File No. 33-49439
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 2
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
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 23, 1997) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
4,438,680 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$6,253,656.25**
* Estimated solely for the purpose of calculating the registration fee, at
$1.41 per unit.
G. Amount of filing fee, computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
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 4,232,874.
There have been no previous filings of post-effective amendments during
the current fiscal year 4,232,874 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"
8,000,000 Units
The investment objective of this Trust is to
preserve capital while providing for capital
appreciation through an investment in "zero-coupon"
United States Treasury obligations (the "Treasury
Obligations") and equity stocks having, in
Sponsor's opinion on the Initial Date of Deposit,
potential for appreciation (the "Stocks"). The
value of the Units will fluctuate with the value of
the portfolio of underlying securities.
The minimum purchase is $1,000 except that the
minimum purchase in connection with an Individual
Retirement Account (IRA) or other tax-deferred
retirement plan is $250. Only whole Units may be
purchased
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST
HAS BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE
ISSUED AND OUTSTANDING UNITS WHICH HAVE BEEN ACQUIRED
BY THE SPONSOR EITHER BY PURCHASE FROM THE TRUSTEE OF
UNITS TENDERED FOR REDEMPTION OR IN THE SECONDARY
MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for future
reference.
Prospectus dated April 23, 1997
Essential Information Regarding The Trust
The Trust. The objective of the PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series
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 Obligations"), and
equity stocks (the "Stock") which, in Sponsor's
opinion on the Initial Date of Deposit, 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 48% of the aggregate
market value of the Trust portfolio and the Stocks
represent approximately 52% of the aggregate market
value of the Trust portfolio. The stripped Treasury
Obligations, as discussed below, make no payment of
current interest, 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
Sponsor believes that the Trust provides an
attractive combination of safety and appreciation
for purchasers who hold Units until the Trust's
termination. 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
Information--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
termination of the Trust, $1,000 per 1,000 Units
purchased. This feature of the Trust provides that
Unitholders who hold their units to the Mandatory
Termination Date of the Trust on March 2, 2004,
will receive the same amount as they originally
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 investment 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
Considerations.") The Stock may appreciate or
depreciate in value (or pay dividends) depending on
the full range of economic and market influences
affecting corporate profitability, the financial
condition of issuers, the prices of equity
securities 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 fluctuations 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 intended maturity
or if the Trust is terminated or Units redeemed
prior to the Trust's intended maturity. The value
of the Securities and, therefore, the value of
Units may be expected to fluctuate. 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 investment, 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 toward
some other objective.
In PaineWebber's view, one of the most important
investment decisions an investor faces may be
determining 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
potential of equities is typically associated with
higher risk. With this in mind, PaineWebber
designed 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 constructing
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 below,
investors should consult the "Schedule of
Investments" herein.
Approximate Percentage
of Aggregate Market Value
Primary Industry Source of Stocks in the Trust
Aerospace/Defense 1.74%
Automobile 2.17
Automobile Parts--Replacement 1.01
Beverages 3.19
Chemicals 2.36
Commercial Services .08
Computer Software 2.18
Diversified Operations .53
Electronics 3.75
Environmental Control .98
Financial Banks--Commercial 5.05
Food--Processing 2.67
Forest Products & Paper 1.01
Insurance 2.41
Manufacturing 1.34
Office/Business Equipment 2.71
Oil/Gas--International 4.85
Pharmaceuticals 6.02
Publishing/Printing 1.59
Restaurants/Food Service .12
Retail 1.73
Retail--Special Line .88
Telecommunications 4.05
X-Ray Equipment .05
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
Securities in the Trust where additional Units are
to be offered to the public, maintaining, exactly,
the original percentage relationship between the
maturity values of the Treasury Obligations and the
number of shares of the Stocks deposited on the
Initial Date of Deposit, subject to certain
adjustments. Costs incurred in acquiring 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 offering period
will experience a dilution of their investment as a
result of such brokerage fees and other expenses
paid by the Trust during additional deposits of
Securities purchased by the Trustee with cash or
cash equivalents pursuant to instructions to
purchase such Securities. (See "The Trust" and
"Risk Factors and Special Considerations".)
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 favorable to the
purchaser. (See "Public Offering of Units--Sales
Charge and Volume Discount".)
The public offering price on the Initial Date of
Deposit is determined on the basis of the value of
the Securities 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 Initial 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
preservation 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 Initial 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 Distribution 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 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
undivided interest represented by each Unit in the
balance will be decreased. If any Units are
redeemed, the aggregate value of Securities in the
Trust will be reduced, and the fractional undivided
interest represented by each remaining Unit in the
balance will be increased. Units will remain
outstanding until redeemed upon tender to the
Trustee by any Unitholder (which may include the
Sponsor) or until the termination of the Trust.
(See "Termination of the Trust".)
_________________
* Reference is hereby made to said Trust
Indenture and Agreement and any statements
contained herein
are qualified in their entirety by the
provisions of said Trust Indenture and Agreement.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Risk Factors. An investment in the Trust should
be made with the understanding of the risks
inherent 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
assurance of income or provide the degree of
protection of debt securities. The issuance of debt
securities or even preferred stock by an issuer
will create prior claims for payment of principal,
interest and dividends which could adversely affect
the ability and inclination of the issuer to
declare or pay dividends on its common stock or the
rights of holders of common stock with respect to
assets of the issuer upon liquidation or
bankruptcy. Unlike debt securities which typically
have a stated principal amount payable at maturity
common stocks do not have a fixed principal amount
or a maturity. Additionally, the value of the
Stocks, 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 Initial 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
profitability, 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 instructions to purchase the
Security and the time the cash is used to purchase
the Security, Units will represent less or more of
that Security and more or less of the other
Securities in 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 46 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; spun off Lucent
Technologies (Networks, Communications Systems and
Software) in 1996. 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. Allstate, a
Sears spin-off, is a major underwriter of property-
liability and life insurance. 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 1,500
offices in 13 states. BankAmerica is the third
largest bank in the U.S. BellSouth is the largest
U.S. phone holding company. Bristol-Myers Squibb is
one of the world's largest pharmaceutical
companies. 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.
Darden Restaurants, a General Mills spin-off,
operates 1,200 restaurants in North America. Dow
Chemical is the one of the largest chemical
companies 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 spun off A.C. Nielsen
(Marketing research) and Cognizant Corporation
(Information Technology and Solutions) in 1996.
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 petrochemicals company. Ford Motor Company is
the second largest automaker in the world and has
large financial services operations. Gannett
publishes over 90 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 64
NAPA distribution centers serving approximately
6,000 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 over 500 warehouse stores in the
U.S. 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; spun off Imation in
1996. Motorola is the leading producer of personal
communications equipment, including cellular
telephones, portable two-way radios and pocket
pagers. NationsBank is the fourth largest bank in
the U.S. Pacific Telesis Group is a phone company
currently serving 15.8 million Access Lines 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,
349 supercenters and 436 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 an investment
company, the Trustee and the Sponsor do not have
authority to manage Trust's assets fully in an
attempt to take advantage of various market
conditions to improve the Trust's net asset value,
but may dispose of Securities under limited
circumstances. (See "Administration of the Trust--
Portfolio Supervision".)
FEDERAL INCOME TAXES
In the opinion of Carter, Ledyard & Milburn,
counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as
a corporation for federal income tax purposes.
Under the Internal Revenue Code of 1986, as amended
(the "Code"), each Unitholder will be treated as
the owner of a pro rata portion of the Trust, and
income of the Trust will be treated as income of
the Unitholders.
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.
3. The Trust is not an association taxable as
a corporation for New York State income tax
purposes. Under New York State law, each
Unitholder will be treated as the owner of a pro
rata portion of the Trust and the income of the
Trust will be treated as income of the Unitholders.
The following general discussion of the
federal income tax treatment of an investment in
Units of the Trust is based on the Code and
Treasury regulations promulgated thereunder as in
effect on the date of this Prospectus. The federal
income tax treatment applicable to a Unitholder may
depend upon the Unitholder's particular tax
circumstances. The tax treatment of non U.S.
investors is not addressed. 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. 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
initial per Unit tax cost for each Security.
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.
Distributions with respect to Stock, to the
extent they do not exceed current or accumulated
earnings and profits of the distributing
corporation, will be treated as dividends to the
Unitholders and will be subject to income tax at
ordinary rates. Corporate Unitholders may be
entitled to the dividends-received deduction
discussed below.
To the extent distributions with respect to a
Stock were to exceed the issuing corporation's
current and accumulated earnings and profits, they
would not constitute dividends. Rather, they would
be treated as a tax free return of capital and
would reduce a Unitholder's tax basis for such
Stock. This reduction in basis would in effect
increase any gain, or reduce any loss, realized by
the Unitholder on any subsequent sale or other
disposition of Units. After 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
Stock.
A Unitholder who is an individual, estate or
trust may be disallowed certain itemized deductions
described in Code Section 67, including
compensation paid to the Trustee and administrative
expenses of the Trust, to the extent these itemized
deductions, in the aggregate, do not exceed two
percent of the Unitholder's adjusted gross income.
Thus, a Unitholder's taxable income from an
investment in Units may exceed amounts distributed
to the extent amounts 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.
The alternative minimum tax may have the effect of
reducing the benefit of the deduction.
Individuals, partnerships, trusts, S corporations
and certain other entities are not eligible for the
dividends-received deduction. The Clinton
Administration has proposed a reduction in the
dividends-received deduction from 70 percent to 50
percent and there have been, from time to time,
other proposals to reduce such deduction. The
Sponsor is unable to predict whether the Clinton
Administration proposal or any other proposal will
be adopted during the life of the Trust.
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 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 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 which (with respect to
such Unitholder) has original issue discount. The
amount of accrued original issue discount included
in income with respect to a Unitholder's 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
may 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 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 Percent of
Public 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 Secondary Market on
January 25, 1999 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 proceeds from the Unitholder's
units would aggregate $3,900. Since only whole
units of an Exchange Trust may be purchased under
the Exchange Option, the Unitholder would be able
to acquire four units in the Exchange Trust for a
total cost of $3,620 ($3,560 for the units and $60
for the sales charge). If all 3,000 units were
tendered, the remaining $280 would be returned to
the Unitholder.
Conversion Option. Owners of units of any
registered unit investment trust sponsored by
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 Exchange Trusts having
a Unit price of approximately $10, or per 1,000
Units in the case of Exchange Trusts having a Unit
price of approximately $1), subject to the terms
and conditions applicable to the Exchange Option
(except that no secondary market is required for
Conversion Trust units). To 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 applicable) than the corresponding
fee then being charged for the Exchange Option).
For a description of the tax consequences of a
conversion reference is made to the Exchange Option
section 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 secondary
market for the Units and continuously offer to
purchase Units at the Trust Fund Evaluation per
Unit next computed after receipt by the Sponsor of
an order from a Unitholder. The Sponsor may cease
to maintain such a market at any time, and from
time to time, without notice. In the event that a
secondary market for the Units is not maintained by
the Sponsor, a Unitholder desiring to dispose of
Units may tender such Units to the Trustee for
redemption at the price calculated in the manner
set forth under "Redemption". Redemption requests
in excess of $100,000 may be redeemed "in kind" as
described under "Redemption." The 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
redemption may be less than the price at which the
Unit was purchased.
The Sponsor may redeem any Units it has purchased
in the secondary market if it determines for any
reason that it is undesirable to continue to hold
these Units in its inventory. Factors which the
Sponsor may consider in making this determination
will include the number of units of all series of
all trusts which it holds in its inventory, the
saleability of the Units and its estimate of the
time required to sell the Units and general market
conditions.
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 Initial 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 Initial 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
redemption request in good order by the Trustee.
The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number of
Units outstanding. (See "Valuation.")
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 Obligations. The Stocks are
valued on the same basis for the initial and
secondary markets and for purposes of redemptions.
On the business day prior to the Initial Date of
Deposit, the Public Offering Price per Unit (which
figure includes the 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 $.00117 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 Securities; and (7) expenses incurred upon
termination of the Trust. In addition, to the
extent then permitted by the Securities and
Exchange Commission, the Trust may incur expenses
of maintaining registration or qualification of the
Trust or the Units under Federal or state
securities laws so long as the Sponsor is
maintaining a secondary market (including, but not
limited to, legal, auditing and printing expenses).
The accounts of the Trust shall be audited not
less than annually by independent public
accountants selected by the 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 certificates, 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, 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
announced 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
economic 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
redemption 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
Unitholders 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 Initial 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 companies,
executes orders on behalf of investment companies
for the purchase and sale of securities of such
companies and sells securities to such companies in
its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not
be liable to the Trustee, 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 Carter, Ledyard and Milburn, 2 Wall
Street, New York, New York, as counsel for the
Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
<CAPTION>
As of December 31, 1996
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: $10,770,916
Number of Units: 8,000,000
Minimum Purchase
250 units for Individual Retirement Accounts
1,000 units for all else
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/8,000,000th
Calculation of Public Offering Price Per Unit:
Value of Net Assets in Trust $10,771,578
Divided by 8,000,000 Units $1.3464
Plus Sales Charge of 4.75% of Public Offering Price $.0671
Public Offering Price per Unit $1.4135
Redemption Value per Unit $1.3464
Excess of Public Offering Price over Redemption Value per Unit: $.0671
Sponsor's Repurchase Price per Unit $1.3464
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.0671
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 2, 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 Expenses of the Trust * *: $.00297 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, 1996 and the related statements of
operations and changes in net assets for the year
ended December 31, 1996 and for the period from
January 24, 1995 (initial 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 audits.
We conducted our audits 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, 1996, 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 audits provide 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, 1996 and the results of its operations
and changes in its net assets for the year ended
December 31, 1996 and 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 16, 1997
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
December 31, 1996
ASSETS
<S> <C> <C>
Treasury Obligation - at market value (Cost $4,830,974)
(note A and note 1 to schedule of investments) $5,119,192
Common Stock - at market value (Cost $3,859,463)
(note 1 to schedule of investments) 5,651,724
Accrued dividends receivable 12,610
Cash 24,477
Total Assets $10,808,003
LIABILITIES AND NET ASSETS
Distribution payable $25,760
Accrued expenses payable 10,665
Total Liabilities 36,425
Net Assets (8,000,000 units of fractional undivided interest outstanding):
Cost to investors (note B) 9,123,818
Less gross underwriting commissions (note C) (433,381)
8,690,437
Net unrealized market appreciation (note D) 2,080,479
Net amount applicable to unitholders 10,770,916
Undistributed investment income-net 814
Overdistributed proceeds from securities sold (152)
Net Assets 10,771,578
Total Liabilities and Net Assets $10,808,003
Net Asset Value per unit $1.3464
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 (Initial Date
Year Ended of Deposit) to
December 31, December 31,
1996 1995
<S> <C> <C>
Operations:
Investment income:
Accretion on Treasury Obligation $389,395 $319,269
Dividend Income 161,242 125,237
Total investment income 550,637 444,506
Less expenses:
Trustee's fees, evaluator's expense and other expenses 27,814 26,101
Total expenses 27,814 26,101
Investment income-net 522,823 418,405
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 495,309 103,602
Net change in unrealized market appreciation 154,465 1,926,014
Net gain on investments 649,774 2,029,616
Net increase in net assets resulting from operations $1,172,597 $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 (Initial Date
Year Ended of Deposit) to
December 31, December 31,
1996 1995
<S> <C> <C>
Operations:
Investment income-net $522,823 $418,405
Net realized gain on securities transactions 495,309 103,602
Net change in unrealized market appreciation 154,465 1,926,014
Net increase in net assets resulting from operations 1,172,597 2,448,021
Less: Distributions to Unitholders (Note E)
Investment income-net 128,244 117,116
Total Distributions 128,244 117,116
Less: Units Redeemed by Unitholders (Note F)
Value of units at date of redemption 2,944,184 699,230
Accrued dividends at date of redemption 3,980 740
Accreted discount at date of redemption 124,136 14,790
Total Redemptions 3,072,300 714,760
Increase (decrease) in net assets (2,027,947) 1,616,145
Net Assets:
Beginning of Period 12,799,525 952,500
Supplemental Deposits (Note F) --- 10,230,880
End of Period $10,771,578 $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, 1996
(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 Obligation is accreted on a
level yield basis. The amount of discount included in
the cost of the Treasury Obligation held as of
December 31, 1996 is $564,928.
(B) Cost to investors represents the initial public
offering price as of the initial 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 deposit.
(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, 1996, the gross unrealized
market appreciation was $2,160,614 and the gross
unrealized market depreciation was ($80,135).The net
unrealized market appreciation was $2,080,479.
(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-
Trustee 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 (Initial Date
Year Ended of Deposit) to
December 31, December 31,
1996 1995
<S> <C> <C>
Number of units redeemed 2,400,000 600,000
Redemption amount $3,072,300 $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, 1996
<CAPTION>
TREASURY OBLIGATIONS (47.53%)
Name of Security Coupon Maturity Value Maturity Date Market Value(1)
<C> <C><C> <C> <C> <C> <C>
U.S. Treasury Interest Payments (2) (47.53%) 0% $8,000,000 2/15/2004 $5,119,192
COMMON STOCKS (52.47%)
Name of Issuer Number of Shares Market Value
Aerospace/Defense: (1.74%)
United Technologies Corporation 2,841 $187,506
Automobile: (2.17%)
Ford Motor Company 3,475 110,766
General Motors Corporation 2,211 123,263
Automobile Parts-Replacement: (1.01%)
Genuine Parts Company 2,448 108,936
Beverages: (3.19%)
The Coca-Cola Company 3,630 191,029
PepsiCo, Inc. 5,211 152,422
Chemicals: (2.36%)
Dow Chemical Company 1,343 105,258
Du Pont (E.I.) de Nemours & Company 1,579 149,018
Commercial Services: (.08%)
ACNielsen Corporation* 578 8,737
Computer Software: (2.18%)
Microsoft Corporation* 2,841 234,738
Diversified Operations: (.53%)
Cognizant Corporation 1,735 57,255
Electronics: (3.75%)
Emerson Electric Company 1,421 137,482
Hewlett-Packard Company 3,475 174,619
Motorola, Inc. 1,500 92,063
Environmental Control: (.98%)
WMX Technologies, Inc. 3,236 105,574
Financial Banks-Commercial: (5.05%)
Banc One Corporation 3,212 138,116
BankAmerica Corporation 2,132 212,667
NationsBank Corporation 1,974 192,958
Food-Processing: (2.67%)
General Mills, Inc. 1,735 109,956
Philip Morris Companies, Inc. 1,579 177,835
Forest Products & Paper: (1.01%)
Weyerhaeuser Company 2,289 108,441
Insurance: (2.41%)
Allstate Corporation 1,829 105,853
American International Group, Inc. 1,419 153,607
Manufacturing: (1.34%)
Minnesota Mining & Manufacturing Co. 1,735 143,788
Office/Business Equipment: (2.71%)
Pitney-Bowes, Inc. 2,843 154,944
Xerox Corporation 2,605 137,088
Oil/Gas-International: (4.85%)
Amoco Corporation 1,500 120,750
Chevron Corporation 1,974 128,310
Exxon Corporation 1,421 139,258
Royal Dutch Petroleum Company~ 788 134,551
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of December 31, 1996
<CAPTION>
COMMON STOCKS (52.47%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Pharmaceuticals: (6.02%)
Abbott Laboratories 2,765 $140,324
Bristol-Myers Squibb Company 1,500 163,125
Johnson & Johnson 3,158 157,110
Merck & Company, Inc. 2,368 187,664
Publishing/Printing: (1.59%)
Dun & Bradstreet Corporation 1,735 41,206
Gannett Company, Inc. 1,735 129,908
Restaurants/Food Service: (.12%)
Darden Restaurants, Inc. 1,468 12,845
Retail: (1.73%)
Sears, Roebuck and Company 1,974 91,051
Wal-Mart Stores, Inc. 4,183 95,686
Retail-Special Line: (.88%)
Home Depot, Inc. 1,895 94,987
Telecommunications: (4.05%)
Airtouch Communications, Inc.* 3,236 81,709
AT & T Corporation 1,895 82,432
BellSouth Corporation 3,159 127,545
Lucent Technologies* 614 28,397
Pacific Telesis Group 3,158 116,056
X-Ray Equipment: (.05%)
Imation Corporation* 174 4,891
TOTAL COMMON STOCKS $5,651,724
TOTAL INVESTMENTS $10,770,916
(1) Valuation of Securities was made by the Co-
Trustees 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.
~ American Depositary Receipts.
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.C1 Opinion of Counsel as to legality of securities
being registered
EX-99.C2 Opinion of Counsel as to certain tax aspects of
of the Trust
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 amendment
to the registration statement to be signed on its behalf by the
undersigned thereunto duly authorized all in the City of New York,
and the State of New York on the 23rd day of April, 1997.
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 23rd day of April, 1997.
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 23, 1997
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. 2 to register for reoffering 4,438,680
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. 2 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 Initial 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 State of New York and the federal laws of 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/ CARTER, LEDYARD & MILBURN
April 23, 1997
PaineWebber Incorporated
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Dear Sirs:
As counsel for PaineWebber Incorporated (the
"Depositor"), we have examined an executed copy of the
Trust Indenture and Agreement dated the date of initial
deposit of the Trust (the "Indenture") which
incorporates the Standard Terms and Conditions of Trust
(the "Agreement"), both between the Depositor, and
Investors Bank & Trust Company and the First National
Bank of Chicago as Co-Trustees (the "Trustee"). The
Indenture established a trust called PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 16
(the "Trust") into which the Depositor deposited
certain United States Treasury obligations or evidences
thereof, and stocks (the "Securities"), and moneys to
be held by the Trustee upon the terms and conditions
set forth in the Indenture and Agreement. Under the
Indenture, certificates of ownership were issued on the
Initial Date of Deposit representing units of
fractional undivided interest in said Trust (the
"Units").
Based upon the foregoing and upon an examination of
such other documents and an investigation of such
matters of law as we have deemed necessary, we are of
the opinion that, under existing statutes and
decisions:
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 Unitholders.
1. 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.
3. The Trust is not an association taxable as a
corporation for New York State income tax purposes.
Under New York State law, each Unitholder will be
treated as the owner of a pro rata portion of the Trust
and the income of the Trust will be treated as income
of the Unitholders.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement relating to the
Units and the Trust referred to above and to the use of
our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> PAINEWEBBER PATHFINDERS TRUST, TREASURY & GROWTH STOCK
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-24-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1
<INVESTMENTS-AT-COST> 8,690,437 0
<INVESTMENTS-AT-VALUE> 10,770,916 0
<RECEIVABLES> 12,610 0
<ASSETS-OTHER> 24,477 0
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 10,808,003 0
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 36,425 0
<TOTAL-LIABILITIES> 36,425 0
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 0 0
<SHARES-COMMON-STOCK> 8,000,000 0
<SHARES-COMMON-PRIOR> 10,400,000 0
<ACCUMULATED-NII-CURRENT> 814 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 0 0
<OVERDISTRIBUTION-GAINS> (152) 0
<ACCUM-APPREC-OR-DEPREC> 2,080,479 0
<NET-ASSETS> 10,771,578 0
<DIVIDEND-INCOME> 161,242 125,237
<INTEREST-INCOME> 0 0
<OTHER-INCOME> 389,395 319,269
<EXPENSES-NET> 27,814 26,101
<NET-INVESTMENT-INCOME> 522,823 418,405
<REALIZED-GAINS-CURRENT> 495,309 103,602
<APPREC-INCREASE-CURRENT> 154,465 1,926,014
<NET-CHANGE-FROM-OPS> 1,172,597 2,448,021
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 128,244 117,116
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 0 0
<NUMBER-OF-SHARES-REDEEMED> 2,400,000 600,000
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> (2,027,947) 1,616,145
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 0 0
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 0 0
<AVERAGE-NET-ASSETS> 0 0
<PER-SHARE-NAV-BEGIN> 0 0
<PER-SHARE-NII> 0 0
<PER-SHARE-GAIN-APPREC> 0 0
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 1 0
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 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 16, 1997, 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 23, 1997
