File No. 33-49439
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 3
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 22, 1998) pursuant to paragraph
(b) of Rule 485.
E. Total and amount of securities being registered:
An indefinite number of units of Beneficial Interest pursuant to Rule
24f-2 under the Investment Company Act of 1940.
F. Proposed maximum offering price to the public of the securities being
registered:
Indefinite pursuant to Rule 24f-2
G. Amount of filing fee, computed at one-thirty-fourth of 1 percent of the
proposed maximum aggregate offering price to the public:
In accordance with Rule 24f-2, a fee in the amount of $0 was paid on
March 20, 1998 in connection with the filing of the Rule 24f-2 Notice
for the Trust's most recent fiscal year.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
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"
5,700,000 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 22, 1998
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
(or "Stocks", and together with the Treasury
Obligations, 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 Considerations"), maturing on
February 15, 2004, represent approximately 43% of
the aggregate market value of the Trust portfolio
and the Stocks represent approximately 57% 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 poten-
tial 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 Index". The S&P 500 Index is an unmanaged
index of 500 stocks the value of which is
calculated by Standard & Poor's Corporation,
which, in PaineWebber's view, is a broadly
diversified, representative segment of the market
of all publicly traded stocks in the United
States.
In constructing the Trust's portfolio, a computer
program was generated against the 500 S&P Index
stocks to identify the 40 S&P 500 Index stocks
(excluding IBM and General Electric and those
stocks rated "Unattractive" or "Sell" by
PaineWebber Equity Research) with the S&P 500
Index within a 3% 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 1.62%
Automobile 2.30
Automobile Parts--Replacement .95
Beverages 3.28
Chemicals 2.48
Commercial Services .11
Computer Software 2.79
Diversified Operations .59
Electronics 3.52
Environmental Control .68
Financial Banks--Commercial 5.52
Food--Processing 2.58
Forest Products & Paper .85
Information Technology .02
Insurance 3.03
Manufacturing 1.08
Office/Business Equipment 3.41
Oil/Gas--International 4.75
Pharmaceuticals 7.03
Publishing/Printing 2.04
Restaurants/Food Service .26
Retail 1.93
Retail--Special Line 1.27
Telecommunications 4.92
X-Ray Equipment .02
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 initial 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, replicating, 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. The Trustee purchases additional
securities with cash or cash equivalents based on
instructions to purchase such Securities. 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 when the Trustee makes additional deposits
of 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, and if
there is no regulatory impediment, 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 ("Short-term Treasury Obligations," and
together with the Stocks and the Treasury
Obligations, the "Securities") (see
"Administration of the Trust--Reinvestment").
Otherwise cash received by the Trust 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 (the "SEC"),
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 distribu-
tions 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 Incorpo-
rated, 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 Index. 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, replicating 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 other corporate action 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. Taxable Stock
dividends received by the Trust, if any, will be
sold by the Trustee and the proceeds will 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 49 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 and the NCR Corporation. 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. General Motors
spun off Hughes Aircraft which subsequently merged
and operates as part of the Raytheon Company, a
major aerospace/defense contractor. 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 re-
modeling 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 merged and now
operates as part of SBC Communications Inc., a
major telecommunications provider. Pepsico
operates in two major domestic and international
businesses: soft drinks (with about one-third of
total U.S. sales and 15% internationally) and
snack foods (Frito-Lay); restaurants (including
Pizza Hut, Taco Bell and Kentucky Fried Chicken)
were spun-off and operate as Tricon Global
Restaurants. 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.
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 pur-
chaser 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.
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 em-
ployees 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 Uni-
tholder 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 advan-
tage of such concession may be deemed to be un-
derwriters 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 Hancock Towers, 200 Clarendon Street,
Boston, MA 02116 upon payment of any transfer or
similar tax which must be paid to effect the
redemption. At the present time there are no such
taxes. No redemption fee will be charged by the
Sponsor or 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 repur-
chase 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 Uni-
tholder 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 clos-
ings; 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 previ-
ously 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 Saturdays,
Sundays, New Year's Day, Martin Luther King, Jr.'s
Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and other days that the New York
Stock Exchange is closed.
The value of Stocks shall be determined by the
Trustee in good faith in the following manner: (1)
if the 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 Re-
demption 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 $.00154 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 guaran-
teed 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 as-
sets 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 li-
able 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 liq-
uidate 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 Hancock Towers, 200 Clarendon
Street, Boston, Massachusetts 02116, 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, 1997
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: $9,355,302
Number of Units: 5,700,000
Minimum Purchase
250 units for Individual Retirement Accounts
1,000 units for all else
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/5,700,000th
Calculation of Public Offering Price Per Unit:
Value of Net Assets in Trust $9,359,806
Divided by 5,700,000 Units $1.6421
Plus Sales Charge of 4.25% of Public Offering Price $.0729
Public Offering Price per Unit $1.7150
Redemption Value per Unit $1.6421
Excess of Public Offering Price over Redemption Value per Unit: $.0729
Sponsor's Repurchase Price per Unit $1.6421
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.0729
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 * *: $.00334 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, 1997 and the related statements of
operations and changes in net assets for the years
ended December 31, 1997, 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, 1997, 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, 1997 and the
results of its operations and changes in its net
assets for the years ended December 31, 1997, 1996
and for the period from January 24, 1995 to Decem-
ber 31, 1995, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 9, 1998
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
December 31, 1997
<CAPTION>
ASSETS
<S> <C> <C>
Treasury Obligation - at market value (Cost $3,696,073)
(note A and note 1 to schedule of investments) $4,019,577
Common Stock - at market value (Cost $2,745,641)
(note 1 to schedule of investments) 5,335,725
Accrued dividends receivable 8,958
Cash 26,830
Total Assets $9,391,090
LIABILITIES AND NET ASSETS
Distribution payable $19,950
Accrued expenses payable 11,334
Total Liabilities 31,284
Net Assets (5,700,000 units of fractional undivided interest outstanding):
Cost to investors (note B) $6,762,954
Less gross underwriting commissions (note C) (321,240)
6,441,714
Net unrealized market appreciation (note D) 2,913,588
Net amount applicable to unitholders 9,355,302
Undistributed investment income-net 1,857
Undistributed proceeds from securities sold 2,647
Net Assets 9,359,806
Total Liabilities and Net Assets $9,391,090
Net Asset Value per unit $1.6421
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 Year Ended of Deposit) to
December 31, December 31, December 31,
1997 1996 1995
<S> <C> <C> <C>
Operations:
Investment income:
Accretion on Treasury Obligation $304,112 $389,395 $319,269
Dividend Income 111,489 161,242 125,237
Total investment income 415,601 550,637 444,506
Less expenses:
Trustee's fees, evaluator's expense and other expenses 22,814 27,814 26,101
Total expenses 22,814 27,814 26,101
Investment income-net 392,787 522,823 418,405
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 936,554 495,309 103,602
Net change in unrealized market appreciation 833,109 154,465 1,926,014
Net gain on investments 1,769,663 649,774 2,029,616
Net increase in net assets resulting from operations $2,162,450 $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 Year Ended of Deposit) to
December 31, December 31, December 31,
1997 1996 1995
<S> <C> <C> <C>
Operations:
Investment income-net $392,787 $522,823 $418,405
Net realized gain on securities transactions 936,554 495,309 103,602
Net change in unrealized market appreciation 833,109 154,465 1,926,014
Net increase in net assets resulting from operations 2,162,450 1,172,597 2,448,021
Less: Distributions to Unitholders (Note E)
Investment income-net 84,492 128,244 117,116
Total Distributions 84,492 128,244 117,116
Less: Units Redeemed by Unitholders (Note F)
Value of units at date of redemption 3,278,139 2,944,184 699,230
Accrued dividends at date of redemption 3,140 3,980 740
Accreted discount at date of redemption 208,451 124,136 14,790
Total Redemptions 3,489,730 3,072,300 714,760
Increase (decrease) in net assets (1,411,772) (2,027,947) 1,616,145
Net Assets:
Beginning of Period 10,771,578 12,799,525 952,500
Supplemental Deposits (Note F) --- --- 10,230,880
End of Period $9,359,806 $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, 1997
(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, 1997 is
$656,515.
(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, 1997, the gross unrealized
market appreciation was $2,916,692 and the gross
unrealized market depreciation was ($3,104).The
net unrealized market appreciation was $2,913,588.
(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 Year Ended of Deposit) to
December 31, December 31, December 31,
1997 1996 1995
<S> <C> <C> <C>
Number of units redeemed 2,300,000 2,400,000 600,000
Redemption amount $3,489,730 $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, 1997
<CAPTION>
TREASURY OBLIGATIONS (42.97%)
Name of Security Coupon Maturity Value Maturity Date Market Value(1)
<C> <C><C> <C> <C> <C> <C>
U.S. Treasury Interest Payments (2) (42.97%) 0% $5,700,000 2/15/2004 $4,019,577
COMMON STOCKS (57.03%)
Name of Issuer Number of Shares Market Value
Aerospace/Defense: (1.62%)
Raytheon Company 100 $4,943
United Technologies Corporation 2,020 147,081
Automobile: (2.30%)
Ford Motor Company 2,471 120,307
General Motors Corporation 1,572 95,303
Automobile Parts-Replacement: (.95%)
Genuine Parts Company 2,612 88,645
Beverages: (3.28%)
The Coca-Cola Company 2,583 172,092
PepsiCo, Inc. 3,707 135,074
Chemicals: (2.48%)
Dow Chemical Company 955 96,932
Du Pont (E.I.) de Nemours & Company 2,248 135,021
Commercial Services: (.11%)
ACNielsen Corporation* 410 9,994
Computer Software: (2.79%)
Microsoft Corporation* 2,020 261,085
Diversified Operations: (.59%)
Cognizant Corporation 1,235 55,035
Electronics: (3.52%)
Emerson Electric Company 2,021 114,060
Hewlett-Packard Company 2,473 154,563
Motorola, Inc. 1,067 60,886
Environmental Control: (.68%)
Waste Management, Inc. 2,303 63,333
Financial Banks-Commercial: (5.52%)
Banc One Corporation 2,285 124,104
BankAmerica Corporation 3,032 221,336
NationsBank Corporation 2,808 170,762
Food-Processing: (2.58%)
General Mills, Inc. 1,235 88,457
Philip Morris Companies, Inc. 3,369 152,658
Forest Products & Paper: (.85%)
Weyerhaeuser Company 1,628 79,874
Information Technology: (.02%)
NCR Corporation* 85 2,364
Insurance: (3.03%)
Allstate Corporation 1,301 118,228
American International Group, Inc. 1,515 164,756
Manufacturing: (1.08%)
Minnesota Mining & Manufacturing Co. 1,235 101,347
Office/Business Equipment: (3.41%)
Pitney-Bowes, Inc. 2,022 181,854
Xerox Corporation 1,853 136,775
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of December 31, 1997
<CAPTION>
COMMON STOCKS (57.03%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Oil/Gas-International: (4.75%)
Amoco Corporation 1,067 $90,828
Chevron Corporation 1,404 108,108
Exxon Corporation 2,022 123,721
Royal Dutch Petroleum Company~ 2,243 121,543
Pharmaceuticals: (7.03%)
Abbott Laboratories 1,967 128,961
Bristol-Myers Squibb Company 2,134 201,930
Johnson & Johnson 2,247 148,021
Merck & Company, Inc. 1,685 179,031
Publishing/Printing: (2.04%)
Dun & Bradstreet Corporation 1,235 38,208
Gannett Company, Inc. 2,470 152,677
Restaurants/Food Service: (.26%)
Darden Restaurants, Inc. 1,045 13,062
Tricon Global Restaurants, Inc.* 371 10,773
Retail: (1.93%)
Sears, Roebuck and Company 1,404 63,531
Wal-Mart Stores, Inc. 2,976 117,366
Retail-Special Line: (1.27%)
Home Depot, Inc. 2,021 118,986
Telecommunications: (4.92%)
Airtouch Communications, Inc.* 2,303 95,718
AT & T Corporation 1,348 82,565
BellSouth Corporation 2,248 126,590
Lucent Technologies 437 34,905
SBC Communications, Inc. 1,643 120,350
X-Ray Equipment: (.02%)
Imation Corporation* 124 1,982
TOTAL COMMON STOCKS $5,335,725
TOTAL INVESTMENTS $9,355,302
(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-27 Financial Data Schedule
EX-99.C2 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, The PaineWebber Pathfinders Trust, Treasury and Growth
Stock Series 16 certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in
the City of New York, and the State of New York on the
22nd day of April, 1998.
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 22nd day of April, 1998.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer
and Director of PaineWebber Incorporated*
Regina A. Dolan Executive Vice President,
Chief Financial Officer and
Director of PaineWebber Incorporated*
Joseph J. Grano, Jr. President and
Director of PaineWebber Incorporated*
Steve P. Baum Executive Vice President and
Director of PaineWebber Incorporated*
Robert H. Silver Executive Vice President and
Director of PaineWebber Incorporated*
Mark B. Sutton Executive Vice President and
Director of PaineWebber Incorporated*
Margo N. Alexander Executive Vice President and
Director of PaineWebber Incorporated*
Terry L. Atkinson Managing Director and
Director of PaineWebber Incorporated*
Brian M. Barefoot Executive Vice President and
Director of PaineWebber Incorporated*
Michael Culp Managing Director and
Director of PaineWebber Incorporated*
Edward M. Kerschner Managing Director and
Director of PaineWebber Incorporated*
James P. MacGilvray Executive Vice President and
Director of PaineWebber Incorporated*
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been previously
filed with the Securities and Exchange Commission with the Post
Effective Amendment to the Registration Statement File No. 2-61279.
April 22, 1998
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"). It is proposed that Post-Effective
Amendment No. 3 to the Trust's registration statement
("Post-Effective Amendment No.3") will be filed with the Securities
and Exchange Commission and dated as of the date hereof in connection
with the continued issuance by the Trust of an indefinite number of
units of fractional undivided interest in the Trust (hereinafter
referred to as the "Units") pursuant to Rule 24f-2 promulgated under
the provisions of the Investment Company Act of 1940, as amended.
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. 3 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 (except "Blue Sky" laws) 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
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> PAINEWEBBER PATHFINDERS TRUST, TREASURY & GROWTH STOCK
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR OTHER
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-24-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1 1
<INVESTMENTS-AT-COST> 6,441,714 0 0
<INVESTMENTS-AT-VALUE> 9,355,302 0 0
<RECEIVABLES> 8,958 0 0
<ASSETS-OTHER> 26,830 0 0
<OTHER-ITEMS-ASSETS> 0 0 0
<TOTAL-ASSETS> 9,391,090 0 0
<PAYABLE-FOR-SECURITIES> 0 0 0
<SENIOR-LONG-TERM-DEBT> 0 0 0
<OTHER-ITEMS-LIABILITIES> 31,284 0 0
<TOTAL-LIABILITIES> 31,284 0 0
<SENIOR-EQUITY> 0 0 0
<PAID-IN-CAPITAL-COMMON> 0 0 0
<SHARES-COMMON-STOCK> 5,700,000 0 0
<SHARES-COMMON-PRIOR> 8,000,000 0 0
<ACCUMULATED-NII-CURRENT> 1,857 0 0
<OVERDISTRIBUTION-NII> 0 0 0
<ACCUMULATED-NET-GAINS> 2,647 0 0
<OVERDISTRIBUTION-GAINS> 0 0 0
<ACCUM-APPREC-OR-DEPREC> 2,913,588 0 0
<NET-ASSETS> 9,359,806 0 0
<DIVIDEND-INCOME> 111,489 161,242 125,237
<INTEREST-INCOME> 0 0 0
<OTHER-INCOME> 304,112 389,395 319,269
<EXPENSES-NET> 22,814 27,814 26,101
<NET-INVESTMENT-INCOME> 392,787 522,823 418,405
<REALIZED-GAINS-CURRENT> 936,554 495,309 103,602
<APPREC-INCREASE-CURRENT> 833,109 154,465 1,926,014
<NET-CHANGE-FROM-OPS> 2,162,450 1,172,597 2,448,021
<EQUALIZATION> 0 0 0
<DISTRIBUTIONS-OF-INCOME> 84,492 128,244 117,116
<DISTRIBUTIONS-OF-GAINS> 0 0 0
<DISTRIBUTIONS-OTHER> 0 0 0
<NUMBER-OF-SHARES-SOLD> 0 0 0
<NUMBER-OF-SHARES-REDEEMED> 2,300,000 2,400,000 600,000
<SHARES-REINVESTED> 0 0 0
<NET-CHANGE-IN-ASSETS> (1,411,772) (2,027,947) 1,616,145
<ACCUMULATED-NII-PRIOR> 0 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0 0
<OVERDISTRIB-NII-PRIOR> 0 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0 0
<GROSS-ADVISORY-FEES> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<GROSS-EXPENSE> 0 0 0
<AVERAGE-NET-ASSETS> 0 0 0
<PER-SHARE-NAV-BEGIN> 0 0 0
<PER-SHARE-NII> 0 0 0
<PER-SHARE-GAIN-APPREC> 0 0 0
<PER-SHARE-DIVIDEND> 0 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0 0
<RETURNS-OF-CAPITAL> 0 0 0
<PER-SHARE-NAV-END> 2 0 0
<EXPENSE-RATIO> 0 0 0
<AVG-DEBT-OUTSTANDING> 0 0 0
<AVG-DEBT-PER-SHARE> 0 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 9, 1998, 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 22, 1998
