File No. 33-49439
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 PATHFINDERS TRUST, TREASURY AND GROWTH STOCK
SERIES 16
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 April 8, 1996) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
2,302,600 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$2,863,283.10**
* Estimated solely for the purpose of calculating the registration fee, at
$1.24 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 1995 is 2,069,486.
There have been no previous filings of post-effective amendments during
the current fiscal year 2,069,486 redeemed or repurchased units are
being used to reduce the filing fee for this amendment.
PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 16
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.
(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.
(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.
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.
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.
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.
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.
PaineWebber Pathfinders Trust
Treasury and Growth Stock Series Sixteen
A "Unit Investment Trust"
10,400,000 Units
The investment objective of this Trust is to
preserve capital while providing for capital ap-
preciation through an investment in "zero-coupon"
United States Treasury obligations (the "Treasury
Obligations") and equity stocks having, in Spon-
sor's opinion on the Date of Deposit, potential
for appreciation (the "Stocks"). The value of the
Units will fluctuate with the value of the port-
folio 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 DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRO-
SPECTUS. 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 PUR-
CHASE FROM THE TRUSTEE OF UNITS TENDERED FOR RE-
DEMPTION OR IN THE SECONDARY MARKET.
l SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for fu-
ture reference.
Prospectus dated April 8, 1996
Essential Information Regarding The Trust
The Trust. The objective of the PaineWebber
Pathfinders Trust, Treasury and Growth Stock Se-
ries 16 (the "Trust") is preservation of capital
and capital appreciation through an investment in
the principal or interest portions of stripped
"zero-coupon" United States Treasury notes or
bonds as the case may be (the "Treasury Obliga-
tions"), and equity stocks (the "Stock") which,
in Sponsor's opinion on the Initial Date of De-
posit, have potential for capital appreciation
(collectively, the "Securities"). The stripped
Treasury Obligations in the Trust portfolio are
interest-only portions of United States Treasury
Obligations (as further discussed under "Risk
Factors and Special Characteristics"), maturing
on February 15, 2004, represent approximately 52%
of the aggregate market value of the Trust port-
folio and the Stocks represent approximately 48%
of the aggregate market value of the Trust port-
folio. The stripped Treasury Obligations, as dis-
cussed below, make no payment of current inter-
est, but rather make a single payment upon their
stated maturity. Because the maturity value of
the Treasury Obligations is backed by the full
faith and credit of the United States, the Spon-
sor believes that the Trust provides an attrac-
tive combination of safety and appreciation for
purchasers who hold Units until the Trust's ter-
mination. The Trust has been formulated so that
the portion of the Trust invested in stripped
Treasury Obligations is designed to provide an
approximate return of principal invested on the
Mandatory Termination Date for purchasers on the
Initial Date of Deposit. (See "Essential Informa-
tion--Distributions".) Therefore, even if the
Stocks are valueless upon termination of the
Trust, and if the Treasury Obligations are held
until their maturity in proportion to the Units
outstanding, purchasers will receive, at the ter-
mination of the Trust, $1,000 per 1,000 Units
purchased. This feature of the Trust provides
that Unitholders who hold their units to the Man-
datory Termination Date of the Trust on March 2,
2004, will receive the same amount as they origi-
nally invested, although they would have foregone
earning any interest on the amounts involved and
will not protect their principal on a present
value basis, assuming the Stocks are valueless.
Therefore, the Trust may be an attractive invest-
ment to those persons who buy their Units during
the initial offering period and hold such Units
throughout the life of the Trust until the Trust
matures.
Summary of Risk Factors. The stripped Treasury
Obligations may appreciate or depreciate in value
depending upon economic and market conditions.
(For a further discussion of stripped Treasury
Obligations, see "Risk Factors and Special Con-
siderations.") The Stock may appreciate or depre-
ciate in value (or pay dividends) depending on
the full range of economic and market influences
affecting corporate profitability, the financial
condition of issuers, the prices of equity secu-
rities in general and the Stock in particular and
the risk inherent in an investment made in common
stocks in general. In addition, the stripped
Treasury Obligations may fluctuate substantially
in value and may be subject to greater fluctua-
tions in value during the life of the Trust than
might be experienced by current interest-bearing
Treasury Obligations which distribute income
regularly. There is no assurance that the Trust's
objective will be achieved at the Trust's in-
tended maturity or if the Trust is terminated or
Units redeemed prior to the Trust's intended ma-
turity. The value of the Securities and, there-
fore, the value of Units may be expected to fluc-
tuate. Purchasers who purchase Units subsequent
to the Initial Date of Deposit will receive, if
the pro rata portion of the Treasury Obligations
are held until maturity, $1,000 per 1,000 Units
as a return of such purchaser's principal invest-
ment, regardless of the purchase price paid by
such purchaser. (See "Risk Factors and Special
Considerations.")
The Composition of the Portfolio. PaineWebber
understands the importance of long-term financial
goals such as planning for retirement, funding a
child's education, or trying to build wealth to-
ward some other objective.
In PaineWebber's view, one of the most important
investment decisions an investor faces may be de-
termining how to best allocate his investments to
capture growth opportunities without exposing his
portfolio to undue risk. For long-term capital
growth, many investment experts recommend stocks.
As with all investments, the higher return poten-
tial of equities is typically associated with
higher risk. With this in mind, PaineWebber de-
signed a portfolio to meet the needs of investors
interested in building wealth prudently over a
long-term time horizon by pairing the security of
U.S. Treasury bonds with the growth potential of
Stocks.
The main objective of PaineWebber in construct-
ing the portfolio of stocks was to select a group
of stocks which, in PaineWebber's view, would be
capable of, over the long-term, closely tracking
the performance of the market as measured by the
S&P 500. The S&P 500 is an unmanaged index of 500
stocks calculated under the auspices of Standard
& Poor's, which, in PaineWebber's view, is a
broadly diversified, representative segment of
the market of all publicly traded stocks in the
United States.
To achieve this result, a computer program was
run against the 500 S&P stocks to construct the
portfolio by identifying the 40 S&P 500 stocks
(excluding IBM and General Electric) which have
the highest correlation with the S&P 500 Index
with the smallest tracking error.
The Trust portfolio, in PaineWebber's opinion,
is comprised of a diversified group of companies
representing various industries. These are common
stocks issued by companies who may receive income
and derive revenues from multiple industry
sources but whose primary source is listed in the
table below. For a list of the individual common
stocks comprising each industry group listed be-
low, investors should consult the "Schedule of
Investments" herein.
Approximate Percentage of
Primary Industry Source Aggregate Net Asset Value of the Trust
Aerospace/Defense 1.37%
Automobile 2.21
Automobile Parts--Replacement 1.02
Beverages 2.85
Chemicals 2.08
Computer Software 1.27
Electronics 3.53
Environmental Control 0.98
Financial Banks--Commercial 4.04
Food--Processing 2.47
Forest Products & Paper 1.01
Insurance 2.10
Manufacturing 1.17
Office/Business Equipment 2.57
Oil/Gas--International 4.44
Pharmaceuticals 5.44
Publishing/Printing 2.23
Restaurants/Food Service 0.18
Retail 1.73
Retail--Special Line 0.92
Telecommunications 4.66
The Sponsor anticipates that, based upon last
dividends actually paid, dividends from the Stock
will be sufficient (i) to pay expenses of the
Trust (see "Expenses of the Trust" herein), and
(ii) after such payment, to make distributions of
such to Unitholders as described below under
"Distributions".
Additional Deposits. After the first deposit on
the Initial Date of Deposit the Sponsor may, from
time to time, cause the deposit of additional Se-
curities in the Trust where additional Units are
to be offered to the public, maintaining, ex-
actly, the original percentage relationship be-
tween the maturity values of the Treasury Obliga-
tions and the number of shares of the Stocks de-
posited on the Initial Date of Deposit, subject
to certain adjustments. Costs incurred in acquir-
ing such additional Stocks which are not listed
on any national securities exchange, including
brokerage fees, stamp taxes and certain other
costs associated with purchasing such additional
Stocks, will be borne by the Trust. Investors
purchasing Units during the initial public offer-
ing period will experience a dilution of their
investment as a result of such brokerage fees and
other expenses paid by the Trust during addi-
tional deposits of Securities purchased by the
Trustee with cash or cash equivalents pursuant to
instructions to purchase such Securities. (See
"The Trust" and "Risk Factors and Special Consid-
erations".)
Termination. As directed by the Sponsor,
approximately 30 days prior to the maturity of
the Treasury Obligations the Trustee will begin
to sell the Stocks held in the Trust. Stocks
having the greatest amount of capital
appreciation will be sold first. In certain
circumstances, monies held upon the sale of
Securities may, at the direction of the Sponsor,
be invested for the benefit of Unitholders in
United States Treasury obligations which mature
on or prior to the next distribution date (see
"Administration of the Trust--Reinvestment"),
otherwise monies held upon the 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 within 15
days after the Treasury Obligations mature. (See
"Termination of the Trust" and "Federal Income
Taxes".)
Public Offering Price. The Public Offering
Price per Unit is computed by dividing the Trust
Fund Evaluation by the number of Units
outstanding and then adding a sales charge of
4.75% of the Public Offering Price (4.99% of the
net amount invested). The sales charge is reduced
after the first year and on a graduated scale for
sales involving at least $50,000 or 50,000 Units
and will be applied on whichever basis is more fa-
vorable to the purchaser. (See "Public Offering
of Units--Sales Charge and Volume Discount".)
The public offering price on the Date of Deposit
is determined on the basis of the value of the Se-
curities as of the close of business on the
preceding business day (i.e., by "backward
pricing") pursuant to an exemptive order of the
Securities and Exchange Commission, which applies
only to purchase orders received on the Initial
Date of Deposit. As a condition of that order,
however, if the public offering price based on
the value of the Securities as of the close of
business on the Initial Date of Deposit (i.e., by
"forward pricing") would be less than $.97 1/2 ,
then purchase orders received on that day will be
filled on the basis of the lower public offering
price.
Distributions. The Trustee will distribute any
net income and principal received quarterly on
the Distribution Dates. Income with respect to
the original issue discount on the Treasury
Obligations will not be distributed although
Unitholders will be subject to income tax at
ordinary income rates as if a distribution had
occurred. (See "Federal Income Taxes".) Upon
termination of the Trust, the Trustee will
distribute to each Unitholder his pro rata share
of the Trust's assets, less expenses. The sale of
Stocks in the Trust in the period prior to
termination and upon termination may result in a
lower amount than might otherwise be realized if
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. Unless a
Unitholder purchases Units on the Date of Deposit
and unless the Treasury Obligations in proportion
to the Units outstanding remain in the Trust,
total distributions, including distributions made
upon termination of the Trust, may be less than
the amount paid for a Unit.
Market for Units. The Sponsor, though not
obligated to do so, presently intends to maintain
a secondary market for Units based upon the bid
side evaluation of the Treasury Obligations. The
public offering price in the secondary market
will be based upon the value of the Securities
next determined after receipt of a purchase order
plus the applicable sales charge. (See "Public
Offering of Units--Public Offering Price" and
"Valuation".) If a secondary market is not
maintained, a Unitholder may dispose of his Units
only through redemption. With respect to
redemption requests in excess of $100,000, the
Sponsor may determine in its sole discretion to
direct the Trustee to redeem units "in kind" by
distributing Securities to the redeeming
Unitholder as directed by the Sponsor. (See
"Redemption".)
THE TRUST
The Trust is one of a series of similar but
separate unit investment trusts created by the
Sponsor pursuant to a Trust Indenture and
Agreement* (the "Indenture") dated as of the
Initial Date of Deposit, among PaineWebber
Incorporated, as Sponsor and the Investors Bank &
Trust Company and The First National Bank of
Chicago, as Co-Trustees (the "Co-Trustees" or
"Trustee"). The objective of the Trust is pres-
ervation of capital and capital appreciation
through an investment in Treasury Obligations and
Stocks. These are equity stocks, which, in the
Sponsor's opinion on the Date of Deposit, are
capable of, over the long-term, closely tracking
the performance of the market as measured by the
S&P 500. The Stocks contained in the Trust are
representative of a number of different
industries. Dividends, if any, received will be
held by the Trustee in non-interest bearing
accounts until used to pay expenses or
distributed to Unitholders on the next Distribu-
tion Date and to the extent that funds are held
therein will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor
deposited with the Trustee the confirmations of
contracts for the purchase of Securities together
with an irrevocable letter or letters of credit
of a commercial bank or
_________________
* Reference is hereby made to said Trust
Indenture and Agreement and any statements
contained herein
are qualified in their entirety by the
provisions of said Trust Indenture and Agreement.
banks in an amount at least equal to the purchase
price. The value of the Securities was determined
on the basis described under "Valuation". In
exchange for the deposit of the contracts to
purchase Securities, the Trustee delivered to the
Sponsor a registered certificate for Units
representing the entire ownership of the Trust.
On the Initial Date of Deposit the fractional
undivided interest in the Trust represented by a
Unit was as set forth in "Essential Information
Regarding the Trust".
With the deposit on the Initial Date of Deposit,
the Sponsor established a proportionate
relationship between the maturity value of the
Treasury Obligations and the number of shares of
each Stock in the Trust. The Sponsor may, from
time to time, cause the deposit of additional
Securities in the Trust when additional Units are
to be offered to the public, maintaining,
exactly, the original percentage relationship
between the maturity value of the Treasury
Obligations and the number of shares of Stock
deposited on the Initial Date of Deposit and
replicating any cash or cash equivalents held by
the Trust (net of expenses). The original
proportionate relationship is subject to
adjustment to reflect the occurrence of a stock
split or 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. Stock dividends
received by the Trust, if any, will be sold by
the Trustee and the proceeds therefrom shall be
treated as income to the Trust.
The Treasury Obligations consist of U.S.
Treasury obligations which have been stripped of
their unmatured interest coupons or interest
coupons stripped from the U.S. Treasury
Obligations. The obligor with respect to the
Treasury Obligations is the United States
Government. U.S. Government backed obligations
are considered the safest investment.
On the Initial Date of Deposit each Unit
represented the fractional undivided interest in
the Securities and net income of the Trust set
forth under "Essential Information Regarding the
Trust". 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 undi-
vided interest represented by each Unit in the
balance will be decreased. If any Units are
redeemed, the aggregate value of Securities in
the Trust will be reduced, and the fractional
undivided interest represented by each remaining
Unit in the balance will be increased. Units will
remain outstanding until redeemed upon tender to
the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of the
Trust. (See "Termination of the Trust".)
RISK FACTORS AND SPECIAL CONSIDERATIONS
Risk Factors. An investment in the Trust should
be made with the understanding of the risks inher-
ent in an investment in deep discount or "zero-
coupon" debt obligations and the risks associated
with an investment in common stocks in general.
The Trust contains stripped Treasury Securities
described below (see "Schedule of Investments").
Stripped Treasury Securities consist of
"interest-only" or "principal-only" portions of
Treasury Obligations. Interest-only portions of
Treasury Obligations represent the rights only to
payment of interest on a date certain, and
principal-only portions of Treasury Obligations
represent the rights only to payment of principal
at a stated maturity. Interest-only and
principal-only portions of Treasury Obligations
are deep discount obligations that are
economically identical to zero-coupon
obligations; that is, all such instruments are
debt obligations which make no periodic payment
of interest prior to maturity. The stripped
Treasury Securities in the Trust were purchased
at a deep discount and do not make any periodic
payments of interest. Instead, the entire payment
of proceeds will be made upon maturity of such
Treasury Obligations. The effect of owning deep
discount bonds which do not make current interest
payments (such as the stripped Treasury
Obligations in the Trust Portfolio) is that a
fixed yield is earned not only on the original
investment but also, in effect, on all earned
discount during the life of the discount
obligation. This implicit reinvestment of
earnings at the same rate eliminates the risk of
being unable to reinvest the income on such
obligations at a rate as high as the implicit
yield on the discount obligation, but at the same
time eliminates the holder's ability to reinvest
at higher rates in the future. For this reason,
while the full faith and credit of the United
States Government provides a high degree of
protection against credit risks, sale of Units
prior to the termination date of the Trust will
involve substantially greater price fluctuations
during periods of changing market interest rates
than would be experienced in connection with sale
of Units of a Trust which held Treasury
Obligations which made scheduled interest
payments on a current basis.
An investment in Units of the Trust should also
be made with an understanding of the risks
inherent in an investment in common stocks in
general. The general risks are associated with
the rights to receive payments from the issuer
which are generally inferior to creditors of, or
holders of debt obligations or preferred stocks
issued by, the issuer. Holders of common stocks
have a right to receive dividends only when and
if, and in the amounts, declared by the issuer's
board of directors and to participate in amounts
available for distribution by the issuer only
after all other claims against the issuer have
been paid or provided for. By contrast, holders
of preferred stocks have the right to receive
dividends at a fixed rate when and as declared by
the issuer's board of directors, normally on a
cumulative basis, but do not participate in other
amounts available for distribution by the issuing
corporation. Dividends on cumulative preferred
stock must be paid before any dividends are paid
on common stock. Preferred stocks are also
entitled to rights on liquidation which are
senior to those of common stocks. For these
reasons, preferred stocks generally entail less
risk than common stocks.
Common stocks do not represent an obligation of
the issuer. Therefore they do not offer any assur-
ance 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 com-
mon stock or the rights of holders of common
stock with respect to assets of the issuer upon
liquidation or bankruptcy. Unlike debt securities
which typically have a stated principal amount
payable at maturity common stocks do not have a
fixed principal amount or a maturity.
Additionally, the value of the Stocks, like the
Treasury Obligations, in the Trust may be
expected to fluctuate over the life of the Trust
to values higher or lower than those prevailing
on the Date of Deposit. The Stocks may appreciate
or depreciate in value (or pay dividends)
depending on the full range of economic and
market influences affecting corporate profitabil-
ity, the financial condition of issuers and the
prices of equity securities in general and the
Stocks in particular.
There is no assurance that the Trust's objective
will be achieved. Until distributed, dividends
and principal received upon the sale of Stocks
may be reinvested, until the next applicable
distribution date, in current interest-bearing
United States Treasury Obligations. (See
"Administration of the Trust-- Reinvestment".)
(The Treasury Obligations, the current interest-
bearing United States Treasury Obligations if
any, and the Stocks may be collectively 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 cash
equivalents, e.g., 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 Evaluation 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 in-
structions to purchase the Security and the time
the cash is used to purchase the Security, Units
will represent less or more of that Security and
more or less of the other Securities in the
Trust. Unitholders will be at risk because of
price fluctuations during this period since if
the price of shares of a Security increases,
Unitholders will have an interest in fewer shares
of that Security, and if the price of a Security
decreases, Unitholders will have an interest in
more shares of that Security, than if the
Security had been purchased on the date cash was
deposited with instructions to purchase the
Security. In order to minimize these effects, the
Trust will attempt to purchase Securities as
close as possible to the Evaluation Time or at
prices as close as possible to the prices used to
evaluate the Trust at the Evaluation Time. Thus
price fluctuations during this period will affect
the value of every Unitholder's Units and the
income per Unit received by the Trust. In
addition, costs incurred in connection with the
acquisition of Securities not listed on any
national securities exchange (due to
differentials between bid and offer prices for
the Securities) and brokerage fees, stamp taxes
and other costs incurred in purchasing stocks
will be at the expense of the Trust and will
affect the value of every Unitholder's Units.
Special Considerations. The 42 Stocks in the
Portfolio represent large, well-known companies.
There follows a brief description of each company
as of the Initial Date of Deposit. AT&T is a
leading provider of long distance phone service,
phone equipment and computers. Abbott
Laboratories is a leading multinational health
care company operating in two main industry
segments: pharmaceutical and nutritional products
and hospital and laboratory products. Airtouch
Communications represents one of the premier
wireless companies in the world with cellular,
paging and wireless data operations covering 85
million people worldwide. American International
Group (AIG) offers property and casualty, marine
and life insurance, along with other financial
services. Amoco is a major international oil
company and the largest producer of natural gas
in North America. Banc One Corporation is an
Ohio-based bank with over 1300 offices in 12
states. BankAmerica is the second largest bank in
the U.S. BellSouth is the largest U.S. phone
holding company. Bristol-Myers Squibb is the
world's third largest pharmaceutical company.
Chevron is an international oil company. Coca-
Cola, the world's largest producer and
distributor of soft drinks, sells its products in
approximately 170 countries around the world. Dow
Chemical is the fifth largest chemical company in
the world, it manufactures and supplies more than
2,000 products and services worldwide. Dupont is
considered the world's largest chemical company,
although 40% of its assets are in oil and gas.
Dun & Bradstreet, a major marketer of business
information and related services, owns Moody's
and A.C. Nielsen. Emerson Electric is a
diversified manufacturing company whose key
products include motors, controls, tools and
industrial automation equipment sold worldwide.
Exxon is a major oil, natural gas and petro-
chemicals company. Ford Motor Company is the
second largest automaker in the world and has
large financial services operations. Gannett
publishes over 80 daily newspapers, including USA
Today, 50 non-daily papers, and is the owner of
television and radio stations, along with an
outdoor advertising company. General Mills is a
consumer foods company whose brands include Betty
Crocker, Bisquick and Gold Medal. General Motors
is the largest industrial corporation and largest
automaker in the world. GM has large operations
in financial services (GMAC), aerospace/defense
(Hughes) and computer services (EDS). Genuine
Parts is the primary member of the national auto
parts association (NAPA). Genuine Parts' largest
division is the automotive parts group which
operates 66 NAPA distribution centers serving
approximately 5900 NAPA stores. Hewlett Packard
is a leading worldwide manufacturer of computers,
test and measurement instruments, medical
systems, electronic components and computer
peripherals, including its well-known laserjet
printers. Home Depot operates 313 warehouse
stores in 26 states and Canada selling building
materials, home improvement items for "do it
yourself" and home remodeling items. Johnson &
Johnson is the world's largest and most
comprehensive health care product manufacturer
serving the consumer, pharmaceutical and
professional markets. Merck is the world's
largest prescription drug company. Microsoft is a
major producer of software for personal
computers. Minnesota Mining and Manufacturing
makes recording tape, abrasives, specialty
chemicals, health care products and office
supplies. Motorola is the leading producer of
personal communications equipment, including
cellular telephones, portable two-way radios and
pocket pagers. NationsBank is the fifth largest
bank in the U.S. Pacific Telesis Group is a phone
company currently serving 14 million customers in
California and Nevada. Pepsico operates in three
major domestic and international businesses: soft
drinks (with about one-third of total U.S. sales
and 15% internationally), snack foods (Frito-Lay)
and restaurants (including Pizza Hut, Taco Bell
and Kentucky Fried Chicken). Philip Morris is the
largest consumer packaged goods company in the
world, whose wholly-owned subsidiaries include
Philip Morris, Inc., Philip Morris International,
Kraft General Foods and Miller Brewing. Pitney
Bowes, a maker of postage meters and related
mailing equipment, also provides dictation
systems, copiers, fax machines and other office
equipment. Royal Dutch Petroleum, a major
integrated oil company, owns Shell Oil in the
U.S. Sears, Roebuck is a major retailer. United
Technologies produces plane engines, helicopters,
elevators and air conditioners. WMX Technologies
is a provider of environmental services. Wal-Mart
Stores operates almost 2,000 Wal-Mart discount
department stores, 100 supercenters and 435 Sam's
Wholesale Clubs. Weyerhaeuser is a major forest
products company which also has real estate and
financial services units. Xerox makes copiers and
other office equipment, as well as offering
financial services.
In the event a contract to purchase a Security
fails, the Sponsor will refund to each Unitholder
the portion of the sales charge attributable to
such failed contract. Principal and income, if
any, attributable to such failed contract will be
distributed to Unitholders of record on the last
business day of the month in which the fail
occurs within 20 days of such record date.
Because the Trust is organized as a unit
investment trust, rather than as a investment com-
pany, the Trustee and the Sponsor do not have
authority to manage Trust's assets fully in an at-
tempt to take advantage of various market
conditions to improve the Trust's net asset
value, but may dispose of Securities under
limited circumstances. (See "Administration of
the Trust--Portfolio Supervision".)
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, exchange, redemption, or payment at
maturity) or when the Unitholder sells its Units
or redeems its Units for cash. The total tax cost
of each Unit to a Unitholder is allocated among
each of the Securities in accordance with the
proportion of the Trust comprised by each
Security to determine the per Unit tax cost for
each Security.
3. The Trust is not an association taxable as a
corporation for New York State income tax pur-
poses. 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 Unitholder's particular 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 advised 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 on Stocks, original issue discount or
interest on Treasury Obligations, gains or losses
upon sales of Securities by the Trust and a pro
rata share of the expenses of the Trust.
Unitholders should note that their taxable income
from an investment in Units will exceed cash
distributions because taxable income will include
accretions of original issue discount on the
Treasury Obligations, as well as amounts that are
not distributed to Unitholders but are used by
the Trust to pay expenses.
Distributions with respect to Stock, to the
extent they do not exceed current or accumulated
earnings and profits of the distributing
corporation, will be treated as dividends to the
Unitholders and will be subject to income tax at
ordinary rates. Corporate Unitholders may be
entitled to the dividends-received deduction dis-
cussed below.
To the extent distributions with respect to a
Stock were to exceed the issuing corporation's
current and accumulated earnings and profits,
they would not constitute dividends. Rather, they
would be treated as a tax free return of capital
and would reduce a Unitholder's tax cost for such
Stock. 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 Uni-
tholder's adjusted gross income. Thus, a
Unitholder's taxable income from an investment in
Units will exceed amounts distributed because
taxable income would include amounts that are not
distributed to Unitholders 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 limitations provided in Section 246 and 246A
of the Code. The dividends-received deduction
generally equals 70 percent of the amount of the
dividend. As a result, the maximum effective tax
rate on dividends received generally will be
reduced from 35 percent to 10.5 percent. A
portion of the dividends-received deduction may,
however, be subject to the alternative minimum
tax. Individuals, partnerships, trusts, S
corporations and certain other entities are not
eligible for the dividends-received deduction.
Original Issue Discount. The Trust will contain
principal or interest portions of stripped "zero-
coupon" United States Treasury Obligations which
are treated as bonds that were originally issued
at a discount ("original issue discount").
Original issue discount represents interest for
federal income tax purposes and can generally be
defined as the difference between the price at
which a bond was issued and its stated redemption
price at maturity. For purposes of the preceding
sentence, stripped obligations, such as the
Treasury Obligations, which variously consist
either of the right to receive payments of
interest or the right to receive payments of
principal, are treated by each successive
purchaser as originally issued on their purchase
dates at an issue price equal to their respective
purchase prices thereof. The market value of the
Trust assets comprising the Trust will be
provided to a Unitholder upon request in order to
enable the Unitholder to calculate the original
issue discount attributable to each of the
Treasury Obligations. Original issue discount on
Treasury Obligations (which were issued or
treated as issued on or after July 2, 1982) is
deemed earned in a geometric progression over the
life of such obligation, taking into account the
compounding of accrued interest at least
annually, resulting in an increasing amount of
income in each year. Each Unitholder is required
to include in income each year the amount of
original issue discount which accrues on its pro
rata portion of each Treasury Obligation with
original issue discount. The amount of accrued
original issue discount included in income with
respect to a Unitholder's pro rata interest in
Treasury Obligations is thereupon added to the
tax cost for such obligations.
Gain or Loss on Sale. If a Unitholder sells or
otherwise disposes of a Unit, the Unitholder
generally will recognize gain or loss in an
amount equal to the difference between the amount
realized on the disposition allocable to the
Securities and the Unitholder's adjusted tax
bases in the Securities. In general, such
adjusted tax bases will equal the Unitholder's
aggregate cost for the Unit increased by any
accrued original issue discount. Such gain or
loss will be capital gain or loss if the Unit and
underlying Securities were held as capital
assets, except that such gain will be treated as
ordinary income to the extent of any accrued
original issue discount not previously reported.
Each Unitholder generally will also recognize
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 certain aspects of the
federal income tax consequences of an investment
in the Trust. Unitholders may also be subject to
state and local taxation. Each Unitholder should
consult its own tax advisor regarding the
federal, state and local tax consequences 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 Investment 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 on the Initial Date of Deposit is equal
to the aggregate market value of the Securities
determined on the day preceding the Initial Date
of Deposit, divided by the number of Units
outstanding plus the sales charge of 4.75%,
pursuant to an exemptive order of the SEC.
However, if the price would be less than $.97 1/2
then purchase orders received that day will be
filled on the basis of the lower public offering
price. Thereafter, the public offering price
during the initial offering period will be
computed by dividing the Trust Fund Evaluation,
next determined after receipt of a purchase
order, and, with respect to the Treasury
Obligations, determined with reference to the
offering side evaluation, by the number of Units
outstanding plus the applicable sales charge. The
initial public offering period will terminate
when the Sponsor chooses to discontinue offering
Units in the initial market. Thereafter, the
Sponsor may offer Units in the secondary market.
The public offering price in the secondary market
will be the Trust Fund Evaluation per Unit next
determined after receipt of a purchase order,
determined with respect to the Treasury
Obligations on the bid side of the market, plus
the applicable sales charge. (See "Valuation".)
The public offering price on any date subsequent
to the Initial Date of Deposit will vary from the
public offering price calculated on the business
day prior to the Initial Date of Deposit (as set
forth on page 2 hereof) due to fluctuations in
the value of Stocks and the Treasury Obligations.
Sales Charge and Volume Discount. 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 of
scales in sales effort and sales related expenses
relating to volume purchases. The sales charge
applicable to volume purchasers of Units is
reduced on a graduated scale for sales to any
person of at least $50,000 or 50,000 Units,
applied on whichever basis is more favorable to
the purchaser.
Initial Public Offering Period and
Secondary Market Through January 24, 1997
Percent of
Public Percent of
Offering Net Amount
Aggregate Dollar Value of Units Price Invested
Less than $50,000 4.75% 4.99%
$50,000 to $99,999 4.50 4.71
$100,000 to $249,999 4.25 4.44
$250,000 to $499,999 3.75 3.90
$500,000 to $749,999 3.25 3.36
$750,000 to $999,999 2.75 2.83
$1,000,000 to $1,999,999 2.25 2.30
$2,000,000 or more 2.00 2.04
* The sales charge applicable to volume
purchasers according to the table above will be
applied on either a dollar or Unit basis,
depending upon which basis provides a more
favorable purchase price to the purchaser.
Secondary Market From January 25, 1997 Through January 24,
1999
Percent of
Public Percent of
Offering Net Amount
Aggregate Dollar Value of Units Price Invested
Less than $50,000 4.25% 4.44%
$50,000 to $99,999 4.00 4.17
$100,000 to $249,999 3.75 3.90
$250,000 to $499,999 3.00 3.09
$500,000 to $749,999 2.75 2.83
$750,000 to $999,999 2.50 2.56
$1,000,000 to $1,999,999 2.00 2.04
$2,000,000 or more 1.75 1.78
* The sales charge applicable to volume
purchasers according to the table above will be
applied on either a dollar or Unit basis,
depending upon which basis provides a more
favorable purchase price to the purchaser.
Secondary Market From January 25, 1999 Secondary Market on and After
Through January 24, 2001 January 25, 2001
Percent of Percent of
Public Percent of Public Percent of
Offering Net Amount Offering Net Amount
Price Invested Price Invested
3.25% 3.36% 2.25% 2.30%
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
1,000 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 Corporate Bond Trust (the
"Corporate Series"); PaineWebber Pathfinder'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
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 Accounts. 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 secondary market maintained
by the Sponsor in both the Units of this series
and units of the applicable Exchange Trust and
there are units of the applicable Exchange Trust
available for sale. While the Sponsor has
indicated that it intends to maintain a market
for the Units of the respective Trusts, there is
no obligation on its part to maintain such a
market. Therefore, there is no assurance that a
market for Units will in fact exist on any given
date at which a Unitholder wishes to sell his
Units of this series and thus there is no
assurance that the Exchange Option will be
available to a Unitholder. Exchanges will be
effected in whole Units only. Any excess proceeds
from Unitholders' Units being surrendered will be
returned. Unitholders will be permitted to
advance new money in order to complete an
exchange to round up to the next highest number
of Units. An exchange of Units pursuant to the
Exchange Option will normally constitute a
"taxable event" under the Code and a Unitholder
will generally recognize a tax gain or loss at
the time of exchange in the same manner as upon a
sale of Units. Unitholders are urged to consult
their own tax advisors as to the tax consequences
to them of exchanging Units in particular cases.
The Sponsor reserves the right to modify,
suspend or terminate this Exchange Option at any
time without further notice to Unitholders. In
the event the Exchange Option is not available to
a Unitholder at the time he wishes to exercise
it, the Unitholder will be immediately notified
and no action will be taken 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
Certificate. Units of the Exchange Trust will be
sold to the Unitholder at a price based upon the
next determined market value of the Securities in
the Exchange Trust plus the reduced sales charge.
Exchange transactions will be effected only in
whole units; thus, any proceeds not used to
acquire whole units will be paid to the selling
Unitholder.
For example, assume that a Unitholder, who has
three thousand units of a trust with a current
price of $1.30 per unit, desires to sell his
units and seeks to exchange the proceeds for
units of a series of an Exchange Trust with a
current price of $890 per unit based on the bid
prices of the underlying securities. In this
example, which does not contemplate any rounding
up to the next highest number of Units, the pro-
ceeds from the Unitholder's units would aggregate
$3,900. Since only whole units of an Exchange
Trust may be purchased under the Exchange Option,
the Unitholder would be able to acquire four
units in the Exchange Trust for a total cost of
$3,620 ($3,560 for the units and $60 for the
sales charge). If all 3,000 units were tendered,
the remaining $280 would be returned to the
Unitholder.
Conversion Option. Owners of units of any
registered unit investment trust sponsored by
another which was initially offered at a maximum
applicable sales charge of at least 3.0% (a
"Conversion Trust") may elect to apply the cash
proceeds of the sale or redemption of those units
directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15
per Unit (or per 100 Units in the case of Ex-
change 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 exercise this option,
the owner should notify his retail broker. He
will be given a prospectus for each series in
which he indicates interest and for which units
are available. The dealer must sell or redeem the
units of the Conversion Trust. Any dealer other
than PaineWebber must certify that the purchase
of units of the Exchange Trust is being made
pursuant to and is eligible for the Conversion
Option. The dealer will be entitled to two thirds
of the applicable reduced sales charge. The
Sponsor reserves the right to modify, suspend or
terminate the Conversion Option at any time
without further notice, including the right to
increase the reduced sales charge applicable to
this option (but not in excess of $5 more per
Unit (or per 100 Units or per 1,000 Units, as ap-
plicable) 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 of the prospectus.
Distribution of Units. The minimum purchase
during the initial public offering is $1,000,
except that the minimum purchase is $250 for
purchases made in connection with Individual
Retirement 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 $.03 per Unit, during the
initial offering period and one-half of the
highest applicable sales charge during the
secondary market, subject to change from time to
time. The difference between the sales charge and
the dealer concession will be retained by the
Sponsor. In the event that the dealer concession
is 90% or more of the sales charge per Unit,
dealers taking advantage of such concession may
be deemed to be underwriters under the Securities
Act of 1933.
The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of
Units. The Sponsor intends to qualify the Units
in all states of the United States, the District
of Columbia and the Commonwealth of Puerto Rico.
Secondary Market for Units. While not obligated
to do so, the Sponsor intends to maintain a secon-
dary 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 Sponsor does
not in any way guarantee the enforceability,
marketability, value or price of any stocks in
the Trust, nor that of the Units.
Investors should note the Trust Fund Evaluation
per Unit at the time of sale or tender for redemp-
tion may be less than the price at which the Unit
was purchased.
The Sponsor may redeem any Units it has
purchased in the secondary market if it
determines for any reason that it is undesirable
to continue to hold these Units in its inventory.
Factors which the Sponsor may consider in making
this determination will include the number of
units of all series of all trusts which it holds
in its inventory, the saleability of the Units
and its estimate of the time required to sell the
Units and general market conditions.
Sponsor's Profits. In addition, to the
applicable sales charge, the Sponsor realizes a
profit (or sustains a loss) in the amount of any
difference between the cost of the Securities to
the Sponsor and the price at which it deposits
the Securities in the Trust, which is the value
of the Securities, determined by the Trustee as
described under "Valuation," at the close of
business on the business day prior to the Date of
Deposit. The cost of Securities to the Sponsor
includes the amount paid by the Sponsor for
brokerage commissions. These amounts are an
expense of the Trust.
Cash, if any, received from Unitholders prior to
the settlement date for the purchase of Units or
prior to the payment for Securities upon their
delivery may be used in the Sponsor's business
subject to the limitations of Rule 15c3-3 under
the Securities 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 that period. In
maintaining a secondary market for the Units, the
Sponsor may realize profits or sustain losses in
the amount of any differences between the price
at which it buys Units and the price at which it
resells or redeems such Units.
REDEMPTION
Units may be tendered to 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 the Trustee. If Units are represented
by a certificate, it must be properly endorsed
accompanied by a letter requesting redemption. If
held in uncertificated form, a written instrument
of redemption must be signed by the Unitholder.
Unitholders must sign exactly as their names
appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor
institution or in such other manner as may be
acceptable to the Trustee. In certain instances
the Trustee may require additional documents such
as, but not limited to, trust instruments,
certificates of death, appointments as executor
or administrator, or certificates of corporate
authority. Unitholders should contact the Trustee
to determine whether additional documents are
necessary. Units tendered to the Trustee for
redemption will be canceled, if not repurchased
by the Sponsor.
Units will be redeemed at the Redemption Value
per Unit next determined after receipt of the re-
demption request in good order by the Trustee.
The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number
of Units outstanding. (See "Valuation.")
A redemption request is deemed received on the
business day (See "Valuation" for a definition of
business day) when such request is received prior
to 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
Investors Bank & Trust Company for redemption no
later than the close of business on the second
business day following such presentation and
Unitholders will receive the Redemption Value
next determined after receipt by the Trustee of
the redemption request. Proceeds of a redemption
will be paid to the Unitholder on the seventh
calendar day following the date of tender (or if
the seventh calendar day is not a business day on
the first business day prior thereto).
With respect to cash redemptions, amounts
representing income received shall be withdrawn
from the Income Account, and, to the extent such
balance is insufficient, from the Capital
Account. The Trustee is empowered, to the extent
necessary, to sell Securities in such manner as
is directed by the Sponsor, which direction shall
be given so as to maximize the objectives of the
Trust. In the event that no such direction is
given by the Sponsor, the Trustee is empowered to
sell Securities as follows: Treasury Obligations
will be sold so as to maintain in the Trust
Treasury Obligations in an amount which, upon
maturity, will equal at least $1.00 per Unit
outstanding after giving effect to such
redemption and Stocks having the greatest amount
of capital appreciation will be sold first. (See
"Administration of the Trust".) However, with
respect to redemption requests in excess of
$100,000, the Sponsor may determine in its
discretion to direct the Trustee to redeem Units
"in kind" by distributing Securities to the
redeeming Unitholder. When Stock is distributed,
a proportionate amount of Stock will be
distributed, rounded to avoid the distribution of
fractional shares and using cash or checks where
rounding is not possible. The Sponsor may direct
the Trustee to redeem Units "in kind" even if it
is then maintaining a secondary market in Units
of the Trust. Securities will be valued for this
purpose as set forth under "Valuation". A
Unitholder receiving a redemption "in kind" may
incur brokerage or other transaction costs in
converting the Securities distributed into cash.
The availability of redemption "in-kind" is
subject to compliance with all applicable laws
and regulations, including the Securities Act of
1933, as amended.
To the extent that Securities are redeemed in
kind or sold, the size and diversity of the Trust
will be reduced. Sales will usually be required
at a time when Securities would not otherwise be
sold and may result in lower prices than might
otherwise be realized. The price received upon
redemption may be more or less than the amount
paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of
redemption. In addition, because of the minimum
amounts in which Securities are required to be
sold, the proceeds of sale may exceed the amount
required at the time to redeem Units; these
excess proceeds will be distributed to
Unitholders on the Distribution Dates.
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 discretion.
VALUATION
The Trustee will calculate the Trust's value
(the "Trust Fund Evaluation") per Unit at the
Valuation Time set forth under "Summary of
Essential Information" (1) on each June 30 and
December 31 (or the last business day prior
thereto), (2) on each business day as long as the
Sponsor is maintaining a bid in the secondary
market, (3) on the business day on which any Unit
is tendered for redemption and (4) on any other
day desired by the Sponsor or the Trustee, by
adding (a) the aggregate value of the Securities
and other assets determined by the Trustee as set
forth below, (b) cash on hand in the Trust,
income accrued on the Treasury Obligations but
not distributed or held for distribution and
dividends receivable on Stocks trading ex-
dividend (other than any cash held in any reserve
account established under the Indenture) and (c)
accounts receivable for securities sold and any
other assets of the Trust Fund not included in
(a) and (b) above and deducting therefrom the sum
of (v) taxes or other governmental charges
against the Trust not previously deducted, (w)
accrued fees and expenses of the Trustee and the
Sponsor (including legal and auditing expenses)
and other Trust expenses, (x) cash allocated for
distribution to Unitholders, and (y) accounts
payable for units tendered for redemption and any
other liabilities of the Trust Fund not included
in (v), (w) , (x) and (y) above. The per Unit
Trust Fund Evaluation is calculated by dividing
the result of such computation by the number of
Units outstanding as of the date thereof.
Business days do not include New Year's Day,
Washington'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 Securities are listed on one or more
national securities exchanges, 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
Securities are listed thereon) (2) if there is no
such appropriate closing sale price on such
exchange, at the mean between the closing bid and
asked prices on such exchange (unless the Trustee
deems such price inappropriate as a basis for
evaluation), (3) if the Securities 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 on the over-the-counter market (unless
the Trustee deems such price inappropriate as a
basis for evaluation) or (4) if there is no such
appropriate closing price, then (a) on the basis
of current bid prices, (b) if bid prices are not
available, on the basis of current bid prices for
comparable securities, (c) by the Trustee's
appraising the value of the Securities in good
faith on the bid side of the market or (d) by any
combination thereof.
During the initial offering period the Treasury
Obligations are valued on the basis of offering
prices; thereafter and for purposes of
determining Redemption Value they are valued on
the basis of bid prices. The aggregate offering
and bid prices of the Treasury Obligations, is
the price obtained from investment dealers or
brokers (which may include the Sponsor) who
customarily deal in Treasury Obligations; or, if
there is no market for the Treasury Obligations,
and bid or offering prices are not available, on
the basis of current bid or offering prices for
comparable securities; or by appraisal; or by any
combination of the above, adjusted to reflect
income accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during
the initial offering period is determined on the
basis of the current offering prices of the
Treasury Obligations, the Public Offering Price
of Units in the secondary market and the
Redemption Value is determined on the basis of
the current bid prices of the Treasury Obli-
gations. The Stocks are valued on the same basis
for the initial and secondary markets and for
purposes of redemptions. On the business day
prior to the Date of Deposit, the Public Offering
Price per Unit (which figure includes the sales
charge) exceeded the Redemption Value, (see:
"Essential Information"). The bid and offering
prices of the Treasury Obligations is 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
Certificates, the Indenture and this Prospectus,
the initial fees of the Trustee and the Trustee's
counsel, 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 initially $.00035 per
Unit, may exceed the actual costs of providing
portfolio supervisory services for the Trust, but
at no time will the total amount it receives for
portfolio supervisory services rendered to all
series of the PaineWebber Pathfinders Trust in
any calendar year exceed the aggregate cost to it
of supplying such services in such year.
For its services as Trustee and Evaluator, the
Trustee will be paid in monthly installments,
annually $.00145 per Unit computed monthly based
upon the largest number of Units outstanding in
the Trust during the preceding month. In
addition, the regular and recurring expenses of
the Trust are estimated to be $.00095 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 approval of the Unitholders by
an amount not exceeding a proportionate increase
in the category entitled "All Services Less Rent"
in the Consumer Price Index published by the
United States Department of Labor or if the Price
Index is no longer published, a similar index as
determined by the Trustee and Sponsor.
In addition to the above, the following charges
are or may be incurred by 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
willful misconduct on its part; (6) brokerage
commissions and other expenses incurred in
connection with the purchase and sale of Se-
curities; 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 main-
taining a secondary market (including, but not
limited to, legal, auditing and printing
expenses).
The accounts of the Trust shall be audited not
less than annually by independent public
accountants selected by the Sponsor. The expenses
of the audit shall be an expense of the Trust. So
long as the Sponsor maintains a secondary market,
the Sponsor will bear any audit expense which
exceeds $.00050 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 Initial Date of
Deposit, dividends on the Stocks are expected to
be sufficient to pay the estimated expenses of
the Trust. To the extent that dividends paid with
respect to the Stocks are not sufficient to meet
the expenses of the Trust, the Trustee is
authorized to sell Securities in the same manner
as provided in "Redemption" herein.
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation
on the books of the Trustee. In order to avoid
additional operating costs and for investor
convenience, certificates will not be issued
unless a request, in writing with signature
guaranteed by an eligible guarantor institution
or in such other manner as may be acceptable to
the Trustee, is delivered by the Unitholder to
the Sponsor. Issued Certificates are transferable
by presentation and surrender to the Trustee at
its office in Boston, Massachusetts properly
endorsed or accompanied by a written instrument
or instruments of transfer. Uncertificated Units
are transferable by presentation to the Trustee
at its office of a written instrument of
transfer.
Certificates may be issued in denominations of
one Unit or any integral multiple 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, mutilated, stolen or lost cer-
tificates, the Unitholder must furnish indemnity
satisfactory to the Trustee and must pay such
expenses as the Trustee may incur. Mutilated
certificates must be surrendered to Investors
Bank & Trust Company for replacement.
DISTRIBUTIONS
The Trustee will distribute any net income and
principal received quarterly on the Distribution
Dates to Unitholders of record on the preceding
Record Date. Income with respect to the original
issue discount on the Treasury Obligations will
not be distributed although Unitholders will be
subject to tax as if a distribution had occurred.
See "Federal Income Taxes".
Within a reasonable period after the Trust is
terminated, each Unitholder will, upon surrender
of his Certificates for cancellation, receive his
pro rata share of the amounts realized upon
disposition of the Securities plus any other
assets of the Trust, less expenses of the Trust.
(See "Termination.")
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest,
if any, accrued on Securities, proceeds from the
sale of Securities or other monies received by
the Trustee on behalf of the Trust shall be held
in trust in non-interest bearing accounts until
required to be disbursed.
The Trustee will credit on its books to an
Income Account any dividends (including stock
dividends which were sold) and interest, if any,
accrued by the Trust. All other receipts (i.e.
return of principal, and gains) are credited on
its books to a Capital Account. Stock dividends
received by the Trust, if any, will be sold by
the Trustee and the proceeds therefrom be treated
as income to the Trust. A record will be kept of
qualifying dividends within the Income Account.
The pro rata share of the Income Account and the
pro rata share of the Capital Account represented
by each Unit will be computed by the Trustee as
set forth under "Valuation".
The Trustee will deduct from the Income Account
and, to the extent funds are not sufficient
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 governmental charges
payable out of the Trust.
Reports and Records. With the distribution of
income from the Trust, Unitholders will be
furnished with a statement setting forth the
amount being distributed from each account.
The Trustee keeps records and accounts of the
Trust at its office in Boston, including records
of the names and addresses of Unitholders, a
current list of underlying Securities in the
portfolio and a copy of the Indenture. Records
pertaining to a Unitholder or to the Trust (but
not to other Unitholders) are available to the
Unitholder for inspection at reasonable times
during business hours.
Within a reasonable period of time after the end
of each calendar year, starting with calendar
year 1995, 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 "managed" by the Sponsor or the
Trustee; their activities described herein are
governed solely by the provisions of the
Indenture. The Indenture provides that the
Sponsor may (but need not) direct the Trustee to
dispose of a Security:
(1) upon the failure of the issuer to declare or
pay anticipated dividends or interest;
(2) upon the institution of materially adverse
action or proceeding at law or in equity seeking
to restrain or enjoin the declaration or payment
of dividends or interest on any such Securities
or the existence of any other materially adverse
legal question or impediment affecting such
Securities or the declaration or payment of
dividends or interest on the same;
(3) upon the breach of covenant or warranty in
any trust indenture or other document relating to
the issuer which might materially and adversely
affect either immediately or contingently the
declaration or payment of dividends or
interest on such Securities;
(4) upon the default in the payment of principal
or par or stated value of, premium, if any, or
income on any other outstanding securities of the
issuer or the guarantor of such securities which
might materially and adversely, either
immediately or contingently, affect the
declaration or payment of dividends or interest
on the Securities;
(5) upon the decline in price or the occurrence
of any materially adverse market or credit
factors, that in the opinion of the Sponsor, make
the retention of such Securities not in the best
interest of the Unitholder;
(6) upon a public tender offer being made for a
Security, or a merger or acquisition being an-
nounced affecting a Security that in the opinion
of the Sponsor make the sale or tender of the
Security in the best interests of the
Unitholders;
(7) upon a decrease in the Sponsor's internal
rating of the Security; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the eco-
nomic fundamentals of the issuer of the Security
or the industry of which it is a part.
The Trustee may dispose of Securities where
necessary to pay Trust expenses or to satisfy re-
demption requests as directed by the Sponsor and
in a manner necessary to maximize the objectives
of the Trust, or if not so directed in its own
discretion, provided however, that Treasury
Obligations will be sold so as to maintain in the
Trust Treasury Obligations in an amount which,
upon maturity, will equal at least $1.00 per Unit
outstanding after giving effect to such
redemption and Stocks having the greatest
appreciation shall be sold first.
Reinvestment. Cash received upon the sale of
Stock (except for sales to meet redemption
requests) and dividends received may, if and to
the extent there is no legal or regulatory
impediment, be reinvested in United States
Treasury obligations which mature on or prior to
the next scheduled Distribution Date. The Sponsor
anticipates that, where permitted, such proceeds
will be reinvested in current interest- bearing
United States Treasury obligations unless factors
exist such that such reinvestment would not be in
the best interest of Unitholders or would be
impractical. Such factors may include, among
others, (i) short reinvestment periods which
would make reinvestment in United States Treasury
obligations undesirable or infeasible and (ii)
amounts not sufficiently large so as to make a
reinvestment economical or feasible. Any moneys
held and not reinvested will be held in a non-
interest bearing account until distribution on
the next Distribution Date to Unitholders of
record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and
the Sponsor without the consent of any of the
Unitholders to cure any ambiguity or to correct
or supplement any provision thereof which may be
defective or inconsistent or to make such other
provisions as will not materially 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 Unithold-
ers rights or their interest in the Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will
terminate within 15 days after the maturity of
the Treasury Obligations held n the Trust. If the
value of the Trust as shown by any evaluation is
less than twenty percent (20%) of the market
value of the Securities on the Date of Deposit,
the Trustee may in its discretion, and will when
so directed by the Sponsor, terminate such Trust.
The Trust may also be terminated at any time by
the written consent of 51% of the Unitholders or
by the Trustee upon the resignation or removal of
the Sponsor if the Trustee determines termination
to be in the best interest of the Unitholders. In
no event will the Trust continue beyond the
Mandatory Termination Date.
As directed by the Sponsor approximately 30 days
prior to the maturity of the Treasury Obligations
the Trustee will begin to sell the Stocks held in
the Trust. Stocks having the greatest amount of
capital appreciation will be sold first. Upon
termination of the Trust, the Trustee will sell
any Stocks then remaining in the Trust and will
then, after deduction of any fees and expenses of
the Trust and payment into the Reserve Account of
any amount required for taxes or other
governmental charges that may be payable by the
Trust, distribute to each Unitholder, upon
surrender for cancellation of his Certificate
after due notice of such termination, such
Unitholder's pro rata share in the Income and
Capital Accounts. Monies held upon the sale of
Securities will be held in non-interest bearing
accounts created by the Indenture until
distributed and will be of benefit to the
Trustee. The sale of Stocks in the Trust in the
period prior to termination and upon termination
may result in a lower amount than might otherwise
be realized if such sale were not required at
such time due to impending or actual termination
of the Trust. For this reason, among others, the
amount realized by a Unitholder upon termination
may be less than the amount paid by such
Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a
corporation organized under the laws of the State
of Delaware. The Sponsor is a member firm of the
New York Stock Exchange, Inc. as well as other
major securities and commodities exchanges and is
a member of the National Association of
Securities Dealers, Inc. The Sponsor is engaged
in a security and commodity brokerage business as
well as underwriting and distributing new issues.
The Sponsor also acts as a dealer in unlisted
securities and municipal bonds and in addition to
participating as a member of various selling
groups or as an agent of other investment compa-
nies, executes orders on behalf of investment
companies for the purchase and sale of securities
of such companies and sells securities to such
companies in its capacity as a broker or dealer
in securities.
The Indenture provides that the Sponsor will not
be liable to the Trustee, 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
of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company
with its office at One Lincoln Plaza, 89 South
Street, Boston, Massachusetts 02111, toll-free
number 1-800-356-2754 (which is subject to
supervision by the Massachusetts Commissioner of
Banks, the Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve
System).
The Indenture provides that the Trustee will not
be liable for any action taken in good faith in
reliance on properly executed documents or the
disposition of moneys, Securities or Certificates
or in respect of any valuation which it is
required to make, except by reason of its own
gross negligence, bad faith or willful
misconduct, nor will the Trustee be liable or
responsible in any way for depreciation or loss
incurred by reason of the sale by the Trustee of
any Securities in the Trust. In the event of the
failure of the Sponsor to act, the Trustee may
act and will not be liable for any such action
taken by it in good faith. The Trustee will not
be personally liable for any taxes or other
governmental charges imposed upon or in respect
of the Securities or upon the interest thereon or
upon it as Trustee or upon or in respect of the
Trust which the Trustee may be required to pay
under any present or future law of the United
States of America or of any other taxing
authority having jurisdiction. In addition, the
Indenture contains other customary provisions
limiting the liability of the Trustee. The
Trustee will be indemnified and held harmless
against any loss or liability accruing to it
without gross negligence, bad faith or willful
misconduct on its part, arising out of or in
connection with its acceptance or administration
of the Trust, including the costs and expenses
(including counsel fees) of defending itself
against any claim of liability.
INDEPENDENT AUDITORS
The financial statements, including the Schedule
of Investments, of the Trust in this prospectus
have been audited by Ernst & Young LLP,
Independent Auditors, and have been included
herein in reliance upon 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.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
<CAPTION>
As of December 31, 1995
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Initial Date of Deposit: January 24, 1995
<S> <C>
Aggregate Market Value of Securities in Trust: $12,798,102
Number of Units: 10,400,000
Minimum Purchase:
250 units for Individual Retirement Accounts
1,000 units for all else
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/10,400,000
Calculation of Public Offering Price Per Unit
Value of Net Assets in Trust $12,799,525
Divided by 10,400,000 Units $1.2307
Plus Sales Charge of 4.75% of Public Offering Price $.0614
Public Offering Price per Unit $1.2921
Redemption Value per unit $1.2307
Excess of Public Offering Price over Redemption Value per Unit $.0614
Sponsor's Repurchase Price per Unit $1.2307
Excess of Public Offering Price over Sponsor's Repurchase Price
per Unit $.0614
Evaluation Time: 4 P.M. New York Time
Distribution Dates*: Quarterly on January 20, April 20,
July 20 and October 20.
Record Date: March 31, June 30, September 30
and December 31.
Mandatory Termination Date: March 1, 2004 (15 days after
maturity of the Treasury
Obligations).
Discretionary Liquidation Amount: 20% of the value of the Securities
upon completion of the deposit of
the Securities.
Estimated Annual Expenses of the Trust * *: $.00275 per Unit
* See " Distributions "
* * See " Expenses of Trust ". Estimated
dividends from the Growth Stocks, based upon last
dividends
actually paid, are expected by the Sponsor to
be sufficient to pay Estimated Expenses of the
Trust.
</TABLE>
<TABLE>
REPORT OF INDEPENDENT AUDITORS
<C> <S>
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER PATHFINDERS TRUST, TREASURY AND
GROWTH STOCK SERIES SIXTEEN:
We have audited the accompanying statement of
financial condition, including the schedule of
investments, of The PaineWebber Pathfinders
Trust, Treasury and Growth Stock Series Sixteen
as of December 31, 1995 and the related
statements of operations and changes in net
assets for the period from January 24, 1995 (date
of deposit) to December 31, 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 December 31, 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 Pathfinders Trust, Treasury and
Growth Stock Series Sixteen at December 31, 1995
and the results of its operations and changes in
its net assets for the period from January 24,
1995 to December 31, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 1, 1996
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
December 31, 1995
ASSETS
<S> <C> <C>
Treasury Obligations - at market value (Cost $5,849,906)
(note A and note 1 to schedule of investments) $6,620,734
Common Stocks - at market value (Cost $5,022,182)
(note 1 to schedule of investments) 6,177,368
Dividends receivable 14,552
Cash 25,748
Total Assets $12,838,402
LIABILITIES AND NET ASSETS
Distributions payable $30,680
Accrued expenses payable 8,197
Total Liabilities 38,877
Net Assets (10,400,000 units of fractional undivided interest outstanding):
Cost to investors (note B) 11,414,605
Less gross underwriting commissions (note C) (542,517)
10,872,088
Net unrealized market appreciation (note D) 1,926,014
Net amount applicable to unitholders 12,798,102
Overdistributed investment income-net (389)
Undistributed proceeds from securities sold 1,812
Net Assets 12,799,525
Total Liabilities and Net Assets $12,838,402
Net Asset Value per unit $1.2307
See Accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
STATEMENT OF OPERATIONS
<CAPTION>
For the
Period from
January 24,
1995 (Date of
Deposit) to
December 31,
1995
<S> <C>
Operations:
Investment income:
Accretion on Treasury Obligation $319,269
Dividend income 125,237
Total investment income 444,506
Less expenses:
Trustee's fees, evaluator's expense and other expenses 26,101
Total expenses 26,101
Investment income-net 418,405
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 103,602
Net change in unrealized market appreciation 1,926,014
Net gain on investments 2,029,616
Net increase in net assets resulting from operations $2,448,021
See accompanying notes to financial statements
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the
Period from
January 24,
1995 (Date of
Deposit) to
December 31,
1995
<S> <C>
Operations:
Investment income-net $418,405
Net realized gain on securities transactions 103,602
Net change in unrealized market appreciation 1,926,014
Net increase in net assets resulting from operations 2,448,021
Less: Distributions to Unitholders (Note E)
Investment income-net 117,116
Total Distributions 117,116
Less: Units Redeemed by Unitholders (Note F)
Value of units at date of redemption 699,230
Accrued dividends at date of redemption 740
Accreted discount at date of redemption 14,790
Total Redemptions 714,760
Increase in net assets 1,616,145
Net Assets:
Beginning of Period 952,500
Supplemental Deposits (Note F) 10,230,880
End of Period $12,799,525
See accompanying notes to financial statements
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
NOTES TO FINANCIAL STATEMENTS
December 31, 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. The
original issue discount on the Treasury
Obligations is accreted on a level yield basis.
The amount of discount included in the cost of
the Treasury Obligations held as of December 31,
1995 is $304,479.
(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", adjusted for
accretion on United States Treasury Obligations
and for securities sold since the date of de-
posit.
(C) Sales charge of the Public Offering Price
per Unit is computed on the basis set forth under
" Public Offering of Units - Sales Charge and
Volume Discount ".
(D) At December 31, 1995, the gross unrealized
market appreciation was $1,940,867 and the gross
unrealized market (depreciation) was ($14,853).
The net unrealized market appreciation was
$1,926,014.
(E) Regular distributions of net income,
excluding accretion income and principal receipts
not used for redemption of units are made
quarterly. Special distributions may be made when
the Sponsor and Co-Trustees deem necessary.
Income with respect to the accretion of original
issue discount is not distributed although the
unitholder is subject to tax, where applicable,
as if the distribution had occurred. Accretion
income earned by the Trust increases a
unitholder's cost basis in the underlying
security.
(F) The following units were redeemed with
proceeds of securities sold as follows:
<CAPTION>
For the
Period from
January 24,
1995 (Date of
Deposit) to
December 31,
1995
<S> <C>
Number of units redeemed 600,000
Redemption amount $714,760
The following units were sold through supplemental
deposits:
Number of units sold 10,000,000
Value of amount, net of sales charge $10,230,880
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of December 31, 1995
<CAPTION>
TREASURY OBLIGATIONS (51.73%)
Name of Security Coupon Maturity Value Maturity Date Market Value(1)
<C> <C> <C> <C> <C>
U.S. Treasury Interest Payments
(2) (51.73%) 0% 10,400,000 2/15/2004 $6,620,734
<CAPTION>
COMMON STOCKS (48.27%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Aerospace/Defense: (1.37%)
United Technologies Corporation 1,849 175,424
Automobile: (2.21%)
Ford Motor Company 4,521 131,109
General Motors Corporation 2,877 152,121
Automobile Parts-Replacement: (1.02%)
Genuine Parts Company 3,185 130,585
Beverages: (2.85%)
The Coca-Cola Company 2,362 175,379
PepsiCo, Inc. 3,390 189,416
Chemicals: (2.08%)
Dow Chemical Company 1,747 122,945
Du Pont (E.I.) de Nemours & Company 2,055 143,593
Computer Software: (1.27%)
Microsoft Corporation* 1,849 162,250
Electronics: (3.53%)
Emerson Electric Company 1,849 151,156
Hewlett-Packard Company 2,261 189,359
Motorola, Inc. 1,952 111,264
Environmental Control: (0.98%)
WMX Technologies, Inc. 4,210 125,774
Financial Banks-Commercial: (4.04%)
Banc One Corporation 4,210 158,927
BankAmerica Corporation 2,774 179,616
NationsBank Corporation 2,569 178,867
Food-Processing: (2.47%)
General Mills, Inc. 2,258 130,400
Philip Morris Companies, Inc. 2,055 185,978
Forest Products & Paper: (1.01%)
Weyerhaeuser Company 2,979 128,842
Insurance: (2.10%)
Allstate Corporation 2,380 97,877
American International Group, Inc. 1,847 170,847
Manufacturing: (1.17%)
Minnesota Mining & Manufacturing Co. 2,258 149,593
Office/Business Equipment: (2.57%)
Pitney-Bowes, Inc. 3,699 173,853
Xerox Corporation 1,129 154,673
Oil/Gas-International: (4.44%)
Amoco Corporation 1,952 140,300
Chevron Corporation 2,569 134,872
Exxon Corporation 1,849 148,151
Royal Dutch Petroleum Company 1,026 144,794
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of December 31, 1995
<CAPTION>
COMMON STOCKS (48.27%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Pharmaceuticals: (5.44%)
Abbott Laboratories 3,597 $150,175
Bristol-Myers Squibb Company 1,952 167,628
Johnson & Johnson 2,055 175,959
Merck & Company, Inc. 3,081 202,576
Publishing/Printing: (2.23%)
Dun & Bradstreet Corporation 2,258 146,206
Gannett Company, Inc. 2,258 138,585
Restaurants/Food Service: (0.18%)
Darden Restaurants, Inc. 1,910 22,681
Retail: (1.73%)
Sears, Roebuck and Company 2,569 100,191
Wal-Mart Stores, Inc. 5,443 121,787
Retail-Special Line: (0.92%)
Home Depot, Inc. 2,466 118,060
Telecommunications: (4.66%)
Airtouch Communications, Inc.* 4,210 118,932
AT & T Corporation 2,466 159,673
BellSouth Corporation 4,110 178,785
Pacific Telesis Group 4,109 138,165
TOTAL COMMON STOCKS 6,177,368
TOTAL INVESTMENTS $12,798,102
(1) Valuation of Securities by the Co-Trustees
was made as described in "Valuation".
(2) This security does not pay current
interest. On the maturity date thereof, the
entire maturity value becomes due and payable.
Generally, a fixed yield is earned on such
security which takes into account the semi-annual
compounding of accrued interest. (See "The
Trust" and "Federal Income Taxes" herein).
* Non-income producing.
</TABLE>
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
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, The PaineWebber Pathfinders Trust, Treasury and Growth Stock
Series 16 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 8th day of April,
1996.
PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 16
(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 8th day of April, 1996.
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 Sales & 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.
April 8, 1996
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
Pathfinders Trust, Treasury and Growth Stock Series 16 (hereinafter
referred to as the "Trust"). The Depositor seeks by means of
Post-Effective Amendment No. 1 to register for reoffering 2,302,600
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. 33-49439) 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. 811-4158), as amended;
(h) The prospectus included in the Amendment (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of
September 1, 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
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> 16
<NAME> TREASURY & GROWTH STOCK
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-24-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 10,872,088
<INVESTMENTS-AT-VALUE> 12,798,102
<RECEIVABLES> 14,552
<ASSETS-OTHER> 25,748
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,838,402
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,877
<TOTAL-LIABILITIES> 38,877
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 10,400,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (389)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,926,014
<NET-ASSETS> 12,799,525
<DIVIDEND-INCOME> 125,237
<INTEREST-INCOME> 0
<OTHER-INCOME> 319,269
<EXPENSES-NET> 26,101
<NET-INVESTMENT-INCOME> 418,405
<REALIZED-GAINS-CURRENT> 103,602
<APPREC-INCREASE-CURRENT> 1,926,014
<NET-CHANGE-FROM-OPS> 2,448,021
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 117,116
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 600,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,616,145
<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> 1
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated April 1,
1996, in the Registration Statement and related Prospectus of the
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 16.
/s/ ERNST & YOUNG LLP
New York, New York
April 8, 1996
