<PAGE>
File No. 333-15799
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on Form N 8B-2
A. Exact name of Trust:
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 20
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
Copy to:
ORRICK, HERRINGTON & SUTCLIFFE LLP
Attention: Kathleen H. Moriarty, Esq.
666 Fifth Avenue
New York, New York 10103
E. Total and amount of securities being registered:
An indefinite number of Units pursuant to Rule
24f-2 of the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the
securities being registered:
Indefinite
<PAGE>
G. Amount of filing fee, computed at one-thirty-third of 1
percent of the proposed maximum aggregate offering price
to the public:
None required 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
/X/
Check box if it is proposed that this filing will become effective at
3:00 p.m. on January 30, 1997 pursuant to Rule 487.
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 20
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)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6 Item Number
Heading in Prospectus
I. Organization and General Information
<S> <C> <C>
1. (a)Name of Trust ) Front Cover
(b)Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and termination of ) The Trust
Trust Agreement ) Termination of the Trust
7. Charges of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding Trust's ) The Trust
Securities and Rights of Holders ) Rights of Unitholders
(a) Type of Securities ) The Trust
(Registered or Bearer )
* Not applicable, answer negative or not required.
(b) Type of Securities ) The Trust
(Cumulative or Distributive) )
<PAGE>
(c) Rights of Holders as to ) Rights of Unitholders
Withdrawal or Redemption ) Redemption Public
) Offering of Units-
) Secondary Market for
) Units
(d) Rights of Holders as to ) Public Offering of
conversion, transfer, etc. ) Units-Secondary Market
) for Units
) Exchange Option
(e) Rights of Trust issues periodic ) *
payment plan certificates )
(f) Voting rights as to Securities ) Rights of Unitholders
under the Indenture )
(g) Notice to Holders as to )
change in
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the
and Trustee ) Trust
(h) Consent of Security Holders )
required to change )
(1) Composition of assets ) Amendment of the Indenture
of Trust
(2) Terms and conditions ) Amendment of the Indenture
of Trust's Securities )
(3) Provisions of Indenture )
(4) Identity of Depositor ) Amendment of the Indenture
and Trustee )
11. Type of securities comprising ) The Trust
security holder's interest ) Rights of Unitholders
) Administration of the
) Trust
) Portfolio Supervision
* Not applicable, answer negative or not required.
<PAGE>
12. Information concerning periodic ) *
payment certificates )
13. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units, Expenses of the
) Trust
(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 by ) Public Offering of Units-
depositor, principal under- ) Public Offering Price;
writers, trustee or affiliated ) -Sponsor's Profit
persons ) -Secondary Market for
-Units
(f) Ratio of annual charges to ) *
income )
14. Issuance of trust's securities ) The Trust
) Public Offering of Units
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust, Administration
Underlying Securities ) of the Trust-Portfolio
) Supervision Rights of
) Unitholders
17. Withdrawal or redemption ) Redemption
) Public Offering of Units
) -Secondary Market for
) Units-Exchange Option
) Rights of Unitholders
18. (a) Receipt and disposition of ) Distributions, Termination
income ) of the Trust,
) Administration of the
) Trust-Reports and Records
(b) Reinvestment of distributions ) *
* Not applicable, answer negative or not required.
(c) Reserves or special fund ) Distributions, Expenses of
) the Trust, Administration
) of the Trust-Reports and
<PAGE>
) Records
(d) Schedule of distribution ) *
19. Records, accounts and report ) Distributions, Adminstra-
) tion of the Trust
20. Certain miscellaneous provisions ) Administration of the
of trust agreement ) Trust
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 )
III. Organization Personnel and
Affiliated Persons of Depositor
25. Organization of Depositor ) Sponsor
26. Fees received by Depositor ) Public Offering Price of
) 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 Depositor ) Sponsor
31. Payments by Depositor for certain ) *
other services trust )
32. Payments by Depositor for certain ) *
other services rendered to trust )
* Not applicable, answer negative or not required.
<PAGE>
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 ) Distribution of Units
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 ) Distribution of Units
(c) Selling agreements )
39. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering of Units
principal underwriter ) -public Offering Price
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 )
* Not applicable, answer negative or not required.
44. (a) Method of valuation ) Public Offering of Units
) -Public Offering Price
<PAGE>
(b) Schedule as to offering price ) *
(c) Variation in offering price ) Public Offering of Units
to certain persons ) -Public Offering Price
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Public Offering of Units
) -Public Offering Price
) -Secondary Market for
) Units Valuation Redemption
(b) Schedule as to redemption price ) *
V. Information concerning the Trustee or Custodian
47. Maintenance of position in ) Redemption, Public
underlying securities ) Offering of Units Public
) Offering Price
48. Organization and regulation of ) Trustee
Trustee ) )
49. Fees and expenses of Trustee ) Expenses of the Trust
50. Trustee's lien ) Expenses of the Trust
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 )
* Not applicable, answer negative or not required.
<PAGE>
(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, Administration
eliminating securities from ) of the Trust-Portfolio
the Trust ) Supervision
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) The Trust, Administration
substitution and elimination ) of the Trust-Portfolio
of securities ) Supervision
(d) Description of any fundamental ) The Trust, Administration
policy of the Trust ) of the Trust-Portfolio
) Supervision
53. (a) Taxable status of the Trust ) Federal Income Taxes
(b) Qualification of the Trust as ) Federal Income Taxes
a mutual investment company
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 )
* Not applicable, answer negative or not required.
<PAGE>
58. Certain information regarding ) *
periodic payment plan certificates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
</TABLE>
* Not applicable, answer negative or not required.
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary and
periodic information, documents, and reports as may be prescribed by any rule
or regulation of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred in that section.
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 20
[Graphic to come]
THE UPSIDE POTENTIAL OF EQUITIES
WITH THE SECURITY OF U.S. TREASURIES
- -----------------------------------------------------------------------------
The investment objective of this Trust is to preserve capital while
providing for capital appreciation through an investment in "zero-coupon"
United States Treasury obligations (the "Treasury Obligations") and equity
stocks (the "Stocks") having, in Sponsor's opinion on the Initial Date of
Deposit, potential for appreciation. The value of the Units will fluctuate with
the value of the portfolio of underlying securities.
The minimum purchase is $250. Only whole Units may be purchased.
- -----------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -----------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Read and retain this prospectus for future reference.
PROSPECTUS DATED JANUARY 30, 1997
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF JANUARY 29, 1997+
<TABLE>
<CAPTION>
<S> <C>
Initial Date of Deposit: January 30, 1997
Aggregate Value of Securities in Trust: ..................... 952,500
Number of Units: ............................................ 1,000,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: ................................................. 1/1,000,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Underlying Securities in Trust ........ $952,500
Divided by 1,000,000 Units ................................ $.9525
Plus Sales Charge of 4.75% of Public Offering Price
(4.99% of net amount invested per Unit) .................. $.0475
Public Offering Price per Unit ............................ $1.00
Redemption Value: ............................................. $.9512
Evaluation Time: .............................................. 4:00 P.M. New York time.
Distribution Dates**: ......................................... Quarterly, commencing
July 20, 1997.
Record Date: .................................................. June 30, 1997, and quarterly
thereafter.
Mandatory Termination Date: ................................... August 30, 2007 (15 days after
maturity of the Treasury
Obligations).
Discretionary Liquidation Amount: ............................. 20% of the value of the Securities
upon completion of the deposit
of the Securities.
Estimated Annual Organizational Expenses of the Trust*** ..... $.00080 per Unit.
Estimated Other Expenses of the Trust ......................... $.00255 per Unit.
Total Estimated Expenses of the Trust****: .................... $.00335 per Unit.
</TABLE>
- ------------
* On the date of this Prospectus (the "Initial Date of Deposit") the
Public Offering Price is based on the value of the Securities as of the
close of business on January 29, 1997 (the business day preceding the
Initial Date of Deposit). However, if the public offering price
determined with reference to values of the Securities as of the close
of business on the Initial Date of Deposit is less than $.975, the
purchase orders received on the Initial Date of Deposit will be filled
on the basis of such lower price. Beginning January 31, 1997 the Public
Offering Price will be based on value of the Securities next computed
following receipt of the purchase order plus the applicable sales
charge. (See "Valuation").
** No distributions of less than $.0050 per Unit need be made from the
Capital account on any Distribution Date. See "Distributions".
*** This Trust (and therefore the investors) will bear all or a portion of
its organizational costs--including costs of preparing the initial
registration statement, the trust indenture and other closing
documents, registering Units with the SEC and the states and the
initial audit of the portfolio--as is common for mutual funds.
Historically, the sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
**** See "Expenses of the Trust". Estimated dividends from the Stocks, based
upon last dividends actually paid, are expected by the Sponsor to be
sufficient to pay Estimated Expenses of the Trust.
+ The date prior to the Initial Date of Deposit.
2
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
The Trust. The objective of the PaineWebber Pathfinders Trust, Treasury and
Growth Stock Series 20 (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 August 15, 2007, representing approximately 52% of
the aggregate market value of the Trust portfolio and the Stocks represent
approximately 48% 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 August 30, 2007 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.")
3
<PAGE>
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.
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
PRIMARY INDUSTRY SOURCE AGGREGATE NET ASSET VALUE OF THE TRUST
----------------------- --------------------------------------
<S> <C>
Aerospace/Defense ...................... 1.21%
Automobile ............................. 2.41%
Beverages .............................. 2.37%
Chemicals .............................. 1.24%
Computer Peripheral Equipment .......... 1.18%
Computer Processing & Data Preparation 1.21%
Computer Software ...................... 1.23%
Electronics/Semi-Conductor ............. 3.56%
Entertainment .......................... 1.24%
Financial Institutions/Banks ........... 6.07%
Household Products ..................... 1.17%
Insurance .............................. 2.37%
Manufacturing .......................... 1.24%
Metals ................................. 1.24%
Office/Business Equipment .............. 1.22%
Oil/Gas ................................ 6.03%
4
<PAGE>
APPROXIMATE PERCENTAGE OF
PRIMARY INDUSTRY SOURCE AGGREGATE NET ASSET VALUE OF THE TRUST
----------------------- --------------------------------------
Pharmaceuticals ........................ 4.81%
Publishing/Printing .................... 1.19%
Restaurants ............................ 1.20%
Retail-Variety Stores .................. 1.21%
Telecommunications ..................... 3.54%
Transportation ......................... 1.20%
</TABLE>
The Sponsor anticipates that, based upon last dividends actually paid,
dividends from the Stock will be sufficient (i) to pay expenses of the Trust
(see "Expenses of the Trust" herein), and (ii) after such payment, to make
distributions of such to Unitholders as described below under "Distributions".
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 appreciation
will be sold first. In certain circumstances, monies held upon the sale of
Securities may, at the direction of the Sponsor, be invested for the benefit of
Unitholders in United States Treasury obligations which mature on or prior to
the next distribution date (see "Administration of the Trust--Reinvestment"),
otherwise monies held upon the sale or maturity of Securities will be held in
non-interest bearing accounts created by the Indenture until distributed and
will be of benefit to the Trustee. During the life of the Trust, Securities
will not be sold to take advantage of market fluctuations. The Trust will
terminate within 15 days after the Treasury Obligations mature. (See
"Termination of the Trust" and "Federal Income Taxes".)
Public Offering Price. The Public Offering Price per Unit is computed by
dividing the Trust Fund Evaluation by the number of Units outstanding and then
adding a sales charge of 4.75% of the Public Offering Price (4.99% of the net
amount invested). The sales charge is reduced after the second year and is also
reduced 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
5
<PAGE>
income tax at ordinary income rates as if a distribution had occurred. (See
"Federal Income Taxes".) Upon termination of the Trust, the Trustee will
distribute to each Unitholder his pro rata share of the Trust's assets, less
expenses. The sale of Stocks in the Trust in the period prior to termination
and upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time due to impending or actual
termination of the Trust. For this reason, among others, the amount realized by
a Unitholder upon termination may be less than the amount paid by such
Unitholder. Unless a Unitholder purchases Units on the Date of Deposit and
unless the Treasury Obligations in proportion to the Units outstanding remain
in the Trust, total distributions, including distributions made upon
termination of the Trust, may be less than the amount paid for a Unit.
Market for Units. The Sponsor, though not obligated to do so, presently
intends to maintain a secondary market for Units based upon the value of the
Stocks and the Treasury Obligations as determined by the Trustee as set forth
in "Valuation". The public offering price in the secondary market will be based
upon the value of the Securities next determined after receipt of a purchase
order plus the applicable sales charge. (See "Public Offering of Units--Public
Offering Price" and "Valuation".) If a secondary market is not maintained, a
Unitholder may dispose of his Units only through redemption. With respect to
redemption requests in excess of $100,000, the Sponsor may determine in its
sole discretion to direct the Trustee to redeem units "in kind" by distributing
Securities to the redeeming Unitholder as directed by the Sponsor. (See
"Redemption".)
TRUST
The Trust is one of a series of similar but separate unit investment <F1>
trusts created by the Sponsor pursuant to a Trust Indenture and Agreement* (the
"Indenture") dated as of the Initial Date of Deposit, among PaineWebber
Incorporated, as Sponsor and the Investors Bank & Trust Company and The First
National Bank of Chicago, as Co-Trustees (the "Co-Trustees" or "Trustee"). The
objective of the Trust is preservation of capital and capital appreciation
through an investment in Treasury Obligations and Stocks. These are equity
stocks, which, in Sponsor's opinion on the Date of Deposit, are capable of,
over the long term, closely tracking the performance of the market as measured
by the S&P 500. The Stocks contained in the Trust are representative of a
number of different industries. Dividends, if any, received will be held by the
Trustee in non-interest bearing accounts until used to pay expenses or
distributed to Unitholders on the next Distribution Date and to the extent that
funds are held therein will benefit the Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
confirmations of contracts for the purchase of Securities together with an
irrevocable letter or letters of credit of a commercial bank or banks in an
amount at least equal to the purchase price. The value of the Securities was
determined on the basis described under "Valuation". In exchange for the
deposit of the contracts to purchase Securities, the Trustee delivered to the
Sponsor a registered certificate for Units representing the entire ownership of
the Trust. On the Initial Date of Deposit the fractional undivided interest in
the Trust represented by a Unit was as set forth in "Essential Information
Regarding the Trust".
With the deposit on the Initial Date of Deposit, the Sponsor established a
proportionate relationship between the maturity value of the Treasury
Obligations and the number of shares of each Stock in the Trust. The Sponsor
may, from time to time, cause the deposit of additional Securities in the Trust
when additional Units are to be offered to the public, maintaining, exactly,
the original percentage relationship between the maturity value of the Treasury
Obligations and the number of shares of Stock deposited on
- ------------
* Reference is hereby made to said Trust Indenture and Agreement and any
statements contained herein are qualified in their entirety by the
provisions of said Trust Indenture and Agreement.
6
<PAGE>
the Initial Date of Deposit and replicating any cash or cash equivalents held
by the Trust (net of expenses). The original proportionate relationship is
subject to adjustment to reflect the occurrence of a stock split or a similar
event which affects the capital structure of the issuer of a Stock but which
does not affect the Trust's percentage ownership of the common stock equity of
such issuer at the time of such event. Stock dividends received by the Trust,
if any, will be sold by the Trustee and the proceeds therefrom shall be treated
as income to the Trust.
The Treasury Obligations consist of U.S. Treasury obligations which have
been stripped of their unmatured interest coupons or interest coupons
stripped from the U.S. Treasury Obligations. The obligor with respect to the
Treasury Obligations is the United States Government. U.S. Government backed
obligations are considered the safest investment.
On the Initial Date of Deposit each Unit represented the fractional
undivided interest in the Securities and net income of the Trust set forth
under "Essential Information Regarding the Trust". However, if additional Units
are issued by the Trust (through the deposit of additional Securities for
purposes of the sale of additional Units), the aggregate value of Securities in
the Trust will be increased and the fractional undivided interest represented
by each Unit in the balance will be decreased. If any Units are redeemed, the
aggregate value of Securities in the Trust will be reduced, and the fractional
undivided interest represented by each remaining Unit in the balance will be
increased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Unitholder (which may include the Sponsor) or until the
termination of the Trust. (See "Termination of the Trust".)
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.
7
<PAGE>
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 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 involves
investment risk substantially different than an investment in securities that
are denominated and principal traded in U.S. dollars. This is due to currency
exchange rate risk, because the U.S. dollar value of the shares underlying the
ADRs and of their dividends will vary with the fluctuations in the U.S. dollar
foreign exchange rates for the relevant currency in which the shares underlying
the ADRs are denominated. 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
8
<PAGE>
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 balance 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.
In the event a contract to purchase a Security fails, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to such
failed contract. Principal and income, if any, attributable to such failed
contract will be distributed to Unitholders of record on the last business day
of the month in which the fail occurs within 20 days of such record date.
BECAUSE THE TRUST IS ORGANIZED AS A UNIT INVESTMENT TRUST, RATHER THAN AS A
MANAGEMENT INVESTMENT COMPANY, THE TRUSTEE AND THE SPONSOR DO NOT HAVE
AUTHORITY TO MANAGE THE TRUST'S ASSETS FULLY IN AN ATTEMPT TO TAKE ADVANTAGE OF
VARIOUS MARKET CONDITIONS TO IMPROVE THE TRUST'S NET ASSET VALUE, BUT MAY
DISPOSE OF SECURITIES ONLY UNDER LIMITED CIRCUMSTANCES. (SEE "ADMINISTRATION OF
THE TRUST--PORTFOLIO SUPERVISION".)
9
<PAGE>
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 Orrick, Herrington & Sutcliffe LLP, counsel for the
Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes. Under the Internal Revenue Code of 1986, as amended
(the "Code"), each Unitholder will be treated as the owner of a pro rata
portion of the Trust, and income of the Trust will be treated as income of
the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes of
a Security (whether by sale, exchange, redemption, or payment at maturity)
or when the Unitholder sells its Units or redeems its Units for cash. The
total tax cost of each Unit to a Unitholder is allocated among each of the
Securities in accordance with the proportion of the Trust comprised by each
Security to determine the per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New York
State income tax purposes. Under New York State law, each Unitholder will be
treated as the owner of a pro rata portion of the Trust and the income of
the Trust will be treated as income of the Unitholders.
The following general discussion of the federal income tax treatment of an
investment in Units of the Trust is based on the Code and Treasury regulations
promulgated thereunder as in effect on the date of this Prospectus. The federal
income tax treatment applicable to a Unitholder may depend upon the
Unitholder's particular tax circumstances. Future legislative, judicial or
administrative changes could modify the statements below and could affect the
tax consequences to Unitholders. Accordingly, each Unitholder is advised to
consult its own tax advisor concerning the effect of an investment in Units.
General. Each Unitholder must report on its federal income tax return a pro
rata share of the entire income of the Trust, derived from dividends on Stocks,
original issue discount or interest on Treasury Obligations, gains or losses
upon dispositions of Securities by the Trust and a pro rata share of the
expenses of the Trust. Unitholders should note that their taxable income from
an investment in Units will exceed cash distributions because taxable income
will include accretions of original issue discount on the Treasury Obligations,
as well as amounts that are not distributed to Unitholders but are used by the
Trust to pay expenses.
Distributions with respect to Stock, to the extent they do not exceed
current or accumulated earnings and profits of the distributing corporation,
will be treated as dividends to the Unitholders and will be subject to income
tax at ordinary rates. Corporate Unitholders may be entitled to the
dividends-received deduction discussed below.
10
<PAGE>
To the extent distributions with respect to a Stock were to exceed the
issuing corporation's current and accumulated earnings and profits, they would
not constitute dividends. Rather, they would be treated as a tax free return of
capital and would reduce a Unitholder's tax cost for such Stock. After such tax
cost has been reduced to zero, any additional distributions in excess of
current and accumulated earnings and profits would be taxable as gain from sale
of common stock. This reduction in basis would increase any gain, or reduce any
loss, realized by the Unitholder on any subsequent sale or other disposition of
Units.
A Unitholder who is an individual, estate or trust may be disallowed certain
itemized deductions described in Code section 67, including compensation paid
to the Trustee and administrative expenses of the Trust, to the extent these
itemized deductions, in the aggregate, do not exceed two percent of the
Unitholder's adjusted gross income. Thus, a Unitholder's taxable income from an
investment in Units will exceed amounts distributed because taxable income
would include amounts that are not distributed to Unitholders but are used by
the Trust to pay expenses.
Corporate Dividends-Received Deduction. Corporate holders of Units may be
eligible for the dividends-received deduction with respect to distributions
treated as dividends, subject to the limitations provided in Section 246 and
246A of the Code. The dividends-received deduction generally equals 70 percent
of the amount of the dividend. As a result, the maximum effective tax rate on
dividends received generally will be reduced from 35 percent to 10.5 percent. A
portion of the dividends-received deduction may, however, be subject to the
alternative minimum tax. Individuals, partnerships, trusts, S corporations and
certain other entities are not eligible for the dividends-received deduction.
The Clinton administration has proposed a reduction in the dividends-received
deduction from 70 percent to 50 percent and there have been, from time to time,
other proposals to reduce such deduction. The Sponsor is unable to predict
whether the Clinton administration proposal or any other proposal will be
adopted during the life of the Trust.
Original Issue Discount. The Trust will contain principal or interest
portions of stripped "zero-coupon" United States Treasury Obligations which are
treated as bonds that were originally issued at a discount ("original issue
discount"). Original issue discount represents interest for federal income tax
purposes and can generally be defined as the difference between the price at
which a bond was issued and its stated redemption price at maturity. For
purposes of the preceding sentence, stripped obligations, such as the Treasury
Obligations, which variously consist either of the right to receive payments of
interest or the right to receive payments of principal, are treated by each
successive purchaser as originally issued on their purchase dates at an issue
price equal to their respective purchase prices thereof. The market value of
the Trust assets comprising the Trust will be provided to a Unitholder upon
request in order to enable the Unitholder to calculate the original issue
discount attributable to each of the Treasury Obligations. Original issue
discount on Treasury Obligations (which were issued or treated as issued on or
after July 2, 1982) is deemed earned based on a compounded, constant yield to
maturity over the life of such obligation, taking into account the compounding
of accrued interest at least annually, resulting in an increasing amount of
original issue discount includible in income in each year. Each Unitholder is
required to include in income each year the amount of original issue discount
which accrues on its pro rata portion of each Treasury Obligation with original
issue discount. The amount of accrued original issue discount included in
income with respect to a Unitholder's pro rata interest in Treasury Obligations
is thereupon added to the tax cost for such obligations.
Gain or Loss on Sale. If a Unitholder sells or otherwise disposes of a Unit,
the Unitholder generally will recognize gain or loss in an amount equal to the
difference between the amount realized on the disposition allocable to the
Securities and the Unitholder's adjusted tax bases in the Securities. In
general, such adjusted tax bases will equal the Unitholder's aggregate cost for
the Unit increased by any accrued
11
<PAGE>
original issue discount. Such gain or loss will be capital gain or loss if the
Unit and underlying Securities were held as capital assets, except that such
gain will be treated as ordinary income to the extent of any accrued original
issue discount not previously reported. Each Unitholder generally will also
recognize taxable gain or loss when all or part of its pro rata portion of a
Security is sold or otherwise disposed of for an amount greater or less than
its per Unit tax cost therefor.
Withholding For Citizen or Resident Investors. In the case of any
noncorporate Unitholder that is a citizen or resident of the United States a 31
percent "backup" withholding tax will apply to certain distributions of the
Trust unless the Unitholder properly completes and files, under penalties of
perjury, IRS Form W-9 (or its equivalent).
The foregoing discussion is a general summary and relates only to certain
aspects of the federal income tax consequences of an investment in the Trust.
Unitholders may also be subject to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the federal, state and local tax
consequences to it of ownership of Units.
Investment in the Trust may be suited for purchase by funds and accounts of
individual investors that are exempt from federal income taxes such as
Individual Retirement Accounts, tax-qualified retirement plans including Keogh
Plans, and other tax-deferred retirement plans. Unitholders desiring to
purchase Units for tax-deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed accounts
established under tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price per Unit on the Initial
Date of Deposit is equal to the aggregate market value of the Securities
determined on the day preceding the Initial Date of Deposit, divided by the
number of Units outstanding plus the sales charge of 4.75%, pursuant to an
exemptive order of the SEC. However, if the price would be less than $.975 then
purchase orders received that day will be filled on the basis of the lower
public offering price. Thereafter, the public offering price during the initial
offering period will be computed by dividing the Trust Fund Evaluation, next
determined after receipt of a purchase order, and, with respect to the Treasury
Obligations, determined with reference to the offering side evaluation, by the
number of Units outstanding plus the applicable sales charge. The initial
public offering period will terminate when the Sponsor chooses to discontinue
offering Units in the initial market. Thereafter, the Sponsor may offer Units
in the secondary market. The public offering price in the secondary market will
be the Trust Fund Evaluation per Unit next determined after receipt of a
purchase order, determined with respect to the Treasury Obligations on the bid
side of the market, plus the applicable sales charge. (See "Valuation".) The
public offering price on any date subsequent to the Initial Date of Deposit
will vary from the public offering price calculated on the business day prior
to the Initial Date of Deposit (as set forth on page 2 hereof) due to
fluctuations in the value of Stocks and the Treasury Obligations, and the
foreign currency exchange rates (if applicable), among other factors.
Sales Charge and Volume Discount. The Public Offering Price of Units of the
Trust includes a sales charge which varies based upon the number of Units
purchased by a single purchaser. (See the sales charge schedule set forth
below.) During the initial public offering period, the sales charge will be
based on the number of Trust Units purchased on the same or any preceding day
by a single purchaser. Such purchaser or his dealer must notify the Sponsor at
the time of purchase of any previous purchase of Trust Units in order to
aggregate all such purchases and must supply the Sponsor with sufficient
information to permit confirmation of such purchaser's eligibility; acceptance
of such purchase order is subject to confirmation. Purchases of Units of other
trusts may not be aggregated with purchases of Trust Units to
12
<PAGE>
qualify for this procedure. This procedure may be amended or terminated at any
time without notice. In the event of such termination, the procedure will
revert to that stated under the sales charge schedule referred to below.
Sales charges during the initial public offering period and for secondary
market sales are set forth below. A discount in the sales charge is available
to volume purchasers of Units due to economies of scales in sales effort and
sales related expenses relating to volume purchases. The sales charge
applicable to volume purchasers of Units is reduced on a graduated scale for
sales to any person of at least $50,000 or 50,000 Units, applied on whichever
basis is more favorable to the purchaser.
INITIAL PUBLIC OFFERING PERIOD AND
SECONDARY MARKET THROUGH JANUARY 30, 1999
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS PRICE INVESTED
- ------------------------------- ----- --------
<S> <C> <C>
Less than $50,000 .............. 4.75% 4.99%
$50,000 to $99,999 ............. 4.50 4.71
$100,000 to $199,999 ........... 4.00 4.17
$200,000 to $399,999 ........... 3.50 3.63
$400,000 to $499,999 ........... 3.00 3.09
$500,000 to $999,999 ........... 2.50 2.56
$1,000,000 or more ............. 2.00 2.04
</TABLE>
- ------------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
SECONDARY MARKET FROM JANUARY 31, 1999 THROUGH JANUARY 30, 2001
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- -------------------------------- ----- --------
<S> <C> <C>
Less than $50,000 ............... 4.25% 4.44%
$50,000 to $99,999 .............. 4.00 4.17
$100,000 to $199,999 ............ 3.50 3.63
$200,000 to $399,999 ............ 3.00 3.09
$400,000 to $499,999 ............ 2.50 2.56
$500,000 to $999,999 ............ 2.00 2.04
$1,000,000 or more .............. 1.75 1.78
</TABLE>
- ------------
* The sales charge applicable to volume purchasers according to the table
above will be applied on either a dollar or Unit basis, depending upon
which basis provides a more favorable purchase price to the purchaser.
<TABLE>
<CAPTION>
SECONDARY MARKET FROM JANUARY 31, 2001 SECONDARY MARKET ON AND AFTER
THROUGH JANUARY 30, 2003 JANUARY 31, 2003
PERCENT OF PERCENT OF
PUBLIC PERCENT OF PUBLIC PERCENT OF
OFFERING NET AMOUNT OFFERING NET AMOUNT
PRICE INVESTED PRICE INVESTED
----- -------- ----- --------
<S> <C> <C> <C>
3.25% 3.36% 2.25% 2.30%
</TABLE>
13
<PAGE>
The volume discount sales charge shown above will apply to all purchases of
Units on any one day by the same person in the amounts stated herein, and for
this purpose purchases of Units of this Trust will be aggregated with
concurrent purchases of any other trust which may be offered by the Sponsor.
Units held in the name of the purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed for the purposes hereof to be
registered in the name of the purchaser. The reduced sales charges are also
applicable to a trustee or other fiduciary purchasing Units for a single trust
estate or single fiduciary account.
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses with respect to the purchase of Units by
employees of the Sponsor and its affiliates, the Sponsor intends to permit
employees of the Sponsor and its affiliates and certain of their relatives to
purchase units of the Trust at a reduced sales charge of $5.00 per 1,000 Units.
Exchange Option. Unitholders may elect to exchange any or all of their Units
of this series for units of one or more of any series of PaineWebber Municipal
Bond Fund (the "PaineWebber Series"); The Municipal Bond Trust (the "National
Series"); The Municipal Bond Trust, Multi-State Program (the "Multi-State
Series"); The Municipal Bond Trust, California Series (the "California
Series"); The Corporate Bond Trust (the "Corporate Series"); PaineWebber
Pathfinder's Trust (the "Pathfinder's Trust"); the PaineWebber Federal
Government Trust (the "Government Series"); The Municipal Bond Trust, Insured
Series (the "Insured Series"); or the PaineWebber Equity Trust (the "Equity
Series") (collectively referred to as the "Exchange Trusts"), at a Public
Offering Price for the Units of the Exchange Trusts to be acquired based on a
reduced sales charge of $15 per Unit, per 100 Units in the case of a trust
whose Units cost approximately $10 or per 1,000 units in the case of a trust
whose Units cost approximately one dollar. Unitholders of this Trust are not
eligible for the Exchange Option into an Equity Trust, Growth Stock Series
designated as a rollover series for the 30 day period prior to termination of
the Trust. The purpose of such reduced sales charge is to permit the Sponsor to
pass on to the Unitholder who wishes to exchange Units the cost savings
resulting from such exchange of Units. The cost savings result from reductions
in time and expense related to advice, financial planning and operational
expenses required for the Exchange Option. Each Exchange Trust has different
investment objectives, therefore a Unitholder should read the prospectus for
the applicable exchange trust carefully prior to exercising this option.
Exchange Trusts having as their objective the receipt of tax-exempt interest
income would not be suitable for tax-deferred investment plans such as
Individual Retirement Accounts. A Unitholder who purchased Units of a series
and paid a per Unit, per 100 Unit or per 1,000 Unit sales charge that was less
than the per Unit, per 100 Unit or per 1,000 Unit sales charge of the series of
the Exchange Trusts for which such Unitholder desires to exchange into, will be
allowed to exercise the Exchange Option at the Unit Offering Price plus the
reduced sales charge, provided the Unitholder has held the Units for at least
five months. Any such Unitholder who has not held the Units to be exchanged for
the five-month period will be required to exchange them at the Unit Offering
Price plus a sales charge based on the greater of the reduced sales charge, or
an amount which, together with the initial sales charge paid in connection with
the acquisition of the Units being exchanged, equals the sales charge of the
series of the Exchange Trust for which such Unitholder desires to exchange
into, determined as of the date of the exchange.
The Sponsor will permit exchanges at the reduced sales charge provided there
is either a primary market for Units or a secondary market maintained by the
Sponsor in both the Units of this series and units of the applicable Exchange
Trust and there are units of the applicable Exchange Trust available for sale.
While the Sponsor has indicated that it intends to maintain a market for the
Units of the respective Trusts, there is no obligation on its part to maintain
such a market. Therefore, there is no assurance that
14
<PAGE>
a market for Units will in fact exist on any given date at which a Unitholder
wishes to sell his Units of this series and thus there is no assurance that the
Exchange Option will be available to a Unitholder. Exchanges will be effected
in whole Units only. Any excess proceeds from Unitholders' Units being
surrendered will be returned. Unitholders will be permitted to advance new
money in order to complete an exchange to round up to the next highest number
of Units. An exchange of Units pursuant to the Exchange Option will normally
constitute a "taxable event" under the Code and a Unitholder will generally
recognize a tax gain or loss at the time of exchange in the same manner as upon
a sale of Units. Unitholders are urged to consult their own tax advisors as to
the tax consequences to them of exchanging Units in particular cases.
The Sponsor reserves the right to modify, suspend or terminate this Exchange
Option at any time without further notice to Unitholders. In the event the
Exchange Option is not available to a Unitholder at the time he wishes to
exercise it, the Unitholder will be immediately notified and no action will be
taken with respect to his Units without further instruction from the
Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor of
his desire to exercise the Exchange Option and to use the proceeds from the
sale of his Units to the Sponsor of this series to purchase Units of one or
more of the Exchange Trusts from the Sponsor. If Units of the applicable
outstanding series of the Exchange Trust are at that time available for sale,
and if such Units may lawfully be sold in the state in which the Unitholder is
resident, the Unitholder may select the series or group of series for which he
desires his investment to be exchanged. The Unitholder will be provided with a
current prospectus or prospectuses relating to each series in which he
indicates interest.
The exchange transaction will operate in a manner essentially identical to
any secondary market transaction, i.e., Units will be repurchased at a price
based on the market value of the Securities in the portfolio of the Trust next
determined after receipt by the Sponsor of an exchange request and properly
endorsed Certificate. Units of the Exchange Trust will be sold to the
Unitholder at a price based upon the next determined market value of the
Securities in the Exchange Trust plus the reduced sales charge. Exchange
transactions will be effected only in whole units; thus, any proceeds not used
to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand units of a
trust with a current price of $1.30 per unit, desires to sell his units and
seeks to exchange the proceeds for units of a series of an Exchange Trust with
a current price of $890 per unit based on the bid prices of the underlying
securities. In this example, which does not contemplate any rounding up to the
next highest number of Units, the proceeds from the Unitholder's units would
aggregate $3,900. Since only whole units of an Exchange Trust may be purchased
under the Exchange Option, the Unitholder would be able to acquire four units
in the Exchange Trust for a total cost of $3,620 ($3,560 for the units and $60
for the sales charge). If all 3,000 units were tendered, the remaining $280
would be returned to the Unitholder.
Conversion Option. Owners of units of any registered unit investment trust
sponsored by another 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
15
<PAGE>
of the Conversion Trust. Any dealer other than PaineWebber must certify that
the purchase of units of the Exchange Trust is being made pursuant to and is
eligible for the Conversion Option. The dealer will be entitled to two thirds
of the applicable reduced sales charge. The Sponsor reserves the right to
modify, suspend or terminate the Conversion Option at any time without further
notice, including the right to increase the reduced sales charge applicable to
this option (but not in excess of $5 more per Unit (or per 100 Units or per
1,000 Units, as applicable) than the corresponding fee then being charged for
the Exchange Option). For a description of the tax consequences of a conversion
reference is made to the Exchange Option section of the prospectus.
Distribution of Units. The minimum purchase during the initial public
offering is $250. Only whole Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a concession of $.03 per Unit,
during the initial offering period and one-half of the highest applicable sales
charge during the secondary market, subject to change from time to time. The
difference between the sales charge and the dealer concession will be retained
by the Sponsor. In the event that the dealer concession is 90% or more of the
sales charge per Unit, dealers taking advantage of such concession may be
deemed to be underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units. The Sponsor intends to qualify the Units in all states
of the United States, the District of Columbia and the Commonwealth of Puerto
Rico.
Secondary Market for Units. While not obligated to do so, the Sponsor
intends to maintain a secondary market for the Units and continuously offer to
purchase Units at the Trust Fund Evaluation per Unit next computed after
receipt by the Sponsor of an order from a Unitholder. The Sponsor may cease to
maintain such a market at any time, and from time to time, without notice. In
the event that a secondary market for the Units is not maintained by the
Sponsor, a Unitholder desiring to dispose of Units may tender such Units to the
Trustee for redemption at the price calculated in the manner set forth under
"Redemption". Redemption requests in excess of $100,000 may be redeemed "in
kind" as described under "Redemption." The Sponsor does not in any way
guarantee the enforceability, marketability, value or price of any stocks in
the Trust, nor that of the Units.
Investors should note the Trust Fund Evaluation per Unit at the time of sale
or tender for redemption may be less than the price at which the Unit was
purchased.
The Sponsor may redeem any Units it has purchased in the secondary market if
it determines for any reason that it is undesirable to continue to hold these
Units in its inventory. Factors which the Sponsor may consider in making this
determination will include the number of units of all series of all trusts
which it holds in its inventory, the saleability of the Units and its estimate
of the time required to sell the Units and general market conditions.
Sponsor's Profits. In addition to the applicable sales charge, the Sponsor
realizes a profit (or sustains a loss) in the amount of any difference between
the cost of the Securities to the Sponsor and the price (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 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.
16
<PAGE>
Cash, if any, received from Unitholders prior to the settlement date for the
purchase of Units or prior to the payment for Securities upon their delivery
may be used in the Sponsor's business subject to the limitations of Rule 15c3-3
under the Securities and Exchange Act of 1934 and may be of benefit to the
Sponsor.
In selling any Units in the initial public offering after the Date of
Deposit, the Sponsor may realize profits or sustain losses resulting from
fluctuations in the net asset value of outstanding Units during that period. In
maintaining a secondary market for the Units, the Sponsor may realize profits
or sustain losses in the amount of any differences between the price at which
it buys Units and the price at which it resells or redeems such Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust Company for redemption at
its office in person, or by mail at One Lincoln Plaza, 89 South Street, Boston,
MA 02111 upon payment of any transfer or similar tax which must be paid to
effect the redemption. At the present time there are no such taxes. No
redemption fee will be charged by the Sponsor or the Trustee. If Units are
represented by a certificate, it must be properly endorsed accompanied by a
letter requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Unitholders must
sign exactly as their names appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In certain instances the Trustee
may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator,
or certificates of corporate authority. Unitholders should contact the Trustee
to determine whether additional documents are necessary. Units tendered to the
Trustee for redemption will be cancelled, if not repurchased by the Sponsor.
Units will be redeemed at the Redemption Value per Unit next determined
after receipt of the redemption request in good order by the Trustee. The
Redemption Value per Unit is determined by dividing the Trust Fund Evaluation
by the number of Units outstanding. (See "Valuation.")
A redemption request is deemed received on the business day (See "Valuation"
for a definition of business day) when such request is received prior to 4:00
p.m. If it is received after 4:00 p.m., it is deemed received on the next
business day. During the period in which the Sponsor maintains a secondary
market for Units, the Sponsor may repurchase any Unit presented for tender to
Investors Bank & Trust Company for redemption no later than the close of
business on the second business day following such presentation and Unitholders
will receive the Redemption Value next determined after receipt by the Trustee
of the redemption request. Proceeds of a redemption will be paid to the
Unitholder on the seventh calendar day following the date of tender (or if the
seventh calendar day is not a business day on the first business day prior
thereto).
With respect to cash redemptions, amounts representing income received shall
be withdrawn from the Income Account, and, to the extent such balance is
insufficient, from the Capital Account. The Trustee is empowered, to the extent
necessary, to sell Securities in such manner as is directed by the Sponsor,
which direction shall be given so as to maximize the objectives of the Trust.
In the event that no such direction is given by the Sponsor, the Trustee is
empowered to sell Securities as follows: Treasury Obligations will be sold so
as to maintain in the Trust Treasury Obligations in an amount which, upon
maturity, will equal at least $1.00 per Unit outstanding after giving effect to
such redemption and Stocks having the greatest amount of capital appreciation
will be sold first. (See "Administration of the Trust".) However, with respect
to redemption requests in excess of $100,000, the Sponsor may determine in its
discretion to direct the Trustee to redeem Units "in kind" by distributing
Securities to the redeeming
17
<PAGE>
Unitholder. When Stock is distributed, a proportionate amount of Stock will be
distributed, rounded to avoid the distribution of fractional shares and using
cash or checks where rounding is not possible. The Sponsor may direct the
Trustee to redeem Units "in kind" even if it is then maintaining a secondary
market in Units of the Trust. Securities will be valued for this purpose as set
forth under "Valuation". A Unitholder receiving a redemption "in kind" may
incur brokerage or other transaction costs in converting the Securities
distributed into cash. The availability of redemption "in-kind" is subject to
compliance with all applicable laws and regulations, including the Securities
Act of 1933, as amended.
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Trust will be reduced. Sales will usually be required at a
time when Securities would not otherwise be sold and may result in lower prices
than might otherwise be realized. The price received upon redemption may be
more or less than the amount paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of redemption. In addition, because
of the minimum amounts in which Securities are required to be sold, the
proceeds of sale may exceed the amount required at the time to redeem Units;
these excess proceeds will be distributed to Unitholders on the Distribution
Dates.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar days following the day of
tender for any period during which the New York Stock Exchange, Inc. is closed
other than for weekend and holiday closings; or for any period during which the
Securities and Exchange Commission determined that trading on the New York
Stock Exchange, Inc. is restricted or for any period during which an emergency
exists as a result of which disposal or evaluation of the Securities is not
reasonably practicable; or for such other period as the Securities and Exchange
Commission may by order permit for the protection of Unitholders. The Trustee
is not liable to any person or in any way for any loss or damages which may
result from any such suspension or postponement, or any failure to suspend or
postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the 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.
18
<PAGE>
The value of Stocks shall be determined by the Trustee in good faith in the
following manner: (1) if the Securities are listed on one or more national
securities exchanges, such evaluation shall be based on the closing sale price
on that day (unless the Trustee deems such price inappropriate as a basis for
evaluation) on the exchange which is the principal market thereof (deemed to be
the New York Stock Exchange if the Securities are listed thereon) (2) if there
is no such appropriate closing sale price on such exchange, at the mean between
the closing bid and asked prices on such exchange (unless the Trustee deems
such price inappropriate as a basis for evaluation), (3) if the Securities are
not so listed or, if so listed and the principal market therefor is other than
on such exchange or there are no such appropriate closing bid and asked prices
available, such evaluation shall be made by the Trustee in good faith based on
the closing sale price on the over-the-counter market (unless the Trustee deems
such price inappropriate as a basis for evaluation) or (4) if there is no such
appropriate closing price, then (a) on the basis of current bid prices, (b) if
bid prices are not available, on the basis of current bid prices for comparable
securities, (c) by the Trustee's appraising the value of the Securities in good
faith on the bid side of the market or (d) by any combination thereof.
During the initial offering period the Treasury Obligations are valued on
the basis of offering prices; thereafter and for purposes of determining
Redemption Value they are valued on the basis of bid prices. The aggregate
offering and bid prices of the Treasury Obligations, is the price obtained from
investment dealers or brokers (which may include the Sponsor) who customarily
deal in Treasury Obligations; or, if there is no market for the Treasury
Obligations, and bid or offering prices are not available, on the basis of
current bid or offering prices for comparable securities; or by appraisal; or
by any combination of the above, adjusted to reflect income accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during the initial offering period
is determined on the basis of the current offering prices of the Treasury
Obligations, the Public Offering Price of Units in the secondary market and the
Redemption Value is determined on the basis of the current bid prices of the
Treasury Obligations. The Stocks are valued on the same basis for the initial
and secondary markets and for purposes of redemptions. On the business day
prior to the Date of Deposit, the Public Offering Price per Unit (which figure
includes the sales charge) exceeded the Redemption Value, (see: "Essential
Information"). The bid and offering prices of the Treasury Obligations is
expected to vary. For this reason and others, including the fact that the
Public Offering Price includes the sales charge, the amount realized by a
Unitholder upon redemption of Units may be less than the price paid by the
Unitholder for such Units.
EXPENSES OF THE TRUST
The cost of the preparation and printing of the Certificates, the Indenture
and this Prospectus, the initial fees of the Trustee and the Trustee's counsel,
and expenses incurred in establishing the Trust including legal and auditing
fees and initial SEC 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.
19
<PAGE>
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
$.00155 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 Trustee (including legal and auditing expenses) and of counsel;
(3) various governmental charges; (4) expenses and costs of any action taken by
the Trustee to protect the trusts and the rights and interests of the
Unitholders; (5) indemnification of the Trustee for any loss, liabilities or
expenses incurred by it in the administration of the Trust without gross
negligence, bad faith or wilful misconduct on its part; (6) brokerage
commissions and other expenses incurred in connection with the purchase and
sale of Securities; and (7) expenses incurred upon termination of the Trust. In
addition, to the extent then permitted by the Securities and Exchange
Commission, the Trust may incur expenses of maintaining registration or
qualification of the Trust or the Units under Federal or state securities laws
so long as the Sponsor is maintaining a secondary market (including, but not
limited to, legal, auditing and printing expenses).
The accounts of the Trust shall be audited not less than annually by
independent 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 the Trustee. A Unitholder may be
required to pay $2.00 per certificate reissued or transferred, and shall be
required to pay any governmental charge that may be imposed in connection with
each such transfer or interchange. For new certificates issued to replace
destroyed, mutilated, stolen
20
<PAGE>
or lost certificates, the Unitholder must furnish indemnity satisfactory to the
Trustee and must pay such expenses as the Trustee may incur. Mutilated
certificates must be surrendered to Investors Bank & Trust Company for
replacement.
DISTRIBUTIONS
The Trustee will distribute any net income 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 assets of the Trust, less expenses of the Trust. (See
"Termination.")
ADMINISTRATION OF THE TRUST
Accounts. All dividends received and interest, if any, accrued on
Securities, proceeds from the sale of Securities or other monies received by
the Trustee on behalf of the Trust shall be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income Account any dividends
(including stock dividends which were sold) and interest, if any, accrued by
the Trust. All other receipts (i.e. return of principal, and gains) are
credited on its books to a Capital Account. Stock dividends received by the
Trust, if any, will be sold by the Trustee and the proceeds therefrom be
treated as income to the Trust. A record will be kept of qualifying dividends
within the Income Account. The pro rata share of the Income Account and the pro
rata share of the Capital Account represented by each Unit will be computed by
the Trustee as set forth under "Valuation".
The Trustee will deduct from the Income Account and, to the extent funds are
not sufficient therein, from the Capital Account, amounts necessary to pay
expenses incurred by the Trust. (See "Expenses and Charges.") In addition, the
Trustee may withdraw from the Income Account and the Capital Account such
amounts as may be necessary to cover redemption of Units by the Trustee. (See
"Redemption.")
The Trustee may establish reserves (the "Reserve Account") within the Trust
for state and local taxes, if any, and any other governmental charges payable
out of the Trust.
Reports and Records. With the distribution of income from the Trust,
Unitholders will be furnished with a statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the Trust at its office in Boston,
including records of the names and addresses of Unitholders, a current list of
underlying Securities in the portfolio and a copy of the Indenture. Records
pertaining to a Unitholder or to the Trust (but not to other Unitholders) are
available to the Unitholder for inspection at reasonable times during business
hours.
Within a reasonable period of time after the end of each calendar year,
starting with calendar year 1997, 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
21
<PAGE>
end of such year; (3) the Trust Fund Evaluation per Unit, based upon a
computation thereof on the 31st day of December of such year (or the last
business day prior thereto); and (4) amounts distributed to Unitholders during
such year.
Portfolio Supervision. The portfolio of the Trust is not "managed" by the
Sponsor or the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of a Security:
(1) upon the failure of the issuer to declare or pay anticipated
dividends or interest;
(2) upon the institution of materially adverse action or proceeding at
law or in equity seeking to restrain or enjoin the declaration or payment of
dividends or interest on any such Securities or the existence of any other
materially adverse legal question or impediment affecting such Securities or
the declaration or payment of dividends or interest on the same;
(3) upon the breach of covenant or warranty in any trust indenture or
other document relating to the issuer which might materially and adversely
affect either immediately or contingently the declaration or payment of
dividends or interest on such Securities;
(4) upon the default in the payment of principal or par or stated value
of, premium, if any, or income on any other outstanding securities of the
issuer or the guarantor of such securities which might materially and
adversely, either immediately or contingently, affect the declaration or
payment of dividends or interest on the Securities;
(5) upon the decline in price or the occurrence of any materially
adverse market or credit factors, that in the opinion of the Sponsor, make
the retention of such Securities not in the best interest of the Unitholder;
(6) upon a public tender offer being made for a Security, or a merger or
acquisition being announced affecting a Security that in the opinion of the
Sponsor make the sale or tender of the Security in the best interests of the
Unitholders;
(7) upon a decrease in the Sponsor's internal rating of the Security; or
(8) upon the happening of events which, in the opinion of the Sponsor,
negatively affect the economic fundamentals of the issuer of the Security or
the industry of which it is a part.
The Trustee may dispose of Securities where necessary to pay Trust expenses
or to satisfy redemption requests as directed by the Sponsor and in a manner
necessary to maximize the objectives of the Trust, or if not so directed in its
own discretion, provided however, that Treasury Obligations will be sold so as
to maintain in the Trust Treasury Obligations in an amount which, upon
maturity, will equal at least $1.00 per Unit outstanding after giving effect to
such redemption and Stocks having the greatest appreciation shall be sold
first.
Reinvestment. Cash received upon the sale of Stock (except for sales to meet
redemption requests) and dividends received may, if and to the extent there is
no legal or regulatory impediment, be reinvested in United States Treasury
obligations which mature on or prior to the next scheduled Distribution Date.
The Sponsor anticipates that, where permitted, such proceeds will be reinvested
in current interest-bearing United States Treasury obligations unless factors
exist such that such reinvestment would not be in the best interest of
Unitholders or would be impractical. Such factors may include, among others,
(i) short reinvestment periods which would make reinvestment in United States
Treasury obligations undesirable or infeasible and (ii) amounts not
sufficiently large so as to make a reinvestment economical or feasible. Any
moneys held and not reinvested will be held in a non-interest bearing account
until distribution on the next Distribution Date to Unitholders of record.
22
<PAGE>
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent or to
make such other provisions as will not materially adversely affect the interest
of the Unitholders.
The Indenture may be amended in any respect by the Sponsor and the Trustee
with the consent of the holders of 51% of the Units then outstanding; provided
that no such amendment shall (1) reduce the interest in the Trust represented
by a Unit or (2) reduce the percentage of Unitholders required to consent to
any such amendment, without the consent of all Unitholders.
The Trustee will promptly notify Unitholders of the substance of any
amendment affecting Unitholders rights or their interest in the Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will terminate within 15 days after
the maturity of the Treasury Obligations held in the Trust. If the value of the
Trust as shown by any evaluation is less than twenty percent (20%) of the
market value of the Securities on the Date of Deposit, the Trustee may in its
discretion, and will when so directed by the Sponsor, terminate such Trust. The
Trust may also be terminated at any time by the written consent of 51% of the
Unitholders or by the Trustee upon the resignation or removal of the Sponsor if
the Trustee determines termination to be in the best interest of the
Unitholders. In no event will the Trust continue beyond the Mandatory
Termination Date.
As directed by the Sponsor approximately 30 days prior to the maturity of
the Treasury Obligations the Trustee will begin to sell the Stocks held in the
Trust. Stocks having the greatest amount of capital appreciation will be sold
first. Upon termination of the Trust, the Trustee will sell any Stocks then
remaining in the Trust and will then, after deduction of any fees and expenses
of the Trust and payment into the Reserve Account of any amount required for
taxes or other governmental charges that may be payable by the Trust,
distribute to each Unitholder, upon surrender for cancellation of his
Certificate after due notice of such termination, such Unitholder's pro rata
share in the Income and Capital Accounts. Monies held upon the sale of
Securities will be held in non-interest bearing accounts created by the
Indenture until distributed and will be of benefit to the Trustee. The sale of
Stocks in the Trust in the period prior to termination and upon termination may
result in a lower amount than might otherwise be realized if such sale were not
required at such time due to impending or actual termination of the Trust. For
this reason, among others, the amount realized by a Unitholder upon termination
may be less than the amount paid by such Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under the
laws of the State of Delaware. The Sponsor is a member firm of the New York
Stock Exchange, Inc. as well as other major securities and commodities
exchanges and is a member of the National Association of Securities Dealers,
Inc. The Sponsor is engaged in a security and commodity brokerage business as
well as underwriting and distributing new issues. The Sponsor also acts as a
dealer in unlisted securities and municipal bonds and in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of such companies and sells securities to such
companies in its capacity as a broker or dealer in securities.
23
<PAGE>
The Indenture provides that the Sponsor will not be liable to the Trustee,
any of the Trusts or to the Unitholders for taking any action or for refraining
from taking any action made in good faith or for errors in judgment, but will
be liable only for its own wilful misfeasance, bad faith, gross negligence or
wilful disregard of its duties. The Sponsor will not be liable or responsible
in any way for depreciation or loss incurred by reason of the sale of any
Securities in the Trust.
The Indenture is binding upon any successor to the business of the Sponsor.
The Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on the business of the Sponsor and
duly assumes all the obligations of the Sponsor under the Indenture. In such
event the Sponsor shall be relieved of all further liability under the
Indenture.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over by
public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of Chicago, a national banking
association with its corporate trust office at One First National Plaza, Suite
0126, Chicago, Illinois 60670-0126 (which is subject to supervision by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System) and Investors Bank & Trust
Company, a Massachusetts trust company with its office at One Lincoln Plaza, 89
South Street, Boston, Massachusetts 02111, toll-free number 1-800-356-2754
(which is subject to supervision by the Massachusetts Commissioner of Banks,
the Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System).
The Indenture provides that the Trustee will not be liable for any action
taken in good faith in reliance on properly executed documents or the
disposition of moneys, Securities or Certificates or in respect of any
valuation which it is required to make, except by reason of its own gross
negligence, bad faith or wilful misconduct, nor will the Trustee be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
by the Trustee of any Securities in the Trust. In the event of the failure of
the Sponsor to act, the Trustee may act and will not be liable for any such
action taken by it in good faith. The Trustee will not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon or upon it as Trustee or upon or in
respect of the Trust which the Trustee may be required to pay under any present
or future law of the United States of America or of any other taxing authority
having jurisdiction. In addition, the Indenture contains other customary
provisions limiting the liability of the Trustee. The Trustee will be
indemnified and held harmless against any loss or liability accruing to it
without gross negligence, bad faith or wilful misconduct on its part, arising
out of or in connection with its acceptance or administration of the Trust,
including the costs and expenses (including counsel fees) of defending itself
against any claim of liability.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Investments audited by
Ernst & Young LLP, independent auditors, have been included herein in reliance
upon their report given on their authority as experts in accounting and
auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Orrick,
Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York, as counsel
for the Sponsor.
24
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 20
We have audited the accompanying Statement of Financial Condition of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 20, including
the Schedule of Investments, as of January 30, 1997. This Statement of
Financial Condition is the responsibility of the Co-Trustees. Our
responsibility is to express an opinion on this Statement of Financial
Condition based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Financial Condition is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statement of Financial
Condition. Our procedures included confirmation with Investors Bank & Trust
Company, a Co-Trustee, of an irrevocable letter of credit deposited for the
purchase of securities, as shown in the Statement of Financial Condition as of
January 30, 1997. An audit also includes assessing the accounting principles
used and significant estimates made by the Co-Trustees, as well as evaluating
the overall Statement of Financial Condition presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the Statement of Financial Condition referred to above
presents fairly, in all material respects, the financial position of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 20 at January
30, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
January 30, 1997
25
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
STATEMENT OF FINANCIAL CONDITION
AS OF INITIAL DATE OF DEPOSIT JANUARY 30, 1997
<TABLE>
<CAPTION>
<S> <C>
TRUST PROPERTY
--------------
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ............................. $ 952,500
Organizational Expenses (b) ................................... 100,000
----------
Total .................................................... $1,052,500
==========
INTEREST OF UNITHOLDERS
-----------------------
Accrued Liability (b) ......................................... $ 100,000
1,000,000 Units outstanding:
Cost to investors (c) ........................................ 1,000,000
Less: Gross underwriting commissions (d) ...................... (47,500)
----------
Total liabilities and net assets ......................... $1,052,500
==========
</TABLE>
- --------------
(a) The aggregate cost to the Trust of the securities listed under "Schedule
of Investments" is determined by the Co-Trustees on the basis set forth under
"Public Offering of Units--Public Offering Price." See also the column headed
Cost of Securities to Trust under "Schedule of Investments." Pursuant to
contracts to purchase securities, an irrevocable letter of credit drawn on
Morgan Guaranty Trust Company of New York in the amount of $1,250,000 has been
deposited with the Co-Trustees, Investors Bank & Trust Company and The First
National Bank of Chicago, for the purchase of $952,500 aggregate value of
Securities in the initial deposit and for the purchase of Securities in
subsequent deposits.
(b) Organizational Expenses incurred by the Trust have been deferred and
will be amortized over five years. Organizational Expenses have been estimated
on projected total assets of $25 million. To the extent the Trust is larger or
smaller, the estimate may vary.
(c) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) Sales charge of 4.75% of the Public Offering Price per Unit is computed
on the basis set forth under "Public Offering of Units--Sales Charge and Volume
Discount."
26
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JANUARY 30, 1997
TREASURY OBLIGATIONS (51.86%) (1)
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
---------------- ------ -------------- ------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3) (51.86%) 0% $1,000,000 August 15, 2007 $494,000.00
COMMON STOCKS (48.14%) (1)
</TABLE>
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Aerospace/Defense (1.21%)
United Technologies Corporation ............. 170 $11,517.50
Automobile (2.41%)
Ford Motor Company .......................... 350 11,331.25
General Motors Corporation .................. 190 11,590.00
Beverages (2.37%)
The Coca-Cola Company ....................... 200 11,275.00
PepsiCo, Inc. ............................... 330 11,343.75
Chemical (1.24%)
DuPont (E.I.) De Nemours & Company ......... 110 11,797.50
Computer Peripheral Equipment (1.18%)
Cisco Systems, Inc.* ........................ 170 11,220.00
Computer Processing & Data Preparation
(1.21%)
First Data Corporation ...................... 300 11,512.50
Computer Software (1.23%)
Microsoft Corporation* ...................... 120 11,670.00
Electronics/Semi-Conductor (3.56%)
Emerson Electric Company .................... 120 11,805.00
Hewlett-Packard Company ..................... 220 11,302.50
Intel Corporation ........................... 70 10,832.50
Entertainment (1.24%)
The Walt Disney Company ..................... 160 11,800.00
Financial Institutions/Banks (6.07%)
Chase Manhattan Corporation ................. 130 11,651.25
Citicorp .................................... 100 11,137.50
Fannie Mae .................................. 290 11,346.25
NationsBank Corporation ..................... 110 11,825.00
Wells Fargo & Company ....................... 40 11,880.00
Household Products (1.17%)
Procter & Gamble Company .................... 100 11,162.50
Insurance (2.37%)
Aetna Inc. .................................. 140 10,412.50
Allstate Corporation ........................ 190 12,136.25
Manufacturing (1.24%)
Minnesota Mining & Manufacturing Company ... 140 11,795.00
Metals (1.24%)
Alcan Aluminum Ltd. ......................... 340 11,815.00
Office/Business Equipment (1.22%)
Pitney Bowes, Inc. .......................... 210 11,655.00
</TABLE>
27
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JANUARY 30, 1997
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Oil/Gas (6.03%)
Amoco Corporation ............ 130 $ 11,310.00
Chevron Corporation .......... 180 11,992.50
Exxon Corporation ............ 110 11,385.00
Royal Dutch Petroleum
Company+ .................... 70 12,092.50
Texaco Inc. .................. 100 10,700.00
Pharmaceuticals (4.81%)
Abbott Laboratories .......... 220 11,687.50
Bristol-Myers Squibb Company 90 11,081.25
Johnson & Johnson ............ 210 11,550.00
Merck & Co., Inc. ............ 130 11,472.50
Publishing/Printing (1.19%)
Gannett Company, Inc. ........ 150 11,343.75
Restaurants (1.20%)
McDonald's Corporation ...... 250 11,437.50
Retail-Variety Stores (1.21%)
Wal-Mart Stores, Inc. ........ 500 11,500.00
Telecommunications (3.54%)
AT&T Corporation ............. 300 11,625.00
Bell Atlantic Corporation ... 160 10,580.00
GTE Corporation .............. 260 11,505.00
Transportation (1.20%)
Burlington Northern Santa Fe 130 11,423.75
TOTAL COMMON STOCKS ......... 458,500.00
-----------
TOTAL INVESTMENTS ........... $952,500.00
===========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to the
Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit was
$492,690.
(3) This security does not pay interest. On the maturity date thereof, the
entire maturity value becomes due and payable. Generally, a fixed yield
is earned on such security which takes into account the semi-annual
compounding of accrued interest. (See "The Trust" and "Federal Income
Taxes" herein.)
(4) The gain to the Sponsor on the Initial Date of Deposit is $11.25.
* Non-income producing.
+ These shares are U.S. dollar denominated and pay dividends in U.S.
dollars but are subject to investment risks generally facing common
stocks of foreign issuers. (See "Risk Factors and Special
Considerations".)
28
<PAGE>
PAINEWEBBER PATHFINDERS TRUST
Treasury and Growth Stock Series 20
[Graphic to come]
The Upside Potential of Equities
with the Security of U.S. Treasuries
<TABLE>
<CAPTION>
CO-TRUSTEES: SPONSOR:
<S> <C> <C>
INVESTORS BANK & TRUST COMPANY THE FIRST NATIONAL BANK PAINEWEBBER INCORPORATED
89 South Street, OF CHICAGO 1200 Harbor Boulevard,
Boston, Mass. 02111 One First National Plaza, Weehawken, N.J. 07087
1 (800) 356-2754 Suite 0126 (201) 902-3000
Chicago, Illinois 60670-0126
</TABLE>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Essential Information Regarding the Trust .... 2
Trust ......................................... 6
Risk Factors and Special Considerations ...... 7
Federal Income Taxes .......................... 10
Public Offering of Units ...................... 12
Public Offering Price ....................... 12
Sales Charge and Volume Discount ............ 12
Employee Discount ........................... 14
Exchange Option ............................. 14
Conversion Option ........................... 15
Distribution of Units ....................... 16
Secondary Market for Units .................. 16
Sponsor's Profits ........................... 16
Redemption .................................... 17
Valuation ..................................... 18
Comparison of Public Offering Price and
Redemption Value ............................. 19
Expenses of the Trust ......................... 19
Rights of Unitholders ......................... 20
Distributions ................................. 21
Administration of the Trust ................... 21
Accounts .................................... 21
Reports and Records ......................... 21
Portfolio Supervision ....................... 22
Reinvestment ................................ 22
Amendment of the Indenture .................... 23
Termination of the Trust ...................... 23
Sponsor ....................................... 23
Trustee ....................................... 24
Independent Auditors .......................... 24
Legal Opinions ................................ 24
Report of Independent Auditors ................ 25
Statement of Financial Condition .............. 26
Schedule of Investments ....................... 27
- -------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE TRUST,
THE TRUSTEE OR THE SPONSOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE TO ANY PERSON
TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- -------------------------------------------------------------------------------
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE TRUST AND THE SPONSOR, BUT
DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE TRUST'S REGISTRATION
STATEMENTS, AMENDMENTS AND EXHIBITS RELATING THERETO, WHICH HAVE BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C. UNDER THE
SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, AND TO WHICH
REFERENCE IS HEREBY MADE.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
Written consents of the following persons:
Ernst & Young LLP
(included in Exhibit 99.C2)
Orrick, Herrington & Sutcliffe LLP
(included in Exhibits 99.2 and 99.C1)
The following exhibits:
1. Ex.-27 - Financial Data Schedule
2. Ex. 99.A1 - Standard Terms and Conditions of Trust
dated as of September 1, 1990 between PaineWebber
Incorporated, Depositor and Investors Bank & Trust
Company and The First National Bank of Chicago,
Co-Trustees (incorporated by reference to Exhibit No.
2 in File No. 33-25030).
3. Ex. 99.A2 - Copy of Trust Indenture and Agreement
between PaineWebber Incorporated, Depositor, and of
Investors Bank & Trust Company and The First National
Bank of Chicago, Co-Trustees, incorporating by
reference Standard Terms and Conditions of Trust dated
as of September 1, 1990.
4. Ex. 99.A5 - Form of Certificate of Ownership (included
in Standard Terms and Conditions of Trust).
5. Ex. 99.A6 - Certificate of Incorporation of
PaineWebber Incorporated, as amended (incorporated by
reference to Exhibit 8 in File No. 2-88344).
6. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit A(6)(a)
in File No. 811-3722).
7. Ex. 99.2 - Opinion of Counsel as to legality of
securities being registered.
8. Ex. 99.C1 - Opinion of Counsel as to income tax status
of securities being registered.
9. Ex. 99.C2 - Consent of Ernst & Young LLP, Independent
Auditors.
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
<PAGE>
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.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 30th day of January, 1997.
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
(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 who constitute the
Executive Committee of its Board of Directors, in the following capacities, and
by the Director of Finance and Control and in the City of New York, and State
of New York, on this 30th day of January, 1997.
<TABLE>
<CAPTION>
PAINEWEBBER INCORPORATED
Name Office
---- ------
<S> <C>
Donald B. Marron Chairman, Chief Executive
Officer, Director & Member of
the Executive Committee*
Joseph J. Grano, Jr. President, Retail Sales & Marketing, Director &
Member of the Executive Committee*
Regina Dolan Senior Vice President and Chief Financial Officer
& Director*
/s/ Robert E. Holley
--------------------------------------
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 Registration Statement No. 33-19786.
</TABLE>
<PAGE>
EXHIBIT INDEX
1. Ex.-27 - Financial Data Schedule
2. Ex. 99.A1 - Standard Terms and Conditions of Trust
dated as of September 1, 1990 between PaineWebber Incorporated,
Depositor and Investors Bank & Trust Company and The First
National Bank of Chicago, Co-Trustees (incorporated by
reference to Exhibit No. 2
in File No. 33-25030).
3. Ex. 99.A2 - Copy of Trust Indenture and Agreement
between PaineWebber Incorporated, Depositor, and of
Investors Bank & Trust Company and The First National
Bank of Chicago, Co-Trustees, incorporating by
reference Standard Terms and Conditions of Trust dated
as of September 1, 1990.
4. Ex. 99.A5 - Form of Certificate of Ownership (included
in Standard Terms and Conditions of Trust).
5. Ex. 99.A6 - Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by reference to
Exhibit 8 in File No. 2-88344).
6. Ex. 99.A6 - By-Laws of PaineWebber Incorporated, as
amended (incorporated by reference to Exhibit A(6)(a)
in File No. 811-3722).
7. Ex. 99.2 - Opinion of Counsel as to legality of
securities being registered.
8. Ex. 99.C1 - Opinion of Counsel as to income tax status
of securities being registered.
9. Ex. 99.C2 - Consent of Ernst & Young, LLP, Independent
Auditors.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 952,500
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 100,000
<TOTAL-ASSETS> 1,052,500
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100,000
<TOTAL-LIABILITIES> 100,000
<SENIOR-EQUITY> 952,500
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,052,500
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 2
THE PAINEWEBBER PATHFINDERS TRUST,
TREASURY AND GROWTH STOCK SERIES 20
TRUST INDENTURE AND AGREEMENT
Dated as of January 30, 1997
Incorporating
Standard Terms and Conditions of Trust
Dated as of September 1, 1990,
Between
PAINEWEBBER INCORPORATED,
as Sponsor
and
INVESTORS BANK & TRUST COMPANY
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Trustees
<PAGE>
THIS TRUST INDENTURE AND AGREEMENT dated as of January 30,
1997 between PaineWebber Incorporated, as Sponsor and Investors Bank & Trust
Company and The First National Bank of Chicago, as Co-Trustees, which sets
forth certain of its provisions in full and incorporates other of its
provisions by reference to a document entitled "Standard Terms and Conditions
of Trust" dated as of September 1, 1990, as amended, among the parties hereto
(hereinafter called the "Standard Terms and Conditions of Trust" or "Standard
Terms"), such provisions as are set forth in full and such provisions as are
incorporated by reference constituting a single instrument.
W I T N E S S E T H T H A T :
Whereas, the parties hereto have heretofore or concurrently
herewith entered into the Standard Terms and Conditions of Trust in order to
facilitate creation of series of securities issued under a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940 and the
laws of the State of New York, each of which series will be composed of
redeemable securities representing undivided interests in a trust fund composed
of publicly traded common or preferred stocks, stripped United States Treasury
obligations, or evidence thereof, and in certain cases, United States Treasury
obligations and Restricted Securities as defined in the Standard Terms and
Conditions of Trust; and
WHEREAS, the parties now desire to create the
Twentieth of the aforesaid series;
NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Sponsor and the Trustee agree as
follows:
Section 1. Incorporation of Standard Terms and Conditions of
Trust. Subject to the provisions of Section 2 and Section 3 of this Trust
Indenture and Agreement set forth below, all of the provisions of the Standard
Terms and Conditions of Trust are herein incorporated by reference in their
entirety and shall be deemed to be a part of this instrument as fully to all
intents and purposes as though said provisions had been set forth in full in
this instrument, except as provided below in this Section 1. Unless otherwise
stated, section references shall refer to sections in the Standard Terms and
Conditions of Trust.
Section 2. Specific Terms of this Series. The following terms
are hereby agreed to for this series of The PaineWebber Pathfinders Trust,
which series shall be known and designated as "The PaineWebber Pathfinders
Trust, Treasury and
Growth Stock Series 20".
A. The Securities deposited pursuant to Section 2.02
are set forth in Schedule A hereto.
<PAGE>
B. (1) The aggregate number of Units outstanding on
the Initial Date of Deposit for this Series is 1,000,000.
(2) The initial fractional undivided interest represented by
each Unit of this series shall initially be 1/1,000,000th of the Trust Fund. A
Certificate representing the total number of Units outstanding on the Initial
Date of Deposit is being delivered by the Trustee to the Sponsor pursuant to
Section 2.03.
C. The term "Record Date" shall mean June 30, 1997 and
quarterly thereafter, except that with respect to a distribution required by
Section 2.02 (b), the Record Date shall be the last business day of the month
during which the contract to purchase the Security fails and except that with
respect to cash representing long-term capital gains held in the Capital
Account the Record Date shall be each December 31.
Record Date shall also include such date or dates determined
by the Sponsor and the Trustee as necessary or desirable and in the best
interest of the Unitholders for federal or state purposes or for other purposes
(hereinafter a "Special Record Date") which date may replace a regularly
scheduled Record Date if such regularly scheduled Record Date is within 30 days
of a Special Record Date.
D. The term "Distribution Date" shall mean the 20th
day following the Record Date, commencing July 20, 1997.
In the event a Special Record Date is declared, the
Distribution Date shall also include such Date as is determined by the Sponsor
and the Trustee to be the Distribution Date in respect of such Special Record
Date.
E. The Discretionary Liquidation Amount shall be twenty per
centum (20%) of the aggregate value of (i) the Securities originally deposited
pursuant to Section 2.02 and (ii) any additional Securities deposited pursuant
to Section 2.02(c).
F. The Mandatory Termination Date shall be August 30, 2007.
The date on which the Trustee shall begin to sell equity Securities in
accordance with Section 9.01 shall be July 15, 2007.
G. The Trustee's annual compensation as referred to in
Section 8.05 shall be $.00145 per Unit computed monthly based on the largest
number of Units outstanding at any time during the preceding month.
H. The Sponsor's annual compensation pursuant to Section 7.02
shall be computed as $.00035 per Unit, based on the largest number of Units
Outstanding at any time during the calendar year.
<PAGE>
I. The balance in the Capital Account below which no
distribution need be made, as referred to in Section 3.04, is
$.005 per Unit outstanding.
J. Section 3.06 with regard to Portfolio Supervision
shall be amended to read as follows:
1. Subparagraph (e) shall be deleted and the following
text shall be inserted in its place as the current
version of paragraph (e): "that a decline in price has
occurred or such materially adverse market or credit factors
have occurred, that in the opinion of the Sponsor the
retention of such Securities would be detrimental to the
interest of the Unitholders"
2. In addition, there shall be added to Section 3.06 the
following subsections:
"(h) that there has been a decrease in the Sponsor's
internal rating of the Security; or
(i) that there has been a happening of events which, in the
opinion of the Sponsor, negatively affects the economic
fundamentals of the issuer of the Security or the industry of
which it is a part."
K. In the event that the Sponsor directs the Trustee to
distribute Securities in lieu of a cash redemption pursuant to Section 5.02,
the Trustee shall distribute only stock and stocks in a proportionate amount,
rounding to avoid the delivery of fractional shares and where such rounding is
not possible by delivering Stocks and an amount equal to the difference between
the Redemption Value and the value of such Stocks delivered (determined in
accordance with Section 4.01 on the date of tender).
L. The Percentage Ratios for the Trust shall be the
percentage ratios between the number of shares of each issue of stock in the
Trust and the maturity value of the Treasury obligations deposited in the Trust
on the date hereof. Such Percentage Ratios are subject to adjustment to reflect
the occurrence of (i) 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, (ii) a merger or reorganization or (iii) sale of any
Securities from the Trust portfolio. 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.
<PAGE>
M. Paragraph (c) of Section 2.02 is hereby amended to
read as follows:
"From time to time, following the Initial Date of Deposit,
the Sponsor is hereby authorized, in its discretion to cause
the Trustee to issue additional Units upon the purchase by
the Trustee of additional Securities in respect thereof. In
such cases, the Sponsor shall instruct the Trustee to create
a specified number of additional Units whereupon the Trustee
shall purchase and deposit the additional securities in
respect thereof. Such additional Securities shall be held,
managed and applied by the Trustee as herein provided. In
connection with each such request to purchase additional
Securities, the Sponsor shall also deliver to the Trustee (i)
cash, a certified check or checks, other cash or equivalents
or an irrevocable letter or letters of credit issued by a
commercial bank or banks, in each case in an amount necessary
to consummate the purchase of any such additional Securities
pursuant to any contracts entered into pursuant to this
Section or (ii) instructions to purchase such Additional
Securities, along with cash, a certified check or checks, or
other cash equivalents, an irrevocable letter or letters of
credit issued by a commercial bank or banks, in each case in
the amount based upon the price of such Additional Securities
on the date each such additional deposit occurs, multiplied
by the number of Units to be issued. All such amounts will be
based upon the price of such Additional Securities at the
Valuation Time on the date such amounts are deposited. Such
purchase and deposit of Additional Securities shall be made,
in each case, pursuant to a Supplemental Indenture executed
by the Sponsor and the Trustee. The Trustee in each case
shall ensure that each deposit of Additional Securities
pursuant to this Section shall be made so as to match as
close as is practicable the Percentage Ratios for such
Securities determined by reference to Schedule A of the Trust
Indenture for each Trust Fund and subject to adjustment as
provided in the Standard Terms and the Trust Indenture."
The Securities deposited pursuant to Section 2.02 are
comprised of (1) the Securities set forth in Schedule A hereto, (2) any
Treasury Securities which may be deposited as temporary reinvestment for sale
proceeds pursuant to Section 3.02, and (3) additional deposits of Securities
pursuant to the paragraph set forth above.
N. The second paragraph of Section 3.05 is hereby
amended to add the phrase ", commencing with calendar year 1997"
following the word "year" and preceding the colon.
<PAGE>
3. The Standard Terms shall be amended to permit the Trustee
to charge the Trust and to deduct from the accounts of the Trust certain fees
and expenses incurred in connection with the organization of this Trust Series
("Initial Costs"), all to the effect and in the amount set forth below.
a. Section 3.04(a) of the Standard Terms shall
hereby be amended as follows:
(1) the text of Section 3.04(a) shall
be deleted in its entirety and;
(2) the following text set forth below
shall be inserted in replacement
of such Section 3.04(a):
"deduct from the Income
Account or, to the extent
such funds are not
available in such account,
from the Capital Account,
and pay to itself
individually the amounts
that it is at the time
entitled to receive (i)
pursuant to Sections 8.01
and 8.05 on account of its
services theretofore
performed and expenses,
losses and liabilities
theretofore incurred, if
any, and (ii) in
reimbursement of advances
made, and other amounts
paid, by the Trustee in
connection with the
organization and
establishment of the Trust
in accordance with the
provisions of, and
procedures set forth in,
Section 10.02."
b. Section 10.02 of the Standard Terms shall
hereby be amended as follows:
(1) the text of Section 10.02 shall be
deleted in its entirety and;
(2) the following text set forth below
shall be inserted in replacement
of such Section 10.02:
"Section 10.02. Initial
Costs (a) The Initial
Costs incurred by the
Sponsor and the Trustee in
connection with the
organization and
establishment of the Trust
shall be paid by the
Trust, or if paid for by
the Trustee initially,
shall be reimbursed by the
Trust to the Trustee in
accordance with Section
3.04(a).
c. Initial Costs to be charged to the Trust
<PAGE>
include, but are not limited to
(1) the costs of the initial preparation,
typesetting and execution of the
registration statement, prospectuses
(including preliminary prospectuses), the
trust indenture and other legal documents
relating to the establishment of the Trust,
and the costs of submitting such documents
in electronic format to the SEC,
(2) SEC and state blue sky registration fees for
the initial registration of Trust Units,
(3) the cost of the initial audit of the Trust,
(4) the legal costs incurred by the Sponsor and
the Trustee related to any and all of the
foregoing, and
(5) other out-of-pocket expenses related to any
and all of the foregoing.
d. Costs and expenses incurred in the marketing
and selling of Trust Units, shall not be
borne by the Trust but shall be paid for by
the Sponsor. Such costs and expenses
include but are not limited to (1) any
expenses incurred in the printing of
prospectuses (including preliminary
prospectuses), (2) the preparation and
printing of brochures and other advertising
or marketing materials, including any legal
costs incurred in the review thereof, and
(3) any other selling or promotional costs
or expenses.
e. Promptly after the Initial Date of Deposit,
upon written certification to the Trustee,
the Sponsor shall receive reimbursement for
any of the Initial Costs set forth in
subsection (b) above which are payable from
the Trust but which were paid for by the
Sponsor, without profit. The Trustee shall
advance out of its own funds such
reimbursement, provided, however, that the
Trustee shall be entitled to be reimbursed
without interest out of the Trust Fund for
any and all amounts advanced by it pursuant
to this Section 10.2(e), in the manner set
forth in Section 3.04(a). Such advances
shall be considered a lien on the Trust
Fund, and the Trustee shall have a priority
over Certificateholders on funds received in
respect of the Securities in the Trust, as
such funds are received.
f. The Trustee shall reimburse itself for the
advances made pursuant to subsection (d)
<PAGE>
above in 60 approximately equal installments
over a five (5) year period unless the
Trust is sooner terminated, in which case
all amounts still due and owing shall be
payable to the Trustee from the assets of
the Trust.
g. The Sponsor shall bear the Initial Costs, if
any, in excess of $100,000.
<PAGE>
IN WITNESS WHEREOF, PaineWebber Incorporated has caused this
Trust Indenture and Agreement to be executed by one of its Senior Vice
Presidents and its corporate seal to be hereto affixed and attested by one of
its Secretaries, and Investors Bank & Trust Company and The First National Bank
of Chicago have caused this Trust Indenture to be executed by one of their
Authorized Signatories and their corporate seals to be hereto affixed and
attested by one of their Authorized Signatories, all as of the date first above
written.
PAINEWEBBER INCORPORATED
as Depositor and Sponsor
SEAL
By ___________________________
Senior Vice President
Attest:
_________________________________
Secretary
<PAGE>
STATE 0F NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 30th day of January, 1997 before me personally
appeared Robert E. Holley, to me known, who being by me duly sworn, said that
he is a Senior Vice President of PaineWebber Incorporated, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
By ____________________________
Notary Public
<PAGE>
INVESTORS BANK & TRUST COMPANY
AND THE FIRST NATIONAL
BANK OF CHICAGO
SEAL
Attest:
By _____________________________
Title:
_________________________
Title:
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 30th day of January, 1997 before me personally
appeared Steven M. Wagner, to me known, who being by me duly sworn, said that
he is a ________ of The First National Bank of Chicago, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Trustees of
said corporation, and that he signed his name thereto by like authority.
_________________________
Notary Public
<PAGE>
SCHEDULE A
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
SCHEDULE OF INVESTMENTS
AS OF INITIAL DATE OF DEPOSIT, JANUARY 30, 1997
TREASURY OBLIGATIONS (51.86%) (1)
<TABLE>
<CAPTION>
COST OF
SECURITIES
NAME OF SECURITY COUPON MATURITY VALUE MATURITY DATE TO TRUST(2)
---------------- ------ -------------- ------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury Interest
Payments (3) (51.86%) 0% $1,000,000 August 15, 2007 $494,000.00
COMMON STOCKS (48.14%) (1)
</TABLE>
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Aerospace/Defense (1.21%)
United Technologies Corporation ............. 170 $11,517.50
Automobile (2.41%)
Ford Motor Company .......................... 350 11,331.25
General Motors Corporation .................. 190 11,590.00
Beverages (2.37%)
The Coca-Cola Company ....................... 200 11,275.00
PepsiCo, Inc. ............................... 330 11,343.75
Chemical (1.24%)
DuPont (E.I.) De Nemours & Company ......... 110 11,797.50
Computer Peripheral Equipment (1.18%)
Cisco Systems, Inc.* ........................ 170 11,220.00
Computer Processing & Data Preparation
(1.21%)
First Data Corporation ...................... 300 11,512.50
Computer Software (1.23%)
Microsoft Corporation* ...................... 120 11,670.00
Electronics/Semi-Conductor (3.56%)
Emerson Electric Company .................... 120 11,805.00
Hewlett-Packard Company ..................... 220 11,302.50
Intel Corporation ........................... 70 10,832.50
Entertainment (1.24%)
The Walt Disney Company ..................... 160 11,800.00
Financial Institutions/Banks (6.07%)
Chase Manhattan Corporation ................. 130 11,651.25
Citicorp .................................... 100 11,137.50
Fannie Mae .................................. 290 11,346.25
NationsBank Corporation ..................... 110 11,825.00
Wells Fargo & Company ....................... 40 11,880.00
Household Products (1.17%)
Procter & Gamble Company .................... 100 11,162.50
Insurance (2.37%)
Aetna Inc. .................................. 140 10,412.50
Allstate Corporation ........................ 190 12,136.25
Manufacturing (1.24%)
Minnesota Mining & Manufacturing Company ... 140 11,795.00
Metals (1.24%)
Alcan Aluminum Ltd. ......................... 340 11,815.00
Office/Business Equipment (1.22%)
Pitney Bowes, Inc. .......................... 210 11,655.00
</TABLE>
<PAGE>
THE PAINEWEBBER PATHFINDERS TRUST
TREASURY AND GROWTH STOCK SERIES 20
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF INITIAL DATE OF DEPOSIT, JANUARY 30, 1997
<TABLE>
<CAPTION>
COST OF
NUMBER OF SECURITIES
NAME OF ISSUER SHARES TO TRUST(2)
-------------- ------ -----------
<S> <C> <C>
Oil/Gas (6.03%)
Amoco Corporation ............ 130 $ 11,310.00
Chevron Corporation .......... 180 11,992.50
Exxon Corporation ............ 110 11,385.00
Royal Dutch Petroleum
Company+ .................... 70 12,092.50
Texaco Inc. .................. 100 10,700.00
Pharmaceuticals (4.81%)
Abbott Laboratories .......... 220 11,687.50
Bristol-Myers Squibb Company 90 11,081.25
Johnson & Johnson ............ 210 11,550.00
Merck & Co., Inc. ............ 130 11,472.50
Publishing/Printing (1.19%)
Gannett Company, Inc. ........ 150 11,343.75
Restaurants (1.20%)
McDonald's Corporation ...... 250 11,437.50
Retail-Variety Stores (1.21%)
Wal-Mart Stores, Inc. ........ 500 11,500.00
Telecommunications (3.54%)
AT&T Corporation ............. 300 11,625.00
Bell Atlantic Corporation ... 160 10,580.00
GTE Corporation .............. 260 11,505.00
Transportation (1.20%)
Burlington Northern Santa Fe 130 11,423.75
TOTAL COMMON STOCKS ......... 458,500.00
-----------
TOTAL INVESTMENTS ........... $952,500.00
===========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of Securities by the Trustee was made as described in
"Valuation" as of the close of business on the business day prior to the
Initial Date of Deposit. The bid side evaluation of the Treasury
Obligations on the business day prior to the Initial Date of Deposit was
$492,690.
(3) This security does not pay interest. On the maturity date thereof, the
entire maturity value becomes due and payable. Generally, a fixed yield
is earned on such security which takes into account the semi-annual
compounding of accrued interest. (See "The Trust" and "Federal Income
Taxes" herein.)
(4) The gain to the Sponsor on the Initial Date of Deposit is $11.25.
* Non-income producing.
+ These shares are U.S. dollar denominated and pay dividends in U.S.
dollars but are subject to investment risks generally facing common
stocks of foreign issuers. (See "Risk Factors and Special
Considerations".)
<PAGE>
Exhibit 7
January 30, 1997
PaineWebber Inc.
1200 Harbor Boulevard
Weehawken, New Jersey 07087
The First National Bank of Chicago
Corporate Trust Administration
One First National Plaza
Chicago, Illinois 06070-0126
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Re: PaineWebber Pathfinders Trust,
Treasury and Growth Stock, Series 20
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Sponsor") of PaineWebber Pathfinders Trust,
Treasury and Growth Stock, Series 20 (hereinafter referred to as the "Trust")
in connection with the issuance by the Trust of an initial 1,000,000 units of
fractional undivided interest in the Trust (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 Sponsor, as
amended, certified by the Secretary of the Sponsor on
the date hereof;
(b) Resolutions of the Board of Directors of the
Sponsor adopted on December 3, 1971 relating to the Trust and
the sale of the Units, certified by the Secretary of the
Sponsor on the date hereof;
(c) Resolutions of the Executive Committee of
the Sponsor adopted on September 24, 1984, certified
<PAGE>
by the Secretary of the Sponsor on the date hereof;
(d) Powers of Attorney as set forth in the
certificate of the Secretary of the Sponsor dated the
date hereof;
(e) The Registration Statement on Form S-6 (File
No. 333-15799) 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") and amendments thereto
including Amendment No. 1 ("Amendment No. 1") proposed
to be filed on January 30, 1997 (the "Registration
Statement");
(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, (the "1940 Act Notification");
(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 (the "1940 Act Registration);
(h) The prospectus included in Amendment No. 1
(the "Prospectus");
(i) The Standard Terms and Conditions of the Trust
dated as of September 1, 1990, between the Sponsor and
Investors Bank & Trust Company and The First National Bank of
Chicago (the "Co-Trustees") (the "Standard Terms");
(j) The Trust Indenture dated as of January 30, 1997
between the Sponsor and the Co-Trustees (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The Closing Memorandum dated January 30,
1997, between the Sponsor and the Co-Trustees (the
"Closing Memorandum");
(l) Officers Certificates required by the
Closing Memorandum;
(m) The form of certificate of ownership for
units (the "Certificate") to be issued under the
Indenture and Agreement; and
(n) Such other pertinent records and documents
as we have deemed necessary.
With your permission, in such examination, we have
<PAGE>
assumed the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of all
documents submitted to us as copies; (c) the truth, accuracy, and completeness
of the information, representations, and warranties contained in the records,
documents, instruments and certificates we have reviewed; (d) except as
specifically covered in the opinions set forth below, the due authorization,
execution, and delivery on behalf of the respective parties thereto of
documents referred to herein and the legal, valid, and binding effect thereof
on such parties; and (e) the absence of any evidence extrinsic to the
provisions of the written agreement(s) between the parties that the parties
intended a meaning contrary to that expressed by those provisions. However, we
have not examined the securities deposited pursuant to the Indenture and
Agreement (the "Securities") nor the contracts for the Securities.
We express no opinion as to matters of law in jurisdictions
other than the States of New York and California and the United States, except
to the extent necessary to render the opinion as to the Sponsor and the
Indenture and Agreement in paragraphs (i) and (iii) 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 Sponsor 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 Sponsor is duly qualified as a foreign corporation
and is in good standing as such within the State of New York;
(iii) The Indenture and Agreement has been duly authorized,
executed and delivered by the Sponsor and, assuming the due authorization,
execution and delivery by the Trustee, is a valid and binding agreement of the
Sponsor, enforceable against the Sponsor in accordance with its terms;
(iv) The Trust has been duly formed and is validly existing
as an investment trust under the laws of the State of New York and has been
duly registered under the Investment Company Act of 1940;
(v) The terms and provisions of the Units conform in
all material respects to the description thereof contained in
the Prospectus;
<PAGE>
(vi) 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 Sponsor'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 Sponsor in effect on the date hereof;
(vii) The Certificates to be issued by the Trust, when duly
executed by the Sponsor and the Co-Trustees in accordance with the Indenture
and Agreement, upon delivery against payment therefor as described in the
Registration Statement and 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; and
(viii) While the Registration Statement has not yet become
effective we have no reason to believe that such Registration Statement will
not become effective on the date and at the time requested therein pursuant to
Rule 487 promulgated under the 1933 Act.
In addition, we have participated in conferences with
representatives of the Sponsor, the Trustee, the Trust's accountants and others
concerning the Registration Statement and the Prospectus and have considered
the matters required to be stated therein and the statements contained therein,
although we have not independently verified the accuracy, completeness or
fairness of such statements. Based upon and subject to the foregoing, nothing
has come to our attention to cause us to believe that the Registration
Statement, as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary
<PAGE>
SIGNATURE
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or that the Prospectus, as of the date hereof,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that we have not been requested to and do not
make any comment in this paragraph with respect to the financial statements,
schedules and other financial and statistical information contained in the
Registration Statement or the Prospectus).
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 consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name wherever it appears in
the Registration Statement and the Prospectus.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
Exhibit 8
January 30, 1997
The First National Bank of Chicago
Corporate Trust Administration
One First National Plaza
Chicago, Illinois, 60670-0126
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Dear Sirs:
As counsel for PaineWebber Incorporated (the "Depositor"), we
have examined an executed copy of the Trust Indenture and Agreement dated as of
January 30, 1997 (the "Indenture") and Standard Terms and Conditions of Trust,
dated as of September 1, 1990 (the "Agreement"), both between the Depositor,
and Investors Bank & Trust Company and The First National Bank of Chicago as
Co-Trustees. The Indenture established a trust called PaineWebber Pathfinders
Trust, Treasury and Growth Stock Series 20 (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
Co-Trustees 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 1,000,000 units of fractional undivided
interest in the 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 holder of a certificate of ownership (a
"Unitholder") will be treated as the owner of a pro rata portion of the Trust,
and income of the Trust will be treated as income of the Unitholder.
<PAGE>
SIGNATURE
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 redeems or sells its Unit. For purposes of
determining gain or loss, 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 Unitholder's per Unit
tax cost for each Security.
3. The Trust is not an association taxable as a corporation
for New York State income tax purposes. Under New York State Law, each
Unitholder will be treated as the owner of a pro rata portion of the Trust, and
the income of the Trust will be treated as income of the Unitholders.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement (File No. 333-15799) relating to the Units
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,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
Exhibit 9
SIGNATURE
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of our report dated
January 30, 1997 relating to the Statement of Financial Condition of The
PaineWebber Pathfinders Trust, Treasury and Growth Stock, Series 20 including
the Schedule of Investments, included herein, and to the reference made to us
under the caption "Independent Auditors" in the Prospectus.
ERNST & YOUNG, LLP
January 30, 1997
New York, New York
