Debt, and (iii) the amount of any securities
offering proceeds received by the Trust or any Subsidiary since the end of
such fiscal quarter (to the extent that such proceeds were not used to acquire
such real estate assets or mortgages receivable or used to reduce Debt)
(Section 1004 of the Senior Securities Indenture).
 
  In addition to the foregoing limitation on the incurrence of Debt, the Trust
will not, and will not permit any Subsidiary to, incur any Debt secured by any
mortgage, lien, charge, pledge, encumbrance or security interest of any kind
upon any of the property of the Trust or any Subsidiary if, immediately after
giving effect to the incurrence of such additional Debt and the application of
the proceeds thereof, the aggregate principal amount of all outstanding Debt
of the Trust and its Subsidiaries on a consolidated basis which is secured by
any mortgage, lien, charge, pledge, encumbrance or security interest on
property of the Trust or any Subsidiary is greater than 40% of the sum of (i)
the Trust's Total Assets as of the end of the fiscal quarter covered in the
Trust's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Debt, (ii) the purchase price of any real estate
assets or mortgages receivable acquired by the Trust or any Subsidiary since
the end of such fiscal quarter, including those obtained in connection with
the incurrence of such additional Debt and (iii) the amount of any securities
offering proceeds received by the Trust or any Subsidiary since the end of
such fiscal quarter (to the extent that such proceeds were not used to acquire
such real estate assets or mortgages receivable or used to reduce Debt)
(Section 1004 of the Senior Securities Indenture).
 
  In addition to the foregoing limitations on the incurrence of Debt, the
Trust will not, and will not permit any Subsidiary to, incur any Debt if
Consolidated Income Available for Debt Service (as defined below) for any 12
consecutive calendar months within the 15 calendar months immediately
preceding the date on which such additional Debt is to be incurred shall have
been less than 1.5 times the Maximum Annual Service Charge (as defined below)
on the Debt of the Trust and all Subsidiaries to be outstanding immediately
after the incurring of such additional Debt (Section 1004 of the Senior
Securities Indenture).
 
                                       8

 
  The Trust will at all times maintain an Unencumbered Total Asset Value in an
amount not less than 100% of the aggregate principal amount of all outstanding
Debt of the Trust and its Subsidiaries that is unsecured (Section 1004 of the
Senior Securities Indenture).
 
  As used herein,
 
  "Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Trust and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Trust
and its Subsidiaries, (b) provision for taxes of the Trust and its
Subsidiaries based on income, (c) amortization of debt discount, (d) property
depreciation and amortization and (e) the effect of any noncash charge
resulting from a change in accounting principles in determining Consolidated
Net Income for such period.
 
  "Consolidated Net Income" for any period means the amount of consolidated
net income (or loss) of the Trust and its Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles.
 
  "Debt" of the Trust or any Subsidiary means any indebtedness of the Trust or
any Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property owned by the Trust or any Subsidiary,
(iii) letters of credit or amounts representing the balance deferred and
unpaid of the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any lease of property
by the Trust or any Subsidiary as lessee which is reflected on the Trust's
Consolidated Balance Sheet as a capitalized lease in accordance with generally
accepted accounting principles, in the case of items of indebtedness under (i)
through (iii) above to the extent that any such items (other than letters of
credit) would appear as a liability on the Trust's Consolidated Balance Sheet
in accordance with generally accepted accounting principles, and also
includes, to the extent not otherwise included, any obligation by the Trust or
any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Trust or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Trust or any
Subsidiary whenever the Trust or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
 
  "Maximum Annual Service Charge" as of any date means the maximum amount
which may become payable in any period of 12 consecutive calendar months from
such date for interest on, and required amortization of, Debt. The amount
payable for amortization shall include the amount of any sinking fund or other
analogous fund for the retirement of Debt and the amount payable on account of
principal on any such Debt which matures serially other than at the final
maturity date of such Debt.
 
  "Total Assets" as of any date means the sum of (i) Undepreciated Real Estate
Assets and (ii) all other assets of the Trust and its Subsidiaries determined
in accordance with generally accepted accounting principles (but excluding
accounts receivable and intangibles).
 
  "Undepreciated Real Estate Assets" as of any date means the amount of real
estate assets of the Trust and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with generally accepted accounting principles.
 
  "Unencumbered Total Asset Value" as of any date means the sum of the Trust's
Total Assets which are unencumbered by any mortgage, lien, charge, pledge or
security interest.
 
  Existence. Except as permitted under "Merger, Consolidation or Sale," the
Trust will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Trust shall not be required to
preserve any right or franchise if it determines that the preservation thereof
is no longer desirable in the conduct of its business and that the loss
thereof is not disadvantageous in any material respect to the Holders of the
Debt Securities (Section 1005 of each Indenture).
 
                                       9

 
  Maintenance of Properties. The Trust will cause all of its properties used
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Trust may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that the Trust and its Subsidiaries shall not be
prevented from selling or otherwise disposing for value its properties in the
ordinary course of business (Section 1006 of each Indenture).
 
  Insurance. The Trust will, and will cause each of its Subsidiaries to, keep
all of its insurable properties adequately insured against loss or damage with
insurers of recognized responsibility and having an A.M. Best policy holder's
rating of not less than A-:V (Section 1007 of each Indenture).
 
  Payment of Taxes and Other Claims. The Trust will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
future taxes, assessments and governmental charges levied or imposed upon it
or any Subsidiary or upon the income, profits or property of the Trust or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Trust or
any Subsidiary, unless such lien would not have a material adverse effect upon
such property; provided, however, that the Trust shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim (i) whose amount, applicability or validity is being contested
in good faith by appropriate proceedings or (ii) for which the Trust has set
apart and maintains an adequate reserve (Section 1008 of each Indenture).
 
  Provision of Financial Information. Whether or not the Trust is subject to
Section 13 or 15(d) of the Exchange Act, the Trust will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Trust would have been required
to file with the Commission pursuant to such Section 13 or 15(d) if the Trust
were so subject, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Trust would
have been required so to file such documents if the Trust were so subject. The
Trust will also in any event (x) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders of Debt Securities, as their names and
addresses appear in the Security Register, without cost to such Holders,
copies of the annual reports and quarterly reports which the Trust would have
been required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act if the Trust were subject to such Sections and (ii) file with
the Trustees copies of the annual reports, quarterly reports and other
documents which the Trust would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Trust were subject
to such Sections and (y) if filing such documents by the Trust with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder (Section 1009 of each
Indenture).
 
EVENTS OF DEFAULT, NOTICE AND WAIVER
 
  Each Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder (a) default
for 30 days in the payment of any installment of interest on any Debt Security
of such series; (b) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series at its Maturity; (c) default in
making any sinking fund payment as required for any Debt Security of such
series; (d) default in the performance of any other covenant of the Trust
contained in the applicable Indenture (other than a covenant added to such
Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), continued for 60 days after written notice
as provided in such Indenture; (e) an event of default under any evidence of
indebtedness of the Trust or any mortgage, indenture or other instrument under
which such indebtedness is issued or by which such indebtedness is secured or
evidenced, such default having resulted in the acceleration of the maturity of
an aggregate principal amount exceeding $10,000,000 of such indebtedness, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled within a specified period of time; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Trust, any Significant Subsidiary
 
                                      10

 
or the property of the Trust or any Significant Subsidiary; and (g) any other
Event of Default provided with respect to a particular series of Debt
Securities (Section 501 of each Indenture). The term "Significant Subsidiary"
means each significant subsidiary (as defined in Regulation S-X promulgated
under the Securities Act) of the Trust.
 
  If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing,
then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
amount as may be specified in the terms thereof) of all of the Debt Securities
of that series to be due and payable immediately by written notice thereof to
the Trust (and to the applicable Trustee if given by the Holders). However, at
any time after such a declaration of acceleration with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under
the applicable Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the Holders of not less than a majority in principal
amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the applicable Indenture, as the case may
be) may rescind and annul such declaration and its consequences if (a) the
Trust shall have deposited with the applicable Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt Securities
of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be), plus certain fees, expenses,
disbursements and advances of the Trustee and (b) all Events of Default, other
than the non-payment of accelerated principal (or specified portion thereof),
with respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the applicable Indenture, as the case may be) have been
cured or waived as provided in the applicable Indenture (Section 502 of each
Indenture). Each Indenture also provides that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of all Debt Securities then Outstanding under the applicable Indenture, as
the case may be) may waive any past default with respect to such series and
its consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the applicable Indenture that
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security affected thereby (Section 513 of each Indenture).
 
  Each Trustee is required to give notice to the Holder of Debt Securities
within 90 days of a default under the applicable Indenture; provided, however,
that the Trustee may withhold notice to the Holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund installment in
respect of any Debt Security of such series) if the Responsible Officers of
the Trustee consider such withholding to be in the interest of such Holders
(Section 601 of each Indenture).
 
  Each Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
applicable Indenture or for any remedy thereunder, except in the case of
failure of the Trustee thereunder for 60 days, to act after it has received a
written request to institute proceedings in respect of an Event of Default
from the Holders of not less than 25% in principal amount of the Outstanding
Debt Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507 of each Indenture). This provision will not
prevent, however, any Holder of Debt Securities from instituting suit for the
enforcement of payment of the principal of (and premium, if any) and interest
on such Debt Securities at the respective due dates thereof (Section 508 of
each Indenture).
 
  Subject to provisions in each Indenture relating to its duties in case of
default, each Trustee is under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request or direction of any
Holders of any series of Debt Securities then Outstanding under such
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity (Section 602 of each Indenture). The Holders of not less
than a majority in principal amount of the applicable Outstanding Debt
Securities of any series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be) shall have the right to direct the
 
                                      11

 
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the applicable Indenture, which may involve the
Trustee in personal liability or which may be unduly prejudicial to the
Holders of Debt Securities of such series not joining therein (Section 512 of
each Indenture).
 
  Within 120 days after the close of each fiscal year, the Trust must deliver
to each Trustee a certificate, signed by one of several specified officers,
stating whether or not such officer has knowledge of any default under the
applicable Indenture and, if so, specifying each such default and the nature
and status thereof (Section 1010 of each Indenture).
 
MODIFICATION OF THE INDENTURES
 
  Modifications and amendments of each Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities issued under such Indenture which are affected by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security; (b)
reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the
Holder of any such Debt Security; (c) change the Place of Payment, or the coin
or currency, for payment of principal of, premium, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the applicable Indenture, to waive compliance with certain
provisions thereof or certain defaults and consequences thereunder or to
reduce the quorum or voting requirements set forth in such Indenture; or (f)
modify any of the foregoing provisions or any of the provisions relating to
the waiver of certain past defaults or certain covenants, except to increase
the required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the Holder of
such Debt Security (Section 902 of each Indenture).
 
  The Holders of not less than a majority in principal amount of Outstanding
Debt Securities issued under either Indenture have the right to waive
compliance by the Trust with certain covenants in the applicable Indenture
(Section 1012 of each Indenture).
 
  Modifications and amendments of each Indenture may be made by the Trust and
the applicable Trustee without the consent of any Holder of Debt Securities
issued thereunder for any of the following purposes: (i) to evidence the
succession of another Person to the Trust as obligor under the applicable
Indenture; (ii) to add to the covenants of the Trust for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Trust in the applicable Indenture; (iii) to add
Events of Default for the benefit of the Holders of all or any series of Debt
Securities; (iv) to add or change any provisions of the applicable Indenture
to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action shall not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect; (v) to change or eliminate any provisions of
the applicable Indenture, provided that any such change or elimination shall
become effective only when there are no Debt Securities Outstanding of any
series created prior thereto which are entitled to the benefit of such
provision; (vi) to secure the Debt Securities; (vii) to establish the form or
terms of Debt Securities of any series, including the provisions and
procedures, if applicable, for the conversion of such Debt Securities into
Preferred Shares or Common Shares of the Trust; (viii) to provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the applicable Indenture by more than one
Trustee; (ix) to cure any ambiguity, defect or inconsistency in the applicable
Indenture, provided that such action shall not adversely affect the interests
of Holders of Debt
 
                                      12

 
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the applicable Indenture to the extent necessary to permit
or facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect (Section
901 of each Indenture).
 
  Each Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon declaration of acceleration of the maturity thereof, (ii) the principal
amount of a Debt Security denominated in a Foreign Currency that shall be
deemed outstanding shall be the U.S. dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent on the issue
date of such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an Indexed Security that shall be deemed
outstanding shall be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to Section 301 of the applicable Indenture, and (iv) Debt
Securities owned by the Trust or any other obligor upon the Debt Securities or
any Affiliate of the Trust or of such other obligor shall be disregarded
(Section 101 of each Indenture).
 
  Each Indenture contains provisions of convening meetings of the Holders of
Debt Securities of a series (Section 1501 of each Indenture). A meeting may be
called at any time by the applicable Trustee, and also, upon request, by the
Trust or the Holders of at least 10% in principal amount of the Outstanding
Debt Securities of such series, in any such case upon notice given as provided
in the applicable Indenture (Section 1502 of each Indenture). Except for any
consent that must be given by the Holder of each Debt Security affected by
certain modifications and amendments of the applicable Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at
which a quorum is present may be adopted by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Debt Securities
of that series; provided, however, that, except as referred to above, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Debt Securities of a series may be adopted
at a meeting or adjourned meeting duly reconvened at which a quorum is present
by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the applicable Indenture
will be binding on all Holders of Debt Securities of that series. The quorum
at any meeting called to adopt a resolution, and at any reconvened meeting,
will be Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may
be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504 of each
Indenture).
 
  Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or of the Holders of such series
and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the Outstanding
Debt Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be
taken into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or
taken under the applicable Indenture (Section 1504 of each Indenture).
 
                                      13

 
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
 
  The Trust may discharge certain obligations to Holders of any series of Debt
Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due
and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient
to pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be (Section 401 of each Indenture).
 
  Each Indenture provides that, if the provisions of Article XIV are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of such Indenture, the Trust may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402 of each Indenture) or (b) to be released
from its obligations with respect to such Debt Securities under Sections 1004
to 1009, inclusive, of the applicable Indenture (being the restrictions
described under "Certain Covenants") or, if provided pursuant to Section 301
of such Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to such Debt Securities ("covenant defeasance")
(Section 1403 of each Indenture), in either case upon the irrevocable deposit
by the Trust with the applicable Trustee, in trust, of an amount, in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at Stated Maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on the scheduled
due dates therefor.
 
  Such a trust may only be established if, among other things, the Trust has
delivered to the applicable Trustee an Opinion of Counsel (as specified in the
applicable Indenture) to the effect that the Holders of such Debt Securities
will not recognize income, gain or loss for U.S. federal income tax purposes
as a result of such defeasance or covenant defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance or covenant
defeasance had not occurred (Section 1404 of each Indenture).
 
  "Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the Foreign Currency in which the Debt Securities of such series are
payable, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America or such other
government, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101 of each Indenture).
 
                                      14

 
  Unless otherwise provided in the applicable Prospectus Supplement, if after
the Trust has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to Section 301 of the applicable Indenture or the terms
of such Debt Security to receive payment in a currency, currency unit or
composite currency other than that in which such deposit has been made in
respect of such Debt Security, or (b) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in
which such deposit has been made, the indebtedness represented by such Debt
Security shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest on such Debt Security as they become due out of the proceeds yielded
by converting the amount so deposited in respect of such Debt Security into
the currency, currency unit or composite currency in which such Debt Security
becomes payable as a result of such election or such cessation of usage based
on the applicable market exchange rate (Section 1405 of each Indenture).
"Conversion Event" means the cessation of use of (i) a Foreign Currency, both
by the government of the country which issued such currency and for the
settlement of transactions by a central bank or other public institutions of
or within the international banking community, (ii) the ECU both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit
or composite currency other than the ECU for the purposes for which it was
established (Section 101 of each Indenture). Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium,
if any) and interest on any Debt Security that is payable in a Foreign
Currency that ceases to be used by its government of issuance shall be made in
U.S. dollars.
 
  In the event the Trust effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default
described in clause (d) under "Events of Default, Notice and Waiver" with
respect to Section 1004 to 1009, inclusive, of the applicable Indenture (which
Sections would no longer be applicable to such Debt Securities) or described
in clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt
Securities are payable, and Government Obligations on deposit with the
applicable Trustee, will be sufficient to pay amounts due on such Debt
Securities at the time of their Stated Maturity but may not be sufficient to
pay amounts due on such Debt Securities at the time of the acceleration
resulting from such Event of Default. However, the Trust would remain liable
to make payment of such amounts due at the time of acceleration.
 
  The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
 
CONVERSION RIGHTS
 
  The terms and conditions, if any, upon which the Debt Securities are
convertible into Preferred Shares or Common Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Preferred Shares or Common
Shares, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option
of the Holders or the Trust, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Debt Securities.
 
GLOBAL SECURITIES
 
  The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depository") identified in
the applicable Prospectus Supplement relating to such series. Global
Securities are expected to be deposited with The Depository Trust Company, as
Depository. Global Securities may be issued in either registered or bearer
form and in either temporary or permanent form.
 
                                      15

 
  Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depository for such Global Security to a nominee of
such Depository or by a nominee of such Depository to such Depository or
another nominee of such Depository or by the Depository or any nominee of such
Depository to a successor Depository or any nominee of such successor.
 
  The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement, the Trust anticipates that the following provisions
will apply to depository arrangements.
 
  Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depository ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Trust if such Debt Securities are offered and sold
directly by the Trust. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee (with respect
to beneficial interests of Participants) and records of Participants (with
respect to beneficial interests of persons who hold through Participants). The
laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair the ability to own, pledge or transfer beneficial interest in a
Global Security.
 
  So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below or in the applicable Prospectus
Supplement, owners of beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of any such Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the applicable Indenture.
 
  Payments of principal of, any premium and any interest on, or any Additional
Amounts payable with respect to, individual Debt Securities represented by a
Global Security registered in the name of a Depository or its nominee will be
made to the Depository or its nominee, as the case may be, as the registered
owner of the Global Security representing such Debt Securities. None of the
Trust, the Trustees, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
 
  The Trust expects that the Depository for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security for such Debt Securities as shown on
the records of such Depository or its nominee. The Trust also expects that
payments by Participants to owners of beneficial interests in such Global
Security held through such Participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name." Such
payments will be the responsibility of such Participants.
 
  If a Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is
not appointed by the Trust within 90 days, the Trust will issue individual
Debt Securities of such series in exchange for the Global Security
representing such series of Debt Securities. In addition, the Trust may, at
any time and in its sole discretion, subject to any limitations described in
the
 
                                      16

 
applicable Prospectus Supplement relating to such Debt Securities, determine
not to have any Debt Securities of such series represented by one or more
Global Securities and, in such event, will issue individual Debt Securities of
such series in exchange for the Global Security or Securities representing
such series of Debt Securities. Individual Debt Securities of such series so
issued will be issued in denominations, unless otherwise specified by the
Trust, of $1,000 and integral multiples thereof.
 
SUBORDINATION
 
  Upon any distribution to creditors of the Trust in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the Subordinated Securities will be subordinated to the extent provided in the
Subordinated Securities Indenture in right of payment to the prior payment in
full of all Senior Debt (Sections 1601 and 1602 of the Subordinated Securities
Indenture), but the obligation of the Trust to make payment of the principal
and interest on the Subordinated Securities will not otherwise be affected
(Section 1608 of the Subordinated Securities Indenture). No payment of
principal or interest may be made on the Subordinated Securities at any time
if a default on Senior Debt exists that permits the holders of such Senior
Debt to accelerate its maturity and the default is the subject of judicial
proceedings or the Trust receives notice of the default (Section 1603 of the
Subordinated Securities Indenture). After all Senior Debt is paid in full and
until the Subordinated Securities are paid in full, holders will be subrogated
to the rights of holders of Senior Debt to the extent that distributions
otherwise payable to holders have been applied to the payment of Senior Debt
(Section 1607 of the Subordinated Securities Indenture). By reason of such
subordination, in the event of a distribution of assets upon insolvency,
certain general creditors of the Trust may recover more, ratably, than holders
of the Subordinated Securities.
 
  Senior Debt is defined in the Subordinated Securities Indenture as the
principal of and interest on, or substantially similar payments to be made by
the Trust in respect of, the following, whether outstanding at the date of
execution of the Subordinated Securities Indenture or thereafter incurred,
created or assumed: (a) indebtedness of the Trust for money borrowed or
represented by purchase-money obligations, (b) indebtedness of the Trust
evidenced by notes, debentures, or bonds, or other securities issued under the
provisions of an indenture, fiscal agency agreement or other instrument, (c)
obligations of the Trust as lessee under leases of property either made as
part of any sale and leaseback transaction to which the Trust is a party or
otherwise, (d) indebtedness of partnerships and joint ventures that is
included in the consolidated financial statements of the Trust, (e)
indebtedness, obligations and liabilities of others in respect of which the
Trust is liable contingently or otherwise to pay or advance money or property
or as guarantor, endorser or otherwise or which the Trust has agreed to
purchase or otherwise acquire, and (f) any binding commitment of the Trust to
fund any real estate investment or to fund any investment in any entity making
such real estate investment, in each case other than (1) any such
indebtedness, obligation or liability referred to in clauses (a) through (f)
above as to which, in the instrument creating or evidencing the same pursuant
to which the same is outstanding, it is provided that such indebtedness,
obligation or liability is not superior in right of payment to the
Subordinated Securities or ranks pari passu with the Subordinated Securities,
(2) any such indebtedness, obligation or liability which is subordinated to
indebtedness of the Trust to substantially the same extent as or to a greater
extent than the Subordinated Securities are subordinated, (3) any trade
accounts payable and (4) the Subordinated Securities (Section 101 of the
Subordinated Securities Indenture). There are no restrictions in the
Subordinated Securities Indenture upon the creation of additional Senior Debt.
However, the Senior Securities Indenture contains limitations on incurrence of
indebtedness by the Trust. See "--Certain Covenants--Senior Securities
Indenture Limitations on Incurrence of Debt."
 
                                      17

 
                        DESCRIPTION OF PREFERRED SHARES
 
  The Trust is authorized to issue 1,000,000 preferred shares of beneficial
interest, par value $1.00 per share, and no Preferred Shares were outstanding
as of the date of this Prospectus.
 
  The following description of the Preferred Shares sets forth certain general
terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate. The particular terms of the Preferred Shares being
offered and the extent to which such general provisions may or may not apply
will be described in a Prospectus Supplement relating to such Preferred
Shares. The statements below describing the Preferred Shares are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Trust's Declaration of Trust, as amended.
 
GENERAL
 
  The Declaration of Trust, as amended, authorizes the Board of Trustees to
issue Preferred Shares in series, and to establish the number of shares to be
included in each series and to fix the designation and relative rights,
preferences and limitations of the shares of each series, including, but not
limited to, the determination of the following: any dividend and distribution
rights; any terms on which Preferred Shares may be redeemed; any voting
rights; any rights in the event of the dissolution, liquidation or winding up
of the Trust; any conversion rights; and any other rights, preferences and
limitations. The Preferred Shares will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
 
  Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
 
    (1) The title and stated value of such Preferred Shares;
 
    (2) The number of shares of such Preferred Shares being offered, the
  liquidation preference per share and the offering price of such Preferred
  Shares;
 
    (3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
  of calculation thereof applicable to such Preferred Shares;
 
    (4) The date from which dividends on such Preferred Shares shall
  accumulate, if applicable;
 
    (5) The procedures for any auction and remarketing, if any, for such
  Preferred Shares;
 
    (6) The provision for a sinking fund, if any, for such Preferred Shares;
 
    (7) The provisions for redemption, if applicable, of such Preferred
  Shares;
 
    (8) Any listing of such Preferred Shares on any securities exchange;
 
    (9) The terms and conditions, if applicable, upon which such Preferred
  Shares will be convertible into Common Shares of the Trust, including the
  conversion price (or manner of calculation thereof);
 
    (10) Whether interests in such Preferred Shares will be represented by
  Depositary Shares;
 
    (11) A discussion of federal income tax considerations applicable to such
  Preferred Shares;
 
    (12) The relative ranking and preferences of such Preferred Shares as to
  dividend rights and rights upon liquidation, dissolution or winding up of
  the affairs of the Trust;
 
    (13) Any limitations on issuance of any series of preferred shares
  ranking senior to or on a parity with such series of Preferred Shares as to
  dividend rights and rights upon liquidation, dissolution or winding up of
  the affairs of the Trust;
 
    (14) Any limitations on direct or beneficial ownership and restrictions
  on transfer of such Preferred Shares, in each case as may be appropriate to
  preserve the status of the Trust as a REIT; and
 
    (15) Any other specific terms, preferences, rights, limitations or
  restrictions of such Preferred Shares.
 
                                      18

 
RANK
 
  Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Shares will, with respect to dividend rights and/or rights upon
liquidation, dissolution or winding up of the Trust, rank (i) senior to all
classes or series of Common Shares of the Trust, and to all equity securities
ranking junior to such Preferred Shares with respect to dividend rights and/or
rights upon liquidation, dissolution or winding up of the Trust, as the case
may be; (ii) on a parity with all equity securities issued by the Trust the
terms of which specifically provide that such equity securities rank on a
parity with the Preferred Shares with respect to dividend rights and/or rights
upon liquidation, dissolution or winding up of the Trust, as the case may be;
and (iii) junior to all equity securities issued by the Trust the terms of
which specifically provide that such equity securities rank senior to the
Preferred Shares with respect to dividend rights and/or rights upon
liquidation, dissolution or winding up of the Trust, as the case may be. As
used in the Declaration of Trust, as amended, for these purposes, the term
"equity securities" does not include convertible debt securities.
 
DIVIDENDS
 
  Holders of Preferred Shares shall be entitled to receive, when, as and if
declared by the Board of Trustees of the Trust, out of assets of the Trust
legally available for payment, cash dividends at such rates (or method of
calculation thereof) and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of
record as they appear on the stock transfer books of the Trust on such record
dates as shall be fixed by the Board of Trustees of the Trust.
 
  Dividends on any series of the Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Trustees of the Trust fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Shares for which dividends are noncumulative, then the holders of
such series of the Preferred Shares will have no right to receive a dividend
in respect of the dividend period ending on such dividend payment date, and
the Trust will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
 
  If any Preferred Shares of any series are outstanding, no full dividends
shall be declared or paid or set apart for payment on the preferred shares of
the Trust of any other series ranking, as to dividends, on a parity with or
junior to the Preferred Shares of such series for any period unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for such payment on the
Preferred Shares of such series for all past dividend periods and the then
current dividend period or (ii) if such series of Preferred Shares does not
have a cumulative dividend, full dividends for the then current dividend
period have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
Preferred Shares of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Preferred
Shares of any series and the shares of any other series of preferred shares
ranking on a parity as to dividends with the Preferred Shares of such series,
all dividends declared upon the Preferred Shares of such series and any other
series of preferred shares ranking on a parity as to dividends with such
Preferred Shares shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Shares of such series and such other
series of preferred shares shall in all cases bear to each other the same
ratio that accrued dividends per share on the Preferred Shares of such series
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such Preferred Shares do not have a cumulative
dividend) and such other series of preferred shares bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on Preferred Shares of such series which may
be in arrears.
 
  Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or
 
                                      19

 
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on the Preferred Shares of
such series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the
then current dividend period, no dividends (other than in common shares or
other capital stock ranking junior to the Preferred Shares of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution upon the Common Shares or any other capital
stock of the Trust ranking junior to or on a parity with the Preferred Shares
of such series as to dividends or upon liquidation, nor shall any Common
Shares or any other capital stock of the Trust ranking junior to or on a
parity with the Preferred Shares of such series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Trust (except by conversion
into or exchange for other capital stock of the Trust ranking junior to the
Preferred Shares of such series as to dividends and upon liquidation).
 
  Any dividend payment made on a series of Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
 
REDEMPTION
 
  If so provided in the applicable Prospectus Supplement, the Preferred Shares
of any series will be subject to mandatory redemption or redemption at the
option of the Trust, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus
Supplement.
 
  The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred
Shares that shall be redeemed by the Trust in each year commencing after a
date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(which shall not, if such Preferred Shares do not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Shares of any series is payable only
from the net proceeds of the issuance of capital stock of the Trust, the terms
of such Preferred Shares may provide that, if no such capital stock shall have
been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Shares shall automatically and mandatorily be converted into shares
of the applicable capital stock of the Trust pursuant to conversion provisions
specified in the applicable Prospectus Supplement.
 
  Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all shares of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period and (ii) if such series
of Preferred Shares does not have a cumulative dividend, full dividends on all
shares of such series have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for the then current dividend period, no shares of such series of Preferred
Shares shall be redeemed unless all outstanding Preferred Shares of such
series are simultaneously redeemed; provided, however, that the foregoing
shall not prevent the purchase or acquisition of Preferred Shares of such
series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Preferred Shares of such series, and, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on all outstanding shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on all shares of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for the then
current dividend period, the Trust shall not purchase or otherwise acquire
directly or indirectly any Preferred Shares of
 
                                      20

 
such series (except by conversion into or exchange for capital stock of the
Trust ranking junior to the Preferred Shares of such series as to dividends
and upon liquidation).
 
  If fewer than all of the outstanding Preferred Shares of any series are to
be redeemed, the number of shares to be redeemed will be determined by the
Trust and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other
equitable method determined by the Trust.
 
  Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares
of any series to be redeemed at the address shown on the stock transfer books
of the Trust. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Shares to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Shares are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights,
if any, as to such shares shall terminate. If fewer than all the Preferred
Shares of any series are to be redeemed, the notice mailed to each such holder
thereof shall also specify the number of Preferred Shares to be redeemed from
each such holder. If notice of redemption of any Preferred Shares has been
properly given and if the funds necessary for such redemption have been
irrevocably set aside by the Trust in trust for the benefit of the holders of
any Preferred Shares so called for redemption, then from and after the
redemption date dividends will cease to accrue on such Preferred Shares, such
Preferred Shares shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price. Any moneys so deposited which remain unclaimed by the
holders of such Preferred Shares at the end of two years after the redemption
date will be returned by the applicable bank or trust company to the Trust.
 
LIQUIDATION PREFERENCE
 
  Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Trust, then, before any distribution or payment shall be
made to the holders of any Common Shares or any other class or series of
capital stock of the Trust ranking junior to any series of Preferred Shares in
the distribution of assets upon any liquidation, dissolution or winding up of
the Trust, the holders of such series of Preferred Shares shall be entitled to
receive, after payment or provision for payment of the Trust's debts and other
liabilities, out of assets of the Trust legally available for distribution to
shareholders, liquidating distributions in the amount of the liquidation
preference per share (set forth in the applicable Prospectus Supplement), plus
an amount equal to all dividends accrued and unpaid thereon (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Shares do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of such series of Preferred Shares will have no right or
claim to any of the remaining assets of the Trust. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
legally available assets of the Trust are insufficient to pay the amount of
the liquidating distributions on all such outstanding Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Trust ranking on a parity with such series of Preferred
Shares in the distribution of assets upon liquidation, dissolution or winding
up, then the holders of such series of Preferred Shares and all other such
classes or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
 
  If the liquidating distributions shall have been made in full to all holders
of a series of Preferred Shares, the remaining assets of the Trust shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to such series of Preferred Shares upon liquidation,
dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of shares.
For purposes of this section, a distribution of assets in any dissolution,
winding up or liquidation will not include (i) any consolidation or merger of
the Trust with or into any other corporation, (ii) any dissolution,
liquidation, winding up, or reorganization of the Trust immediately followed
by incorporation of another corporation to which such
 
                                      21

 
assets are distributed or (iii) a sale or other disposition of all or
substantially all of the Trust's assets to another corporation; provided that,
in each case, effective provision is made in the charter of the resulting and
surviving corporation or otherwise for the recognition, preservation and
protection of the rights of the holders of Preferred Shares.
 
VOTING RIGHTS
 
  Holders of any series of Preferred Shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by law or
as indicated in the applicable Prospectus Supplement. The Declaration of
Trust, as amended, provides that no holders of Preferred Shares shall have the
right to elect one or more separate trustees. However, if the Trust elects to
issue a series of Preferred Shares, it may amend the Declaration of Trust to
provide for certain additional voting rights to holders of Preferred Shares.
 
  So long as any Preferred Shares remain outstanding, the Trust will not,
without the affirmative vote or consent of the holders of two-thirds (2/3) of
the shares of each series of Preferred Shares outstanding at the time, given
in person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking prior to such
series of Preferred Shares with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, or
reclassify any authorized capital stock of the Trust into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or
repeal the provisions of the Trust's Declaration of Trust, as amended, whether
by merger, consolidation or otherwise, so as to materially and adversely
affect any right, preference, privilege or voting power of such series of
Preferred Shares or the holders thereof; provided, however, that any increase
in the amount of the authorized preferred shares or the creation or issuance
of any other series of preferred shares, or any increase in the amount of
authorized shares of such series or any other series of Preferred Shares, in
each case ranking on a parity with or junior to the Preferred Shares of such
series with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
 
  The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be affected, all outstanding shares of such series of Preferred Shares shall
have been redeemed or called for redemption upon proper notice and sufficient
funds shall have been irrevocably deposited in trust to effect such
redemption.
 
CONVERSION RIGHTS
 
  The terms and conditions, if any, upon which any series of Preferred Shares
are convertible into Common Shares will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
Common Shares into which the Preferred Shares are convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of the Preferred
Shares or the Trust, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of
such Preferred Shares.
 
RESTRICTIONS ON OWNERSHIP
 
  For the Trust to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or
constructively, by five or fewer individuals (as defined in the Code) during
the last half of a taxable year, and the capital stock must be beneficially
owned by 100 or more persons during at least 335 days of a taxable year of 12
months (or during a proportionate part of a shorter taxable year). Therefore,
the Declaration of Trust, as amended, imposes certain restrictions on the
ownership and transferability of Preferred Shares. All certificates
representing Preferred Shares will bear a legend referring to these
restrictions. For a general description of such restrictions, see "Description
of Common Shares-- Restrictions on Ownership."
 
                                      22

 
                       DESCRIPTION OF DEPOSITARY SHARES
 
GENERAL
 
  The Trust may issue receipts ("Depositary Receipts") for Depositary Shares,
each of which will represent a fractional interest of a share of a particular
series of Preferred Shares, as specified in the applicable Prospectus
Supplement. Preferred Shares of each series represented by Depositary Shares
will be deposited under a separate Deposit Agreement (each, a "Deposit
Agreement") among the Trust, the depositary named therein (the "Preferred
Shares Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest
of a share of a particular series of Preferred Shares represented by the
Depositary Shares evidenced by such Depositary Receipt, to all rights and
preferences of the Preferred Shares represented by such Depositary Shares
(including dividend, voting, conversion, redemption and liquidation rights).
 
  The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Shares by the Trust to the Preferred
Shares Depositary, the Trust will cause the Preferred Shares Depositary to
issue, on behalf of the Trust, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Trust upon request, and the following summary of the form thereof
filed as an exhibit to the Registration Statement of which this Prospectus is
a part is qualified in its entirety by reference thereto.
 
DIVIDENDS AND OTHER DISTRIBUTIONS
 
  The Preferred Shares Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Shares to the record
holders of Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Shares Depositary.
 
  In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Shares Depositary, unless the Preferred
Shares Depositary determines that it is not feasible to make such
distribution, in which case the Preferred Shares Depositary may, with the
approval of the Trust, sell such property and distribute the net proceeds from
such sale to such holders.
 
WITHDRAWAL OF SHARES
 
  Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled
to delivery at such office, to or upon such holder's order, of the number of
whole or fractional Preferred Shares and any money or other property
represented by the Depositary Shares evidenced by such Depositary Receipts.
Holders of Depositary Receipts will be entitled to receive whole or fractional
shares of the related Preferred Shares on the basis of the proportion of
Preferred Shares represented by each Depositary Share as specified in the
applicable Prospectus Supplement, but holders of such Preferred Shares will
not thereafter be entitled to receive Depositary Shares therefor. If the
Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
shares of Preferred Shares to be withdrawn, the Preferred Shares Depositary
will deliver to such holder at the same time a new Depositary Receipt
evidencing such excess number of Depositary Shares. The Trust does not expect
that there will be any public market for Preferred Shares that are withdrawn
as described in this paragraph.
 
REDEMPTION OF DEPOSITARY SHARES
 
  Whenever the Trust redeems Preferred Shares held by the Preferred Shares
Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the
 
                                      23

 
Preferred Shares so redeemed, provided the Trust shall have paid in full to
the Preferred Shares Depositary the redemption price of the Preferred Shares
to be redeemed plus an amount equal to any accrued and unpaid dividends
thereon to the date fixed for redemption. The redemption price per Depositary
Share will be equal to the redemption price and any other amounts per share
payable with respect to the Preferred Shares. If fewer than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected pro rata (as nearly as may be practicable without creating fractional
Depositary Shares) or by any other equitable method determined by the Trust.
 
  From and after the date fixed for redemption, all dividends in respect of
the Preferred Shares so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except
the right to receive any moneys payable upon such redemption and any money or
other property to which the holders of such Depositary Receipts were entitled
upon such redemption upon surrender thereof to the Preferred Shares
Depositary.
 
VOTING OF THE PREFERRED SHARES
 
  Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Shares Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Shares) will be entitled to instruct the
Preferred Shares Depositary as to the exercise of the voting rights pertaining
to the amount of Preferred Shares represented by such holder's Depositary
Shares. The Preferred Shares Depositary will vote the amount of Preferred
Shares represented by such Depositary Shares in accordance with such
instructions, and the Trust will agree to take all reasonable action which may
be deemed necessary by the Preferred Shares Depositary in order to enable the
Preferred Shares Depositary to do so. The Preferred Shares Depositary will
abstain from voting the amount of Preferred Shares represented by such
Depositary Shares to the extent it does not receive specific instructions from
the holders of Depositary Receipts evidencing such Depositary Shares. The
Preferred Shares Depositary shall not be responsible for any failure to carry
out any instruction to vote, or for the manner or effect of any such vote
made, as long as any such action or non-action is in good faith and does not
result from negligence or willful misconduct of the Preferred Shares
Depositary.
 
LIQUIDATION PREFERENCE
 
  In the event of the liquidation, dissolution or winding up of the Trust,
whether voluntary or involuntary, the holders of each Depositary Receipt will
be entitled to the fraction of the liquidation preference accorded each
Preferred Share represented by the Depositary Share evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
 
CONVERSION OF PREFERRED SHARES
 
  The Depositary Shares, as such, are not convertible into Common Shares or
any other securities or property of the Trust. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of the
Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the Preferred Shares Depositary with written instructions to the
Preferred Shares Depositary to instruct the Trust to cause conversion of the
Preferred Shares represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Shares, other shares of
Preferred Shares of the Trust or other shares of capital stock, and the Trust
has agreed that upon receipt of such instructions and any amounts payable in
respect thereof, it will cause the conversion thereof utilizing the same
procedures as those provided for delivery of Preferred Shares to effect such
conversion. If the Depositary Shares evidenced by a Depositary Receipt are to
be converted in part only, a new Depositary Receipt will be issued for any
Depositary Shares not to be converted. No fractional shares of
 
                                      24

 
Common Shares will be issued upon conversion, and if such conversion will
result in a fractional share being issued, an amount will be paid in cash by
the Trust equal to the value of the fractional interest based upon the closing
price of the Common Shares on the last business day prior to the conversion.
 
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
 
  The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may
at any time be amended by agreement between the Trust and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Shares will not be effective unless such amendment has been approved
by the existing holders of at least a majority of the Depositary Shares
evidenced by the Depositary Receipts then outstanding. No amendment shall
impair the right, subject to certain exceptions in the Deposit Agreement, of
any holder of Depositary Receipts to surrender any Depositary Receipt with
instructions to deliver to the holder the related Preferred Shares and all
money and other property, if any, represented thereby, except in order to
comply with law. Every holder of an outstanding Depositary Receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold
such Depositary Receipt, to consent and agree to such amendment and to be
bound by the Deposit Agreement as amended thereby.
 
  The Deposit Agreement may be terminated by the Trust upon not less than 30
days' prior written notice to the Preferred Shares Depositary if (i) such
termination is necessary to preserve the Trust's status as a REIT or (ii) at
least two-thirds of each series of Preferred Shares affected by such
termination consents to such termination, whereupon the Preferred Shares
Depositary shall deliver or make available to each holder of Depositary
Receipts, upon surrender of the Depositary Receipts held by such holder, such
number of whole or fractional shares of Preferred Shares as are represented by
the Depositary Shares evidenced by such Depositary Receipts together with any
other property held by the Preferred Shares Depositary with respect to such
Depositary Receipt. The Trust has agreed that if the Deposit Agreement is
terminated to preserve the Trust's status as a REIT, then the Trust will use
its best efforts to list the Preferred Shares issued upon surrender of the
related Depositary Shares on a national securities exchange. In addition, the
Deposit Agreement will automatically terminate if (i) all outstanding
Depositary Shares shall have been redeemed or converted, or (ii) there shall
have been a final distribution in respect of the related Preferred Shares in
connection with any liquidation, dissolution or winding up of the Trust and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Shares.
 
CHARGES OF PREFERRED SHARES DEPOSITARY
 
  The Trust will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Trust will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay certain other transfer and
other taxes and governmental charges as well as the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
 
RESIGNATION AND REMOVAL OF DEPOSITARY
 
  The Preferred Shares Depositary may resign at any time by delivering to the
Trust notice of its election to do so, and the Trust may at any time remove
the Preferred Shares Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Shares Depositary. A
successor Preferred Shares Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
 
 
                                      25

 
MISCELLANEOUS
 
  The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Trust which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.
 
  Neither the Preferred Shares Depositary nor the Trust will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The
obligations of the Trust and the Preferred Shares Depositary under the Deposit
Agreement will be limited to performing their duties thereunder in good faith
and without negligence or willful misconduct, and the Trust and the Preferred
Shares Depositary will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Receipts, Depositary Shares or
Preferred Shares represented thereby unless satisfactory indemnity is
furnished. The Trust and the Preferred Shares Depositary may rely on written
advice of counsel or accountants, or information provided by persons
presenting Preferred Shares represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine
and signed by a proper party.
 
  In the event the Preferred Shares Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Trust, on the other hand, the Preferred Shares
Depositary shall be entitled to act on such claims, requests or instructions
received from the Trust.
 
                         DESCRIPTION OF COMMON SHARES
 
  The Trust has the authority to issue an unlimited number of common shares of
beneficial interest without par value. At May 20, 1996, the Trust had
outstanding 57,894,726 common shares of beneficial interest without par value.
 
  The following description of the Common Shares sets forth certain general
terms and provisions of the Common Shares to which any Prospectus Supplement
may relate, including a Prospectus Supplement providing that Common Shares
will be issuable upon conversion of Debt Securities or Preferred Shares or
upon the exercise of Warrants. The statements below describing the Common
Shares are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the Trust's Declaration of Trust, as
amended.
 
  Holders of the Trust's Common Shares will be entitled to receive dividends
when, as and if declared by the Board of Trustees of the Trust, out of funds
legally available therefor. Payment and declaration of dividends on the Common
Shares and purchases of Common Shares by the Trust will be subject to certain
restrictions if the Trust fails to pay dividends on the Preferred Shares. See
"Description of Preferred Shares". Upon any liquidation, dissolution or
winding up of the Trust, holders of Common Shares will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of the debts and other liabilities of the
Trust and the preferential amounts owing with respect to any outstanding
Preferred Shares. The Common Shares will possess ordinary voting rights for
the election of trustees and in respect of other corporate matters, each share
entitling the holder thereof to one vote. Trustees are elected in classes for
terms expiring at the third succeeding annual meeting. Holders of Common
Shares do not have cumulative voting rights in the election of trustees, which
means that holders of more than 50% of all of the Trust's Common Shares voting
for the election of trustees at any annual meeting can elect all of the
trustees to be elected at such meeting if they choose to do so and the holders
of the remaining shares cannot elect any trustees at such meeting. Approval of
the following matters requires the affirmative vote of the holders of at least
66 2/3% of all outstanding Common Shares: amendments to the Trust's
Declaration of Trust, as amended, termination of the Trust, certain mergers,
reorganizations or consolidations of the Trust or the sale, conveyance,
exchange or other disposition of more than 50% of the Trust's property, and
the removal of any trustee by the shareholders. Holders of Common Shares will
not have preemptive rights, which means they have no right to acquire any
additional Common Shares that may be issued by the Trust at a subsequent date.
The Common Shares will, when issued, be fully paid and nonassessable.
 
                                      26

 
RESTRICTIONS ON OWNERSHIP
 
  For the Trust to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code) during the last half of
a taxable year, and its capital stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months (or
during a proportionate part of a shorter taxable year). The Declaration of
Trust, as amended, imposes certain restrictions on the ownership and
transferability of Common Shares and Preferred Shares (collectively,
"Shares"). If two-thirds (2/3) of the Trustees determine that ownership of
Shares has become, or that there is a substantial possibility it may become,
concentrated to an extent which would prevent the Trust from continuing to be
qualified as a REIT, then the Trustees may redeem (by lot or other manner
deemed equitable by the Trustees) a sufficient number of Shares to bring the
ownership of the Shares into conformity with the requirements of the Code, or
prohibit the transfer of Shares to prevent the ownership of Shares from being
concentrated to an extent which may not allow the Trust to qualify as a REIT
under the Code. The redemption price to be paid will be (i) the last reported
sale price of the applicable Shares on the last business day prior to the
redemption date on the principal national securities exchange on which such
Shares are listed, or (ii) if the applicable Shares are not so listed, the
average of the highest bid and lowest asked prices on such last business day
as reported by the National Quotation Bureau Incorporated or a similar
organization selected from time to time by the Trustees for the purpose, or
(iii) if not determinable as aforesaid, as determined in good faith by the
Trustees. From and after the date fixed for redemption by the Trustees, the
holder of any Shares so called for redemption shall cease to be entitled to
any distributions, voting rights and other benefits with respect to the Shares
called for redemption, except the right to payment of the applicable
redemption price. Under certain circumstances the proceeds of redemption might
be taxed as a dividend to the recipient.
 
  In order to insure that the Trust remains qualified as a REIT for federal
income tax purposes, the Declaration of Trust, as amended, also provides that
any transfer of Shares that would prevent the Trust from continuing to be so
qualified shall be void ab initio, and the intended transferee of such Shares
shall be deemed never to have had an interest therein. If the foregoing
provision is determined to be void or invalid by virtue of any legal decision,
statute, rule or regulation, then the transferee of such Shares shall be
deemed to have acted as agent on behalf of the Trustees in acquiring such
Shares, and to hold such Shares on behalf of the Trustees.
 
  In addition, except as set forth below, any issuance or transfer of Shares
that would create a direct or indirect owner of more than 7.5% of the lesser
of the number or the value of the total Shares outstanding ("Excess Shares")
shall be void ab initio and the would-be transferee of such Shares shall be
deemed never to have had any interest in the Shares purportedly transferred.
The Trustees may waive such restriction unless the ownership of Excess Shares
would result in the termination of the status of the Trust as a REIT under the
Code.
 
  Any person who could, as a result of any transfer and/or registration of
transfer on the books of the Trust of any Shares, or securities convertible
into Shares, become a direct or indirect owner of Excess Shares shall give
written notice to the Trust of the proposed transfer and any information as
may be required by the Trustees no later than the 15th day prior to any
transfer which, if consummated, would result in such ownership.
 
  If a shareholder has knowledge that he owns, directly or indirectly,
together with certain related persons, 500,000 or more Shares (including
Shares into which convertible securities, options and warrants may be
converted or purchased pursuant thereto), within 10 days of becoming aware of
such ownership, whether or not connected with any acquisition of Shares, he
must notify the Trust in writing of such fact and must similarly notify the
Trust of any subsequent acquisition of Shares (or convertible securities,
options or warrants) by himself or related persons of which he has knowledge
within 10 days of becoming aware of such acquisition. In addition, each
shareholder shall upon demand be required to disclose to the Trust in writing
such information with respect to the direct, indirect and constructive
ownership of Shares as the Board of Trustees deems necessary to comply with
the provisions of the Code applicable to a REIT or to comply with the
requirements of any taxing authority or governmental agency.
 
  The Registrar and Transfer Agent for the Trust's Common Shares is Boston
Equiserve.
 
                                      27

 
                            DESCRIPTION OF WARRANTS
 
  The Trust may issue Warrants for the purchase of Debt Securities, Preferred
Shares, Depositary Shares or Common Shares. Warrants may be issued
independently or together with any Offered Securities and may be attached to
or separate from such securities. Each series of Warrants will be issued under
a separate warrant agreement (each, a "Warrant Agreement") to be entered into
between the Trust and a warrant agent ("Warrant Agent"). The Warrant Agent
will act solely as an agent of the Trust in connection with the Warrants of
such series and will not assume any obligation or relationship of agency or
trust for or with any holders or beneficial owners of Warrants. The following
sets forth certain general terms and provisions of the Warrants offered
hereby. Further terms of the Warrants and the applicable Warrant Agreement
will be set forth in the applicable Prospectus Supplement.
 
  The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4)
the currencies in which the price of such Warrants may be payable; (5) the
designation, aggregate principal amount and terms of the securities
purchasable upon exercise of such Warrants; (6) the designation and terms of
the Offered Securities with which such Warrants are issued and the number of
such Warrants issued with each such security; (7) the currency or currencies,
including composite currencies, in which the principal of or any premium or
interest on the securities purchasable upon exercise of such Warrants will be
payable; (8) if applicable, the date on and after which such Warrants and the
related securities will be separately transferable; (9) the price at which and
currency or currencies, including composite currencies, in which the
securities purchasable upon exercise of such Warrants may be purchased; (10)
the date on which the right to exercise such Warrants shall commence and the
date on which such right shall expire; (11) the minimum or maximum amount of
such Warrants which may be exercised at any one time; (12) information with
respect to book-entry procedures, if any; (13) a discussion of certain Federal
income tax considerations; and (14) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
 
                             DESCRIPTION OF RIGHTS
 
  The Trust may issue Rights to its shareholders for the purchase of Common
Shares. Each series of Rights will be issued under a separate rights agreement
(a "Rights Agreement") to be entered into between the Trust and a bank or
trust company, as Rights agent, all as set forth in the Prospectus Supplement
relating to the particular issue of Rights. The Rights agent will act solely
as an agent of the Trust in connection with the certificates relating to the
Rights and will not assume any obligation or relationship of agency or trust
for or with any holders of Rights certificates or beneficial owners of Rights.
The Rights Agreement and the Rights certificates relating to each series of
Rights will be filed with the Commission and incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Rights.
 
  The applicable Prospectus Supplement will describe the terms of the Rights
to be issued, including the following where applicable: (i) the date for
determining the shareholders entitled to the Rights distribution; (ii) the
aggregate number of Common Shares purchasable upon exercise of such Rights and
the exercise price; (iii) the aggregate number of Rights being issued; (iv)
the date, if any, on and after which such Rights may be transferable
separately; (v) the date on which the right to exercise such Rights shall
commence and the date on which such right shall expire; (vi) any special
United States federal income tax consequences; and (vii) any other terms of
such Rights, including terms, procedures and limitations relating to the
distribution, exchange and exercise of such Rights.
 
                                      28

 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
                       TO THE TRUST OF ITS REIT ELECTION
 
  The following summary of certain federal income tax considerations to the
Trust is based on current law, is for general information only, and is not tax
advice. The tax treatment of a holder of any of the Offered Securities will
vary depending upon the terms of the specific securities acquired by such
holder, as well as his particular situation, and this discussion does not
attempt to address any aspects of federal income taxation relating to holders
of Offered Securities. Certain federal income tax considerations relevant to
holders of the Offered Securities will be provided in the applicable
Prospectus Supplement relating thereto.
 
  EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE
ACQUISITION, OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
 
TAXATION OF THE TRUST AS A REIT
 
  General. The Trust has elected to be taxed as a real estate investment trust
under Sections 856 through 860 of the Code, commencing with its taxable year
ended July 31, 1972. The Trust believes that, commencing with its taxable year
ended July 31, 1972, it was organized and has been operating in such a manner
as to qualify for taxation as a REIT under the Code and the Trust intends to
continue to operate in such a manner, but no assurance can be given that it
will operate in a manner so as to qualify or remain qualified.
 
  These sections of the Code are highly technical and complex. The following
sets forth the material aspects of the sections that govern the federal income
tax treatment of a REIT. This summary is qualified in its entirety by the
applicable Code provisions, rules and regulations promulgated thereunder, and
administrative and judicial interpretations thereof.
 
  In the opinion of Altheimer & Gray, commencing with the Trust's taxable year
which ended July 31, 1972, the Trust has been organized in conformity with the
requirements for qualification as a REIT, and its method of operation enabled
it to meet the requirements for qualification and taxation as a REIT under the
Code. It must be emphasized that this opinion is based on various assumptions
and is conditioned upon certain representations made by the Trust as to
factual matters. In addition, this opinion is based upon the factual
representations of the Trust concerning its business and properties as set
forth in this Prospectus. Moreover, such qualification and taxation as a REIT
depends upon the Trust's ability to meet, through actual annual operating
results, distribution levels, diversity of stock ownership, and the various
qualification tests imposed under the Code discussed below, the results of
which have not been and will not be reviewed by Altheimer & Gray. Accordingly,
no assurance can be given that the actual results of the Trust's operation in
any particular taxable year will satisfy such requirements. See "--Failure to
Qualify."
 
  If the Trust qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to shareholders. This treatment substantially eliminates the
"double taxation" (at both the corporate and shareholder levels) that
generally results from investment in a regular corporation. However, the Trust
will be subject to federal income tax as follows: First, the Trust will be
taxed at regular corporate rates on any undistributed real estate investment
trust taxable income, including undistributed net capital gains. Second, under
certain circumstances, the Trust may be subject to the "alternative minimum
tax" on its items of tax preference. Third, if the Trust has (i) net income
from the sale or other disposition of "foreclosure property" which is held
primarily for sale to customers in the ordinary course of business or (ii)
other non-qualifying income from foreclosure property, it will be subject to
tax at the highest corporate rate on such income. Fourth, if the Trust has net
income from prohibited transactions (which are, in general, certain sales or
other dispositions of property held primarily for sale to customers in the
ordinary course of business other than foreclosure property), such income will
be subject to a 100% tax. Fifth, if the Trust should
 
                                      29

 
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), but has nonetheless maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on an amount equal to (a) the gross income attributable to the greater of
the amount by which the Trust fails the 75% or 95% test, multiplied by (b) a
fraction intended to reflect the Trust's profitability. Sixth, if the Trust
should fail to distribute during each calendar year at least the sum of (i)
85% of its REIT ordinary income for such year, (ii) 95% of its REIT capital
gain net income for such year, and (iii) any undistributed taxable income from
prior periods, the Trust would be subject to a 4% excise tax on the excess of
such required distribution over the amounts actually distributed. Seventh, if
the Trust acquires any asset from a C corporation (i.e., generally a
corporation subject to full corporate-level tax) in certain transactions in
which the basis of the asset in the hands of the Trust is determined by
reference to the basis of the asset (or any other property) in the hands of
the C corporation, and the Trust recognizes gain on the disposition of such
asset during the 10-year period (the "Recognition Period") beginning on the
date on which such asset was acquired by the Trust, then, to the extent of the
excess, if any, of the fair market value over the adjusted basis of any such
asset as of the beginning of the Recognition Period (the "Built-in Gain"),
such gain will be subject to tax at the highest regular corporate rate
pursuant to Internal Revenue Service ("IRS") regulations that have not yet
been promulgated.
 
  Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or
directors, (2) the beneficial ownership of which is evidenced by transferable
shares, or by transferable certificates of beneficial interest, (3) which
would be taxable as a domestic corporation, but for Section 856 through 859 of
the Code, (4) which is neither a financial institution nor an insurance
company subject to certain provisions of the Code, (5) the beneficial
ownership of which is held by 100 or more persons, (6) during the last half of
each taxable year, not more than 50% in value of the outstanding stock of
which is owned, directly or constructively, by five or fewer individuals (as
defined in the Code) and (7) which meets certain other tests, described below,
regarding the nature of its income and assets. The Code provides that
conditions (1) to (4) must be met during the entire taxable year and that
condition (5) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12
months. Conditions (5) and (6) will not apply until after the first taxable
year for which an election is made to be taxed as a REIT.
 
  The Trust has satisfied condition (5) and believes that it has issued
sufficient shares to allow it to satisfy condition (6). In addition, the
Trust's Declaration of Trust, as amended, provides for restrictions regarding
ownership and transfer of the Trust's capital stock, which restrictions are
intended to assist the Trust in continuing to satisfy the share ownership
requirements described in (5) and (6) above. The ownership and transfer
restrictions pertaining to a particular series of Preferred Shares are
described in "Description of Preferred Shares--Restrictions on Ownership."
 
  The Trust owns and operates a number of properties through subsidiaries.
Code Section 856(i) provides that a corporation which is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities and such items (as the
case may be) of the REIT. Thus, in applying the requirements described herein,
the Trust's "qualified REIT subsidiaries" will be ignored, and all assets,
liabilities and items of income, deduction, and credit of such subsidiaries
will be treated as assets, liabilities and items of the Trust.
 
  Income Tests. In order to maintain qualification as a REIT, the Trust
annually must satisfy three gross income requirements. First, at least 75% of
the Trust's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types
of temporary investments. Second, at least 95% of the Trust's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from such real property investments, dividends, interest and
gain from the sale or disposition of stock or securities (or from any
combination of the foregoing). Third, short-term gain from the sale or other
disposition of stock or securities, gain from prohibited transactions and gain
on the sale or other disposition of real property held for less than four
 
                                      30

 
years (apart from involuntary conversions and sales of foreclosure property)
must represent less than 30% of the Trust's gross income (including gross
income from prohibited transactions) for each taxable year.
 
  Rents received by the Trust will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents
received from a tenant will not qualify as "rents from real property" in
satisfying the gross income tests if the real estate investment trust, or an
owner of 10% or more of the REIT, directly or constructively owns 10% or more
of such tenant (a "Related Party Tenant"). Third, if rent attributable to
personal property leased in connection with a lease of real property is
greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." Finally, for rents received to qualify as "rents from real
property," the REIT generally must not operate or manage the property or
furnish or render services to the tenants of such property, other than through
an independent contractor from whom the REIT derives no revenue; provided,
however, the Trust may directly perform certain services that are "usually or
customarily rendered" in connection with the rental of space for occupancy
only and are not otherwise considered "rendered to the occupant" of the
property. The Trust does not and will not charge rent for any property that is
based in whole or in part on the income or profits of any person (except by
reason of being based on a percentage of receipts of sales, as described
above), the Trust does not and will not rent any property to a Related Party
Tenant, and the Trust does not and will not derive rental income attributable
to personal property (other than personal property leased in connection with
the lease of real property, the amount of which is less than 15% of the total
rent received under the lease). The Trust directly performs services under
certain of its leases.
 
  The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends
in whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales.
 
  If the Trust fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such
year if it is entitled to relief under certain provisions of the Code. These
relief provisions will generally be available if the Trust's failure to meet
such tests was due to reasonable cause and not due to willful neglect, the
Trust attaches a schedule of the sources of its income to its federal income
tax return, and any incorrect information on the schedule was not due to fraud
with intent to evade tax. It is not possible, however, to state whether in all
circumstances the Trust would be entitled to the benefit of these relief
provisions. As discussed above under "--General," even if these relief
provisions apply, a tax would be imposed with respect to the excess net
income.
 
  Asset Tests. The Trust, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Trust's total assets must be represented by real
estate assets (including (i) assets held by the Trust's qualified REIT
subsidiaries and the Trust's allocable share of real estate assets held by
partnerships in which the Trust owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Trust),
cash, cash items and government securities. Second, not more than 25% of the
Trust's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class,
the value of any one issuer's securities owned by the Trust may not exceed 5%
of the value of the Trust's total assets and the Trust may not own more than
10% of any one issuer's outstanding voting securities.
 
  The Trust currently has numerous wholly-owned subsidiaries. As set forth
above, the ownership of more than 10% of the voting securities of any one
issuer by a REIT is prohibited by the asset tests. However, if the Trust's
subsidiaries are "qualified REIT subsidiaries" as defined in the Code, such
subsidiaries will not be
 
                                      31

 
treated as separate corporations for federal income tax purposes. Thus, the
Trust's ownership of stock of a "qualified REIT subsidiary" will not cause the
Trust to fail the asset tests.
 
  Annual Distribution Requirements. The Trust, in order to qualify as a REIT,
is required to distribute dividends (other than capital gain dividends) to its
shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Trust's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Trust's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Trust disposes of any asset
during a Recognition Period, the Trust will be required, pursuant to IRS
regulations which have not yet been promulgated, to distribute at least 95% of
the Built-in Gain (after tax), if any, recognized on the disposition of such
asset. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the Trust timely
files its tax return for such year and if paid on or before the first regular
dividend payment after such declaration. To the extent that the Trust does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its "real estate investment trust taxable income," as adjusted,
it will be subject to tax thereon at regular ordinary and capital gain
corporate tax rates. Furthermore, if the Trust should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT capital gain income for such year,
and (iii) any undistributed taxable income from prior periods, the Trust would
be subject to a 4% excise tax on the excess of such required distribution over
the amounts actually distributed. The Trust intends to make timely
distributions sufficient to satisfy this annual distribution requirement.
 
  It is possible that the Trust, from time to time, may not have sufficient
cash or other liquid assets to meet the above distribution requirements due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Trust. In the event that
such timing differences occur, in order to meet the 95% distribution
requirement, the Trust may find it necessary to arrange for short-term, or
possibly long-term borrowings or to pay dividends in the form of taxable stock
dividends.
 
  Under certain circumstances, the Trust may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends"
to stockholders in a later year, which may be included in the Trust's
deduction for dividends paid for the earlier year. Thus, the Trust may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Trust will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.
 
FAILURE TO QUALIFY
 
  If the Trust fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Trust will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which
the Trust fails to qualify will not be deductible by the Trust nor will they
be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income and, subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Trust will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not possible to
state whether in all circumstances the Trust would be entitled to such
statutory relief.
 
                             PLAN OF DISTRIBUTION
 
  The Trust may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to
investors directly or through agents. Any such underwriter or agent involved
in the offer and sale of the Offered Securities will be named in the
applicable Prospectus Supplement.
 
                                      32

 
  Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Trust also may, from
time to time, authorize underwriters acting as the Trust's agents to offer and
sell the Offered Securities upon the terms and conditions as are set forth in
the applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Trust in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may
act as agent. Underwriters may sell Offered Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
 
  Any underwriting compensation paid by the Trust to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Offered Securities
may be deemed to be underwriters, and any discounts and commissions received
by them and any profit realized by them on resale of the Offered Securities
may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters, dealers and agents may be entitled, under
agreements entered into with the Trust, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.
 
  If so indicated in a Prospectus Supplement, the Trust will authorize agents,
underwriters or dealers to solicit offers by certain institutional investors
to purchase Offered Securities of the series to which such Prospectus
Supplement relates providing for payment and delivery on a future date
specified in such Prospectus Supplement. There may be limitations on the
minimum amount which may be purchased by any such institutional investor or on
the portion of the aggregate principal amount of the particular Offered
Securities which may be sold pursuant to such arrangements. Institutional
investors to which such offers may be made, when authorized, include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and such other institutions
as may be approved by the Trust. The obligations of any such purchasers
pursuant to such delayed delivery and payment arrangements will not be subject
to any conditions except that (i) the purchase by an institution of the
particular Offered Securities shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which such
institution is subject, and (ii) if the particular Offered Securities are
being sold to underwriters, the Trust shall have sold to such underwriters the
total principal amount of such Offered Securities or number of Warrants less
the principal amount or number thereof, as the case may be, covered by such
arrangements. Underwriters will not have any responsibility in respect of the
validity of such arrangements or the performance of the Trust or such
institutional investors thereunder.
 
  Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Trust and its subsidiaries
in the ordinary course of business.
 
                                 ERISA MATTERS
 
  The Trust may be considered a "party in interest" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and a
"disqualified person" under corresponding provisions of the Code with respect
to certain employee benefit plans. Certain transactions between an employee
benefit plan and a party in interest or disqualified person may result in
"prohibited transactions" within the meaning of ERISA and the Code, unless
such transactions are effected pursuant to an applicable exemption. Any
employee benefit plan or other entity subject to such provisions of ERISA or
the Code proposing to invest in the Offered Securities should consult with its
legal counsel.
 
                                      33

 
                                LEGAL OPINIONS
 
  Certain legal matters will be passed upon for the Trust by Steven F. Siegel,
General Counsel and Secretary of the Trust, and by Robinson Silverman Pearce
Aronsohn & Berman LLP, New York, New York. The legal authorization and
issuance of the Offered Securities, as well as certain other legal matters
concerning Massachusetts law, will be passed upon for the Trust by Goodwin,
Procter & Hoar LLP., Boston, Massachusetts, Altheimer & Gray, Chicago,
Illinois, has acted as counsel to the Trust on tax and certain other matters.
Norman Gold, a member of Altheimer & Gray, is a Trustee. Mr. Gold beneficially
owns 10,899 Common Shares.
 
  Certain legal matters will be passed upon for the underwriters, dealers or
agents by Brown & Wood, New York, New York.
 
                                    EXPERTS
 
  The consolidated balance sheets as of July 31, 1995 and 1994 and the
consolidated statements of income, changes in shareholders' equity, and cash
flows and the consolidated financial statement schedules of the Trust for each
of the three years in the period ended July 31, 1995, which appear in the
Annual Report on the Form 10-K incorporated by reference in this Prospectus,
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
 
  The historical summary of revenues and certain operating expenses of certain
properties acquired by the Trust for various year ends appearing in the
Trust's Report on Form 8-K/A dated August 9, 1995 and the
historical summary of revenues and certain operating expenses of certain
properties acquired by the Trust for the year ended July 31, 1995 appearing in
the Trust's Report on Form 8-K dated October 20, 1995 and as amended by the
Trust's Reports on Form 8-K/A dated November 9, 1995, December 22, 1995 and
March 19, 1996, have been audited by Eichler Bergsman & Co., LLP, independent
accountants, as set forth in their reports thereon, included therein and
incorporated herein by reference. Such historical summaries of revenues and
certain operating expenses are incorporated herein by reference in reliance
upon such reports given on the authority of that firm as experts in accounting
and auditing.
 
                                      34

 
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 NO DEALER, SALESPERSON, OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE
PRICING SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST OR THE AGENTS. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUP-
PLEMENT OR THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE NOTES OFFERED HEREBY AND
THEREBY OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH NOTES IN
ANY JURISDICTION BY ANY PERSONS NOT AUTHORIZED OR QUALIFIED TO MAKE SUCH OFFER
OR SOLICITATION OR TO ANY PERSONS TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE APPLICA-
BLE PRICING SUPPLEMENT OR THE PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND
THEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TRUST SINCE THE DATE OF THE APPLICA-
BLE PRICING SUPPLEMENT OR THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS
OF ANY TIME SINCE SUCH DATE.
 
                              ------------------
 
                               TABLE OF CONTENTS
 


                                                                           Page
                                                                           ----
                                                                        
                             Prospectus Supplement
Risk Factors..............................................................  S-2
Description of Notes......................................................  S-4
Special Provisions Relating to Foreign Currency Notes..................... S-19
Certain United States Federal Income Tax Considerations................... S-22
Plan of Distribution...................................................... S-30
                                  Prospectus
Available Information.....................................................    2
Incorporation of Certain Documents by Reference...........................    2
The Trust.................................................................    3
Ratios of Earnings to Fixed Charges.......................................    4
Use of Proceeds...........................................................    4
Description of Debt Securities............................................    4
Description of Preferred Shares...........................................   18
Description of Depositary Shares..........................................   23
Description of Common Shares..............................................   26
Description of Warrants...................................................   28
Description of Rights.....................................................   28
Certain Federal Income Tax Considerations to the Trust of its REIT
 Election.................................................................   29
Plan of Distribution......................................................   32
ERISA Matters.............................................................   33
Legal Opinions............................................................   34
Experts...................................................................   34

 
 
                                 $163,000,000
 
                                   NEW PLAN
                                 REALTY TRUST
 
                               MEDIUM-TERM NOTES
                            DUE NINE MONTHS OR MORE
                              FROM DATE OF ISSUE
 
                              ------------------
 
                             PROSPECTUS SUPPLEMENT
                                 MAY 24, 1996
 
                              ------------------
 
                                LEHMAN BROTHERS
 
                              MERRILL LYNCH & CO.
 
                             MORGAN STANLEY & CO.
                                 INCORPORATED
 
                               SMITH BARNEY INC.
 
 
 
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