PAINEWEBBER EQUITY TRUST ABCS TRUST SERIES 2, 487, 1999-02-23

PAINEWEBBER EQUITY TRUST ABCS TRUST SERIES 2
487, 1999-02-23

Previous: UACSC 1998-C AUTO TRUST, 8-K, 1999-02-23

Next: NUVEEN INVESTMENT TRUST III, 497, 1999-02-23

<PAGE>

File No. 333-64461

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 2
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, New Jersey 07087

Copy to:

CARTER, LEDYARD & MILBURN
Attention: Kathleen H. Moriarty, Esq.
2 Wall Street
New York, New York 10005

E. Total and amount of securities being registered:

An indefinite number of Units pursuant to Rule 24f-2
of the Investment Company Act of 1940.

F. Proposed maximum offering price to the public of the
securities being registered:

Indefinite

<PAGE>

G. Amount of filing fee, computed at one-thirty- 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

/x/ Check box if it is proposed that this filing will
become effective on February 23, 1999 at 3:00 p.m.
pursuant to Rule 487.

<PAGE>

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
- ----------
<S> <C>

I. Organization and General Information
1. (a) Name of Trust ) Front Cover
(b) Title of securities issued )

2. Name and address of Depositor ) Back Cover

3. Name and address of Trustee ) Back Cover

4. Name and address of principal ) Back Cover
Underwriter )

5. Organization of Trust ) The Trust

6. Execution and termination of ) The Trust
Trust Agreement ) Termination of the
) Trust

7. Changes of name ) *

8. Fiscal Year ) *

9. Litigation ) *

II. General Description of the Trust
and Securities of the Trust

10. General Information regarding Trust's ) The Trust
Securities and Rights of Holders ) Rights of
Unitholders

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

(a) Type of Securities ) The Trust
(Registered or Bearer) )

(b) Type of Securities ) The Trust
(Cumulative or Distributive) )

(c) Rights of Holders as to ) Rights of Unitholders
Withdrawal or Redemption ) Redemption
) Public Offering of
) Units, Secondary
) Market for Units
) Exchange Option

(d) Rights of Holders as to ) Public Offering of
conversion, transfer, etc. ) Units-Administration
) of the Trust

(e) Rights of Trust issues periodic ) *
payment plan certificates )

(f) Voting rights as to Securities, ) Rights of Unitholders
under the Indenture ) Amendment of the Trust
) Termination of the
) Trust

(g) Notice to Holders as to )
change in )
(1) Assets of Trust )
(2) Terms and Conditions )
of Trust's Securities )
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the Trust-
and Trustee ) Portfolio Supervision

(h) Consent of Security Holders )
required to change )

(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture )
(4) Identity of Depositor and ) Amendment of the Indenture
Trustee )

11. Type of securities comprising ) The Trust Rights of Unit- security
holder's interest ) holders Administration of
) the Trust-Portfolio
) Supervision

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

12. Information concerning periodic ) *
payment certificates )

13. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units, Administration of
) the Trust, Expenses of the
) Trust

(b) Certain information regarding ) *
periodic payment certificates )

(d) Certain other fees, etc. )
payable by holders ) Rights of Unitholders

(e) Certain profits receivable by ) Public Offering of Units-
depositor, principal under- ) Public Offering Price;
writers, trustee or affiliated ) -Sponsor's Profit-Secondary
persons ) Market for Units

(f) Ratio of annual charges to ) *
income )

14. Issuance of trust's securities ) The Trust
) Public Offering of Units

15. Receipt and handling of payments ) Public offering of Units
from purchasers )

16. Acquisition and disposition of ) The Trust, Administration
Underlying Securities ) of the Trust, Amendment of
) the Indenture, Termination
) of the Trust

17. Withdrawal or redemption ) Public Offering of Units
) Administration of the Trust

18. (a) Receipt and disposition of ) Distributions, The Trust,
income ) Distributions, Administra-
) tion of the Trust

(b) Reinvestment of distributions ) *

(c) Reserves or special fund ) Distributions, Redemption,
) Expenses of the Trust,
) Termination of the Trust,
) Amendment of the Indenture

* Not applicable, answer negative or not required.

<PAGE>

(d) Schedule of distribution ) *

19. Records, accounts and report ) Distributions, Administra-
) tion of the Trust

20. Certain miscellaneous provisions ) Trustee, Sponsor, Termina-
of trust agreement ) tion of the Trust, Amend-
) ment of the Indenture

21. Loans to security holders ) *

22. Limitations on liability ) Sponsor, Trustee, Redemp-
) tion

23. Bonding arrangements ) Included in Form N-8B-2

24. Other material provisions of ) *
trust agreement )

III. Organization Personnel and
Affiliated Persons of Depositor

25. Organization of Depositor ) Sponsor

26. Fees received by Depositor ) Public Offering of
) Units-Public Offering
) Price, Expenses of the
) Trust

27. Business of Depositor ) Sponsor

28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )

29. Voting securities of Depositor ) *

30. Persons controlling Depositor ) Sponsor

31. Payments by Depositor for certain ) *
other services trust )

32. Payments by Depositor for certain ) *
certain other services )
rendered to trust )

33. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

34. Remuneration of other persons ) *
for certain services rendered )
to trust )

IV. Distribution and Redemption of Securities

35. Distribution of trust's ) Public Offering of Units
securities by states )

36. Suspension of sales of trust's ) *
securities )

37. Revocation of authority to ) *
distribute )

38. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements ) The Trust, Administration
(c) Selling agreements ) of The Trust

39. (a) Organization of principal ) Sponsor
Underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )

40. Certain fees received by ) Public Offering of Units,
principal underwriter ) Expenses of the Trust

41. (a) Business of principal ) Sponsor
underwriter )

(b) Branch officers of principal )
underwriter )

42. Ownership of trust's securities ) *
by certain persons )

43. Certain brokerage commissions ) *
received by principal underwriter )

44. (a) Method of valuation ) Public Offering of Units
) Valuation
(b) Schedule as to offering price ) *

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

45. Suspension of redemption rights ) *

46. (a) Redemption valuation ) Public Offering of Units
) -Public Offering Price
) -Secondary Market for Units
) Valuation, Redemption

(b) Schedule as to redemption ) *
price )

V. Information concerning the Trustee or Custodian

47. Maintenance of position in ) Redemption, Public Offering
underlying securities ) of Units-Public Offering
) Price

48. Organization and regulation of ) Trustee
Trustee )

49. Fees and expenses of Trustee ) Expenses of the Trust

50. Trustee's lien ) Expenses of the Trust

VI. Information concerning Insurance of Holders of Securities

51. (a) Name and address of Insurance ) *
Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
(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 )

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

VII. Policy of Registrant

52. (a) Method of selecting and ) The Trust, Administration
eliminating securities from ) of the Trust
the Trust )
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) The Trust, Administration
substitution and elimination ) of the Trust
of securities )
(d) Description of any funda- ) The Trust, Administration mental
policy of the Trust ) of the Trust-Portfolio
) Supervision

53. (a) Taxable status of the Trust ) Federal Income Taxes
(b) Qualification of the Trust as )
a regulated investment company )

VIII. Financial and Statistical Information

54. Information regarding the Trust's ) *
past ten fiscal years )

55. Certain information regarding ) *
periodic payment plan certificates )

56. Certain information regarding ) *
periodic payment plan certificates )

57. Certain information regarding ) *
periodic payment plan certificates )

58. Certain information regarding ) *
periodic payment plan certificates )

59. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition

</TABLE>

- --------------------
* Not applicable, answer negative or not required.

<PAGE>

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary and
periodic information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

<PAGE>

PAINEWEBBER EQUITY TRUST
ABCs Trust Series 2

- --------------------------------------------------------------------------------

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 23, 1999

<PAGE>

ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF FEBRUARY 22, 19991

<TABLE>
<S> <C>
Sponsor: PaineWebber Incorporated
Trustee: Investors Bank & Trust Company
</TABLE>

Initial Date of Deposit: February 23, 1999

<TABLE>
<S> <C>
Aggregate Value of Securities in Trust: .................................. $990,009
Number of Units2: ........................................................ 100,000
Fractional Undivided Interest in the Trust Represented by Each Unit: ..... 1/100,000th
Calculation of Public Offering Price Per Unit2, 3
Public Offering Price per Unit .......................................... $ 10.00
Less Reimbursement to Sponsor for Initial Organizational Costs6 ......... $ 0.009
Less Initial Sales Charge4* of 1% of Public Offering Price
(1.00% of net amount invested per 100 Units) ........................... $ 0.10
Net Asset Value per Unit ................................................ $ 9.891
Net Asset Value for 100,000 Units ....................................... $989,109
Divided by 100,000 Units2 ............................................... $ 9.891
Redemption Value:** ......................................................... $ 9.70
Evaluation Time: ............................................................ 4:00 P.M. New York time.
Income Account Distribution Dates5: ......................................... June 25, 1999 and on
quarterly thereafter and on
the Mandatory
Termination Date.
Capital Account Distribution Dates5: ........................................ December 31, 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: ............................................................... June 10, 1999 and quarterly
thereafter.
Mandatory Termination Date: ................................................. March 31, 2000
Discretionary Liquidation Amount: ........................................... 40% of the value of Securities
upon completion of the
deposit of Securities.
Estimated Initial Organizational Costs of the Trust6: ....................... $.009 per Unit.
Estimated Annual Expenses of the Trust7 ..................................... $.026 per Unit.
</TABLE>

- ----------
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 February 23, 1999 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
<PAGE>

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 $0.009 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 annual 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 total return 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 Unitholders choose to
exercise their exchange option in respect of the February 25, 2000 Special

3
<PAGE>

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"
and in the table below.

<TABLE>
<CAPTION>
APPROXIMATE PERCENT OF AGGREGATE
PRIMARY INDUSTRY SOURCE MARKET VALUE OF THE TRUST
- ------------------------------------------------ ---------------------------------
<S> <C>
Airlines ................................ 2.76%
Auto/Truck Parts & Equipment ............ 2.76%
Biotechnology ........................... 2.81%
Building-Maintenance & Services ......... 2.79%
Cable TV ................................ 2.75%
Computers-Hardware/Software ............. 5.54%
Containers-Paper/Plastic ................ 2.78%
Cosmetics & Toiletries .................. 2.79%
Data Processing/Management .............. 2.77%
Electric ................................ 2.78%
Electronics/Semi-Conductor .............. 2.80%
Financial Institutions/Banks ............ 5.55%
Insurance-Multi-Line .................... 8.34%
Internet Software ....................... 2.79%
Medical Instruments & Devices ........... 5.55%
Multimedia .............................. 2.78%
</TABLE>

4
<PAGE>

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 first
among the submitted lists of 15 major firms for the five-year period ended
December 31, 1998. For the one-year performance period ended December 31, 1998,
PaineWebber's

Performance Portfolio was ranked number 3 out of 15 firms. The Wall Street
Journal arrives at this ranking by comparing the estimated performance 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 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 may not be, during the term of
this Trust, the same stocks as those contained in the Performance Portfolio.

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".)

5
<PAGE>

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 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 series of
the ABCs Trust, Unitholders may exercise their exchange option in lieu of
selling or redeeming their Units on or after the February 25, 2000 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 February 25, 2000
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.

6
<PAGE>

(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".)

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".

- ----------
*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>

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".)

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 CERTAIN
LIMITED 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

8
<PAGE>

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 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

9
<PAGE>

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 or to pay the
accrued Deferred Sales Charge to the Sponsor, may impact upon the value of
the underlying Securities and the Units. For example, the Sponsor's 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,

10
<PAGE>

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 February 25, 2000 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".

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

11
<PAGE>

have a material adverse effect on the value of Securities in the Portfolio. In
addition, at any time after the Initial Date of Deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Securities in the Portfolio or the issuers of such Securities. Changing
approaches to regulation may have a negative impact on certain companies
represented in the Portfolio. There can be no assurance that future litigation,
legislation, regulation or deregulation will not have a material adverse effect
on the Portfolio or will not impair the ability of issuers of the Securities to
achieve their business goals.

Certain of the Stocks may be attractive acquisition candidates pursuant to
mergers, acquisitions and tender offers. In general, tender offers involve a
bid by an issuer or other acquiror to acquire a stock based on the terms of its
offer. Payment generally takes the form of cash, securities (typically bonds or
notes), or cash and securities. The Indenture contains provisions requiring the
Trustee to follow certain procedures regarding mergers, acquisitions, tender
offers and other corporate actions. Under certain circumstances, the Trustee,
at the direction of the Sponsor, may hold or sell any stock or securities
received in connection with such corporate actions (see "Administration of the
Trust--Portfolio Supervision").

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.

12
<PAGE>

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 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 February 25,
2000 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

13
<PAGE>

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 $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 thirteen (13) month
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.

The Deferred Sales Charge will be accrued on the books of the Trust and
will be paid to the Sponsor, upon the Sponsor's request. The Trustee is
directed to sell Securities to make this payment. 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.

14
<PAGE>

<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>

- ----------
* 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.

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

15
<PAGE>

"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.

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

16
<PAGE>

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 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 February 25, 2000 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

17
<PAGE>

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 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.

18
<PAGE>

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, 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.

19
<PAGE>

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.

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

20
<PAGE>

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 February 25, 2000 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 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 February 25, 2000 Special
Redemption Date.

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

21
<PAGE>

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.

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

22
<PAGE>

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 February 25, 2000
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 February 29, 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 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;

23
<PAGE>

(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 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.

24
<PAGE>

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.

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.

25
<PAGE>

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.

26
<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 February 23, 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 February 23, 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 February 23, 1999, in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

New York, New York
February 23, 1999

27
<PAGE>

THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
STATEMENT OF NET ASSETS

AS OF INITIAL DATE OF DEPOSIT, FEBRUARY 23, 1999

<TABLE>
<S> <C>
NET ASSETS
- ------------------------------------------------------------------------------------------
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ................................. $ 990,009
Reimbursement to Sponsor for Initial Organizational Costs (b) ..... $ (900)
----------
Total ......................................................... $ 989,109
==========
Units outstanding (c) ............................................. 100,000
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------------------------
Cost to investors (d) ............................................ $1,000,000
Less: Gross underwriting commissions (e) ......................... (9,991)
Reimbursement to Sponsor for Initial Organizational Costs (900)
----------
Net Assets .................................................... $ 989,109
==========
</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 The Chase Manhattan Bank, in the amount of $2,000,000 has been
deposited with the Trustee, Investors Bank & Trust Company for the purchase of
$990,009 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 $0.009 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 February 10, 2000, 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.

<PAGE>

THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, FEBRUARY 23, 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>
Airlines (2.76%)
Continental Airlines, Inc.--Class B* ......... 830 $ 27,338.13
Auto/Truck Parts & Equipment (2.76%)
Borg-Warner Automotive, Inc. ................. 620 27,357.50
Biotechnology (2.81%)
Amgen Inc.* .................................. 220 27,857.50
Building--Maintenance & Services (2.79%)
Ecolab Inc. .................................. 680 27,582.50
Cable TV (2.75%)
MediaOne Group, Inc.* ........................ 490 27,256.25
Computers--Hardware/Software (5.54%)
Compaq Computer Corporation .................. 640 27,440.00
Storage Technology Corporation* .............. 740 27,380.00
Containers--Paper/Plastic (2.78%)
Smurfit-Stone Container Corporation* ......... 1,600 27,500.00
Cosmetics & Toiletries (2.79%)
The Estee Lauder Companies Inc. .............. 310 27,667.50
Data Processing/Management (2.77%)
Acxiom Corporation* .......................... 1,200 27,450.00
Electric (2.78%)
Consolidated Edison, Inc. .................... 570 27,502.50
Electronics/Semi-Conductor (2.80%)
Texas Instruments Incorporated ............... 280 27,702.50
Financial Institutions/Banks (5.55%)
Freddie Mac .................................. 450 27,562.50
The Bank of New York Company, Inc. ........... 740 27,380.00
Insurance--Multi-Line (8.34%)
CIGNA Corporation ............................ 340 27,582.50
Hartford Life, Inc. .......................... 480 27,390.00
The Allstate Corporation ..................... 710 27,601.25
Internet Software (2.79%)
America Online, Inc.* ........................ 160 27,660.00
Medical Instruments & Devices (5.55%)
Medtronic, Inc. .............................. 360 27,585.00
STERIS Corporation* .......................... 830 27,390.00
Multimedia (2.78%)
The Walt Disney Company ...................... 790 27,560.25
Office Automation & Equipment (2.68%)
Xerox Corporation ............................ 220 26,537.48
</TABLE>

29
<PAGE>

THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, FEBRUARY 23, 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>
Oil/Gas (11.17%)
Anadarko Petroleum Corporation .............. 980 $ 27,378.75
Sunoco, Inc. ................................ 880 27,940.00
The Coastal Corporation ..................... 870 27,405.00
Unocal Corporation .......................... 980 27,868.75
Pharmaceutical (2.83%)
Pfizer Inc. ................................. 210 27,969.38
Radio (2.75%)
Clear Channel Communications, Inc.* ......... 470 27,260.00
Railroad Transportation (2.77%)
Canadian National Railway Company ........... 550 27,465.63
Retail--Apparel/Shoe (5.56%)
Nordstrom, Inc. ............................. 630 27,641.25
The Men's Wearhouse, Inc.* .................. 950 27,371.88
Retail--Office Supplies (2.76%)
Staples, Inc.* .............................. 950 27,312.50
Telecommunications (11.14%)
Lucent Technologies Inc. .................... 260 27,706.25
MCI WorldCom, Inc.* ......................... 320 27,200.00
Micron Electronics, Inc.* ................... 1,760 27,500.00
NEXTLINK Communications, Inc.* .............. 650 27,706.25
------------
TOTAL INVESTMENTS .......................... $ 990,009.00
============
</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 loss to the Sponsor on the Initial Date of Deposit is $867.
* Non-income producing security.

<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>
<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 ........... 14
Employee Discount .......................... 15
Distribution of Units ...................... 15
Secondary Market for Units ................. 15
Sponsor's Profits .......................... 16
Redemption ................................... 16
Valuation .................................... 18
Comparison of Public Offering Price and
Redemption Value ............................ 19
Expenses of the Trust ........................ 19
Rights of Unitholders ........................ 20

</TABLE>
<TABLE>
<S> <C>
Distributions ................................ 20
Reinvestment Plan ............................ 20
Exchange Option .............................. 21
Administration of the Trust .................. 22
Accounts ................................... 22
Reports and Records ........................ 23
Portfolio Supervision ...................... 23
Amendment of the Indenture ................... 24
Termination of the Trust ..................... 24
Sponsor ...................................... 25
Trustee ...................................... 25
Independent Auditors ......................... 26
Legal Opinions ............................... 26
Report of Independent Auditors ............... 27
Statement of Net Assets ...................... 28
Schedule of Investments ...................... 29
</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.
Written consents of the following persons:
Ernst & Young LLP (included in Exhibit
99.C2) Carter, Ledyard & Milburn (included
in Exhibits 99.2 and 99.C1)

The following exhibits:

1. Ex.-99.A1 - Standard Terms and Conditions of
Trust dated as of July 1, 1998 between PaineWebber
Incorporated, Depositor and Investors Bank & Trust
Company, as Trustee (incorporated herein by
reference to Exibit No. 2 to Amendment No. 3 to File
No. 333-55697).

2. Ex.-99.A2 - Copy of Trust Indenture and
Agreement between PaineWebber Incorporated,
Depositor, and Investors Bank & Trust Company,
as Trustee, (incorporating herein by reference
the Standard Terms and Conditions of Trust
dated as of July 1, 1998 filed as as Exhibit
No. 2 to Amendment No. 3 to File No. 333-
55697).

3. Ex.-99.A5 - Form of Certificate of Ownership
(included in Standard Terms and Conditions of
Trust).

4. Ex.-99.A6 - Certificate of Incorporation of
PaineWebber Incorporated, as amended
(incorporated by reference to Exhibit 8 in File
No. 2-88344).

5. Ex.-99.A6 - By-Laws of PaineWebber
Incorporated, as amended (incorporated by
reference to Exhibit A(6)(a) in File No.
811-3722).

6. Ex.-99.2 - Opinion of Counsel as to legality of
securities being registered.

<PAGE>

7. Ex.-99.C1 - Opinion of Counsel as to income tax
status of securities being registered.

8. Ex.-99.C2 - Consent of Ernst & Young LLP,
Independent Auditors.

<PAGE>

FINANCIAL STATEMENTS

1. Statement of Condition of the Trust as shown in the current Prospectus for
this series.

2. Financial Statements of the Depositor.

PaineWebber Incorporated-Financial Statements incorporated by
reference to Form 10-K and Form 10-Q(File No. 1-7367),
respectively.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the registrant, The PaineWebber Equity Trust, ABCs Trust Series 2, has duly
caused this Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State
of New York on the 23rd day of February, 1999.

ALTERNATIVE FORM OF SIGNATURES FOR FILINGS UNDER RULE 487

The registrant, The PaineWebber Equity Trust, ABCs Trust,
Series 2 hereby identifies the ABCs Trust, Series 1 and Growth Stock Series 15
and 16 and The PaineWebber Pathfinders Trust, Treasury & Growth Stock, Series
24 for purposes of the representations required by Rule 487 and represents the
following:

1) That the portfolio securities deposited in the series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series; 2) That, except to the extent necessary to identify
the specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to the
securities of which this registration statement is being filed, this
registration statement does not contain disclosures that differ in any
material respect from those contained in the registration statement for
such previous series as to which the effective date was determined by
the Commission or the staff; and 3) That it has complied with rule 460
under the Securities Act of 1933.

<PAGE>

SIGNATURE

Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and State of New York, on the 23rd day of February, 1999.

THE PAINEWEBBER EQUITY TRUST,
ABCs TRUST 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 23rd of February, 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*

/s/ Robert E. Holley
--------------------
Robert E. Holley
Attorney-in-fact*

- --------------------
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with Post Effective
Amendment No.19 to the Registration Statement File No. 2-61279.

<PAGE>

EXHIBIT INDEX

1. Ex.-99.A1 - Standard Terms and Conditions of Trust dated as of July 1,
1998 between PaineWebber Incorporated, Depositor and Investors Bank &
Trust Company, as Trustee (incorporated herein by reference to Exhibit
No. 2 to Amendment No. 3 to File No. 333-55697).

2. Ex.-99.A2 - Copy of Trust Indenture and Agreement between PaineWebber
Incorporated, Depositor, and Investors Bank & Trust Company, as
Trustee, (incorporating by reference Standard Terms and Conditions of
Trust dated as of July 1, 1998 filed as Exhibit No. 2 to Amendment No.
3 to File No. 333-55697).

3. Ex.-99.A5 - Form of Certificate of Ownership (included in Standard
Terms and Conditions of Trust).

4. Ex.-99.A6 - Certificate of Incorporation of PaineWebber Incorporated,
as amended (incorporated by reference to Exhibit 8 in File No.
2-88344).

5. Ex.-99.A6 - By-Laws of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit A(6)(a) in
File No. 811-3722).

6. Ex.-99.2 - Opinion of Counsel as to legality of securities being
registered.

7. Ex.-99.C1 - Opinion of Counsel as to income tax status of securities
being registered.

8. Ex.-99.C2 - Consent of Ernst & Young LLP, Independent Auditors.

<PAGE>

Exhibit 99.A2

THE PAINEWEBBER EQUITY TRUST,
ABCs TRUST SERIES 2

TRUST INDENTURE AND AGREEMENT

Dated as of February 23, 1999

Incorporating

Standard Terms and Conditions of Trust
Dated as of July 1, 1998,

Between

PAINEWEBBER INCORPORATED,
as Depositor

and

INVESTORS BANK & TRUST COMPANY
as Trustee

<PAGE>

THIS TRUST INDENTURE AND AGREEMENT dated as of February 23,
1999 between PaineWebber Incorporated, as Depositor, and Investors Bank & Trust
Company, as Trustee, which sets forth certain of its provisions in full and
incorporates other of its provisions by reference to a document entitled
"Standard Terms and Conditions of Trust" dated as of July 1, 1998, among the
parties hereto (hereinafter called the "Standard Terms"), such provisions as
are set forth in full and such provisions as are incorporated by reference
constituting a single instrument.

W I T N E S S E T H T H A T:

WHEREAS, the parties hereto have heretofore or concurrently
herewith entered into the Standard Terms in order to facilitate creation of a
series of securities issued under a unit investment trust pursuant to the
provisions of the Investment Company Act of 1940, as amended, and the laws of
the State of New York, each of which series will be composed of redeemable
securities representing undivided interests in a trust fund composed of
publicly traded common or preferred stocks issued by domestic companies, and,
in certain cases, interest-bearing United States Treasury Obligations
("Treasury Obligations"); and

WHEREAS, the parties now desire to create the Second ABCs
Trust of the aforesaid series;

NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor and the Trustee agree as
follows:

Section 1. Incorporation of Standard Terms and Conditions of
Trust. Subject to the provisions of Section 2 of this Trust Indenture and
Agreement set forth below, all of the provisions of the Standard Terms are
incorporated by reference in their entirety and shall be deemed to be a part of
this instrument as fully to all intents and purposes as though said provisions
had been set forth in full in this instrument. Unless otherwise stated, section
references shall refer to sections in the Standard Terms.

Section 2. Specific Terms of this Series. The following terms
are hereby agreed to for this series of The PaineWebber Equity Trust, which
series shall be known and designated as "The PaineWebber Equity Trust, ABCs
Trust Series 2".

A. (1) The aggregate number of Units outstanding on the date
hereof for this Series is 100,000.

(2) The initial fractional undivided interest
represented by each Unit of this series shall be 1/100,000th of the Trust Fund.
A receipt evidencing the ownership of this total number of Units outstanding on
the date hereof is being delivered by the Trustee to the Depositor.

<PAGE>

(3) The Securities deposited into the Trust on the Initial
Date of Deposit are set forth on Schedule A hereto.

B. The term "Record Date" shall mean June 10, 1999 and
quarterly thereafter; provided, however, that with respect to a distribution
required by Section 2.02(b), the Record Date shall be the last business day of
the month during which the contract to purchase the Security fails.

"Record Date" shall also include such date or dates
determined by the Sponsor and the Trustee as necessary or desirable and in the
best interest of the Unitholders for federal or state tax purposes, or for
other purposes (hereinafter a "Special Record Date") which date may replace a
regularly scheduled Record Date if such regularly scheduled Record Date is
within 30 days of a Special Record Date.

C. The term "Distribution Date" shall mean the 15th day
following each Record Date, commencing June 25, 1999, and quarterly
thereafter with respect to Income Account Distributions (the "Income Account
Distribution Dates") and shall mean December 31, 1999 with respect to Capital
Account Distributions (the "Capital Account Distribution Dates"), except that
the Trustee may declare a Record Date of December 31 in any year for a
Distribution Date of January 25 of the following year, if required for
compliance with the rules and regulations governing regulated investment
companies. With respect to a distribution required by Section 2.02(b), the
Distribution Date shall be the fifteenth (15) day after the Record Date with
respect thereto.

In the event a Special Record Date is declared, "Distribution
Date" shall also include such Special Record Date as is determined by the
Sponsor and the Trustee to be the Distribution Date in respect of such Special
Record Date.

D. The Discretionary Liquidation Amount shall be forty per
centum (40%) of the aggregate market value of the Securities initially
deposited on the date hereof and subsequently deposited pursuant to any
Supplemental Indenture pursuant to Section 2.02.

E. The Mandatory Termination Date shall be March 31,
2000. Unless advised to the contrary by the Sponsor, the date on which the
Trustee shall begin to sell equity Securities in accordance with Section 9.01
shall be March 11, 2000.

F. The Trustee's annual compensation as referred to in
Section 8.05 shall be $.0170 per Unit computed monthly based on the largest
number of Units outstanding during the preceding month.

G. The Sponsor's annual compensation pursuant to Section 7.02
shall be computed as $.0035 per Unit, based on the largest number of Units
outstanding in a calendar year.

<PAGE>

H. The balance in the Capital Account below which no
distribution need be made, as referred to in Section 3.04, is $.05 per Unit
outstanding.

I. The Trust hereby elects to qualify as a "grantor trust"
under the Internal Revenue Code of 1986, as amended. The taxable year for this
Trust shall end on December 31.

J. The Trust hereby elects to make available a Reinvestment
Plan for this Series.

K. Units of this Trust shall not be held in certificated
form.

L. An annual report for this Trust shall be provided to
Unitholders for calendar year 1999.

M. For purposes of this Trust, the In-Kind Distribution
Amount shall be $500,000, and the Sponsor shall direct whether an In-Kind
Distribution shall be made.

N. The Units of this Trust shall be subject to a Deferred
Sales Charge in an amount, and that shall be paid in the manner, set forth in
the Prospectus.

O. The Exchange Notification Date shall be February 24,
2000.

P. The Special Redemption Date shall be February 25, 2000.

Q. The Special Liquidation Period shall commence on
February 25, 2000.

R. For purposes of this Trust, the Trustee shall act as
Distribution Agent.

S. The Sponsor's Initial Costs are estimated to be $.009 per
Unit.

T. The Trust may receive Supplemental Deposits and issue
Additional Units in accordance with Section 2.02(c).

U. The Trustee address for notices under Section 10.06 is:

Hancock Towers
200 Clarendon Street
Boston, MA 02116

<PAGE>

IN WITNESS WHEREOF, PaineWebber Incorporated has caused this
Trust Indenture and Agreement to be executed by one of its Senior Vice
Presidents and its corporate seal to be hereto affixed and attested by one of
its Assistant Secretaries, and Investors Bank & Trust Company has caused this
Trust Indenture to be executed by one of its Authorized Signatories and its
corporate seals to be hereto affixed and attested by one of its Authorized
Signatories, all as of the date first above written.

PAINEWEBBER INCORPORATED
as Depositor and Sponsor

SEAL By ___________________________
Senior Vice President

Attest:

- --------------------------
Secretary

<PAGE>

STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )

On this 23rd day of February, 1999 before me personally
appeared Robert E. Holley, to me known, who being by me duly sworn, said that
he is a Senior Vice President of PaineWebber Incorporated, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.

------------------------------
Notary Public

<PAGE>

SCHEDULE A TO TRUST INDENTURE

THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, FEBRUARY 23, 1999

COMMON STOCKS (1)

<PAGE>

THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 2
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, FEBRUARY 23, 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>
Oil/Gas (11.17%)
Anadarko Petroleum Corporation .............. 980 $ 27,378.75
Sunoco, Inc. ................................ 880 27,940.00
The Coastal Corporation ..................... 870 27,405.00
Unocal Corporation .......................... 980 27,868.75
Pharmaceutical (2.83%)
Pfizer Inc. ................................. 210 27,969.38
Radio (2.75%)
Clear Channel Communications, Inc.* ......... 470 27,260.00
Railroad Transportation (2.77%)
Canadian National Railway Company ........... 550 27,465.63
Retail--Apparel/Shoe (5.56%)
Nordstrom, Inc. ............................. 630 27,641.25
The Men's Wearhouse, Inc.* .................. 950 27,371.88
Retail--Office Supplies (2.76%)
Staples, Inc.* .............................. 950 27,312.50
Telecommunications (11.14%)
Lucent Technologies Inc. .................... 260 27,706.25
MCI WorldCom, Inc.* ......................... 320 27,200.00
Micron Electronics, Inc.* ................... 1,760 27,500.00
NEXTLINK Communications, Inc.* .............. 650 27,706.25
------------
TOTAL INVESTMENTS .......................... $ 990,009.00
============
</TABLE>

<PAGE>

Exhibit 99.2

PaineWebber Inc.
1200 Harbor Boulevard
Weehawken, New Jersey 07087 February 23, 1999

Investors Bank & Trust Company
Hancock Towers
200 Clarendon Street
Boston, Massachusetts 02116

Re: PaineWebber Equity Trust,
ABCs Trust Series 2

Ladies and Gentlemen:

We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Sponsor") of PaineWebber Equity Trust, ABCs Trust
Series 2 (hereinafter referred to as the "Trust") in connection with the
issuance by the Trust of an initial 100,000 units of fractional undivided
interest in the Trust (hereinafter referred to as the "Units").

In this regard, we have examined executed originals or copies
of the following:

(a) The Restated Certificate of Incorporation, as
amended, and the By-Laws of the Sponsor, as amended,
certified by the Secretary of the Sponsor on the date hereof;

<PAGE>

(b) Resolutions of the Board of Directors of the
Sponsor adopted on December 3, 1971 relating to the Trust and
the sale of the Units, certified by the Secretary of the
Sponsor on the date hereof;

(c) Resolutions of the Executive Committee of the
Sponsor adopted on September 24, 1984, certified by the
Secretary of the Sponsor on the date hereof;

(d) Powers of Attorney as set forth in the
certificate of the Secretary of the Sponsor dated the date
hereof;

(e) The Registration Statement on Form S-6 (File No.
333-64461) filed with the Securities and Exchange Commission
(the "Commission") in accordance with the Securities Act of
1933, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively, the "1933
Act") and amendments thereto including Amendment No. 2
("Amendment No. 2") proposed to be filed on February 29, 1999
(the "Registration Statement");

(f) The Notification of Registration of the Trust
filed with the Commission under the Investment Company Act of
1940, as amended (collectively, the "1940 Act") on Form N-8A,
as amended, (the "1940 Act Notification");

(g) The registration of the Trust filed with the
Commission under the 1940 Act on Form N-8B-2 (File No.
811-3722), as amended (the "1940 Act Registration);

(h) The prospectus included in Amendment No. 2 (the
"Prospectus");

(i) The Standard Terms and Conditions of the Trust
dated as of July 1, 1998, between the Sponsor and Investors
Bank & Trust Company, (the "Trustee") (the "Standard Terms");

(j) The Trust Indenture dated as of February 23,
1999 between the Sponsor and the Trustee (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");

(k) The Closing Memorandum dated February 23, 1999,
between the Sponsor and the Trustee (the "Closing
Memorandum");

(l) Officers Certificates required by the Closing
Memorandum;

(m) The form of certificate of ownership for units
(the "Certificate") to be issued under the Indenture and
Agreement; and

<PAGE>

(n) Such other pertinent records and documents as we
have deemed necessary.

With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the genuineness
of all signatures; (b) the conformity to the originals of all documents
submitted to us as copies; (c) the truth, accuracy, and completeness of the
information, representations, and warranties contained in the records,
documents, instruments and certificates we have reviewed; (d) except as
specifically covered in the opinions set forth below, the due authorization,
execution, and delivery on behalf of the respective parties thereto of
documents referred to herein and the legal, valid, and binding effect thereof
on such parties; and (e) the absence of any evidence extrinsic to the
provisions of the written agreement(s) between the parties that the parties
intended a meaning contrary to that expressed by those provisions. However, we
have not examined the securities deposited pursuant to the Indenture and
Agreement (the "Securities") nor the contracts for the Securities.

We express no opinion as to matters of law in jurisdictions
other than the laws of the State of New York (except "Blue Sky" laws) and the
federal laws of the United States, except to the extent necessary to render the
opinion as to the Sponsor and the Indenture and Agreement in paragraphs (i) and
(iii) below with respect to Delaware law. As you know we are not licensed to
practice law in the State of Delaware, and our opinion in paragraph (i) and
(iii) as to Delaware law is based solely on review of the official statutes of
the State of Delaware.

Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:

(i) The Sponsor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware with
full corporate power to conduct its business as described in the Prospectus;

(ii) The Sponsor is duly qualified as a foreign corporation
and is in good standing as such within the State of New York;

(iii) The Indenture and Agreement has been duly authorized,
executed and delivered by the Sponsor and, assuming the due authorization,
execution and delivery by the Trustee, is a valid and binding agreement of the
Sponsor, enforceable against the Sponsor in accordance with its terms;

(iv) The Trust has been duly formed and is validly existing
as an investment trust under the laws of the State of New York and has been
duly registered under the Investment Company Act of 1940;

(v) The terms and provisions of the Units conform in all
material respects to the description thereof contained in the Prospectus;

<PAGE>

(vi) The consummation of the transactions contemplated under
the Indenture and Agreement and the fulfillment of the terms thereof will not
be in violation of the Sponsor's Restated Certificate of Incorporation, as
amended, or By-Laws, as amended and will not conflict with any applicable laws
or regulations applicable to the Sponsor in effect on the date hereof;

(vii) The Certificates to be issued by the Trust, when duly
executed by the Sponsor and the Trustee in accordance with the Indenture and
Agreement, upon delivery against payment therefor as described in the
Registration Statement and Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance with their
terms, will be entitled to the benefits of the Indenture and Agreement and will
be fully paid and non-assessable; and

(viii) While the Registration Statement has not yet become
effective we have no reason to believe that such Registration Statement will
not become effective on the date and at the time requested therein pursuant to
Rule 487 promulgated under the 1933 Act.

In addition, we have participated in conferences with
representatives of the Sponsor, the Trustee, the Trust's accountants and others
concerning the Registration Statement and the Prospectus and have considered
the matters required to be stated therein and the statements contained therein,
although we have not independently verified the accuracy, completeness or
fairness of such statements. Based upon and subject to the foregoing, nothing
has come to our attention to cause us to believe that the Registration
Statement, as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or that the Prospectus, as of the date
hereof, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that we have not been requested to and do
not make any comment in this paragraph with respect to the financial
statements, schedules and other financial and statistical information contained
in the Registration Statement or the Prospectus).

Our opinion that any document is valid, binding, or
enforceable in accordance with its terms is qualified as to:

(a) limitations imposed by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights generally;

(b) rights to indemnification and contribution which may be
limited by applicable law or equitable principles; and

<PAGE>

(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name wherever it appears in
the Registration Statement and the Prospectus.

Very truly yours,

CARTER, LEDYARD & MILBURN

KHM:def

<PAGE>

Exhibit 99.C1

PaineWebber Incorporated
1200 Harbor Boulevard February 23, 1999
Weehawken, New Jersey 07087

Investors Bank & Trust Company
Hancock Towers
200 Clarendon Street
Boston, Massachusetts 02116

Ladies & Gentlemen:

As counsel for PaineWebber Incorporated (the "Depositor"), we
have examined an executed copy of the Trust Indenture and Agreement dated as of
February 23, 1999 (the "Indenture") and Standard Terms and Conditions of Trust,
dated as of July 1, 1998 (the "Agreement"), both between the Depositor, and
Investors Bank & Trust Company, as Trustee. The Indenture established a trust
called PaineWebber Equity Trust, ABCs Trust Series 2 (the "Trust") into which
the Depositor deposited certain stocks (the "Securities"), and moneys to be
held by the Trustee upon the terms and conditions set forth in the Indenture
and Agreement. Under the Indenture, units were issued on the Initial Date of
Deposit representing 100,000 units of fractional undivided interest in the
Trust (the "Units").

Based upon the foregoing and upon an examination of such
other documents and an investigation of such other pertinent records and
documents and matters of law as we have deemed necessary, we are of the opinion
that, under existing statutes and decisions:

<PAGE>

1. The Trust is not an association taxable as a corporation
for Federal income tax purposes. Under the Internal Revenue Code of 1986, as
amended (the "Code"), each Unitholder will be treated as the owner of a pro
rata portion of the Trust, and income of the Trust will be treated as income of
the Unitholder.

2. Each Unitholder will have a taxable event when the Trust
disposes of a Security (whether by sale, exchange or payment at maturity) or
when the Unitholder redeems or sells its Unit or redeems its Unit for cash. For
purposes of determining gain or loss, the total tax cost of each Unit to a
Unitholder is allocated among each of the Securities, in accordance with the
proportion of the Trust comprised by each Security, to determine the
Unitholder's per Unit tax cost for each Security.

3. The Trust is not an association taxable as a corporation
for New York State income tax purposes. Under New York State Law, each
Unitholder will be treated as the owner of a pro rata portion of the Trust, and
the income of the Trust will be treated as income of the Unitholders.

We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement (File No. 333-64461) relating to the Units
referred to above and to the use of our name and to the reference to our firm
in said Registration Statement and in the related Prospectus.

Very truly yours,

CARTER, LEDYARD & MILBURN

KHM:def

<PAGE>

Exhibit 99.C2

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in this Amendment to the Registration Statement of our
report dated February 23, 1999 relating to the Statement of Net Assets of The
PaineWebber Equity Trust, ABCs Trust Series 2, including the Schedule of
Investments, included herein, and to the reference made to us under the caption
"Independent Auditors" in the Prospectus.

ERNST & YOUNG LLP

February 23, 1999
New York, New York