<PAGE>
File No: 333-64461
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 EQUITY TRUST,
ABCs TRUST, SERIES 2
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 Boulevard
Weehawken, N.J. 07087
copy to:
CARTER LEDYARD & MILBURN
Attention: Kathleen H. Moriarty, Esq.
2 Wall Street,
New York, NY 10005
E. Title and amount of securities being registered:
An indefinite number of Units pursuant to Rule 24f-2
under the Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to
the public of the securities being registered:
Indefinite
G. Amount of filing fee, computed at one-thirty-fourth
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
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary
to delay its effective date until the registrant
shall file a further amendment which specifically
states that this Registration Statement shall
thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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THE PAINEWEBBER EQUITY TRUST,
ABCs TRUST, SERIES 2
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 ) Nature of Trust
6. Execution and termination of ) Nature of Trust
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding ) Summary of Portfolio
Trust's Securities and Rights ) Rights of Certificate-
of Holders ) holders
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*Not applicable, answer negative or not required.
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(a) Type of Securities ) Creation of Trust
(Registered or Bearer) )
(b) Type of Securities ) Creation of Trust
(Cumulative or Distributive) )
(c) Rights of Holders as to ) Rights of Certificate-
Withdrawal or Redemption ) holders
) Redemption of Units by
) Trustee
) The Municipal Bond Trust
) Reinvestment Program
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units, Exchange Option
(e) Rights of Trust issues ) *
periodic payment plan )
certificates )
(f) Voting rights as to Secu- ) Rights of Certificate-
rities, under the Indenture ) holders
(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 ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
11. Type of securities comprising ) *
periodic payment certificates )
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*Not applicable, answer negative or not required.
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12. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units Expenses of the
) Trust
(b) Certain information regard- ) *
ing periodic payment )
certificates )
(c) Certain percentages ) *
(d) Certain other fees, etc. ) Expenses of the Trust
payable by holders )
(e) Certain profits receivable ) Public Offering Price of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons )
(f) Ratio of annual charges ) *
to income )
13. Issuance of trust's securities ) Nature of the Trust
) Public Offering of Units
14. Receipt and handling of ) *
payments from purchasers )
15. Acquisition and disposition of ) Acquisition of Securities
underlying securities ) for the Trust Supervision
) of Trust Investments
16. Withdrawal or redemption ) Redemption of Units by
) Trustee
17. (a) Receipt and disposition of ) Distributions to Certifi-
income ) cateholders
(b) Reinvestment of )
distributions ) *
(c) Reserves or special fund ) Distributions to Certifi-
) cateholders
(d) Schedule of distribution ) *
18. Records, accounts and report ) Statements to Certificate-
) holders Administration of
) the Trust
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*Not applicable, answer negative or not required.
<PAGE>
19. Certain miscellaneous ) Administration of the
provisions of trust agreement ) Trust
20. Loans to security holders ) *
21. Limitations on liability ) Limitation of Liabilities
22. Bonding arrangements ) Included in Form N-8B-2
23. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
24. Organization of Depositor ) Sponsor
25. Fees received by Depositor ) Public Offering Price of
) Units Expenses of the
) Trust
26. Business of Depositor ) Sponsor
27. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
28. Voting securities of Depositor ) *
29. Persons controlling Depositor ) Sponsor
30. Payments by Depositor for ) *
certain other services trust )
31. Payments by Depositor for ) *
certain other services )
rendered to trust )
32. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
33. Remuneration of other persons ) *
for certain services rendered )
to trust )
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*Not applicable, answer negative or not required.
<PAGE>
IV. Distribution and Redemption of Securities
34. Distribution of trust's ) Public Offering of Units
securities by states )
35. Suspension of sales of trust's ) *
securities )
36. Revocation of authority to ) *
distribute )
37. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements )
(c) Selling agreements )
38. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
39. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
40. (a) Business of principal ) Sponsor
underwriter )
(b) Branch officers of )
principal underwriter )
(c) Salesman of principal ) *
underwriter )
41. Ownership of trust's securities ) *
by certain persons )
42. Certain brokerage commissions ) *
received by principal )
underwriter )
43. (a) Method of valuation ) Public Offering Price
) Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Public Offering
price to certain persons ) Units
44. Suspension of redemption rights ) *
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*Not applicable, answer negative or not required.
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45. (a) Redemption valuation ) Redemption of Units by
) Trustee
(b) Schedule as to redemption ) *
price )
V. Information concerning the Trustee or Custodian
46. Maintenance of position in ) Secondary Market for Units
underlying securities ) Redemption of Units by
) Trustee
) Evaluation of the Trust
47. Organization and regulation of ) Administration of the
Trustee ) Trust Trustee
48. Fees and expenses of Trustee ) Expenses of the Trust
49. Trustee's lien ) Expenses of the Trust
VI. Information concerninq Insurance of Holders of Securities
50. (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 )
(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 )
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*Not applicable, answer negative or not required.
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VII. Policy of Registrant
51. (a) Method of selecting and ) Acquisition of Securities
eliminating securities ) for the Trust
from the Trust )
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) Supervision of Trust
substitution and elimina- ) Investment
tion of securities )
(d) Description of any funda- ) Acquisition of Securities
mental policy of the Trust ) for the Trust
) Supervision of Trust
) Investments
52. (a) Taxable status of the Trust ) Tax status of the Trust
(b) Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
VIII. Financial and Statistical Information
53. Information regarding the ) *
Trust's past ten fiscal years )
54. Certain information regarding ) *
periodic payment plan certifi- )
cates )
55. Certain information regarding ) *
periodic payment plan certifi- )
cates )
56. Certain information regarding ) *
periodic payment plan certifi- )
cates )
57. Certain information regarding ) *
periodic payment plan certifi- )
cates )
58. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
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*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>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to the registration statement or qualification under
the securities laws of any such jurisdiction.
Subject to Completion, Dated January 29, 1999
PAINEWEBBER EQUITY TRUST
ABCs Trust Series 2
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The investment objective of this Trust is to provide for total return
through an investment in equity securities selected from PaineWebber's
ANALYSTS' BEST CALLS ("ABCs") list. The value of the Units will fluctuate with
the value of the portfolio of underlying securities and there is no assurance
that dividends will be paid or that the securities, and therefore the Units,
will appreciate in value.
The minimum purchase is $250. Only whole Units may be purchased.
- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -----------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Read and retain this prospectus for future reference.
PROSPECTUS DATED FEBRUARY , 1999
1
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ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF , 1999(1)
<TABLE>
<CAPTION>
<S> <C>
Sponsor: PaineWebber Incorporated
Trustee: Investors Bank & Trust Company
</TABLE>
Initial Date of Deposit: , 1999
<TABLE>
<CAPTION>
<S> <C>
Aggregate Value of Securities in Trust: ............................ $
Number of Units(2): ................................................ 100,000
Fractional Undivided Interest in the Trust Represented by Each 1/100,000th
Unit: ..............................................................
Calculation of Public Offering Price Per Unit2, (3)
Public Offering Price per Unit .................................... $10.00
Less Reimbursement to Sponsor for Initial Organizational Costs(6) . $
Less Initial Sales Charge(4)* of 1% of Public Offering Price
(1.00% of net amount invested per 100 Units) ..................... $
Net Asset Value per Unit .......................................... $
Net Asset Value for 100,000 Units ................................. $
Divided by 100,000 Units(2) ....................................... $
Redemption Value:** .................................................... $
Evaluation Time:........................................................ 4:00 P.M. New York time.
Income Account Distribution Dates(5): .................................. 1999 and on quarterly
thereafter and on the Mandatory
Termination Date.
Capital Account Distribution Dates(5):.................................. , 1999 and on the Mandatory
Termination Date. No distributions
of less than $.05 per Unit need be
made from the Capital Account on
any Distribution Date.
Record Dates:........................................................... , 1999 and quarterly
thereafter.
Mandatory Termination Date:.............................................
Discretionary Liquidation Amount:....................................... 40% of the value of Securities
upon completion of the deposit of
Securities.
Estimated Organizational Expenses Paid by Unitholders(6): ............. $ per Unit.
Estimated Expenses of the Trust(7)...................................... $ per Unit.
</TABLE>
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(1) The date prior to the Initial Date of Deposit.
(2) As of the close of business on the Initial Date of Deposit, the number
of Units may be adjusted so that the Public Offering Price Per Unit will
equal approximately $10.00, based on the 4:00 p.m. Eastern time
valuation of the Securities in the Portfolio on such date. Thereafter,
to the extent of any such adjustment in the number of Units, the
fractional undivided interest per Unit will increase or decrease
accordingly, from the amounts indicated above.
(3) The Public Offering Price will be based upon the value of the Stocks
next computed following receipt of the purchase order plus the
applicable sales charges and will vary on any date subsequent to
from the Public Offering Price per Unit shown above. Following the
Initial Date of Deposit, costs incurred in connection with the
acquisition of additional Stocks will be at the expense of the Trust.
Any investor purchasing Units after the Initial Date of Deposit will
also pay a pro-rata share of any accumulated dividends in the Income
Account. (See "Essential Information Regarding the Trust--Additional
Deposits," "Risk Factors and Special Considerations" and "Valuation").
(4) The Initial Sales Charge is 1% per 100 Units. In addition, ten (10)
monthly Deferred Sales Charges of $2.00 per 100 Units (totalling $20.00
per 100 Units) will be deducted from the Trust's net asset value during
the third (3rd) through twelfth (12th) months of the Trust's thirteen
(13) month life. The Initial Sales Charge is reduced on purchases of
Units worth $50,000 or more. See "Public Offering of Units--Sales Charge
and Volume Discount."
(5) See "Distributions".
continued on page 3
2
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(6) 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
$0. 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.
(7) 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 expenses of the Trust. If such dividends and
income paid are insufficient to pay 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 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 Initial Sales Charge of 1.00% and
the Maximum Deferred Sales Charges of $0.20 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").
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
THE TRUST. The objective of the PaineWebber Equity Trust, ABCs Trust
Series 2 (the "Trust") is to provide for capital appreciation through an
investment in equity securities selected from PaineWebber's Analysts' Best
Calls list as discussed briefly below (referred to herein as the "Stocks" or
the "Securities"). THERE CAN BE NO ASSURANCE THAT THE OBJECTIVE OF THE TRUST
WILL BE ACHIEVED.
The PaineWebber Research Department has been long recognized as one of the
leaders on Wall Street; only PaineWebber has been named among the top 10
investment firms in "Institutional Investor's All America Research Team" in
each of its 27 annual surveys. Analysts' Best Calls ("ABCs") is a compilation
of PaineWebber's research analysts' top stock selections. All stocks on the
ABCs list must be rated either "buy" or "attractive", with an investment
horizon of twelve (12) months.
PaineWebber selected the Stocks in the Trust Portfolio from the securities
on the ABCs list as of the day prior to the Initial Date of Deposit, subject
to certain capitalization and liquidity screens (see "The Composition of the
Portfolio").
SUMMARY OF RISK FACTORS. There are certain investment risks inherent in
unit trust portfolios which hold equity securities. 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 the issuers, the prices of equity securities, the
condition of the stock markets in general and the prices of the stocks in
particular. In addition, rights of common stock holders are generally
inferior to those of holders of debt obligations or preferred stock. See
"Risk Factors and Special Considerations" for a discussion of these risks.
There can also be no assurance that the Trust portfolio will remain
constant during the life of the Trust (see "Risk Factors and Special
Considerations"). For example, the Trustee will sell Securities to reimburse
the Sponsor for the Initial Organizational Costs and may be required to sell
Securities to pay for the expenses of the Trust (see "Expenses of the Trust"
and "Administration of the Trust--Accounts"). Also, certain events might
occur which could lead to the elimination of one or more Stocks from the
Portfolio (see "Administration of the Trust--Portfolio Supervision"), thereby
reducing the diversity of the Trust's investments. Further, under certain
circumstances, if a tender offer is made for any of the Stocks in the Trust,
or in the event of a merger or reorganization, the Trust may tender the
Stocks or sell them as more fully described under the captions "Risk Factors
and Special Considerations" and "Administration of the Trust--Portfolio
Supervision," herein. Also, to the extent a significant number of
3
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Unitholders choose to exercise their exchange option in respect of the
Special Redemption Date, or thereafter, the Trust will experience a
correspondingly significant redemption at such time, thereby reducing the
size of the Trust (see "Exchange Option").
THE COMPOSITION OF THE TRUST PORTFOLIO
PaineWebber observes that the challenge for many investors today is to
build a portfolio that offers the potential for solid performance from the
thousands of issues currently trading in the market. PaineWebber has
historically maintained a commitment to providing its clients with superior,
performance-oriented equity research.
Analysts' Best Calls ("ABCs") is a compilation of PaineWebber's research
analysts' top stock selections. More than 50 of PaineWebber's senior analysts
covering over 50 different industries each select a stock from their
respective sectors based on their assessment of the likelihood that the stock
will outperform the market over the next 12 months. It is the stock the
analyst believes has the highest total return potential in its universe
coupled with the highest level of conviction, and must be rated either "buy"
or "attractive" by PaineWebber. ABCs are drawn from the entire range of
industries and companies covered by the Research Department. Historically,
the ABCs list has comprised approximately 40 to 50 stocks. The Stocks in the
Trust were chosen from the entire universe of the stocks on the ABCs list.
Investors should note that because the Stocks held by the Trust were subject
to several selection screens described below, the Trust may not hold the
entire ABCs list.
The Stocks included in the Trust were chosen in the following manner:
first, all Stocks had to be ABCs as of the day prior to the Initial Date of
Deposit. Second, each Stock had to have a minimum market capitalization of $1
billion. Third, only Stocks chosen by PaineWebber research analysts who rated
at least 20% of their followed stocks either "buy" or "attractive", were
permitted to be included in the Trust. All Stocks meeting these three
criteria were included as Stocks in the Trust's Portfolio shown under the
heading "Schedule of Investments".
All the Stocks in the Trust Portfolio are common stocks issued by
companies that may receive income and derive revenues from multiple industry
sources but whose primary industry is listed in the "Schedule of
Investments."
THE PAINEWEBBER EQUITY RESEARCH DEPARTMENT
The PaineWebber Equity Research Department (the "Research Department")
seeks to identify today's best investment opportunities based on established
and emerging economic, market, industry and company trends. Using a
fundamental approach, PaineWebber's research professionals visit with the
company managements and evaluate their strategies in terms of the probable
impact on corporate earnings. At PaineWebber, the process involves a constant
and dynamic dialogue among strategists, economists and analysts; using
leading-edge technology, they look at information from the top down and the
bottom up, challenging each others' assumptions and continuously sharpening
their focus on both major issues and supporting details.
The firm's Equity Research Department has been long recognized as one of the
leaders on Wall Street. Only PaineWebber has been named among the top 10
investment firms in Institutional Investor's "All America Research Team," in
each of its 27 annual surveys. Institutional Investor bases this ranking on the
opinions of directors of research, chief investment officers, portfolio
managers and analysts of major money management institutions. Additionally,
The Wall Street Journal reported that PaineWebber's Performance Portfolio,
which is submitted by the Research Department to Zacks Investment Research,
ranked second among the submitted lists of 15 major firms for the five-year
period ended September 30, 1998. For the one-year performance period ended
September 30, 1998, PaineWebber's Performance Portfolio was ranked number 8
out of 15 firms. The Wall Street Journal arrives at this ranking by comparing
the estimated peformance of stocks on the recommended lists submitted by 15
major brokerage firms. The performance figures are computed using a variety of
data, including stock price changes, dividends and hypothetical trading
commissions of 1%. Each brokerage firm constructs its recommended list using
the criteria it deems important. PaineWebber's Performance Portfolio consists
of a select list of stocks rated "Buy" or "Attractive" by PaineWebber's
investment research analysts. There is no
4
<PAGE>
assurance that PaineWebber will be successful in stock selection during the
term of this Trust or will continue to be highly ranked among investment
firms for stock selection. The stocks on the ABCs list have not been, are
not, and may not be during the term of this Trust, the same stocks as those
contained in the Performance Portfolio.
<TABLE>
<CAPTION>
APPROXIMATE PERCENT OF AGGREGATE
PRIMARY INDUSTRY SOURCE MARKET VALUE OF THE TRUST
- --------------------------- ------------------------------------
<S> <C>
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
</TABLE>
ADDITIONAL DEPOSITS. After the first deposit on the Initial Date of
Deposit the Sponsor may, from time to time, cause the deposit of additional
Securities ("Additional Securities") in the Trust where additional Units are
to be offered to the public. (See "The Trust"). The Trust, when acquiring
such Additional Securities, may purchase Stocks notwithstanding that, at the
time of such purchase, such Stocks are no longer included in the most current
ABCs list. Costs incurred in acquiring such Additional Securities 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 additional deposits of Securities purchased by the Trustee with
cash or cash equivalents pursuant to instructions to purchase such
Securities. (See "The Trust" and "Risk Factors and Special Considerations".)
PUBLIC OFFERING PRICE. Units will be charged a combination of an Initial
Sales Charge on the date of purchase of 1.00% of the Public Offering Price,
plus Deferred Sales Charges which will aggregate $20.00 per 100 Units over
the third (3rd) through twelfth (12th) months of the thirteen (13) month life
of the Trust. For example, on a $1,000 investment, $990.00 is invested in the
Trust and a $10.00 Initial Sales Charge is collected. In addition, a Deferred
Sales charge of $2.00 per 100 Units will be deducted from the Trust's net
asset value on the tenth (10th) day of each month from months three (3)
through twelve (12) of the Trust's life for a total of $20.00. This deferred
method of payment keeps more of the investor's money invested over a longer
period of time than would be the case if a single sales
5
<PAGE>
charge of the same amount were collected on the initial date of purchase. The
Initial Sales Charge is reduced on a graduated scale for volume purchasers
and is reduced for certain other purchasers. Units are offered at the Public
Offering Price computed as of the Evaluation Time for all sales subsequent to
the previous evaluation. The Public Offering Price on any date subsequent to
the Initial Date of Deposit, will vary from the Public Offering Price set
forth on page 2. Units redeemed or repurchased prior to the accrual of the
final Deferred Sales Charge installment will have any amount of any remaining
installments deducted from the redemption or repurchase proceeds or deducted
in calculating an in-kind redemption. (See "Public Offering of Units".) In
addition, during the initial public offering period, the Public Offering
Price per 100 Units 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 Stocks in the Trust were chosen for their total return
potential, not for their income potential. The Trustee will make distributions
on the Distribution Dates. (See "Distributions", "Exchange Option" and
"Administration of the Trust".) Unitholders may elect to have their Income and
Capital Account distributions automatically reinvested into additional Units
of the Trust at no Initial Sales Charge (see "Reinvestment Plan"). (Such Units,
like all Units, will be subject to Deferred Sales Charges.) Upon termination of
the Trust, the Trustee will distribute to each Unitholder of record on such
date his pro rata share of the Trust's assets, less expenses. The sale of
Securities in 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 realized by a Unitholder upon
termination may be less than the amount paid by such Unitholder.
TERMINATION. Unitholders may receive their termination proceeds in cash
(or, at the Sponsor's election, in kind for distributions in excess of
$500,000) after the Trust terminates (see "Termination of the Trust"). Unless
advised to the contrary by the Sponsor, the Trustee will begin to sell the
Securities held in the Trust approximately twenty days prior to the Mandatory
Termination Date. Moneys held upon such sale or maturity of Securities will
be held in non-interest bearing accounts created by the Indenture until
distributed and will be of benefit to the Trustee. The Trust will terminate
approximately thirteen (13) months after the Initial Date of Deposit
regardless of market conditions at the time. (See "Termination of the Trust"
and "Federal Income Taxes".)
EXCHANGE OPTION. So long as the Sponsor continues to offer new ABCs Trust,
Unitholders may exercise their exchange option in lieu of selling or
redeeming their Units on or after the Special Redemption Date, at
a reduced sales charge described under "Exchange Option". The Sponsor
reserves the right not to offer new ABCs Trusts and there is no guarantee
that a new Trust will be available on or after the Special Redemption
Date.
MARKET FOR UNITS. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units. 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. With respect to 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 to the redeeming Unitholder. (See "Redemption".)
6
<PAGE>
THE TRUST
The Trust is one of a series of similar but separate unit investment
trusts created under New York law by the Sponsor pursuant to a Trust
Indenture and Agreement* (the "Indenture") dated as of the Initial Date of
Deposit, between PaineWebber Incorporated, as Sponsor and Investors Bank &
Trust Company, as Trustee (the "Trustee"). The objective of the Trust is
total return through an investment in equity securities selected from
PaineWebber's Analysts' Best Calls ("ABCs") list. Of course, there can be no
assurance that the objective of the Trust will be achieved.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of Stocks 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. 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 receipt for Units representing the entire ownership of the Trust.
With the deposit on the Initial Date of Deposit, the Sponsor established a
proportionate relationship between the Securities in the Trust (determined by
reference to the number of shares of each issue of Stock). 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 or pursuant to the
Reinvestment Plan. During the 90-day period following the Initial Date of
Deposit, deposits of Additional Securities or cash in connection with the
issuance and sale of additional Units will maintain, to the extent
practicable, the original proportionate relationship among the number of
shares of each Security. The original proportionate relationship is subject
to adjustment to reflect the occurrence of a stock split or a similar event
which affects the capital structure of the issuer of a Security but which
does not affect the Trust's percentage ownership of the common stock equity
of such issuer at the time of such event, to reflect a merger or
reorganization, to reflect the acquisition of Securities or to reflect a sale
or other disposition of a Security. It may not be possible to maintain the
exact original proportionate relationship among the Securities deposited on
the Initial Date of Deposit because of, among other reasons, purchase
requirements, changes in prices, brokerage commissions or unavailability of
Securities (see "Administration of the Trust--Portfolio Supervision"). Units
may be continuously offered to the public by means of this Prospectus (see
"Public Offering of Units--Public Offering Price") resulting in a potential
increase in the number of Units outstanding. Deposits of Additional
Securities subsequent to the 90-day period following the Initial Date of
Deposit must replicate exactly the proportionate relationship among the
number of shares of each of the Securities comprising the Portfolio
immediately prior to such deposit of Additional Securities. Stock dividends
issued in lieu of cash dividends, if any, received by the Trust will be sold
by the Trustee and the proceeds therefrom shall be added to the Income
Account. (See "Administration of the Trust" and "Reinvestment Plan").
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". However, if additional
Units are issued by the Trust (through the deposit of Additional Securities
for purposes of the sale of additional Units or pursuant to the Reinvestment
Plan), 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 hereby made to said Trust Indenture and Agreement and any
statements contained herein are qualified in their entirety by the provisions
of said Trust Indenture and Agreement.
7
<PAGE>
Investors should be aware that the Trust, unlike a mutual fund, is not a
"managed" fund and as a result the adverse financial condition of a company
will not result in its elimination from the portfolio except under
extraordinary circumstances (see "Trust Administration--Portfolio
Administration"). In addition, Securities will not be sold by the Trust to
take advantage of market fluctuations or changes in anticipated rates of
appreciation.
Investors should note that PaineWebber, in its general securities
business, acts as agent or principal in connection with the purchases and
sales of equity securities, including the Securities in the Trust, and may
act as a market maker in certain of the Securities. PaineWebber also from
time to time issues reports and may make recommendations relating to equity
securities, including the Securities in the Trust, and has provided, and may
continue to provide, investment banking services to the issuers of the
Securities.
Investors should note in particular that the Securities were selected by
the Sponsor as of the Initial Date of Deposit. The Trust may continue to
purchase Additional Securities when additional Units are offered to the
public or pursuant to the Reinvestment Plan, or may continue to hold
Securities originally selected through this process. This may be the case
even though the Securities may no longer be included in the current ABCs list
or the evaluation of the attractiveness of such Securities may have changed
and, if the evaluation were performed again at that time, the Securities
would not be selected for the Trust. In addition, the Sponsor may continue to
sell Trust Units even if PaineWebber changes a recommendation relating to one
or more Securities in the Trust.
RISK FACTORS AND SPECIAL CONSIDERATIONS
An investment in Units of the Trust should 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 which 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 issuing corporation. Dividends on cumulative preferred stock 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.
The Trust is not appropriate for investors who require high current income
or seek conservation of capital.
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
of debt securities. The issuance of debt securities or even preferred stock
by an issuer will create prior claims for payment of principal, interest and
dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the rights of
holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. 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 the Stocks in the Trust may
be expected to fluctuate over the life of the Trust.
Certain of the Stocks in the Trust may be ADRs which are subject to
additional risks. (See "Schedule of Investments".) ADRs evidence American
Depositary Shares ("ADS"), which, in turn, represent
8
<PAGE>
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.
Any distributions of income to Unitholders will generally depend upon the
declaration of dividends by the issuers of Securities and the declaration of
dividends depends upon several factors, including the financial condition of
the issuers and general economic conditions. In addition, there are
investment risks common to all equity issues. The Stocks may appreciate or
depreciate in value depending upon a variety of factors, including the full
range of economic and market influences affecting corporate profitability,
the financial condition of issuers, changes in national or worldwide economic
conditions, and the prices of equity securities in general and the Stocks in
particular. Distributions of income, generally made by declaration of
dividends, is also dependent upon several factors, including those discussed
above in the preceding sentence.
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trust or to satisfy redemptions of Units or
to reimburse the Sponsor for the Initial Organizational Costs, may impact
upon the value of the underlying Securities and the Units. For example, the
Sponsor's
9
<PAGE>
acquisition of certain of the Securities in open market purchases may have
the unintended result of increasing the closing market price for such
Securities at the close of business on the date(s) of such purchases. The
publication of the list of the Securities selected for the Trust may also
cause increased buying activity in certain of the Securities comprising the
Trust portfolio. After such announcement, investment advisory and brokerage
clients of the Sponsor and its affiliates may purchase individual Securities
appearing on the list during the course of the initial offering period. Such
buying activity in the stock of these companies prior to the purchase of the
Securities by the Trust may cause the Trust to purchase stocks at a higher
price than those buyers who effect purchases prior to purchases by the Trust
and may also increase the amount of the profit realized by the Sponsor on the
purchase of the Securities from their issuers.
Investors should note that the creation of additional Units subsequent to
the Initial Date of Deposit may have an effect upon the value of previously
existing Units. 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 Additional Securities in amounts and in percentage
relationships described above under "The Trust." To the extent the price of a
Security increases or decreases between the time cash is deposited with
instructions to purchase the Additional Security and the time the cash is
used to purchase the Additional 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 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 Additional Securities as closely as
possible to the Evaluation Time or at prices as closely as possible to the
prices used to evaluate the Trust at the Evaluation Time. Thus price
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 Additional Securities will be
at the expense of the Trust and will affect the value of every Unitholder's
Units.
Investors should note that the Trust has adopted an internal policy which
prohibits the ownership of any issue of Securities by all series of the ABCs
Trust combined beyond 9.9% of the then-current outstanding common stock of
such issue. The Sponsor is authorized to immediately discontinue the offering
of any additional Units of any ABCs Trust Series, including those to be
created for Reinvestment Plan purposes, until such time as all ABCs Trust
series, in the aggregate, hold less than 9.9% of the then-current outstanding
common stock of such issuer.
In the event a contract to purchase a Stock to be deposited on the Initial
Date of Deposit or any other date fails, cash held or available under a
letter or letters of credit, attributable to such failed contract may be
reinvested in another stock or stocks having characteristics sufficiently
similar to the Stocks originally deposited (in which case the original
proportionate relationship shall be adjusted) or, if not so reinvested,
distributed to Unitholders of record on the last day of the month in which
the failure occurred. The distribution will be made twenty days following
such record date and, in the event of such a distribution, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to
such failed contract.
To the extent that a significant number of Unitholders exercise their
exchange option on or after the Special Redemption Date, the Trust
will experience a correspondingly significant redemption at such time thereby
reducing the size of the Trust. Such redemptions may increase the expense
ratios for Unitholders who hold their Units until the Mandatory Termination
Date. See "Exchange Option".
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<PAGE>
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 CERTAIN LIMITED CIRCUMSTANCES. (SEE THE
DISCUSSION BELOW RELATING TO DISPOSITION OF STOCKS WHICH MAY BE THE SUBJECT
OF A TENDER OFFER, MERGER OR REORGANIZATION AND ALSO THE DISCUSSION UNDER THE
CAPTION "ADMINISTRATION OF THE TRUST--PORTFOLIO SUPERVISION".)
A number of the Securities in the Trust may also be owned by other clients
of the Sponsor. However, because these clients may have investment objectives
which differ from that of the Trust, the Sponsor may sell certain Securities
from such clients' accounts in instances where a sale of such Securities by
the Trust would be impermissible, such as to maximize return by taking
advantage of attractive market fluctuations in such Securities. As a result,
the amount realized upon the sale of the Securities from the Trust may not be
the highest price attained for an individual Security during the life of the
Trust.
Many computer systems were designed in such a way that they may be unable
to distinguish between the year 2000 and the year 1900 and therefore may not
properly process and calculate date-related information and data (commonly
known as the "Year 2000 Problem"). As with all investment and financial
companies, the Year 2000 Problem may have an adverse impact upon the handling
of securities trades, pricing and account services and other activities
conducted by or for the Trust. The Sponsor and Trustee are taking steps that
they believe are reasonably designed to address the Year 2000 Problem with
respect to computer systems that they use and to obtain reasonable assurances
that comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust. The Year 2000 Problem is
expected to impact corporations, which may include issuers of Securities
contained in the Trust, to varying degrees based upon various factors,
including, but not limited to, their industry sector and degree of
technological sophistication. The Sponsor is unable to predict what impact,
if any, the Year 2000 Problem will have on issuers of the Securities
contained in the Trust.
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.
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
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<PAGE>
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").
The Trust is not appropriate for investors who require high current income
or seek conservation of capital.
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. Each Unitholder will be considered to have received all of
the dividends paid on such Unitholder's pro rata portion of each Security
when such dividends are received by the Trust, whether or not such
dividends are used to pay a portion of Trust expenses or whether they are
automatically reinvested in additional Trust Units (see "Reinvestment
Plan").
2. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, or other disposition) 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, interest on 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.
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
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<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 such stock or 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.
Any Unitholder exercising the Exchange Option on or after the
Special Redemption Date will recognize capital gain or loss with respect to
the Securities but will not be entitled to a deduction for certain capital
losses realized on the Securities sold and, because of the exchange
procedures, will not receive a cash distribution with which to pay such taxes
(see "Exchange Option").
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.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit is based on the
aggregate market value of the Securities, next determined after the receipt
of a purchase order, divided by the number of Units outstanding plus the
sales charge set forth below. The public offering price per Unit is computed
by dividing the Trust Fund Evaluation, next determined after receipt of a
purchase order, by the number of Units outstanding plus the 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 set forth on
page 2 hereof) due to fluctuations in the value of the Stocks 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". The Initial Organizational Costs include the cost of
preparing the registration statement, trust documents and closing documents
for the Trust, registering with the Securities and Exchange Commission (the
"SEC") and the 50 States, the initial fees of the Trustee's and Sponsor's
counsel, and the initial audit of the Trust's portfolio. The sales charge
will not be assessed on those Securities held in the Trust and sold by the
Trustee at the end of the public offering period to reimburse the Sponsor for
the Initial Organizational Costs. See "Administration of the Trust--Accounts"
for a description of the method by which the Trustee will sell such
Securities.
Sales Charge and Volume Discount. Units will be charged a Total Sales
Charge of 3.00% per 100 Units which is a combination of the Initial and
Deferred Sales Charges. The Initial Sales Charge will be
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<PAGE>
$10.00 per 100 Units (1.00% of the Public Offering Price). Commencing in the
third (3rd) month and continuing through the twelfth (12th) month of the
Trust's life, the Deferred Sales Charge per 100 Units will be $20.00,
approximately 2.00% of the Public Offering Price. Because the Deferred Sales
Charge per 100 Units is $20.00 regardless of the price paid for Units, the
Total Sales Charge expressed as a percentage of the Public Offering Price
will vary with the price you pay to purchase Units. So, for example, if an
investor bought 100 Units for $1,000 (including the Initial Sales Charge of
$10.00 and held the Units until the Trust terminates, such investor would pay
a Total Sales Charge of $30.00 or 3.00% of the acquisition price for such
Units. If, however, an investor bought 100 Units for $900 (including the
Initial Sales Charge of $9.00), such investor would pay a Total Sales Charge
of $29.00 or 3.2% of the acquisition price for such Units. Conversely, if an
investor bought 100 Units for $1,100 (including the Initial Sales Charge of
$11.00), such investor would pay a total of $31.00 or 2.8% of the acquisition
price for such Units.
The Deferred Sales Charge is a charge of $20.00 per 100 Units and is
accrued in ten (10) monthly installments during the first twelve (12) months
of the life of the Trust ($20.00 annual total) commencing in the third (3rd)
month of the Trust. UNITS REDEEMED OR REPURCHASED PRIOR TO THE ACCRUAL OF THE
FINAL DEFERRED SALES CHARGES INSTALLMENT WILL HAVE THE AMOUNT OF ANY
INSTALLMENTS REMAINING DEDUCTED FROM THE REDEMPTION OR REPURCHASE PROCEEDS OR
DEDUCTED IN CALCULATING AN IN-KIND REDEMPTION, ALTHOUGH THIS DEDUCTION WILL
BE WAIVED IN THE EVENT OF DEATH OR DISABILITY (AS DEFINED IN THE INTERNAL
REVENUE CODE) OF AN INVESTOR.
It is anticipated that the Securities will not be sold to pay the Deferred
Sales Charges until after the date of the final installment. Investors will
be at risk for market price fluctuations in the Securities from the several
installment accrual dates to the date of actual sales of Securities to
satisfy this liability.
A discount in the Initial Sales Charge is available to volume purchasers
of Units due to economies of scale in sales effort and sales related expenses
relating to volume purchases. The Initial Sales Charge applicable to volume
purchasers of Units is reduced on a graduated scale as set forth below for
sales made on a single day to any person of at least $50,000 or 5,000 Units,
applied on whichever basis is more favorable to the purchaser.
<TABLE>
<CAPTION>
INITIAL SALES CHARGE TOTAL SALES CHARGE
------------------------------- -------------------------------
MAXIMUM DOLLAR
AMOUNT OF
DEFERRED SALES
AGGREGATE DOLLAR AS % OF PUBLIC AS % OF NET AS % OF PUBLIC AS % OF NET CHARGE PER
VALUE OF UNITS* OFFERING PRICE AMOUNT INVESTED OFFERING PRICE AMOUNT INVESTED 100 UNITS
- --------------------- -------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Up to $49,999 ........ 1.00% 1.01% 3.00% 3.09% $20.00
$50,000 to $99,999 .. 0.75 0.76 2.75 2.83 $20.00
$100,000 to $249,999 0.50 0.50 2.50 2.56 $20.00
$250,000 to $499,999 . 0.25 0.25 2.25 2.30 $20.00
$500,000 or more .... 0.00 0.00 2.00 2.04 $20.00
</TABLE>
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* The Initial Sales Charge applicable to volume purchasers according to
the table above will be applied either on a dollar or Unit basis,
depending upon which basis provides a more favorable purchase price to
the purchaser.
The volume discount on the Initial Sales Charge shown above will apply to
all purchases of Units on any one day by the same person in the amounts
stated herein, and for this purpose purchases of Units of this Trust will NOT
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 hereof to be registered in the name of the purchaser. The reduced
Initial Sales Charges are also applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
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No Initial Sales Charge will be imposed on Units of the Trust acquired by
Unitholders in connection with participation in the Reinvestment Plan (see
"Reinvestment Plan").
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses with respect to 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 with no Initial Sales Charge imposed, subject
only to the Deferred Sales Charges remaining on the Units received.
Distribution of Units. The minimum purchase in 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 $.30 per Unit
at the highest sales charge, subject to change from time to time. The
difference between the sales charge and the dealer concession will be
retained by the Sponsor. In the event that the dealer concession is 90% or
more of the sales charge per Unit, dealers taking advantage of such
concession may be deemed to be underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor intends to qualify the Units in all
states of the United States, the District of Columbia and the Commonwealth of
Puerto Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer
to purchase Units at the Trust Fund Evaluation per Unit next computed after
receipt by the Sponsor of an order from a Unitholder. The Sponsor may cease
to maintain such 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 such Units to
the Trustee for redemption at the price calculated in the manner set forth
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 of the
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 and
its estimate of the time required to sell the Units and general market
conditions.
A Unitholder who wishes to dispose of his Units should inquire of his bank
or broker as to current market prices in order to determine if
over-the-counter prices exist in excess of the redemption price and the
repurchase price (see "Redemption").
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 Stocks to the Sponsor and the price at which it
deposits the Stocks in the Trust in exchange for Units, which is the value of
the Stocks, determined by the Trustee as described under "Valuation". The
cost of Stock to the Sponsor includes the amount paid by the Sponsor for
brokerage commissions. These amounts are an expense of the Trust.
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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 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 the 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 Investors Bank & Trust Company for redemption at
its office in person, or by mail at Hancock Towers, 200 Clarendon Street,
Boston, MA 02116 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 Trustee. A written
instrument of redemption must be signed by the Unitholder. Unitholders must
sign exactly as their names appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In certain instances the Trustee
may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or
administrator, or certificates of corporate authority. Unitholders should
contact the Trustee to determine whether additional documents are necessary.
Units tendered to the Trustee for redemption will be cancelled, if not
repurchased by the Sponsor.
Units will be redeemed at the Redemption Value per Unit 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".) Unitholders who redeem
prior to the accrual of the final Deferred Sales Charges installment will
have the amount of any installments remaining deducted from their redemption
proceeds or deducted in calculating an in-kind redemption, although this
deduction will be waived in the event of death or disability (as defined in
the Internal Revenue Code) of an investor.
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 4:00 p.m. If it is received after 4:00 p.m., 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 no later than 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 thereto).
With respect to cash redemptions, amounts representing income received
shall be withdrawn from the Income Account, and, to the extent such balance
is insufficient and for remaining amounts, from the Capital Account. The
Trustee is empowered, to the extent necessary, to sell Securities to meet
redemptions. The Trustee will sell Securities in such manner as is directed
by the Sponsor. In the event no such direction is given, Stocks will be sold
pro rata, to the extent possible, and if not possible, the Trustee may
designate Securities to be sold. (See "Administration of the Trust".)
However, with respect to redemption requests in excess of $500,000, the
Sponsor may determine in its sole discretion to direct
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the Trustee to redeem Units "in kind" by distributing Stocks to the redeeming
Unitholder. When Stocks are so distributed, a proportionate amount of each
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 Stocks distributed into cash. The availability of
redemption "in kind" is subject to compliance with all applicable laws and
regulations, including the Securities Act of 1933, as amended.
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 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.
To the extent that a significant number of Unitholders exercise the
Exchange Option on or after the Special Redemption Date, the Trust
will experience a correspondingly significant redemption at such time,
thereby reducing the size of the Trust. Such redemption may increase the
expense ratios for Unitholders who hold their Units until the Mandatory
Termination Date. See "Exchange Option".
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar days following the day of
tender for any period during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday closings; or for any period during
which the SEC determined that trading on the New York Stock Exchange, Inc. is
restricted or for any period during which an emergency exists as a result of
which disposal or evaluation of the Securities is not reasonably practicable;
or for such other period as the SEC may by order permit for the protection of
Unitholders. The Trustee is not liable to any person or in any way for any
loss or damages which may result from any such suspension or postponement, or
any failure to suspend or postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the Evaluation Time set forth under "Summary of Essential
Information Regarding the Trust" (1) on each business day as long as the
Sponsor is maintaining a bid in the secondary market, (2) on the business day
on which any Unit is tendered for redemption, (3) on any other day desired by
the Sponsor or the Trustee and (4) upon termination, by adding (a) the
aggregate value of the Securities and other assets determined by the Trustee
as set forth below, (b) cash on hand in the Trust, including dividends
receivable on Stock trading ex-dividend and income accrued held but not yet
distributed (other than any cash held in any reserve account established
under the Indenture or cash held for the purchase of Contract Securities) and
(c) accounts receivable for Securities sold and any other assets of the Trust
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), other Trust expenses and any accrued
Deferred Sales Charge installment not yet paid to the Sponsor (x) cash
allocated for distributions to Unitholders and amounts owed to the Sponsor in
reimbursement of Initial Organizational Costs and (y) accounts payable for
Units tendered for
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redemption and any other liabilities of the Trust Fund not included in (v),
(w), (x) and (y) above. The per Unit Trust Fund Evaluation is calculated by
dividing the result of such computation by the number of Units outstanding as
of the date thereof. Business days do not include Saturdays, Sundays, New
Year's Day, Martin Luther King, Jr. Day, Presidents' 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 value of Stocks shall be determined by the Trustee in good faith in
the following manner: (1) if the domestic Stocks are listed on one or more
national securities exchanges or on the National Market System maintained by
the National Association of Securities Dealers Automated Quotations System,
such evaluation shall be based on the last reported 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 thereof (deemed to be the New
York Stock Exchange in the case of the domestic Stocks if such Stocks are
listed thereon), (2) if there is no such appropriate sales price on such
exchange or system, at the mean between the closing bid and asked prices on
such exchange or system (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 therefor 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 in
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 Stock
in good faith on the bid side of the market or (d) by any combination
thereof. The tender of a Stock pursuant to a tender offer will not affect the
method of valuing such Stock.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
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
Initial Date of Deposit, the Public Offering Price per Unit (which figure
includes the Initial Sales Charge) exceeded the Redemption Value. (See
"Essential Information"). The prices of Stocks 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 such Units. Also,
as of the close of the initial public 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 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 not to exceed $.0035
per Unit per calendar year, 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 Equity 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, annually $.0170 per Unit, based on the largest number
of Units outstanding during the previous month. In addition,
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the regular and recurring expenses of the Trust are estimated to be $.0055
per Unit, which include, but are not limited to certain mailing, printing,
and audit 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 by 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 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 such Account, from the Capital Account (see "Administration of
the Trust--Accounts"): (1) fees for the Trustee for extraordinary services;
(2) expenses of the Trustee (including legal and auditing expenses) and of
counsel; (3) various governmental charges; (4) expenses and costs of any
action taken by the Trustee to protect the Trust and the rights and interests
of the Unitholders; (5) indemnification of the Trustee for any loss,
liabilities or expenses incurred by it in the administration of the Trust
without gross negligence, bad faith or wilful misconduct on its part; (6)
brokerage commissions and other expenses incurred in connection with the
purchase and sale of Securities; and (7) expenses incurred upon termination
of the Trust. In addition, to the extent then permitted by the SEC, the Trust
may incur expenses of maintaining registration or qualification of the Trust
or the Units under Federal or state securities laws so long as the Sponsor is
maintaining a secondary market (including, but not limited to, legal,
auditing and printing expenses).
The accounts of the Trust shall be audited not less than annually by
independent public accountants 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 annual audit expense which
exceeds $.005 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 set forth 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 entire amount of estimated expenses
of the Trust. To the extent that dividends paid with respect to the Stocks
are not sufficient to meet the expenses of the Trust, the Trustee is
authorized to sell Securities to meet the expenses of the Trust. Securities
will be selected in the same manner as is set forth under "Redemption".
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.
DISTRIBUTIONS
The Trustee will distribute net dividends and interest, if any, from the
Income Account on the quarterly Distribution Dates to Unitholders of record
on the preceding Record Date. Distributions from the Capital Account will be
made on the Capital Account Distribution Date to Unitholders of record on the
preceding Record Date. Distributions of less than $.05 per Unit need not be
made from the Capital Account on any Distribution Date. See "Essential
Information". Whenever required for regulatory or tax purposes, the Trustee
will make special distributions of any dividends or capital on special
Distribution Dates to Unitholders of record on special Record Dates declared
by the Trustee.
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If and to the extent that the Sponsor, on behalf of the Trust, receives a
favorable response to a no-action letter request which it intends to submit
to the Division of Investment Management of the SEC with respect to
reinvesting cash proceeds received by the Trust, the Trustee may reinvest
such cash proceeds in additional Securities held in the Trust Fund at such
time. Such reinvestment shall be made so that each deposit of additional
Securities shall be made so as to match as closely as practicable the
percentage relationships of shares of Stocks and such reinvestment shall be
made in accordance with the parameters set forth in the no-action letter
response. If the Sponsor and the Trustee determine that it shall be necessary
to amend the Indenture to comply with the parameters set forth in the
no-action letter response, such documents may be amended without the consent
of Unitholders. There can be no assurance that the Sponsor will receive a
favorable no-action letter response.
Unitholders may elect to have their Income Account and Capital Account
distributions automatically reinvested into additional Units of the Trust at
no Initial Sales Charge. (See "Reinvestment Plan").
Upon termination of the Trust, each Unitholder of record on such date will
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 of the Trust".)
REINVESTMENT PLAN
Income Account and Capital Account distributions on Units may be
reinvested by participating in the Trust's Reinvestment Plan (the
"Reinvestment Plan"). To participate in the Reinvestment Plan, a Unitholder
must contact his broker, dealer or financial institution to determine whether
he may participate in the Reinvestment Plan. Under the Reinvestment Plan, the
Units acquired for current Unitholders will be either Units already held in
inventory by the Sponsor or new Units created by the Sponsor's deposit of
Additional Securities, contracts to purchase Additional Securities or cash
(or a bank letter of credit in lieu of cash) with instructions to purchase
Additional Securities. Deposits or purchases of Additional Securities will be
made so as to maintain the percentage relationships of shares of Stocks,
except as discussed under "The Trust". Purchases made pursuant to the
Reinvestment Plan will be made without any Initial Sales Charge at the net
asset value for Units of the Trust; of course, such Units will be subject to
the Deferred Sales Charges remaining on Units received. Under the
Reinvestment Plan, the Trust will pay the distributions to the Trustee which
in turn will purchase for those participating Unitholders whole Units of the
Trust at the price determined as of the close of business on the Distribution
Date and will add such Units to the Unitholder's account. The Unitholder's
account statement will reflect the reinvestment. The Trustee will not issue
fractional Units, thus any cash remaining after purchasing the maximum number
of whole Units will be distributed to the Unitholder. Unitholders wishing to
terminate their participation in the Reinvestment Plan must notify their
broker, dealer or financial institution of such decision. The Sponsor
reserves the right to amend, modify or terminate the Reinvestment Plan at any
time without prior notice.
EXCHANGE OPTION
So long as the Sponsor continues to offer new ABCs Trusts, Unitholders, in
lieu of selling or redeeming their Units, may elect, by contacting the
Sponsor no later than 12 noon on the Exchange Notification Date described
below, to exchange their Units in the Trust for units of the next ABCs Trust
on or after the Special Redemption Date at no Initial Sales Charge.
Units acquired by means of the Exchange Option will, of course, be subject to
the Deferred Sales Charges aggregating $20.00 per 100 Units. No election to
exchange may be made prior to 40 days before the date set forth in the notice
sent by the Distribution Agent (defined below) (the "Exchange Notification
Date") and any
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exchange election will be revocable at any time prior to 12 noon on the
Exchange Notification Date. It is expected that the terms of the new Trust
will be substantially the same as those of this Trust. The Sponsor reserves
the right not to offer new ABCs Trusts and there is no guarantee that a new
Trust will be available on or after the Special Redemption Date or
(the Mandatory Termination Date of the Trust).
An exchange of a Unitholder's Units will be accomplished by the in-kind
redemption of such Units, followed by the sale of the underlying Securities
by the Trustee acting as the distribution agent (the "Distribution Agent") on
behalf of participating Unitholders and the reinvestment of the sale proceeds
(net of brokerage fees, governmental charges and other sale expenses) in
units of the next ABCs Trust at their then-current net asset value.
Exchanges will be effected in whole Units only. Any excess proceeds from
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.
The Sponsor intends to direct the sale of the distributed Securities by
the Distribution Agent, as quickly as practicable, subject to the concerns
that the concentrated sale of large volumes of securities may affect market
prices in a manner adverse to the interest of investors. Accordingly, the
Sponsor may, in its sole discretion, undertake to cause a more gradual sale
of the distributed Securities to help mitigate any negative market price
consequences caused by this large volume of securities trades. In order to
minimize potential losses caused by market movement during this period,
program trades may be utilized in connection with the sales of the
distributed Securities, which might increase brokerage commissions payable by
investors. There can be no assurance, however, that any trading procedures
will be successful or might not result in less advantageous prices. Sales of
Securities pursuant to program trades will be made at such Securities'
closing prices on the exchange or system where they are principally traded.
An exchange of Units pursuant to the Exchange Option generally will
constitute a "taxable event" under the Code, i.e., a Unitholder will
recognize a tax gain or loss at the time of exchange with respect to each of
the Securities. While Unitholders exercising the Exchange Option will be
required to report taxable capital gains from the exchange, they will not be
allowed to a deduction for certain capital losses realized on the exchange.
Because of the exchange procedures, such Unitholders will not receive a cash
distribution with which to pay taxes owed. Unitholders are urged to consult
their own tax advisors as to the tax consequences to them of exchanging Units
in particular cases.
The Sponsor reserves the right to modify, suspend or terminate this
Exchange Option at any time with 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 with respect to his Units without further instruction from the
Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor by
no later than 12 noon on the Exchange Notification Date that such Unitholder
wishes to exercise the Exchange Option and to use the proceeds from the sale
of underlying Securities in respect of his in-kind redemption of Units of
this Trust to purchase Units of the next ABCs Trust from the Sponsor. If
Units of the next ABCs 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 will be provided with a current prospectus or prospectuses
relating to such next ABCs Trust series.
Unitholders who do not exercise the Exchange Option, or otherwise sell or
redeem their Units, will continue to hold their Units until the termination
of the Trust; however, depending upon the extent of participation in the
Exchange Option, the aggregate size of the Trust may be sharply reduced,
resulting in a significant increase in per Unit expenses.
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The Division of Investment Management of the SEC is of the view that the
Exchange Option constitutes an "exchange offer", for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be
prohibited absent an exemptive order. The Sponsor has received exemptive
orders under Section 11(c) which the Sponsor believes permit the offering of
this Exchange Option, but no assurance can be given that the SEC will concur
with the Sponsor's position and additional regulatory approvals may be
required.
ADMINISTRATION OF THE TRUST
Accounts. All dividends and interest received on Securities, proceeds from
the sale of Securities or other moneys received by the Trustee on behalf of
the Trust may be held in trust in non-interest bearing accounts until
required to be disbursed.
The Trustee will credit on its books to an Income Account dividends, if
any, and interest income, on Securities in the Trust. All other receipts
(i.e., return of principal and gains) are credited on its books to a Capital
Account. 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 therein, from the Capital Account, amounts necessary to
pay expenses incurred by the Trust. (See "Expenses and Charges.") In
addition, the Trustee may withdraw from the Income Account and the Capital
Account such amounts as may be necessary to cover redemption of Units by the
Trustee. (See "Redemption.") In addition, distributions of amounts necessary
to pay (1) the Initial Organizational Costs and (2) the Deferred Sales
Charges will be made from the Capital Account to special accounts maintained
by the Trustee for purposes of (1) reimbursing the Sponsor and (2) satisfying
Unitholders' Deferred Sales Charges obligations, respectively. 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.
Although the Sponsor may collect the Deferred Sales Charges monthly,
currently the Sponsor does not anticipate sales of Securities to pay such
sales charges until after the Special Redemption Date.
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 any distribution 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 such calendar year
1999 and by , 2000, the Trustee will furnish each person who was a
Unitholder at any time during such periods 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 such year
in the Income and
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Capital Accounts and any Reserves; (2) any Securities sold during such
periods and the Securities held at the end of such periods; (3) the Trust
Fund Evaluation per Unit, based upon a computation thereof on the last
business day of such period); and (4) amounts distributed to Unitholders
during such periods.
Portfolio Supervision. The portfolio of the Trust is not "managed" by the
Sponsor or the Trustee; their activities described herein 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 under the
following circumstances:
(1) upon the failure of the issuer to declare or pay anticipated
dividends or interest;
(2) upon the institution of a 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 on such Securities;
(4) upon the default in the payment of principal or par or stated value
of, premium, if any, or income on any other outstanding securities of the
issuer or the guarantor of such Securities which might materially and
adversely, either immediately or contingently, affect the declaration or
payment of dividends on the Securities;
(5) upon the decline in price or the occurrence of any materially adverse
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 decrease in the Sponsor's internal rating of the Security; or
(7) 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.
Securities may also be tendered or sold in the event of a tender offer,
merger or acquisition in the manner described under "The Trust."
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 thereof which may be defective or inconsistent or to
alter any provision as may be required by the SEC to make such other
provisions as will not adversely affect the interest of the Unitholders.
The Indenture may also be amended by the Trustee and the Sponsor without
the consent of any of the Unitholders to implement a program to reinvest cash
proceeds received by the Trust in connection with corporate actions and in
other situations, when and if the Sponsor receives a favorable response to
the no-action letter request which it intends to submit to the Division of
Investment Management at the SEC discussed above (see "Distributions"). There
can be no assurance that a favorable no-action letter response will be
received.
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
23
<PAGE>
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 on the Mandatory
Termination Date. If the value of the Trust as shown by any evaluation is
less than forty per cent (40%) of the market value of the Stocks upon
completion of the deposit of Stocks, the Trustee may in its discretion, and
will when so directed by the Sponsor, terminate such 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.
Unless advised to the contrary by the Sponsor, approximately 20 days prior
to the termination of the Trust the Trustee will begin to sell the Securities
held 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, after due notice of such termination, such
Unitholder's pro rata share in the Income and Capital Accounts. Moneys held
upon the sale of Securities may be held in non-interest bearing accounts
created by the Indenture until distributed and will be of benefit to the
Trustee. The sale of Securities in the Trust in the period prior to
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 realized
by a Unitholder upon termination may be less than the amount paid by such
Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under
the laws of the State of Delaware. The Sponsor is a member firm of the New
York Stock Exchange, Inc. as well as other major securities and commodities
exchanges and is a member of the National Association of Securities Dealers,
Inc. The Sponsor is engaged in a security and commodity brokerage business as
well as underwriting and distributing new issues. The Sponsor also acts as a
dealer in unlisted securities and municipal bonds and in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for
the purchase and sale of securities of such companies and sells securities to
such companies in its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to the Trustee,
the Trust 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 willful misfeasance, bad faith, gross negligence or
willful 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.
24
<PAGE>
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over
by public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Trustee is Investors Bank & Trust Company, a Massachusetts trust
company with its principal office at Hancock Towers, 200 Clarendon Street,
Boston, Massachusetts 02116, toll-free number 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 in respect of any
valuation which it is required to make, except by reason of its own gross
negligence, bad faith or willful 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 such 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 thereon 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 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 willful 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 audited by Ernst &
Young LLP, independent auditors, have been included in reliance on their
report given on their authority as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Carter,
Ledyard & Milburn, 2 Wall Street, New York, New York, as counsel for the
Sponsor.
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND TRUSTEE
THE PAINEWEBBER EQUITY TRUST, ABCs TRUST SERIES 2
We have audited the accompanying Statement of Net Assets of The
PaineWebber Equity Trust, ABCs Trust Series 2, including the Schedule of
Investments, as of , 1999. 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 generally accepted auditing
standards. 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 , 1999.
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 Equity
Trust, ABCs Trust Series 2 at , 1999, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
, 1999
26
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
STATEMENT OF NET ASSETS
AS OF INITIAL DATE OF DEPOSIT, , 1999
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
----------
Sponsor's Contracts to Purchase underlying Securities backed
by irrevocable letter of credit (a)........................... $
Reimbursement to Sponsor for Initial Organizational Costs (b) . $
------------
Total...................................................... $
============
Units outstanding (c):......................................... 100,000
ANALYSIS OF NET ASSETS
----------------------
Cost to investors (d)......................................... $1,000,000
Less: Gross underwriting commissions (e)......................
Reimbursement to Sponsor for Initial Organizational
Costs..................................................
------------
Net Assets................................................. $
============
</TABLE>
- ------------
(a) The aggregate cost to the Trust of the securities listed under
"Schedule of Investments" is determined by the Trustee on the basis set forth
above under "Public Offering of Units--Public Offering Price." See also the
column headed Cost of Securities to Trust under "Schedule of Investments."
Pursuant to contracts to purchase securities, an irrevocable letter of credit
drawn on , in the amount of $ has been deposited with the
Trustee, Investors Bank & Trust Company for the purchase of $ 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 $ 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) Because the value of Securities at the Valuation Time on the Initial
Date of Deposit may differ from the amounts shown in this Statement of Net
Assets, the number of Units offered on the Initial Date of Deposit will be
adjusted from the initial number of Units shown to maintain the $10 per Unit
offering price only for that day. The Public Offering Price on any subsequent
day will vary.
(d) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(e) Assumes the maximum Initial Sales Charge of 1.00% of the Public
Offering Price. Additionally, Deferred Sales Charges of $2.00 per 100 Units,
payable in ten equal monthly installments on the tenth (10th) day of each
month from the third (3rd) through twelfth (12th) months of the Trust for an
aggregate amount of $20.00 per 100 Units, will be deducted. Distributions
will be made to an account maintained by the Trustee from which the Deferred
Sales Charges obligation of the Unitholders to the Sponsor will be met. If
Units are sold, redeemed or exchanged prior to , the remaining portion
of the distribution applicable to such redeemed Units will be transferred to
the account on such sale, exchange or redemption date. The sales charges are
computed on the basis set forth under "Public Offering of Units--Sales Charge
and Volume Discount." Based on the projected total assets of $200,000,000,
the estimated maximum Deferred Sales Charge would be $4,000,000.
27
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, , 1999
COMMON STOCKS (1)
<TABLE>
<CAPTION>
PRIMARY INDUSTRY SOURCE AND NUMBER OF COST OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)(3)
- ------------------------------- ------------- ----------------------
<S> <C> <C>
28
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, , 1999 (CONTINUED)
COMMON STOCKS (1)
PRIMARY INDUSTRY SOURCE AND NUMBER OF COST OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)(3)
-------------- ------ --------------
TOTAL INVESTMENTS ............ $
===========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of the 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.
(3) The [gain] [loss] to the Sponsor on the Initial Date of Deposit is
$ .
* Non-income producing security.
+ 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.")
29
<PAGE>
PaineWebber Equity Trust
ABCs Trust Series 2
TRUSTEE:
INVESTORS BANK & TRUST COMPANY
Hancock Towers
200 Clarendon Street
Boston, Mass. 02116
(800) 356-2754
SPONSOR:
PAINEWEBBER INCORPORATED
1200 Harbor Boulevard,
Weehawken, N.J. 07087
(201) 902-3000
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Essential Information Regarding the
Trust .................................... 2
The Trust ............................... 7
Risk Factors and Special Considerations . 8
Federal Income Taxes .................... 12
Public Offering of Units ................ 13
Public Offering Price ................. 13
Sales Charge and Volume Discount ...... 13
Employee Discount ..................... 15
Distribution of Units ................. 15
Secondary Market for Units ............ 15
Sponsor's Profits ..................... 15
Redemption .............................. 16
Valuation ............................... 17
Comparison of Public Offering Price and
Redemption Value ....................... 18
Expenses of the Trust ................... 18
Rights of Unitholders ................... 19
Distributions ........................... 19
Reinvestment Plan ....................... 20
Exchange Option ......................... 20
Administration of the Trust ............. 22
Accounts .............................. 22
Reports and Records ................... 22
Portfolio Supervision ................. 23
Amendment of the Indenture .............. 23
Termination of the Trust ................ 24
Sponsor ................................. 24
Trustee ................................. 25
Independent Auditors .................... 25
Legal Opinions .......................... 25
Report of Independent Auditors .......... 26
Statement of Net Assets ................. 27
Schedule of Investments ................. 28
</TABLE>
- -------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEE OR THE SPONSOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- -------------------------------------------------------------------------------
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE TRUST AND THE SPONSOR,
BUT DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE TRUST'S
REGISTRATION STATEMENTS, AMENDMENTS AND EXHIBITS RELATING THERETO, WHICH HAVE
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, AND
TO WHICH REFERENCE IS HEREBY MADE.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
The following exhibits:
1. Ex. 99.A1 Standard Terms and Conditions of Trust dated as
of July 1, 1998 between PaineWebber Incorporated, Depositor, Investors Bank &
Trust Co., as Trustee (incorporated by reference to Exhibit 2 in File No.
333-55697).
2. Ex. 99.A6 Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by reference to Exhibit
8 in File No. 2-88344).
3. Ex. 99.A6 By-Laws of PaineWebber Incorporated, as amended
(incorporated by reference to Exhibit A(6)(a) in File No.
811-3722).
The following exhibits to be supplied by amendment:
1. Ex.27 Financial Data Schedule
2. Ex.99.A2 Copy of Trust Indenture and Agreement between
PaineWebber Incorporated, Depositor, Investors Bank & Trust Co. as Trustee
incorporating by reference Standard Terms and Conditions of Trust dated as of
July 1, 1998.
3. Ex.99.A5 Form of Certificate of Ownership (included in
Standard Terms and Conditions of Trust).
4. Ex.99.2 Opinion of Counsel as to legality of securities
being registered.
5. Ex.99.C1 Opinion of Counsel as to income tax status of
securities being registered.
6. Ex.99.C2 Consent of Ernst and Young, LLP Independent
Auditors.
<PAGE>
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Group-Financial Statements incorporated by
reference to Form 10-K and 10-Q, File No. 1-7367, respectively.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, and State of New York, on the 28th day of January, 1999.
THE PAINEWEBBER EQUITY TRUST,
ABCs SERIES 2
(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 28th of January, 1999.
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.
