FILE NO. 33-57631
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-6
For Registration Under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on Form N-8B-2
A. Exact name of Trust:
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK,
SERIES 17
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal
executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Boulevard
Weehawken, N.J. 07087
copy to:
ORRICK, HERRINGTON & SUTCLIFFE
Attention: Donald J. Robinson, Esq.
599 Lexington Avenue, New York, New York 10022
E. Title and amount of securities being registered:
An indefinite number of Units pursuant to Rule 24f-2
under the Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to
the public of the securities being registered:
Indefinite
G. Amount of filing fee, computed at one-twenty-ninth
of 1 percent of the proposed maximum aggregate
offering price to the public:
Pursuant to Rule 24f-2
$500.00 (Paid with preliminary Registration)
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary
to delay its effective date until the registrant
shall file a further amendment which specifically
states that this Registration Statement shall
thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said
Section 8(a), may determine.
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK,
SERIES 17
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction 1
as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Trust ) Front Cover
(b) Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) Nature of Trust
6. Execution and termination of ) Nature of Trust
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding ) Summary of Portfolio
Trust's Securities and Rights ) Rights of Certificate-
of Holders ) holders
----------
*Not applicable, answer negative or not required.
(a) Type of Securities ) Creation of Trust
(Registered or Bearer) )
(b) Type of Securities ) Creation of Trust
(Cumulative or Distributive) )
(c) Rights of Holders as to ) Rights of Certificate-
Withdrawal or Redemption ) holders
) Redemption of Units by
) Trustee
) The Municipal Bond Trust
) Reinvestment Program
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units, Exchange Option
(e) Rights of Trust issues ) *
periodic payment plan )
certificates )
(f) Voting rights as to Secu- ) Rights of Certificate-
rities, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
(h) Consent of Security Holders )
required to change )
(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
11. Type of securities comprising ) *
periodic payment certificates )
----------
*Not applicable, answer negative or not required.
12. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units Expenses of the
) Trust
(b) Certain information regard- ) *
ing periodic payment )
certificates )
(c) Certain percentages ) *
(d) Certain other fees, etc. ) Expenses of the Trust
payable by holders )
(e) Certain profits receivable ) Public Offering Price of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons )
(f) Ratio of annual charges ) *
to income )
13. Issuance of trust's securities ) Nature of the Trust
) Public Offering of Units
14. Receipt and handling of ) *
payments from purchasers )
15. Acquisition and disposition of ) Acquisition of Securities
underlying securities ) for the Trust Supervision
) of Trust Investments
16. Withdrawal or redemption ) Redemption of Units by
) Trustee
17. (a) Receipt and disposition of ) Distributions to Certifi-
income ) cateholders
(b) Reinvestment of )
distributions ) *
(c) Reserves or special fund ) Distributions to Certifi-
) cateholders
(d) Schedule of distribution ) *
18. Records, accounts and report ) Statements to Certificate-
) holders Administration of
) the Trust
----------
*Not applicable, answer negative or not required.
19. Certain miscellaneous ) Administration of the
provisions of trust agreement ) Trust
20. Loans to security holders ) *
21. Limitations on liability ) Limitation of Liabilities
22. Bonding arrangements ) Included in Form N-8B-2
23. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
24. Organization of Depositor ) Sponsor
25. Fees received by Depositor ) Public Offering Price of
) Units Expenses of the
) Trust
26. Business of Depositor ) Sponsor
27. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
28. Voting securities of Depositor ) *
29. Persons controlling Depositor ) Sponsor
30. Payments by Depositor for ) *
certain other services trust )
31. Payments by Depositor for ) *
certain other services )
rendered to trust )
32. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
33. Remuneration of other persons ) *
for certain services rendered )
to trust )
----------
*Not applicable, answer negative or not required.
IV. Distribution and Redemption of Securities
34. Distribution of trust's ) Public Offering of Units
securities by states )
35. Suspension of sales of trust's ) *
securities )
36. Revocation of authority to ) *
distribute )
37. (a) Method of distribution ) Public Offering of Units
(b) Underwriting agreements )
(c) Selling agreements )
38. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
39. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
40. (a) Business of principal ) Sponsor
underwriter )
(b) Branch officers of )
principal underwriter )
(c) Salesman of principal ) *
underwriter )
41. Ownership of trust's securities ) *
by certain persons )
42. Certain brokerage commissions ) *
received by principal )
underwriter )
43. (a) Method of valuation ) Public Offering Price
) Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Public Offering
price to certain persons ) Units
44. Suspension of redemption rights ) *
----------
*Not applicable, answer negative or not required.
45. (a) Redemption valuation ) Redemption of Units by
) Trustee
(b) Schedule as to redemption ) *
price )
V. Information concerning the Trustee or Custodian
46. Maintenance of position in ) Secondary Market for Units
underlying securities ) Redemption of Units by
) Trustee
) Evaluation of the Trust
47. Organization and regulation of ) Administration of the
Trustee ) Trust Trustee
48. Fees and expenses of Trustee ) Expenses of the Trust
49. Trustee's lien ) Expenses of the Trust
VI. Information concerninq Insurance of Holders of Securities
50. (a) Name and address of ) *
Insurance Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
(g) Method of determining ) *
premiums )
(h) Amount of aggregate ) *
premiums paid )
(i) Who receives any part of ) *
premiums )
(j) Other material provisions ) *
of the Trust relating to )
insurance )
----------
*Not applicable, answer negative or not required.
VII. Policy of Registrant
51. (a) Method of selecting and ) Acquisition of Securities
eliminating securities ) for the Trust
from the Trust )
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) Supervision of Trust
substitution and elimina- ) Investment
tion of securities )
(d) Description of any funda- ) Acquisition of Securities
mental policy of the Trust ) for the Trust
) Supervision of Trust
) Investments
52. (a) Taxable status of the Trust ) Tax status of the Trust
(b) Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
VIII. Financial and Statistical Information
53. Information regarding the ) *
Trust's past ten fiscal years )
54. Certain information regarding ) *
periodic payment plan certifi- )
cates )
55. Certain information regarding ) *
periodic payment plan certifi- )
cates )
56. Certain information regarding ) *
periodic payment plan certifi- )
cates )
57. Certain information regarding ) *
periodic payment plan certifi- )
cates )
58. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
----------
*Not applicable, answer negative or not required.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d)
of the Securities Exchange Act of 1934, the undersigned
registrant hereby undertakes to file with the Securities and
Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by
any rule or regulation of the Commission heretofore or
hereafter duly adopted pursuant to authority conferred in that
section.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities.
PRELIMINARY, SUBJECT TO CHANGE DATED AUGUST 15, 1995
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 17
[LOGO]
THE UPSIDE POTENTIAL OF EQUITIES
WITH THE SECURITY OF U.S. TREASURIES
-----------------------------------------------------------------------------
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 (the "Stocks") having, in Sponsor's opinion on the Initial Date of
Deposit, potential for appreciation. The value of the Units will fluctuate
with the value of the portfolio of underlying securities.
The minimum purchase is $1,000 except that the minimum purchase in
connection with an Individual Retirement Account (IRA) or other tax-deferred
retirement plan is $250. Only whole Units may be purchased.
-----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR 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.
-----------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Read and retain this prospectus for future reference.
PROSPECTUS DATED , 1995
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF , 1995+
<TABLE>
<CAPTION>
<S> <C>
Initial Date of Deposit: , 1995
Aggregate Value of Securities in Trust: ..................... $
Number of Units: ............................................
Fractional Undivided Interest in the Trust Represented by
Each Unit: ................................................. 1/th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Underlying Securities in Trust ........ $
Divided by Units .......................................... $.
Plus Sales Charge of 4.75% of Public Offering Price
(4.99% of net amount invested per Unit) .................. $.0475
Public Offering Price per Unit ............................ $1.00
Redemption Value: ............................................. $.
Evaluation Time: .............................................. 4:00 P.M. New York time.
Distribution Dates**: ......................................... Quarterly, commencing
.
Record Date: .................................................. and quarterly
thereafter.
Mandatory Termination Date: ................................... (15 days after
maturity of the Treasury
Obligations).
20% of the value of the Securities
upon completion of the deposit
Discretionary Liquidation Amount: ............................. of the Securities.
Estimated Expenses of the Trust***: ........................... $. per Unit.
</TABLE>
* On the date of this Prospectus (the "Initial Date of Deposit") the
Public Offering Price is based on the value of the Securities as of
the close of business on , 1995 (the business day preceding
the Initial Date of Deposit). However, if the public offering price
determined with reference to values of the Securities as of the close
of business on the Initial Date of Deposit is less than $.975, the
purchase orders received on the Initial Date of Deposit will be
filled on the basis of such lower price. Beginning , 1995,
the Public Offering Price will be based on value of the Securities
next computed following receipt of the purchase order plus the
applicable sales charge. (See "Valuation").
** See "Distributions".
*** See "Expenses of the Trust". Estimated dividends from the Stocks,
based upon last dividends actually paid, are expected by the Sponsor
to be sufficient to pay Estimated Expenses of the Trust.
+ The date prior to the Initial Date of Deposit.
2
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
The Trust. The objective of the PaineWebber Pathfinders Trust, Treasury
and Growth Stock Series 17 (the "Trust") is preservation of capital and
capital appreciation through an investment in the principal or interest
portions of stripped "zero-coupon" United States Treasury notes or bonds as
the case may be (the "Treasury Obligations"), and equity stocks (the "Stock")
which, in Sponsor's opinion on the Initial Date of Deposit, have potential
for capital appreciation (collectively, the "Securities"). The stripped
Treasury Obligations in the Trust portfolio are interest-only portions of
United States Treasury Obligations (as further discussed under "Risk Factors
and Special Characteristics"), maturing , representing approximately
50% of the aggregate market value of the Trust portfolio and the Stocks
represent approximately 50% 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 purchased their units at or below $1,000 per 1,000 Units
and who hold their units to the Mandatory Termination Date of the Trust
, (approximately 10-11 years from the Initial Date of Deposit),
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.
3
<PAGE>
In PaineWebber's view, one of the most important investment decisions an
investor faces may be determining how to best allocate his investments to
capture growth opportunities without exposing his portfolio to undue risk.
For long-term capital growth, many investment experts recommend stocks. As
with all investments, the higher return potential of equities is typically
associated with higher risk. With this in mind, PaineWebber designed a
portfolio to meet the needs of investors interested in building wealth
prudently over a long-term time horizon by pairing the security of U.S.
Treasury bonds with the growth potential of Stocks. The Trust is a balanced
portfolio with approximately equal portions in U.S. Treasury bonds and
Stocks. Therefore, should interest rates decline significantly prior to
maturity, there is a potential for achieving greater returns by liquidating
the portfolio before the final maturity date. Unitholders can sell units at
any time at the then current net asset value with no additional sales charge.
(See PUBLIC OFFERING OF UNITS--SECONDARY MARKET FOR UNITS and REDEMPTION.)
The main objective of PaineWebber in constructing the portfolio of stocks
to be included in the Trust was to select a group of stocks which, in
PaineWebber's view, would be capable of, over the long term, closely tracking
the performance of the market as measured by the S&P 500. The S&P 500 is an
unmanaged index of 500 stocks calculated under the auspices of Standard &
Poor's, which, in PaineWebber's view, is a broadly diversified,
representative segment of the market of all publicly traded stocks in the
United States.
In constructing the Trust's portfolio, a computer program was generated
against the 500 S&P stocks to identify a combination of 40 S&P 500 stocks
(excluding General Electric and those stocks rated "Unattractive" or "Sell"
by PaineWebber Equity Research) which, when equally weighted, have the
highest correlation with the S&P 500 Index with the smallest tracking error.
The Trust portfolio, in PaineWebber's opinion, is comprised of a
diversified group of large, well-known 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.
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF AGGREGATE NET
PRIMARY INDUSTRY SOURCE ASSET VALUE OF THE TRUST
------------------------------ ------------------------------------------
<S> <C>
Aerospace/Defense ............. %
Automobile .................... %
Beverages ..................... %
Chemicals ..................... %
Computer Software ............. %
Consumer Goods ................ %
Electronics/Semi-Conductor .... %
Entertainment ................. %
Financial Banks ............... %
Forest Products & Paper ...... %
Household Products ............ %
Insurance ..................... %
Office/Business Equipment .... %
Oil/Gas ....................... %
Pharmaceuticals ............... %
Publishing/Printing ........... %
Retail ........................ %
Telecommunications ............ %
</TABLE>
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".
4
<PAGE>
Additional Deposits. After the first deposit on the Initial Date of
Deposit the Sponsor may, from time to time, cause the deposit of additional
Securities in the Trust where additional Units are to be offered to the
public, maintaining, exactly, the original percentage relationship between
the maturity values of the Treasury Obligations and the number of shares of
the Stocks deposited on the Initial Date of Deposit, subject to certain
adjustments. Costs incurred in acquiring such additional Stocks which are not
listed on any national securities exchange, including brokerage fees, stamp
taxes and certain other costs associated with purchasing such additional
Stocks, will be borne by the Trust. Investors purchasing Units during the
initial public offering period will experience a dilution of their investment
as a result of such brokerage fees and other expenses paid by the Trust
during additional deposits of Securities purchased by the Trustee with cash
or cash equivalents pursuant to instructions to purchase such Securities.
(See "The Trust" and "Risk Factors and Special Considerations".)
Termination. As directed by the Sponsor, approximately 30 days prior to
the maturity of the Treasury Obligations the Trustee will begin to sell the
Stocks held in the Trust. Stocks having the greatest amount of capital
appreciation will be sold first. In certain circumstances, monies held upon
the sale of Securities may, at the direction of the Sponsor, be invested for
the benefit of Unitholders in United States Treasury obligations which mature
on or prior to the next distribution date (see "Administration of the
Trust--Reinvestment"), otherwise monies held upon the sale or maturity of
Securities will be held in non-interest bearing accounts created by the
Indenture until distributed and will be of benefit to the Trustee. During the
life of the Trust, Securities will not be sold to take advantage of market
fluctuations. The Trust will terminate within 15 days after the Treasury
Obligations mature. (See "Termination of the Trust" and "Federal Income
Taxes".)
Public Offering Price. The Public Offering Price per Unit is computed by
dividing the Trust Fund Evaluation by the number of Units outstanding and
then adding a sales charge of 4.75% of the Public Offering Price (4.99% of
the net amount invested). The sales charge is reduced after the first year
and on a graduated scale for sales involving at least $50,000 or 50,000 Units
and will be applied on whichever basis is more favorable to the purchaser.
(See "Public Offering of Units--Sales Charge and Volume Discount".)
The public offering price on the Initial Date of Deposit is determined on
the basis of the value of the Securities as of the close of business on the
preceding business day (i.e., by "backward pricing") pursuant to an exemptive
order of the Securities and Exchange Commission, which applies only to
purchase orders received on the Initial Date of Deposit. As a condition of
that order, however, if the public offering price based on the value of the
Securities as of the close of business on the Initial Date of Deposit (i.e.,
by "forward pricing") would be less than $.97 1/2 , then purchase orders
received on that day will be filled on the basis of the lower public offering
price.
Distributions. The Trustee will distribute any net income and principal
received quarterly on the Distribution Dates. Income with respect to the
original issue discount on the Treasury Obligations will not be distributed
although Unitholders will be subject to income tax at ordinary income rates
as if a distribution had occurred. (See "Federal Income Taxes".) Upon
termination of the Trust, the Trustee will distribute to each Unitholder his
pro rata share of the Trust's assets, less expenses. The sale of Stocks in
the Trust in the period prior to termination and upon termination may result
in a lower amount than might otherwise be realized if such sale were not
required at such time due to impending or actual termination of the Trust.
For this reason, among others, the amount realized by a Unitholder upon
termination may be less than the amount paid by such Unitholder. Unless a
Unitholder purchases Units on the Date of Deposit and unless the Treasury
Obligations in proportion to the Units outstanding remain in the Trust, total
distributions, including distributions made upon termination of the Trust,
may be less than the amount paid for a Unit.
5
<PAGE>
Market for Units. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units based upon the value of the
Stocks and the Treasury Obligations as determined by the Trustee as set forth
in "Valuation". 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".)
TRUST
The Trust is one of a series of similar but separate unit investment
trusts created by the Sponsor pursuant to a Trust Indenture and Agreement*
(the "Indenture") dated as of the Initial Date of Deposit, among PaineWebber
Incorporated, as Sponsor and the Investors Bank & Trust Company and The First
National Bank of Chicago, as Co-Trustees (the "Co-Trustees" or "Trustee").
The objective of the Trust is preservation of capital and capital
appreciation through an investment in Treasury Obligations and Stocks. These
are equity stocks, which, in Sponsor's opinion on the Date of Deposit, are
capable of, over the long term, closely tracking the performance of the
market as measured by the S&P 500. The Stocks contained in the Trust are
representative of a number of different industries. Dividends, if any,
received will be held by the Trustee in non-interest bearing accounts until
used to pay expenses or distributed to Unitholders on the next Distribution
Date and to the extent that funds are held therein will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
confirmations of contracts for the purchase of Securities together with an
irrevocable letter or letters of credit of a commercial bank or banks in an
amount at least equal to the purchase price. The value of the Securities was
determined on the basis described under "Valuation". In exchange for the
deposit of the contracts to purchase Securities, the Trustee delivered to the
Sponsor a registered certificate for Units representing the entire ownership
of the Trust. On the Initial Date of Deposit the fractional undivided
interest in the Trust represented by a Unit was as set forth in "Essential
Information Regarding the Trust".
With the deposit on the Initial Date of Deposit, the Sponsor established a
proportionate relationship between the maturity value of the Treasury
Obligations and the number of shares of each Stock in the Trust. The Sponsor
may, from time to time, cause the deposit of additional Securities in the
Trust when additional Units are to be offered to the public, maintaining,
exactly, the original percentage relationship between the maturity value of
the Treasury Obligations and the number of shares of Stock deposited on the
Initial Date of Deposit and replicating any cash or cash equivalents held by
the Trust (net of expenses). The original proportionate relationship is
subject to adjustment to reflect the occurrence of a stock split or a similar
event which affects the capital structure of the issuer of a Stock but which
does not affect the Trust's percentage ownership of the common stock equity
of such issuer at the time of such event. Stock dividends received by the
Trust, if any, will be sold by the Trustee and the proceeds therefrom shall
be treated as income to the Trust.
The Treasury Obligations consist of U.S. Treasury obligations which have
been stripped of their unmatured interest coupons or interest coupons
stripped from the U.S. Treasury Obligations. The obligor with respect to the
Treasury Obligations is the United States Government. U.S. Government backed
obligations are considered the safest investment.
* 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.
6
<PAGE>
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".)
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
7
<PAGE>
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 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.
Certain of the Stock in the Trust are ADRs which are subject to additional
risks. (See "Schedule of Investments" herein.) ADRs evidence American
Depositary Shares, which, in turn, represent common stock of foreign issuers
deposited with a custodian in a depositary. ADRs involve certain investment
risks that are different from those experienced by Stocks issued by domestic
issuers. These investment risks include potential future political and
economic developments and the potential establishment of exchange controls,
new or higher levels of taxation, or other governmental actions which might
adversely affect the payment or receipt of payment of dividends on the common
stock of foreign issuers underlying such ADRs. ADRs may also be subject to
current foreign taxes, which could reduce the yield on such securities. Also,
certain foreign issuers are not subject to reporting requirements under
certain U.S. securities laws and therefore may make less information publicly
available than that afforded by their domestic counterparts. Further, foreign
issuers are not necessarily subject to uniform financial reporting, auditing
and accounting standards, requirements and practices such as are applicable
to domestic issuers.
In addition, the securities underlying the ADRs held in the Trust are
generally denominated, and pay dividends, in foreign currency. An investment
in securities denominated and principally traded in foreign currencies
involves investment risk substantially different than an investment in
securities that are denominated and principal traded in U.S. dollars. This is
due to currency exchange rate risk, because the U.S. dollar value of the
shares underlying the ADRs and of their dividends will vary with the
fluctuations in the U.S. dollar foreign exchange rates for the relevant
currency in which the shares underlying the ADRs are denominated. Paine
Webber observes that, in the recent past, most foreign currencies have
fluctuated widely in value against the U.S. dollar for many reasons,
including the soundness of the world economy, supply and demand of the
relevant currency, and the strength of the relevant regional economy as
compared to the economies of the United States and other countries. Exchange
rate fluctuations are also dependent, in part, on a number of economic
factors including economic conditions within the relevant country, interest
rate differentials between currencies, the balance of imports and exports of
goods and services, and transfer of income and capital from one country to
another. These economic factors in turn are influenced by a particular
country's monetary and fiscal policies, perceived political stability
(particularly with respect to transfer of capital) and investor psychology,
especially that of institutional investors predicting the future relative
strength or weakness of a particular currency. As a general rule, the
currency of a country with a low rate of inflation and a favorable balance of
trade should increase in value relative to the currency of a country with a
high rate of inflation and deficits in the balance of trade. There is no
assurance that the Trust's objective will be achieved. (The Stocks may be
referred to as "Securities" herein.) The value of the Securities and,
therefore, the value of Units may be expected to fluctuate.
8
<PAGE>
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.
9
<PAGE>
Special Considerations
The 40 Stocks in the Portfolio represent large, well-known companies.
There follows the name and a brief description of each company as of the
Initial Date of Deposit. (See also "Schedule of Investments" herein.)
Airtouch Communications, Inc.
Amoco Corporation
American Home Products Corporation
American International Group, Inc.
AT&T Corporation
Automatic Data Processing
Chevron Corporation
Citicorp
The Coca-Cola Company
Walt Disney Company
Dow Chemical Company
DuPont (E.I.) de Nemours & Company
Dun & Bradstreet Corporation
Exxon Corporation
Federal National Mortgage Association
Ford Motor Company
Gannett Company, Inc.
General Motors Corporation
Hewlett-Packard Company
Intel Corporation
Johnson & Johnson
Merck & Company, Inc.
Microsoft Corporation
Mobil Corporation
Philip Morris Companies, Inc.
Motorola, Inc.
NYNEX Corporation
Occidental Petroleum Corporation
PepsiCo, Inc.
Pitney-Bowes, Inc.
Procter & Gamble Company
Royal Dutch Petroleum Company
SBC Communications, Inc.
Tenneco, Inc.
Travelers Group, Inc.
US West, Inc.
United Technologies Corporation
Wal-Mart Stores, Inc.
Weyerhaeuser Company
Xerox Corporation
(Potential investors should note that the Stocks listed above are subject
to change, without notice, prior to the Initial Date of Deposit.)
10
<PAGE>
In the event a contract to purchase a Security fails, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to
such failed contract. Principal and income, if any, attributable to such
failed contract will be distributed to Unitholders of record on the last
business day of the month in which the fail occurs within 20 days of such
record date.
BECAUSE THE TRUST IS ORGANIZED AS A UNIT INVESTMENT TRUST, RATHER THAN AS
A MANAGEMENT INVESTMENT COMPANY, THE TRUSTEE AND THE SPONSOR DO NOT HAVE
AUTHORITY TO MANAGE THE TRUST'S ASSETS FULLY IN AN ATTEMPT TO TAKE ADVANTAGE
OF VARIOUS MARKET CONDITIONS TO IMPROVE THE TRUST'S NET ASSET VALUE, BUT MAY
DISPOSE OF SECURITIES ONLY UNDER LIMITED CIRCUMSTANCES. (SEE "ADMINISTRATION
OF THE TRUST--PORTFOLIO SUPERVISION".)
FEDERAL INCOME TAXES
In the opinion of Orrick, Herrington & Sutcliffe, counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
federal income tax purposes. Under the Internal Revenue Code of 1986, as
amended (the "Code"), each Unitholder will be treated as the owner of a
pro rata portion of the Trust, and income of the Trust will be treated as
income of the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes
of a Security (whether by sale, exchange, redemption, or payment at
maturity) or when the Unitholder sells its Units or redeems its Units for
cash. The total tax cost of each Unit to a Unitholder is allocated among
each of the Securities in accordance with the proportion of the Trust
comprised by each Security to determine the per Unit tax cost for each
Security.
3. The Trust is not an association taxable as a corporation for New
York State income tax 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. Future
legislative, judicial or administrative changes could modify the statements
below and could affect the tax consequences to Unitholders. Accordingly, each
Unitholder is advised to consult its own tax advisor concerning the effect of
an investment in Units.
General. Each Unitholder must report on its federal income tax return a
pro rata share of the entire income of the Trust, derived from dividends on
Stocks, original issue discount or interest on Treasury Obligations, gains or
losses upon sales of Securities by the Trust and a pro rata share of the
expenses of the Trust. Unitholders should note that their taxable income from
an investment in Units will exceed cash distributions because taxable income
will include accretions of original issue discount on the Treasury
Obligations, as well as amounts that are not distributed to Unitholders but
are used by the Trust to pay expenses.
Distributions with respect to Stock, to the extent they do not exceed
current or accumulated earnings and profits of the distributing corporation,
will be treated as dividends to the Unitholders and will be subject to income
tax at ordinary rates. Corporate Unitholders may be entitled to the
dividends-received deduction discussed below.
To the extent distributions with respect to a Stock were to exceed the
issuing corporation's current and accumulated earnings and profits, they
would not constitute dividends. Rather, they would be treated as a tax free
return of capital and would reduce a Unitholder's tax cost for such Stock.
After such tax cost
11
<PAGE>
has been reduced to zero, any additional distributions in excess of current
and accumulated earnings and profits would be taxable as gain from sale of
common stock. This reduction in basis would increase any gain, or reduce any
loss, realized by the Unitholder on any subsequent sale or other disposition
of Units.
A Unitholder who is an individual, estate or trust may be disallowed
certain itemized deductions described in Code section 67, including
compensation paid to the Trustee and administrative expenses of the Trust, to
the extent these itemized deductions, in the aggregate, do not exceed two
percent of the Unitholder's adjusted gross income. Thus, a Unitholder's
taxable income from an investment in Units will exceed amounts distributed
because taxable income would include amounts that are not distributed to
Unitholders but are used by the Trust to pay expenses.
Corporate Dividends-Received Deduction. Corporate holders of Units may be
eligible for the dividends-received deduction with respect to distributions
treated as dividends, subject to the limitations provided in Section 246 and
246A of the Code. The dividends-received deduction generally equals 70
percent of the amount of the dividend. As a result, the maximum effective tax
rate on dividends received generally will be reduced from 35 percent to 10.5
percent. A portion of the dividends-received deduction may, however, be
subject to the alternative minimum tax. Individuals, partnerships, trusts, S
corporations and certain other entities are not eligible for the
dividends-received deduction.
Original Issue Discount. The Trust will contain principal or interest
portions of stripped "zero-coupon" United States Treasury Obligations which
are treated as bonds that were originally issued at a discount ("original
issue discount"). Original issue discount represents interest for federal
income tax purposes and can generally be defined as the difference between
the price at which a bond was issued and its stated redemption price at
maturity. For purposes of the preceding sentence, stripped obligations, such
as the Treasury Obligations, which variously consist either of the right to
receive payments of interest or the right to receive payments of principal,
are treated by each successive purchaser as originally issued on their
purchase dates at an issue price equal to their respective purchase prices
thereof. The market value of the Trust assets comprising the Trust will be
provided to a Unitholder upon request in order to enable the Unitholder to
calculate the original issue discount attributable to each of the Treasury
Obligations. Original issue discount on Treasury Obligations (which were
issued or treated as issued on or after July 2, 1982) is deemed earned in a
geometric progression over the life of such obligation, taking into account
the compounding of accrued interest at least annually, resulting in an
increasing amount of income in each year. Each Unitholder is required to
include in income each year the amount of original issue discount which
accrues on its pro rata portion of each Treasury Obligation with original
issue discount. The amount of accrued original issue discount included in
income with respect to a Unitholder's pro rata interest in Treasury
Obligations is thereupon added to the tax cost for such obligations.
Gain or Loss on Sale. If a Unitholder sells or otherwise disposes of a
Unit, the Unitholder generally will recognize gain or loss in an amount equal
to the difference between the amount realized on the disposition allocable to
the Securities and the Unitholder's adjusted tax bases in the Securities. In
general, such adjusted tax bases will equal the Unitholder's aggregate cost
for the Unit increased by any accrued original issue discount. Such gain or
loss will be capital gain or loss if the Unit and underlying Securities were
held as capital assets, except that such gain will be treated as ordinary
income to the extent of any accrued original issue discount not previously
reported. Each Unitholder generally will also recognize taxable gain or loss
when all or part of its pro rata portion of a Security is sold or otherwise
disposed of for an amount greater or less than its per Unit tax cost
therefor.
Withholding For Citizen or Resident Investors. In the case of any
noncorporate Unitholder that is a citizen or resident of the United States a
31 percent "backup" withholding tax will apply to certain distributions of
the Trust unless the Unitholder properly completes and files, under penalties
of perjury, IRS Form W-9 (or its equivalent).
12
<PAGE>
The foregoing discussion is a general summary and relates only to certain
aspects of the federal income tax consequences of an investment in the Trust.
Unitholders may also be subject to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the federal, state and local tax
consequences to it of ownership of Units.
Investment in the Trust may be suited for purchase by funds and accounts
of individual investors that are exempt from federal income taxes such as
Individual Retirement Accounts, tax-qualified retirement plans including
Keogh Plans, and other tax-deferred retirement plans. Unitholders desiring to
purchase Units for tax-deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
accounts established under tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit on the Initial
Date of Deposit is equal to the aggregate market value of the Securities
determined on the day preceding the Initial Date of Deposit, divided by the
number of Units outstanding plus the sales charge of 4.75%, pursuant to an
exemptive order of the SEC. However, if the price would be less than $.97 1/2
then purchase orders received that day will be filled on the basis of the
lower public offering price. Thereafter, the public offering price during the
initial offering period will be computed by dividing the Trust Fund
Evaluation, next determined after receipt of a purchase order, and, with
respect to the Treasury Obligations, determined with reference to the
offering side evaluation, by the number of Units outstanding plus the
applicable sales charge. The initial public offering period will terminate
when the Sponsor chooses to discontinue offering Units in the initial market.
Thereafter, the Sponsor may offer Units in the secondary market. The public
offering price in the secondary market will be the Trust Fund Evaluation per
Unit next determined after receipt of a purchase order, determined with
respect to the Treasury Obligations on the bid side of the market, plus the
applicable sales charge. (See "Valuation".) The public offering price on any
date subsequent to the Initial Date of Deposit will vary from the public
offering price calculated on the business day prior to the Initial Date of
Deposit (as set forth on page 2 hereof) due to fluctuations in the value of
Stocks and the Treasury Obligations.
Sales Charge and Volume Discount. Sales charges during the initial public
offering period and for secondary market sales are set forth below. A
discount in the sales charge is available to volume purchasers of Units due
to economies of scales in sales effort and sales related expenses relating to
volume purchases. The sales charge applicable to volume purchasers of Units
is reduced on a graduated scale for sales to any person of at least $50,000
or 50,000 Units, applied on whichever basis is more favorable to the
purchaser.
INITIAL PUBLIC OFFERING PERIOD AND
SECONDARY MARKET THROUGH
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS PRICE INVESTED
------------------------------- ------------ ------------
<S> <C> <C>
Less than $50,000 .............. 4.75% 4.99%
$50,000 to $99,999 ............. 4.50 4.71
$100,000 to $249,999 ........... 4.25 4.44
$250,000 to $499,999 ........... 3.75 3.90
$500,000 to $749,999 ........... 3.25 3.36
$750,000 to $999,999 ........... 2.75 2.83
$1,000,000 to $1,999,999 ...... 2.25 2.30
$2,000,000 or more ............. 2.00 2.04
</TABLE>
----------------
* 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.
13
<PAGE>
SECONDARY MARKET FROM THROUGH
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
-------------------------------- ------------ ------------
<S> <C> <C>
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
</TABLE>
-------------------
* 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.
<TABLE>
<CAPTION>
SECONDARY MARKET FROM
THROUGH SECONDARY MARKET ON AND
AFTER
PERCENT OF PERCENT OF
PUBLIC PERCENT OF PUBLIC PERCENT OF
OFFERING NET AMOUT OFFERING NET AMOUNT
PRICE INVESTED PRICE INVESTED
----------- ------------ ------------ ------------
<S> <C> <C> <C>
3.25% 3.36% 2.25% 2.30%
</TABLE>
14
<PAGE>
The volume discount sales charge shown above will apply to all purchases
of Units on any one day by the same person in the amounts stated herein, and
for this purpose purchases of Units of this Trust will be aggregated with
concurrent purchases of any other trust which may be offered by the Sponsor.
Units held in the name of the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed for the purposes hereof to
be registered in the name of the purchaser. The reduced sales charges are
also applicable to a trustee or other fiduciary purchasing Units for a single
trust estate or single fiduciary account.
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses with respect to the purchase of Units by
employees of the Sponsor and its affiliates, the Sponsor intends to permit
employees of the Sponsor and its affiliates and certain of their relatives to
purchase units of the Trust at a reduced sales charge of $5.00 per 1,000
Units.
Exchange Option. Unitholders may elect to exchange any or all of their
Units of this series for units of one or more of any series of PaineWebber
Municipal Bond Fund (the "PaineWebber Series"); The Municipal Bond Trust (the
"National Series"); The Municipal Bond Trust, Multi-State Program (the
"Multi-State Series"); The Municipal Bond Trust, California Series (the
"California Series"); The Corporate Bond Trust (the "Corporate Series");
PaineWebber Pathfinder's Trust (the "Pathfinder's Trust"); the PaineWebber
Federal Government Trust (the "Government Series"); The Municipal Bond Trust,
Insured Series (the "Insured Series"); or the PaineWebber Equity Trust (the
"Equity Series") (collectively referred to as the "Exchange Trusts"), at a
Public Offering Price for the Units of the Exchange Trusts to be acquired
based on a reduced sales charge of $15 per Unit, per 100 Units in the case of
a trust whose Units cost approximately $10 or per 1,000 units in the case of
a trust whose Units cost approximately one dollar. Unitholders of this Trust
are not eligible for the Exchange Option into an Equity Trust, Growth Stock
Series designated as a rollover series for the 30 day period prior to
termination of the Trust. The purpose of such reduced sales charge is to
permit the Sponsor to pass on to the Unitholder who wishes to exchange Units
the cost savings resulting from such exchange of Units. The cost savings
result from reductions in time and expense related to advice, financial
planning and operational expenses required for the Exchange Option. Each
Exchange Trust has different investment objectives, therefore a Unitholder
should read the prospectus for the applicable exchange trust carefully prior
to exercising this option. Exchange Trusts having as their objective the
receipt of tax-exempt interest income would not be suitable for tax-deferred
investment plans such as Individual Retirement Accounts. A Unitholder who
purchased Units of a series and paid a per Unit, per 100 Unit or per 1,000
Unit sales charge that was less than the per Unit, per 100 Unit or per 1,000
Unit sales charge of the series of the Exchange Trusts for which such
Unitholder desires to exchange into, will be allowed to exercise the Exchange
Option at the Unit Offering Price plus the reduced sales charge, provided the
Unitholder has held the Units for at least five months. Any such Unitholder
who has not held the Units to be exchanged for the five-month period will be
required to exchange them at the Unit Offering Price plus a sales charge
based on the greater of the reduced sales charge, or an amount which,
together with the initial sales charge paid in connection with the
acquisition of the Units being exchanged, equals the sales charge of the
series of the Exchange Trust for which such Unitholder desires to exchange
into, determined as of the date of the exchange.
The Sponsor will permit exchanges at the reduced sales charge provided
there is either a primary market for Units or a secondary market maintained
by the Sponsor in both the Units of this series and units of the applicable
Exchange Trust and there are units of the applicable Exchange Trust available
for sale. While the Sponsor has indicated that it intends to maintain a
market for the Units of the respective Trusts, there is no obligation on its
part to maintain such a market. Therefore, there is no assurance that
15
<PAGE>
a market for Units will in fact exist on any given date at which a Unitholder
wishes to sell his Units of this series and thus there is no assurance that
the Exchange Option will be available to a Unitholder. Exchanges will be
effected in whole Units only. Any excess proceeds from Unitholders' Units
being surrendered will be returned. Unitholders will be permitted to advance
new money in order to complete an exchange to round up to the next highest
number of Units. An exchange of Units pursuant to the Exchange Option will
normally constitute a "taxable event" under the Code and a Unitholder will
generally recognize a tax gain or loss at the time of exchange in the same
manner as upon a sale of Units. Unitholders are urged to consult their own
tax advisors as to the tax consequences to them of exchanging Units in
particular cases.
The Sponsor reserves the right to modify, suspend or terminate this
Exchange Option at any time without further notice to Unitholders. In the
event the Exchange Option is not available to a Unitholder at the time he
wishes to exercise it, the Unitholder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor of
his desire to exercise the Exchange Option and to use the proceeds from the
sale of his Units to the Sponsor of this series to purchase Units of one or
more of the Exchange Trusts from the Sponsor. If Units of the applicable
outstanding series of the Exchange Trust are at that time available for sale,
and if such Units may lawfully be sold in the state in which the Unitholder
is resident, the Unitholder may select the series or group of series for
which he desires his investment to be exchanged. The Unitholder will be
provided with a current prospectus or prospectuses relating to each series in
which he indicates interest.
The exchange transaction will operate in a manner essentially identical to
any secondary market transaction, i.e., Units will be repurchased at a price
based on the market value of the Securities in the portfolio of the Trust
next determined after receipt by the Sponsor of an exchange request and
properly endorsed Certificate. Units of the Exchange Trust will be sold to
the Unitholder at a price based upon the next determined market value of the
Securities in the Exchange Trust plus the reduced sales charge. Exchange
transactions will be effected only in whole units; thus, any proceeds not
used to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand units of a
trust with a current price of $1.30 per unit, desires to sell his units and
seeks to exchange the proceeds for units of a series of an Exchange Trust
with a current price of $890 per unit based on the bid prices of the
underlying securities. In this example, which does not contemplate any
rounding up to the next highest number of Units, the proceeds from the
Unitholder's units would aggregate $3,900. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Unitholder
would be able to acquire four units in the Exchange Trust for a total cost of
$3,620 ($3,560 for the units and $60 for the sales charge). If all 3,000
units were tendered, the remaining $280 would be returned to the Unitholder.
Conversion Option. Owners of units of any registered unit investment trust
sponsored by another which was initially offered at a maximum applicable
sales charge of at least 3.0% (a "Conversion Trust") may elect to apply the
cash proceeds of the sale or redemption of those units directly to acquire
available units of any Exchange Trust at a reduced sales charge of $15 per
Unit (or per 100 Units in the case of Exchange Trusts having a Unit price of
approximately $10, or per 1,000 Units in the case of Exchange Trusts having a
Unit price of approximately $1), subject to the terms and conditions
applicable to the Exchange Option (except that no secondary market is
required for Conversion Trust units). To exercise this option, the owner
should notify his retail broker. He will be given a prospectus for each
series in which he indicates interest and for which units are available. The
dealer must sell or redeem the units of the
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Conversion Trust. Any dealer other than PaineWebber must certify that the
purchase of units of the Exchange Trust is being made pursuant to and is
eligible for the Conversion Option. The dealer will be entitled to two thirds
of the applicable reduced sales charge. The Sponsor reserves the right to
modify, suspend or terminate the Conversion Option at any time without
further notice, including the right to increase the reduced sales charge
applicable to this option (but not in excess of $5 more per Unit (or per 100
Units or per 1,000 Units, as applicable) than the corresponding fee then
being charged for the Exchange Option). For a description of the tax
consequences of a conversion reference is made to the Exchange Option section
of the prospectus.
Distribution of Units. The minimum purchase during the initial public
offering is $1,000, except that the minimum purchase is $250 for purchases
made in connection with Individual Retirement Accounts or other tax-deferred
retirement plans. Only whole Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a concession of $.03 per Unit,
during the initial offering period and one-half of the highest applicable
sales charge during the secondary market, subject to change from time to
time. The difference between the sales charge and the dealer concession will
be retained by the Sponsor. In the event that the dealer concession is 90% or
more of the sales charge per Unit, dealers taking advantage of such
concession may be deemed to be underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units. The Sponsor intends to qualify the Units in all
states of the United States, the District of Columbia and the Commonwealth of
Puerto Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer
to purchase Units at the Trust Fund Evaluation per Unit next computed after
receipt by the Sponsor of an order from a Unitholder. The Sponsor may cease
to maintain such a market at any time, and from time to time, without notice.
In the event that a secondary market for the Units is not maintained by the
Sponsor, a Unitholder desiring to dispose of Units may tender such Units to
the Trustee for redemption at the price calculated in the manner set forth
under "Redemption". Redemption requests in excess of $100,000 may be redeemed
"in kind" as described under "Redemption." The Sponsor does not in any way
guarantee the enforceability, marketability, value or price of any stocks in
the Trust, nor that of the Units.
Investors should note the Trust Fund Evaluation per Unit at the time of
sale or tender for redemption may be less than the price at which the Unit
was purchased.
The Sponsor may redeem any Units it has purchased in the secondary market
if it determines for any reason that it is undesirable to continue to hold
these Units in its inventory. Factors which the Sponsor may consider in
making this determination will include the number of units of all series of
all trusts which it holds in its inventory, the saleability of the Units and
its estimate of the time required to sell the Units and general market
conditions.
Sponsor's Profits. In addition to the applicable sales charge, the Sponsor
realizes a profit (or sustains a loss) in the amount of any difference
between the cost of the Securities to the Sponsor and the price at which it
deposits the Securities in the Trust, which is the value of the Securities,
determined by the Trustee as described under "Valuation," at the close of
business on the business day prior to the 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.
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Cash, if any, received from Unitholders prior to the settlement date for
the purchase of Units or prior to the payment for Securities upon their
delivery may be used in the Sponsor's business subject to the limitations of
Rule 15c3-3 under the Securities and Exchange Act of 1934 and may be of
benefit to the Sponsor.
In selling any Units in the initial public offering after the Date of
Deposit, the Sponsor may realize profits or sustain losses resulting from
fluctuations in the net asset value of outstanding Units during that period.
In maintaining a secondary market for the Units, the Sponsor may realize
profits or sustain losses in the amount of any differences between the price
at which it buys Units and the price at which it resells or redeems such
Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust Company for redemption at
its office in person, or by mail at One Lincoln Plaza, 89 South Street,
Boston, MA 02111 upon payment of any transfer or similar tax which must be
paid to effect the redemption. At the present time there are no such taxes.
No redemption fee will be charged by the Sponsor or the Trustee. If Units are
represented by a certificate, it must be properly endorsed accompanied by a
letter requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Unitholders must
sign exactly as their names appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In certain instances the Trustee
may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or
administrator, or certificates of corporate authority. Unitholders should
contact the Trustee to determine whether additional documents are necessary.
Units tendered to the Trustee for redemption will be cancelled, if not
repurchased by the Sponsor.
Units will be redeemed at the Redemption Value per Unit next determined
after receipt of the redemption request in good order by the Trustee. The
Redemption Value per Unit is determined by dividing the Trust Fund Evaluation
by the number of Units outstanding. (See "Valuation.")
A redemption request is deemed received on the business day (See
"Valuation" for a definition of business day) when such request is received
prior to 4:00 p.m. If it is received after 4:00 p.m., it is deemed received
on the next business day. During the period in which the Sponsor maintains a
secondary market for Units, the Sponsor may repurchase any Unit presented for
tender to Investors Bank & Trust Company for redemption no later than the
close of business on the second business day following such presentation and
Unitholders will receive the Redemption Value next determined after receipt
by the Trustee of the redemption request. Proceeds of a redemption will be
paid to the Unitholder on the seventh calendar day following the date of
tender (or if the seventh calendar day is not a business day on the first
business day prior thereto).
With respect to cash redemptions, amounts representing income received
shall be withdrawn from the Income Account, and, to the extent such balance
is insufficient, from the Capital Account. The Trustee is empowered, to the
extent necessary, to sell Securities in such manner as is directed by the
Sponsor, which direction shall be given so as to maximize the objectives of
the Trust. In the event that no such direction is given by the Sponsor, the
Trustee is empowered to sell Securities as follows: Treasury Obligations will
be sold so as to maintain in the Trust Treasury Obligations in an amount
which, upon maturity, will equal at least $1.00 per Unit outstanding after
giving effect to such redemption and Stocks having the greatest amount of
capital appreciation will be sold first. (See "Administration of the Trust".)
However, with respect to redemption requests in excess of $100,000, the
Sponsor may determine in its discretion to direct the Trustee to redeem Units
"in kind" by distributing Securities to the redeeming
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Unitholder. When Stock is distributed, a proportionate amount of Stock will
be distributed, rounded to avoid the distribution of fractional shares and
using cash or checks where rounding is not possible. The Sponsor may direct
the Trustee to redeem Units "in kind" even if it is then maintaining a
secondary market in Units of the Trust. Securities will be valued for this
purpose as set forth under "Valuation". A Unitholder receiving a redemption
"in kind" may incur brokerage or other transaction costs in converting the
Securities distributed into cash. The availability of redemption "in-kind" is
subject to compliance with all applicable laws and regulations, including the
Securities Act of 1933, as amended.
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Trust will be reduced. Sales will usually be required at a
time when Securities would not otherwise be sold and may result in lower
prices than might otherwise be realized. The price received upon redemption
may be more or less than the amount paid by the Unitholder depending on the
value of the Securities in the portfolio at the time of redemption. In
addition, because of the minimum amounts in which Securities are required to
be sold, the proceeds of sale may exceed the amount required at the time to
redeem Units; these excess proceeds will be distributed to Unitholders on the
Distribution Dates.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar days following the day of
tender for any period during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday closings; or for any period during
which the Securities and Exchange Commission determined that trading on the
New York Stock Exchange, Inc. is restricted or for any period during which an
emergency exists as a result of which disposal or evaluation of the
Securities is not reasonably practicable; or for such other period as the
Securities and Exchange Commission may by order permit for the protection of
Unitholders. The Trustee is not liable to any person or in any way for any
loss or damages which may result from any such suspension or postponement, or
any failure to suspend or postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the Valuation Time set forth under "Summary of Essential
Information" (1) on each June 30 and December 31 (or the last business day
prior thereto), (2) on each business day as long as the Sponsor is
maintaining a bid in the secondary market, (3) on the business day on which
any Unit is tendered for redemption and (4) on any other day desired by the
Sponsor or the Trustee, by adding (a) the aggregate value of the Securities
and other assets determined by the Trustee as set forth below, (b) cash on
hand in the Trust, income accrued on the Treasury Obligations but not
distributed or held for distribution and dividends receivable on Stocks
trading ex-dividend (other than any cash held in any reserve account
established under the Indenture) and (c) accounts receivable for securities
sold and any other assets of the Trust Fund not included in (a) and (b) above
and deducting therefrom the sum of (v) taxes or other governmental charges
against the Trust not previously deducted, (w) accrued fees and expenses of
the Trustee and the Sponsor (including legal and auditing expenses) and other
Trust expenses, (x) cash allocated for distribution to Unitholders, and (y)
accounts payable for units tendered for redemption and any other liabilities
of the Trust Fund not included in (v), (w) , (x) and (y) above. The per Unit
Trust Fund Evaluation is calculated by dividing the result of such
computation by the number of Units outstanding as of the date thereof.
Business days do not include New Year's Day, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and other days that the New York Stock Exchange is closed.
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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 Date of Deposit, the Public Offering Price per Unit
(which figure includes the sales charge) exceeded the Redemption Value, (see:
"Essential Information"). The bid and offering prices of the Treasury
Obligations is expected to vary. For this reason and others, including the
fact that the Public Offering Price includes the sales charge, the amount
realized by a Unitholder upon redemption of Units may be less than the price
paid by the Unitholder for such Units.
EXPENSES OF THE TRUST
The cost of the preparation and printing of the Certificates, the
Indenture and this Prospectus, the initial fees of the Trustee and the
Trustee's counsel, and expenses incurred in establishing the Trust including
legal and auditing fees (the "Organizational Expenses"), will be paid by the
Trust, as is common for mutual funds. Historically, the Sponsors of Unit
Investment Trusts have paid all organizational expenses. 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 $.0035 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.
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For its services as Trustee and Evaluator, the Trustee will be paid in
monthly installments, annually $. 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 $. 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 wilful misconduct on its part;
(6) brokerage commissions and other expenses incurred in connection with the
purchase and sale of Securities; and (7) expenses incurred upon termination
of the Trust. In addition, to the extent then permitted by the Securities and
Exchange Commission, the Trust may incur expenses of maintaining registration
or qualification of the Trust or the Units under Federal or state securities
laws so long as the Sponsor is maintaining a secondary market (including, but
not limited to, legal, auditing and printing expenses).
The accounts of the Trust shall be audited not less than annually by
independent public accountants selected by the Sponsor. The expenses of the
audit shall be an expense of the Trust. So long as the Sponsor maintains a
secondary market, the Sponsor will bear any audit expense which exceeds
$.00050 per Unit. Unitholders covered by the audit during the year may
receive a copy of the audited financials upon request.
The fees and expenses set forth above are payable out of the Trust and
when unpaid will be secured by a lien on the Trust. Based upon the last
dividend paid prior to the Initial Date of Deposit, dividends on the Stocks
are expected to be sufficient to pay the estimated expenses of the Trust. To
the extent that dividends paid with respect to the Stocks are not sufficient
to meet the expenses of the Trust, the Trustee is authorized to sell
Securities in the same manner as provided in "Redemption" herein.
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation on the books of the
Trustee. In order to avoid additional operating costs and for investor
convenience, certificates will not be issued unless a request, in writing
with signature guaranteed by an eligible guarantor institution or in such
other manner as may be acceptable to the Trustee, is delivered by the
Unitholder to the Sponsor. Issued Certificates are transferable by
presentation and surrender to the Trustee at its office in Boston,
Massachusetts properly endorsed or accompanied by a written instrument or
instruments of transfer. Uncertificated Units are transferable by
presentation to the Trustee at its office of a written instrument of
transfer.
Certificates may be issued in denominations of one Unit or any integral
multiple thereof as deemed appropriate by the Trustee. A Unitholder may be
required to pay $2.00 per certificate reissued or transferred, and shall be
required to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. For new certificates issued to
replace destroyed, mutilated, stolen
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or lost certificates, the Unitholder must furnish indemnity satisfactory to
the Trustee and must pay such expenses as the Trustee may incur. Mutilated
certificates must be surrendered to Investors Bank & Trust Company for
replacement.
DISTRIBUTIONS
The Trustee will distribute any net income and principal received
quarterly on the Distribution Dates to Unitholders of record on the preceding
Record Date. Income with respect to the original issue discount on the
Treasury Obligations will not be distributed although Unitholders will be
subject to tax as if a distribution had occurred. See "Federal Income Taxes".
Within a reasonable period after the Trust is terminated, each Unitholder
will, upon surrender of his Certificates for cancellation, receive his pro
rata share of the amounts realized upon disposition of the Securities plus
any other assets of the Trust, less expenses of the Trust. (See
"Termination.")
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest, if any, accrued on
Securities, proceeds from the sale of Securities or other monies received by
the Trustee on behalf of the Trust shall be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income Account any dividends
(including stock dividends which were sold) and interest, if any, accrued by
the Trust. All other receipts (i.e. return of principal, and gains) are
credited on its books to a Capital Account. Stock dividends received by the
Trust, if any, will be sold by the Trustee and the proceeds therefrom be
treated as income to the Trust. A record will be kept of qualifying dividends
within the Income Account. The pro rata share of the Income Account and the
pro rata share of the Capital Account represented by each Unit will be
computed by the Trustee as set forth under "Valuation".
The Trustee will deduct from the Income Account and, to the extent funds
are not sufficient therein, from the Capital Account, amounts necessary to
pay expenses incurred by the Trust. (See "Expenses and Charges.") In
addition, the Trustee may withdraw from the Income Account and the Capital
Account such amounts as may be necessary to cover redemption of Units by the
Trustee. (See "Redemption.")
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any other governmental charges
payable out of the Trust.
Reports and Records. With the distribution of income from the Trust,
Unitholders will be furnished with a statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the Trust at its office in
Boston, including records of the names and addresses of Unitholders, a
current list of underlying Securities in the portfolio and a copy of the
Indenture. Records pertaining to a Unitholder or to the Trust (but not to
other Unitholders) are available to the Unitholder for inspection at
reasonable times during business hours.
Within a reasonable period of time after the end of each calendar year,
starting with calendar year 1996, 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.
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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.
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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 in the Trust. If the value of
the Trust as shown by any evaluation is less than twenty percent (20%) of the
market value of the Securities on the Date of Deposit, the Trustee may in its
discretion, and will when so directed by the Sponsor, terminate such Trust.
The Trust may also be terminated at any time by the written consent of 51% of
the Unitholders or by the Trustee upon the resignation or removal of the
Sponsor if the Trustee determines termination to be in the best interest of
the Unitholders. In no event will the Trust continue beyond the Mandatory
Termination Date.
As directed by the Sponsor approximately 30 days prior to the maturity of
the Treasury Obligations the Trustee will begin to sell the Stocks held in
the Trust. Stocks having the greatest amount of capital appreciation will be
sold first. Upon termination of the Trust, the Trustee will sell any Stocks
then remaining in the Trust and will then, after deduction of any fees and
expenses of the Trust and payment into the Reserve Account of any amount
required for taxes or other governmental charges that may be payable by the
Trust, distribute to each Unitholder, upon surrender for cancellation of his
Certificate after due notice of such termination, such Unitholder's pro rata
share in the Income and Capital Accounts. Monies held upon the sale of
Securities will be held in non-interest bearing accounts created by the
Indenture until distributed and will be of benefit to the Trustee. The sale
of Stocks in the Trust in the period prior to termination and upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time due to impending or actual
termination of the Trust. For this reason, among others, the amount realized
by a Unitholder upon termination may be less than the amount paid by such
Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under
the laws of the State of Delaware. The Sponsor is a member firm of the New
York Stock Exchange, Inc. as well as other major securities and commodities
exchanges and is a member of the National Association of Securities Dealers,
Inc. The Sponsor is engaged in a security and commodity brokerage business as
well as underwriting and distributing new issues. The Sponsor also acts as a
dealer in unlisted securities and municipal bonds and in addition to
participating as a member of various selling groups or as an agent of other
investment 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.
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The Indenture provides that the Sponsor will not be liable to the Trustee,
any of the Trusts or to the Unitholders for taking any action or for
refraining from taking any action made in good faith or for errors in
judgment, but will be liable only for its own wilful misfeasance, bad faith,
gross negligence or wilful disregard of its duties. The Sponsor will not be
liable or responsible in any way for depreciation or loss incurred by reason
of the sale of any Securities in the Trust.
The Indenture is binding upon any successor to the business of the
Sponsor. The Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on the business of the Sponsor and
duly assumes all the obligations of the Sponsor under the Indenture. In such
event the Sponsor shall be relieved of all further liability under the
Indenture.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over
by public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of Chicago, a national banking
association with its corporate trust office at One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126 (which is subject to supervision by
the Comptroller of the Currency, the Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company with its office at One Lincoln
Plaza, 89 South Street, Boston, Massachusetts 02111, toll-free number
1-800-356-2754 (which is subject to supervision by the Massachusetts
Commissioner of Banks, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System).
The Indenture provides that the Trustee will not be liable for any action
taken in good faith in reliance on properly executed documents or the
disposition of moneys, Securities or Certificates or in respect of any
valuation which it is required to make, except by reason of its own gross
negligence, bad faith or wilful 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 wilful misconduct on its part, arising
out of or in connection with its acceptance or administration of the Trust,
including the costs and expenses (including counsel fees) of defending itself
against any claim of liability.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Investments audited
by Ernst & Young LLP, independent auditors, have been included herein in
reliance upon their report given on their authority as experts in accounting
and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Orrick,
Herrington & Sutcliffe, 599 Lexington Avenue, New York, New York, as counsel
for the Sponsor.
25
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 17
We have audited the accompanying Statement of Financial Condition of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 17, including
the Schedule of Investments, as of , 1995. This Statement of Financial
Condition is the responsibility of the Co-Trustees. Our responsibility is to
express an opinion on this Statement of Financial Condition based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Statement of Financial
Condition is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the Statement
of Financial Condition. Our procedures included confirmation with Investors
Bank & Trust Company, a Co-Trustee, of an irrevocable letter of credit
deposited for the purchase of securities, as shown in the Statement of
Financial Condition as of , 1995. An audit also includes assessing the
accounting principles used and significant estimates made by the Co-Trustees,
as well as evaluating the overall Statement of Financial Condition
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the Statement of Financial Condition referred to above
presents fairly, in all material respects, the financial position of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 17 at ,
1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
, 1995
26
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 17
STATEMENT OF FINANCIAL CONDITION
AS OF INITIAL DATE OF DEPOSIT , 1995
<TABLE>
<CAPTION>
TRUST PROPERTY
---------------
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ................................. $
---------
Organizational Expenses (b) .......................................
Total ........................................................ $
=========
INTEREST OF UNITHOLDERS
-----------------------
Units outstanding:
Cost to investors (c) ............................................ $
Less: Gross underwriting commissions (d) .......................... ( )
Accrued Liability (b) ............................................. $
---------
Net amount applicable to investors ............................ $
---------
Total ........................................................ $
=========
<FN>
---------------
(a) The aggregate cost to the Trust of the securities listed under
"Schedule of Investments" is determined by the Co-Trustees on the basis set
forth under "Public Offering of Units--Public Offering Price." See also the
column headed Cost of Securities to Trust under "Schedule of Investments."
Pursuant to contracts to purchase securities, an irrevocable letter of credit
drawn on in the amount of $ has been deposited with the Co-Trustees,
Investors Bank & Trust Company and The First National Bank of Chicago, for
the purchase of $ aggregate value of Securities in the initial deposit and
for the purchase of Securities in subsequent deposits.
(b) Organizational Expenses incurred by the Trust have been deferred and
will be amortized over years. Organizational Expenses have been estimated on
projected total assets of $ million. To the extent the Trust is larger or
smaller, the estimate may vary.
(c) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) Sales charge of 4.75% of the Public Offering Price per Unit is
computed on the basis set forth under "Public Offering of Units--Sales Charge
and Volume Discount."
</TABLE>
27
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 17
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, , 1995
TREASURY OBLIGATIONS ( %) (1)
<TABLE>
<CAPTION>
COST OF
SECURITIES TO
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TRUST(2)
-------------------------- ---------- ------------------ ----------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3) (%) ......... % $ $
</TABLE>
COMMON STOCKS ( %) (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES TO
NAME OF ISSUER SHARES TRUST(2)
------------------ ------------- --------------
<S> <C> <C>
$
</TABLE>
28
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 17
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, , 1995
COMMON STOCKS (1)
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES TO
NAME OF ISSUER SHARES TRUST(2)
------------------------- ------------- --------------
<S> <C> <C>
--------------
TOTAL COMMON STOCKS ... $
--------------
TOTAL INVESTMENTS ..... $
==============
<FN>
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuations" as of the close of business on the business day prior to
the Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit
was $ .
(3) This security does not pay 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.)
(4) The profit (loss) to the Sponsor on the Initial Date of Deposit is
$ .
* Non-income producing.
+ American Depositary Receipts.
</TABLE>
29
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 17
[LOGO]
The Upside Potential of Equities
with the Security of U.S. Treasuries
<TABLE>
<CAPTION>
CO-TRUSTEES: SPONSOR:
INVESTORS BANK & TRUST COMPANY THE FIRST NATIONAL BANK PAINEWEBBER INCORPORATED
OF CHICAGO
<S> <C> <C>
89 South Street, One First National Plaza 1200 Harbor Boulevard
Boston, Mass. 02111 Suite 0126 Weehawken, N.J. 07087
1 (800) 356-2754 Chicago, Illinois 60670-0126 (201) 902-3000
</TABLE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Essential Information Regarding the Trust ....2
Trust ......................................... 6
Risk Factors and Special Considerations ...... 7
Federal Income Taxes .......................... 11
Public Offering of Units ...................... 13
Public Offering Price ....................... 13
Sales Charge and Volume Discount ............ 13
Employee Discount ........................... 15
Exchange Option ............................. 15
Conversion Option ........................... 16
Distribution of Units ....................... 17
Secondary Market for Units .................. 17
Sponsor's Profits ........................... 17
Redemption .................................... 18
Valuation ..................................... 19
Comparison of Public Offering Price and
Redemption Value ............................. 20
Expenses of the Trust ......................... 20
Rights of Unitholders ......................... 21
Distributions ................................. 22
Administration of the Trust ................... 22
Accounts .................................... 22
Reports and Records ......................... 22
Portfolio Supervision ....................... 23
Reinvestment ................................ 23
Amendment of the Indenture .................... 24
Termination of the Trust ...................... 24
Sponsor ....................................... 24
Trustee ....................................... 25
Independent Auditors .......................... 25
Legal Opinions ................................ 25
Report of Independent Auditors ................ 26
Statement of Financial Condition .............. 27
Schedule of Investments ....................... 28
</TABLE>
------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEE OR THE SPONSOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
-------------------------------------------------------------------------------
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE TRUST AND THE SPONSOR,
BUT DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE TRUST'S
REGISTRATION STATEMENTS, AMENDMENTS AND EXHIBITS RELATING THERETO, WHICH HAVE
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, AND
TO WHICH REFERENCE IS HEREBY MADE.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
The following exhibits:
1. Standard Terms and Conditions of Trust dated as
of September 1, 1990 between PaineWebber Incorporated,
Depositor, Investors Bank & Trust Co. and The First National
Bank of Chicago, as Co-Trustees (incorporated by reference to
Exhibit 2 in File No. 33-25030).
2. Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by reference to Exhibit
8 in File No. 2-88344).
3. By-Laws of PaineWebber Incorporated, as amended
(incorporated by reference to Exhibit A(6)(a) in File No.
811-3722).
The following exhibits to be supplied by amendment:
1. Copy of Trust Indenture and Agreement between
PaineWebber Incorporated, Depositor, Investors Bank & Trust
Co. and The First National Bank of Chicago as Co-Trustees
incorporating by reference Standard Terms and Conditions of
Trust dated as of September 1, 1990.
2. Form of Certificate of Ownership (included in
Standard Terms and Conditions of Trust).
3. Opinion of Counsel as to legality of securities
being registered.
4. Opinion of Counsel as to income tax status of
securities being registered.
5. Consent of Ernst and Young, 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 Group-Financial Statements incorporated by reference
to Form 10-K and 10-Q respectively (File No. 1-7367).
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested,
all in the City of New York, and State of New York, on this
15th day of August, 1995.
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK,
SERIES 17
(Registrant)
By: PaineWebber Incorporated
(Depositor)
Robert E. Holley
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 who constitute a majority of the Executive Committee
of its Board of Directors in the following capacities and in
the City Of New York, and State of New York, on this 15th day
of August, 1995.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive
By Officer, Director & Member of
the Executive Committee
Robert E. Holley
Attorney-in-fact*
Regina Dolan Senior Vice President and
Chief Financial Officer
By
Robert E. Holley
Attorney-in-fact*
Joseph Grano, Jr. President, Retail Sales & Marketing,
By Director and Member
of the Executive Committee
Robert E. Holley
Attorney-in-fact*
--------
* Executed copies of the powers of attorney have been filed
with the Securities and Exchange Commission in connection with
the Registration Statement No. 33-19786.
