<PAGE>
File No. 333-74557
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N 8B-2
A. Exact name of Trust:
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 25
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Copy to:
CARTER, LEDYARD & MILBURN
Attention: Kathleen H. Moriarty, Esq.
2 Wall Street
New York, New York 10005
E. Total and amount of securities being registered:
An indefinite number of Units pursuant to Rule 24f-2 of the
Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities being
registered:
Indefinite
<PAGE>
G. Amount of filing fee, computed at one-thirty-eighth of 1 percent of the
proposed maximum aggregate offering price to the public:
None required pursuant to Rule 24f-2.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
// Check box if it is proposed that this filing will become effective at
3:00 p.m. on __________, 2000 pursuant to Rule 487.
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 25
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction 1
as to Prospectus on Form S-6)
Form N-8B-2 Form S-6 Item Number
Heading in Prospectus
---------------------
I. Organization and General Information
---------------------------------------
1. (a)Name of Trust ) Front Cover
(b)Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and termination of ) The Trust
Trust Agreement ) Termination of the Trust
7. Charges of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
---------------------------
10. General Information regarding Trust's ) The Trust
Securities and Rights of Holders ) Rights of Unitholders
(a) Type of Securities ) The Trust
(Registered or Bearer )
- ---------------------
* Not applicable, answer negative or not required.
(b) Type of Securities ) The Trust
(Cumulative or Distributive) )
<PAGE>
(c) Rights of Holders as to ) Rights of Unitholders
Withdrawal or Redemption ) Redemption Public
) Offering of Units-
) Secondary Market for
) Units
(d) Rights of Holders as to ) Public Offering of
conversion, transfer, etc. ) Units-Secondary Market
) for Units
) Exchange Option
(e) Rights of Trust issues periodic ) *
payment plan certificates )
(f) Voting rights as to Securities ) Rights of Unitholders
under the Indenture )
(g) Notice to Holders as to )
change in
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
(h) Consent of Security Holders )
required to change )
(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture )
(4) Identity of Depositor ) Amendment of the Indenture
and Trustee )
11. Type of securities comprising ) The Trust
security holder's interest ) Rights of Unitholders
) Administration of the
) Trust
) Portfolio Supervision
- ----------------
* Not applicable, answer negative or not required.
<PAGE>
12. Information concerning periodic ) *
payment certificates )
13. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units, Expenses of the
) Trust
(b) Certain information regarding ) *
periodic payment certificates- )
(c) Certain percentages ) *
(d) Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e) Certain profits receivable by ) Public Offering of Units-
depositor, principal under- ) Public Offering Price;
writers, trustee or affiliated ) -Sponsor's Profit
persons ) -Secondary Market for
-Units
(f) Ratio of annual charges to ) *
income )
14. Issuance of trust's securities ) The Trust
) Public Offering of Units
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust, Administration
Underlying Securities ) of the Trust-Portfolio
) Supervision Rights of
) Unitholders
17. Withdrawal or redemption ) Redemption
) Public Offering of Units
) -Secondary Market for
) Units-Exchange Option
) Rights of Unitholders
18. (a) Receipt and disposition of ) Distributions,
income ) Termination of the Trust,
) Administration of the
) Trust-Reports and Records
(b) Reinvestment of distributions ) *
- -------------------------
* Not applicable, answer negative or not required.
(c) Reserves or special fund ) Distributions, Expenses
) of the Trust,
) Administration
<PAGE>
) of the Trust-Reports and
) Records
(d) Schedule of distribution ) *
19. Records, accounts and report ) Distributions, Adminstra-
) tion of the Trust
20. Certain miscellaneous provisions ) Administration of the
of trust agreement ) Trust
21. Loans to security holders ) *
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
-------------------------------
25. Organization of Depositor ) Sponsor
26. Fees received by Depositor ) Public Offering Price of
) Units, Expenses of the
) Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of Depositor ) *
30. Persons controlling Depositor ) Sponsor
31. Payments by Depositor for certain ) *
other services trust )
32. Payments by Depositor for certain ) *
other services rendered to trust )
- ---------------------
* Not applicable, answer negative or not required.
<PAGE>
33. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
34. Remuneration of other persons ) *
for certain services rendered )
to trust )
IV. Distribution and Redemption of Securities
---------------------------------------------
35. Distribution of trust's ) Public Offering of Units
securities by states ) Distribution of Units
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements ) Distribution of Units
(c) Selling agreements )
39. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering of Units
principal underwriter ) -public Offering Price
41. (a) Business of principal ) Sponsor
underwriter )
(b) Branch officers of principal )
underwriter )
(c) Salesman of principal ) *
underwriter )
42. Ownership of trust's securities ) *
by certain persons )
43. Certain brokerage commissions ) *
received by principal underwriter )
* Not applicable, answer negative or not required.
44. (a) Method of valuation ) Public Offering of Units
) -Public Offering Price
<PAGE>
(b) Schedule as to offering price ) *
(c) Variation in offering price ) Public Offering of Units
to certain persons ) -Public Offering Price
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Public Offering of Units
) -Public Offering Price
) -Secondary Market for
) Units Valuation Redemption
(b) Schedule as to redemption price ) *
V. Information concerning the Trustee or Custodian
--------------------------------------------------
47. Maintenance of position in ) Redemption, Public
underlying securities ) Offering of Units Public
) Offering Price
48. Organization and regulation of ) Trustee
Trustee ) )
49. Fees and expenses of Trustee ) Expenses of the Trust
50. Trustee's lien ) Expenses of the Trust
VI. Information concerning Insurance of Holders of Securities
-------------------------------------------------------------
51. (a) Name and address of Insurance ) *
Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
- ---------------------
* Not applicable, answer negative or not required.
<PAGE>
(g) Method of determining premiums ) *
(h) Amount of aggregate premiums ) *
paid )
(i) Who receives any part of ) *
premiums )
(j) Other material provisions of ) *
the Trust relating to insurance )
VII. Policy of Registrant
-------------------------
52. (a) Method of selecting and ) The Trust, Administration
eliminating securities from ) of the Trust-Portfolio
the Trust ) Supervision
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) The Trust, Administration
substitution and elimination ) of the Trust-Portfolio
of securities ) Supervision
(d) Description of any fundamental ) The Trust, Administration
policy of the Trust ) of the Trust-Portfolio
) Supervision
53. (a) Taxable status of the Trust ) Federal Income Taxes
(b) Qualification of the Trust as ) Federal Income Taxes
a mutual investment company
VIII. Financial and Statistical Information
-------------------------------------------
54. Information regarding the Trust's ) *
past ten fiscal years )
55. Certain information regarding ) *
periodic payment plan certificates )
56. Certain information regarding ) *
periodic payment plan certificates )
57. Certain information regarding ) *
periodic payment plan certificates )
- ----------------------
* Not applicable, answer negative or not required.
<PAGE>
58. Certain information regarding ) *
periodic payment plan certificates )
59. Financial statements ) Statement of Net Assets
(Instruction 1(c) to Form S-6) )
- -----------------------
* Not applicable, answer negative or not required.
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 25
(A Unit Investment Trust)
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
PORTFOLIO OF "ZERO-COUPON" U.S. TREASURY OBLIGATIONS AND COMMON STOCKS
DESIGNED FOR PRESERVATION OF CAPITAL AND POTENTIAL CAPITAL APPRECIATION
- --------------------------------------------------------------------------------
THIS PROSPECTUS CONSISTS OF TWO PARTS: PART A AND PART B. PARTS A AND B SHOULD
BOTH BE ATTACHED FOR THIS PROSPECTUS TO BE COMPLETE.
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
ABOUT THIS TRUST NOT CONTAINED IN THIS PROSPECTUS, AND YOU SHOULD NOT RELY ON
ANY OTHER INFORMATION. READ AND KEEP BOTH PARTS OF THIS PROSPECTUS FOR FUTURE
REFERENCE.
- --------------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
PROSPECTUS DATED JANUARY 27, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PART A PAGE
----
Brief Description of the Trust's Investment Portfolio ............ A-3
ls this Trust Appropriate for You? ............................... A-4
Summary of Risks ................................................. A-4
Essential Information Regarding the Trust ........................ A-8
Report of Independent Auditors ................................... A-10
Statement of Net Assets .......................................... A-11
Schedule of Investments .......................................... A-12
PART B
The Trust's Objective ............................................ B-1
The Composition of the Portfolio ................................. B-1
Trust ............................................................ B-4
Risk Factors and Special Considerations .......................... B-5
Federal Income Taxes ............................................. B-8
Public Offering of Units ......................................... B-10
Public Offering Price ........................................... B-10
Sales Charge and Volume Discount ................................ B-11
Employee Discount ............................................... B-13
Exchange Option ................................................. B-13
Conversion Option ............................................... B-14
Distribution of Units ........................................... B-15
Secondary Market for Units ...................................... B-15
Sponsor's Profits ............................................... B-15
Redemption ....................................................... B-16
Valuation ........................................................ B-17
Comparison of Public Offering Price and Redemption Value ......... B-18
Expenses of the Trust ............................................ B-18
Rights of Unitholders ............................................ B-19
Distributions .................................................... B-20
Administration of the Trust ...................................... B-20
Accounts ........................................................ B-20
Reports and Records ............................................. B-20
Portfolio Supervision ........................................... B-21
Reinvestment .................................................... B-22
Amendment of the Indenture ....................................... B-22
Termination of the Trust ......................................... B-22
Sponsor .......................................................... B-23
Trustee .......................................................... B-23
Independent Auditors ............................................. B-24
Legal Opinions ................................................... B-24
</TABLE>
A-2
<PAGE>
BRIEF DESCRIPTION OF THE TRUST'S INVESTMENT PORTFOLIO
1. THE TRUST'S OBJECTIVE.
The Trust seeks to provide preservation of capital and potential capital
appreciation through an investment in a portfolio of stripped "zero-coupon"
United States Treasury Obligations maturing on May 15, 2010 and common
stocks. Because the maturity value of the Treasury Obligations is backed by
the full faith and credit of the United States, the Sponsor believes that the
Trust provides an attractive combination of principal preservation and
capital appreciation potential for purchasers who hold Units until May 30,
2010, the Trust's "Mandatory Termination Date".
As of the date of this Prospectus Part A, 52.5% of the Trust's Portfolio is
invested in interest-only portions of United States Treasury Obligations and
the remaining 47.5% was invested in common stocks as described briefly below.
The stripped "zero-coupon" U.S. Treasury Obligations make no payment of
current interest, but rather make a single payment upon their stated
maturity. PaineWebber chose the stocks in the Trust's Portfolio for their
capital appreciation potential, not for their income potential. Many of the
stocks currently pay little or no dividend income.
The Trust has been formulated so that the portion of the Trust invested in
stripped Treasury Obligations is designed to provide an approximate return of
principal invested on the Mandatory Termination Date for purchasers on the
Initial Date of Deposit. (See "Essential Information-- Distributions".)
Therefore, even if the Stocks are valueless upon termination of the Trust,
and if the Treasury Obligations are held until their maturity in proportion
to the Units outstanding, purchasers will receive, at the termination of the
Trust, $1,000 per 1,000 Units purchased. This feature of the Trust provides
that Unitholders who purchased their Units at or below $1,000 per 1,000 Units
and who hold their Units to the Mandatory Termination Date will receive the
same amount as they originally invested, although they would have foregone
earning any interest on the amounts involved and will not protect their
principal on a present value basis, assuming the Stocks are valueless.
2. BRIEF DESCRIPTION OF THE TRUST'S PORTFOLIO.
The Trust is a unit investment trust which means that, unlike a mutual fund,
the Trust's Portfolio is not managed and the Trust Portfolio's investments
are not sold because of market changes.
Unless terminated sooner, the Trust is scheduled to terminate on or about May
30, 2010 regardless of market conditions at the time. The Trust plans to hold
until its termination the U.S. Treasury Obligations maturing May 15, 2010 and
a diversified group of stocks, all as shown on the "Schedule of Investments"
in this Prospectus Part A.
The main objective of PaineWebber in constructing the portfolio of stocks to
be included in the Trust is to select a group of stocks which, in
PaineWebber's view, would be capable of, over the long term, closely tracking
the performance of the market as measured by the S&P 500 Index. The S&P 500
Index is an unmanaged index of 500 stocks calculated under the auspices of
Standard & Poor's, which, in PaineWebber's view, is a broadly diversified,
representative segment of the market of all publicly traded stocks in the
United States.
In constructing the Trust's Portfolio, a computer program was generated
against the 500 S&P stocks to identify a combination of S&P 500 stocks
(excluding General Electric and those stocks rated "Unattractive" by
PaineWebber Equity Research) which, when equally weighted are highly
correlated with the S&P 500 Index with a minimal tracking error.
A-3
<PAGE>
The common stocks in the Trust's Portfolio have been issued by companies who
receive income and derive revenues from multiple industry sources, but whose
primary industry is listed in the "Schedule of Investments" in this
Prospectus Part A.
<TABLE>
<CAPTION>
APPROXIMATE PERCENT
OF AGGREGATE
PRIMARY INDUSTRY SOURCE MARKET VALUE OF THE TRUST
- ------------------------------------------ --------------------------
<S> <C>
Aerospace/Defense ........................ 2.40%
Automobile ............................... 1.15
Beverages ................................ 1.19
Biotechnology ............................ 1.21
Broadcast Services ....................... 1.21
Computers--Hardware/Software ............. 5.75
Cosmetics & Toiletries ................... 1.16
Electric ................................. 2.39
Electronics/Semi-Conductor ............... 2.28
Financial Institutions/Banks ............. 4.91
Foods--Miscellaneous/Diversified ......... 1.20
Insurance--Multi-Line .................... 1.22
Internet Software ........................ 1.20
Medical Instruments ...................... 1.21
Multimedia ............................... 2.38
Networking Products ...................... 1.24
Oil/Gas .................................. 3.59
Pharmaceutical ........................... 4.82
Retail--Building Products ................ 1.17
Retail--Discount ......................... 1.11
Telecommunications ....................... 4.71
</TABLE>
IS THIS TRUST APPROPRIATE FOR YOU?
Yes, if you are a long-term investor seeking capital protection combined
with potential capital appreciation over the life of the Trust. You will benefit
from a professionally selected portfolio whose risk is reduced by investing in
stocks of several different issuers.
No, if you want a speculative investment that changes to take advantage of
market movements, if you are unable or unwilling to assume the risks involved
generally with equity investment or if you need current income.
SUMMARY OF RISKS
YOU CAN LOSE MONEY BY INVESTING IN THE TRUST. This can happen for various
reasons. A further discussion of the risks summarized below can be found in Part
B of this Prospectus.
A-4
<PAGE>
1. RISKS OF INVESTING IN THE TRUST
Certain risks are involved with an investment in a unit trust which holds
stripped "zero-coupon" U.S. Treasury Obligations and common stocks. For
example:
The Trust, unlike a mutual fund, is not "managed", so neither the U.S.
Treasury Obligations nor the stocks will be sold by the Trust to take
advantage of market fluctuations.
The Trust Portfolio may not remain constant during the life of the Trust. The
Trustee is required to sell stocks to reimburse the Sponsor for initial costs
incurred in organizing the Trust, may be required to sell stocks to pay Trust
expenses, to tender stocks under certain circumstances or to sell stocks in
the event certain negative events occur.
The sale of stocks from the Trust in the period prior to termination and upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time due to impending or actual
termination of the Trust. For this reason, among others, the amount you
receive upon termination may be less than the amount you paid.
If many investors sell their Units, the Trust will have to sell Portfolio
Securities. This could reduce the diversification of your investment and
increase your share of Trust expenses.
The price of your Units depends upon the full range of economic and market
influences including the prices of bonds and equity securities, current
interest rates, the condition of the bond and stock markets and other
economic influences that affect the global or United States economy.
Assuming no changes occur in the prices of the U.S. Treasury Obligations and
the stocks held by the Trust, the price you receive for your Units will
generally be less than the price you paid because your purchase price
included a sales charge.
The stocks in the Trust's Portfolio will generally trade on a domestic stock
exchange or in the over- the-counter market. We cannot assure you that a
liquid trading market will exist. The value of the Trust's Portfolio, and of
your investment, may be reduced if trading in one or more stocks is limited
or absent.
Additional stocks and U.S. Treasury Obligations may be acquired by the Trust
when additional Units are to be offered to the public. Costs incurred in
acquiring such additional stocks and Treasury Obligations will be borne by
the Trust. Unitholders will experience a dilution of their investment as a
result of such brokerage fees and other expenses paid by the Trust during the
additional deposits of securities purchased by the Trustee with cash or cash
equivalents.
INVESTING ALWAYS INVOLVES RISK. The risks described below are the most
significant risks associated with investing in the U.S. Treasury Obligations
and stocks held by the Trust.
2. RISKS OF INVESTING IN STRIPPED "ZERO-COUPON" U.S. TREASURY OBLIGATIONS
The value of the stripped Treasury Securities in the Trust may increase or
decrease depending upon market and economic conditions. Also, the Trust's
stripped Treasury Securities are purchased at a deep discount and do not make
any periodic payments of interest. Instead, the entire payment of proceeds
will be made upon maturity of such Treasury Obligations. Owners of deep
discount bonds which make no current interest payments earn a fixed yield not
only on the original investment but also on all earned discount during the
life of such obligation. This implicit reinvestment of earnings at the same,
fixed rate eliminates the owner's ability to reinvest at higher rates in the
future. For this reason, sale of Units prior to the termination date of the
Trust will involve substantially greater price
A-5
<PAGE>
fluctuations during periods of changing market interest rates than would be
experienced in connection with sale of Units of a Trust which held Treasury
Obligations which made scheduled interest payments on a current basis.
3. RISKS OF INVESTING IN STOCKS
Holders of common stocks such as those held by the Trust have rights that are
generally inferior to the holders of debt obligations or preferred stocks.
Common stocks are not obligations of the issuer. Therefore, they do not
provide any assurance of income or provide the degree of protection of debt
securities.
The stocks held by the Trust can be expected to fluctuate in value depending
on a wide variety of factors, such as economic and market influences
affecting corporate profitability, financial condition of issuers, changes in
worldwide or national economic conditions, the prices of equity securities in
general and the Trust's stocks in particular.
YEAR 2000 PROBLEM
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 and therefore may not
properly process and calculate date-related information and data (commonly known
as the "Year 2000 Problem"). As with all investment and financial entities, the
Year 2000 Problem may have an adverse impact upon the handling of securities
trades, pricing and account services and other activities conducted by or for
the Trust. The Sponsor and the Trustee have taken steps to address the Year 2000
Problem with respect to the computer systems they use and to obtain reasonable
assurances that similar steps have been taken by the Trust's other service
providers. Operations ran smoothly from the last week in December through the
first few weeks of January, but the Year 2000 Problem may yet have an adverse
impact on financial market participants and other entities, including the
companies whose stocks are contained in the Trust's Portfolio.
FEES AND EXPENSES
This table shows the fees and expenses a Unitholder may pay, either directly
or indirectly, when investing in Units of the Trust.
ESTIMATED ANNUAL OPERATING EXPENSES OF THE TRUST
<TABLE>
<CAPTION>
AMOUNT
AS A % OF AMOUNT PER
NET ASSETS $1,000 INVESTED
(AS OF THE (AS OF THE
FIRST DAY OF FIRST DAY OF
THE TRUST) THE TRUST)
-------------- ----------------
<S> <C> <C>
Trustee's Fee .153% $1.45
Portfolio, Bookkeeping and Administrative Expenses .080% $0.76
Other Operating Expenses .025% $0.24
Total .258% $2.45
==== =====
ESTIMATED INITIAL ORGANIZATIONAL COSTS OF THE TRUST(1) .210% $2.00
---- -----
</TABLE>
- ----------
(1) Applicable only to purchasers of Units during the initial offering period.
A-6
<PAGE>
EXAMPLE
This example may help you compare the cost of investing in the Trust to the
cost of investing in other funds.
The example below assumes that you invest $10,000 in the Trust for the
periods indicated and then either redeem or do not redeem your Units at the end
of those periods. The example also assumes a 5% return on your investment each
year and that the Trust's annual operating expenses stay the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- --------- --------- ---------
<S> <C> <C> <C>
$520 $568 $617 $740
</TABLE>
See "Expenses of the Trust" in Part B of this Prospectus for additional
information regarding expenses.
A-7
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF JANUARY 26, 2000+
<TABLE>
<CAPTION>
<S> <C>
Initial Date of Deposit: January 27, 2000
$952,595
Aggregate Value of Securities in Trust: ......................
Number of Units: ............................................. 1,000,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: .................................................. 1/1,000,000th
Calculation of Public Offering Price Per Unit*
Public Offering Price per Unit .............................. $1.00
Less Reimbursement to Sponsor for Initial Organizational
Costs*** .................................................. $.002
Less Initial Sales Charge++ of 4.75% of Public Offering
Price (4.99% of net amount invested per Unit) ............. $.0475
Net Asset Value per Unit .................................... $.9505
Net Asset Value for 1,000,000 Units ......................... $950,500
Divided by 1,000,000 Units .................................. $.9505
Redemption Value:+++ ........................................... $.9525
Evaluation Time: ............................................... Closing time of the regular trading
session on the New York Stock
Exchange, Inc. (ordinarily 4:00 P.M.
New York time).
Distribution Dates**: .......................................... Quarterly, commencing
June 25, 2000.
Record Date: ................................................... June 10, 2000, and quarterly
thereafter.
Mandatory Termination Date: .................................... May 30, 2010 (15 days after
maturity of the Treasury
Obligations).
Discretionary Liquidation Amount: .............................. 20% of the value of the Securities
upon completion of the deposit
of the Securities.
Estimated Initial Organizational Costs of the Trust*** ......... $.00200 per Unit.
Estimated Annual Expenses of the Trust****: .................... $.00245 per Unit.
</TABLE>
- ----------
* On the date of this Prospectus (the "Initial Date of Deposit"), the Public
Offering Price is based on the value of the Securities as of the close of
business on January 26, 2000 (the business day preceding the Initial Date
of Deposit). However, if the public offering price determined with
reference to values of the Securities as of the close of business on the
Initial Date of Deposit is less than $.975 per Unit, the purchase orders
received on the Initial Date of Deposit will be filled on the basis of such
lower price. Beginning January 28, 2000, the Public Offering Price will be
based on the value of the Securities next computed following receipt of the
purchase order plus the applicable sales charge. (See "Valuation").
** No distributions of less than $.0050 per Unit need be made from the
Capital Account on any Distribution Date. See "Distributions".
*** Investors purchasing Units during the initial offering period will
reimburse the Sponsor for all or a portion of the costs incurred by the
Sponsor in connection with organizing the Trust and offering the Units for
sale described more fully in "Public Offering Price" (collectively, the
"Initial Organizational Costs"). These costs have been estimated at $.002
per Unit based upon the expected number of Units to be created during the
initial offering period. Certain Securities purchased with the proceeds of
the Public Offering Price will be sold by the Trustee at the completion of
the initial public offering period to reimburse the Sponsor for Initial
Organizational Costs actually incurred. If the actual Initial
Organizational Costs are less than the estimated amount, only the actual
Initial Organizational Costs will be deducted from the assets of the Trust.
If, however, the amount of the actual Initial Organizational Costs are
greater than the estimated amount, only the estimated amount of the Initial
Organizational Costs will be deducted from the assets of the Trust.
continued on page A-9
A-8
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
**** See "Expenses of the Trust". Estimated dividends from the Stocks, based
upon last dividends actually paid, are expected by the Sponsor to be
sufficient to pay estimated annual expenses of the Trust. If such
dividends paid are insufficient to pay such annual expenses, the Trustee
is authorized to sell Securities in an amount sufficient to pay such
expenses. (See "Administration of the Trust" and "Expenses of the
Trust".)
+ The date prior to the Initial Date of Deposit.
++ The sales charge will not be assessed on these Securities sold to
reimburse the Sponsor for the Initial Organizational Costs.
+++ This figure reflects deduction of the maximum Sales Charges of $.0475 per
Unit. As of the close of the initial offering period, the Redemption
Value will be reduced to reflect the payment of Initial Organizational
Costs (see "Summary of Risk Factors" and "Comparison of Public Offering
Price and Redemption Value").
A-9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND TRUSTEE
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 25
We have audited the accompanying Statement of Net Assets of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 25,
including the Schedule of Investments, as of January 27, 2000. This
financial statement is the responsibility of the Trustee. Our
responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement. Our procedures included
confirmation with Investors Bank & Trust Company, Trustee, of an
irrevocable letter of credit deposited for the purchase of securities,
as shown in the financial statement as of January 27, 2000. An audit
also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 25 at
January 27, 2000, in conformity with accounting principles generally
accepted in the United States.
ERNST & YOUNG LLP
New York, New York
January 27, 2000
A-10
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 25
STATEMENT OF NET ASSETS
AS OF INITIAL DATE OF DEPOSIT, JANUARY 27, 2000
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
----------
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ................................. $ 952,595
Reimbursement to Sponsor for Initial Organizational Costs (b) ..... (2,000)
----------
Total ......................................................... $ 950,595
==========
Units outstanding: ................................................ 1,000,000
ANALYSIS OF NET ASSETS
----------------------
Cost to investors (c) ............................................ $1,000,000
Less: Gross underwriting commissions (d) ......................... (47,405)
Reimbursement to Sponsor for Initial Organizational Costs (2,000)
----------
Net Assets .................................................... $ 950,595
==========
</TABLE>
- ----------
(a) The aggregate cost to the Trust of the Securities listed under
"Schedule of Investments" is determined by the Trustee on the basis set forth
above under "Public Offering of Units--Public Offering Price." See also the
column headed Cost of Securities to Trust under "Schedule of Investments."
Pursuant to contracts to purchase Securities, an irrevocable letter of credit
drawn on Credit Lyonnais, in the amount of $3,000,000 has been deposited with
the Trustee, Investors Bank & Trust Company for the purchase of $952,595
aggregate value of Securities in the initial deposit and for the purchase of
Securities in subsequent deposits.
(b) Investors purchasing Units during the initial offering period will
reimburse the Sponsor for all or a portion of the costs incurred by the Sponsor
in connection with organizing the Trust and offering the Units for sale as
described more fully in "Public Offering Price" (collectively, the "Initial
Organizational Costs"). These costs have been estimated at $.002 per Unit based
upon the expected number of Units to be created during the initial offering
period. Certain Securities purchased with the proceeds of the Public Offering
Price will be sold by the Trustee at the completion of the initial public
offering period to reimburse the Sponsor for Initial Organizational Costs
actually incurred. If the actual Initial Organizational Costs are less than the
estimated amount, only the actual Initial Organizational Costs will be deducted
from the assets of the Trust. If, however, the amount of the actual Initial
Organizational Costs are greater than the estimated amount, only the estimated
amount of the Initial Organizational Costs will be deducted from the assets of
the Trust.
(c) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) Sales charge of 4.75% of the Public Offering Price per Unit is computed
on the basis set forth under "Public Offering of Units--Sales Charge and Volume
Discount."
A-11
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 25
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JANUARY 27, 2000
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
- -------------------------------- -------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3) (52.50%) ......... 0% $1,000,000 May 15, 2010 $500,090.00
</TABLE>
COMMON STOCKS (47.50%) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Aerospace/Defense (2.40%)
Honeywell International Inc. .............................. 240 $11,430.00
United Technologies Corporation ........................... 200 11,400.00
Automobile (1.15%)
General Motors Corporation ................................ 140 10,998.75
Beverages (1.19%)
The Coca-Cola Company ..................................... 180 11,351.25
Biotechnology (1.21%)
Amgen Inc.* ............................................... 180 11,542.50
Broadcast Services (1.21%)
Clear Channel Communications, Inc.* ....................... 130 11,521.25
Computers--Hardware/Software (5.75%)
Computer Associates International, Inc. ................... 150 11,184.38
Electronic Data Systems Corporation ....................... 160 11,170.00
Hewlett-Packard Company ................................... 90 9,787.50
International Business Machines Corporation (IBM) ......... 100 11,687.50
Microsoft Corporation* .................................... 110 10,931.25
Cosmetics & Toiletries (1.16%)
The Procter & Gamble Company .............................. 110 11,048.13
Electric (2.39%)
Duke Energy Corporation ................................... 200 11,437.50
Emerson Electric Co. ...................................... 200 11,300.00
Electronics/Semi-Conductor (2.28%)
Intel Corporation ......................................... 120 11,580.00
Texas Instruments Incorporated ............................ 90 10,102.50
Financial Institutions/Banks (4.91%)
Bank of America Corporation ............................... 240 11,310.00
Citigroup Inc. ............................................ 200 11,587.50
Fannie Mae ................................................ 210 12,022.50
Wells Fargo Company ....................................... 310 11,857.50
Foods--Miscellaneous/Diversified (1.20%)
Bestfoods ................................................. 250 11,406.25
Insurance--Multi-Line (1.22%)
American International Group, Inc. ........................ 110 11,605.00
</TABLE>
A-12
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 25
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JANUARY 27, 2000
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------------------ ----------- ---------------
<S> <C> <C>
Internet Software (1.20%)
America Online, Inc.* ................... 190 $ 11,423.72
Medical Instruments (1.21%)
Medtronic, Inc. ......................... 250 11,531.25
Multimedia (2.38%)
The Walt Disney Company ................. 310 11,315.00
Viacom Inc.*--Class B ................... 190 11,388.13
Networking Products (1.24%)
Cisco Systems, Inc.* .................... 110 11,790.63
Oil/Gas (3.59%)
Chevron Corporation ..................... 130 11,310.00
Conoco Inc.--Class B .................... 450 11,250.00
Exxon Mobil Corporation ................. 140 11,663.75
Pharmaceutical (4.82%)
Bristol-Myers Squibb Company ............ 190 11,685.00
Merck & Co., Inc. ....................... 160 11,650.00
Pfizer Inc. ............................. 320 11,160.00
Schering-Plough Corporation ............. 280 11,445.00
Retail--Building Products (1.17%)
Lowe's Companies, Inc. .................. 240 11,190.00
Retail--Discount (1.11%)
Wal-Mart Stores, Inc. ................... 170 10,529.38
Telecommunications (4.71%)
AT&T Corporation ........................ 220 11,247.50
BellSouth Corporation ................... 260 11,488.75
Nortel Networks Corporation (5) ......... 110 10,993.13
SBC Communications Inc. ................. 280 11,182.50
-----------
TOTAL COMMON STOCKS ................... $452,505.00
-----------
TOTAL INVESTMENTS ..................... $952,595.00
===========
</TABLE>
- ----------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to the
Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit was
$498,020.
(3) This security does not pay interest. On the maturity date thereof, the
entire maturity value becomes due and payable. Generally, a fixed yield is
earned on such security which takes into account the semi-annual
compounding of accrued interest. (See "The Trust" and "Federal Income
Taxes" herein.)
(4) The loss to the Sponsor on the Initial Date of Deposit is $12.
(5) On January 26, 2000 BCE Inc. announced that it will spin off 94% of its
stake in Nortel Networks Corporation through a new holding company to be
formed by Nortel. It is expected that the new company will have the same
name. Assuming shareholder and other approvals, Nortel shareholders,
including the Trust, will receive one share of the new company for each
share of Nortel.
* Non-income producing.
A-13
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 25
PROSPECTUS PART B
- --------------------------------------------------------------------------------
PART B OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY PART A.
Part B contains a description of the important features of the PaineWebber
Pathfinders Trust Treasury and Growth Stock Series 25 and also includes a more
detailed discussion of the investment risks that a Unitholder might face while
holding Trust Units.
THE TRUST'S OBJECTIVE
The objective of the PaineWebber Pathfinders Trust, Treasury and Growth
Stock Series 25 (the "Trust") is preservation of capital and capital
appreciation through an investment in the principal or interest portions of
stripped "zero-coupon" United States Treasury notes or bonds as the case may be
(the "Treasury Obligations"), and equity stocks (the "Stock" or "Stocks", and
together with the Treasury Obligations, the "Securities") which, in Sponsor's
opinion on the Initial Date of Deposit, have potential for capital appreciation.
The stripped Treasury Obligations in the Trust portfolio are interest-only
portions of United States Treasury Obligations (as further discussed under "Risk
Factors and Special Considerations"), maturing May 15, 2010 and which represent
approximately 52.5% of the aggregate market value of the Trust portfolio. The
Stocks represent approximately 47.5% of the aggregate market value of the Trust
portfolio. The stripped Treasury Obligations, as discussed below, make no
payment of current interest, but rather make a single payment upon their stated
maturity. Because the maturity value of the Treasury Obligations is backed by
the full faith and credit of the United States, the Sponsor believes that the
Trust provides an attractive combination of principal preservation and capital
appreciation potential for purchasers who hold Units until the Trust's
termination. The Trust has been formulated so that the portion of the Trust
invested in stripped Treasury Obligations is designed to provide an approximate
return of principal invested on the Mandatory Termination Date for purchasers on
the Initial Date of Deposit. (See "Essential Information--Distributions".)
Therefore, even if the Stocks are valueless upon termination of the Trust, and
if the Treasury Obligations are held until their maturity in proportion to the
Units outstanding, purchasers will receive, at the termination of the Trust,
$1,000 per 1,000 Units purchased. This feature of the Trust provides that
Unitholders who purchased their units (the "Units") at or below $1,000 per 1,000
Units and who hold their units to the Mandatory Termination Date of the Trust on
May 30, 2010 will receive the same amount as they originally invested, although
they would have foregone earning any interest on the amounts involved and will
not protect their principal on a present value basis, assuming the Stocks are
valueless. Therefore, the Trust may be an attractive investment to those persons
who buy their Units during the initial offering period and hold such Units
throughout the life of the Trust until the Trust matures.
THE COMPOSITON OF THE PORTFOLIO
PaineWebber understands the importance of long-term financial goals such as
planning for retirement, funding a child's education, or trying to build wealth
toward some other objective.
In PaineWebber's view, one of the most important investment decisions an
investor faces may be determining how to best allocate his or her investments to
capture growth opportunities without exposing
B-1
<PAGE>
his or her portfolio to undue risk. For long-term capital growth, many
investment experts recommend stocks. As with all investments, the higher return
potential of equities is typically associated with higher risk. With this in
mind, PaineWebber designed a portfolio to meet the needs of investors interested
in building wealth prudently over a long-term time horizon by pairing the
security of zero-coupon U.S. Treasury bonds with the growth potential of equity
securities. The Trust is a balanced portfolio with approximately equal portions
in zero-coupon U.S. Treasury bonds and equity securities. Unitholders can sell
Units at any time at the then current net asset value, which may be higher or
lower than at the time of purchase, with no additional sales charge. (See
"Public Offering of Units--Secondary Market for Units and Redemption".)
PaineWebber's main objective in constructing the portfolio of Stocks to be
included in the Trust was to select a group of stocks which, in PaineWebber's
view, would be capable of, over the long term, closely tracking the performance
of the market as measured by the "S&P 500 Index". The S&P 500 Index is an
unmanaged index of 500 stocks the value of which is calculated by Standard &
Poor's, which index, in PaineWebber's view, is a broadly diversified,
representative segment of the market of all publicly traded stocks in the United
States.
In constructing the Trust's portfolio, a computer program was generated
against the 500 S&P Index stocks to identify a combination of S&P 500 Index
stocks (excluding General Electric and those stocks rated "Unattractive" by
PaineWebber Equity Research) which, when equally weighted, are highly correlated
with the S&P 500 Index with a minimal tracking error.
The Trust portfolio, in PaineWebber's opinion, is comprised of a
diversified group of large, well-known companies representing various
industries. These are common stocks issued by companies who may receive income
and derive revenues from multiple industry sources but whose primary source is
listed in the table in Part A above. For a list of the individual common stocks
comprising each industry group, investors should consult the "Schedule of
Investments" in Part A above.
The Sponsor anticipates that, based upon last dividends actually paid,
dividends from the Stock will be sufficient (i) to pay expenses of the Trust
(see "Expenses of the Trust"), and (ii) after such payment, to make
distributions of such dividends to Unitholders as described below under
"Distributions".
Additional Deposits. After the initial deposit on the Initial Date of
Deposit the Sponsor may, from time to time, cause the deposit of additional
Securities in the Trust where additional Units are to be offered to the public,
replicating the original percentage relationship between the maturity values of
the Treasury Obligations and the number of shares of the Stocks deposited on the
Initial Date of Deposit, subject to certain adjustments. The Trustee purchases
additional Securities with cash or cash equivalents based on instructions to
purchase such Securities. Costs incurred in acquiring additional Stocks which
are either not listed on any national securities exchange or are ADRs, including
brokerage fees, stamp taxes and certain other costs associated with purchasing
such additional Stocks, will be borne by the Trust. Investors purchasing Units
during the initial public offering period will experience a dilution of their
investment as a result of the payment of brokerage fees and other expenses paid
by the Trust when the Trustee makes additional deposits of Securities. (See "The
Trust" and "Risk Factors and Special Considerations".)
Termination. As directed by the Sponsor, approximately 30 days prior to the
Mandatory Termination Date the Trustee will begin to sell the Stocks held in the
Trust. Stocks having the greatest amount of capital appreciation will be sold
first. In certain circumstances, and if there is no regulatory impediment,
monies held upon the sale of Securities may, at the direction of the Sponsor, be
invested for the benefit of Unitholders in United States Treasury obligations
which mature on or prior to the next distribution
B-2
<PAGE>
date ("Short-Term Treasury Obligations," and together with the Stocks and the
Treasury Obligations, the "Securities") (see "Administration of the
Trust--Reinvestment"). Otherwise, cash received by the Trust upon the sale or
maturity of Securities will be held in non-interest bearing accounts (created
under the Indenture) until distributed and will be of benefit to the Trustee.
During the term of the Trust, Securities will not be sold to take advantage of
market fluctuations. The Trust will terminate within 15 days after the Treasury
Obligations mature. (See "Termination of the Trust and "Federal Income Taxes".)
Public Offering Price. The Public Offering Price per Unit is computed by
dividing the Trust Fund Evaluation by the number of Units outstanding and then
adding a sales charge of 4.75% of the Public Offering Price (4.99% of the net
amount invested). The sales charge is reduced after the second year and is also
reduced on a graduated scale for sales involving at least $50,000 or 50,000
Units and will be applied on whichever basis is more favorable to the purchaser.
(See "Public Offering of Units--Sales Charge and Volume Discount".)
The public offering price on the Initial Date of Deposit is determined on
the basis of the value of the Securities as of the close of business on the
preceding business day (i.e., by "backward pricing") under an exemptive order of
the Securities and Exchange Commission (the "SEC"), which applies only to
purchase orders received on the Initial Date of Deposit. As a condition of that
order, however, if the public offering price based on the value of the
Securities as of the close of business on the Initial Date of Deposit (i.e., by
"forward pricing") would be less than $.975 per Unit, then purchase orders
received on that day will be filled on the basis of the lower public offering
price. The Public Offering Price on any day subsequent to the Initial Date of
Deposit will vary from the Public Offering Price set forth under "Essential
Information Regarding the Trust" in Part A. In addition, during the initial
public offering period, the Public Offering Price will include an amount
sufficient to reimburse the Sponsor for the payment of all or a portion of the
Initial Organizational Costs described more fully in "Public Offering Price".
Distributions. The Trustee will distribute any net income and principal
received in excess of $.005 per Unit quarterly on the Distribution Dates. (See
"Distributions".) Income with respect to the original issue discount on the
Treasury Obligations will not be distributed although Unitholders will be
subject to income tax at ordinary income tax rates as if a distribution had
occurred. (See "Federal Income Taxes".) Upon termination of the Trust, the
Trustee will distribute to each Unitholder his pro rata share of the Trust's
assets, less expenses. The sale of Stocks in the Trust in the period prior to
termination and upon termination may result in a lower amount than might
otherwise be realized if the sale were not required at such time due to
impending or actual termination of the Trust. For this reason, among others, the
amount realized by a Unitholder upon termination of the Trust may be less than
the amount paid by the Unitholder. Unless a Unitholder purchases Units on the
Initial Date of Deposit and unless the Treasury Obligations are maintained in
proportion to the Units created on the Initial Date of Deposit, total
distributions, including distributions made upon termination of the Trust, may
be less than the amount paid for a Unit by a Unitholder.
Market for Units. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units based upon the value of the
Stocks and the Treasury Obligations as determined by the Trustee as set forth
under "Valuation". The public offering price in the secondary market will be
based upon the value of the Securities next determined after receipt of a
purchase order plus the applicable sales charge. (See "Public Offering of
Units--Public Offering Price" and "Valuation".) If a secondary market is not
maintained, a Unitholder may dispose of his Units only through redemption. For
redemption requests in excess of $500,000, the Sponsor may determine in its sole
discretion to direct the Trustee to redeem units "in kind" by distributing
Securities in lieu of cash to the redeeming Unitholder as directed by the
Sponsor. (See "Redemption".)
B-3
<PAGE>
TRUST
The Trust is one of a series of similar but separate unit investment trusts
created by the Sponsor under a Trust Indenture and Agreement* (the "Indenture")
dated as of the Initial Date of Deposit, among PaineWebber Incorporated, as
Sponsor, and the Investors Bank & Trust Company, as Trustee (the "Trustee"). The
objective of the Trust is preservation of capital and capital appreciation
through an investment in Treasury Obligations and Stocks. These Stocks are
equity securities which, in the Sponsor's opinion on the Initial Date of
Deposit, are capable, over the long term, of closely tracking the performance of
the public market for equity securities as measured by the S&P 500 Index. The
Stocks contained in the Trust are representative of a number of different
industries. Dividends received by the Trust, if any, may be invested in
Short-Term Treasury Obligations (if there is no regulatory impediment).
Otherwise, such dividends will be held by the Trustee in non-interest bearing
accounts until used to pay annual expenses or distributed to Unitholders on the
next Distribution Date and to the extent that funds are held in such accounts
such funds will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
confirmations of contracts for the purchase of Securities together with an
irrevocable letter or letters of credit of a commercial bank or banks in an
amount at least equal to the purchase price of the Securities. The value of the
Securities was determined on the basis described under "Valuation". In exchange
for the deposit of the contracts to purchase Securities, the Trustee delivered
to the Sponsor a registered certificate for Units representing the entire
ownership of the Trust. On the Initial Date of Deposit the fractional undivided
interest in the Trust represented by a Unit was as described in "Essential
Information Regarding the Trust" in Part A.
With the deposit on the Initial Date of Deposit, the Sponsor established a
proportionate relationship between the maturity value of the Treasury
Obligations and the number of shares of each Stock in the Trust. The Sponsor
may, from time to time, cause the deposit of additional Securities in the Trust
when additional Units are to be offered to the public, replicating the original
percentage relationship between the maturity value of the Treasury Obligations
and the number of shares of Stock deposited on the Initial Date of Deposit and
replicating any cash or cash equivalents held by the Trust (net of expenses).
The original proportionate relationship is subject to adjustment to reflect the
occurrence of a stock split or other corporate action which affects the capital
structure of the issuer of a Stock but which does not affect the Trust's
percentage ownership of the common stock equity of the issuer at the time of
such event. Taxable stock dividends received by the Trust, if any, will be sold
by the Trustee and the proceeds received will be treated as income to the Trust.
The Treasury Obligations consist of U.S. Treasury obligations which have
been stripped of their unmatured interest coupons or interest coupons stripped
from the U.S. Treasury Obligations. The obligor with respect to the Treasury
Obligations is the United States Government. U.S. Government backed obligations
are generally considered the safest investment.
On the Initial Date of Deposit, each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set forth under
"Essential Information Regarding the Trust" in Part A. However, if additional
Units are issued by the Trust (through either the deposit of (i) additional
Securities or (ii) cash for the purchase of additional Securities for purposes
of the sale of additional Units), the aggregate value of Securities in the Trust
will be increased and the fractional undivided interest represented by each Unit
in the balance will be decreased. If any Units are redeemed, the aggregate value
of Securities in the Trust will be reduced, and the fractional undivided
interest represented by each remaining Unit in the balance will be increased.
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of the
Trust. (See "Termination of the Trust".)
- ----------
* Reference is made to the Trust Indenture and Agreement and any statements
contained in this Prospectus are qualified in their entirety by the
provisions of the Trust Indenture and Agreement.
B-4
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
Risk Factors
An investment in the Trust should be made with the understanding of the
risks inherent in an investment in deep discount or "zero-coupon" debt
obligations and the risks associated with an investment in common stocks in
general.
The Trust contains stripped Treasury securities described below. (See
"Schedule of Investments" in Part A.) Stripped Treasury securities consist of
"interest-only" or "principal-only" portions of Treasury Obligations.
Interest-only portions of Treasury Obligations represent the rights only to
payment of interest on a date certain, and principal-only portions of Treasury
Obligations represent the rights only to payment of principal at a stated
maturity. Interest-only and principal-only portions of Treasury Obligations are
deep discount obligations that are economically identical to zero-coupon
obligations; that is, all such instruments are debt obligations which make no
periodic payment of interest prior to maturity. THE STRIPPED TREASURY SECURITIES
IN THE TRUST WERE PURCHASED AT A DEEP DISCOUNT AND DO NOT MAKE ANY PERIODIC
PAYMENTS OF INTEREST. Instead, the entire payment of proceeds will be made upon
maturity of such Treasury Obligations. The effect of owning deep discount bonds
which do not make current interest payments (such as the stripped Treasury
Obligations in the Trust Portfolio) is that a fixed yield is earned not only on
the original investment but also, in effect, on all earned discount during the
life of the discount obligation. This implicit reinvestment of earnings at the
same rate eliminates the risk of being unable to reinvest the income on such
obligations at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher rates
in the future. For this reason, while the full faith and credit of the United
States Government provides a high degree of protection against credit risks, the
sale of Units prior to the termination date of the Trust will involve
substantially greater price fluctuations during periods of changing market
interest rates than would be experienced in connection with sale of Units of a
Trust which held Treasury Obligations and which made scheduled interest payments
on a current basis.
An investment in Units of the Trust should also be made with an
understanding of the risks inherent in an investment in common stocks in
general. The general risks are associated with the rights to receive payments
from the issuer of the Stocks, which rights are generally inferior to creditors
of, or holders of debt obligations or preferred stocks issued by, the issuer.
Holders of common stocks have a right to receive dividends only when and if, and
in the amounts, declared by the issuer's board of directors, and to participate
in amounts available for distribution by the issuer only after all other claims
against the issuer have been paid or provided for. By contrast, holders of
preferred stocks have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis, but
do not participate in other amounts available for distribution by the issuer.
Dividends on cumulative preferred stock typically must be paid before any
dividends are paid on common stock. Preferred stocks are also entitled to rights
on liquidation which are senior to those of common stocks. For these reasons,
preferred stocks generally entail less risk than common stocks.
Common stocks do not represent an obligation of the issuer. Therefore they
do not offer any assurance of income or provide the degree of protection offered
by debt securities. The issuance of debt securities or preferred stock by an
issuer will create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer to
declare or pay dividends on its common stock or the rights of holders of common
stock with respect to assets of the issuer upon liquidation or bankruptcy.
Unlike debt securities which typically have a stated principal amount payable at
maturity, common stocks do not have a fixed principal amount or a maturity.
Additionally, the value of
B-5
<PAGE>
the Stocks in the Trust, like the Treasury Obligations, may be expected to
fluctuate over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit. The Stocks may appreciate or
depreciate in value (or pay dividends) depending on the full range of economic
and market influences affecting corporate profitability, the financial condition
of issuers and the prices of equity securities in general and the Stocks in
particular.
Certain of the Stocks in the Trust may be ADRs which are subject to
additional risks. (See "Schedule of Investments" in Part A.) ADRs evidence
American Depositary Shares ("ADS"), which, in turn, represent common stock of
foreign issuers deposited with a custodian in a depositary. (For purposes of
this Prospectus, the term "ADR" generally includes "ADS".) ADRs involve certain
investment risks that are different from those found in stocks issued by
domestic issuers. These investment risks include potential political and
economic developments, potential establishment of exchange controls, new or
higher levels of taxation, or other governmental actions which might adversely
affect the payment or receipt of payment of dividends on the common stock of
foreign issuers underlying such ADRs. ADRs may also be subject to current
foreign taxes, which could reduce the yield on such securities. Also, certain
foreign issuers are not subject to reporting requirements under U.S. securities
laws and therefore may make less information publicly available than that
provided by domestic issuers. Further, foreign issuers are not necessarily
subject to uniform financial reporting, auditing and accounting standards and
practices which are applicable to publicly traded domestic issuers.
In addition, the securities underlying the ADRs held in the Trust are
generally denominated, and pay dividends, in foreign currency. An investment in
securities denominated and principally traded in foreign currencies involves
investment risk substantially different than an investment in securities that
are denominated and principally traded in U.S. dollars. This is due to currency
exchange rate risk, because the U.S. dollar value of the shares underlying the
ADRs and of their dividends will vary with the fluctuations in the U.S. dollar
foreign exchange rates for the relevant currency in which the shares underlying
the ADRs are denominated. The Trust, however, will compute its income in United
States dollars, and to the extent any of the Stocks in the Trust pay income or
dividends in foreign currency, the Trust's computation of income will be made on
the date of its receipt by the Trust at the foreign exchange rate then in
effect. PaineWebber observes that, in the recent past, most foreign currencies
have fluctuated widely in value against the U.S. dollar for many reasons,
including the soundness of the world economy, supply and demand of the relevant
currency, and the strength of the relevant regional economy as compared to the
economies of the United States and other countries. Exchange rate fluctuations
are also dependent, in part, on a number of economic factors including economic
conditions within the relevant country, interest rate differentials between
currencies, the balance of imports and exports of goods and services, and the
transfer of income and capital from one country to another. These economic
factors in turn are influenced by a particular country's monetary and fiscal
policies, perceived political stability (particularly with respect to transfer
of capital) and investor psychology, especially that of institutional investors,
who make assessments of the future relative strength or weakness of a particular
currency. As a general rule, the currency of a country with a low rate of
inflation and a favorable balance of trade should increase in value relative to
the currency of a country with a high rate of inflation and deficits in the
balance of trade.
There is no assurance that the Trust's objectives will be achieved. Under
ordinary circumstances, dividends and principal received upon the sale of Stocks
may not be reinvested, and such money will be held in a non-interest bearing
account until the next distribution made on the Distribution Date. Under certain
limited circumstances and if there is no regulatory impediment, such dividends
and principal may be reinvested in Short-Term Treasury Obligations maturing on
or before the next Distribution Date. (See "Administration of the
Trust--Reinvestment".) The value of the Securities and, therefore, the value of
Units may be expected to fluctuate.
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<PAGE>
Investors should note that the creation of additional Units subsequent to
the Initial Date of Deposit may have an effect upon the value of Units held by
Unitholders. To create additional Units, the Sponsor may deposit cash (or cash
equivalents, e.g., a bank letter of credit in lieu of cash) with instructions to
purchase Securities in amounts sufficient to replicate the original percentage
relationship among the Securities based on the price of the Securities (at the
Evaluation Time) on the date the cash is deposited. To the extent the price of a
Security (or the relevant foreign currency exchange rate, if applicable)
increases or decreases between the time cash is deposited with instructions to
purchase the Security and the time the cash is used to purchase the Security,
Units will represent less or more of that Security and more or less of the other
Securities in the Trust. Unitholders will be at risk because of price (and
currency) fluctuations during this period since if the price of shares of a
Security increases, Unitholders will have an interest in fewer shares of that
Security, and if the price of a Security decreases, Unitholders will have an
interest in more shares of that Security, than if the Security had been
purchased on the date cash was deposited with instructions to purchase the
Security. In order to minimize these effects, the Trust will attempt to purchase
Securities as closely as possible to the Evaluation Time or at prices as close
as possible to the prices used to evaluate the Trust at the Evaluation Time.
Thus price (and currency) fluctuations during this period will affect the value
of every Unitholder's Units and the income per Unit received by the Trust. In
addition, costs incurred in connection with the acquisition of Securities not
listed on any national securities exchange (due to differentials between bid and
offer prices for the Securities) and brokerage fees, stamp taxes and other costs
incurred in purchasing stocks will be at the expense of the Trust and will
affect the value of every Unitholder's Units.
Special Considerations
In the event a contract to purchase a Security fails, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to such
failed contract. Principal and income, if any, attributable to such failed
contract will be distributed to Unitholders of record on the last business day
of the month in which the fail occurs within 20 days of such record date.
BECAUSE THE TRUST IS ORGANIZED AS A UNIT INVESTMENT TRUST, RATHER THAN AS A
MANAGEMENT INVESTMENT COMPANY, THE TRUSTEE AND THE SPONSOR DO NOT HAVE AUTHORITY
TO MANAGE THE TRUST'S ASSETS FULLY IN AN ATTEMPT TO TAKE ADVANTAGE OF VARIOUS
MARKET CONDITIONS TO IMPROVE THE TRUST'S NET ASSET VALUE, BUT MAY DISPOSE OF
SECURITIES ONLY UNDER LIMITED CIRCUMSTANCES. (SEE "ADMINISTRATION OF THE
TRUST--PORTFOLIO SUPERVISION".)
Many computer systems were designed in such a way that they may be unable
to distinguish between the year 2000 and the year 1900 and therefore may not
properly process and calculate date-related information and data (commonly known
as the "Year 2000 Problem"). As with all investment and financial entities, the
Year 2000 Problem may have an adverse impact upon the handling of securities
trades, pricing and account services and other activities conducted by or for
the Trust. The Sponsor and the Trustee have taken steps to address the Year 2000
Problem with respect to the computer systems they use and to obtain reasonable
assurances that similar steps have been taken by the Trust's other service
providers. Operations ran smoothly from the last week in December through the
first few weeks of January, but the Year 2000 Problem may yet have an adverse
impact on financial market participants and other entities, including the
companies whose stocks are contained in the Trust's Portfolio.
The Sponsor may have acted as underwriter, manager, or co-manager of a
public offering of the Securities deposited into the Trust on the Initial Date
of Deposit, or as an adviser to one or more of the issuers of the Securities,
during the last three (3) years. The Sponsor or affiliates of the Sponsor may
serve as specialists in the Securities on one or more stock exchanges and may
have a long or short position in any of these Securities or in options on any of
them, and may be on the opposite sides of public orders executed on the floor of
an exchange where the Securities are listed. The Sponsor may trade for its own
B-7
<PAGE>
account as an odd-lot dealer, market maker, block positioner and/or arbitrageur
in any of the Securities or options on them. The Sponsor, its affiliates,
directors, elected officers and employee benefits programs may have either a
long or short position in any of the Securities or in options on them.
The Sponsor does not know of any pending litigation as of the Initial Date
of Deposit that might reasonably be expected to have a material adverse effect
on the Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in the Portfolio. In addition, at any time after the
Initial Date of Deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of such Securities. Changing approaches to regulation may have a
negative impact on certain companies represented in the Portfolio. There can be
no assurance that future litigation, legislation, regulation or deregulation
will not have a material adverse effect on the Portfolio or will not impair the
ability of issuers of the Securities to achieve their business goals.
Certain of the Stocks may be attractive acquisition candidates pursuant to
mergers, acquisitions and tender offers. In general, tender offers involve a bid
by an issuer or other acquiror to acquire a stock based on the terms of its
offer. Payment generally takes the form of cash, securities (typically bonds or
notes), or cash and securities. The Indenture contains provisions requiring the
Trustee to follow certain procedures regarding mergers, acquisitions, tender
offers and other corporate actions. Under certain circumstances, the Trustee, at
the direction of the Sponsor, may hold or sell any stock or securities received
in connection with such corporate actions (see "Administration of the
Trust--Portfolio Supervision").
FEDERAL INCOME TAXES
In the opinion of Carter, Ledyard & Milburn, counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes. Under the Internal Revenue Code of 1986, as amended
(the "Code"), each Unitholder will be treated as the owner of a pro rata
portion of the Trust, and income of the Trust will be treated as income of
the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes of
a Security (whether by sale, exchange, redemption, or payment at maturity)
or when the Unitholder sells its Units or redeems its Units for cash. The
total tax cost of each Unit to a Unitholder is allocated among each of the
Securities in accordance with the proportion of the Trust comprised by each
Security to determine the per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New
York State income tax purposes. Under New York State law, each Unitholder
will be treated as the owner of a pro rata portion of the Trust and the
income of the Trust will be treated as income of the Unitholders.
The following general discussion of the federal income tax treatment of an
investment in Units of the Trust is based on the Code and United States Treasury
Regulations (established under the Code) as in effect on the date of this
Prospectus. The federal income tax treatment applicable to a Unitholder may
depend upon the Unitholder's particular tax circumstances. The tax-treatment
applicable to non-U.S. investors is not addressed in this Prospectus. Future
legislative, judicial or administrative changes could modify the statements
below and could affect the tax consequences to Unitholders. Accordingly, each
Unitholder is advised to consult his or her own tax advisor concerning the
effect of an investment in Units.
General. Each Unitholder must report on its federal income tax return a
pro rata share of the entire income of the Trust, derived from dividends on
Stocks, original issue discount or interest on Treasury
B-8
<PAGE>
Obligations and Short-Term Treasury Obligations (if any), gains or losses upon
dispositions of Securities by the Trust and a pro rata share of the expenses of
the Trust. Unitholders should note that their taxable income from an investment
in Units will exceed cash distributions because taxable income will include
accretions of original issue discount on the Treasury Obligations.
Distributions with respect to Stock, to the extent they do not exceed
current or accumulated earnings and profits of the distributing corporation,
will be treated as dividends to the Unitholders and will be subject to income
tax at ordinary rates. Corporate Unitholders may be entitled to the
dividends-received deduction discussed below.
To the extent distributions with respect to a Stock were to exceed the
issuing corporation's current and accumulated earnings and profits, they would
not constitute dividends. Rather, they would be treated as a tax free return of
capital and would reduce a Unitholder's tax cost for such Stock. This reduction
in basis would increase any gain, or reduce any loss, realized by the Unitholder
on any subsequent sale or other disposition of Units. After the tax cost has
been reduced to zero, any additional distributions in excess of current and
accumulated earnings and profits would be taxable as gain from the sale of
Stock.
A Unitholder who is an individual, estate or trust may be disallowed
certain itemized deductions described in Code Section 67, including compensation
paid to the Trustee and administrative expenses of the Trust, to the extent
these itemized deductions, in the aggregate, do not exceed two percent of the
Unitholder's adjusted gross income. Thus, a Unitholder's taxable income from an
investment in Units may further exceed amounts distributed to the extent amounts
are used by the Trust to pay expenses.
Capital gains realized by noncorporate taxpayers are generally taxable at a
maximum rate of 20% if the taxpayer has a holding period of more than 12 months.
Corporate Dividends-Received Deduction. Corporate holders of Units may be
eligible for the dividends-received deduction with respect to distributions
treated as dividends, subject to the limitations provided in Sections 246 and
246A of the Code. The dividends-received deduction generally equals 70 percent
of the amount of the dividend. As a result, the maximum effective tax rate on
dividends received generally will be reduced from 35 percent to 10.5 percent. A
portion of the dividends-received deduction may, however, be subject to the
alternative minimum tax. Individuals, partnerships, trusts, S corporations and
certain other entities are not eligible for the dividends-received deduction.
Original Issue Discount. The Trust will contain principal or interest
portions of stripped "zero-coupon" Treasury Obligations which are treated as
bonds that were originally issued at a discount ("original issue discount").
Original issue discount represents interest for federal income tax purposes and
can generally be defined as the difference between the price at which a bond was
issued and its stated redemption price at maturity. For purposes of the
preceding sentence, stripped obligations, such as the Treasury Obligations,
which variously consist either of the right to receive payments of interest or
the right to receive payments of principal, are treated by each successive
purchaser as originally issued on their purchase dates at an issue price equal
to their respective purchase prices. The market value of the assets comprising
the Trust will be provided to a Unitholder upon request to enable the Unitholder
to calculate the original issue discount attributable to each of the Treasury
Obligations. Original issue discount on Treasury Obligations (which were issued
or treated as issued on or after July 2, 1982) is deemed earned based on a
compounded, constant yield to maturity over the life of such obligation, taking
into account the compounding of accrued interest at least annually, resulting in
an increasing amount of original issue discount includible in income in each
year. Each Unitholder is required to include in income each year the amount of
original issue discount which accrues on its pro rata portion of each Treasury
Obligation with original issue discount. The amount of accrued original issue
discount included in income for a Unitholder's pro rata interest in Treasury
Obligations is added to the tax cost for such obligations.
B-9
<PAGE>
Gain or Loss on Sale. If a Unitholder sells or otherwise disposes of a
Unit, the Unitholder generally will recognize gain or loss in an amount equal to
the difference between the amount realized on the disposition allocable to the
Securities and the Unitholder's adjusted tax bases in the Securities. In
general, such adjusted tax bases will equal the Unitholder's aggregate cost for
the Unit increased by any accrued original issue discount. The gain or loss will
be capital gain or loss if the Unit and underlying Securities were held as
capital assets, except that the gain will be treated as ordinary income to the
extent of any accrued original issue discount not previously reported. Each
Unitholder generally will also recognize taxable gain or loss when all or part
of its pro rata portion of a Security is sold or otherwise disposed of for an
amount greater or less than the Security's per Unit tax cost.
Withholding For Citizen or Resident Investors. In the case of any
noncorporate Unitholder that is a citizen or resident of the United States a 31
percent "backup" withholding tax will apply to certain distributions of the
Trust unless the Unitholder properly completes and files, under penalties of
perjury, IRS Form W-9 (or its equivalent).
The foregoing discussion is a general summary and relates only to certain
aspects of the federal income tax consequences of an investment in the Trust.
Unitholders may also be subject to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the federal, state and local tax
consequences of ownership of Units.
Investment in the Trust may be suited for purchase by funds and accounts of
individual investors that are exempt from federal income taxes such as
Individual Retirement Accounts, tax-qualified retirement plans including Keogh
Plans, and other tax-deferred retirement plans. Unitholders desiring to purchase
Units for tax-deferred plans and IRA's should consult their PaineWebber
Financial Advisor for details on establishing such accounts. Units may also be
purchased by persons who already have self-directed accounts established under
tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit on the Initial
Date of Deposit is equal to the aggregate market value of the Securities
determined on the day preceding the Initial Date of Deposit, divided by the
number of Units outstanding plus the sales charge of 4.75%, pursuant to an
exemptive order of the SEC. However, if the public offering price would be less
than $.975 per Unit, then purchase orders received that day will be filled on
the basis of the lower public offering price. Thereafter, the public offering
price during the initial offering period will be computed by dividing the
Trust's value (the "Trust Fund Evaluation"), next determined after receipt of a
purchase order, and, with respect to the Treasury Obligations, determined with
reference to the offering side evaluation, by the number of Units outstanding
plus the applicable sales charge. The initial public offering period will
terminate when the Sponsor chooses to discontinue offering Units in the initial
market. Thereafter, the Sponsor may offer Units in the secondary market. The
public offering price in the secondary market will be the Trust Fund Evaluation
per Unit next determined after receipt of a purchase order, determined for the
Treasury Obligations on the bid side of the market, plus the applicable sales
charge. (See "Valuation".) The public offering price on any date subsequent to
the Initial Date of Deposit will vary from the public offering price calculated
on the business day prior to the Initial Date of Deposit (as described in
"Essential Information Regarding the Trust" in Part A) due to fluctuations in
the value of Stocks and the Treasury Obligations, and the foreign currency
exchange rates (if applicable), among other factors. In addition, during the
initial public offering period, a portion of the Public Offering Price also
consists of an amount sufficient to reimburse the Sponsor for the payment of all
or a portion of the Initial Organizational Costs in the amount shown as a per
Unit amount in "Essential Information Regarding the Trust" in Part A. The
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<PAGE>
Initial Organizational Costs include the cost of preparing the registration
statement, trust documents and closing documents for the Trust, registering with
the SEC and the 50 States, the initial fees of the Trustee's and Sponsor's
counsel, and the initial audit of the Trust's portfolio. The sales charge will
not be assessed on those Securities held in the Trust and sold by the Trustee at
the end of the public offering period to reimburse the Sponsor for the Initial
Organizational Costs. See "Administration of the Trust--Accounts" for a
description of the method by which the Trustee will sell such Securities.
Sales Charge and Volume Discount. The Public Offering Price of Units of the
Trust includes a sales charge which varies based upon the number of Units
purchased by a single purchaser. (See the sales charge schedule below.) Sales
charges during the initial public offering period and for secondary market sales
are described below. A discount in the sales charge is available to volume
purchasers of Units due to economies of scales in sales effort and sales-related
expenses relating to volume purchases. The sales charge applicable to volume
purchasers of Units is reduced on a graduated scale for sales to any person of
at least $50,000 or 50,000 Units, applied on whichever basis is more favorable
to the purchaser.
B-11
<PAGE>
INITIAL PUBLIC OFFERING PERIOD AND
SECONDARY MARKET THROUGH JANUARY 27, 2002
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- ---------------------------------- ------------ -----------
<S> <C> <C>
Less than $50,000 ............. 4.75% 4.99%
$50,000 to $99,999 ............ 4.50 4.71
$100,000 to $199,999........... 4.00 4.17
$200,000 to $399,999 .......... 3.50 3.63
$400,000 to $499,999 .......... 3.00 3.09
$500,000 to $999,999 .......... 2.50 2.56
$1,000,000 or more ............ 2.00 2.04
</TABLE>
- ----------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
SECONDARY MARKET FROM JANUARY 28, 2002 THROUGH JANUARY 27, 2004
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- ---------------------------------- ------------ -----------
<S> <C> <C>
Less than $50,000 ............. 4.25% 4.44%
$50,000 to $99,999 ............ 4.00 4.17
$100,000 to $199,999 .......... 3.50 3.63
$200,000 to $399,999 .......... 3.00 3.09
$400,000 to $499,999 .......... 2.50 2.56
$500,000 to $999,999 .......... 2.00 2.04
$1,000,000 or more............. 1.75 1.78
</TABLE>
- ----------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
<TABLE>
<CAPTION>
SECONDARY MARKET ON AND
SECONDARY MARKET FROM JANUARY 28, 2004 AFTER
THROUGH JANUARY 27, 2006 JANUARY 28, 2006
PERCENT OF PERCENT OF
PUBLIC PERCENT OF PUBLIC PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
PRICE INVESTED PRICE INVESTED
----- -------- ----- --------
<S> <C> <C> <C>
3.25% 3.36% 2.25% 2.30%
</TABLE>
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<PAGE>
The volume discount sales charge shown above will apply to all purchases of
Units on any one day by the same person in the amounts stated above, and for
this purpose purchases of Units of this Trust will be aggregated with concurrent
purchases of any other trust which may be offered by the Sponsor. Units held in
the name of the purchaser's spouse or in the name of a purchaser's child under
the age of 21 are deemed for the purposes of calculating the reduced sales
charge to be registered in the name of the purchaser. The reduced sales charges
are also applicable to a trustee or other fiduciary purchasing Units for a
single trust estate or single fiduciary account.
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses for the purchase of Units by employees of the
Sponsor and its affiliates, the Sponsor intends to permit employees of the
Sponsor and its affiliates and certain of their relatives to purchase Units of
the Trust at a per Unit price equal to the Trust Fund Evaluation next determined
after the receipt of the employee's purchase order, divided by the number of
Units outstanding. The Sponsor does not intend to impose a sales charge on such
employee sales.
Exchange Option. Unitholders may elect to exchange any or all of their
Units of this series for units of one or more of any series of PaineWebber
Municipal Bond Fund Series (the "PaineWebber Series"); The Municipal Bond Trust,
(the "National Series"); The Municipal Bond Trust, Multi-State Program (the
"Multi-State Series"); The Municipal Bond Trust, California Series (the
"California Series"); The Municipal Bond Trust, Insured Series (the "Insured
Series"); The Corporate Bond Trust, (the "Corporate Series"); The PaineWebber
Pathfinders Trust, (the "Pathfinders Series"), The PaineWebber Federal
Government Trust, (the "Government Series") or the PaineWebber Equity Trust,
(the "Equity Series") (collectively referred to as the "Exchange Trusts"), at a
Public Offering Price for the units of the Exchange Trusts to be acquired based
on a reduced sales charge of $15 per unit. Unitholders of this Trust are not
eligible for the Exchange Option into (1) any Exchange Trust designated as a
rollover series for the 30 day period prior to termination of such Trust or (2)
any Exchange Trust subject to a deferred sales charge. The purpose of such
reduced sales charge is to permit the Sponsor to pass on to the Unitholder who
wishes to exchange Units the cost savings resulting from such exchange of Units.
The cost savings result from reductions in time and expense related to advice,
financial planning and operational expense required for the Exchange Option.
Each Exchange Trust has different investment objectives, therefore a Unitholder
should read the prospectus for the applicable Exchange Trust carefully prior to
exercising this option. Exchange Trusts having as their objective the receipt of
tax-exempt interest income would not be suitable for tax-deferred investment
plans such as Individual Retirement Accounts. A Unitholder who purchased Units
of a series and paid a per unit sales charge that was less than the per Unit
sales charge of the series of Exchange Trusts for which such Unitholder desires
to exchange into, will be allowed to exercise the Exchange Option at the Unit
Offering Price plus the reduced sales charge, provided the Unitholder has held
the Units for at least five months. Any such Unitholder who has not held the
Units to be exchanged for the five-month period will be required to exchange
them at the Unit Offering Price plus a sales charge based on the greater of the
reduced sales charge, or an amount which, together with the initial sales charge
paid in connection with the acquisition of the Units being exchanged, equals the
sales charge of the series of the Exchange Trust for which such Unitholder
desires to exchange into, determined as of the date of the exchange.
The Sponsor will permit exchanges at the reduced sales charge provided
there is either a primary market for Units or a secondary market maintained by
the Sponsor in both the Units of this series and units of the applicable
Exchange Trust and there are units of the applicable Exchange Trust available
for sale. While the Sponsor has indicated that it intends to maintain a market
for the Units of the respective Trusts, there is no obligation on its part to
maintain such a market. Therefore, there is no assurance that
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<PAGE>
a market for Units will in fact exist on any given date at which a Unitholder
wishes to sell his Units of this series and thus there is no assurance that the
Exchange Option will be available to a Unitholder. Exchanges will be effected in
whole Units only. Any excess proceeds from a Unitholders' Units being
surrendered will be returned. Unitholders will be permitted to advance new money
in order to complete an exchange to round up to the next highest number of
Units. An exchange of Units under the Exchange Option will normally constitute a
"taxable event" under the Code and a Unitholder will generally recognize a tax
gain or loss at the time of exchange in the same manner as upon a sale of Units.
Unitholders are urged to consult their own tax advisors as to the tax
consequences of exchanging Units.
The Sponsor reserves the right to modify, suspend or terminate the Exchange
Option at any time without further notice to Unitholders. In the event the
Exchange Option is not available to a Unitholder at the time he wishes to
exercise it, the Unitholder will be immediately notified and no action will be
taken regarding the exchange of Units without further instruction from the
Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor of
his desire to exercise the Exchange Option and to use the proceeds from the sale
of his Units to the Sponsor to purchase units of one or more of the Exchange
Trusts from the Sponsor. If units of the applicable outstanding series of the
Exchange Trust are at that time available for sale, and if such units may
lawfully be sold in the state in which the Unitholder is resident, the
Unitholder may select the series or group of series for which he desires his
investment to be exchanged. The Unitholder will be provided with a current
prospectus or prospectuses relating to each series in which he indicates
interest.
The exchange transaction will operate in a manner essentially identical to
any secondary market transaction, i.e., Units will be repurchased at a price
based on the market value of the Securities in the portfolio of the Trust next
determined after receipt by the Sponsor of an exchange request and properly
endorsed Certificate, if any, for Units. Units of the Exchange Trust will be
sold to the Unitholder at a price based upon the next determined market value of
the securities in the Exchange Trust plus the reduced sales charge. Exchange
transactions will be effected only in whole units; thus, any proceeds not used
to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand units of a
trust with a current price of $1.30 per unit, desires to sell his units and
seeks to exchange the proceeds for units of a series of an Exchange Trust with a
current price of $890 per unit based on the bid prices of the underlying
securities. In this example, which does not contemplate any rounding up to the
next highest number of units, the proceeds from the Unitholder's units would
aggregate $3,900. Since only whole units of an Exchange Trust may be purchased
under the Exchange Option, the Unitholder would be able to acquire four units in
the Exchange Trust for a total cost of $3,620 ($3,560 for the units and $60 for
the sales charge). If all 3,000 units were tendered, the remaining $280 would be
returned to the Unitholder.
Conversion Option. Owners of units of any registered unit investment trust
sponsored by another sponsor which was initially offered at a maximum applicable
sales charge of at least 3.0% (a "Conversion Trust") may elect to apply the cash
proceeds of the sale or redemption of those units directly to acquire available
units of any Exchange Trust at a reduced sales charge of $15 per unit (or per
100 units in the case of Exchange Trusts having a unit price of approximately
$10, or per 1,000 units in the case of Exchange Trusts having a unit price of
approximately $1), subject to the terms and conditions applicable to the
Exchange Option (except that no secondary market is required for Conversion
Trust units). To exercise this option, the owner should notify his retail
broker. He will be given a prospectus for each series in which he indicates
interest and for which units are available. The dealer must sell or redeem the
units of the Conversion Trust. Any dealer other than PaineWebber must certify
that the purchase of units of the
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Exchange Trust is being made pursuant to and is eligible for the Conversion
Option. The dealer will be entitled to two thirds of the applicable reduced
sales charge. The Sponsor reserves the right to modify, suspend or terminate the
Conversion Option at any time without further notice, including the right to
increase the reduced sales charge applicable to this conversion option (but not
in excess of $5 more per Unit (or per 100 Units or per 1,000 Units, as
applicable) than the corresponding fee then being charged for the Exchange
Option). For a description of the tax consequences of a conversion, please refer
to the Exchange Option section of this Prospectus.
Distribution of Units. The minimum purchase during the initial public
offering is $250. Only whole Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a concession of $.03 per Unit,
during the initial offering period and one-half of the highest applicable sales
charge during the secondary market, subject to change from time to time. The
difference between the sales charge and the dealer concession will be retained
by the Sponsor. In the event that the dealer concession is 90% or more of the
sales charge per Unit, dealers taking advantage of such concession may be deemed
to be underwriters under the Securities Act of 1933, as amended (the "Securities
Act").
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor intends to qualify the Units in all
states of the United States, the District of Columbia and the Commonwealth of
Puerto Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer to
purchase Units at the Trust Fund Evaluation per Unit next computed after receipt
by the Sponsor of an order from a Unitholder. The Sponsor may cease to maintain
a market at any time, and from time to time, without notice. In the event that a
secondary market for the Units is not maintained by the Sponsor, a Unitholder
desiring to dispose of Units may tender Units to the Trustee for redemption, at
the price calculated in the manner described under "Redemption". Redemption
requests in excess of $500,000 may be redeemed "in kind" as described under
"Redemption." The Sponsor does not in any way guarantee the enforceability,
marketability, value or price of any Stocks in the Trust, nor that of the Units.
Investors should note the Trust Fund Evaluation per Unit at the time of
sale or tender for redemption may be less than the price at which the Unit was
purchased.
The Sponsor may redeem any Units it has purchased in the secondary market
if it determines for any reason that it is undesirable to continue to hold these
Units in its inventory. Factors which the Sponsor may consider in making this
determination will include the number of units of all series of all trusts which
it holds in its inventory, the saleability of the Units, its estimate of the
time required to sell the Units and general market conditions.
Sponsor's Profits. In addition to the applicable sales charge, the Sponsor
realizes a profit (or sustains a loss) in the amount of any difference between
the cost of the Securities to the Sponsor and the price (including foreign
currency rates, if any) at which it deposits the Securities in the Trust, which
is the value of the Securities, determined by the Trustee as described under
"Valuation" at the close of business on the business day prior to the Initial
Date of Deposit. The cost of Securities to the Sponsor includes the amount paid
by the Sponsor for brokerage commissions.
Cash, if any, received from Unitholders prior to the settlement date for
the purchase of Units or prior to the payment for Securities upon their delivery
may be used in the Sponsor's business subject to the limitations of Rule 15c3-3
under the Securities Exchange Act of 1934, as amended and may be of benefit to
the Sponsor.
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<PAGE>
In selling any Units in the initial public offering after the Initial Date
of Deposit, the Sponsor may realize profits or sustain losses resulting from
fluctuations in the net asset value of outstanding Units during that period. In
maintaining a secondary market for the Units, the Sponsor may realize profits or
sustain losses in the amount of any differences between the price at which it
buys Units and the price at which it resells or redeems such Units.
REDEMPTION
Units may be tendered to the Trustee, Investors Bank & Trust Company, for
redemption at its office in person, or by mail at Hancock Towers, P.O. Box 9130,
Boston, MA 02117-9130 upon payment of any transfer or similar tax which must be
paid to effect the redemption. At the present time, there are no such taxes. No
redemption fee will be charged by the Sponsor or the Trustee. If Units are
represented by a certificate, it must be properly endorsed accompanied by a
letter requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Unitholders must sign
exactly as their names appear on the records of the Trustee with signatures
guaranteed by an eligible guarantor institution or in such other manner as may
be acceptable to the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator, or
certificates of corporate authority. Unitholders should contact the Trustee to
determine whether additional documents are necessary. Units tendered to the
Trustee for redemption will be cancelled if not repurchased by the Sponsor.
Units will be redeemed at the redemption value per Unit (the "Redemption
Value") next determined after receipt of the redemption request in good order
by the Trustee. The Redemption Value per Unit is determined by dividing the
Trust Fund Evaluation by the number of Units outstanding. (See "Valuation.")
A redemption request is deemed received on the business day (See
"Valuation" for a definition of business day) when such request is received
prior to the closing time of the regular trading session on the New York Stock
Exchange, Inc. (ordinarily 4:00 P.M. New York time). If it is received after
that time, it is deemed received on the next business day. During the period in
which the Sponsor maintains a secondary market for Units, the Sponsor may
repurchase any Unit presented for tender to the Trustee for redemption no later
than the close of business on the second business day following such
presentation and Unitholders will receive the Redemption Value next determined
after receipt by the Trustee of the redemption request. Proceeds of a redemption
will be paid to the Unitholder by the seventh calendar day following the date of
tender (or if the seventh calendar day is not a business day on the first
business day prior to the seventh calendar day).
With respect to cash redemptions, amounts representing income received
shall be withdrawn from the Income Account, and, to the extent such balance is
insufficient, from the Capital Account. The Trustee is empowered, to the extent
necessary, to sell Securities in the manner as is directed by the Sponsor, which
direction will be given to maximize the objectives of the Trust. In the event
that no such direction is given by the Sponsor, the Trustee is empowered to sell
Securities as follows: Treasury Obligations will be sold to maintain in the
Trust Treasury Obligations in an amount which, upon maturity, will equal at
least $1.00 per Unit outstanding after giving effect to such redemption and
Stocks having the greatest amount of capital appreciation will be sold first.
(See "Administration of the Trust".) However, with respect to redemption
requests in excess of $500,000, the Sponsor may determine in its discretion to
direct the Trustee to redeem Units "in kind" by distributing Securities to the
redeeming Unitholder. When Stock is distributed, a proportionate amount of Stock
will be distributed, rounded to avoid the distribution of fractional shares and
using cash or checks where rounding is not possible. The Sponsor may direct the
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Trustee to redeem Units "in kind" even if it is then maintaining a secondary
market in Units of the Trust. Securities will be valued for this purpose as set
forth under "Valuation". A Unitholder receiving a redemption "in kind" may incur
brokerage or other transaction costs in converting the Securities distributed
into cash. The availability of redemption "in-kind" is subject to compliance
with all applicable laws and regulations, including the Securities Act.
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Trust will be reduced. Sales will usually be required at a time
when Securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received for Units upon redemption may be
more or less than the amount paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of redemption. In addition, because
of the minimum amounts in which Securities are required to be sold, the proceeds
of sale may exceed the amount required at the time to redeem Units; these excess
proceeds will be distributed to Unitholders on the Distribution Dates.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of the
Redemption Value, for more than seven calendar days following the day of tender
for any period during which the New York Stock Exchange, Inc. is closed other
than for weekend and holiday closings; or for any period during which the SEC
determined that trading on the New York Stock Exchange, Inc. is restricted or
for any period during which an emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably practicable; or for such other
period as the SEC may by order permit for the protection of Unitholders. The
Trustee is not liable to any person or in any way for any loss or damages which
may result from any suspension or postponement, or any failure to suspend or
postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust Fund Evaluation per Unit at the
Evaluation Time described under "Essential Information Regarding the Trust" in
Part A (1) on each June 30 and December 31 (or the last business day prior
thereto), (2) on each business day as long as the Sponsor is maintaining a bid
in the secondary market, (3) on the business day on which any Unit is tendered
for redemption and (4) on any other day desired by the Sponsor or the Trustee,
by adding (a) the aggregate value of the Securities and other assets determined
by the Trustee as described below, (b) cash on hand in the Trust, income accrued
on the Treasury Obligations but not distributed or held for distribution and
dividends receivable on Stocks trading ex-dividend (other than any cash held in
any reserve account established under the Indenture) and (c) accounts receivable
for Securities sold and any other assets of the Trust Fund not included in (a)
and (b) above and deducting therefrom the sum of (v) taxes or other governmental
charges against the Trust not previously deducted, (w) accrued fees and expenses
of the Trustee and the Sponsor (including legal and auditing expenses) and other
Trust expenses, (x) cash allocated for distribution to Unitholders and amounts
owed to the Sponsor in reimbursement of Initial Organizational Costs, and (y)
accounts payable for Units tendered for redemption and any other liabilities of
the Trust Fund not included in (v), (w), (x) and (y) above. The Trust Fund
Evaluation per Unit is calculated by dividing the result of the above
computation by the number of Units outstanding as of the date of the Trust Fund
Evaluation. Business days do not include Saturdays, Sundays, New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other days
that the New York Stock Exchange is closed. The U.S. dollar value of Stock
denominated in foreign currency, if any, contained in the Trust, will be based
on the applicable foreign currency exchange rate calculated at the Evaluation
Time.
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The value of Stocks will be determined by the Trustee in good faith in the
following manner: (1) if the Securities are listed on one or more national
securities exchanges, the evaluation will be based on the closing sale price on
that day (unless the Trustee deems such price inappropriate as a basis for
evaluation) on the exchange which is the principal market for the Stock (deemed
to be the New York Stock Exchange if the Securities are listed thereon) (2) if
there is no such appropriate closing sale price on such exchange, at the mean
between the closing bid and asked prices on such exchange (unless the Trustee
deems such price inappropriate as a basis for evaluation), (3) if the Stocks are
not so listed or, if so listed and the principal market for the Stock is other
than on such exchange or there are no such appropriate closing bid and asked
prices available, such evaluation shall be made by the Trustee in good faith
based on the closing sale price on the over-the-counter market (unless the
Trustee deems such price inappropriate as a basis for evaluation) or (4) if
there is no such appropriate closing price, then (a) on the basis of current bid
prices, (b) if bid prices are not available, on the basis of current bid prices
for comparable securities, (c) by the Trustee's appraising the value of the
Securities in good faith on the bid side of the market or (d) by any combination
of the above.
During the initial offering period, the Treasury Obligations are valued on
the basis of offering prices; thereafter and for purposes of determining the
Redemption Value they are valued on the basis of bid prices. The aggregate
offering and bid prices of the Treasury Obligations are the prices obtained from
investment dealers or brokers (which may include the Sponsor) who customarily
deal in Treasury Obligations; or, if there is no market for the Treasury
Obligations, and bid or offering prices are not available, on the basis of
current bid or offering prices for comparable securities; or by appraisal; or by
any combination of the above, adjusted to reflect income accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during the initial offering period
is determined on the basis of the current offering prices of the Treasury
Obligations, the Public Offering Price of Units in the secondary market and the
Redemption Value is determined on the basis of the current bid prices of the
Treasury Obligations. The Stocks are valued on the same basis for the initial
and secondary markets and for purposes of redemptions. On the business day prior
to the Date of Deposit, the Public Offering Price per Unit (which figure
includes the sales charge) exceeded the Redemption Value, (See "Essential
Information Regarding the Trust" in Part A). The bid and offering prices of the
Treasury Obligations are expected to vary. For this reason and others, including
the fact that the Public Offering Price includes the sales charge, the amount
realized by a Unitholder upon redemption of Units may be less than the price
paid by the Unitholder for the Units. Also, as of the close of the initial
offering period, the Redemption Value per Unit will be reduced to reflect the
sale of Securities made to reimburse the Sponsor for the Initial Organizational
Costs.
EXPENSES OF THE TRUST
The Initial Organizational Costs will be paid by the Trust, as is common
for mutual funds. Historically, the Sponsors of unit investment trusts have paid
all organizational expenses. The Sponsor will receive no fee from the Trust for
its services in establishing the Trust.
The Sponsor will receive a fee, which is earned for portfolio supervisory
services, and which is based upon the largest number of Units outstanding during
the calendar year. The Sponsor's fee, which is initially $.00035 per Unit, may
exceed the actual costs of providing portfolio supervisory services for the
Trust, but at no time will the total amount it receives for portfolio
supervisory services rendered to all series of the PaineWebber Pathfinders Trust
in any calendar year exceed the aggregate cost to it of supplying such services
in such year.
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For its services as Trustee and Evaluator, the Trustee will be paid in
monthly installments, at an annual rate of $.00145 per Unit computed monthly
based upon the largest number of Units outstanding in the Trust during the
preceding month. In addition, the regular and recurring expenses of the Trust
are estimated to be $.00065 per Unit, which include, but are not limited to
certain mailing, printing, and auditing expenses. Expenses in excess of this
estimate will be borne by the Trust. The Trustee could also benefit to the
extent that it may hold funds in non-interest bearing accounts created under the
Indenture.
The Sponsor's fee and Trustee's fee may be increased without approval of
the Unitholders by an amount not exceeding a proportionate increase in the
category entitled "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor or if the Consumer Price Index is no
longer published, a similar index as determined by the Trustee and Sponsor.
In addition to the above, the following charges are or may be incurred by
the Trust and paid from the Income Account, or, to the extent funds are not
available in the Income Account, from the Capital Account (see "Administration
of the Trust-Accounts"): (1) fees for the Trustee for extraordinary services;
(2) expenses of the Trustee (including legal and auditing expenses) and of
counsel; (3) various governmental charges; (4) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and interests of the
Unitholders; (5) indemnification of the Trustee for any loss, liabilities or
expenses incurred by it in the administration of the Trust without gross
negligence, bad faith or wilful misconduct on its part; (6) brokerage
commissions and other expenses incurred in connection with the purchase and sale
of Securities; and (7) expenses incurred upon termination of the Trust. In
addition, to the extent then permitted by the SEC, the Trust may incur expenses
of maintaining registration or qualification of the Trust or the Units under
Federal or state securities laws so long as the Sponsor is maintaining a
secondary market (including, but not limited to, legal, auditing and printing
expenses).
The accounts of the Trust shall be audited not less than annually by
independent auditors selected by the Sponsor. The expenses of the audit shall be
an expense of the Trust. So long as the Sponsor maintains a secondary market,
the Sponsor will bear any audit expense which exceeds $.00050 per Unit.
Unitholders covered by the audit during the year may receive a copy of the
audited financial statements upon request.
The fees and expenses described above are payable out of the Trust and when
unpaid will be secured by a lien on the Trust. Based upon the last dividend paid
prior to the Initial Date of Deposit, dividends on the Stocks are expected to be
sufficient to pay the estimated annual expenses of the Trust. To the extent that
dividends paid with respect to the Stocks are not sufficient to meet such
expenses of the Trust, the Trustee is authorized to sell Securities in the same
manner as provided in "Redemption" herein.
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation on the books of the Trustee.
In order to avoid additional operating costs and for investor convenience,
certificates will not be issued unless a request, in writing with signature
guaranteed by an eligible guarantor institution or in such other manner as may
be acceptable to the Trustee, is delivered by the Unitholder to the Sponsor.
Issued certificates are transferable by presentation and surrender to the
Trustee at its office in Boston, Massachusetts properly endorsed or accompanied
by a written instrument or instruments of transfer. Uncertificated Units are
transferable by presentation to the Trustee at its office of a written
instrument of transfer.
Certificates may be issued in denominations of one Unit or any integral
multiple of one Unit as deemed appropriate by the Trustee. A Unitholder may be
required to pay $2.00 per certificate reissued or transferred, and shall be
required to pay any governmental charge that may be imposed in connection with
each transfer or interchange. For new certificates issued to replace destroyed,
mutilated, stolen or lost certificates, the Unitholder must furnish indemnity
satisfactory to the Trustee and must pay any expenses that the Trustee may
incur. Mutilated certificates must be surrendered to the Trustee for
replacement.
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<PAGE>
DISTRIBUTIONS
The Trustee will distribute any net income received, if any, from the
Income Account, quarterly on the Distribution Dates to Unitholders of record on
the preceding Record Date. Income with respect to the original issue discount on
the Treasury Obligations will not be distributed although Unitholders will be
subject to tax as if a distribution had occurred. Distributions from the Capital
Account will be made on quarterly Distribution Dates to Unitholders of record on
the preceding Record Date, provided however, that distributions of less than
$.005 per Unit need not be made from the Capital Account on any Distribution
Date. (See "Federal Income Taxes".)
Within a reasonable period after the Trust is terminated, each Unitholder
will, upon surrender of his Certificates for cancellation, receive his pro rata
share of the amounts realized upon disposition of the Securities plus any other
assets of the Trust, less expenses of the Trust. (See "Termination".)
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest, if any, accrued on
Securities, proceeds from the sale of Securities or other monies received by the
Trustee on behalf of the Trust shall be held in trust in Short-Term Treasury
Obligations (if permissible) or in non-interest bearing accounts until required
to be disbursed.
The Trustee will credit on its books to the Income Account any dividends
(including stock dividends which were sold) and interest, if any, accrued by the
Trust. All other receipts (i.e. return of principal, and gains) are credited on
its books to a Capital Account. Stock dividends received by the Trust, if any,
will be sold by the Trustee and the proceeds therefrom be treated as income to
the Trust. A record will be kept of qualifying dividends within the Income
Account. The pro rata share of the Income Account and the pro rata share of the
Capital Account represented by each Unit will be computed by the Trustee as set
forth under "Valuation".
The Trustee will deduct from the Income Account and, to the extent funds
are not sufficient in the Income Account, from the Capital Account, amounts
necessary to pay annual expenses incurred by the Trust. (See "Expenses of the
Trust.") In addition, the Trustee may withdraw from the Income Account and the
Capital Account any amounts that may be necessary to cover redemption of Units
by the Trustee. (See "Redemption.") In addition, distributions of amounts
necessary to pay the Initial Organizational Costs will be made from the Capital
Account to special accounts maintained by the Trustee for purpose of reimbursing
the Sponsor. To the extent that funds are not available in the Capital Account
to meet certain charges or expenses, the Trustee may sell Securities. Upon
notification from the Sponsor that the initial offering period is terminated,
the Trustee, at the direction of the Sponsor, will cause the sale of Securities
in an amount equal to the Initial Organizational Costs as certified to it by the
Sponsor.
The Trustee may establish reserves (the "Reserve Account") within the Trust
for state and local taxes, if any, and any other governmental charges payable
out of the Trust.
Reports and Records. With the distribution of income from the Trust,
Unitholders will be furnished with a statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the Trust at its office in
Boston, including records of the names and addresses of Unitholders, a current
list of underlying Securities in the portfolio and a copy of the Indenture.
Records pertaining to a Unitholder or to the Trust (but not to other
Unitholders) are available to the Unitholder for inspection at reasonable times
during business hours.
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<PAGE>
Within a reasonable period of time after the end of each calendar year,
starting with calendar year 2000, the Trustee will furnish each person who was a
Unitholder at any time during the calendar year an annual report containing the
following information, expressed in reasonable detail both as a dollar amount
and as a dollar amount per Unit: (1) a summary of transactions for the year in
the Income, Capital and Reserve Accounts; (2) any Securities sold during the
year and the Securities held at the end of the year; (3) the Trust Fund
Evaluation per Unit, computed as of the 31st day of December of such year (or
the last business day prior thereto); and (4) amounts distributed to Unitholders
during such year.
Portfolio Supervision. The portfolio of the Trust is not "managed" by the
Sponsor or the Trustee; their activities described in this Prospectus are
governed solely by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of a Security (or
tender a Security for cash in the case of paragraph (6) below):
(1) upon the failure of the issuer to declare or pay anticipated
dividends or interest;
(2) upon the institution of materially adverse action or proceeding at
law or in equity seeking to restrain or enjoin the declaration or payment
of dividends or interest on any such Securities or the existence of any
other materially adverse legal question or impediment affecting such
Securities or the declaration or payment of dividends or interest on the
same;
(3) upon the breach of covenant or warranty in any trust indenture or
other document relating to the issuer which might materially and adversely
affect either immediately or contingently the declaration or payment of
dividends or interest on such Securities;
(4) upon the default in the payment of principal or par or stated value
of, premium, if any, or income on any other outstanding securities of the
issuer or the guarantor of such securities which might materially and
adversely, either immediately or contingently, affect the declaration or
payment of dividends or interest on the Securities;
(5) upon the decline in price or the occurrence of any materially
adverse market or credit factors, that in the opinion of the Sponsor, make
the retention of such Securities not in the best interest of the
Unitholder;
(6) upon a public tender offer being made for a Security, or a merger
or acquisition being announced affecting a Security that in the opinion of
the Sponsor make the sale or tender of the Security in the best interests
of the Unitholders;
(7) upon a decrease in the Sponsor's internal rating of the Security;
or
(8) upon the happening of events which, in the opinion of the Sponsor,
negatively affect the economic fundamentals of the issuer of the Security
or the industry of which it is a part.
The Indenture contains certain instructions to the Trustee regarding
corporate actions that affect Securities held in the Trust. In most cases, the
Trustee is required to use its best efforts to vote the Securities as closely as
practicable in the same manner and in the same proportion as are all other
securities held by owners other than the Trust. In cases of offers to exchange
Securities for other stock or securities (including but not limited to a tender
offer), the Trustee is required to reject such offers. If, after complying with
such procedures, the Trustee nevertheless receives stock or securities, with or
without cash, as a result of the corporate action, the Trustee, at the direction
of the Sponsor, may retain or sell the stock or securities. Any stock or
securities so retained will be subject to the terms and conditions of the
Indenture to the same extent as the Securities originally deposited in the
Trust.
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<PAGE>
The Trustee may dispose of Securities where necessary to pay annual Trust
expenses or to satisfy redemption requests as directed by the Sponsor and in a
manner necessary to maximize the objectives of the Trust, or if not so directed,
in its own discretion, provided however, that Treasury Obligations will be sold
to maintain in the Trust Treasury Obligations in an amount which, upon maturity,
will equal at least $1.00 per Unit outstanding after giving effect to the
redemption and Stocks having the greatest appreciation shall be sold first.
Reinvestment. Cash received upon the sale of Stock (except for sales to
meet redemption requests) and dividends received may, if and to the extent there
is no legal or regulatory impediment, be reinvested in Short-Term Treasury
Obligations. The Sponsor anticipates that, where permitted, such proceeds will
be reinvested in interest bearing Short-Term Treasury Obligations unless factors
exist such that reinvestment would not be in the best interest of Unitholders or
would be impractical. Such factors may include, among others, (i) short
reinvestment periods which would make reinvestment in Short-Term Treasury
Obligations undesirable or infeasible and (ii) amounts not sufficiently large so
as to make a reinvestment economical or feasible. Any moneys held and not
reinvested will be held in a non-interest bearing account until distribution on
the next Distribution Date to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders to cure any ambiguity or to correct or
supplement any provision of the Indenture which may be defective or inconsistent
or to make other provisions that will not materially adversely affect the
interest of the Unitholders.
The Indenture may be amended in any respect by the Sponsor and the Trustee
with the consent of the holders of 51% of the Units then outstanding; provided
that no such amendment shall (1) reduce the interest in the Trust represented by
a Unit or (2) reduce the percentage of Unitholders required to consent to any
such amendment, without the consent of all Unitholders.
The Trustee will promptly notify Unitholders of the substance of any
amendment affecting Unitholders' rights or their interest in the Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will terminate within 15 days after
the maturity of the Treasury Obligations held in the Trust. If the value of the
Trust as shown by the Trust Fund Evaluation is less than twenty percent (20%) of
the market value of the Securities upon completion of the deposit of Securities,
the Trustee may in its discretion, and will when so directed by the Sponsor,
terminate the Trust. The Trust may also be terminated at any time by the written
consent of 51% of the Unitholders or by the Trustee upon the resignation or
removal of the Sponsor if the Trustee determines termination to be in the best
interest of the Unitholders. In no event will the Trust continue beyond the
Mandatory Termination Date as stated in "Essential Information Regarding the
Trust" in Part A.
As directed by the Sponsor approximately 30 days prior to the Mandatory
Termination Date the Trustee will begin to sell the Stocks held in the Trust.
Stocks having the greatest amount of capital appreciation will be sold first.
Upon termination of the Trust, the Trustee will sell any Stocks then remaining
in the Trust and will then, after deduction of any fees and expenses of the
Trust and payment into the Reserve Account of any amount required for taxes or
other governmental charges that may be payable by the Trust, distribute to each
Unitholder, upon surrender for cancellation of his Certificate (if applicable)
after due notice of such termination, such Unitholder's pro rata share in the
Income and
B-22
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Capital Accounts. Monies held upon the sale of Securities will be held in
Short-Term Treasury Obligations (if permissible) or in non-interest bearing
accounts created under the Indenture until distributed and, if not re-invested,
will be of benefit to the Trustee. The sale of Stocks in the Trust in the period
prior to termination and upon termination may result in a lower amount than
might otherwise be realized if the sale were not required at such time due to
impending or actual termination of the Trust. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the amount
paid by the Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under the
laws of the State of Delaware. The Sponsor is a member firm of the New York
Stock Exchange, Inc. as well as other major securities and commodities exchanges
and is a member of the National Association of Securities Dealers, Inc. The
Sponsor is engaged in a security and commodity brokerage business as well as
underwriting and distributing new issues. The Sponsor also acts as a dealer in
unlisted securities and municipal bonds and in addition to participating as a
member of various selling groups or as an agent of other investment companies,
executes orders on behalf of investment companies for the purchase and sale of
securities of such companies and sells securities to such companies in its
capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to the Trustee,
any of the Trusts or to the Unitholders for taking any action or for refraining
from taking any action made in good faith or for errors in judgment, but will be
liable only for its own wilful misfeasance, bad faith, gross negligence or
wilful disregard of its duties. The Sponsor will not be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any
Securities in the Trust.
The Indenture is binding upon any successor to the business of the Sponsor.
The Sponsor may transfer all or substantially all of its assets to a corporation
or partnership which carries on the business of the Sponsor and duly assumes all
the obligations of the Sponsor under the Indenture. In such event the Sponsor
shall be relieved of all further liability under the Indenture.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over by
public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Trustee is Investors Bank & Trust Company, a Massachusetts trust
company with its office at Hancock Towers, 200 Clarendon Street, Boston,
Massachusetts 02116, toll-free number 1-800-356-2754 (which is subject to
supervision by the Massachusetts Commissioner of Banks, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve System).
The Indenture provides that the Trustee will not be liable for any action
taken in good faith in reliance on properly executed documents or the
disposition of moneys, Securities or certificates or for any valuation which it
is required to make, except by reason of its own gross negligence, bad faith or
wilful misconduct, nor will the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities in the Trust. In the event of the failure of the Sponsor to act, the
Trustee may act and will not be liable for any action taken by it in good faith.
The Trustee will not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest on the
Securities or upon it as Trustee or upon or in respect of the Trust
B-23
<PAGE>
which the Trustee may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions limiting the
liability of the Trustee. The Trustee will be indemnified and held harmless
against any loss or liability accruing to it without gross negligence, bad faith
or wilful misconduct on its part, arising out of or in connection with its
acceptance or administration of the Trust, including the costs and expenses
(including counsel fees) of defending itself against any claim of liability.
INDEPENDENT AUDITORS
The Statement of Net Assets and Schedule of Investments have been audited
by Ernst & Young LLP, independent auditors and have been included in this
Prospectus in reliance upon their report given on their authority as experts in
accounting and auditing.
LEGAL OPINIONS
The legality of the Units offered by this Prospectus has been passed upon
by Carter, Ledyard & Milburn, 2 Wall Street, New York, New York, as counsel for
the Sponsor.
B-24
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 25
[GRAPHIC OMITTED]
Designed for Preservation of Capital
and Potential Capital Appreciation
TRUSTEE: SPONSOR:
INVESTORS BANK & TRUST COMPANY PAINEWEBBER INCORPORATED
Hancock Towers, 1200 Harbor Boulevard,
200 Clarendon Street Weehawken, NJ 07087
Boston, MA 02116 (201) 352-3000
(800) 356-2754
- --------------------------------------------------------------------------------
This Prospectus does not include all of the information with respect to The
PaineWebber Pathfinders Trust, Treasury and Growth Stock, Series 25 set forth in
its Registration Statement filed with the Securities and Exchange Commission
(the "Commission") in Washington, D.C. under the:
o Securities Act of 1933 (File No. 333-74557) and
o Investment Company Act of 1940 (File No. 811-4158)
TO OBTAIN COPIES FROM THE COMMISSION AT PRESCRIBED RATES--
WRITE: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549
CALL: 1-800-SEC-0330
VISIT: http://www.sec.gov
- --------------------------------------------------------------------------------
No person is authorized to give any information or make any representation about
The PaineWebber Pathfinders Trust, Treasury and Growth Stock, Series 25 not
contained in this Prospectus, and you should not rely on any other information.
Read and keep both parts of the Prospectus for future reference.
- --------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 27, 2000
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
Written consents of the following persons:
Ernst & Young LLP
(included in Exhibit 99.C2)
Carter, Ledyard & Milburn
(included in Exhibits 99.2 and 99.C1)
The following exhibits:
1. Ex. 99.A1 - Standard Terms and Conditions of Trust dated as of July 1, 1997
between PaineWebber Incorporated, Depositor and Investors Bank & Trust
Company, Trustee (incorporated herein by reference to Exhibit No. 2 to
Amendment No. 1 to File No. 333-22641).
2. Ex. 99.A2 - Copy of Trust Indenture and Agreement between PaineWebber
Incorporated, Depositor, and Investors Bank & Trust Company, Trustee
(incorporating herein by reference Standard Terms and Conditions of Trust
dated as of July 1, 1997 filed as Exhibit No. 2 to Amendment No. 1 to File
No. 333-22641).
3. Ex. 99.A5 - Form of Certificate of Ownership (included in Standard Terms
and Conditions of Trust).
4. Ex. 99.A6 - Certificate of Incorporation of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit 8 in File No. 2-88344).
5. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as amended (incorporated
by reference to Exhibit A(6)(a) in File No. 811-3722).
6. Ex. 99.2 - Opinion of Counsel as to legality of securities being
registered and consent of Counsel.
7. Ex. 99.C1 - Opinion of Counsel as to income tax status of securities being
registered.
8. Ex. 99.C2 - Consent of Ernst & Young LLP, Independent Auditors.
<PAGE>
FINANCIAL STATEMENTS
1. Statement of Net Assets of the Trust as shown in the current Prospectus
for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated-Financial Statements incorporated by reference to Form
10-K and Form 10-Q (File No. 1-7367), respectively.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 27th day of January, 2000.
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY & GROWTH STOCK SERIES 25
(Registrant)
By: PaineWebber Incorporated
(Depositor)
/s/ Robert E. Holley
----------------------------------
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed on behalf of PaineWebber
Incorporated the Depositor by the following persons who constitute a majority of
the Executive Committee of its Board of Directors in the following capacities
and in the City of New York, and State of New York, on this 27th day of January,
2000.
PAINEWEBBER INCORPORATED
Name Office
---- ------
Donald B. Marron Chairman, Chief Executive
Officer, Director & Member of
the Executive Committee*
Regina A. Dolan Executive Vice President, Chief
Financial Officer & Director of
PaineWebber Incorporated*
Joseph J. Grano, Jr. President, Retail Sales &
Marketing, Director & Member of
the Executive Committee*
Steve P. Baum Executive Vice President, Director
of PaineWebber Incorporated*
Robert H. Silver Executive Vice President Director
of Paine Webber Incorporated*
Mark B. Sutton Executive Vice President, Director
of PaineWebber Incorporated*
Margo N. Alexander Executive Vice President, Director
of PaineWebber Incorporated*
Terry L. Atkinson Managing Director, Director of
PaineWebber Incorporated*
Brian M. Barefoot Executive Vice President, Director
of PaineWebber Incorporated*
Michael Culp Managing Director, Director of
PaineWebber Incorporated*
Edward M. Kerschner Managing Director, Director of
PaineWebber Incorporated*
James P. MacGilvray Executive Vice President, Director
of PaineWebber Incorporated*
By /s/ Robert E. Holley
---------------------------------
Robert E. Holley
Attorney-in-fact*
- --------------------------
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with Post Effective
Amendment No.19 to the Registration Statement File No. 2-61279.
<PAGE>
EXHIBIT INDEX
1. Ex. 99.A1 - Standard Terms and Conditions of Trust dated as of July 1, 1997
between PaineWebber Incorporated, Depositor and Investors Bank & Trust
Company, Trustee (incorporated herein by reference to Exhibit No. 2 to
Amendment No. 1 to File No. 333-22641).
2. Ex. 99.A2 - Copy of Trust Indenture and Agreement between PaineWebber
Incorporated, Depositor, and of Investors Bank & Trust Company, Trustee,
(incorporating herein by reference Standard Terms and Conditions of Trust
dated as of July 1, 1997 filed as Exhibit No. 2 to Amendment No. 1 to File
No. 333-22641).
3. Ex. 99.A5 - Form of Certificate of Ownership (included in Standard Terms
and Conditions of Trust).
4. Ex. 99.A6 - Certificate of Incorporation of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit 8 in File No. 2-88344).
5. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as amended (incorporated
by reference to Exhibit A(6)(a) in File No. 811-3722).
6. Ex. 99.2 - Opinion of Counsel as to legality of securities being
registered and consent of Counsel.
7. Ex. 99.C1 - Opinion of Counsel as to income tax status of securities being
registered.
8. Ex. 99.C2 - Consent of Ernst & Young, LLP, Independent Auditors.
<PAGE>
Exhibit 2
(Ex. 99.A2)
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 25
TRUST INDENTURE AND AGREEMENT
Dated as of January 27, 2000
Incorporating
Standard Terms and Conditions of Trust
Dated as of July 1, 1997,
Between
PAINEWEBBER INCORPORATED,
as Sponsor
and
INVESTORS BANK & TRUST COMPANY
as Trustee
<PAGE>
THIS TRUST INDENTURE AND AGREEMENT dated as of January 27, 2000 between
PaineWebber Incorporated, as Sponsor and Investors Bank & Trust Company, as
Trustee, which sets forth certain of its provisions in full and incorporates
other of its provisions by reference to a document entitled "Standard Terms and
Conditions of Trust" dated as of July 1, 1997 between the parties hereto
(hereinafter called the "Standard Terms and Conditions of Trust" or the
"Standard Terms"), such provisions as are set forth in full and such provisions
as are incorporated by reference constituting a single instrument.
W I T N E S S E T H T H A T :
Whereas, the parties hereto have heretofore or concurrently herewith
entered into the Standard Terms and Conditions of Trust in order to facilitate
creation of series of securities issued under a unit investment trust pursuant
to the provisions of the Investment Company Act of 1940 and the laws of the
State of New York, each of which series will be composed of redeemable
securities representing undivided interests in a trust fund composed of publicly
traded common or preferred stocks, stripped United States Treasury obligations,
or evidence thereof, and in certain cases, United States Treasury obligations
and Restricted Securities as defined in the Standard Terms and Conditions of
Trust; and
WHEREAS, the parties now desire to create the Twenty-Fifth of the aforesaid
series;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Sponsor and the Trustee agree as follows:
Section 1. Incorporation of Standard Terms and Conditions of Trust. Subject
to the provisions of Section 2 of this Trust Indenture and Agreement set forth
below, all of the provisions of the Standard Terms and Conditions of Trust are
herein incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully to all intents and purposes as though said
provisions had been set forth in full in this instrument, except as provided
below in this Section 1. Unless otherwise stated, section references shall refer
to sections in the Standard Terms and Conditions of Trust.
Section 2. Specific Terms of this Series. The following terms are hereby
agreed to for this series of The PaineWebber Pathfinders Trust, which series
shall be known and designated as "The PaineWebber Pathfinders Trust, Treasury
and Growth Stock Series 25".
A. The Securities deposited pursuant to Section 2.02 are set forth in
Schedule A hereto.
B. (1) The aggregate number of Units outstanding on the Initial Date of
Deposit for this Series is 1,000,000.
<PAGE>
(2) The initial fractional undivided interest represented by each Unit of
this series shall initially be 1/1,000,000th of the Trust Fund. A receipt
representing the total number of Units outstanding on the Initial Date of
Deposit is being delivered by the Trustee to the Sponsor pursuant to Section
2.03.
C. The term "Record Date" shall mean June 10, 2000 and quarterly
thereafter, except that with respect to a distribution required by Section 2.02
(b), the Record Date shall be the last business day of the month during which
the contract to purchase the Security fails and except that with respect to cash
representing long-term capital gains held in the Capital Account the Record Date
shall be each December 31.
Record Date shall also include such date or dates determined by the Sponsor
and the Trustee as necessary or desirable and in the best interest of the
Unitholders for federal or state purposes or for other purposes (hereinafter a
"Special Record Date") which date may replace a regularly scheduled Record Date
if such regularly scheduled Record Date is within 30 days of a Special Record
Date.
D. The term "Distribution Date" shall mean the 15th day following the
Record Date, commencing June 25, 2000.
In the event a Special Record Date is declared, the Distribution Date shall
also include such Date as is determined by the Sponsor and the Trustee to be the
Distribution Date in respect of such Special Record Date.
E. The Discretionary Liquidation Amount shall be twenty per centum (20%) of
the aggregate value of (i) the Securities originally deposited pursuant to
Section 2.02 and (ii) any additional Securities deposited pursuant to Section
2.02(c).
F. The Mandatory Termination Date shall be May 30, 2010. The Trustee shall
begin to sell equity Securities in accordance with Section 9.01 on or after
May 1, 2000.
G. The Trustee's annual compensation as referred to in Section 8.05 shall
be $.00145 per Unit computed monthly based on the largest number of Units
outstanding at any time during the preceding month.
H. The Sponsor's annual compensation pursuant to Section 7.02 shall be
computed as $.00035 per Unit, based on the largest number of Units Outstanding
at any time during the calendar year.
I. The balance in the Capital Account below which no distribution need be
made, as referred to in Section 3.04, is $.005 per Unit outstanding.
J. The calendar year to be specified pursuant to Section 3.05 shall be
calendar year 2000, so that the Trustee's first annual report will be furnished
to Unitholders within a reasonable period of time following calendar year 2000.
<PAGE>
K. The Sponsor's Initial Costs are estimated to be $.002 per Unit.
L. The text of the introduction shall be amended by deleting the word "and"
prior to clause (x) and inserting the following text following the term "(x)":
" the Sponsor's estimated Initial Costs amount, and (xi)"
M. The definition of "Initial Costs" as set forth below shall be added to
the definitions contained in Article I:
"Initial Costs
Shall have the meaning specified in Section 10.02(a)".
N. Section 5.01 shall be amended by deleting the text of the clause (3) in
its entirety under the term "Deduct" and inserting the following text in its
place:
"cash allocated as of a date prior to the evaluation then being made for
distribution and in accordance with the provisions of Section 10.02, the
amounts allocated to the Sponsor for reimbursement of Initial Costs; and"
O. Section 5.02 shall be amended by adding the following text to the first
sentence of the second paragraph thereof prior to the word "Agreement":
", including, but not limited to, the expenses of the Trust as provided in
Section 8.05 and the Initial Costs as provided in Section 10.02".
P. Section 5.02 shall be amended by adding the following text to the last
sentence of the second paragraph thereof prior to the word "first":
", including, but not limited to, the expenses of the Trust as provided in
Section 8.05 and the Initial Costs as provided in Section 10.02".
Q. The text of Section 10.02 shall be deleted in its entirety and the
following text shall be inserted in its place:
"Initial Organizational and Offering Costs. (a) Subject to reimbursement as
hereinafter provided, the initial costs incurred in connection with the
organization and establishment of the Trust and the sale of Units (the
"Initial Costs") shall be paid by the Sponsor, provided, however, that the
liability on the part of the Sponsor under this Section shall not include any
fees or other expenses incurred in connection with the administration of the
Trust subsequent to the Initial Date of Deposit. The Trustee shall pay to the
Sponsor the Sponsor's reimbursable Initial Costs in the manner set forth in
subsections 10.02(d) and 10.02(e) below; such reimbursement of Initial Costs
shall be for the account of the Unitholders of record at the conclusion of
the
<PAGE>
initial offering period and shall not be reflected in the computation of Unit
Value prior thereto.
(b) The Initial Costs paid by the Sponsor which are reimbursable to the
Sponsor in accordance with this Section include, but are not limited to (1) the
costs of the initial preparation, typesetting and execution of the registration
statement, prospectuses (including preliminary prospectuses), the Indenture and
other legal documents relating to the establishment of the Trust, and the costs
of submitting such documents in electronic format to the Commission, (2)
Commission and state Blue Sky registration fees for the initial registration of
the Trust Units, (3) the cost of the initial audit of the Trust, (4) the legal
costs incurred by the Sponsor and the Trustee related to any and all of the
foregoing, and (5) other out-of-pocket expenses related to any and all of the
foregoing, provided, however, that if so stated in the Prospectus for a Trust
Fund, such Initial Costs shall not exceed the amount, if any, of the estimated
costs per Unit set forth in the Prospectus.
(c) Costs and expenses incurred in the marketing and selling of the Trust
Units, shall be paid for by the Sponsor but shall not be reimbursable to the
Sponsor. Such costs and expenses include but are not limited to (1) those
incurred with the printing of prospectuses (including preliminary prospectuses),
(2) those incurred in the preparation and printing of brochures and other
advertising or marketing materials, including any legal costs incurred in the
review thereof, and (3) any other selling or promotional costs or expenses.
(d) Promptly after the conclusion of the initial public offering period,
upon written certification to the Trustee, the Sponsor shall receive
reimbursement for any of the Initial Costs set forth in subsection (b), in the
manner set forth in subsection 10.02(e) below.
(e) Upon receipt of written certification from the Sponsor as set forth in
subsection 10.02(d) the Trustee shall pay to the Sponsor from the assets of the
Trust Fund, such Initial Costs. If so directed by the Sponsor, and upon receipt
of directions to sell those Securities selected by the Sponsor, the Trustee
shall sell those Securities having a value, as determined under Section 4.01 as
of the date of such sale, sufficient for reimbursement of Initial Costs and
shall distribute the proceeds of the sale to or upon the order of the Sponsor,
but only to the extent of the Initial Costs as set forth in the Sponsor's
certification delivered in accordance with paragraph (d) above."
R. To the extent that any provision of the Standard Terms conflicts or is
inconsistent with Section 10.02 and the provisions relating thereto, the
Standard Terms shall be amended to be in substantial conformity with such
Section and provisions.
<PAGE>
T. The definition of "Evaluation Time" as set forth in Article I shall be
amended to read as follows:
"Evaluation Time - The closing time of the regular trading session on the
New York Stock Exchange, Inc. (ordinarily 4:00 pm New York time) or any other
time as may be stated in current prospectus for this Trust, as may be amended
from time to time."
<PAGE>
IN WITNESS WHEREOF, PaineWebber Incorporated has caused this Trust
Indenture and Agreement to be executed by one of its Senior Vice Presidents and
its corporate seal to be hereto affixed and attested by one of its Secretaries,
and Investors Bank & Trust Company has caused this Trust Indenture to be
executed by one of its Authorized Signatories and its corporate seals to be
hereto affixed and attested by one of its Authorized Signatories, all as of the
date first above written.
PAINEWEBBER INCORPORATED
as Depositor and Sponsor
SEAL
By
------------------------------
Senior Vice President
Attest:
- ------------------------------
Secretary
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NEW YORK)
On this 27th day of January, 2000 before me personally appeared Robert E.
Holley, to me known, who being by me duly sworn, said that he is a Senior Vice
President of PaineWebber Incorporated, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
By
---------------------------------
Notary Public
<PAGE>
INVESTORS BANK & TRUST COMPANY
SEAL
Attest:
By
---------------------------------
Title:
- --------------------------
Title:
<PAGE>
SCHEDULE A
----------
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 25
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JANUARY 27, 2000
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
- -------------------------------- -------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3) (52.50%) ......... 0% $1,000,000 May 15, 2010 $500,090.00
</TABLE>
COMMON STOCKS (47.50%) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Aerospace/Defense (2.40%)
Honeywell International Inc. .............................. 240 $11,430.00
United Technologies Corporation ........................... 200 11,400.00
Automobile (1.15%)
General Motors Corporation ................................ 140 10,998.75
Beverages (1.19%)
The Coca-Cola Company ..................................... 180 11,351.25
Biotechnology (1.21%)
Amgen Inc.* ............................................... 180 11,542.50
Broadcast Services (1.21%)
Clear Channel Communications, Inc.* ....................... 130 11,521.25
Computers--Hardware/Software (5.75%)
Computer Associates International, Inc. ................... 150 11,184.38
Electronic Data Systems Corporation ....................... 160 11,170.00
Hewlett-Packard Company ................................... 90 9,787.50
International Business Machines Corporation (IBM) ......... 100 11,687.50
Microsoft Corporation* .................................... 110 10,931.25
Cosmetics & Toiletries (1.16%)
The Procter & Gamble Company .............................. 110 11,048.13
Electric (2.39%)
Duke Energy Corporation ................................... 200 11,437.50
Emerson Electric Co. ...................................... 200 11,300.00
Electronics/Semi-Conductor (2.28%)
Intel Corporation ......................................... 120 11,580.00
Texas Instruments Incorporated ............................ 90 10,102.50
Financial Institutions/Banks (4.91%)
Bank of America Corporation ............................... 240 11,310.00
Citigroup Inc. ............................................ 200 11,587.50
Fannie Mae ................................................ 210 12,022.50
Wells Fargo Company ....................................... 310 11,857.50
Foods--Miscellaneous/Diversified (1.20%)
Bestfoods ................................................. 250 11,406.25
Insurance--Multi-Line (1.22%)
American International Group, Inc. ........................ 110 11,605.00
</TABLE>
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 25
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JANUARY 27, 2000
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
- ------------------------------------------ ----------- ---------------
<S> <C> <C>
Internet Software (1.20%)
America Online, Inc.* ................... 190 $ 11,423.72
Medical Instruments (1.21%)
Medtronic, Inc. ......................... 250 11,531.25
Multimedia (2.38%)
The Walt Disney Company ................. 310 11,315.00
Viacom Inc.*--Class B ................... 190 11,388.13
Networking Products (1.24%)
Cisco Systems, Inc.* .................... 110 11,790.63
Oil/Gas (3.59%)
Chevron Corporation ..................... 130 11,310.00
Conoco Inc.--Class B .................... 450 11,250.00
Exxon Mobil Corporation ................. 140 11,663.75
Pharmaceutical (4.82%)
Bristol-Myers Squibb Company ............ 190 11,685.00
Merck & Co., Inc. ....................... 160 11,650.00
Pfizer Inc. ............................. 320 11,160.00
Schering-Plough Corporation ............. 280 11,445.00
Retail--Building Products (1.17%)
Lowe's Companies, Inc. .................. 240 11,190.00
Retail--Discount (1.11%)
Wal-Mart Stores, Inc. ................... 170 10,529.38
Telecommunications (4.71%)
AT&T Corporation ........................ 220 11,247.50
BellSouth Corporation ................... 260 11,488.75
Nortel Networks Corporation (5) ......... 110 10,993.13
SBC Communications Inc. ................. 280 11,182.50
-----------
TOTAL COMMON STOCKS ................... $452,505.00
-----------
TOTAL INVESTMENTS ..................... $952,595.00
===========
</TABLE>
- ----------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to the
Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit was
$498,020.
(3) This security does not pay interest. On the maturity date thereof, the
entire maturity value becomes due and payable. Generally, a fixed yield is
earned on such security which takes into account the semi-annual
compounding of accrued interest. (See "The Trust" and "Federal Income
Taxes" herein.)
(4) The loss to the Sponsor on the Initial Date of Deposit is $12.
(5) On January 26, 2000 BCE Inc. announced that it will spin off 94% of its
stake in Nortel Networks Corporation through a new holding company to be
formed by Nortel. It is expected that the new company will have the same
name. Assuming shareholder and other approvals, Nortel shareholders,
including the Trust, will receive one share of the new company for each
share of Nortel.
* Non-income producing.
<PAGE>
Exhibit 6 (Ex. 99.2)
PaineWebber Inc. January 27, 2000
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Investors Bank & Trust Company
Hancock Towers
200 Clarendon Street
Boston, Massachusetts 02116
Re: PaineWebber Pathfinders Trust,
Treasury and Growth Stock, Series 25
------------------------------------
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as sponsor and
depositor (the "Sponsor") of PaineWebber Pathfinders Trust, Treasury and Growth
Stock, Series 25 (hereinafter referred to as the "Trust") in connection with the
issuance by the Trust of an initial 1,000,000 units of fractional undivided
interest in the Trust (hereinafter referred to as the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Sponsor, as amended, certified by the Secretary of the
Sponsor on the date hereof;
<PAGE>
(b) Resolutions of the Board of Directors of the Sponsor adopted on
December 3, 1971 relating to the Trust and the sale of the Units, certified
by the Secretary of the Sponsor on the date hereof;
(c) Resolutions of the Executive Committee of the Sponsor adopted
on September 24, 1984, certified by the Secretary of the Sponsor on the
date hereof;
(d) Powers of Attorney as set forth in the certificate of the
Secretary of the Sponsor dated the date hereof;
(e) The Registration Statement on Form S-6 (File No. 333-74557)
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (collectively, the
"1933 Act") and amendments thereto including Amendment No. 1 ("Amendment
No. 1") proposed to be filed on January 27, 2000 (the "Registration
Statement");
(f) The Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as amended
(collectively, the "1940 Act") on Form N-8A, as amended, (the "1940 Act
Notification");
(g) The registration of the Trust filed with the Commission under
the 1940 Act on Form N-8B-2 (File No. 811-4158), as amended (the "1940 Act
Registration);
(h) The prospectus included in Amendment No. 1 (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of July
1, 1997, between the Sponsor and Investors Bank & Trust Company (the
"Trustee") (the "Standard Terms");
(j) The Trust Indenture dated as of January 27, 2000 between the
Sponsor and the Trustee (the "Trust Indenture" and, collectively with the
Standard Terms, the "Indenture and Agreement");
(k) The Closing Memorandum dated January 27, 2000, between the
Sponsor and the Trustee (the "Closing Memorandum");
(l) Officers Certificates required by the Closing Memorandum; and
<PAGE>
(m) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed the following:
(a) the authenticity of original documents and the genuineness of all
signatures; (b) the conformity to the originals of all documents submitted to us
as copies; (c) the truth, accuracy, and completeness of the information,
representations, and warranties contained in the records, documents, instruments
and certificates we have reviewed; (d) except as specifically covered in the
opinions set forth below, the due authorization, execution, and delivery on
behalf of the respective parties thereto of documents referred to herein and the
legal, valid, and binding effect thereof on such parties; and (e) the absence of
any evidence extrinsic to the provisions of the written agreement(s) between the
parties that the parties intended a meaning contrary to that expressed by those
provisions. However, we have not examined the securities deposited pursuant to
the Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other than the
laws of the State of New York (except for "Blue Sky" laws) and the federal laws
of the United States, except to the extent necessary to render the opinion as to
the Sponsor and the Indenture and Agreement in paragraphs (i) and (iii) below
with respect to Delaware law. As you know we are not licensed to practice law in
the State of Delaware, and our opinion in paragraph (i) and (iii) as to Delaware
law is based solely on review of the official statutes of the State of Delaware.
Based upon such examination, and having regard for legal considerations
which we deem relevant, we are of the opinion that:
(i) The Sponsor is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware with full corporate power
to conduct its business as described in the Prospectus;
(ii) The Sponsor is duly qualified as a foreign corporation and is in good
standing as such within the State of New York;
(iii) The Indenture and Agreement has been duly authorized, executed and
delivered by the Sponsor and, assuming the due authorization, execution and
delivery by the Trustee, is a valid and binding agreement of the Sponsor,
enforceable against the Sponsor in accordance with its terms;
(iv) The Trust has been duly formed and is validly existing as an
investment trust under the laws of the State of New York and has been duly
registered under the Investment Company Act of 1940;
(v) The terms and provisions of the Units conform in all material respects
to the description thereof contained in the Prospectus;
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(vi) The consummation of the transactions contemplated under the Indenture
and Agreement and the fulfillment of the terms thereof will not be in violation
of the Sponsor's Restated Certificate of Incorporation, as amended, or By-Laws,
as amended, and will not conflict with any applicable laws or regulations
applicable to the Sponsor in effect on the date hereof;
(vii) The Units to be issued by the Trust, and recorded on its registration
books in accordance with the Indenture and Agreement, against payment therefor
as described in the Registration Statement and Prospectus will constitute
fractional undivided interests in the Trust enforceable against the Trust in
accordance with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable; and
(viii) While the Registration Statement has not yet become
effective we have no reason to believe that such Registration Statement will not
become effective within 30 days after the date hereof.
In addition, we have participated in conferences with representatives of
the Sponsor, the Trustee, the Trust's accountants and others concerning the
Registration Statement and the Prospectus and have considered the matters
required to be stated therein and the statements contained therein, although we
have not independently verified the accuracy, completeness or fairness of such
statements. Based upon and subject to the foregoing, nothing has come to our
attention to cause us to believe that the Registration Statement, as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or that the Prospectus, as of the date hereof, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that we have not been requested to and do not make any comment in
this paragraph with respect to the financial statements, schedules and other
financial and statistical information contained in the Registration Statement or
the Prospectus).
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to or
affecting the enforcement of creditors' rights generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in the
Registration Statement and the Prospectus.
Very truly yours,
CARTER, LEDYARD & MILBURN
KHM:def
<PAGE>
Exhibit 7 (Ex. 99.C1)
January 27, 2000
Investors Bank & Trust Company
Hancock Towers
200 Clarendon Street
Boston, Massachusetts 02116
Dear Sirs:
As counsel for PaineWebber Incorporated (the "Depositor"), we have examined
an executed copy of the Trust Indenture and Agreement dated as of January 27,
2000 (the "Indenture") and Standard Terms and Conditions of Trust, dated as of
July 1, 1997 (the "Agreement"), both between the Depositor and Investors Bank &
Trust Company, as Trustee. The Indenture established a trust called PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 25 (the "Trust") into which
the Depositor deposited certain United States Treasury obligations, or evidences
thereof, and stocks (the "Securities"), and moneys to be held by the Trustee
upon the terms and conditions set forth in the Indenture and Agreement. Under
the Indenture, receipts of ownership were issued on the Initial Date of Deposit
representing 1,000,000 units of fractional undivided interest in the Trust (the
"Units").
Based upon the foregoing and upon an examination of such other documents
and an investigation of such matters of law as we have deemed necessary, we are
of the opinion that, under existing statutes and decisions:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes. Under the Internal Revenue Code of 1986, as amended (the
"Code"), each
<PAGE>
Unitholder will be treated as the owner of a pro rata portion of the Trust, and
income of the Trust will be treated as income of the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or when
the Unitholder redeems or sells its Unit or redeems its units for cash. For
purposes of determining gain or loss, the total tax cost of each Unit to a
Unitholder is allocated among each of the Securities, in accordance with the
proportion of the Trust comprised by each Security, to determine the
Unitholder's per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New York
State income tax purposes. Under New York State Law, each Unitholder will be
treated as the owner of a pro rata portion of the Trust, and the income of the
Trust will be treated as income of the Unitholders.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement (File No. 333-74557) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
CARTER, LEDYARD & MILBURN
<PAGE>
Exhibit 8 (Ex. 99.C2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of our report dated January
27, 2000 relating to the Statement of Net Assets of The PaineWebber Pathfinders
Trust, Treasury and Growth Stock, Series 25 including the Schedule of
Investments, included herein, and to the reference made to us under the caption
"Independent Auditors" in the Prospectus.
ERNST & YOUNG, LLP
January 27, 2000
New York, New York
