<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 4
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal
executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Boulevard
Weehawken, N.J. 07087
copy to:
CARTER LEDYARD & MILBURN
Attention: Kathleen H. Moriarty, Esq.
2 Wall Street,
New York, NY 10005
E. Title and amount of securities being registered:
An indefinite number of Units pursuant to Rule 24f-2
under the Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to
the public of the securities being registered:
Indefinite
G. Amount of filing fee, computed at one-thirty-eighth
of 1 percent of the proposed maximum aggregate
offering price to the public:
None Required
Pursuant to Rule 24f-2
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary
to delay its effective date until the registrant
shall file a further amendment which specifically
states that this Registration Statement shall
thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
ABCs TRUST, SERIES 4
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction 1
as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Trust ) Front Cover
(b) Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) Nature of Trust
6. Execution and termination of ) Nature of Trust
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding ) Summary of Portfolio
Trust's Securities and Rights ) Rights of Certificate-
of Holders ) holders
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*Not applicable, answer negative or not required.
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(a) Type of Securities ) Creation of Trust
(Registered or Bearer) )
(b) Type of Securities ) Creation of Trust
(Cumulative or Distributive) )
(c) Rights of Holders as to ) Rights of Certificate-
Withdrawal or Redemption ) holders
) Redemption of Units by
) Trustee
) The Municipal Bond Trust
) Reinvestment Program
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units, Exchange Option
(e) Rights of Trust issues ) *
periodic payment plan )
certificates )
(f) Voting rights as to Secu- ) Rights of Certificate-
rities, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
(h) Consent of Security Holders )
required to change )
(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
11. Type of securities comprising ) *
periodic payment certificates )
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*Not applicable, answer negative or not required.
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12. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units Expenses of the
) Trust
(b) Certain information regard- ) *
ing periodic payment )
certificates )
(c) Certain percentages ) *
(d) Certain other fees, etc. ) Expenses of the Trust
payable by holders )
(e) Certain profits receivable ) Public Offering Price of
by depositor, principal ) Units
underwriters, trustee or ) Public offering of Units
affiliated persons )
(f) Ratio of annual charges ) *
to income )
13. Issuance of trust's securities ) Nature of the Trust
) Public Offering of Units
14. Receipt and handling of ) *
payments from purchasers )
15. Acquisition and disposition of ) Acquisition of Securities
underlying securities ) for the Trust Supervision
) of Trust Investments
16. Withdrawal or redemption ) Redemption of Units by
) Trustee
17. (a) Receipt and disposition of ) Distributions to Certifi-
income ) cateholders
(b) Reinvestment of )
distributions ) *
(c) Reserves or special fund ) Distributions to Certifi-
) cateholders
(d) Schedule of distribution ) *
18. Records, accounts and report ) Statements to Certificate-
) holders Administration of
) the Trust
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*Not applicable, answer negative or not required.
<PAGE>
19. Certain miscellaneous ) Administration of the
provisions of trust agreement ) Trust
20. Loans to security holders ) *
21. Limitations on liability ) Limitation of Liabilities
22. Bonding arrangements ) Included in Form N-8B-2
23. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
24. Organization of Depositor ) Sponsor
25. Fees received by Depositor ) Public Offering Price of
) Units Expenses of the
) Trust
26. Business of Depositor ) Sponsor
27. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
28. Voting securities of Depositor ) *
29. Persons controlling Depositor ) Sponsor
30. Payments by Depositor for ) *
certain other services trust )
31. Payments by Depositor for ) *
certain other services )
rendered to trust )
32. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
33. Remuneration of other persons ) *
for certain services rendered )
to trust )
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*Not applicable, answer negative or not required.
<PAGE>
IV. Distribution and Redemption of Securities
34. Distribution of trust's ) Public Offering of Units
securities by states )
35. Suspension of sales of trust's ) *
securities )
36. Revocation of authority to ) *
distribute )
37. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements )
(c) Selling agreements )
38. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
39. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
40. (a) Business of principal ) Sponsor
underwriter )
(b) Branch officers of )
principal underwriter )
(c) Salesman of principal ) *
underwriter )
41. Ownership of trust's securities ) *
by certain persons )
42. Certain brokerage commissions ) *
received by principal )
underwriter )
43. (a) Method of valuation ) Public Offering Price
) Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Public Offering
price to certain persons ) Units
44. Suspension of redemption rights ) *
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*Not applicable, answer negative or not required.
<PAGE>
45. (a) Redemption valuation ) Redemption of Units by
) Trustee
(b) Schedule as to redemption ) *
price )
V. Information concerning the Trustee or Custodian
46. Maintenance of position in ) Secondary Market for Units
underlying securities ) Redemption of Units by
) Trustee
) Evaluation of the Trust
47. Organization and regulation of ) Administration of the
Trustee ) Trust Trustee
48. Fees and expenses of Trustee ) Expenses of the Trust
49. Trustee's lien ) Expenses of the Trust
VI. Information concerning Insurance of Holders of Securities
50. (a) Name and address of ) *
Insurance Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
(g) Method of determining ) *
premiums )
(h) Amount of aggregate ) *
premiums paid )
(i) Who receives any part of ) *
premiums )
(j) Other material provisions ) *
of the Trust relating to )
insurance )
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*Not applicable, answer negative or not required.
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VII. Policy of Registrant
51. (a) Method of selecting and ) Acquisition of Securities
eliminating securities ) for the Trust
from the Trust )
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) Supervision of Trust
substitution and elimina- ) Investment
tion of securities )
(d) Description of any funda- ) Acquisition of Securities
mental policy of the Trust ) for the Trust
) Supervision of Trust
) Investments
52. (a) Taxable status of the Trust ) Tax status of the Trust
(b) Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
VIII. Financial and Statistical Information
53. Information regarding the ) *
Trust's past ten fiscal years )
54. Certain information regarding ) *
periodic payment plan certifi- )
cates )
55. Certain information regarding ) *
periodic payment plan certifi- )
cates )
56. Certain information regarding ) *
periodic payment plan certifi- )
cates )
57. Certain information regarding ) *
periodic payment plan certifi- )
cates )
58. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
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*Not applicable, answer negative or not required.
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO THE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION, DATED FEBRUARY 2, 2000
PAINEWEBBER EQUITY TRUST
ABCs Trust Series 4
(A Unit Investment Trust)
- --------------------------------------------------------------------------------
o Portfolio of Common Stocks Chosen from PaineWebber's Analysts' Best
Calls ("ABCs") List
o Designed for Total Return
o Annual Capital Distributions
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
THIS PROSPECTUS CONSISTS OF TWO PARTS: PART A AND PART B.
PROSPECTUS PART A DATED , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ABCS TRUST SERIES 4 PROSPECTUS PART A PAGE
----
Brief Description of the Trust ................................... A-3
Summary of Risks ................................................. A-4
Fees and Expenses ................................................ A-6
Brief Description of the Trust's Investment Portfolio ............ A-7
Availability of Exchange Option .................................. A-8
Is This Trust Appropriate for You? ............................... A-8
Performance of Prior Series ...................................... A-8
Essential Information Regarding the Trust ........................ A-9
Report of Independent Auditors ................................... A-11
Statement of Net Assets .......................................... A-12
Schedule of Investments .......................................... A-13
ABCS TRUST SERIES 4 PROSPECTUS PART B
The Composition of the Trust Portfolio ........................... B-1
The PaineWebber Equity Research Department ....................... B-1
Summary of Certain Trust Features ................................ B-2
The Trust ........................................................ B-4
Risk Factors and Special Considerations .......................... B-5
Federal Income Taxes ............................................. B-9
Public Offering of Units ......................................... B-10
Public Offering Price ........................................... B-10
Sales Charge and Volume Discount ................................ B-11
Employee Discount ............................................... B-12
Distribution of Units ........................................... B-12
Secondary Market for Units ...................................... B-13
Sponsor's Profits ............................................... B-13
Redemption ....................................................... B-14
Valuation ........................................................ B-15
Comparison of Public Offering Price and Redemption Value ......... B-16
Expenses of the Trust ............................................ B-16
Rights of Unitholders ............................................ B-17
Distributions .................................................... B-17
Reinvestment Plan ................................................ B-18
Exchange Option .................................................. B-18
Administration of the Trust ...................................... B-20
Accounts ........................................................ B-20
Reports and Records ............................................. B-20
Portfolio Supervision ........................................... B-21
Amendment of the Indenture ....................................... B-21
Termination of the Trust ......................................... B-22
Sponsor .......................................................... B-22
Trustee .......................................................... B-23
Independent Auditors ............................................. B-23
Legal Opinions ................................................... B-23
</TABLE>
A-2
<PAGE>
PAINEWEBBER EQUITY TRUST, ABCS TRUST SERIES 4 - PROSPECTUS PART A
BRIEF DESCRIPTION OF THE TRUST
1. THE TRUST'S OBJECTIVES.
o The Trust seeks total return by investing in a fixed portfolio of stocks
chosen from the PaineWebber Equity Research Department's "Analysts' Best
Calls" lists, also called the "ABCs List."
o The Trust plans to hold until its termination a diversified portfolio of
stocks which PaineWebber selected on _____, 2000, the day before the first
day of the Trust.
o As of _____, 2000, the first day of the Trust, PaineWebber believes that
the Trust's portfolio of stocks have the potential for achieving total
return during the life of the Trust because the stocks have been chosen
from the ABCs List in the manner described below.
o The Trust is a unit investment trust which means that, unlike a mutual
fund, the Trust's portfolio is not managed and stocks are not sold because
of market changes.
2. THE PAINEWEBBER EQUITY RESEARCH DEPARTMENT.
o The PaineWebber Equity Research Department seeks to identify the best
investment opportunities by focusing on established and emerging trends in
economics, the stock market and individual industries and companies.
o The Equity Research Department analyzes opportunities in the stocks of
individual companies by closely examining the fundamentals of the company
and its industry. For example, the Research Department's analysts meet
with company management, review management's strategies, evaluate the
company's earnings potential, and examine the information gathered in the
context of sophisticated economic and financial models.
o Based on the information obtained from its research, the Equity Research
Department assigns one of four investment ratings to each stock that it
covers: "Buy", "Attractive", "Neutral" or "Unattractive".
3. HOW ARE STOCKS CHOSEN FOR THE ABCS LIST?
o The ABCs List is a list of the PaineWebber Equity Research Department's
top stock selections. The ABCs List typically contains approximately 40 to
50 stocks.
o To compile the list, most of the more than 50 analysts from the Equity
Research Department who cover over 50 different industries each choose a
stock from their respective industry that the analyst believes is most
likely to outperform the stock market as a whole during the following 12
months.
o The stocks chosen for the ABCs List must also be rated either "Buy" or
"Attractive" by PaineWebber's Equity Research Department. A "Buy" rating
is assigned to the stocks PaineWebber believes will achieve a total return
of at least 20% during that 12-month time period, assuming a flat market,
and an "Attractive" rating is assigned to those stocks PaineWebber
believes will achieve a total return of 10-20% within the same time
period. Of course, there is no assurance that the stocks assigned such
ratings will, in fact, achieve such projected total returns, nor that the
stocks will continue to be assigned such ratings during the 12-month time
period following the first day of the Trust.
A-3
<PAGE>
4. HOW DOES PAINEWEBBER CHOOSE THE STOCKS FOR THE TRUST FROM THE ABCS LIST?
The Trust contains ____ stocks chosen from the most current ABCs List. Not
all of the stocks included in the most current ABCs List are included in the
Trust. To be included in the Trust's portfolio, each stock had to meet each
of the following three (3) tests on ____, 2000
o First, the stock must appear on the most current ABCs List;
o Second, the stock must be issued by a company that has a market
capitalization of at least $3 billion; and
o Third, the stock must be recommended by a PaineWebber Equity Research
Department analyst who rated more than 50% of the securities that the
analyst follows as either "Buy" or "Attractive".
SUMMARY OF RISKS
YOU CAN LOSE MONEY BY INVESTING IN THE TRUST. This can happen for various
reasons. A further discussion of the risks summarized below can be found in Part
B of this Prospectus.
1. RISKS OF INVESTING IN THE TRUST
Certain risks are involved with an investment in a unit trust which holds common
stocks. For example:
THE TRUST IS NOT "MANAGED"
o The Trust, unlike a mutual fund, is not "managed" and stocks will not be
sold by the Trust to take advantage of market fluctuations.
o The Trust holds a fixed portfolio of stocks chosen from the most current
ABCs List on the first day of the Trust. Since the Trust is fixed, and not
managed like a mutual fund, the Trust will not buy and sell portfolio
stocks to match the most current ABCs List. Therefore, when new ABCs Lists
are published by PaineWebber on a periodic basis, they may contain stocks
different from those included in the most current ABCs List and from those
held by the Trust.
o The Trust may, in the future, continue to buy more of the stocks held by
the Trust when additional Units are offered to the public or for the
Reinvestment Plan, even though those stocks may no longer be on the then
current ABCs List at the time such purchases are made by the Trust.
THE TRUST MAY SELL PORTFOLIO STOCKS
o The Trust portfolio may not remain constant during the life of the Trust.
The Trustee may be required to sell stocks to pay Trust expenses, to meet
redemptions, to sell, exchange or tender stocks under certain
circumstances or to sell stocks in the event certain serious negative
events occur.
o The sale of stocks from the Trust in the period prior to termination and
upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time due to impending or
actual termination of the Trust. For this reason, among others, the amount
you receive upon termination may be less than the amount you paid.
o If many investors sell their Units, the Trust will have to sell stocks.
This could reduce the diversification of your investment and increase your
share of Trust expenses.
A-4
<PAGE>
THE PRICE AND VALUE OF UNITS WILL FLUCTUATE DURING THE TRUST'S TERM.
o The price of your Units depends upon the full range of economic and market
influences including the prices of equity securities, the condition of the
stock markets and other economic influences that affect the global or
United States economy.
o Assuming no changes occur in the prices of the stocks held by the Trust,
the price you receive for your Units will generally be less than the price
you paid because your purchase price included a sales charge.
o The stocks in the Trust's portfolio will generally trade on a domestic
stock exchange or in the over-the-counter market. PaineWebber cannot
assure you that a liquid trading market will exist. The value of the
Trust's portfolio, and of your investment, may be reduced if trading in
one or more stocks is limited or absent.
o Additional stocks may be purchased by the Trust when additional Units are
offered to the public or for the Reinvestment Plan. Costs, such as
brokerage fees, incurred in purchasing such additional stocks will be
borne by the Trust. Your Units will be worth less as a result of the
Trust's payment of these brokerage fees and other expenses.
2. RISKS OF INVESTING IN STOCKS
INVESTING ALWAYS INVOLVES RISKS. The risks described below are the most
significant risks associated with investing in the stocks held by the Trust.
o The stocks held by the Trust can be expected to fluctuate in value
depending on a wide variety of factors, such as economic and market
influences affecting corporate profitability, financial condition of
issuers, changes in worldwide or national economic conditions, the prices
of equity securities in general and the Trust's stocks in particular.
o The stocks held by the Trust may not perform as well as expected, and
other trusts with similar investment objectives may hold stocks that
outperform the Trust's stocks during the Trust's lifetime.
o Holders of common stocks such as those held by the Trust have rights that
are generally inferior to the holders of debt obligations or preferred
stocks.
o Common stocks are not obligations of the issuer of the stocks. Therefore,
they do not provide any guaranteed income or provide the degree of
protection of debt securities.
3. YEAR 2000 PROBLEM RISKS
o Many computer systems were designed in such a way that they may be unable
to distinguish between the year 2000 and the year 1900 and therefore may
not properly process and calculate date-related information and data
(commonly known as the "Year 2000 Problem"). As with all investment and
financial entities, the Year 2000 Problem may have an adverse impact upon
the handling of securities trades, pricing and account services and other
activities conducted by or for the Trust. The Sponsor and the Trustee have
taken steps to address the Year 2000 Problem with respect to the computer
systems they use and to obtain reasonable assurances that similar steps
have been taken by the Trust's other service providers. Operations ran
smoothly from the last week in December through the first few weeks of
January, but the Year 2000 Problem may yet have an adverse impact on
financial market participants and other entities, including the companies
whose stocks are contained in the Trust's Portfolio.
A-5
<PAGE>
FEES AND EXPENSES
This table shows the fees and expenses a Unitholder may pay, either
directly or indirectly, when investing in Units of the Trust.
SALES CHARGES(1)
Maximum 1% Initial Sales Charge(2)
Total Deferred Sales Charges of $20.00 per 100 units(3)
ESTIMATED ANNUAL OPERATING EXPENSES OF THE TRUST
<TABLE>
<CAPTION>
AMOUNT
AS A % OF AMOUNT PER
NET ASSETS $1,000 INVESTED
(AS OF THE (AS OF THE
FIRST DAY OF FIRST DAY OF
THE TRUST) THE TRUST)
-------------- ----------------
<S> <C> <C>
Trustee's Fee % $
Portfolio, Bookkeeping and Administrative Expenses % $
Other Operating Expenses % $
-------- --------
Total % $
ESTIMATED INITIAL ORGANIZATION COSTS OF THE TRUST(4) % $
-------- --------
</TABLE>
- ----------
(1) Unitholders pay a combination of Initial and Deferred Sales Charges.
(2) The Initial Sales Charge of 1% of the Public Offering Price is reduced for
purchasers of Units worth $50,000 or more. Also, certain classes of
investors are entitled to reduced sales charges. For futher details, see
"Public Offering of Units -- Sales Charge and Volume Discount" and "--
Employee Discount" in Part B of this Prospectus.
(3) The Deferred Sales Charge of $2.00 per 100 Units will be deducted from
the Trust's net asset value from the 3rd through 12th months of the 13
month life of the Trust, aggregating $20.00 per 100 Units during such
period. If Units are redeemed prior to , the amount of any
remaining Deferred Sales Charge installments will be deducted from the
redemption proceeds. See "Public Offering Price -- Sales Charge and
Volume Discount" and "Administration of the Trust" in Part B of this
Prospectus for further details.
(4) Applicable only to purchasers of Units during the initial offering period
(approximately 6 weeks).
EXAMPLE
This example may help you compare the cost of investing in the Trust to the
cost of investing in other funds.
The example below assumes that you invest $10,000 in the Trust for the
periods indicated and then either redeem or do not redeem your Units at the end
of those periods. The example also assumes a 5% return on your investment each
year and that the Trust's annual operating expenses stay the same.
A-6
<PAGE>
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- --------- --------- ---------
$ $ $ $
While the Trust has a term of approximately 13 months, you may be able to
invest in future ABCs Trusts with reduced sales charges. These future sales
charges are included in the amounts provided above.
See "Expenses of the Trust" in Part B of this Prospectus for additional
information regarding expenses.
BRIEF DESCRIPTION OF THE TRUST'S INVESTMENT PORTFOLIO.
o The common stocks in the Trust's Portfolio have been issued by companies who
receive income and derive revenues from multiple industry sources, but whose
primary industry is listed in the "Schedule of Investments" in this
Prospectus Part A.
APPROXIMATE PERCENT OF AGGREGATE
PRIMARY INDUSTRY SOURCE MARKET VALUE OF THE TRUST
A-7
<PAGE>
AVAILABILITY OF EXCHANGE OPTION
o When this Trust portfolio is about to terminate, you may elect the Exchange
Option and acquire units of another ABCs Trust Series if one is available.
o Unitholders electing the Exchange Option may exchange their Units of this
Trust for units of a future ABCs Trust Series, at no Initial Sales Charge.
Units acquired through the Exchange Option will, of course, be subject to the
Deferred Sales Charges aggregating $20.00 per 100 Units.
o If you notify the Sponsor by ____, 2001, your Units will be redeemed and your
proceeds from the sale of the Trust's securities will be reinvested in units
of a new ABCs Trust Series on ____, 2001.
o If you decide not to elect the Exchange Option, you will receive a cash
distribution after the portfolio terminates.
o For a discussion of the tax effects of electing the Exchange Option see
"Exchange Option" in this Prospectus Part B. Unitholders are encouraged to
consult with their own tax advisors as to the consequences to them of
electing the Exchange Option.
IS THIS TRUST APPROPRIATE FOR YOU?
Yes, if you are seeking total return over the life of the Trust by
investing in common stocks issued by companies which PaineWebber selected for
their growth and/or income potential. You can benefit from a professionally
selected portfolio whose risk is reduced by investing in stocks of several
different issuers from various industries.
No, if you want a managed investment that changes to take advantage of
market movements, if you are unable or unwilling to assume the risks involved
generally with equity investments or if you need current income.
PERFORMANCE OF PRIOR SERIES
The following table shows the actual annualized pre-tax returns to
investors who bought and held Units of ABCs Trust Series 1 and Series 2 during
the period shown below. These returns assume that investors received all payment
of dividends as if paid on the last day of the period (but did not reinvest such
dividends) and paid the maximum sales fees on their Units. The table also shows
the performance of the S&P 500 Index during the same time period, without costs,
such as brokerage fees and sales charges, and also assumes payment (but no
reinvestment) of dividends as if paid on the last day of the period. Of course,
past performance is no guarantee of future performance, and the securities held
in these ABCs Trust Series may not be the same securities held in any other ABCs
Trust Series. This table does not show the performance of the ABCs Trust Series
3 because of the limited time since its inception (August 24, 1999).
<TABLE>
<CAPTION>
TRUST S&P 500 INDEX
TRUST ANNUALIZED S&P 500 INDEX TOTAL ANNUALIZED
ISSUE PERFORMANCE PERIOD TOTAL RETURN RETURN TOTAL RETURN RETURN
----- ------------------ ------------ ------ ------------ ------
<S> <C> <C> <C> <C> <C>
ABCs Series 1 7/29/98 through 1/28/00 27.62% 17.64% 23.10% 14.85%
ABCs Series 2 2/23/99 through 1/28/00 0.49% N/A 8.22% N/A
</TABLE>
A-8
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF , 2000(1)
SPONSOR: PaineWebber Incorporated
TRUSTEE: Investors Bank & Trust Company
INITIAL DATE OF DEPOSIT: , 2000
<TABLE>
<S> <C>
TOTAL VALUE OF SECURITIES HELD BY THE TRUST: ............................. $
TOTAL NUMBER OF UNITS(2) ................................................. 100,000
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED BY EACH UNIT: ..... 1/100,000th
CALCULATION OF PUBLIC OFFERING PRICE PER UNIT(2),(3)
Public Offering Price per Unit .......................................... $ 10.00
Less Reimbursement to Sponsor for Initial Organizational Costs(6)........ $
Less Initial Sales Charge(4)* of 1% of Offering Price
(1.00% of net amount invested per 100 Units) ........................... $
Net Asset Value per Unit ................................................ $
Net Asset Value for 100,000 Units ....................................... $
Divided by 100,000 Units(2) ............................................. $
REDEMPTION VALUE**: ......................................................... $
EVALUATION TIME: ............................................................ Closing time of the regular
trading session on the New
York Stock Exchange, Inc.
(ordinarily 4:00 P.M. New
York time).
INCOME ACCOUNT DISTRIBUTION DATES5: ......................................... ___, 2000 and
quarterly thereafter and on
or after the Mandatory
Termination Date.
CAPITAL ACCOUNT DISTRIBUTION DATES5: ........................................ ___, 2000 and on or
after 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: ............................................................... ___, 2000 and
quarterly thereafter.
MANDATORY TERMINATION DATE: ................................................. ___, 2001
DISCRETIONARY LIQUIDATION AMOUNT: ........................................... 40% of the value of stocks
upon completion of the
deposit of the stocks.
ESTIMATED INITIAL ORGANIZATIONAL COSTS OF THE TRUST(6): ..................... $ per Unit.
Continued on page A-10
</TABLE>
A-9
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
<TABLE>
<S> <C>
ESTIMATED ANNUAL OPERATING EXPENSES OF THE TRUST7 ....................... $ per Unit.
Trustee's Fee .......................................................... $ per Unit.
Portfolio Supervision, Bookkeeping and Administrative Expenses ......... $ per Unit.
Other Operating Expenses ............................................... $ per Unit.
EXCHANGE NOTIFICATION DATE .............................................. ___, 2001
SPECIAL REDEMPTION DATE ................................................. ___, 2001
</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
stocks in the Portfolio on such date. Subsequently, 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 any purchase orders received plus the applicable sales
charges and will vary on any date after ___, 2000 from the Public Offering
Price per Unit shown above. Following the Initial Date of Deposit, costs
incurred in purchasing additional stocks will be at the expense of the
Trust. Any investor purchasing Units after the Initial Date of Deposit will
also pay a proportionate share of any accumulated dividends in the Income
Account. (See "Summary of Certain Trust Features--Additional Deposits,"
"Risk Factors and Special Considerations" and "Valuation" in Part B of this
Prospectus).
(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" in
Part B of this Prospectus.
(5) See "Distributions" in Part B of this Prospectus.
(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" in Part B of this Prospectus
(collectively, the "Initial Organizational Costs"). These costs have been
estimated at $ ___ per Unit based upon the expected number of Units to be
created during the initial offering period. Certain stocks 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" in Part B of this Prospectus. Estimated
dividends from the stocks purchased, 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" in Part B of this Prospectus.)
* The sales charge will not be assessed on 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
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" in Part B of this
Prospectus).
A-10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND TRUSTEE
THE PAINEWEBBER EQUITY TRUST, ABCs TRUST SERIES 4
We have audited the accompanying Statement of Net Assets of The
PaineWebber Equity Trust, ABCs Trust Series 4, including the Schedule of
Investments, as of ___, 2000. This financial statement is the
responsibility of the Trustee. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with 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
___, 2000. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of The
PaineWebber Equity Trust, ABCs Trust Series 4 at ____, 2000, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
, 2000
A-11
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
ABCS TRUST SERIES 4
STATEMENT OF NET ASSETS
AS OF INITIAL DATE OF DEPOSIT, ____, 2000
NET ASSETS
----------
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ................................. $
Reimbursement to Sponsor for Initial Organizational Costs (b) .....
Total ......................................................... $
=========
Units outstanding (c) ............................................. 100,000
ANALYSIS OF NET ASSETS
----------------------
Cost to investors (d) ............................................ $1,000,000
Less: Gross underwriting commissions (e) .........................
Reimbursement to Sponsor for Initial Organizational Costs
Net Assets .................................................... $
==========
</TABLE>
- ----------
(a) The aggregate cost to the Trust of the securities listed under
"Schedule of Investments" in this Prospectus Part A is determined by the Trustee
on the basis set forth under "Public Offering of Units--Public Offering Price"
in Part B of this Prospectus. See also the column headed "Cost of Securities to
Trust" under "Schedule of Investments" in this Prospectus Part A. Pursuant to
contracts to purchase securities, an irrevocable letter of credit drawn on ___,
in the amount of $ ___ has been deposited with the Trustee, Investors Bank &
Trust Company for the purchase of $ ___ aggregate value of Securities in the
initial deposit and for the purchase of Securities in subsequent deposits.
(b) Investors purchasing Units during the initial offering period will
reimburse the Sponsor for all or a portion of the costs incurred by the Sponsor
in connection with organizing the Trust and offering the Units for sale as
described more fully in "Public Offering Price" in Part B of this Prospectus
(collectively, the "Initial Organizational Costs"). These costs have been
estimated at $ ___ per Unit based upon the expected number of Units to be
created during the initial offering period. Certain stocks 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 stocks 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" in Part B of this
Prospectus.
(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. Amounts will be credited to an
account maintained by the Trustee from which the Deferred Sales Charge
obligation of the Unitholders to the Sponsor will be met. If Units are sold,
redeemed or exchanged prior to ___, the remaining portion of the Deferred Sales
Charge applicable to such redeemed Units will be deducted from the proceeds and
will be credited 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" in Part B of this Prospectus. Based on
the projected total assets of , the estimated maximum Deferred Sales
Charge would be .
A-12
<PAGE>
THE PAINEWEBBER EQUITY TRUST
ABCS TRUST SERIES 4
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, , 2000
COMMON STOCKS (1)
PRIMARY INDUSTRY SOURCE AND NUMBER OF COST OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)(3)
-------------- ------ --------------
A-13
<PAGE>
THE PAINEWEBBER EQUITY TRUST
ABCS TRUST SERIES 4
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, , 2000
COMMON STOCKS (1)
PRIMARY INDUSTRY SOURCE AND NUMBER OF COST OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)(3)
-------------- ------ --------------
--------------
TOTAL INVESTMENTS $
==============
- ----------
(1) All Stocks are represented entirely by contracts to purchase such Stocks.
(2) Valuation of the Securities by the Trustee was made as described in
"Valuation" in Part B of this Prospectus as of the close of business on the
business day prior to the Initial Date of Deposit.
(3) The loss [gain] to the Sponsor on the Initial Date of Deposit is $ ____.
* Non-income producing security.
A-14
<PAGE>
PAINEWEBBER EQUITY TRUST
ABCS TRUST SERIES 4
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES NOR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Prospectus Part B may not be distributed unless accompanied
by Prospectus Part A.
This Prospectus Part B contains a description of the important features of
the PaineWebber Equity Trust, ABCs Trust Series 4 and also includes a more
detailed discussion of the investment risks that a Unitholder might face while
holding Trust Units.
THIS PROSPECTUS CONSISTS OF TWO PARTS: PART A AND PART B.
PROSPECTUS PART B DATED , 2000.
<PAGE>
PAINEWEBBER EQUITY TRUST
ABCS TRUST SERIES 4
PROSPECTUS PART B
- --------------------------------------------------------------------------------
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. Most of the more than 50 PaineWebber senior
analysts who cover 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. The ABC is the stock the
analyst believes has the highest total return potential in its universe and on
which the analyst has 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 PaineWebber Equity Research Department
(the "Equity Research Department"). Historically, the ABCs list has comprised
approximately 40 to 50 stocks. The stocks included in the Trust (the "Stocks" or
the "Securities") 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, the issuer of each Stock had to have a minimum market
capitalization of $3 billion. Third, only Stocks chosen by PaineWebber research
analysts who rated more than 50% 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" in Part A of this Prospectus.
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" in Part A of
this Prospectus.
THE PAINEWEBBER EQUITY RESEARCH DEPARTMENT
The Equity 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 management teams 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. After visiting their companies, building detailed financial
models, evaluating near-and-longer term prospects for each company and its
competitors, establishing valuation frameworks for each stock, and factoring-in
the work of PaineWebber's strategists and economists, the analyst assigns an
investment rating to the stock.
PaineWebber analysts assign one of four investment ratings to each stock
under research coverage: "Buy", "Attractive", "Neutral" or "Unattractive". Each
rating assumes a 12-month time horizon and is
B-1
<PAGE>
based on a stock's total return potential (stock price appreciation plus
dividend) relative to the market. A "Buy" rating is assigned to those stocks
PaineWebber believes will achieve total return of at least 20% in a flat market.
A stock rated "Attractive" is one which PaineWebber believes will offer total
return of 10-20% in the coming 12-month period. The "Neutral" rating is assigned
to those stocks which are selling within 10% of the PaineWebber analysts'
estimated price targets one year out and whose stock prices are not expected to
change materially in price during the next 12 months. The "Unattractive" rating
is assigned to those stocks which PaineWebber believes has at least ten
percentage points more downside risk than the current dividend yield, assuming a
flat market environment.
The Research Department has been long recognized as one of the leaders on
Wall Street. PaineWebber has been named among the top 10 investment firms in
Institutional Investor's "All America Research Team," in each of its 28 annual
surveys. Institutional Investor bases this ranking on the opinions of directors
of research, chief investment officers, portfolio managers and analysts of major
money management institutions. Additionally, The Wall Street Journal reported
that PaineWebber's "Performance Portfolio," which is submitted by the Research
Department to Zacks Investment Research, ranked second among the submitted lists
of 15 major firms for the five-year period ended September 30, 1999, achieving a
return of 220.2%. For the one-year performance period ended September 30, 1999,
PaineWebber's Performance Portfolio was ranked number 9 out of 15 firms,
achieving a return of 30.6%. 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. Additionally, PaineWebber's Performance Portfolio
is selected by PaineWebber Research Department management and the stocks
included in the Portfolio have no minimum market capitalization requirements. In
contrast, the stocks included in the ABCs Series Trust are chosen by individual
Equity Research Analysts and are subject to a minimum market capitalization
requirement discussed below. 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.
SUMMARY OF CERTAIN TRUST FEATURES
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" in this Prospectus Part B). 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" in this
Prospectus Part B.)
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
B-2
<PAGE>
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 A-9 of this Prospectus. 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 this Prospectus Part B). 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" in
this Prospectus Part B.
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" in this Prospectus Part B.) 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") in this Prospectus Part B. (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" in this Prospectus
Part B). 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" in this Prospectus Part B.)
Exchange Option. So long as the Sponsor continues to offer new series of
the ABCs Trust, Unitholders may exercise their exchange option on ___ (the
"Special Redemption Date"), and acquire units of the new series of the ABCs
Trust at a reduced sales charge described under "Exchange Option" in this
Prospectus Part B. The Sponsor reserves the right not to offer new series of the
ABCs Trust and there is no guarantee that a new series will be available on or
after the Special Redemption Date. (See "Exchange Option" in this Prospectus
Part B.)
Market for Units. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units. The public offering price in
the secondary market will be based upon the value of the Securities next
determined after receipt of a purchase order, plus the applicable sales charge.
(See "Public Offering of Units--Public Offering Price" and "Valuation" in this
Prospectus Part B.) 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" in this Prospectus Part B.)
B-3
<PAGE>
THE TRUST
The Trust is one of a series of similar but separate unit investment trusts
created under New York law by the Sponsor pursuant to a Trust Indenture and
Agreement* (the "Indenture") dated as of the Initial Date of Deposit, between
PaineWebber Incorporated, as Sponsor and Investors Bank & Trust Company, as
Trustee (the "Trustee"). The objective of the Trust is total return through an
investment in equity securities selected from PaineWebber's 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 this Prospectus Part B.
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" in this Prospectus Part B). Units may be continuously offered to
the public by means of this Prospectus (see "Public Offering of Units--Public
Offering Price" in this Prospectus Part B) 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" in this Prospectus Part B).
On the Initial Date of Deposit each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set forth under
"Essential Information Regarding the Trust" in Part A of this Prospectus.
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
- ----------
*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.
B-4
<PAGE>
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" in this Prospectus
Part B.)
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 "ADMINISTRATION OF THE TRUST--PORTFOLIO SUPERVISION" IN THIS
PROSPECTUS PART B). IN ADDITION, SECURITIES WILL NOT BE SOLD BY THE TRUST TO
TAKE ADVANTAGE OF MARKET FLUCTUATIONS OR CHANGES IN ANTICIPATED RATES OF
APPRECIATION.
Investors should note that PaineWebber, in its general securities business,
acts as agent or principal in connection with the purchases and sales of equity
securities, including the Securities in the Trust, and may act as a market maker
in certain of the Securities. PaineWebber also from time to time issues reports
and may make recommendations relating to equity securities, including the
Securities in the Trust, and has provided, and may continue to provide,
investment banking services to the issuers of the Securities.
Investors should note in particular that the Securities were selected by
the Sponsor as of the Initial Date of Deposit. The Trust may continue to
purchase Additional Securities when additional Units are offered to the public
or pursuant to the Reinvestment Plan, or may continue to hold Securities
originally selected through this process. This may be the case even though the
Securities may no longer be included in the current ABCs list or the evaluation
of the attractiveness of such Securities may have changed and, if the evaluation
were performed again at that time, the Securities would not be selected for the
Trust. In addition, the Sponsor may continue to sell Trust Units even if
PaineWebber changes a recommendation relating to one or more Securities in the
Trust.
RISK FACTORS AND SPECIAL CONSIDERATIONS
An investment in Units of the Trust should be made with an understanding of
the risks inherent in an investment in common stocks in general. The general
risks are associated with the rights to receive payments from the issuer which
are generally inferior to creditors of, or holders of debt obligations or
preferred stocks issued by, the issuer. Holders of common stocks have a right to
receive dividends only when and if, and in the amounts, declared by the issuer's
board of directors and to participate in amounts available for distribution by
the issuer only after all other claims against the issuer have been paid or
provided for. By contrast, holders of preferred stocks have the right to receive
dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis, but do not participate in other
amounts available for distribution by the issuing corporation. Dividends on
cumulative preferred stock must be paid before any dividends are paid on common
stock. Preferred stocks are also entitled to rights on liquidation which are
senior to those of common stocks. For these reasons, preferred stocks generally
entail less risk than common stocks.
The Trust is not appropriate for investors who require high current income
or seek conservation of capital.
Common stocks do not represent an obligation of the issuer. Therefore, they
do not offer any assurance of income or provide the degree of protection of debt
securities. The issuance of debt securities or even preferred stock by an issuer
will create prior claims for payment of principal, interest and dividends which
could adversely affect the ability and inclination of the issuer to declare or
pay dividends on its common stock or the rights of holders of common stock with
respect to assets of the issuer upon
B-5
<PAGE>
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" in Part A of this Prospectus.)
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 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.
B-6
<PAGE>
Investors should note that the Trust's objective may not be realized
because the Securities held in the Trust's portfolio may not perform as well as
expected, and other investment vehicles with similar investment objectives may
hold stocks that outperform the Trust's stocks during the Trust's lifetime.
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. During the initial public offering period
the Sponsor may also purchase large blocks of the Securities in connection with
the offering of other investment funds holding substantially the same portfolio
of Securities as the Trust. The Sponsor's acquisition of certain of the
Securities in open market purchases may have the unintended result of increasing
the market price for such Securities during the period that the Sponsor is
acquiring Securities for the Trust. 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 for deposit
into the Trust.
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
issuer. 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,
B-7
<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 the Special Redemption Date, the Trust will experience a
correspondingly significant redemption at such time thereby reducing the size of
the Trust. Such redemptions may increase the expense ratios for Unitholders who
hold their Units until the Mandatory Termination Date. See "Exchange Option" in
this Prospectus Part B.
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" in this Prospectus Part B.)
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 entities, the
Year 2000 Problem may have an adverse impact upon the handling of securities
trades, pricing and account services and other activities conducted by or for
the Trust. The Sponsor and the Trustee have taken steps to address the Year 2000
Problem with respect to the computer systems they use and to obtain reasonable
assurances that similar steps have been taken by the Trust's other service
providers. Operations ran smoothly from the last week in December through the
first few weeks of January, but the Year 2000 Problem may yet have an adverse
impact on financial market participants and other entities, including the
companies whose stocks are contained in the Trust's Portfolio.
The Sponsor may have acted as underwriter, manager, or co-manager of a
public offering of the Securities deposited into the Trust on the Initial Date
of Deposit, or as an adviser to one or more of the issuers of the Securities,
during the last three (3) years. The Sponsor or affiliates of the Sponsor may
serve as specialists in the Securities on one or more stock exchanges and may
have a long or short position in any of these Securities or in options on any of
them, and may be on the opposite sides of public orders executed on the floor of
an exchange where the Securities are listed. The Sponsor may trade for its own
account as an odd-lot dealer, market maker, block positioner and/or arbitrageur
in any of the Securities or options on them. The Sponsor, its affiliates,
directors, elected officers and employee benefits programs may have either a
long or short position in any of the Securities or in options on them.
The Sponsor does not know of any pending litigation as of the Initial Date
of Deposit that might reasonably be expected to have a material adverse effect
on the Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in the Portfolio. In addition, at any time after the
B-8
<PAGE>
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" in this Prospectus Part B).
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"
in this Prospectus Part B).
2. Each Unitholder will have a taxable event when the Trust disposes of
a Security (whether by sale, exchange, or other disposition) or when the
Unitholder sells its Units or redeems its Units for cash. The total tax
cost of each Unit to a Unitholder is allocated among each of the Securities
in accordance with the proportion of the Trust comprised by each Security
to determine the per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New York
State income tax purposes. Under New York State law, each Unitholder will
be treated as the owner of a pro rata portion of the Trust and the income
of the Trust will be treated as income of the Unitholders.
The following general discussion of the federal income tax treatment of an
investment in Units of the Trust is based on the Code and United States Treasury
Regulations (established under the Code) as in effect on the date of this
Prospectus. The federal income tax treatment applicable to a Unitholder may
depend upon the Unitholder's particular tax circumstances. The tax-treatment
applicable to non-U.S. investors is not addressed in this Prospectus. Future
legislative, judicial or administrative changes could modify the statements
below and could affect the tax consequences to Unitholders. Accordingly, each
Unitholder is advised to consult his or her own tax advisor concerning the
effect of an investment in Units.
General. Each Unitholder must report on its federal income tax return a pro
rata share of the entire income of the Trust, derived from dividends on Stocks
gains or losses upon dispositions of Securities by the Trust and a pro rata
share of the expenses of the Trust.
B-9
<PAGE>
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.
Unitholders will be taxed in the manner discussed above regardless of
whether distributions from the Trust are actually received by the Unitholder in
cash or are reinvested pursuant to the "Reinvestment Plan" described later in
this Prospectus Part B. Unitholders exercising the Exchange Option may also
experience certain adverse tax consequences as described in the "Exchange
Option" described later in this Prospectus Part B.
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" in this
Prospectus Part B.) 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 A-9
hereof) due to fluctuations in the value of the Stocks among other factors. In
addition, during the initial public offering period, a portion of the Public
Offering Price also consists of an amount sufficient to reimburse the Sponsor
for the payment of all or a portion of the Initial Organizational Costs in the
amount shown as a per Unit amount in "Essential Information Regarding the Trust"
in Part A of this Prospectus. The Initial Organizational Costs include the cost
of preparing the registration statement, trust documents and closing
B-10
<PAGE>
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" in this
Prospectus Part B 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 approximately 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 on the Initial Date of Deposit (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.
B-11
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM DOLLAR
INITIAL SALES CHARGE TOTAL SALES CHARGE 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" in this Prospectus Part B).
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 at a reduced sales charge.
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 0.80% of the
Total Sales Charge (3.00%) per Unit, subject to change from time to time. Volume
incentives can be earned as a marketing allowance by "Eligible Dealer Firms" who
reach cumulative firm sales or sales arrangement levels of a specified dollar
amount of the PaineWebber Equity Trust ABCs Trust Series 4 sold in the primary
market from ____, 2000 through ____, 2000 (the "Incentive Period"), as set forth
in the table below. Eligible Dealer Firms are dealers that are providing
marketing support for PaineWebber unit trusts in the form of distributing or
permitting the distribution of marketing materials and other product
information. Eligible Dealer Firms will not include firms that solely provide
clearing services to broker/dealer firms. For firms that meet the necessary
volume level, volume incentives may be given on all trades involving the ABCs
Trust Series 4, originated from client accounts only, during the Incentive
Period.
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT SOLD OVER
INCENTIVE PERIOD VOLUME INCENTIVE
- --------------------------------- ------------------------------------------------------------
<S> <C>
$1,000,000 to $2,999,999......... Additional 0.02% on sales between $1,000,000 and $2,999,999
$3,000,000 to $4,999,999......... Additional 0.04% on sales between $3,000,000 and $4,999,999
$5,000,000 or more .............. Additional 0.07% on sales above/over $5,000,000
</TABLE>
B-12
<PAGE>
Only sales through the Sponsor qualify for volume incentives and for
meeting minimum requirements. The Sponsor reserves the right to modify or change
the volume incentive schedule at any time and make the determination as to which
firms qualify for the marketing allowance and the amount paid. The difference
between the sales charge and the dealer concession will be retained by the
Sponsor. In the event that the dealer concession is 90% or more of the sales
charge per Unit, dealers taking advantage of such concession may be deemed to be
underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor intends to qualify the Units in all
states of the United States, the District of Columbia and the Commonwealth of
Puerto Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer to
purchase Units at the Trust Fund Evaluation per Unit next computed after receipt
by the Sponsor of an order from a Unitholder. The Sponsor may cease to maintain
such a market at any time, and from time to time, without notice. In the event
that a secondary market for the Units is not maintained by the Sponsor, a
Unitholder desiring to dispose of Units may tender such Units to the Trustee for
redemption at the price calculated in the manner set forth under "Redemption" in
this Prospectus Part B. 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 that 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" in this Prospectus Part B).
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" in this Prospectus Part
B. The cost of Stock to the Sponsor includes the amount paid by the Sponsor for
brokerage commissions.
Cash, if any, received from Unitholders prior to the settlement date for
the purchase of Units or prior to the payment for Securities upon their delivery
may be used in the Sponsor's business subject to the limitations of Rule 15c3-3
under the Securities Exchange Act of 1934 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.
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<PAGE>
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" in this Prospectus Part B.)
Unitholders who redeem prior to the accrual of the final Deferred Sales Charges
installment will have the amount of any installments remaining deducted from
their redemption proceeds or deducted in calculating an in-kind redemption,
although this deduction will be waived in the event of death or disability (as
defined in the Internal Revenue Code) of an investor.
A redemption request is deemed received on the business day (see
"Valuation" in this Prospectus Part B for a definition of business day) when
such request is received prior to the closing time of the regular trading
session on the New York Stock Exchange, Inc. (ordinarily 4:00 p.m. New York
time). If it is received after that time, it is deemed received on the next
business day. During the period in which the Sponsor maintains a secondary
market for Units, the Sponsor may repurchase any Unit presented for tender to
the Trustee for redemption no later than the close of business on the second
business day following such presentation and Unitholders will receive the
Redemption Value next determined after receipt by the Trustee of the redemption
request. Proceeds of a redemption will be paid to the Unitholder 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" in this Prospectus Part B.) 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" in
this Prospectus Part B. 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.
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<PAGE>
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Trust will be reduced. Sales will usually be required at a time
when Securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received upon redemption may be more or
less than the amount paid by the Unitholder depending on the value of the
Securities in the portfolio at the time of redemption. In addition, because of
the minimum amounts in which Securities are required to be sold, the proceeds of
sale may exceed the amount required at the time to redeem Units; these excess
proceeds will be distributed to Unitholders on the Distribution Dates.
To the extent that a significant number of Unitholders exercise the
Exchange Option on or after the Special Redemption Date, the Trust will
experience a correspondingly significant redemption at such time, thereby
reducing the size of the Trust. Such redemption may increase the expense ratios
for Unitholders who hold their Units until the Mandatory Termination Date. See
"Exchange Option" in this Prospectus Part B.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of the
Redemption Value, for more than seven calendar days following the day of tender
for any period during which the New York Stock Exchange, Inc. is closed other
than for weekend and holiday closings; or for any period during which the SEC
determined that trading on the New York Stock Exchange, Inc. is restricted or
for any period during which an emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably practicable; or for such other
period as the SEC may by order permit for the protection of Unitholders. The
Trustee is not liable to any person or in any way for any loss or damages which
may result from any such suspension or postponement, or any failure to suspend
or postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the Evaluation Time set forth under "Essential Information Regarding
the Trust" in Part A of this Prospectus (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
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<PAGE>
System maintained by the National Association of Securities Dealers Automated
Quotations System, such evaluation shall be based on the last reported sale
price on that day (unless the Trustee deems such price inappropriate as a basis
for evaluation) on the exchange which is the principal market thereof (deemed to
be the New York Stock Exchange in the case of the domestic Stocks if such Stocks
are listed thereon), (2) if there is no such appropriate sales price on such
exchange or system, at the mean between the closing bid and asked prices on such
exchange or system (unless the Trustee deems such price inappropriate as a basis
for evaluation), (3) if the Stocks are not so listed or, if so listed and the
principal market therefor is other than on such exchange or there are no such
appropriate closing bid and asked prices available, such evaluation shall be
made by the Trustee in good faith based on the closing sale price in the
over-the-counter market (unless the Trustee deems such price inappropriate as a
basis for evaluation) or (4) if there is no such appropriate closing price, then
(a) on the basis of current bid prices, (b) if bid prices are not available, on
the basis of current bid prices for comparable securities, (c) by the Trustee's
appraising the value of the Stock in good faith on the bid side of the market or
(d) by any combination thereof. The tender of a Stock pursuant to a tender offer
will not affect the method of valuing such Stock.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
The Stocks are valued on the same basis for the initial and secondary
markets and for purposes of redemptions. On the business day prior to the
Initial Date of Deposit, the Public Offering Price per Unit (which figure
includes the Initial Sales Charge) exceeded the Redemption Value. (See
"Essential Information" in Part A of this Prospectus). 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 $ 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 $ 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 $ per Unit, which
include, but are not limited to certain mailing, printing, and audit expenses.
These expenses, including 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
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<PAGE>
(see "Administration of the Trust--Accounts" in this Prospectus Part B): (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
$0.50 per Unit, unless the Trustee has been advised that such expenses are
permitted by the SEC to be deducted from the Trust. Unitholders covered by the
audit during the year may receive a copy of the audited financial statements
upon request.
The fees and expenses set forth above are payable out of the Trust and when
unpaid will be secured by a lien on the Trust. Based upon the last dividend paid
prior to the Initial Date of Deposit, dividends on the Stocks are expected to be
sufficient to pay the entire amount of estimated expenses of the Trust. To the
extent that dividends paid with respect to the Stocks are not sufficient to meet
the expenses of the Trust, the Trustee is authorized to sell Securities to meet
the expenses of the Trust. Securities will be selected in the same manner as is
set forth under "Redemption" in this Prospectus Part B.
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 Income Account 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" in Part A of this Prospectus. 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
B-17
<PAGE>
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" in this Prospectus Part B).
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" in this Prospectus Part B.)
REINVESTMENT PLAN
Income Account and Capital Account distributions on Units may be reinvested
by participating in the Trust's Reinvestment Plan (the "Reinvestment Plan"). To
participate in the Reinvestment Plan, a Unitholder must contact his broker,
dealer or financial institution to determine whether he may participate in the
Reinvestment Plan. Under the Reinvestment Plan, the Units acquired for current
Unitholders will be either Units already held in inventory by the Sponsor or new
Units created by the Sponsor's deposit of Additional Securities, contracts to
purchase Additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase Additional Securities. Deposits or purchases
of Additional Securities will be made so as to maintain the percentage
relationships of shares of Stocks, except as discussed under "The Trust" in this
Prospectus Part B. 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. Unitholders receiving Units
as a result of their participation in the Reinvestment Plan will be taxed with
respect to such Units in the manner described in "Federal Income Taxes" earlier
in this Prospectus Part B.
EXCHANGE OPTION
So long as the Sponsor continues to offer new series of the ABCs Trust,
Unitholders, in lieu of redeeming their Units or receiving liquidation proceeds
upon termination of this Trust series, may elect, by contacting the Sponsor no
later than 12 noon EST on ___ (the "Exchange Notification Date"), to exchange
their Units in this Trust series for units of the next series of the ABCs Trust
on the Special Redemption Date at no Initial Sales Charge. Units acquired by
means of the Exchange Option will, of course, be subject to the Deferred Sales
Charges aggregating $20.00 per 100 Units. No election to exchange may be made
prior to 40 days before the Exchange Notification Date and any exchange election
will be revocable at any time prior to 12 noon EST on the Exchange Notification
Date. It is expected that the terms of the new Trust series will be
substantially the same as those of this Trust series. The Sponsor reserves the
right not to offer new series of the ABCs Trust and there is no guarantee that a
new Trust series will be available on the Special Redemption Date.
B-18
<PAGE>
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.
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 series at their then-current net asset value.
Certain of the underlying Securities held in the portfolio of an existing
ABCs Trust Series may also be included in the portfolio of a future ABCs Trust
Series made available to Unitholders electing to exchange their Units on a
Special Redemption Date. For example, certain stocks in the portfolio of ABCs
Trust Series 2 also appear in the portfolio of ABCs Trust Series 4. In such
cases, a direct sale of these stocks from one ABCs Trust Series to a new ABCs
Trust Series is now permitted pursuant to an SEC exemptive order discussed
below. These direct sales will be effected at the stocks' closing sales prices
on the exchanges where they are principally traded, free of any brokerage
charges. The remaining securities in the existing ABCs Trust Series which will
not be held in the portfolio of the new ABCs Trust Series will be sold, in the
manner discussed below in the next paragraph, and the proceeds of such sale will
be used to buy the other securities required for deposit into the portfolio of
the new ABCs Trust Series.
The Sponsor intends to direct the sale of the 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 such 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.
Unitholders electing the Exchange Option may realize taxable capital gains
but will not be entitled to a deduction for certain capital losses realized.
Moreover, because of the exchange procedures described above, Unitholders should
be aware that they will not receive a cash distribution to pay any taxes owed.
Unitholders are encouraged to consult with their own tax advisors as to the
consequences to them of electing the Exchange Option.
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 EST 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.
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<PAGE>
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. In
addition, Section 17(a) of the Investment Company Act prohibits one trust series
from selling securities to another trust series when such trust series are under
the control of a common sponsor. With regard to the Exchange Option, Section
17(a) would prohibit the direct sale of securities from one ABCs Trust Series to
another on the books of the Trustee without an exemptive order. The Sponsor has
received an exemptive order from the SEC which, subject to certain exceptions,
permits the direct sale of securities from one ABCs Trust Series to another on
the books of the Trustee.
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 and
interest income, if any, 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" in this Prospectus Part B.
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 of the Trust" in this Prospectus
Part B.) 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 this Prospectus Part B.) In addition,
distributions of amounts necessary to pay (1) the Initial Organizational Costs
and (2) the Deferred Sales Charges will be made from the Income Account and, to
the extent funds are not sufficient therein, from the Capital Account, to
special accounts maintained by the Trustee for purposes of (1) reimbursing the
Sponsor and (2) satisfying Unitholders' Deferred Sales Charges obligations,
respectively. To the extent that funds are not available in the Capital Account
to meet certain charges or expenses, the Trustee may sell Securities. Upon
notification from the Sponsor that the initial offering period is terminated,
the Trustee, at the direction of the Sponsor, will cause the sale of Securities
in an amount equal to the Initial Organizational Costs as certified to it by the
Sponsor. Although the Sponsor may collect the Deferred Sales Charges monthly,
currently the Sponsor does not anticipate sales of Securities to pay such sales
charges until after the Special Redemption Date.
The Trustee may establish reserves (the "Reserve Account") within the Trust
for state and local taxes, if any, and any other governmental charges payable
out of the Trust.
Reports and Records. With any distribution from the Trust, Unitholders will
be furnished with a statement setting forth the amount being distributed from
each account.
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<PAGE>
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 calendar year 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;
(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" in this
Prospectus Part B.
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.
B-21
<PAGE>
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" in this
Prospectus Part B). 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.
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
B-22
<PAGE>
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.
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.
B-23
<PAGE>
PAINEWEBBER EQUITY TRUST
ABCS TRUST SERIES 4
TRUSTEE: SPONSOR:
INVESTORS BANK & TRUST COMPANY PAINEWEBBER INCORPORATED
Hancock Towers, 1200 Harbor Boulevard,
200 Clarendon Street Weehawken, N.J. 07087
Boston, Mass. 02116 (201) 352-3000
(800) 356-2754
- --------------------------------------------------------------------------------
This Prospectus does not include all of the information with respect to The
PaineWebber Equity Trust, ABCs Trust Series 4 set forth in its Registration
Statement filed with the Securities and Exchange Commission (the "Commission")
in Washington, D.C. under the:
o Securities Act of 1933 (File No. 333- ) and
o Investment Company Act of 1940 (File No. 811-3722)
TO OBTAIN COPIES FROM THE COMMISSION AT PRESCRIBED RATES--
WRITE: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549
CALL: 1--800--SEC--0330
VISIT: http://www.sec.gov
- --------------------------------------------------------------------------------
No person is authorized to give any information or make any representation about
this Trust not contained in this Prospectus, and you should not rely on any
other information. Read and keep both parts of the Prospectus for future
reference.
- --------------------------------------------------------------------------------
PROSPECTUS DATED , 2000
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
The following exhibits:
1. Ex. 99.A1 Standard Terms and Conditions of Trust dated as of July
1, 1998 between PaineWebber Incorporated, Depositor, Investors Bank & Trust Co.,
as Trustee (incorporated by reference to Exhibit 2 in File No. 333-55697).
2. Ex. 99.A6 Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by reference to Exhibit
8 in File No. 2-88344).
3. Ex. 99.A6 By-Laws of PaineWebber Incorporated, as amended
(incorporated by reference to Exhibit A(6)(a) in File No. 811-3722).
The following exhibits to be supplied by amendment:
1. Ex.99.A2 Copy of Trust Indenture and Agreement between PaineWebber
Incorporated, Depositor, Investors Bank & Trust Co. as Trustee incorporating by
reference Standard Terms and Conditions of Trust dated as of July 1, 1998.
2. Ex.99.A5 Form of Certificate of Ownership (included in Standard
Terms and Conditions of Trust).
3. Ex.99.2 Opinion of Counsel as to legality of securities being
registered and consent of Counsel.
4. Ex.99.C1 Opinion of Counsel as to income tax status of securities
being registered.
5. Ex.99.C2 Consent of Ernst and Young, LLP Independent Auditors.
<PAGE>
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in the current
Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Group-Financial Statements incorporated by
reference to Form 10-K and 10-Q, File No. 1-7367, respectively.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this 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 2nd day of February, 2000.
THE PAINEWEBBER EQUITY TRUST,
ABCs TRUST SERIES 4
(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 2nd day of
February, 2000.
PAINEWEBBER INCORPORATED
Name Office
---- ------
Donald B. Marron Chairman, Chief Executive
Officer, Director & Member of
the Executive Committee*
Regina A. Dolan Executive Vice President, Chief
Financial Officer & Director of PaineWebber
Incorporated*
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director & Member of the Executive
Committee*
Steve P. Baum Executive Vice President, Director of
PaineWebber Incorporated*
Robert H. Silver Executive Vice President Director of
Paine Webber Incorporated*
Mark B. Sutton Executive Vice President, Director of
PaineWebber Incorporated*
Margo N. Alexander Executive Vice President, Director of
PaineWebber Incorporated*
Terry L. Atkinson Managing Director, Director of PaineWebber
Incorporated*
Brian M. Barefoot Executive Vice President, Director of
PaineWebber Incorporated*
Michael Culp Managing Director, Director of PaineWebber
Incorporated*
Edward M. Kerschner Managing Director, Director of PaineWebber
Incorporated*
James P. MacGilvray Executive Vice President, Director of
PaineWebber Incorporated*
By /s/ Robert E. Holley
-----------------------------------
Robert E. Holley
Attorney-in-fact*
- --------------
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with Post Effective
Amendment No.19 to the Registration Statement File No. 2-61279.
