File No. 33-63305
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER PATHFINDERS TRUST, TREASURY AND GROWTH STOCK
SERIES 18
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
(x) Check if it is proposed that this filing should become effective
(immediately upon filing or on July 18, 1997) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
7,680,940 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$9,588,885.50**
* Estimated solely for the purpose of calculating the registration fee, at
$1.25 per unit.
G. Amount of filing fee, computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
THE REGISTRANT HEREBY TERMINATES ITS ELECTION MADE PURSUANT TO RULE 24f-2
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
* The method of calculation is made pursuant to Rule 24e-2 under the
Investment Company Act of 1940.The total amount of units redeemed or
repurchased during the previous fiscal year ending 1996 is 7,448,661.
There have been no previous filings of post-effective amendments during
the current fiscal year 7,448,661 redeemed or repurchased units are
being used to reduce the filing fee for this amendment.
PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 18
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C under the Securities Act of
1933
(Form N-8B-2 Items required by Instruction 1 as to Prospectus on
Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a)Name of Trust ) Front Cover
(b)Title of securities issued )
2. Name and address of ) Back Cover
Depositor
3. Name and address of ) Back Cover
Trustee
4. Name and address of ) Back Cover
Principal
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and ) The Trust
termination of
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General Information ) The Trust;
regarding
Trust's Securities and ) Rights of Unit
Rights
of Holders ) holders
(a) Type of Securities ) The Trust
(Registered or Bearer) )
(b) Type of Securities ) The Trust
(Registered or Bearer) )
* Not applicable, answer
negative or not required.
(c) Rights of Holders as to ) Rights of Unit
Withdrawal or ) holders
Redemption
) Redemption;
) Public Offering of Units-
) Secondary Market for Units
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units Exchange Option
(e) Rights of Trust issues )
periodic payment plan ) *
certificates )
(f) Voting rights as to ) Rights of Unit
Securi-
ties, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1)Assets of Trust ) Amendment of the
Indenture
(2)Terms and Conditions ) Administration of the
Trust-Portfolio Supervision
of Trust's Securities ) Investments
(3)Provisions of Trust ) Amendment of the
Indenture
(4)Identity of Depositor and ) Administration of the Trust
Trustee
(h) Consent of Security )
Holders
required to change )
(1)Composition of assets ) Amendment of the
Indenture
of Trust )
(2)Terms and conditions ) Amendment of the
Indenture
of Trust's Securities )
(3)Provisions of Indenture ) Amendment of the
Indenture
(4)Identity of Depositor ) Administration of the Trust
and Trustee )
11. Type of Securities ) The Trust
Comprising Units
12. Type of securities ) *
comprising
periodic payment )
certificates
13. (a)Load, fees, expenses, etc. ) Public Offering of
) Units; Expenses of the
) Trust
* Not applicable, answer
negative or not required.
(b)Certain information ) *
regarding periodic payment ) *
certificates )
(c)Certain percentages ) *
(d)Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e)Certain profits receivable ) Public Offering of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons ) Market for Units
(f)Ratio of annual charges to ) *
income )
14. Issuance of Trust's ) The Trust
securities
) Public Offering of Units
15. Receipt and handling of ) *
payments from )
purchasers
16. Acquisition and ) The Trust; Administration
disposition of
underlying securities ) of the Trust; Termination
) of Trust
17. Withdrawal or ) Redemption
redemption
) Public offering of Units
) -Secondary Market for
) -Exchange Option
) -Conversion Option
18. (a)Receipt and disposition of ) Distributions of
income ) Unitholders
(b)Reinvestment of ) *
distributions
(c)Reserves or special fund ) Distributions to
) Unitholders; Expenses of
Trust
(d)Schedule of distribution ) *
19. Records, accounts and ) Distributions
report
) Administration
) of the Trust
20. Certain miscellaneous ) Administration of the Trust
pro-
visions of Trust )
agreement
21. Loans to security ) *
holders
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material ) *
provisions of
trust agreement )
* Not applicable, answer
negative or not required.
III. Organization
Personnel and Affiliated
Persons of Depositor
25. Organization of ) Sponsor
Depositor
26. Fees received by ) Public Offering of
Depositor
) Units Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of ) *
Depositor
30. Persons controlling ) Sponsor
Depositor
31. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
32. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
33. Remuneration of ) *
employees of
Depositor for certain )
services
rendered to Trust )
34. Remuneration of other ) *
persons
for certain services )
rendered
to Trust )
IV. Distribution and Redemption of Securities
35. Distribution of Trust's ) Public Offering of Units
securities by states )
36. Suspension of sales of ) *
Trust's
securities )
37. Revocation of authority ) *
to
distribute )
38. (a)Method of distribution ) Public Offering of Units
(b)Underwriting agreements )
(c)Selling agreements ) Sponsor
* Not applicable, answer
negative or not required.
39. (a)Organization of principal ) Sponsor
underwriter )
(b)N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
41. (a)Business of principal ) Sponsor
underwriter )
(b)Branch officers of ) *
principal underwriter )
(c)Salesman of principal ) *
underwriter )
42. Ownership of Trust's ) *
securities
by certain persons )
43. Certain brokerage ) *
commissions
received by principal )
underwriter )
44. (a)Method of valuation ) Public Offering Price of
) Units
(b)Schedule as to offering ) *
price )
(c)Variation in Offering ) Public Offering Price of
price to certain persons ) Units
45. Suspension of ) *
redemption rights
46. (a)Redemption valuation ) Public Offering of Units
) -Secondary Market for Units
) -Valuation
(b)Schedule as to redemption )
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position ) Public Offering of Units
in
underlying securities ) Redemption
) Trustee
) Evaluation of the Trust
48. Organization and )
regulation of
Trustee ) Trustee
49. Fees and expenses of ) Expenses of the Trust
Trustee
50. Trustee's lien ) Expenses of the Trust
* Not applicable, answer
negative or not required.
VI. Information
concerning Insurance of
Holders of Securities
51. (a)Name and address of ) *
Insurance Company )
(b)Type of policies ) *
(c)Type of risks insured and ) *
excluded )
(d)Coverage of policies ) *
(e)Beneficiaries of policies ) *
(f)Terms and manner of ) *
cancellation )
(g)Method of determining ) *
premiums )
(h)Amount of aggregate ) *
premiums paid )
(i)Who receives any part of ) *
premiums )
(j)Other material provisions ) *
of the Trust relating to )
insurance )
VII. Policy of Registrant
52. (a)Method of selecting and ) The Trust;
eliminating securities ) Administration of the Trust
from the Trust )
(b)Elimination of securities ) *
from the Trust )
(c)Policy of Trust regarding ) Portfolio Supervision
) Administration of Trust
substitution and
elimination of securities )
(d)Description of any funda- ) Administration of
mental policy of the Trust ) Trust
) Portfolio Supervision
53. (a)Taxable status of the ) Tax status of the Trust
Trust )
(b)Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
* Not applicable, answer
negative or not required.
VIII. Financial and
Statistical Information
54. Information regarding ) *
the
Trust's past ten fiscal )
years
55. Certain information ) *
regarding
periodic payment plan )
certificates )
56. Certain information ) *
regarding
periodic payment plan )
certificates )
57. Certain information ) *
regarding
periodic payment plan )
certificates )
58. Certain information ) *
regarding
periodic payment plan )
certi-
ficates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to ) Condition
Form S-6)
* Not applicable, answer
negative or not required.
PaineWebber Pathfinders Trust
Treasury and Growth Stock Series Eighteen
A "Unit Investment Trust"
24,100,000 Units
The investment objective of this Trust is to
preserve capital while providing for capital
appreciation through an investment in "zero-
coupon" United States Treasury obligations (the
"Treasury Obligations") and equity stocks (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 $250. Only whole Units
may be purchased.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST
HAS BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE
ISSUED AND OUTSTANDING UNITS WHICH HAVE BEEN
ACQUIRED BY THE SPONSOR EITHER BY PURCHASE FROM
THE TRUSTEE OF UNITS TENDERED FOR REDEMPTION OR IN
THE SECONDARY MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for
future reference.
Prospectus dated July 18, 1997
Essential Information Regarding The Trust
The Trust. The objective of the PaineWebber
Pathfinders Trust, Treasury and Growth Stock
Series 18 (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" or
"Stocks") 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 Considerations"), maturing November 15,
2006, representing approximately 47% of the
aggregate market value of the Trust portfolio
and the Stocks represent approximately 53% 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 on November 30, 2006, 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. Also, the Trust may contain American
Depositary Receipts ("ADRs") which are
susceptible to additional risks, such as foreign
currency exchange rate fluctuations, as well as
potential future political and economic
developments, which might adversely affect the
payment or receipt of payments on dividends.
(See "Schedule of Investments" to determine if
this Trust contains ADRs and "Risk Factors and
Special Considerations" for a further discussion
of ADRs.) In addition, the stripped Treasury
Obligations may fluctuate substantially in value
and may be subject to greater fluctuations in
value during the life of the Trust than might be
experienced by current interest-bearing Treasury
Obligations which distribute income regularly.
There is no assurance that the Trust's objective
will be achieved at the Trust's intended
maturity or if the Trust is terminated or Units
redeemed prior to the Trust's intended maturity.
The value of the Securities and, therefore, the
value of Units may be expected to fluctuate.
Purchasers who purchase Units subsequent to the
Initial Date of Deposit will receive, if the pro
rata portion of the Treasury Obligations are
held until maturity, $1,000 per 1,000 Units as a
return of such purchaser's principal investment,
regardless of the purchase price paid by such
purchaser. (See "Risk Factors and Special
Considerations.")
The Composition of the Portfolio. PaineWebber
understands the importance of long-term
financial goals such as planning for retirement,
funding a child's education, or trying to build
wealth toward some other objective.
In PaineWebber's view, one of the most
important investment decisions an investor faces
may be determining how to best allocate his
investments to capture growth opportunities
without exposing his portfolio to undue risk.
For long-term capital growth, many investment
experts recommend stocks. As with all
investments, the higher return potential of
equities is typically associated with higher
risk. With this in mind, PaineWebber designed a
portfolio to meet the needs of investors
interested in building wealth prudently over a
long-term time horizon by pairing the security
of U.S. Treasury bonds with the growth potential
of Stocks. The 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.
Approximate Percentage
of Aggregate Market Value
Primary Industry Source of Stocks in the Trust
Aerospace/Defense 1.49%
Automobile .99
Beverages 2.63
Chemicals 3.74
Computer Software 2.98
Consumer Goods 1.38
Electronics/Semi-Conductor 4.85
Entertainment 1.29
Financial Banks 5.43
Household Products 1.48
Information Technology .04
Insurance 3.02
Manufacturing 1.41
Office/Business Equipment 2.72
Oil/Gas 7.48
Pharmaceuticals 4.36
Publishing/Printing 1.41
Restaurants 1.08
Retail 2.44
Shipbuilding .06
Telecommunications 1.90
Transportation .92
X-Ray Equipment .03
The Sponsor anticipates that, based upon last
dividends actually paid, dividends from the
Stock will be sufficient (i) to pay expenses of
the Trust (see "Expenses of the Trust" herein),
and (ii) after such payment, to make
distributions of such to Unitholders as
described below under "Distributions".
Additional Deposits. After the first deposit on
the Initial Date of Deposit the Sponsor may,
from time to time, cause the deposit of
additional Securities in the Trust where
additional Units are to be offered to the
public, maintaining, exactly, the original
percentage relationship between the maturity
values of the Treasury Obligations and the
number of shares of the Stocks deposited on the
Initial Date of Deposit, subject to certain
adjustments. Costs incurred in acquiring such
additional Stocks which are either not listed on
any national securities exchange or are ADRs,
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 ap-
preciation 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 $.975, 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 in excess of $.00500
per Unit received quarterly on the Distribution
Dates. (See "Distributions.") Income with
respect to the original issue discount on the
Treasury Obligations will not be distributed
although Unitholders will be subject to income
tax at ordinary income rates as if a
distribution had occurred. (See "Federal Income
Taxes".) Upon termination of the Trust, the
Trustee will distribute to each Unitholder his
pro rata share of the Trust's assets, less
expenses. The sale of Stocks in the Trust in the
period prior to termination and upon termination
may result in a lower amount than might
otherwise be realized if such sale were not
required at such time due to impending or actual
termination of the Trust. For this reason, among
others, the amount realized by a Unitholder upon
termination may be less than the amount paid by
such Unitholder. Unless a Unitholder purchases
Units on the Initial Date of Deposit and unless
the Treasury Obligations in proportion to the
Units outstanding remain in the Trust, total
distributions, including distributions made upon
termination of the Trust, may be less than the
amount paid for a Unit.
Market for Units. The Sponsor, though not
obligated to do so, presently intends to
maintain a secondary market for Units based upon
the 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".)
THE TRUST
The Trust is one of a series of similar but
separate unit investment trusts created by the
Sponsor pursuant to a Trust Indenture and
Agreement* (the "Indenture") dated as of the
Initial Date of Deposit, among PaineWebber
Incorporated, as Sponsor and the Investors Bank
& Trust Company and The First National Bank of
Chicago, as Co-Trustees (the "Co-Trustees" or
"Trustee"). The objective of the Trust is
preservation of capital and capital appreciation
through an investment in Treasury Obligations
and Stocks. These are equity stocks, which, in
Sponsor's opinion on the Initial Date of
Deposit, are capable of, over the long term,
closely tracking the performance of the market
as measured by the S&P 500. The Stocks contained
in the Trust are representative of a number of
different industries. Dividends, if any,
received will be held by the Trustee in non-
interest bearing accounts until used to pay
expenses or distributed to Unitholders on the
next Distribution Date and to the extent that
funds are held therein will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor
deposited with the Trustee the confirmations of
contracts for the purchase of Securities
together with an irrevocable letter or letters
of credit of a commercial bank or banks in an
amount at least equal to the purchase price. The
value of the Securities was determined on the
basis described under "Valuation". In exchange
for the deposit of the contracts to purchase
Securities, the Trustee delivered to the Sponsor
a registered certificate for Units representing
the entire ownership of the Trust. On the
Initial Date of Deposit the fractional undivided
interest in the Trust represented by a Unit was
as set forth in "Essential Information Regarding
the Trust".
With the deposit on the Initial Date of
Deposit, the Sponsor established a proportionate
relationship between the maturity value of the
Treasury Obligations and the number of shares of
each Stock in the Trust. The Sponsor may, from
time to time, cause the deposit of additional
Securities in the Trust when additional Units
are to be offered to the public, maintaining,
exactly, the original percentage relationship
between the maturity value of the Treasury
Obligations and the number of shares of Stock
deposited on the Initial Date of Deposit and
replicating any cash or cash equivalents held by
the Trust (net of expenses). The original
proportionate relationship is subject to
adjustment to reflect the occurrence of a stock
split or a similar event which affects the
capital structure of the issuer of a Stock but
which does not affect the Trust's percentage
ownership of the common stock equity of such
issuer at the time of such event. Stock
dividends received by the Trust, if any, will be
sold by the Trustee and the proceeds therefrom
shall be treated as income to the Trust.
_________________
* 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.
The Treasury Obligations consist of U.S.
Treasury obligations which have been stripped of
their unmatured interest coupons or interest
coupons stripped from the U.S. Treasury
Obligations. The obligor with respect to the
Treasury Obligations is the United States
Government. U.S. Government backed obligations
are considered the safest investment.
On the Initial Date of Deposit each Unit
represented the fractional undivided interest in
the Securities and net income of the Trust set
forth under "Essential Information Regarding the
Trust". However, if additional Units are issued
by the Trust (through the deposit of additional
Securities for purposes of the sale of
additional Units), the aggregate value of
Securities in the Trust will be increased and
the fractional undivided interest represented by
each Unit in the balance will be decreased. If
any Units are redeemed, the aggregate value of
Securities in the Trust will be reduced, and the
fractional undivided interest represented by
each remaining Unit in the balance will be in-
creased. 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 are also entitled to rights on
liquidation which are senior to those of common
stocks. For these reasons, preferred stocks
generally entail less risk than common stocks.
Common stocks do not represent an obligation of
the issuer. Therefore they do not offer any
assurance of income or provide the degree of
protection of debt securities. The issuance of
debt securities or even preferred stock by an
issuer will create prior claims for payment of
principal, interest and dividends which could
adversely affect the ability and inclination of
the issuer to declare or pay dividends on its
common stock or the rights of holders of common
stock with respect to assets of the issuer upon
liquidation or bankruptcy. Unlike debt
securities which typically have a stated
principal amount payable at maturity common
stocks do not have a fixed principal amount or a
maturity. Additionally, the value of the Stocks,
like the Treasury Obligations, in the Trust may
be expected to fluctuate over the life of the
Trust to values higher or lower than those
prevailing on the Initial Date of Deposit. The
Stocks may appreciate or depreciate in value (or
pay dividends) depending on the full range of
economic and market influences affecting
corporate profitability, the financial condition
of issuers and the prices of equity securities
in general and the Stocks in particular.
Certain of the Stock in the Trust may be ADRs
which are subject to additional risks. (See
"Schedule of Investments" herein.) ADRs evidence
American Depositary Shares ("ADS"), which, in
turn, represent common stock of foreign issuers
deposited with a custodian in a depositary. (For
purposes of this Prospectus, the term "ADR"
generally includes "ADS".) 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 in-
volves 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. The Trust, however,
will compute its income in United States
dollars, and to the extent any of the Stocks in
the Trust pay income or dividends in foreign
currency, the Trust's computation of income will
be made on the date of its receipt by the Trust
at the foreign exchange rate in effect on such
date. PaineWebber 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 bal-
ance of trade.
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 (or the relevant foreign
currency exchange rate, if applicable) 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 (and currency)
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 (and
currency) fluctuations during this period will
affect the value of every Unitholder's Units and
the income per Unit received by the Trust. In
addition, costs incurred in connection with the
acquisition of Securities not listed on any
national securities exchange (due to
differentials between bid and offer prices for
the Securities) and brokerage fees, stamp taxes
and other costs incurred in purchasing stocks
will be at the expense of the Trust and will
affect the value of every Unitholder's Units.
Special Considerations
The original 40 Stocks in the Portfolio
represent large, well-known companies. As of the
date of this Prospectus, AT&T has completed a
corporate restructuring spinning off Lucent
Technologies Inc. and NCR Corporation. During
1996, Minnesota Mining & Manufacturing Company
spun-off Imation Corporation; Union Pacific
Corporation spun-off union Pacific Resources
Group; and in a restructuring, Tenneco Inc.
exchanged stock and spun-off Newport News
Shipbuilding Inc. and El Paso Natural Gas
Company.
The Trustee has been instructed to
retain such shares of the newly created
companies in the Trust Portfolio following their
receipt and to hold such shares in the Portfolio
in lieu of the original securities. There are
now 46 Stocks held in the Portfolio.
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 Supervi-
sion".)
Certain of the Stocks may be attractive
acquisition candidates pursuant to mergers,
acquisitions and tender offers. In general,
tender offers involve a bid by an issuer or
other acquiror to acquire a stock pursuant to
the terms of its offer. Payment generally takes
the form of cash, securities (typically bonds or
notes), or cash and securities. Pursuant to
federal law a tender offer must remain open for
at least 20 days and withdrawal rights apply
during the entire offering period. Frequently
offers are conditioned upon a specified number
of shares being tendered and upon the obtaining
of financing. There may be other conditions to
the tender offer as well. Additionally, an
offeror may only be willing to accept a
specified number of shares. In the event a
greater number of shares is tendered, the
offeror must take up and pay for a pro rata
portion of the shares deposited by each
depositor during the period the offer remains
open. The Agreement contains provisions
permitting Stocks to be either held or sold in
the event of a tender offer, merger or
reorganization involving one or more of the
Stocks in the Trust (see "Administration of the
Trust-Portfolio Supervision" herein).
FEDERAL INCOME TAXES
In the opinion of Carter, Ledyard & Milburn,
counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as a
corporation for federal income tax purposes.
Under the Internal Revenue Code of 1986, as
amended (the "Code"), each Unitholder will be
treated as the owner of a pro rata portion of
the Trust, and income of the Trust will be
treated as income of the Unitholders.
2. Each Unitholder will have a taxable event
when the Trust disposes of a Security (whether
by sale, exchange, redemption, or payment at
maturity) or when the Unitholder sells its Units
or redeems its Units for cash.
3. The Trust is not an association taxable as a
corporation for New York State income tax
purposes. Under New York State law, each
Unitholder will be treated as the owner of a pro
rata portion of the Trust and the income of the
Trust will be treated as income of the
Unitholders.
The following general discussion of the federal
income tax treatment of an investment in Units
of the Trust is based on the Code and Treasury
regulations promulgated thereunder as in effect
on the date of this Prospectus. The federal
income tax treatment applicable to a Unitholder
may depend upon the Unitholder's particular tax
circumstances. The tax treatment of non U.S.
investors is not addressed. Future legislative,
judicial or administrative changes could modify
the statements below and could affect the tax
consequences to Unitholders. Accordingly, each
Unitholder is advised to consult its own tax
advisor concerning the effect of an investment
in Units.
General. The total tax cost of each Unit to a
Unitholder is allocated among each of the
Securities in accordance with the proportion of
the Trust comprised by each Security to
determine the initial per Unit tax cost for each
Security.
Each Unitholder must report on its federal
income tax return a pro rata share of the entire
income of the Trust, derived from dividends on
Stocks, original issue discount or interest on
Treasury Obligations, gains or losses upon sales
of Securities by the Trust and a pro rata share
of the expenses of the Trust. Unitholders
should note that their taxable income from an
investment in Units will exceed cash
distributions because taxable income will
include accretions of original issue discount on
the Treasury Obligations.
Distributions with respect to Stock, to the
extent they do not exceed current or accumulated
earnings and profits of the distributing
corporation, will be treated as dividends to the
Unitholders and will be subject to income tax at
ordinary rates. Corporate Unitholders may be
entitled to the dividends-received deduction
discussed below.
To the extent distributions with respect to a
Stock were to exceed the issuing corporation's
current and accumulated earnings and profits,
they would not constitute dividends. Rather,
they would be treated as a tax free return of
capital and would reduce a Unitholder's tax
basis for such Stock. This reduction in basis
would in effect increase any gain, or reduce any
loss, realized by the Unitholder on any
subsequent sale or other disposition of Units.
After tax cost has been reduced to zero, any
additional distributions in excess of current
and accumulated earnings and profits would be
taxable as gain from sale of Stock.
A Unitholder who is an individual, estate or
trust may be disallowed certain itemized
deductions described in Code Section 67,
including compensation paid to the Trustee and
administrative expenses of the Trust, to the ex-
tent these itemized deductions, in the
aggregate, do not exceed two percent of the
Unitholder's adjusted gross income. Thus, a
Unitholder's taxable income from an investment
in Units may exceed amounts distributed to the
extent amounts are used by the Trust to pay
expenses.
Corporate Dividends-Received Deduction.
Corporate holders of Units may be eligible for
the dividends-received deduction with respect to
distributions treated as dividends, subject to
the limitations provided in Section 246 and 246A
of the Code. The dividends-received deduction
generally equals 70 percent of the amount of the
dividend. The alternative minimum tax may have
the effect of reducing the benefit of the
deduction. Individuals, partnerships, trusts, S
corporations and certain other entities are not
eligible for the dividends-received deduction.
The Clinton Administration has proposed a
reduction in the dividends-received deduction
from 70 percent to 50 percent and there have
been, from time to time, other proposals to
reduce such deduction. The Sponsor is unable to
predict whether the Clinton Administration
proposal or any other proposal will be adopted
during the life of the Trust.
Original Issue Discount. The Trust will contain
principal or interest portions of stripped
"zero-coupon" United States Treasury Obligations
which are treated as bonds that were originally
issued at a discount ("original issue dis-
count"). 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 pur-
poses of the preceding sentence, stripped
obligations, such as the Treasury Obligations,
which variously consist either of the right to
receive payments of interest or the right to
receive payments of principal, are treated by
each successive purchaser as originally issued
on their purchase dates at an issue price equal
to their respective purchase prices thereof.
The market value of the Trust assets will be
provided to a Unitholder upon request in order
to enable the Unitholder to calculate the
original issue discount attributable to each of
the Treasury Obligations. Original issue
discount on Treasury Obligations (which were
issued or treated as issued on or after July 2,
1982) is deemed earned over the life of such
obligation, taking into account the compounding
of accrued interest at least annually, resulting
in an increasing amount of income in each year.
Each Unitholder is required to include in
income each year the amount of original issue
discount which accrues on its pro rata portion
of each Treasury Obligation which (with respect
to such Unitholder) has original issue discount.
The amount of accrued original issue discount
included in income with respect to a
Unitholder's interest in Treasury Obligations
is thereupon added to the tax cost for such obli-
gations.
Gain or Loss on Sale. If a Unitholder sells or
otherwise disposes of a Unit, the Unitholder
generally will recognize gain or loss in an
amount equal to the difference between the
amount realized on the disposition allocable to
the Securities and the Unitholder's adjusted tax
bases in the Securities. In general, such
adjusted tax bases will equal the Unitholder's
aggregate cost for the Unit increased by any
accrued original issue discount. Such gain or
loss will be capital gain or loss if the Unit
and underlying Securities were held as capital
assets, except that such gain will be treated as
ordinary income to the extent of any accrued
original issue discount not previously reported.
Each Unitholder generally will also recognize
taxable gain or loss when all or part of its pro
rata portion of a Security is sold or otherwise
disposed of for an amount greater or less than
its per Unit tax cost therefor.
Withholding For Citizen or Resident Investors.
In the case of any noncorporate Unitholder that
is a citizen or resident of the United States a
31 percent "backup" withholding tax may apply to
certain distributions of the Trust unless the
Unitholder properly completes and files, under
penalties of perjury, IRS Form W-9 (or its
equivalent).
The foregoing discussion is a general summary
and relates only to certain aspects of the
federal income tax consequences of an investment
in the Trust. Unitholders, may also be subject
to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the
federal, state and local tax consequences to it
of ownership of Units.
Investment in the Trust may be suited for
purchase by funds and accounts of individual
investors that are exempt from federal income
taxes such as Individual Retirement Accounts,
tax-qualified retirement plans including Keogh
Plans, and other tax-deferred retirement plans.
Unitholders desiring to purchase Units for tax-
deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on
establishing such accounts. Units may also be
purchased by persons who already have self-
directed accounts established under tax-deferred
retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering
price 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 due to fluctuations in the
value of Stocks and the Treasury Obligations,
and the foreign currency exchange rates (if
applicable), among other factors.
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 April 12, 1998
Percent of Percent of
Aggregate Dollar Public Offering Net Amount
Value of Units Price Invested
Less than $50,000 4.75% 4.99%
$50,000 to $99,999 4.50 4.71
$100,000 to $249,999 4.25 4.44
$250,000 to $499,999 3.75 3.90
$500,000 to $749,999 3.25 3.36
$750,000 to $999,999 2.75 2.83
$1,000,000 to $1,999,999 2.25 2.30
$2,000,000 or more 2.00 2.04
_____________
* The sales charge applicable to volume
purchasers according to the table above will be
applied on either a dollar or Unit basis, depend-
ing upon which basis provides a more favorable
purchase price to the purchaser.
Secondary Market From April 13, 1998
Through April 12, 2000
Percent of Percent of
Aggregate Dollar Public Offering Net Amount
Value of Units Price Invested
Less than $50,000 4.25% 4.44%
$50,000 to $99,999 4.00 4.17
$100,000 to $249,999 3.75 3.90
$250,000 to $499,999 3.00 3.09
$500,000 to $749,999 2.75 2.83
$750,000 to $999,999 2.50 2.56
$1,000,000 to $1,999,999 2.00 2.04
$2,000,000 or more 1.75 1.78
_____________
* The sales charge applicable to volume
purchasers according to the table above will be
applied on either a dollar or Unit basis, depend-
ing upon which basis provides a more favorable
purchase price to the purchaser.
Secondary Market From Secondary Market on and After
April 13, 2000 April 13, 2002
Through April 12, 2002
Percent of Percent of
Public Percent of Public Percent of
Offering Net Amount Offering Net Amount
Price Invested Price Invested
3.25% 3.36% 2.25% 2.30%
The volume discount sales charge shown above
will apply to all purchases of Units on any one
day by the same person in the amounts stated
herein, and for this purpose purchases of Units
of this Trust will be aggregated with concurrent
purchases of any other trust which may be
offered by the Sponsor. Units held in the name
of the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed
for the purposes hereof to be registered in the
name of the purchaser. The reduced sales charges
are also applicable to a trustee or other fi-
duciary 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 re-
duced sales charge is to permit the Sponsor to
pass on to the Unitholder who wishes to exchange
Units the cost savings resulting from such
exchange of Units. The cost savings result from
reductions in time and expense related to
advice, financial planning and operational
expenses required for the Exchange Option. Each
Exchange Trust has different investment
objectives, therefore a Unitholder should read
the prospectus for the applicable exchange trust
carefully prior to exercising this option.
Exchange Trusts having as their objective the
receipt of tax-exempt interest income would not
be suitable for tax-deferred investment plans
such as Individual Retirement Accounts. A
Unitholder who purchased Units of a series and
paid a per Unit, per 100 Unit or per 1,000 Unit
sales charge that was less than the per Unit,
per 100 Unit or per 1,000 Unit sales charge of
the series of the Exchange Trusts for which such
Unitholder desires to exchange into, will be
allowed to exercise the Exchange Option at the
Unit Offering Price plus the reduced sales
charge, provided the Unitholder has held the
Units for at least five months. Any such
Unitholder who has not held the Units to be
exchanged for the five-month period will be
required to exchange them at the Unit Offering
Price plus a sales charge based on the greater
of the reduced sales charge, or an amount which,
together with the initial sales charge paid in
connection with the acquisition of the Units
being exchanged, equals the sales charge of the
series of the Exchange Trust for which such
Unitholder desires to exchange into, determined
as of the date of the exchange.
The Sponsor will permit exchanges at the
reduced sales charge provided there is either a
primary market for Units or secondary market
maintained by the Sponsor in both the Units of
this series and units of the applicable Exchange
Trust and there are units of the applicable
Exchange Trust available for sale. While the
Sponsor has indicated that it intends to
maintain a market for the Units of the
respective Trusts, there is no obligation on its
part to maintain such a market. Therefore, there
is no assurance that a market for Units will in
fact exist on any given date at which a
Unitholder wishes to sell his Units of this
series and thus there is no assurance that the
Exchange Option will be available to a
Unitholder. Exchanges will be effected in whole
Units only. Any excess proceeds from Uni-
tholders' 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 con-
sult 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 sponsor which was initially offered at a
maximum applicable sales charge of at least 3.0%
(a "Conversion Trust") may elect to apply the
cash proceeds of the sale or redemption of those
units directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15
per Unit (or per 100 Units in the case of
Exchange Trusts having a Unit price of
approximately $10, or per 1,000 Units in the
case of Exchange Trusts having a Unit price of
approximately $1), subject to the terms and
conditions applicable to the Exchange Option
(except that no secondary market is required for
Conversion Trust units). To exercise this
option, the owner should notify his retail
broker. He will be given a prospectus for each
series in which he indicates interest and for
which units are available. The dealer must sell
or redeem the units of the Conversion Trust. Any
dealer other than PaineWebber must certify that
the purchase of units of the Exchange Trust is
being made pursuant to and is eligible for the
Conversion Option. The dealer will be entitled
to two thirds of the applicable reduced sales
charge. The Sponsor reserves the right to
modify, suspend or terminate the Conversion
Option at any time without further notice,
including the right to increase the reduced
sales charge applicable to this option (but not
in excess of $5 more per Unit (or per 100 Units
or per 1,000 Units, as applicable) than the
corresponding fee then being charged for the
Exchange Option). For a description of the tax
consequences of a conversion reference is made
to the Exchange Option section of the
prospectus.
Distribution of Units. The 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 (including foreign
currency rates, if any) at which it deposits the
Securities in the Trust, which is the value of
the Securities, determined by the Trustee as
described under "Valuation," at the close of
business on the business day prior to the
Initial Date of Deposit. The cost of Securities
to the Sponsor includes the amount paid by the
Sponsor for brokerage commissions. These amounts
are an expense of the Trust.
Cash, if any, received from Unitholders prior
to the settlement date for the purchase of Units
or prior to the payment for Securities upon
their delivery may be used in the Sponsor's
business subject to the limitations of Rule
15c3-3 under the Securities and Exchange Act of
1934 and may be of benefit to the Sponsor.
In maintaining a secondary market for the
Units, the Sponsor may realize profits or
sustain losses in the amount of any differences
between the price at which it buys Units and the
price at which it resells or redeems such Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust
Company for redemption at its office in person,
or by mail at Hancock Towers, 200 Clarendon
Street, Boston, MA 02116 upon payment of any
transfer or similar tax which must be paid to
effect the redemption. At the present time there
are no such taxes. No redemption fee will be
charged by the Sponsor or the Trustee. If Units
are represented by a certificate, it must be
properly endorsed accompanied by a letter
requesting redemption. If held in uncertificated
form, a written instrument of redemption must be
signed by the Unitholder. Unitholders must sign
exactly as their names appear on the records of
the Trustee with signatures guaranteed by an
eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In
certain instances the Trustee may require
additional documents such as, but not limited
to, trust instruments, certificates of death,
appointments as executor or administrator, or
certificates of corporate authority. Unitholders
should contact the Trustee to determine whether
additional documents are necessary. Units
tendered to the Trustee for redemption will be
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 Unitholder. When Stock is
distributed, a proportionate amount of Stock
will be distributed, rounded to avoid the dis-
tribution 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
Evaluation Time set forth under "Essential
Information Regarding the Trust" (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, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day
and Christmas Day and other days that the New
York Stock Exchange is closed. The U.S. dollar
value of Stock denominated in foreign currency,
if any, contained in the Trust, will be based on
the applicable foreign currency exchange rate
calculated at the Evaluation Time.
The value of Stocks shall be determined by the
Trustee in good faith in the following manner:
(1) if the Securities are listed on one or more
national securities exchanges, such evaluation
shall be based on the closing sale price on that
day (unless the Trustee deems such price
inappropriate as a basis for evaluation) on the
exchange which is the principal market thereof
(deemed to be the New York Stock Exchange if the
Securities are listed thereon) (2) if there is
no such appropriate closing sale price on such
exchange, at the mean between the closing bid
and asked prices on such exchange (unless the
Trustee deems such price inappropriate as a
basis for evaluation), (3) if the Securities are
not so listed or, if so listed and the principal
market therefor is other than on such exchange
or there are no such appropriate closing bid and
asked prices available, such evaluation shall be
made by the Trustee in good faith based on the
closing sale price on the over-the-counter
market (unless the Trustee deems such price
inappropriate as a basis for evaluation) or (4)
if there is no such appropriate closing price,
then (a) on the basis of current bid prices, (b)
if bid prices are not available, on the basis of
current bid prices for comparable securities,
(c) by the Trustee's appraising the value of the
Securities in good faith on the bid side of the
market or (d) by any combination thereof.
During the initial offering period the Treasury
Obligations are valued on the basis of offering
prices; thereafter and for purposes of
determining Redemption Value they are valued on
the basis of bid prices. The aggregate offering
and bid prices of the Treasury Obligations, is
the price obtained from investment dealers or
brokers (which may include the Sponsor) who
customarily deal in Treasury Obligations; or, if
there is no market for the Treasury Obligations,
and bid or offering prices are not available, on
the basis of current bid or offering prices for
comparable securities; or by appraisal; or by
any combination of the above, adjusted to
reflect income accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during
the initial offering period is determined on the
basis of the current offering prices of the
Treasury Obligations, the Public Offering Price
of Units in the secondary market and the
Redemption Value is determined on the basis of
the current bid prices of the Treasury
Obligations. The Stocks are valued on the same
basis for the initial and secondary markets and
for purposes of redemptions. On the business day
prior to the Initial Date of Deposit, the Public
Offering Price per Unit (which figure includes
the sales charge) exceeded the Redemption Value,
(see: "Essential Information"). The bid and
offering prices of the Treasury Obligations is
expected to vary. For this reason and others,
including the fact that the Public Offering
Price includes the sales charge, the amount
realized by a Unitholder upon redemption of
Units may be less than the price paid by the
Unitholder for such Units.
EXPENSES OF THE TRUST
The cost of the preparation and printing of the
Certificates, the Indenture and this Prospectus,
the initial fees of the Trustee and the
Trustee's counsel, and expenses incurred in
establishing the Trust including legal and
auditing fees and initial Securities and
Exchange Commission and state registration 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 in establishing the Trust.
The Sponsor will receive a fee, which is earned
for portfolio supervisory services, and which is
based upon the largest number of Units
outstanding during the calendar year. The
Sponsor's fee, which is initially $.00035 per
Unit, may exceed the actual costs of providing
portfolio supervisory services for the Trust,
but at no time will the total amount it receives
for portfolio supervisory services rendered to
all series of the PaineWebber Pathfinders Trust
in any calendar year exceed the aggregate cost
to it of supplying such services in such year.
For its services as Trustee and Evaluator, the
Trustee will be paid in monthly installments,
annually $.00145 per Unit computed monthly based
upon the largest number of Units outstanding in
the Trust during the preceding month. In
addition, the regular and recurring expenses of
the Trust are estimated to be $.00135 per Unit
annually which include, but are not limited to
Organizational Expenses of $.00080 per Unit and
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 Trus-
tee (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) in-
demnification 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 auditors
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 financial statements 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 he Trustee. A Unitholder
may be required to pay $2.00 per certificate
reissued or transferred, and shall be required
to pay any governmental charge that may be
imposed in connection with each such transfer or
interchange. For new certificates issued to
replace destroyed, mutilated, stolen or lost
certificates, the Unitholder must furnish in-
demnity 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
received , if any, from the Income Account,
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.
Distributions from the Capital Account will be
made on quarterly Distribution Dates to
Unitholders of record on the preceding Record
Date, provided however, that distributions of
less than $.00500 per Unit need not be made from
the Capital Account on any Distribution Date.
See "Federal Income Taxes".
Within a reasonable period after the Trust is
terminated, each Unitholder will, upon surrender
of his Certificates for cancellation, receive
his pro rata share of the amounts realized upon
disposition of the Securities plus any other as-
sets of the Trust, less expenses of the Trust.
(See "Termination.")
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest,
if any, accrued on Securities, proceeds from the
sale of Securities or other monies received by
the Trustee on behalf of the Trust shall be held
in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an
Income Account any dividends (including stock
dividends which were sold) and interest, if any,
accrued by the Trust. All other receipts (i.e.
return of principal, and gains) are credited on
its books to a Capital Account. Stock dividends
received by the Trust, if any, will be sold by
the Trustee and the proceeds therefrom be
treated as income to the Trust. A record will be
kept of qualifying dividends within the Income
Account. The pro rata share of the Income
Account and the pro rata share of the Capital
Account represented by each Unit will be
computed by the Trustee as set forth under
"Valuation".
The Trustee will deduct from the Income Account
and, to the extent funds are not sufficient
therein, from the Capital Account, amounts
necessary to pay expenses incurred by the Trust.
(See "Expenses and Charges.") In addition, the
Trustee may withdraw from the Income Account and
the Capital Account such amounts as may be neces-
sary 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.
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 Spon-
sor 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 divi-
dends or interest on such Securities;
(4) upon the default in the payment of
principal or par or stated value of, premium, if
any, or income on any other outstanding
securities of the issuer or the guarantor of
such securities which might materially and
adversely, either immediately or contingently,
affect the declaration or payment of dividends
or interest on the Securities;
(5) upon the decline in price or the occurrence
of any materially adverse market or credit
factors, that in the opinion of the Sponsor,
make the retention of such Securities not in the
best interest of the Unitholder;
(6) upon a public tender offer being made for a
Security, or a merger or acquisition being
announced affecting a Security that in the
opinion of the Sponsor make the sale or tender
of the Security in the best interests of the
Unitholders;
(7) upon a decrease in the Sponsor's internal
rating of the Security; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the
economic fundamentals of the issuer of the
Security or the industry of which it is a part.
The Trustee may dispose of Securities where
necessary to pay Trust expenses or to satisfy
redemption requests as directed by the Sponsor
and in a manner necessary to maximize the
objectives of the Trust, or if not so directed
in its own discretion, provided however, that
Treasury Obligations will be sold so as to
maintain in the Trust Treasury Obligations in an
amount which, upon maturity, will equal at least
$1.00 per Unit outstanding after giving effect
to such redemption and Stocks having the
greatest appreciation shall be sold first.
Reinvestment. Cash received upon the sale of
Stock (except for sales to meet redemption
requests) and dividends received may, if and to
the extent there is no legal or regulatory
impediment, be reinvested in United States
Treasury obligations which mature on or prior to
the next scheduled Distribution Date. The
Sponsor anticipates that, where permitted, such
proceeds will be reinvested in current interest-
bearing United States Treasury obligations
unless factors exist such that such reinvestment
would not be in the best interest of Unitholders
or would be impractical. Such factors may
include, among others, (i) short reinvestment
periods which would make reinvestment in United
States Treasury obligations undesirable or
infeasible and (ii) amounts not sufficiently
large so as to make a reinvestment economical or
feasible. Any moneys held and not reinvested
will be held in a non-interest bearing account
until distribution on the next Distribution Date
to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and
the Sponsor without the consent of any of the
Unitholders to cure any ambiguity or to correct
or supplement any provision thereof which may be
defective or inconsistent or to make such other
provisions as will not materially adversely
affect the interest of the Unitholders.
The Indenture may be amended in any respect by
the Sponsor and the Trustee with the consent of
the holders of 51% of the Units then
outstanding; provided that no such amendment
shall (1) reduce the interest in the Trust
represented by a Unit or (2) reduce the
percentage of Unitholders required to consent to
any such amendment, without the consent of all
Unitholders.
The Trustee will promptly notify Unitholders of
the substance of any amendment affecting
Unitholders rights or their interest in the
Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will
terminate within 15 days after the maturity of
the Treasury Obligations held n the Trust. If
the value of the Trust as shown by any
evaluation is less than twenty percent (20%) of
the market value of the Securities on the
Initial Date of Deposit, the Trustee may in its
discretion, and will when so directed by the
Sponsor, terminate such Trust. The Trust may
also be terminated at any time by the written
consent of 51% of the Unitholders or by the
Trustee upon the resignation or removal of the
Sponsor if the Trustee determines termination to
be in the best interest of the Unitholders. In
no event will the Trust continue beyond the
Mandatory Termination Date.
As directed by the Sponsor approximately 30
days prior to the maturity of the Treasury
Obligations the Trustee will begin to sell the
Stocks held in the Trust. Stocks having the
greatest amount of capital appreciation will be
sold first. Upon termination of the Trust, the
Trustee will sell any Stocks then remaining in
the Trust and will then, after deduction of any
fees and expenses of the Trust and payment into
the Reserve Account of any amount required for
taxes or other governmental charges that may be
payable by the Trust, distribute to each
Unitholder, upon surrender for cancellation of
his Certificate after due notice of such
termination, such Unitholder's pro rata share in
the Income and Capital Accounts. Monies held
upon the sale of Securities will be held in non-
interest bearing accounts created by the
Indenture until distributed and will be of
benefit to the Trustee. The sale of Stocks in
the Trust in the period prior to termination and
upon termination may result in a lower amount
than might otherwise be realized if such sale
were not required at such time due to impending
or actual termination of the Trust. For this
reason, among others, the amount realized by a
Unitholder upon termination may be less than the
amount paid by such Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a
corporation organized under the laws of the
State of Delaware. The Sponsor is a member firm
of the New York Stock Exchange, Inc. as well as
other major securities and commodities exchanges
and is a member of the National Association of
Securities Dealers, Inc. The Sponsor is engaged
in a security and commodity brokerage business
as well as underwriting and distributing new
issues. The Sponsor also acts as a dealer in
unlisted securities and municipal bonds and in
addition to participating as a member of various
selling groups or as an agent of other
investment companies, executes orders on behalf
of investment companies for the purchase and
sale of securities of such companies and sells
securities to such companies in its capacity as
a broker or dealer in securities.
The Indenture provides that the Sponsor will
not be liable to the Trustee, any of the Trusts
or to the Unitholders for taking any action or
for refraining from taking any action made in
good faith or for errors in judgment, but will
be liable only for its own 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 Hancock Towers, 200
Clarendon Street, Boston, Massachusetts 02116,
toll-free number 1-800-356-2754 (which is sub-
ject 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 Carter, Ledyard & Milburn, 2
Wall Street, New York, New York, as counsel for
the Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
<CAPTION>
As of March 31, 1997
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Initial Date of Deposit: April 12, 1996
<S> <C>
Aggregate Market Value of Securities in Trust: $26,349,297
Number of Units: 24,100,000
Minimum Purchase
250 units for Individual Retirement Accounts
1,000 units for all else
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/24,100,000th
Calculation of Public Offering Price Per Unit:
Value of Net Assets in Trust $26,351,801
Divided by 24,100,000 Units $1.0934
Plus Sales Charge of 4.75% of Public Offering Price $.0545
Public Offering Price per Unit $1.1479
Redemption Value per Unit $1.0934
Excess of Public Offering Price over Redemption Value per Unit: $.0545
Sponsor's Repurchase Price per Unit $1.0934
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.0545
Evaluation Time: 4 P.M. New York Time
Distribution Dates*: Quarterly on January 20, April 20,
July 20 and October 20.
Record Date: March 31, June 30, September 30
and December 31.
Mandatory Termination Date: November 30, 2006 (15 days after
maturity of the Treasury Obligations)
Discretionary Liquidation Amount: 20% of the value of the Securities
upon completion of the deposit of
the Securities
Estimated Expenses of the Trust * *: $.00315 per Unit
* See " Distributions "
* * See " Expenses of Trust ". Estimated
dividends from the Growth Stocks, based upon last
dividends
actually paid, are expected by the Sponsor to
be sufficient to pay Estimated Expenses of the
Trust.
</TABLE>
<TABLE>
REPORT OF INDEPENDENT AUDITORS
<C> <S>
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER PATHFINDERS TRUST, TREASURY AND
GROWTH STOCK SERIES EIGHTEEN:
We have audited the accompanying statement of
financial condition, including the schedule of
investments, of The PaineWebber Pathfinders Trust,
Treasury and Growth Stock Series Eighteen as of
March 31, 1997 and the related statements of
operations and changes in net assets for the
period from April 12, 1996 (initial date of
deposit) to March 31, 1997. These financial
statements are the responsibility of the Co-
Trustees. Our responsibility is to express an
opinion on these financial statements based on our
audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. Our
procedures included confirmation of the securities
owned as of March 31, 1997, as shown in the
statement of financial condition and schedule of
investments, by correspondence with the Co-
Trustees. An audit also includes assessing the
accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of The PaineWebber
Pathfinders Trust, Treasury and Growth Stock
Series Eighteen at March 31, 1997 and the results
of its operations and changes in its net assets
for the period from April 12, 1996 to March 31,
1997, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New York, New York
July 10, 1997
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF FINANCIAL CONDITION
March 31, 1997
<CAPTION>
ASSETS
<S> <C> <C>
Treasury Obligation - at market value (Cost $12,563,450)
(note A and note 1 to schedule of investments) $12,350,744
Common Stock - at market value (Cost $11,693,011)
(note 1 to schedule of investments) 13,998,553
Accrued dividends receivable 27,149
Cash 249
Prepaid organizational expenses 79,479
Total Assets $26,456,174
LIABILITIES AND NET ASSETS
Advance from Trustee $34,003
Accrued expenses payable 31,087
Distributions payable 39,283
Total Liabilities 104,373
Net Assets (24,100,000 units of fractional undivided interest outstanding):
Cost to investors (note B) 25,466,101
Less gross underwriting commissions (note C) (1,209,640)
24,256,461
Net unrealized market appreciation (note D) 2,092,836
Net amount applicable to unitholders 26,349,297
Undistributed investment income-net 2,255
Undistributed proceeds from securities sold 249
Net assets 26,351,801
Total liabilities and net assets $26,456,174
Net Asset Value per unit $1.0934
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF OPERATIONS
<CAPTION>
For the Period
from April 12,
1996 (Initial Date
of Deposit) to
March 31,
1997
<S> <C>
Operations:
Investment income:
Accretion on Treasury Obligation $796,465
Dividend Income 271,981
Total investment income 1,068,446
Less expenses:
Trustee's fees, evaluator's expense and other
expenses 98,926
Total expenses 98,926
Investment income-net 969,520
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 605,425
Net change in unrealized market appreciation 2,092,836
Net gain on investments 2,698,261
Net increase in net assets resulting from operations $3,667,781
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
from April 12,
1996 (Initial Date
of Deposit) to
March 31,
1997
<S> <C>
Operations:
Investment income-net $969,520
Net realized gain on securities transactions 605,425
Net change in unrealized market appreciation 2,092,836
Net increase in net assets resulting from operations 3,667,781
Less: Distributions to Unitholders (Note E)
Investment income-net 176,970
Total Distributions 176,970
Less: Units Redeemed by Unitholders (Note F)
Value of units at date of redemption 5,476,431
Accrued dividends at date of redemption 3,900
Accreted discount at date of redemption 98,529
Total Redemptions 5,578,860
Decrease in net assets (2,088,049)
Net Assets:
Beginning of Period 8,572,500
Supplemental Deposits (Note F) 19,867,350
End of Period $26,351,801
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting.
Security transactions are accounted for on the
date the securities are purchased or sold. The
original issue discount on the Treasury Obligation
is accreted on a level yield basis. The amount of
discount included in the cost of the Treasury
Obligation held as of March 31, 1997 is $694,332.
(B) Cost to investors represents the initial
public offering price as of the date of deposit,
and the value of units through supplemental
deposits computed on the basis set forth under
"Public Offering Price of Units", adjusted for
accretion on United States Treasury Obligations
and for securities sold since the date of deposit.
(C) Sales charge of the Public Offering Price
per Unit is computed on the basis set forth under
" Public Offering of Units - Sales Charge and
Volume Discount ".
(D) At March 31, 1997, the gross unrealized
market appreciation was $2,092,836 and the gross
unrealized market depreciation was $0. The net
unrealized market appreciation was $2,092,836.
(E) Regular distributions of net income,
excluding accretion income and principal receipts
not used for redemption of units are made
quarterly. Special distributions may be made when
the Sponsor and Co-Trustee deem necessary. Income
with respect to the accretion of original issue
discount is not distributed although the
unitholder is subject to tax, where applicable, as
if the distribution had occurred. Accretion income
earned by the Trust increases a unitholder's cost
basis in the underlying security.
(F) The following units were redeemed with
proceeds of securities sold as follows:
<CAPTION>
For the Period
from April 12,
1996 (Initial Date
of Deposit) to
March 31,
1997
<S> <C>
Number of units redeemed 5,100,000
Redemption amount $5,578,860
The following units were sold through supplemental
deposits:
Number of units sold 20,200,000
Value of amount, net of sales charge $19,867,350
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
SCHEDULE OF INVESTMENTS
As of March 31, 1997
<CAPTION>
TREASURY OBLIGATIONS (46.87%)
Name of Security Coupon Maturity Value Maturity Date Market Value(1)
<C> <C> <C> <C> <C>
U.S. Treasury Interest Payments (2) (46.87%) 0% $24,100,000 11/15/2006 $12,350,744
<CAPTION>
COMMON STOCKS (53.13%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Aerospace/Defense: (1.49%)
United Technologies Corporation 5,232 $393,708
Automobile: (.99%)
Ford Motor Company 8,287 260,005
Beverages: (2.63%)
The Coca-Cola Company 7,003 391,293
PepsiCo, Inc. 9,248 301,716
Chemicals: (3.74%)
Dow Chemical Company 3,179 254,320
DuPont (E.I.) De Nemours & Company 3,475 368,350
Monsanto Company 9,480 362,610
Computer Software: (2.98%)
First Data Corporation 8,119 275,031
Microsoft Corporation* 5,563 510,058
Consumer Goods: (1.38%)
Philip Morris Companies, Inc. 3,179 362,803
Electronics/Semi-Conductor: (4.85%)
Emerson Electric Company 7,159 322,155
Hewlett-Packard Company 5,824 310,128
Intel Corporation 4,645 646,236
Entertainment: (1.29%)
Walt Disney Company 4,645 339,085
Financial/Banks: (5.43%)
Banc One Corporation 8,495 337,676
Bank of New York Company, Inc. 11,702 430,048
Federal National Mortgage Association 9,540 344,633
Wells Fargo & Company 1,116 317,084
Household Products: (1.48%)
Procter & Gamble Company 3,391 389,965
Information Technology: (.04%)
NCR Corporation (3)* 289 10,187
Insurance: (3.02%)
Allstate Corporation 7,240 429,875
American International Group, Inc. 3,128 367,149
Manufacturing: (1.41%)
Minnesota Mining & Manufacturing Co.(3) 4,406 372,307
Office/Business Equipment: (2.72%)
Pitney Bowes, Inc. 5,827 342,336
Xerox Corporation 6,573 373,839
Oil/Gas: (7.48%)
Exxon Corporation 3,420 368,505
El Paso Natural Gas Company (3) 503 28,482
Mobil Corporation 2,429 317,288
Occidental Petroleum Corporation 11,089 273,067
Royal Dutch Petroleum Company ~ 1,894 331,450
Tenneco, Inc. (3) 5,184 202,176
Texaco, Inc. 3,234 354,123
Union Pacific Resources Group, Inc. (3) 3,599 96,273
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES EIGHTEEN
SCHEDULE OF INVESTMENTS
As of March 31, 1997
<CAPTION>
COMMON STOCKS (53.13%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Pharmaceuticals: (4.36%)
Bristol-Myers Squibb Company 6,951 $410,109
Johnson & Johnson 6,414 339,140
Merck & Company, Inc. 4,731 398,587
Publishing/Printing: (1.41%)
Gannett Company, Inc. 4,330 371,839
Restaurants: (1.08%)
McDonald's Corporation 6,038 285,296
Retail: (2.44%)
Sears, Roebuck and Company 5,717 287,279
Wal-Mart Stores, Inc. 12,800 356,800
Shipbuilding: (.06%)
Newport News Shipbuilding, Inc. (3) 1,081 15,675
Telecommunications: (1.90%)
AT & T Corporation (3) 4,542 157,834
Lucent Technologies (3) 1,547 81,604
NYNEX Corporation 5,717 260,838
Transportation: (.92%)
Union Pacific Corporation (3) 4,249 241,131
X-Ray Equipment: (.03%)
Imation Corporation (3)* 338 8,460
TOTAL COMMON STOCKS $13,998,553
TOTAL INVESTMENTS $26,349,297
(1) Valuation of Securities was made by the Co-
Trustees as described in "Valuation".
(2) This security does not pay current
interest. On the maturity date thereof, the
entire maturity value becomes
due and payable. Generally, a fixed yield is
earned on such security which takes into account
the semi-annual
compounding of accrued interest. (See "The
Trust" and "Federal Income Taxes" herein).
(3) See "Risk Factors and Special
Considerations - Special Considerations" herein.
* Non-income producing.
~ American Depositary Receipts.
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.C1 Opinion of Counsel as to legality of securities
being registered
EX-99.C2 Opinion of Counsel as to certain tax aspects of
of the Trust
EX-27 Financial Data Schedule
EX-99.C3 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, The PaineWebber Pathfinders Trust, Treasury and Growth
Stock Series 18 certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested,
all in the City of New York, and the State of New York on the 18th
day of July, 1997.
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 18
(Registrant)
By: PaineWebber Incorporated
(Depositor)
/s/ ROBERT E. HOLLEY
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of PaineWebber
Incorporated, the Depositor, by the following persons in the
following capacities and in the City of New York, and State of New
York, on this 18th day of July, 1997.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director and Member of the Executive
Committee *
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement for File No. 33-19786.
July 18, 1997
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 18 (hereinafter
referred to as the "Trust"). The Depositor seeks by means of
Post-Effective Amendment No. 1 to register for reoffering 7,680,940
Units acquired by the Depositor in the secondary market (hereinafter
referred to as the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 33-63305) to be filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "1933 Act") proposed to be filed on or about the
date hereof (the "Amendment");
(f) The Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as
amended (collectively, the "1940 Act") on Form N-8A, as
amended;
(g) The registration of the Trust filed with the Commission under the
1940 Act on Form N-8B-2 (File No. 811-4158), as amended;
(h) The prospectus included in the Amendment (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of
September 1, 1990, as amended, among the Depositor, and
Investors Bank & Trust Company and The First National Bank of
Chicago (the "Trustee"), as successor Co-Trustee, (the "Standard
Terms");
(j) The Trust Indenture dated as of the Initial Date of Deposit, among
the Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other
than the State of New York and the federal laws of the United States,
except to the extent necessary to render the opinion as to the
Depositor in paragraph (i) below with respect to Delaware law. As
you know we are not licensed to practice law in the State of
Delaware, and our opinion in paragraph (i) and (iii) as to Delaware
law is based solely on review of the official statutes of the State of
Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
July 18, 1997
PaineWebber Incorporated
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Dear Sirs:
As counsel for PaineWebber Incorporated (the
"Depositor"), we have examined an executed copy of the
Trust Indenture and Agreement dated the date of initial
deposit of the Trust (the "Indenture") which
incorporates the Standard Terms and Conditions of Trust
(the "Agreement"), both between the Depositor, and
Investors Bank & Trust Company and the First National
Bank of Chicago as Co-Trustees (the "Trustee"). The
Indenture established a trust called PaineWebber
Pathfinders Trust, Treasury and Growth Stock Series 18
(the "Trust") into which the Depositor deposited
certain United States Treasury obligations or evidences
thereof, and stocks (the "Securities"), and moneys to
be held by the Trustee upon the terms and conditions
set forth in the Indenture and Agreement. Under the
Indenture, certificates of ownership were issued on the
Initial Date of Deposit representing units of
fractional undivided interest in said Trust (the
"Units").
Based upon the foregoing and upon an examination of
such other documents and an investigation of such
matters of law as we have deemed necessary, we are of
the opinion that, under existing statutes and
decisions:
1. The Trust is not an association taxable as a
corporation for federal income tax purposes. Under the
Internal Revenue Code of 1986, as amended (the "Code"),
each Unitholder will be treated as the owner of a pro
rata portion of the Trust, and income of the Trust will
be treated as income of the Unitholders.
2. Each Unitholder will have a taxable event when the
Trust disposes of a Security (whether by sale,
exchange, redemption, or payment at maturity) or when
the Unitholder sells its Units or redeems its Units for
cash.
3. The Trust is not an association taxable as a
corporation for New York State income tax purposes.
Under New York State law, each Unitholder will be
treated as the owner of a pro rata portion of the Trust
and the income of the Trust will be treated as income
of the Unitholders.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement relating to the
Units and the Trust referred to above and to the use of
our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
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<NUMBER> 18
<NAME> PAINEWEBBER PATHFINDERS TRUST, TREASURY & GROWTH STOCK
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<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-12-1996
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INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated July 10,
1997, in the Registration Statement and related Prospectus of the
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 18.
/s/ ERNST & YOUNG LLP
New York, New York
July 18, 1997
