File No. 33-51891
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 15
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
(x) Check if it is proposed that this filing should become effective
(immediately upon filing or on October 23, 1995) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
153,867 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$16,151,572.86**
* Estimated solely for the purpose of calculating the registration fee, at
$104.97 per unit.
G. Amount of filing fee, computed at one-twenty-ninth of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
THE REGISTRANT HEREBY TERMINATES ITS ELECTION MADE 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 method of calculation is made pursuant to Rule 24e-2 under the
Investment Company Act of 1940.The total amount of units redeemed or
repurchased during the previous fiscal year ending 1994 is 151,105.
There
have been no previous filings of post-effective amendments during the
current fiscal year 151,105 redeemed or repurchased units are being
used
to reduce the filing fee for this amendment.
<PAGE>
PAINEWEBBER EQUITY TRUST, GROWTH STOCK
SERIES 15
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 ) Back Cover
Depositor
3. Name and address of ) Back Cover
Trustee
4. Name and address of ) Back Cover
Principal
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and ) The Trust
termination of
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 ) The Trust;
regarding
Trust's Securities and ) Rights of Unit
Rights
of Holders ) holders
(a) Type of Securities ) The Trust
(Registered or Bearer) )
(b) Type of Securities ) The Trust
(Registered or Bearer) )
* Not applicable, answer
negative or not required.
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(c) Rights of Holders as to ) Rights of Unit
Withdrawal or ) holders
Redemption
) Redemption;
) Public Offering of Units-
) Secondary Market for Units
(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 ) Rights of Unit
Securi-
ties, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1)Assets of Trust ) Amendment of the
Indenture
(2)Terms and Conditions ) Administration of the
Trust-Portfolio Supervision
of Trust's Securities ) Investments
(3)Provisions of Trust ) Amendment of the
Indenture
(4)Identity of Depositor and ) Administration of the Trust
Trustee
(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 Trust
and Trustee )
11. Type of Securities ) The Trust
Comprising Units
12. Type of securities ) *
comprising
periodic payment )
certificates
13. (a)Load, fees, expenses, etc. ) Public Offering of
) Units; Expenses of the
) Trust
* Not applicable, answer
negative or not required.
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(b)Certain information ) *
regarding periodic payment ) *
certificates )
(c)Certain percentages ) *
(d)Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e)Certain profits receivable ) Public Offering of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons ) Market for Units
(f)Ratio of annual charges to ) *
income )
14. Issuance of Trust's ) The Trust
securities
) Public Offering of Units
15. Receipt and handling of ) *
payments from )
purchasers
16. Acquisition and ) The Trust; Administration
disposition of
underlying securities ) of the Trust; Termination
) of Trust
17. Withdrawal or ) Redemption
redemption
) Public offering of Units
) -Secondary Market for
) -Exchange Option
) -Conversion Option
18. (a)Receipt and disposition of ) Distributions of
income ) Unitholders
(b)Reinvestment of ) *
distributions
(c)Reserves or special fund ) Distributions to
) Unitholders; Expenses of
Trust
(d)Schedule of distribution ) *
19. Records, accounts and ) Distributions
report
) Administration
) of the Trust
20. Certain miscellaneous ) Administration of the Trust
pro-
visions of Trust )
agreement
21. Loans to security ) *
holders
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material ) *
provisions of
trust agreement )
* Not applicable, answer
negative or not required.
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III. Organization
Personnel and Affiliated
Persons of Depositor
25. Organization of ) Sponsor
Depositor
26. Fees received by ) Public Offering of
Depositor
) Units Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of ) *
Depositor
30. Persons controlling ) Sponsor
Depositor
31. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
32. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
33. Remuneration of ) *
employees of
Depositor for certain )
services
rendered to Trust )
34. Remuneration of other ) *
persons
for certain services )
rendered
to Trust )
IV. Distribution and Redemption of Securities
35. Distribution of Trust's ) Public Offering of Units
securities by states )
36. Suspension of sales of ) *
Trust's
securities )
37. Revocation of authority ) *
to
distribute )
38. (a)Method of distribution ) Public Offering of Units
(b)Underwriting agreements )
(c)Selling agreements ) Sponsor
* Not applicable, answer
negative or not required.
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39. (a)Organization of principal ) Sponsor
underwriter )
(b)N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
41. (a)Business of principal ) Sponsor
underwriter )
(b)Branch officers of ) *
principal underwriter )
(c)Salesman of principal ) *
underwriter )
42. Ownership of Trust's ) *
securities
by certain persons )
43. Certain brokerage ) *
commissions
received by principal )
underwriter )
44. (a)Method of valuation ) Public Offering Price of
) Units
(b)Schedule as to offering ) *
price )
(c)Variation in Offering ) Public Offering Price of
price to certain persons ) Units
45. Suspension of ) *
redemption rights
46. (a)Redemption valuation ) Public Offering of Units
) -Secondary Market for Units
) -Valuation
(b)Schedule as to redemption )
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position ) Public Offering of Units
in
underlying securities ) Redemption
) Trustee
) Evaluation of the Trust
48. Organization and )
regulation of
Trustee ) Trustee
49. Fees and expenses of ) Expenses of the Trust
Trustee
50. Trustee's lien ) Expenses of the Trust
* Not applicable, answer
negative or not required.
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VI. Information
concerning Insurance of
Holders of Securities
51. (a)Name and address of ) *
Insurance Company )
(b)Type of policies ) *
(c)Type of risks insured and ) *
excluded )
(d)Coverage of policies ) *
(e)Beneficiaries of policies ) *
(f)Terms and manner of ) *
cancellation )
(g)Method of determining ) *
premiums )
(h)Amount of aggregate ) *
premiums paid )
(i)Who receives any part of ) *
premiums )
(j)Other material provisions ) *
of the Trust relating to )
insurance )
VII. Policy of Registrant
52. (a)Method of selecting and ) The Trust;
eliminating securities ) Administration of the Trust
from the Trust )
(b)Elimination of securities ) *
from the Trust )
(c)Policy of Trust regarding ) Portfolio Supervision
) Administration of Trust
substitution and
elimination of securities )
(d)Description of any funda- ) Administration of
mental policy of the Trust ) Trust
) Portfolio Supervision
53. (a)Taxable status of the ) Tax status of the Trust
Trust )
(b)Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
* Not applicable, answer
negative or not required.
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VIII. Financial and
Statistical Information
54. Information regarding ) *
the
Trust's past ten fiscal )
years
55. Certain information ) *
regarding
periodic payment plan )
certificates )
56. Certain information ) *
regarding
periodic payment plan )
certificates )
57. Certain information ) *
regarding
periodic payment plan )
certificates )
58. Certain information ) *
regarding
periodic payment plan )
certi-
ficates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to ) Condition
Form S-6)
* Not applicable, answer
negative or not required.
<PAGE>
PaineWebber Equity Trust
Growth Stock Series Fifteen
(Strategic Action 2)
461,000 Units
The investment objective of this Trust is to provide for capital
appreciation through an investment in equity stocks having, in the
Sponsor's opinion on the Date of Deposit, an above average
potential for capital appreciation. The value of the Units will fluctuate
with the value of the portfolio of underlying securities.
The minimum purchase is $1,000, except that the minimum
purchase in connection with an Individual Retirement Account (IRA)
or other tax-deferred retirement plan is $250. Only whole Units may
be purchased.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAP-
PROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST HAS
BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE ISSUED
AND OUTSTANDING UNITS WHICH HAVE BEEN ACQUIRED BY THE
SPONSOR EITHER BY PURCHASE FROM THE TRUSTEE OF UNITS
TENDERED FOR REDEMPTION OR IN THE SECONDARY MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for future reference.
Prospectus Part A dated October 23, 1995
<PAGE>
Essential Information Regarding The Trust
The Trust. The objective of the PaineWebber Equity Trust,
Growth Stock Series 15 (the "Trust") is to provide for capital
appreciation through an investment in equity stocks which have, in
the Sponsor's opinion, on the Date of Deposit, an above-average
potential for capital appreciation (the "Stocks").
The Trust will seek to achieve its objective of capital apprecia-
tion through an investment in a diversified portfolio of Stocks issued
by companies that PaineWebber believes are likely to be involved in
"restructuring," cost cutting, mergers, acquisitions or other similar
takeover activities as strategies to improve earnings and growth
prospects during the remainder of the 1990s. PaineWebber uses the
term "restructuring" to mean reconfiguring the corporation in order
to increase shareholder value, all as further described below under
the caption "The Composition of the Portfolio." Taking these factors
into account, PaineWebber's Strategy Group, in conjunction with
PaineWebber's industry analysts, selected companies included in
the Trust Portfolio which they believe are most likely to benefit
should these companies take such strategic action during the life of
the Trust.
Summary of Risk Factors. There are certain investment risks
inherent in unit trust portfolios which hold equity securities. The
securities may appreciate or depreciate in value or pay dividends
depending on the full range of economic and market influences
affecting corporate profitability, the financial condition of the issuers,
the prices of equity securities, the condition of the stock markets in
general and the prices of the stocks in particular. In addition, rights
of common stock holders are generally inferior to those of holders
of debt obligations or preferred stock. The Trusts portfolio has been
diversified among the various industry groups involved in restruc-
turing and other strategic activities in an attempt to limit the risks
inherent in owning a portfolio stock. The stocks may be categorized
by industry groups as shown in the table below under the caption
"The Composition of the Trust." There is no assurance, however,
that such diversification will eliminate an investor's risk of earnings
or market price volatility or trading liquidity. There can also be no
assurance that the Trust portfolio will remain constant during the
life of the Trust. Certain events might occur which could lead to the
elimination of one or more Stocks from the Portfolio (see: "Admin-
istration of the Trust--Portfolio Supervision"), thereby reducing the
diversity of the Trust's investments. Further, under certain cir-
cumstances, if a tender offer is made for any of the Stocks in the
Trust, or in the event of a merger or reorganization, the Trust will
either tender the Stocks or sell them as more fully described under
the caption "The Trust".
The Composition of The Portfolio. In PaineWebbers view,
todays equity market is earnings-driven, meaning that leadership in
this market is delineated by companies that can deliver solid
earnings gains. PaineWebber believes that, while at current levels
the stock market may not be overvalued, it certainly is not inexpen-
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sive. Combining this fact with rising interest rates in the United
States and rising currencies abroad could well have a significant
destimulative effect on growth prospects for the near term. In such
an environment, PaineWebber asserts that a key source of real
earnings power is likely to be found in those companies that
successfully undertake what PaineWebbers research professionals
refer to as strategic action--restructuring, cost-cutting and/or strate-
gic acquisitions.
Faced with minimal growth prospects, coupled with recent
pressure from shareholders seeking to increase the value of their
investment, corporate managements have focused on cutting costs,
restructuring and mergers as methods to raise corporate profits.
PaineWebber believes that as the fundamental imperative that is
driving corporations to take strategic action--falling inflation (also
known as disinflation)--remains in place, very few companies can
produce satisfactory earnings growth on a sustained basis simply
by relying on their own top-line growth. Those companies that have
not yet fully implemented cost-cutting strategies (e.g., closing un-
profitable and/or redundant facilities, stabilizing or reducing com-
pensation and layoffs) will be likely candidates to so during the life
of the Trust. Those companies that have already cut costs to the
limit may, in PaineWebbers opinion, turn to increase profitability by
acquiring other companies, thereby adding capacity. PaineWebber
forecasts that this will be done in several ways, such as by
becoming involved in shrewd acquisitions (either as the takeover
company or the company being taken over) or by merging with
other companies. Managements, of course, are not limited to
pursuing only one course of action, and PaineWebber expects that
some companies will combine two or three of the above-mentioned
strategic actions to maximize earnings and growth potential. For
example, cost cutting and restructuring may go together as firms
attempt to raise the profitability of divisions before selling them.
PaineWebber believes that corporations taking some or all of the
strategic actions discussed below which prove to be correct for
them will lead the market, as measured by the S&P 500, over the
next 2-3 years.
PaineWebber believes that "restructuring" activity will be an
important strategy for increasing growth and profitability. Restruc-
turing is defined as reconfiguring the corporation in order to
increase shareholder value. This may involve the total break-up of
the company or simply a more aggressive management of a
portfolio of businesses. This occurs for several reasons. In certain
cases, the individual components or business lines of a corporation
are worth more than the corporation as a whole. Splitting such a
company into component pieces which are better understood and
hence valued, by the market, may be a major means to achieve
higher valuation. In other cases, eliminating unprofitable areas from
a company may be the reason to effectuate a split and help the
remaining company pursue a stronger earnings growth program.
PaineWebber believes such restructuring will continue during the life
of the Trust. While some industry sectors have been in a restruc-
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<PAGE>
turing mode for several years, other industries are now just begin-
ning to take advantage of this strategic action.
PaineWebber observes that, with mergers and acquisitions ac-
tivity having slowed down sharply over the past six years, there is
pent-up demand for such business combinations. In PaineWebbers
view, the pace of acquisitions should increase over the next few
years for several reasons. First, many cash-rich firms are often
eager to make acquisitions, viewing such activity as a faster and
less risky method to add new capacity to their ongoing operations,
rather than by building it or growing it from inside, even if the cost
of that acquisition is rather expensive. For example, a large regional
bank wishing to expand into a new market can choose between
spending a number of years and a significant amount of money
buying several small community banks, creating an ATM network
and advertising aggressively to build a name in that new market (all
of which may or may not prove successful) or can enter that
market by purchasing a well-known, large bank with a solid fran-
chise in that market.
Second, PaineWebber believes that there are certain industries,
such as health care and telecommunications, that are rapidly con-
solidating under the pressure of competition and technological
change.
Third, PaineWebber asserts that industry consolidation is part
of corporate cost-cutting. Often industry fragmentation leads to
redundancy whereas consolidation can lead to economies of scale
and increased bargaining power with suppliers. Profitability can
sometimes be improved when small firms are integrated into a
larger organization. In PaineWebbers view, it makes economic sense
to even more aggressively merge similar businesses so that redun-
dant facilities (such as sales offices and factories) can be shut
down. To realize these savings, it is not necessary for two public
companies to merge fully; they can simply sell or spin off weak
businesses.
Fourth, PaineWebber believes that certain acquisitions occur
because a solid corporations stock is depressed for temporary
cyclical, market or other reasons. The acquiring corporation is often
able to purchase the assets of such a company to build a company
and market presence in a related area.
Taking all of these factors into account, PaineWebbers research
professionals selected certain stocks in the industries listed below
as those which it believes will benefit should they implement one or
more strategic actions described above (restructuring, cost-cutting
or mergers and acquisitions). These are common stocks issued by
companies who may receive income and derive revenues from
multiple industry sources but whose primary industry is listed in the
table below:
Primary Industry Approximate
Source and Percentage of
Name of Issuer Aggregate Market
Value of the Trust
3
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Banking and Financial Institutions 12%
Biotechnology 10
Computer Hardware 8
Computer Software 15
Chemical 17
Energy 14
Multi-Industry 17
Telecommunications 7
4
<PAGE>
The Sponsor anticipates that, based on the last dividend pay-
ments made by the Stocks, the Trust will receive dividends suffi-
cient (i) to pay expenses of the Trust (see "Expenses of the Trust"
herein) and (ii) after such payment, to make distributions of such to
Unitholders of record as described below under "Distributions."
Additional Deposits. After the initial deposit on the Date of
Deposit the Sponsor may, from time to time, cause the deposit of
additional Securities in the Trust where additional Units are to be
offered to the public, maintaining the original percentage relation-
ships between the number of shares of Stock deposited on the Date
of Deposit, subject to certain adjustments. Costs incurred in acquir-
ing such additional Stocks not listed on any national securities
exchange will be borne by the Trust. (See "The Trust" and Risk
Factors and Special Considerations).
Termination. Unless advised to the contrary by the Sponsor,
the Trustee will begin to sell the Securities held in the Trust 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. During the life of the Trust, Securities
will not be sold to take advantage of market fluctuations. The Trust
will terminate approximately three years after the Date of Deposit
regardless of market conditions at the time. (See "Termination of
the Trust" and "Federal Income Taxes").
Public Offering Price. The Public Offering Price per Unit is
computed by dividing the Trust Fund Evaluation by the number of
Units outstanding and then adding a sales charge of 3.75% of the
Public Offering Price (3.90% of the net amount invested). The sales
charge is reduced on a graduated scale for volume purchasers and
is reduced for certain other purchasers. (See "Public Offering of
Units--Public Offering Price").
Distributions. The Trustee will make distributions on the
Distribution Dates. (See "Distributions" and "Administration of the
Trust--Reinvestment"). 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.
Market for Units. The Sponsor, though not obligated to do so,
presently intends to maintain a secondary market for Units. The
public offering price in the secondary market will be based upon the
value of the Securities next determined after receipt of a purchase
order plus the applicable sales charge. (See "Public Offering of
Units--Public Offering Price" and "Valuation"). If a secondary mar-
ket is not maintained, a Unitholder may dispose of his Units only
through redemption. With respect to redemption requests in excess
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<PAGE>
of $100,000, the Sponsor may determine in its sole discretion to
direct the Trustee to redeem units "in kind" by distributing Securi-
ties to the redeeming Unitholder. (See "Redemption").
THE TRUST
The Trust is one of a series of similar but separate unit
investment trusts created under New York law by the Sponsor
pursuant to a Trust Indenture and Agreement* (the "Indenture")
dated as of the Date of Deposit, between PaineWebber Incorporated,
as Sponsor and Investors Bank & Trust Company and The First
National Bank of Chicago, N.A., as Co-Trustees (the "Trustee"). The
objective of the Trust is capital appreciation through an investment
in equity stocks having, in Sponsor's opinion on the Date of
Deposit, potential for capital appreciation.
On the 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 Stocks was determined on the basis described under "Valu-
ation". In exchange for the deposit of the contracts to purchase
Securities, the Trustee delivered to the
*Reference is hereby made to said Trust Indenture and Agree-
ment and any statements contained herein are qualified in their
entirety by the provisions of said Trust Indenture and Agreement.
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Sponsor a receipt for Units representing the entire ownership of the
Trust.
With the deposit on the Date of Deposit, the Sponsor estab-
lished a proportionate relationship between the Securities in the
Trust (determined by reference to the number of shares of Stock).
The Sponsor may, from time to time, cause the deposit of addi-
tional Securities in the Trust when additional Units are to be offered
to the public, maintaining the original percentage relationship be-
tween the Securities deposited on the Date of Deposit and replicat-
ing any cash or cash equivalents held by the Trust (net of
expenses). The original proportionate relationship is subject to
adjustment to reflect the occurrence of a stock split or a similar
event which affects the capital structure of the issuer of a Stock but
which does not affect the Trust's percentage ownership of the
common stock equity of such issuer at the time of such event, to
reflect a sale or maturity of Security or to reflect a merger or
reorganization. Stock dividends, if any, received by the Trust will be
sold by the Trustee and the proceeds therefrom shall be distributed
on the next Income Account Distribution Date.
On the Date of Deposit each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set
forth under "Essential Information Regarding the Trust". However, if
additional Units are issued by the Trust (through the deposit of
additional Securities for purposes of the sale of additional Units),
the aggregate value of Securities in the Trust will be increased and
the fractional undivided interest represented by each Unit in the
balance will be decreased. If any Units are redeemed, the aggregate
value of Securities in the Trust will be reduced, and the fractional
undivided interest represented by each remaining Unit in the bal-
ance 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").
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. Divi-
dends on cumulative preferred stock must be paid before any
dividends are paid on common stock. Preferred stocks are also
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entitled to rights on liquidation which are senior to those of
common stocks. For these reasons, preferred stocks generally entail
less risk than common stocks.
Common stocks do not represent an obligation of the issuer.
Therefore they do not offer any assurance of income or provide the
degree of protection of debt securities. The issuance of debt
securities or even preferred stock by an issuer will create prior
claims for payment of principal, interest and dividends which could
adversely affect the ability and inclination of the issuer to declare or
pay dividends on its common stock or the rights of holders of
common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Unlike debt securities which typically have a stated
principal amount payable at maturity, common stocks do not have a
fixed principal amount or a maturity. Additionally, the value of the
Stock in the Trust may be expected to fluctuate over the life of the
Trust.
In addition, there are investment risks common to all equity
issues. The Stocks may appreciate or depreciate in value (or pay
dividends) depending on the full range of economic and market
influences affecting corporate profitability, the financial condition of
issuers and the prices of equity securities in general and the Stocks
in particular. Certain of the Stocks in the Trust may be American
Depositary Receipts, which are subject to additional risks. American
Depositary Receipts ("ADRs") evidence American Depositary Shares
which, in turn, represent common stock of foreign issuers deposited
with a custodian in a depositary. Currency fluctuations will affect the
U.S. dollar equivalent of the local currency price of the underlying
domestic share and as a result, are likely to affect the value of
ADRs and the value of any dividends actually received by the Trust.
In addition, the rights of holders of ADRs may be different than
those of holders of the underlying shares, and the market for ADRs
may be less liquid than that for the underlying shares. Therefore,
investment in this Trust should be made with an understanding that
the value of the ADRs may fluctuate with fluctuations in the values
of the particular foreign currency relative to the U.S. dollar. There is
no assurance that the Trust's objective will be achieved. (The
Stocks may be referred to as "Securities" herein). The value of the
Securities and, therefore, the value of Units may be expected to
fluctuate.
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 a bank letter of credit in lieu of cash)
with instructions to purchase Securities in amounts sufficient to
maintain, to the extent practicable, the percentage relationship
among the Securities based on the price of the Securities at the
Valuation Time on the date the cash is deposited. To the extent the
price of a Security increases or decreases between the time cash is
deposited with instructions to purchase the Security and the time
the cash is used to purchase the Security, Units will represent less
or more of that Security and more or less of the other Securities in
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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 the cash was deposited with
instructions to purchase the Security. In order to minimize these
effects, the Trust will attempt to purchase Securities as close as
possible to the Valuation Time or at prices as close as possible to
the prices used to evaluate the Trust at the Valuation Time. Thus
price fluctuations during this period will affect the value of every
Unitholders Units and the income per Unit received by the Trust. In
addition, costs incurred in connection with the acquisition of Securi-
ties not listed on any national securities exchange (due to differen-
tials between bid and offer prices for the Securities) will be at the
expense of the Trust and will affect the value of every Unitholders
Units.
In the event a contract to purchase a Stock to be deposited on
the Date of Deposit fails, cash held or available under a letter or
letters of credit, attributable to such failed contract may be re-
invested in another stock or stocks having characteristics suffi-
ciently similar to the Stocks originally deposited (in which case the
original proportionate relationship shall be adjusted) or, if not so
reinvested, distributed to Unitholders of record on the last day of
the month in which the failure occurred. The distribution will be
made twenty days following such record date and, in the event of
such a distribution, the Sponsor will refund to each Unitholder the
portion of the sales charge attributable to such failed contract.
Because the Trust is organized as a unit investment trust,
rather than as a management investment company, the Trustee
and the Sponsor do not have authority to manage the Trust's
assets fully in an attempt to take advantage of various market
conditions to improve the Trust's net asset value, but may
dispose of Securities only under limited circumstances. (See 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").
Certain of the Stocks have been selected for their capital
appreciation potential in light of the Sponsor's opinion on the Date
of Deposit that the issuers of such 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 pursuant to the terms of its offer.
Payment generally takes the form of cash, securities (typically
bonds or notes), or cash and securities. Pursuant to federal law a
tender offer must remain open for at least 20 days and withdrawal
rights apply during the entire offering period. Frequently offers are
conditioned upon a specified number of shares being tendered and
upon the obtaining of financing. There may be other conditions to
the tender offer as well. Additionally, an offeror may only be willing
9
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to accept a specified number of shares. In the event a greater
number of shares is tendered, the offeror must take up and pay for
a pro rata portion of the shares deposited by each depositor during
the period the offer remains open.
Because certain of the Stocks have been selected with a view
to potential acquisitions, the Agreement sets forth criteria to be
applied in the event of a tender offer, merger or reorganization.
In the event a tender offer is made for a Stock, on the third
business day prior to the expiration of the best tender offer then in
effect, as determined by the Sponsor, the Sponsor will instruct the
Trustee, and the Trustee will, tender the Stock; provided, however
that the Trustee will sell the Stock on such date if it can realize at
least 90% of the value of the price to be paid pursuant to the
tender offer (such value to be determined by the Sponsor) except
where the best tender offer is an offer for any and all outstanding
Stock and is not conditioned upon the offeror's receipt of financing.
In the event the Trustee has tendered and, in Sponsor's opinion, a
better offer is made prior to the expiration of the prior offer, the
Trustee will use its best efforts to exercise its withdrawal rights and
follow the procedures set forth in the preceding sentence. Upon
consummation of the tender offer, in the event any of the Stock
tendered is not purchased (which could occur if such Stock is
excluded due to pro rationing) the Trustee will sell the Stock as
soon as practicable. Any securities received pursuant to a con-
summated tender offer will be sold by the Trustee as soon as
practicable. If a tender offer fails, the Stock will be returned to the
Trust. During the initial deposit period for Stocks the Trustee will
not tender any Stock.
In the event an issuer of a Stock announces a proposed
merger into another company and certain compensation is to be
paid in exchange for the Stock, or in the event the issuer of a Stock
announces a sale of substantially all of its assets, the Trustee will
sell the Stock if it can realize 90% of the value to be received by
shareholders upon completion of the merger or sale (such value to
be determined by the Sponsor). If the Trust holds the Stock upon
completion of the merger, any securities received as compensation
will be sold by the Trustee as soon as practicable. In the event an
issuer of Stock announces that another company will be merged
into it, the Stock of such issuer will be retained unless the Sponsor
directs the Trustee to sell the Stock for reasons set forth under the
heading "Portfolio Supervision". In the event of a corporate reorga-
nization any securities received by the Trust will be sold as soon as
practicable.
In its investment banking, underwriting or merchant banking
activities the Sponsor may acquire material non-public information
about an issuer of Stocks in the Trust. Use of this information by
the Sponsor in connection with the Trust may constitute a violation
of the federal securities laws. Therefore, in order to avoid the
possible use of this information there may be circumstances where
the Sponsor is unable to give advice to the Trust, including advice
on the value of a transaction or whether an offer is the best offer.
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In such case the Sponsor shall immediately advise the Trustee of
its inability and, in such event, (a) with respect to a tender offer,
the Trustee is required to sell the applicable Stock as close to the
opening of the stock exchanges as is practicable on the last
business day a tender offer is in effect and (b) with respect to a
sale of substantially all of an issuer's assets or its merger into
another issuer, the Trust will continue to hold the Stocks.
In most circumstances the Trust has been structured to provide
for the sale of Stock at 90% of the value to be received upon
completion of a tender, merger or acquisition in order to provide the
Trust a price close to the price which could be received in the
future if certain conditions to such completion are met. The percent-
age accommodates a discount reflecting the time value of money
and the uncertainties of the tender, merger or acquisition taking
place.
The Trust is not managed and has been structured with the
foregoing automatic provisions. The foregoing may interfere with the
Trust's ability to maximize its objectives and, consequently, a
Unitholder's value. In such case, Unitholders shall have no rights
against the Trust, the Sponsor, the Trustee or any other party
associated with the Trust. The foregoing is not a disclaimer of
responsibilities under Section 36 of the Investment Company Act of
1940.
There is no guarantee that there will be a tender offer for any
of the Stocks, or merger or acquisition of any of the issuers whose
stock is contained in the Trust. In addition, it is possible that
legislation or regulations affecting merger and acquisition activity in
the future may be passed and, if passed, the Sponsor cannot
predict the impact upon the Trust. There is also no guarantee that
the price received upon sale or pursant to an acquisition will be the
best price which could be received by the Trust at any time. For
example, after stock is sold, the value may increase due to general
market factors or due to subsequent tender offers. Additionally, the
price of a Stock may decline for Stocks not taken up pursuant to
tender offer or in the event a merger or acquisition is not com-
pleted.
FEDERAL INCOME TAXES
In the opinion of Orrick, Herrington & Sutcliffe, counsel for the
Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for
federal income tax purposes. Under the Internal Revenue Code of
1986, as amended (the "Code"), each Unitholder will be treated as
the owner of a pro rata portion of the Trust, and income of the
Trust will be treated as income of the Unitholder.
2. Each Unitholder will have a taxable event when the Trust
disposes of a Security (whether by sale or exchange) or when the
Unitholder sells its Units or redeems its Units for cash. The total tax
cost of each to a Unitholder is allocated among each of the
Securities in accordance with the proportion of the Trust comprised
by each Security in order to determine the per Unit tax cost for
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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 Treasury regulations promulgated thereunder as in effect
on the date of this Prospectus. The federal income tax treatment
applicable to a Unitholder may depend upon the Unitholders par-
ticular tax circumstances. Future legislative, judicial or administrative
changes could modify the statements below and could affect the tax
consequences to Unitholders. Accordingly, each Unitholder is ad-
vised to consult its 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 from common stocks, gains or losses upon sales of
securities by the Trust and a pro rata share of the expenses of the
Trust.
Distributions with respect to common 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 Unithol-
ders 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 common stock
were to exceed the issuing corporations 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 Unitholders tax cost for such common stock. After such
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 sale of common stock. This reduction in basis
would increase any gain, or reduce any loss, realized by the
Unitholder on any subsequent sale or other disposition of Units.
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 Unitholders
adjusted gross income. Thus, a Unitholders taxable income from an
investment in Units will exceed amounts distributed because taxable
income would include amounts that are not distributed to Unithol-
ders but are used by the Trust to pay expenses.
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 limita-
tions provided in Sections 246 and 246A of the Code. The divi-
dends-received deduction generally equals 70 percent of the amount
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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.
Gain or Loss on Sale. If a Unitholder sells or otherwise
disposes of a Unit, the Unitholder generally will recognize gain or
loss in an amount equal to the difference between the amount
realized on the disposition allocable to the Securities and the
Unitholders adjusted tax bases in the Securities. In general, such
adjusted tax bases will equal the Unitholders aggregate cost for the
Unit. Such gain or loss will be capital gain or loss if the Unit and
underlying Securities were held as capital assets. Each Unitholder
generally will also recognize taxable gain or loss when all or part of
its pro rata portion of a Security is sold or otherwise disposed of
for an amount greater or less than its per Unit tax cost therefor.
Withholding For Citizen or Resident Investors. In the case of
any noncorporate Unitholder that is a citizen or resident of the
United States, a 31 percent "backup" withholding tax will apply to
certain distributions of the Trust unless the Unitholder properly
completes and files under penalties of perjury, IRS Form W-9 (or its
equivalent).
The foregoing discussion is a general summary and relates
only to the federal income tax consequences of an investment in
the Trust. Unitholders may also be subject to state and local
taxation. Each Unitholder should consult its own tax advisor regard-
ing the Federal, state and local tax consequences to it of ownership
of Units.
Investment in the Trust may be suited for purchase by funds
and accounts of individual investors that are exempt from federal
income taxes such as Individual Retirement Accounts, tax-qualified
retirement plans including Keogh Plans, and other tax-deferred
retirement plans. Unitholders desiring to purchase Units for tax-
deferred plans and IRA's should consult their PaineWebber Invest-
ment Executive for details on establishing such accounts. Units may
also be purchased by persons who already have self-directed
accounts established under tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit is
based on the aggregate market value of the Stocks (determined on
the bid side of the market), 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 is
computed by dividing the Trust Fund Evaluation, next determined
after receipt of a purchase order by the number of Units outstand-
ing plus the sales charge. (See "Valuation").
Sales charges during the initial public offering period and for
secondary market sales are set forth below. A discount in the sales
charge is available to volume purchasers of Units due to economies
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of scale in sales effort and sales related expenses relating to
volume purchases. The sales charge applicable to volume pur-
chasers of Units is reduced on a graduated scale for sales to any
person of at least $50,000 or 5,000 Units, applied on whichever
basis is more favorable to the purchaser.
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Initial Public Offering Period and Secondary Market Thereafter
Percent of
Public Percent of
Aggregate Dollar Offering Net Amount
Value of Units* Price Invested
Less than $50,000 3.75% 3.90%
$50,000 to 99,999 3.50 3.63
$100,000 to 249,999 3.25 3.36
$250,000 to 499,999 2.75 2.83
$500,000 to 749,999 2.25 2.30
$750,000 to 999,999 2.00 2.04
$1,000,000 but less than 1,999,999 1.50 1.52
$2,000,000 or more 1.00 1.01
* The 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 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 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 sales charges
are also applicable to a trustee or other fiduciary purchasing Units
for a single trust estate or single fiduciary account.
Employee Discount. Due to the realization of economies of
scale in sales effort and sales related expenses 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 of $5.00 per 100 Units.
Exchange Option. Unitholders may elect to exchange any or all
of their Units of this series for units of one or more of any series of
PaineWebber Municipal Bond Fund (the "PaineWebber Series"); The
Municipal Bond Trust (the "National Series"); The Municipal Bond
Trust, Multi-State Program (the "Multi-State Series"); The Municipal
Bond Trust, California Series (the "California Series"); The Cor-
porate Bond Trust (the "Corporate Series"); PaineWebber Path-
finder's Trust (the "Pathfinder's Trust"); the PaineWebber Federal
Government Trust (the "Government Series"); The Municipal Bond
Trust, Insured Series (the "Insured Series"); or the PaineWebber
Equity Trust (the "Equity Series") (collectively referred to as the
"Exchange Trusts"), at a Public Offering Price for the Units of the
Exchange Trusts to be acquired based on a reduced sales charge of
$15 per Unit, per 100 Units in the case of a trust whose Units cost
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<PAGE>
approximately $10 or per 1,000 units in the case of a trust whose
Units cost approximately one dollar. Unitholders of this Trust are
not eligible for the Exchange Option into an Equity Trust, Growth
Stock Series designated as a rollover series for the 30 day period
prior to termination of the Trust. The purpose of such reduced sales
charge is to permit the Sponsor to pass on to the Unitholder who
wishes to exchange Units the cost savings resulting from such
exchange of Units. The cost savings result from reductions in time
and expense related to advice, financial planning and operational
expenses required for the Exchange Option. Each Exchange Trust
has different investment objectives, therefore a Unitholder should
read the prospectus for the applicable exchange trust carefully prior
to exercising this option. Exchange Trusts having as their objective
the receipt of tax-exempt interest income would not be suitable for
tax-deferred investment plans such as Individual Retirement Ac-
counts. A Unitholder who purchased Units of a series and paid a
per Unit, per 100 Unit or per 1,000 Unit sales charge that was less
than the per Unit, per 100 Unit or per 1,000 Unit sales charge of
the series of the Exchange Trusts for which such Unitholder desires
to exchange into, will be allowed to exercise the Exchange Option at
the Unit Offering Price plus the reduced sales charge, provided the
Unitholder has held the Units for at least five months. Any such
Unitholder who has not held the Units to be exchanged for the
five-month period will be required to exchange them at the Unit
Offering Price plus a sales charge based on the greater of the
reduced sales charge, or an amount which, together with the initial
sales charge paid in connection with the acquisition of the Units
being exchanged, equals the sales charge of the series of the
Exchange Trust for which such Unitholder desires to exchange into,
determined as of the date of the exchange.
The Sponsor will permit exchanges at the reduced sales charge
provided there is either a primary market for Units or a secondary
market maintained by the Sponsor in both the Units of this series
and units of the applicable Exchange Trust and there are units of
the applicable Exchange Trust available for sale. While the Sponsor
has indicated that it intends to maintain a market for the Units of
the respective Trusts, there is no obligation on its part to maintain
such a market. Therefore, there is no assurance that a market for
Units will in fact exist on any given date at which a Unitholder
wishes to sell his Units of this series and thus there is no
assurance that the Exchange Option will be available to a Unithol-
der. Exchanges will be effected in whole Units only. Any excess
proceeds from Unitholders' Units being surrendered will be re-
turned. Unitholders will be permitted to advance new money in
order to complete an exchange to round up to the next highest
number of Units. An exchange of Units pursuant to the Exchange
Option generally will constitute a "taxable event" under the Code,
i.e., a Unitholder will recognize a tax gain or loss at the time of
exchange. Unitholders are urged to consult their own tax advisors
as to the tax consequences to them of exchanging Units in
particular cases.
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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 of his desire to exercise the Exchange Option and to use
the proceeds from the sale of his Units to the Sponsor of this
series to purchase Units of one or more of the Exchange Trusts
from the Sponsor. If Units of the applicable outstanding series of
the Exchange Trust are at that time available for sale, and if such
Units may lawfully be sold in the state in which the Unitholder is
resident, the Unitholder may select the series or group of series for
which he desires his investment to be exchanged. The Unitholder
will be provided with a current prospectus or prospectuses relating
to each series in which he indicates interest.
The exchange transaction will operate in a manner essentially
identical to any secondary market transaction, i.e., Units will be
repurchased at a price based on the market value of the Securities
in the portfolio of the Trust next determined after receipt by the
Sponsor of an exchange request and properly endorsed documents.
Units of the Exchange Trust will be sold to the Unitholder at a price
based upon the next determined market value of the Securities in
the Exchange Trust plus the reduced sales charge. Exchange trans-
actions will be effected only in whole units; thus, any proceeds not
used to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand
units of a trust with a current price of $1.30 per unit, desires to sell
his units and seeks to exchange the proceeds for units of a series
of an Exchange Trust with a current price of $890 per Unit based
on the bid prices of the underlying securities. In this example,
which does not contemplate any rounding up to the next highest
number of Units, the proceeds from the Unitholder's Units would
aggregate $3,900. Since only whole units of an Exchange Trust may
be purchased under the Exchange Option, the Unitholder would be
able to acquire four Units in the Exchange Trust for a total cost of
$3,620 ($3,560 for the Units and $60 for the sales charge). If all
3,000 Units were tendered, the remaining $280 would be returned
to the Unitholder.
Conversion Option. Owners of units of any registered unit
investment trust sponsored by others which was initially offered at a
maximum applicable sales charge of at least 3.0% (a "Conversion
Trust") may elect to apply the cash proceeds of the sale or
redemption of those units directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15 per Unit, per 100
Units in the case of Exchange Trusts having a Unit price of
approximately $10, or per 1,000 Units in the case of Exchange
Trusts having a Unit price of approximately $1, subject to the terms
and conditions applicable to the Exchange Option (except that no
secondary market is required for Conversion Trust units). To ex-
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<PAGE>
ercise this option, the owner should notify his retail broker. He will
be given a prospectus for each series in which he indicates interest
and for which units are available. The dealer must sell or redeem
the units of the Conversion Trust. Any dealer other than PaineWeb-
ber must certify that the purchase of the units of the Exchange
Trust is being made pursuant to and is eligible for the Conversion
Option. The dealer will be entitled to two thirds of the applicable
reduced sales charge. The Sponsor reserves the right to modify,
suspend or terminate the Conversion Option at any time with notice,
including the right to increase the reduced sales charge applicable
to this option (but not in excess of $5 more per Unit, per 100 Units
or per 1,000 Units, as applicable than the corresponding fee then
being charged for the Exchange Option). For a description of the tax
consequences of a conversion reference is made to the Exchange
Option section herein.
Distribution of Units. The minimum purchase in the initial
public offering is 100 Units, except that the minimum purchase is
25 Units for purchases made in connection with Individual Retire-
ment Accounts or other tax-deferred retirement plans. Only whole
Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may,
however, be made to dealers who are members of the National
Association of Securities Dealers, Inc. ("NASD") at prices which
include a concession of $.30 per Unit at the highest sales charge,
subject to change from time to time. The difference between the
sales charge and the dealer concession will be retained by the
Sponsor. In the event that the dealer concession is 90% or more of
the sales charge per Unit, dealers taking advantage of such conces-
sion may be deemed to be underwriters under the Securities Act of
1933.
The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. The Sponsor intends to qualify
the Units in all states of the United States, the District of Columbia
and the Commonwealth of Puerto Rico.
Secondary Market for Units. While not obligated to do so, the
Sponsor intends to maintain a secondary market for the Units and
continuously offer to purchase Units at the Trust Fund Evaluation
per Unit next computed after receipt by the Sponsor of an order
from a Unitholder. The Sponsor may cease to maintain such a
market at any time, and from time to time, without notice. In the
event that a secondary market for the Units is not maintained by
the Sponsor, a Unitholder desiring to dispose of Units may tender
such Units to the Trustee for redemption at the price calculated in
the manner set forth under "Redemption". Redemption requests in
excess of $100,000 may be redeemed "in kind" as described under
"Redemption."
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 un-
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desirable to continue to hold these Units in their 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 their inventory, the saleability of the Units and their estimate of
the time required to sell the Units and general market conditions.
A Unitholder who wishes to dispose of his Units should
inquire of his bank or broker as to current market prices in order
to determine if over-the-counter prices exist in excess of the
redemption price and the repurchase price (see "Redemption").
Sponsor's Profits. In addition to the applicable sales charge,
the Sponsor realizes a profit (or sustains a loss) in the amount of
any difference between the cost of the Stocks to the Sponsor and
the price at which it deposits the Stocks in the Trust in exchange
for Units, which is the value of the Stocks, determined by the
Trustee as described under "Valuation". The cost of Stock to the
Sponsor includes the amount paid by the Sponsor for brokerage
commissions. These amounts are not an expense of the Trust.
Cash, if any, received from Unitholders prior to the settlement
date for the purchase of Units or prior to the payment for Securities
upon their delivery may be used in the Sponsor's business subject
to the limitations of Rule 15c3-3 under the Securities and Exchange
Act of 1934 and may be of benefit to the Sponsor.
In selling any Units in the initial public offering after the Date of
Deposit, the Sponsor may realize profits or sustain losses resulting
from fluctuations in the net asset value of outstanding Units during
the period. In maintaining a secondary market for the Units, the
Sponsor may realize profits or sustain losses in the amount of any
differences between the price at which it buys Units and the price at
which it resells or redeems such Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust Company for
redemption at its office in person, or by mail at One Lincoln Plaza,
89 South Street, Boston, MA 02111 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. If the Units are represented by
a certificate it must be properly endorsed accompanied by a letter
requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Un-
itholders 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 ten-
dered 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
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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 outstand-
ing. (See "Valuation").
A redemption request is deemed received on the business day
(see "Valuation" for a definition of business day) when such
request is received prior to 4:00 p.m. If it is received after 4:00
p.m., it is deemed received on the next business day. During the
period in which the Sponsor maintains a secondary market for
Units, the Sponsor may repurchase any Unit presented for tender to
the Trustee for redemption no later than the close of business on
the second business day following such presentation and Unithol-
ders 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 in-
come 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, Stock will be sold pro rata, to the
extent possible, and if not possible Stocks having the greatest
amount of capital appreciation will be sold first. (See "Administra-
tion of the Trust"). However, with respect to redemption requests in
excess of $100,000, the Sponsor may determine in its discretion to
direct the Trustee to redeem Units "in kind" by distributing Securi-
ties to the redeeming Unitholder. When Stocks are so distributed, a
proportionate amount of each Stock will be distributed, rounded to
avoid the distribution of fractional shares and using cash or checks
where rounding is not possible. The Sponsor may direct the Trustee
to redeem Units "in kind" even if it is then maintaining a secondary
market in Units of the Trust. Securities will be valued for this
purpose as set forth under "Valuation". A Unitholder receiving a
redemption "in kind" may incur brokerage or other transaction
costs in converting the Stock distributed into cash. The availability
of redemption "in kind" is subject to compliance with all applicable
laws and regulations, including the Securities Act of 1933, as
amended.
To the extent that Securities are redeemed in kind or sold, the
size and diversity of the Trust will be reduced. Sales will usually be
required at a time when Securities would not otherwise be sold and
may result in lower prices than might otherwise be realized. The
price received upon redemption may be more or less than the
amount paid by the Unitholder depending on the value of the
Securities in the portfolio at the time of redemption. In addition,
because of the minimum amounts in which Securities are required
to be sold, the proceeds of sale may exceed the amount required at
the time to redeem Units; these excess proceeds will be distributed
20
<PAGE>
to Unitholders on the Distribution Dates.
The Trustee may, in its discretion, and will, when so directed
by the Sponsor, suspend the right of redemption, or postpone the
date of payment of the Redemption Value, for more than seven
calendar days following the day of tender for any period during
which the New York Stock Exchange, Inc. is closed other than for
weekend and holiday closings; or for any period during which the
Securities and Exchange Commission 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 Securities and Exchange Commission 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 discre-
tion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund
Evaluation") per Unit at the Valuation Time set forth under "Sum-
mary of Essential Information Regarding the Trust" (1) on each
business day as long as the Sponsor is maintaining a bid in the
secondary market, (2) on the business day on which any Unit is
tendered for redemption, (3) on any other day desired by the
Sponsor or the Trustee and (4) upon termination, by adding (a) the
aggregate value of the Securities and other assets determined by
the Trustee as set forth below and (b) cash on hand in the Trust
and dividends receivable on Stock trading ex-dividend (other than
any cash held in any reserve account established under the Inden-
ture) and deducting therefrom the sum of (x) taxes or other
governmental charges against the Trust not previously deducted, (y)
accrued fees and expenses of the Trustee and the Sponsor (includ-
ing legal and auditing expenses) and other Trust expenses. 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 New Year's Day, Wash-
ington's Birthday, 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 Stocks are listed on one or
more national securities exchanges or on the National Market
System maintained by the National Association of Securities Dealers
Automated Quotations System, such evaluation shall be based on
the closing sale price on that day (unless the Trustee deems such
price inappropriate as a basis for evaluation) on the exchange which
is the principal market thereof (deemed to be the New York Stock
Exchange if the Stocks are listed thereon) (2) if there is no such
appropriate closing sales price on such exchange or system, at the
mean between the closing bid and asked prices on such exchange
21
<PAGE>
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 Stock.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION
VALUE
On the business day prior to the Date of Deposit, the Public
Offering Price per Unit (which figure includes the sales charge)
exceeded the Redemption Value (see "Essential Information"). The
prices of the Securities 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.
EXPENSES OF THE TRUST
The cost of the preparation and printing of the Indenture and
this Prospectus, the initial fees of the Trustee, advertising expenses
and expenses incurred in establishing the Trust, including legal and
auditing fees, are paid by the Sponsor and not by the Trust. The
Sponsor will receive no fee from the Trust for its services as
Sponsor.
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 $.0025 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 ag-
gregate cost to it of supplying such services in such year.
For its services as Trustee and Evaluator, the Trustee will be
paid in monthly installments, annually $.0170 per Unit, based on
the largest number of Units outstanding during the previous month.
In addition, the regular and recurring expenses of the Trust are
estimated to be $.0055 per Unit annually which include, but are not
limited to certain mailing, printing, and audit expenses. Expenses in
excess of this estimate will be borne by the Trust. The Trustee
could also benefit to the extent that it may hold funds in non-
interest bearing accounts created by the Indenture.
The Sponsor's fee and Trustee's fee may be increased without
22
<PAGE>
approval of the Unitholders by an amount not exceeding a propor-
tionate increase in the category entitled "All Services Less Rent" in
the Consumer Price Index published by the United States Depart-
ment 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 each Trust and paid from the Income Account, or, to
the extent funds are not available in such Account, from the Capital
Account (see "Administration of the Trust--Accounts"): (1) fees for
the Trustee for extraordinary services; (2) expenses of the Trustee
(including legal and auditing expenses) and of counsel; (3) various
governmental charges; (4) expenses and costs of any action taken
by the Trustee to protect the trusts 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 in connection with the sale of
Securities; and (7) expenses incurred upon termination of the Trust.
In addition, to the extent then permitted by the Securities and
Exchange Commission, 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 Spon-
sor. The expenses of the audit shall be an expense of the Trust. So
long as the Sponsor maintains a secondary market, the Sponsor will
bear any audit expense which exceeds $.0050 per Unit. Unitholders
covered by the audit during the year may receive a copy of the
audited financials 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 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 Securi-
ties to meet the expenses of the Trust. Securities will be selected in
the same manner as is set forth under "Redemption".
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation on the books of
the Trustee. In order to avoid additional operating costs and for
investor convenience, certificates will not be issued unless a re-
quest, in writing with signature guaranteed by an eligible guarantor
institution or in such other manner as may be acceptable to the
Trustee, is delivered by the Unitholder to the Sponsor. Issued
Certificates are transferable by presentation and surrender to the
Trustee at its office in Boston, Massachusetts properly endorsed or
accompanied by a written instrument or instruments of transfer.
23
<PAGE>
Uncertificated Units are transferable by presentation to the Trustee
at its office in Boston of a written instrument of transfer.
Certificates may be issued in denominations of one Unit or any
integral multiple thereof as deemed appropriate by the Trustee. A
Unitholder may be required to pay $2.00 per certificate reissued or
transferred, and shall be required to pay any governmental charge
that may be imposed in connection with each such transfer or
interchange. For new certificates issued to replace destroyed, mu-
tilated, stolen or lost certificates, the Unitholder must furnish indem-
nity satisfactory to the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be surrendered to the
Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute dividends and interest, if any, from
the Income Account on the quarterly Distribution Dates to Unithol-
ders of record on the preceding Record Date. Distributions from the
Capital Account will be made on quarterly Distribution Dates to
Unitholders of record on the preceding Record Date. Distributions of
less than $.05 per Unit need not be made from the Capital Account
on any Distribution Date. See "Essential Information". Whenever
required for regulatory or tax purposes, the Trustee will make
special distributions of any dividends on special Distribution Dates
to Unitholders of record on special Record Dates declared by the
Trustee.
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").
ADMINISTRATION OF THE TRUST
Accounts. All dividends and interest received on Securities,
proceeds from the sale of Securities or other moneys received by
the Trustee on behalf of the Trust may be held in trust in
non-interest bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income Account
dividends, if any, and interest income, on Securities in the Trust. All
other receipts (i.e., return of principal and gains) are credited on its
books to a Capital Account. A record will be kept of qualifying
dividends within the Income Account. The pro rata share of the
Income Account and the pro rata share of the Capital Account
represented by each Unit will be computed by the Trustee as set
forth under "Valuation".
The Trustee will deduct from the Income Account and, to the
extent funds are not sufficient therein, from the Capital Account,
amounts necessary to pay expenses incurred by the Trust. (See
"Expenses and Charges.") In addition, the Trustee may withdraw
from the Income Account and the Capital Account such amounts as
may be necessary to cover redemption of Units by the Trustee.
(See "Redemption.")
The Trustee may establish reserves (the "Reserve Account")
within the Trust for state and local taxes, if any, and any other
24
<PAGE>
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.
Investors Bank & Trust 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 sixty (60) days after the end of each calendar year, the
Trustee will furnish each person who was a Unitholder at any time
during the calendar year an annual report containing the following
information, expressed in reasonable detail both as a dollar amount
and as a dollar amount per Unit: (1) a summary of transactions for
such year in the Income and Capital Accounts and any Reserves;
(2) any Securities sold during the year and the Securities held at
the end of such year; (3) the Trust Fund Evaluation per Unit, based
upon a computation thereof on the 31st day of December of such
year (or the last business day prior thereto); and (4) amounts
distributed to Unitholders during such year.
Portfolio Supervision. The portfolio of the Trust is not "man-
aged" 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:
(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 on any such Securities or the
existence of any other materially adverse legal question or impedi-
ment affecting such Securities or the declaration or payment of
dividends 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 outstand-
ing securities of the issuer or the guarantor of such Securities
which might materially and adversely, either immediately or contin-
gently, affect the declaration or payment of dividends on the
Securities;
(5) upon the decline in price or the occurrence of any materi-
ally 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 public tender offer being made for a Security, or a
merger or acquisition being announced affecting a Security that in
25
<PAGE>
the opinion of the Sponsor make the sale or tender of the Security
in the best interests of the Unitholders (as further described under
"Risk Factors and Special Considerations" herein);
(7) upon a decrease in the Sponsor's internal rating of the
Security; or
(8) upon the happening of events which, in the opinion of the
Sponsor, negatively affect the economic fundamentals of the issuer
of the Security or the industry of which it is a part.
Securities may also be sold in the manner described under
"The Trust". The Trustee may dispose of Securities where neces-
sary to pay Trust expenses or to satisfy redemption requests as
directed by the Sponsor, and the proceeds of such sale may not be
reinvested.
Cash received upon the sale of Stock (including sales to meet
redemption requests) and dividends received will not be reinvested
and will be held in a non-interest bearing account until distribution
on the next Distribution Date to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Spon-
sor 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 make such other provisions
as will not adversely affect the interest of the Unitholders.
The Indenture may be amended in any respect by the Sponsor
and the Trustee with the consent of the holders of 51% of the Units
then outstanding; provided that no such amendment shall (1)
reduce the interest in the Trust represented by a Unit or (2) reduce
the percentage of Unitholders required to consent to any such
amendment, without the consent of all Unitholders.
The Trustee will promptly notify Unitholders of the substance of
any amendment affecting Unitholders' rights or their interest in the
Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will terminate on the
Mandatory Termination Date. If the value of the Trust as shown by
any evaluation is less than fifty per cent (50%) 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 Termina-
tion 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 gov-
ernmental charges that may be payable by the Trust, distribute to
26
<PAGE>
each Unitholder, after due notice of such termination, such Unithol-
der'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 or-
ganized 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 com-
panies in its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to
the Trustee, any of the Trusts or to the Unitholders for taking any
action or for refraining from taking any action made in good faith or
for errors in judgment, but will be liable only for its own 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 Co-Trustees are The First National Bank of Chicago, a
national banking association with its corporate trust office at One
First National Plaza, Suite 0126, Chicago, Illinois 60670-0126 (which
is subject to supervision by the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and the Board of Governors
27
<PAGE>
of the Federal Reserve System) and Investors Bank & Trust Com-
pany, a Massachusetts trust company with its office at One Lincoln
Plaza, 89 South Street, Boston, Massachusetts 02111, toll-free
number 800-356-2754 (which is subject to supervision by the
Massachusetts Commissioner of Banks, the Federal Deposit Insur-
ance Corporation and the Board of Governors of the Federal Re-
serve 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 mis-
conduct, 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 Financial Condition and Schedule of Invest-
ments 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 Orrick, Herrington & Sutcliffe, 666 Fifth Avenue, New York, New
York, as counsel for the Sponsor.
28
<PAGE>
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of June 30, 1995
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank and Trust Company and
The First National Bank of Chicago
Date of Deposit: July 7, 1994
<S> <C>
Aggregate Market Value of Securities in Trust: $4,327,459
Number of Units: 461,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/461,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Net Assets in Trust $4,331,929
Divided by 461,000 Units $9.3968
Plus Sales Charge of 3.75% of Public Offering Price
(3.90% of net amount invested ) $.3661
Public Offering Price per Unit $9.7629
Redemption Value Per Unit: $9.3968
Excess of Public Offering Price: $.3661
Sponsors Repurchase Price Per Unit: $9.3968
Excess of Public Offering on Sponsors Repurchase: $.3661
Evaluation Time: 4 P.M. New York Time
Distribution Dates**: January 20, April 20, July 20,
October 20
Record Dates: March 31, June 30, September 30,
December 31
Mandatory Termination Date: July 20, 1997
Discretionary Liquidation Amount: 50% of the value of the
Securities upon completion
of the deposit of the Securities
Estimated Annual Expenses of the Trust*** $.0360 per Unit
*The Public Offering Price will be based upon the value of the Stocks next computed following receipt of the
purchase order plus the applicable sales charges. (See Valuation).
**See "Distributions".
***See "Expenses of the Trust". Estimated dividends from the Stocks, based upon last dividends actually paid, are
expected by the Sponsor to be sufficient to pay estimated expenses of the Trust.
</TABLE>
<PAGE>
<TABLE>
REPORT OF INDEPENDENT AUDITORS
<C> <S>
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES FIFTEEN:
We have audited the accompanying statement of financial condition of The PaineWebber Equity Trust, Growth
Stock Series Fifteen, including the schedule of investments, as of June 30, 1995 and the related statements of
operations and changes in net assets for the period from July 7, 1994 (date of deposit) to June 30, 1995. These
financial statements are the responsibility of the Co-Trustees. Our responsibility is to express an opinion on these
financial statements 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 statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of the securities owned as of June 30,
1995, as shown in the statement of financial condition and schedule of investments, by correspondence with the
Co-Trustees. An audit also includes assessing the accounting principles used and significant estimates made by the
Co-Trustees, 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 statements referred to above present fairly, in all material respects, the financial
position of The PaineWebber Equity Trust, Growth Stock Series Fifteen at June 30, 1995 and the results of its
operations and changes in its net assets for the period from July 7, 1994 to June 30, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
October 17, 1995
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES FIFTEEN
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
June 30, 1995
ASSETS
<S> <C>
Common Stock - at market value (Cost $3,686,870)
(note 1 to schedule of investments) $4,327,459
Dividends receivable 14,658
Cash 5,043
Total Assets $4,347,160
LIABILITIES AND NET ASSETS
Distributions payable $9,939
Accrued expenses payable 5,292
Total Liabilities 15,231
Net Assets (461,000 units of fractional undivided interest outstanding):
Cost of 461,000 units (note B) 3,830,514
Less sales charge (note C) (143,644)
Net amount applicable to investors 3,686,870
Net unrealized market appreciation (note D) 640,589
Net amount applicable to unitholders 4,327,459
Undistributed investment income-net 1,751
Undistributed proceeds from securities sold 2,719
Net assets 4,331,929
Total liabilities and net assets $4,347,160
Net asset value per Unit $9.3968
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES FIFTEEN
STATEMENT OF OPERATIONS
<CAPTION>
Period from
July 7, 1994
(date of
deposit ) to
June 30,
1995
<S> <C>
Operations:
Dividend income $78,115
Total investment income 78,115
Less expenses:
Trustee's fees, expenses and evaluator's expense 17,447
Total expenses 17,447
Investment income-net 60,668
Realized and unrealized gain (loss) on investments-net:
Net realized gain on securities transactions 781,218
Net change in unrealized market appreciation 640,589
Net realized and unrealized loss on investments 1,421,807
Net increase in net assets resulting from operations $1,482,475
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES FIFTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period from
July 7, 1994
(date of
deposit) to
June 30,
1995
<S> <C>
Operations:
Investment income-net $60,668
Net realized gain on securities transactions 781,218
Net change in unrealized market appreciation 640,589
Net increase in net assets resulting from operations 1,482,475
Less: Distributions to Unitholders (Note E)
Principal 1,881,693
Investment income 58,443
Total Distributions 1,940,136
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 962,218
Undistributed income at date of redemption 474
Total Redemptions 962,692
Decrease in net assets (1,420,353)
Net Assets:
Begining of Period 481,250
Supplemental Deposits 5,271,032
End of Period $4,331,929
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(A) The financial statements of the Trust are prepared on the accrual basis of accounting. Security transactions
are accounted for on the date the securities are purchased or sold.
(B) Cost to investors represents the initial public offering price as of the date of deposit, and the value of units
through supplemental deposits computed on the basis set forth under "Public Offering Price of Units".
(C) Sales charge in the Initial Public Offering period was 3.75% (3.90% of the net amount invested). See "Public
Offering of Units - Sales Charge and Volume Discount", for information relating to the secondary market.
(D) At June 30, 1995, the gross unrealized market appreciation was $649,430 and the gross unrealized market
depreciation was ($8,841). The net unrealized market appreciation was $640,589.
(E) Regular distributions of net income and principal receipts not used for redemption of units are made
quarterly. Special distributions may be made as the Sponsor and Trustee deem necessary to comply with income tax
regulations.
(F) The following units were redeemed with proceeds of securities sold as follows:
<CAPTION>
Period from
July 7, 1994
(date of
deposit) to
June 30,
1995
<S> <C>
Total number of units redeemed 99,000
Redemption amount $962,692
The following units were sold through supplemental
deposits:
Number of units sold 510,000
Value of amount, net of sales charge $5,275,633
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES FIFTEEN
SCHEDULE OF INVESTMENTS
As of June 30, 1995
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value (1)
<S> <C> <C>
Banking and Financial Institutions:
(12%)
Bank South Corp. 15,554 $346,076
Signet Banking Corp. 7,402 161,919
Biotechnology: (10%)
Amgen, Inc.* 1,700 136,744
Biogen, Inc.* 2,536 112,852
Chiron Corp.* 877 57,005
Genzyme Corp.* 2,862 114,480
Computer Software: (8%)
Borland International, Inc.* 27,970 360,114
Computer Hardware: (15%)
Digital Equipment Corp.* 15,644 637,493
Chemical: (17%)
Air Products and Chemicals, Inc. 7,105 396,104
Occidental Petroleum Corp. 15,416 352,641
Energy: (14%)
Baker Hughes, Inc. 13,517 277,098
Camco International, Inc. 13,841 323,533
Multi-Industry: (17%)
Philip Morris Companies, Inc. 5,639 419,401
Textron, Inc. 5,454 317,014
Telecommunications: (7%)
LIN Broadcasting Corp.* 2,490 314,985
TOTAL INVESTMENTS $4,327,459
(1)Valuation of Securities was made by the Co-Trustees as described in "Valuation".
*Non-income producing.
</TABLE>
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.2 Opinion of Counsel as to legality of securities
being registered.
EX-27 Financial Data Schedule
EX-99.C1 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
as of December 31, 1994 and March 31, 1995
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) filed on March 31,
1995 and May 15, 1995, respectively.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PaineWebber Equity Trust, Growth Stock Series 15
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned thereunto duly authorized,
and its seal to be hereunto affixed and attested, all in the City of
New York, and the State of New York on the 23rd day of October,
1995.
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 15
(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
Registration Statement has been signed on behalf of PaineWebber
Incorporated, the Depositor, by the following persons in the
following capacities and in the City of New York, and State of New
York, on this 23rd day of October, 1995.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sale & Marketing,
Director and Member of the Executive
Committee *
By:/s/ 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 the Registration
Statement for File No. 33-19786.
<PAGE>
<PAGE>
October 23, 1995
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber Equity
Trust, Growth Stock Series 15 (hereinafter referred to as the
"Trust"). The Depositor seeks by means of Post-Effective
Amendment No. 1 to register for reoffering 153,867 Units acquired
by the Depositor in the secondary market (hereinafter referred to as
the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 33-51891) to be filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "1933 Act") proposed to be filed on or about the
date hereof (the "Amendment");
(f) The Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as
amended (collectively, the "1940 Act") on Form N-8A, as
amended;
(g) The registration of the Trust filed with the Commission under the
1940 Act on Form N-8B-2 (File No. 811-3722), as amended;
(h) The prospectus included in the Amendment (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of
July 10, 1990, as amended, among the Depositor, and
Investors Bank & Trust Company and The First National Bank of
Chicago (the "Trustee"), as successor Co-Trustee, (the "Standard
Terms");
(j) The Trust Indenture dated as of the Date of Deposit, among the
Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
<PAGE>
Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other
than the States of New York and California and the United States,
except to the extent necessary to render the opinion as to the
Depositor in paragraph (i) below with respect to Delaware law. As
you know we are not licensed to practice law in the State of
Delaware, and our opinion in paragraph (i) and (iii) as to Delaware
law is based solely on review of the official statutes of the State of
Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> EQUITY GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-07-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 3,686,870
<INVESTMENTS-AT-VALUE> 4,327,459
<RECEIVABLES> 14,658
<ASSETS-OTHER> 5,043
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,347,160
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,231
<TOTAL-LIABILITIES> 15,231
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 461,000
<SHARES-COMMON-PRIOR> 560,000
<ACCUMULATED-NII-CURRENT> 1,751
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 640,589
<NET-ASSETS> 4,331,929
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 78,115
<OTHER-INCOME> 0
<EXPENSES-NET> 17,447
<NET-INVESTMENT-INCOME> 60,668
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 781,218
<NET-CHANGE-FROM-OPS> 640,589
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,482,475
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,420,353)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated October 17,
1995, in the Registration Statement and related Prospectus of the
PaineWebber Equity Trust, Growth Stock Series 15.
/s/ ERNST & YOUNG LLP
New York, New York
October 23, 1995
