<PAGE>
File No. 333-46290
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 26
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
/X/ Check box if it is proposed that this filing will become effective at
3:00 p.m. on October 26, 2000, pursuant to Rule 487.
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 26
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 )
(b) Type of Securities ) The Trust
(Cumulative or Distributive) )
--------------
* Not applicable, answer negative or not required.
<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, Termination
income ) of the Trust,
) Administration of the
) Trust-Reports and Records
(b) Reinvestment of distributions ) *
(c) Reserves or special fund ) Distributions, Expenses of
) the Trust, Administration
--------------
* Not applicable, answer negative or not required.
<PAGE>
) of the Trust-Reports and
) Records
(d) Schedule of distribution ) *
19. Records, accounts and report ) Distributions, Adminstration
) 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 )
44. (a) Method of valuation ) Public Offering of Units
) -Public Offering Price
--------------
* Not applicable, answer negative or not required.
<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 26
(A Unit Investment Trust)
[GRAPHIC]
--------------------------------------------------------------------------------
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 OCTOBER 26, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<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-16
Sponsor's Profits .............................................. B-16
Redemption ....................................................... B-16
Valuation ........................................................ B-18
Comparison of Public Offering Price and Redemption Value ......... B-19
Expenses of the Trust ............................................ B-19
Rights of Unitholders ............................................ B-20
Distributions .................................................... B-20
Administration of the Trust ...................................... B-20
Accounts ....................................................... B-20
Reports and Records ............................................ B-21
Portfolio Supervision .......................................... B-21
Reinvestment ................................................... B-22
Amendment of the Indenture ....................................... B-22
Termination of the Trust ......................................... B-23
Sponsor .......................................................... B-23
Code of Ethics ................................................... B-24
Trustee .......................................................... B-24
Independent Auditors ............................................. B-25
Legal Opinions ................................................... B-25
</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 November 15, 2012 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 November
30, 2012, the Trust's "Mandatory Termination Date".
As of the date of this Prospectus Part A, 52.05% of the Trust's Portfolio is
invested in interest-only portions of United States Treasury Obligations and
the remaining 47.95% 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
November 30, 2012 regardless of market conditions at the time. The Trust
plans to hold until its termination the U.S. Treasury Obligations maturing
November 15, 2012 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 NET ASSET VALUE OF THE TRUST
----------------------- ----------------------------
<S> <C>
Beverages .................................... 1.22%
Biotechnology ................................ 1.22%
Chemicals .................................... 1.21%
Computers--Hardware/Software ................. 6.06%
Cosmetics & Toiletries ....................... 1.18%
Diversified Manufacturing Operations ......... 2.44%
Electric ..................................... 1.23%
Electronics/Semi-Conductor ................... 2.42%
Fiber Optics ................................. 1.19%
Financial Institutions/Banks ................. 7.18%
Insurance--Multi-Line ........................ 1.15%
Internet Software ............................ 1.23%
Medical Products ............................. 2.34%
Multimedia ................................... 1.19%
Networking Products .......................... 1.22%
Oil/Gas ...................................... 3.56%
Pharmaceutical ............................... 3.55%
Pipelines .................................... 1.20%
Retail--Building Products .................... 1.15%
Retail--Discount ............................. 1.22%
Telecommunications ........................... 4.79%
</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.
A-6
<PAGE>
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.
SALES CHARGE(1)
Unitholders pay a maximum Initial Sales Charge of 4.75% of the Public
Offering Price per Unit.
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(2) .210% $ 2.00
---- ------
</TABLE>
--------------
(1) The Initial Sales Charge of 4.75% is reduced for purchasers of Units
worth $50,000 or more. Also, certain classes of investors are entitled to
reduced sales charges. For further details, see "Public Offering of Units
-- Sales Charge and Volume Discount" and "-- Employee Discount" in Part B
of this Prospectus.
(2) Applicable only to purchasers of Units during the initial offering
period.
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$520 $568 $617 $740
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 OCTOBER 25, 2000+
<TABLE>
<S> <C>
Initial Date of Deposit: October 26, 2000
Aggregate Value of Securities in Trust: ...................... $952,595
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
December 25, 2000.
Record Date: ................................................... December 10, 2000, and quarterly
thereafter.
Mandatory Termination Date: .................................... November 30, 2012 (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 October 25, 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 October 27, 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 26
We have audited the accompanying Statement of Net Assets of The PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 26, including the Schedule
of Investments, as of October 26, 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 October 26, 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 26 at October 26, 2000, in conformity
with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
New York, New York
October 26, 2000
A-10
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 26
STATEMENT OF NET ASSETS
AS OF INITIAL DATE OF DEPOSIT, OCTOBER 26, 2000
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
==========
--------------
(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 26
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, OCTOBER 26, 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) (52.05%) ......... 0% $1,000,000 November 15, 2012 $495,860.00
</TABLE>
COMMON STOCKS (47.95%) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Beverages (1.22%)
PepsiCo, Inc. ............................................. 240 $ 11,640.00
Biotechnology (1.22%)
Amgen Inc.* ............................................... 170 11,666.25
Chemicals (1.21%)
E.I. du Pont de Nemours and Company ....................... 270 11,508.75
Computers--Hardware/Software (6.06%)
Dell Computer Corporation* ................................ 440 11,385.00
International Business Machines Corporation (IBM) ......... 130 11,383.13
Microsoft Corporation* .................................... 190 11,637.50
Oracle Corporation* ....................................... 330 11,343.75
Sun Microsystems, Inc.* ................................... 110 11,948.75
Cosmetics & Toiletries (1.18%)
Kimberly-Clark Corporation ................................ 180 11,283.75
Diversified Manufacturing Operations (2.44%)
Minnesota Mining and Manufacturing Company (3M) ........... 130 11,716.25
Tyco International Ltd. ................................... 210 11,510.63
Electric (1.23%)
Duke Energy Corporation ................................... 140 11,716.25
Electronics/Semi-Conductor (2.42%)
Intel Corporation ......................................... 280 11,567.50
Texas Instruments Incorporated ............................ 270 11,508.75
Fiber Optics (1.19%)
JDS Uniphase Corporation* ................................. 160 11,360.00
Financial Institutions/Banks (7.18%)
Bank of America Corporation ............................... 260 11,456.25
Citigroup Inc. ............................................ 230 11,643.75
Fannie Mae ................................................ 150 11,212.50
Fifth Third Bancorp ....................................... 220 11,302.50
FleetBoston Financial Corporation ......................... 330 11,405.63
Merrill Lynch & Co., Inc. ................................. 180 11,407.50
Insurance--Multi-Line (1.15%)
American International Group, Inc. ........................ 110 10,931.25
</TABLE>
A-12
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 26
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, OCTOBER 26, 2000
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Internet Software (1.23%)
America Online, Inc.* .................. 250 $ 11,752.45
Medical Products (2.34%)
Baxter International Inc. .............. 140 11,042.50
Johnson & Johnson ...................... 120 11,272.50
Multimedia (1.19%)
Viacom Inc.*--Class B .................. 210 11,326.88
Networking Products (1.22%) .............
Cisco Systems, Inc.* ................... 230 11,643.75
Oil/Gas (3.56%)
Exxon Mobil Corporation ................ 130 11,334.38
Royal Dutch Petroleum Company+ ......... 190 11,293.13
Schlumberger Limited ................... 150 11,296.88
Pharmaceutical (3.55%)
Merck & Co., Inc. ...................... 130 11,350.63
Pfizer Inc. ............................ 250 11,250.00
Schering-Plough Corporation ............ 210 11,235.00
Pipelines (1.20%)
Enron Corp. ............................ 150 11,418.75
Retail--Building Products (1.15%)
Lowe's Companies, Inc. ................. 270 10,935.00
Retail--Discount (1.22%)
Wal-Mart Stores, Inc. .................. 250 11,484.38
Telecommunications (4.79%)
Nortel Networks Corporation ............ 250 11,218.75
SBC Communications Inc. ................ 210 11,510.63
Verizon Communications ................. 230 11,471.25
WorldCom, Inc.* ........................ 450 11,362.50
-----------
TOTAL COMMON STOCKS .................. $456,735.00
-----------
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 $493,840.
(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 gain to the Sponsor on the Initial Date of Deposit is $253.
* Non-income producing.
+ These shares are U.S. dollar denominated and pay dividends in U.S. dollars
but are subject to investment risks generally facing common stocks of
foreign issuers (see "Risk Factors and Special Considerations" in Part B.)
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY PROSPECTUS FOR A
FUTURE TRUST IN THIS SERIES, THE PORTFOLIO WILL CONTAIN DIFFERENT
SECURITIES FROM THOSE DESCRIBED ABOVE.
A-13
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 26
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 26 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 26 (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 November
15, 2012 and which represent approximately 52.05% of the aggregate market value
of the Trust portfolio. The Stocks represent approximately 47.95% 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 November
30, 2012 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 COMPOSITION 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.
B-6
<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".)
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 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.
B-7
<PAGE>
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 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
B-8
<PAGE>
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.
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
B-9
<PAGE>
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
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.
B-10
<PAGE>
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 OCTOBER 26, 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 OCTOBER 27, 2002 THROUGH OCTOBER 26, 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 FROM OCTOBER 27, 2004 SECONDARY MARKET ON AND AFTER
THROUGH OCTOBER 26, 2006 OCTOBER 27, 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>
B-12
<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 as discussed below. Unitholders of this Trust are not
eligible for the Exchange Option into any Exchange Trust designated as a
rollover series for the 30 day period prior to termination of such Exchange
Trust. 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 this Pathfinders 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. Owners of units of this
Pathfinders Series electing to use the Exchange Option in connection with units
of other Exchange Trusts subject to a deferred sales charge ("Deferred Sales
Charge Units") will be permitted to acquire Deferred Sales Charge Units, at
their then-current net asset value, with no up-front, initial sales charge
imposed. Deferred Sales Charge Units acquired through the Exchange Option will
continue to be subject to the deferred sales charge installments remaining on
those Deferred Sales Charge Units so acquired.
B-13
<PAGE>
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 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
B-14
<PAGE>
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). Owners of Conversion Trust Units will
be permitted to use the cash proceeds received from the sale or redemption of
those units to acquire Deferred Sales Charge Units at their then-current net
asset value, with no up-front, initial sales charge imposed. Deferred Sales
Charge Units acquired through the Conversion Option will continue to be subject
to the deferred sales charge installments remaining on those Deferred Sales
Charge Units so acquired. 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 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 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. Volume
incentives can be earned as a marketing allowance by "Eligible Dealer Firms"
who reach cumulative firm sales or sales arrangement levels of a specified
dollar amount of the PaineWebber Pathfinders Series 26 sold in the primary
market (the "Incentive Period"), as set forth in the table below. Eligible
Dealer Firms are dealers that are providing marketing support for PaineWebber
unit trusts in the form of distributing or permitting the distribution of
marketing materials and other product information. Eligible Dealer Firms will
not include firms that solely provide clearing services to broker/dealer firms.
For firms that meet the necessary volume level, volume incentives may be given
on all trades involving Pathfinders Series 26 originated from client accounts
only, during the Incentive Period.
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT OVER
INCENTIVE PERIOD VOLUME INCENTIVE DURING THE INCENTIVE PERIOD
--------------------------------- ---------------------------------------------------------
<S> <C>
$1,000,000 to $2,999,999......... Additional 2% on sales between $1,000,000 and $2,999,999
$3,000,000 to $4,999,999......... Additional 4% on sales between $3,000,000 and $4,999,999
$5,000,000 or more............... Additional 7% on sales above/over $5,000,000
</TABLE>
Only sales through the Sponsor qualify for volume incentives and for
meeting minimum requirements. The Sponsor reserves the right to modify or
change the volume incentive schedule at anytime and make the determination as
to which firms qualify for the marketing allowance and the amount paid. 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.
B-15
<PAGE>
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.
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.
B-16
<PAGE>
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 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
B-17
<PAGE>
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.
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.
B-18
<PAGE>
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.
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
B-19
<PAGE>
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.
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.
B-20
<PAGE>
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.
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;
B-21
<PAGE>
(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.
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.
B-22
<PAGE>
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 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.
On July 12, 2000, Paine Webber Group Inc. ("PW Group"), UBS AG ("UBS") and
UBS Americas Inc. ("UBSA") a wholly owned subsidiary of UBS, entered into an
agreement and plan of merger (the "Merger Agreement") pursuant to which PW
Group will merge into UBSA. Stockholders of PW Group approved the adoption of
the Merger Agreement at a meeting held on October 23, 2000. If all required
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<PAGE>
approvals are obtained and the required conditions are satisfied, PW Group and
UBS expect to complete the transaction in November 2000. UBS, with headquarters
in Zurich, Switzerland, is an internationally diversified organization with
operations in many areas of the financial services industry.
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.
CODE OF ETHICS
The Trust and the Sponsor have each adopted a code of ethics effective
March 1, 2000 regarding personal securities transactions by the Sponsor's
employees. The Code permits investments in securities, including securities
that may be purchased or held by the Trust. The Code is designed to prevent
fraud, deception and misconduct against the Trust and to provide for reporting
of personal securities transactions by certain employees. The Code is on file
with the Commission and can be reviewed and copied at the Commission's Public
Reference Room in Washington, DC. For information on operations of the Public
Reference room, call the Commission at (202) 942-8090. The Code is available on
the EDGAR Database on the Commission's Internet site at http:/www.sec.gov. A
copy may be obtained, after paying a duplicating fee, by electronic request at
[email protected], or by writing the Commission's Public Reference Section,
Washington, DC 20549-0102.
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 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
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<PAGE>
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-25
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 26
[GRAPHIC]
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 www.painewebber.com/uit
--------------------------------------------------------------------------------
This Prospectus does not include all of the information with respect to The
PaineWebber Pathfinders Trust, Treasury and Growth Stock, Series 26 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. 333-46290) 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 26
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 OCTOBER 26, 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 as referenced above).
4. Ex. 99.A6 - Restated Certificate of Incorporation of PaineWebber
Incorporated, dated June 11, 1991 (incorporated by reference to Exhibit 1.7
to the Registration Statement on Form S-6 for the Municipal Investment Trust
Fund, Monthly Payment Series 573 Defined Assets Funds, Reg. No. 333-08241,
filed on July 7, 1996).
5. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as amended dated June 10,
1991 (incorporated by reference to Exhibit 1.8 to the Registration Statement
on Form S-6 for the Municipal Investment Trust Fund, Monthly Payment Series
573 Defined Assets Funds, Reg. No. 333-08241, filed on July 7, 1996).
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, The PaineWebber Pathfinders Trust, Treasury and Growth Stock Series
26, has duly caused this Amendment to 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 26th day of October, 2000.
ALTERNATIVE FORM OF SIGNATURES FOR FILINGS UNDER RULE 487
The registrant, The PaineWebber Pathfinders Trust, Treasury and Growth
Stock Series 26 hereby identifies the ABCs Trust, Series 1, Series 3 and Series
6 and Growth Stock Series 15 and 16 for purposes of the representations required
by Rule 487 and represents the following:
1) That the portfolio securities deposited in the series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which
this registration statement is being filed, this registration statement
does not contain disclosures that differ in any material respect from
those contained in the registration statement for such previous series
as to which the effective date was determined by the Commission or the
staff; and
3) That it has complied with rule 460 under the Securities Act of 1933.
<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 26th day of October , 2000.
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY & GROWTH STOCK SERIES 26
(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 26th day of
October , 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 referenced above).
4. Ex. 99.A6 - Restated Certificate of Incorporation of PaineWebber
Incorporated, dated June 11, 1991 (incorporated by reference to Exhibit 1.7
to the Registration Statement on Form S-6 for the Municipal Investment
Trust Fund, Monthly Payment Series 573 Defined Assets Funds, Reg. No.
333-08241, filed on July 7, 1996).
5. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as amended dated June 10,
1991 (incorporated by reference to Exhibit 1.8 to the Registration Statement
on Form S-6 for the Municipal Investment Trust Fund, Monthly Payment Series
573 Defined Assets Funds, Reg. No. 333-08241, filed on July 7, 1996).
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.
