File No. 33-54569
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 16
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
(x) Check if it is proposed that this filing should become effective
(immediately upon filing or on February 7, 1996) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
120,900 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$1,486,973.28**
* Estimated solely for the purpose of calculating the registration fee, at
$12.30 per unit.
G. Amount of filing fee, computed at one-twenty-ninth of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
THE REGISTRANT HEREBY TERMINATES ITS ELECTION MADE PURSUANT TO RULE 24f-2.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
* The method of calculation is made pursuant to Rule 24e-2 under the
Investment Company Act of 1940.The total amount of units redeemed or
repurchased during the previous fiscal year ending 1994 is 97,331. There
have been no previous filings of post-effective amendments during the
current fiscal year 97,331 redeemed or repurchased units are being used
to reduce the filing fee for this amendment.
<PAGE>
PAINEWEBBER EQUITY TRUST, GROWTH STOCK
SERIES 16
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C under the Securities Act of
1933
(Form N-8B-2 Items required by Instruction 1 as to Prospectus on
Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a)Name of Trust ) Front Cover
(b)Title of securities issued )
2. Name and address of ) Back Cover
Depositor
3. Name and address of ) Back Cover
Trustee
4. Name and address of ) Back Cover
Principal
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and ) The Trust
termination of
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General Information ) The Trust;
regarding
Trust's Securities and ) Rights of Unit
Rights
of Holders ) holders
(a) Type of Securities ) The Trust
(Registered or Bearer) )
(b) Type of Securities ) The Trust
(Registered or Bearer) )
* Not applicable, answer
negative or not required.
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(c) Rights of Holders as to ) Rights of Unit
Withdrawal or ) holders
Redemption
) Redemption;
) Public Offering of Units-
) Secondary Market for Units
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units Exchange Option
(e) Rights of Trust issues )
periodic payment plan ) *
certificates )
(f) Voting rights as to ) Rights of Unit
Securi-
ties, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1)Assets of Trust ) Amendment of the
Indenture
(2)Terms and Conditions ) Administration of the
Trust-Portfolio Supervision
of Trust's Securities ) Investments
(3)Provisions of Trust ) Amendment of the
Indenture
(4)Identity of Depositor and ) Administration of the Trust
Trustee
(h) Consent of Security )
Holders
required to change )
(1)Composition of assets ) Amendment of the
Indenture
of Trust )
(2)Terms and conditions ) Amendment of the
Indenture
of Trust's Securities )
(3)Provisions of Indenture ) Amendment of the
Indenture
(4)Identity of Depositor ) Administration of the Trust
and Trustee )
11. Type of Securities ) The Trust
Comprising Units
12. Type of securities ) *
comprising
periodic payment )
certificates
13. (a)Load, fees, expenses, etc. ) Public Offering of
) Units; Expenses of the
) Trust
* Not applicable, answer
negative or not required.
<PAGE>
(b)Certain information ) *
regarding periodic payment ) *
certificates )
(c)Certain percentages ) *
(d)Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e)Certain profits receivable ) Public Offering of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons ) Market for Units
(f)Ratio of annual charges to ) *
income )
14. Issuance of Trust's ) The Trust
securities
) Public Offering of Units
15. Receipt and handling of ) *
payments from )
purchasers
16. Acquisition and ) The Trust; Administration
disposition of
underlying securities ) of the Trust; Termination
) of Trust
17. Withdrawal or ) Redemption
redemption
) Public offering of Units
) -Secondary Market for
) -Exchange Option
) -Conversion Option
18. (a)Receipt and disposition of ) Distributions of
income ) Unitholders
(b)Reinvestment of ) *
distributions
(c)Reserves or special fund ) Distributions to
) Unitholders; Expenses of
Trust
(d)Schedule of distribution ) *
19. Records, accounts and ) Distributions
report
) Administration
) of the Trust
20. Certain miscellaneous ) Administration of the Trust
pro-
visions of Trust )
agreement
21. Loans to security ) *
holders
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material ) *
provisions of
trust agreement )
* Not applicable, answer
negative or not required.
<PAGE>
III. Organization
Personnel and Affiliated
Persons of Depositor
25. Organization of ) Sponsor
Depositor
26. Fees received by ) Public Offering of
Depositor
) Units Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of ) *
Depositor
30. Persons controlling ) Sponsor
Depositor
31. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
32. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
33. Remuneration of ) *
employees of
Depositor for certain )
services
rendered to Trust )
34. Remuneration of other ) *
persons
for certain services )
rendered
to Trust )
IV. Distribution and Redemption of Securities
35. Distribution of Trust's ) Public Offering of Units
securities by states )
36. Suspension of sales of ) *
Trust's
securities )
37. Revocation of authority ) *
to
distribute )
38. (a)Method of distribution ) Public Offering of Units
(b)Underwriting agreements )
(c)Selling agreements ) Sponsor
* Not applicable, answer
negative or not required.
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39. (a)Organization of principal ) Sponsor
underwriter )
(b)N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
41. (a)Business of principal ) Sponsor
underwriter )
(b)Branch officers of ) *
principal underwriter )
(c)Salesman of principal ) *
underwriter )
42. Ownership of Trust's ) *
securities
by certain persons )
43. Certain brokerage ) *
commissions
received by principal )
underwriter )
44. (a)Method of valuation ) Public Offering Price of
) Units
(b)Schedule as to offering ) *
price )
(c)Variation in Offering ) Public Offering Price of
price to certain persons ) Units
45. Suspension of ) *
redemption rights
46. (a)Redemption valuation ) Public Offering of Units
) -Secondary Market for Units
) -Valuation
(b)Schedule as to redemption )
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position ) Public Offering of Units
in
underlying securities ) Redemption
) Trustee
) Evaluation of the Trust
48. Organization and )
regulation of
Trustee ) Trustee
49. Fees and expenses of ) Expenses of the Trust
Trustee
50. Trustee's lien ) Expenses of the Trust
* Not applicable, answer
negative or not required.
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VI. Information
concerning Insurance of
Holders of Securities
51. (a)Name and address of ) *
Insurance Company )
(b)Type of policies ) *
(c)Type of risks insured and ) *
excluded )
(d)Coverage of policies ) *
(e)Beneficiaries of policies ) *
(f)Terms and manner of ) *
cancellation )
(g)Method of determining ) *
premiums )
(h)Amount of aggregate ) *
premiums paid )
(i)Who receives any part of ) *
premiums )
(j)Other material provisions ) *
of the Trust relating to )
insurance )
VII. Policy of Registrant
52. (a)Method of selecting and ) The Trust;
eliminating securities ) Administration of the Trust
from the Trust )
(b)Elimination of securities ) *
from the Trust )
(c)Policy of Trust regarding ) Portfolio Supervision
) Administration of Trust
substitution and
elimination of securities )
(d)Description of any funda- ) Administration of
mental policy of the Trust ) Trust
) Portfolio Supervision
53. (a)Taxable status of the ) Tax status of the Trust
Trust )
(b)Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
* Not applicable, answer
negative or not required.
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VIII. Financial and
Statistical Information
54. Information regarding ) *
the
Trust's past ten fiscal )
years
55. Certain information ) *
regarding
periodic payment plan )
certificates )
56. Certain information ) *
regarding
periodic payment plan )
certificates )
57. Certain information ) *
regarding
periodic payment plan )
certificates )
58. Certain information ) *
regarding
periodic payment plan )
certi-
ficates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to ) Condition
Form S-6)
* Not applicable, answer
negative or not required.
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PaineWebber Equity Trust
Growth Stock Series Sixteen
(The New Growth Stocks)
730,000 Units
The investment objective of this Trust is to provide for capital
appreciation through an investment in equity stocks having, in
Sponsor's opinion on the Initial Date of Deposit, an above average
potential for capital appreciation. The value of the Units will fluctuate
with the value of the portfolio of underlying securities.
The minimum purchase is $1,000, except that the minimum
purchase in connection with an Individual Retirement Account (IRA)
or other tax-deferred retirement plan is $250. Only whole Units may
be purchased.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAP-
PROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST HAS
BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE ISSUED
AND OUTSTANDING UNITS WHICH HAVE BEEN ACQUIRED BY THE
SPONSOR EITHER BY PURCHASE FROM THE TRUSTEE OF UNITS
TENDERED FOR REDEMPTION OR IN THE SECONDARY MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for future reference.
Prospectus Part A dated February 7, 1996
<PAGE>
Essential Information Regarding The Trust
The Trust. The objective of the PaineWebber Equity Trust,
Growth Stock Series 16 (the "Trust") is to provide for capital
appreciation through an investment in equity stocks which have, in
the Sponsor's opinion on the Initial Date of Deposit, an above-
average potential for capital appreciation (referred to herein alter-
natively as either the "Stocks" or the "Securities").
The Trust will seek to achieve its objective of capital apprecia-
tion through an investment in a diversified portfolio of Stocks issued
by companies that PaineWebber believes are likely to benefit from a
return to potential outperformance by growth stocks. PaineWebber
uses the term growth stocks to mean those stocks whose earnings
growth rate is greater than that of the market as a whole, as defined
by the S&P 500.* PaineWebbers Strategy Group, in conjunction
with Painewebbers industry analysts, selected those companies to
be included in the portfolio which they believe are most likely to
benefit from the anticipated trend towards growth stocks which
PaineWebber forecasts.
Summary of Risk Factors. There are certain investment risks
inherent in unit trust portfolios which hold equity securities. The
equity securities 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
the issuers, the prices of equity securities, the condition of the
stock markets in general and the prices of the stocks in particular.
In addition, rights of common stock holders are generally inferior to
those of holders of debt obligations or preferred stock. In addition,
the American Depositary Receipts (ADRs) and, the equity securities
of foreign issuers (Foreign Stocks) which are denominated in
currencies other than the U.S. dollar held in the Trust Portfolio, are
susceptible to additional risks, such as currency exchange rate
fluctuations as well as potential future political and economic devel-
opments which might adversely affect the payment or receipt of
payment on dividends. Also, foreign securities markets in general
have substantially less volume than U.S. markets and Foreign
Stocks may be less liquid and experience greater price volatility
than securities of comparable domestic companies. See Risk Fac-
tors and Special Considerations for a discussion of these risks. The
Trusts portfolio has been diversified among various industry groups
in an attempt to limit the risks inherent in owning a portfolio of
stock. The stocks may be categorized by industry groups as shown
in the table below under the caption The Composition of the
Portfolio. There is no assurance, however, that such diversification
will eliminate an investor's risk of earnings or market price volatility
or trading liquidity. There can also be no assurance that the Trust
portfolio will remain constant during the life of the Trust. Certain
events might occur which could lead to the elimination of one or
more Stocks from the Portfolio (see: "Administration of the Trust-
-Portfolio Supervision"), thereby reducing the diversity of the Trust's
investments. Further, under certain circumstances, if a tender offer
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is made for any of the Stocks in the Trust, or in the event of a
merger or reorganization, the Trust will either tender the Stocks or
sell them as more fully described under the caption "The Trust".
The Composition of The Portfolio.
PaineWebber forecasts that investors should return to invest-
ments in growth stocks. PaineWebbers research professionals be-
lieve there are four timely reasons behind this statement.
First, PaineWebber believes that the relative earnings of growth
stocks should improve in the near future as S&P earnings growth
slows because of tough comparisons to past earnings and the
Federal Reserve Board's anticipated continued tightening of the
money supply (which is accomplished by raising short-term interest
rates). Such tightening is an attempt to slow inflation and growth as
measured by gross domestic product (GDP). Assuming the Federal
Reserve gets the slower GDP growth it desires over the next year, it
is PaineWebber's view that many growth stocks are likely to grow
faster than the S&P 500 in the future.
______
*The Standard & Poor's 500 Index (the "S&P 500") is an
unmanaged index of 500 stocks calculated under the auspices of
Standard & Poors, which, in PaineWebber's view, constitutes a
broadly diversified, representative segment of the market of publicly
traded stocks in the United States.
2
<PAGE>
Second, PaineWebber's economists forecast that bond yields,
near their peak, should start to decline slightly over the next few
years. PaineWebber forecasts that, as interest rates fall, the relative
price to earnings ratio (P/E) of growth stocks should expand. As the
P/E of the entire market expands with falling rates, growth stocks
should benefit from both the rise in the market's P/E and an
increasing relative P/E for growth. Stocks with growth rates greater
than the market's should get a P/E benefit from lower interest rates
that is more than the benefit for the overall market.
Third, PaineWebber believes that many growth stocks are cur-
rently undervalued in the market. In fact, over the past several years
the prices of many growth stocks have stagnated as investors
gravitated towards other types of equity investments. However, while
these stock prices have stagnated, their earnings have continued to
grow at a double-digit pace, making many of them statistically
inexpensive at this point.
Fourth, PaineWebber asserts that, although the earnings of
cyclical stocks probably will increase further, the prices of cyclical
stocks tend to peak long before their earnings. Due to this fact,
many investors should consider moving their investments out of
cyclical stocks and into growth stocks long before the anticipated
cyclicals' earnings peak.
PaineWebber asserts that the major challenge for investors
seeking to return to investments in growth stocks is to buy stocks
that really are growth stocks. In PaineWebber's view, investors
should resist the impulse to return to investing in the growth stocks
which may have done well in the last cycle, but have since fallen
out of favor. This is because the identity of what constitutes a
"growth industry" or "growth stock" is always changing.
In light of PaineWebber's above-mentioned forecast of a return
to growth stocks and seeking to determine future areas for new
growth, PaineWebber's Strategy Group worked in conjunction with
its research professionals to distinguish certain areas which they
believe may foster future growth. PaineWebber's experts have iden-
tified five themes (outlined below) which, in PaineWebber's opinion,
will be the leaders in the next growth cycle.
These are industries and sectors that because of a secular,
structural change--such as a demographic trend (e.g., the aging of
baby boomers), a major political development (e.g., the decline of
communism) or a technological change (e.g., the proliferation of
personal computers)--present firms with excellent opportunities for
earnings growth. PaineWebber's professionals have identified the
following five themes they feel will foster heightened growth pros-
pects over the next several years.
1. U.S. Demographics. Between 1994 and 2000, the number of
Americans aged 35 - 55 will increase by 11 million, accounting for
fully 71% of the total increase in U.S. population. These baby
boomers are the core of what PaineWebber calls the "new American
consumer". PaineWebber classifies this consumer as one who
wants convenience, value and products that are better and better for
you. PaineWebber believes that firms which may be leaders in an
3
<PAGE>
existing product or service category and, in particular those in
under-developed product lines, have an opportunity to generate
substantial earnings growth by capturing rising shares of rapidly
expanding markets.
In addition, PaineWebber sees a special demographic opportu-
nity in the U.S. Hispanic market, whose population is forecast to
grow three times as rapidly as the overall U.S. population as we
near the next century. This creates an opportunity both for com-
panies serving the Hispanic market and for states such as Florida
and Texas that attract many Hispanic people.
2. Healthcare. PaineWebber believes that, although there are
still opportunities among selected drug and medical device stocks,
investors should also look to companies participating in the consoli-
dation of healthcare services. However, PaineWebber thinks such
consolidation is not the only attractive opportunity in the healthcare
industry. PaineWebber cites three reasons why it believes healthcare
is still a growth sector.
* Demography. The fastest growing age group from 1994 to
2000 will be 45-55 year olds, who are still generally healthy but are
starting to develop medical problems. The second fastest growing
group in percentage terms is Americans aged 75 and above, who
are by far the heaviest consumers of health care. Similar trends
exist in Japan and Western Europe.
* Technology. Due to advances in biotechnology, electronics,
material science and many other areas, companies continue to
generate many new good products that allow people to live longer.
The United States is the global leader in these areas by a wide
margin.
* Politics. Because of recent voter resentment of proposals to
control the price of or limit the amount or quality of healthcare that
middle class patients receive, PaineWebber believes that any health-
care reform that does occur will simply be a new entitlement that
increases overall demand for healthcare.
Two other areas of healthcare-related growth, in PaineWebber's
view, are biotechnology companies with patented, value-added pro-
ducts and health service providers, including nursing homes and
well-managed providers in the home health care sector.
3. Emerging Markets Consumerism. An enormous economic
development of the past six years has been the introduction of
capitalism, or at least a more pure and powerful strain of capitalism,
to over 3.2 billion people in China, India, the former Soviet Empire,
Latin America and Southeast Asia. Vietnam and South Africa have
become more accessible to American businesses, and PaineWebber
believes Cuba probably is not far behind. At the same time,
international trade has been fostered by trade agreements such as
NAFTA, GATT, the European Union and the Mercosur agreement
between Brazil, Argentina, Paraguay and Uruguay, which raise living
standards by fostering intraregional trade.
Because the United States is the world's largest consumer
culture with considerable stature and influence beyond its borders,
the dramatic advance of capitalism creates a huge opportunity for
4
<PAGE>
U.S. firms that produce and sell items considered commonplace
within the U.S. (e.g., cigarettes, razors, soap, soda, beer, sneakers
and chewing gum). PaineWebber believes this opportunity is, for a
few select firms, even bigger and more captivating than it seems,
because of characteristics found in many of these emerging mar-
kets, including rapid population growth, limited competition, rapid
income growth, young populations poised to increase consumption,
large numbers of "middle class" citizens and the greater economic
impact from life-style changes.
4. Emerging Markets Infrastructure. If, as PaineWebber ex-
pects, emerging markets register rapid GDP growth over the next
several years, investment in infrastructure will be both a major force
behind this growth and an indispensable prerequisite for it. Just as
the United States required heavy capital investment in canals,
railroads and telegraph lines during the nineteenth century, so do
emerging economies today need highways, airports, telephone sys-
tems, electricity and sewage systems. Water treatment is one
example of an excellent infrastructure opportunity in both developing
and emerging economies.
In PaineWebber's opinion, enormous investments in infrastruc-
ture will take place, creating opportunities for well-placed firms. Of
course, investors must recognize the possibility of a disruption in
capital flows due to political turmoil or global financial downturns
which could conceivably halt foreign investment.
PaineWebber believes that the most leveraged plays on this
anticipated massive investment are foreign companies, although
strong demand from emerging markets is also a significant benefit
for U.S. industrial firms. Many of these companies operate in
mature industries where top-line growth is difficult to generate, so
the incremental demand coming from emerging markets is very
important to them.
5. The Information Highway. PaineWebber believes that the
long-term growth prospects of the information highway are still
promising. But, the best investments tend to be familiar companies
that are currently profitable and not making large expenditures in
the information highway which might not pay off for years and
years, if ever.
PaineWebber projects that, in the near term, rapid growth will
be in companies involved in the personal computer (PC) side of the
information highway. In PaineWebber's view, the safest way to
invest in the PC explosion is in dominant companies that are
low-cost producers (for example, of chips, computers, printers and
software) or who set industry standards, or both. Other targeted
areas of growth selected by PaineWebber are companies which sell
copyrighted content to be distributed over the information highway
and wireless communications, which is the fastest growing part of
the U.S. telecommunications industry.
Taking all of these factors described above into account,
PaineWebber's research professionals have selected certain stocks
in the industries listed below which they believe will benefit from
their participation in one or more of the five themes, described
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<PAGE>
above, which are expected to be the leaders of the next growth
cycle. In PaineWebber's search for such potential growth stocks,
there was no particular bias toward large capitalization or small
capitalization issues. In PaineWebber's view, the list below which
they have assembled is fairly evenly distributed among small-
capitalization, mid-capitalization and large-capitalization stocks.
These are common stocks issued by companies who may receive
income and derive revenues from multiple industry sources but
whose primary industry is listed in the "Schedule of Investments."
Primary Industry Approximate
Source and Percentage of
Name of Issuer Aggregate Market
Value of the Trust
Advertising- Omnicom 2 %
Banking/Finance - Barnett Banks 2
Biotechnology - Amgen; Biogen; Chiron; Genzyme* 9
Building Materials - Ply-Gem Industries 1
Cellular/Paging Communication - Grupo Iusacell; Paging 5
Network; Rogers Cantel; Vodafone
Construction - Empresas ICA 1
Computer Hardware/Software - Compaq; Microsoft; Oracle 6
Systems
Consumer/Household Products - Gillette; Procter & Gamble 4
Consumer Finance - World Acceptance 3
Electrical - Emerson Electric 2
Electronic/Semi-Conductor - Hewlett-Packard; Intel; 1
Littelfuse; Motorola; Nokia
Entertainment - Walt Disney Company; Time Warner; Viacom 5
Food/Beverage - Coca-Cola; Wrigley 3
Food Retailer - General Nutrition; Starbucks; Whole Foods 5
Market
Healthcare/Hospitals - Columbia/HCA; Integrated Health 3
Investment Conglomerate- Swire Pacific 1
Machinery - AlliedSignal 2
Medical Delivery Services - Apria Healthcare*; 9
Boston Scientific; Medtronic
Motor Vehicle Parts - Special Devices; Superior 4
Industries; TRW
Packaging - BAESA; Crown Cork & Seal 2
Power Utility - China Light & Power 1
Publishing - A.H. Belo 2
Radio Network - Grupo Radio; Heftel 2
Real Estate Development - Sun Hung Kai 1
Specialty Retailer - Barnes & Noble; CUC International; 5
Home Shopping Network
Telecommunications -Telecom Argentina;Telefonos de Mexico 1
Television/Cable Networks- Bell Cablemedia; Capital 5
Cities/ABC; United Video Satellite Group
Water Treatment - Ionics; U.S. Filter 4
*Of the original 59 stocks in the portfolio, Homedco Group and
Genzyme Corp. have restructured. Homedco Group merged to form
Apria Healthcare and Genzyme spun off its Tissue Repair Division.
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The following table categorizes the Portfolio Securities by the
five themes which PaineWebber believes will be the leaders in the
next growth cycle. Some of the Stocks may fall into more than one
category.
U.S. Demographics:
Barnes & Noble, Barnett Banks, A.H. Belo, General Nutrition, Heftel,
Home Shopping Network, Littelfuse, Ply-Gem Industries, Special
Devices, Starbucks, Whole Foods Market, World Acceptance
Healthcare:
Amgen, Apria Healthcare, Biogen, Boston Scientific, Chiron, Colum-
bia/HCA, Genzyme, Integrated Health, Medtronic
Emerging Markets Consumerism:
BAESA, Coca-Cola, Crown Cork and Seal, Walt Disney Company,
Gillette, Grupo Radio, Omnicom, Procter & Gamble, Time Warner,
Viacom, Wrigley
Emerging Markets Infrastructure:
AlliedSignal, China Light & Power, Emerson Electric, Empresas ICA,
Ionics, Grupo Iusacell, Motorola, Nokia, Sun Hung Kai, Superior
Industries, Swire Pacific, Telecom Argentina, Telefonos de Mexico,
TRW, U.S. Filter
Information Highway:
Bell Cablemedia, Capital Cities/ABC, Compaq, CUC International,
Walt Disney Company, Hewlett-Packard, Intel, Microsoft, Motorola,
Nokia, Oracle Systems, Paging Network, Rogers Cantel, Time War-
ner, United Video Satellite, Viacom, Vodafone
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 the original percentage relation-
ships between the number of shares of Stock deposited on the
Initial Date of Deposit, subject to certain adjustments. Costs in-
curred in acquiring such additional Stocks which are either not
listed on any national securities exchange or are ADRs or Foreign
Stocks, including brokerage fees, stamp taxes and certain costs
associated with foreign trading incurred in purchasing such addi-
tional 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. Unless advised to the contrary by the Sponsor,
the Trustee will begin to sell the Securities held in the Trust twenty
days prior to the Mandatory Termination Date. Moneys held upon
such 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 approximately five (5) years after the Initial Date of
Deposit regardless of market conditions at the time. (See "Termina-
7
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tion of the Trust" and "Federal Income Taxes".)
Public Offering Price. The Public Offering Price per Unit is
computed by dividing the Trust Fund Evaluation, including the U.S.
dollar value of the Foreign Stocks based on the applicable currency
exchange rate calculated at the Evaluation Time, by the number of
Units outstanding and then adding a sales charge of 3.75% of the
Public Offering Price (3.90% of the net amount invested). The sales
charge is reduced on a graduated scale for volume purchasers and
is reduced for certain other purchasers. Units are offered at the
Public Offering Price computed as of the Evaluation Time for all
sales subsequent to the previous evaluation. The Public Offering
Price will vary from the Public Offering Price set forth on page 20.
(See "Public Offering of Units--Public Offering Price".)
Distributions. The Trustee will make distributions on the
Distribution Dates. (See "Distributions" and "Administration of the
Trust".) Upon termination of the Trust, the Trustee will distribute to
each Unitholder of record on such date his pro rata share of the
Trust's assets, less expenses. The sale of Securities 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.
Market for Units. The Sponsor, though not obligated to do so,
presently intends to maintain a secondary market for Units. 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, including the U.S. dollar value of the Foreign Stocks based
on the applicable currency exchange rate calculated at the Evalu-
ation Time, 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 discre-
tion to direct the Trustee to redeem units "in kind" by distributing
Securities to the redeeming Unitholder. (See "Redemption".)
THE TRUST
The Trust is one of a series of similar but separate unit
investment trusts created under New York law by the Sponsor
pursuant to a Trust Indenture and Agreement* (the "Indenture")
dated as of the Initial Date of Deposit, between PaineWebber
Incorporated, as Sponsor and Investors Bank & Trust Company and
The First National Bank of Chicago, N.A., as Co-Trustees (the
"Trustee"). The objective of the Trust is capital appreciation through
an investment in equity stocks having, in Sponsor's opinion on the
Initial Date of Deposit, potential for capital appreciation.
On the Initial Date of Deposit, the Sponsor deposited with the
Trustee confirmations of contracts for the purchase of Stocks
together with an irrevocable letter or letters of credit of a commer-
8
<PAGE>
cial bank or banks in an amount at least equal to the purchase
price. The value of the Stocks was determined on the basis
described under "Valuation". In exchange for the deposit of the
contracts to purchase Securities, the Trustee delivered to the Spon-
sor a receipt for Units representing the entire ownership of the
Trust.
With the deposit on the Initial Date of Deposit, the Sponsor
established a proportionate relationship between the Securities in
the Trust (determined by reference to the number of shares of
Stock). 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 as closely as practicable the
original percentage relationship between the Securities deposited on
the Initial Date of Deposit and replicating any cash or cash equiv-
alents held by the Trust (net of expenses). The original proportion-
ate 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, to reflect a sale or maturity of Security or to
reflect a merger or reorganization. Stock dividends, if any, received
by the Trust will be sold by the Trustee and the proceeds therefrom
shall be distributed on the next Income Account Distribution Date.
On the Initial Date of Deposit each Unit represented the frac-
tional undivided interest in the Securities and net income of the
Trust set forth under "Essential Information Regarding the Trust".
However, if additional Units are issued by the Trust (through the
deposit of additional Securities for purposes of the sale of additional
Units), the aggregate value of Securities in the Trust will be
increased and the fractional undivided interest represented by each
Unit in the balance will be decreased. If any Units are redeemed,
the aggregate value of Securities in the Trust will be reduced, and
the fractional undivided interest represented by each remaining Unit
in the balance will be increased. Units will remain outstanding until
redeemed upon tender to the Trustee by any Unitholder (which may
include the Sponsor) or until the termination of the Trust. (See
"Termination of the Trust".)
______
*Reference is hereby made to said Trust Indenture and Agree-
ment and any statements contained herein are qualified in their
entirety by the provisions of said Trust Indenture and Agreement.
9
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RISK FACTORS AND SPECIAL CONSIDERATIONS
An investment in Units of the Trust should 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. Divi-
dends 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
Stock in the Trust may be expected to fluctuate over the life of the
Trust.
In addition, there are investment risks common to all equity
issues. The Stocks may appreciate or depreciate in value depending
upon a variety of factors, including the full range of economic and
market influences affecting corporate profitability, the financial con-
dition of issuers, changes in national or worldwide economic con-
ditions, and the prices of equity securities in general and the Stocks
in particular. Distributions of income, generally made by declaration
of dividends, is also dependent upon several factors, including
those discussed above in the preceding sentence.
Certain of the Stocks in the Trust are ADRs and Foreign Stocks,
which are subject to additional risks. (See "Schedule of Invest-
ments" herein.) ADRs evidence American Depositary Shares, which,
in turn, represent common stock of foreign issuers deposited with a
custodian in a depositary. ADRs and Foreign Stocks 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 estab-
10
<PAGE>
lishment of exchange controls, new or higher levels of taxation, or
other governmental actions which might adversely affect the pay-
ment or receipt of payment of dividends on such Foreign Stocks
and ADRs. ADRs and Foreign Stocks 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, re-
quirements and practices such as are applicable to domestic issu-
ers. These factors may have an impact on general market prices for
the stocks of such issuers.
In addition, Foreign Stocks generally are denominated in non-
U.S. currency, and pay dividends and trade in such foreign cur-
rency. The securities underlying the ADRs held in the Trust are also
generally denominated, and pay dividends, in foreign currency. An
investment in securities denominated and principally traded in for-
eign currencies involves investment risk substantially different than
an investment in securities that are denominated and principally
traded in U.S. dollars. This is due to currency exchange rate risk,
because the U.S. dollar value of the Foreign Stocks and 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 Foreign Stocks and the shares underlying the
ADRs are denominated. PaineWebber observes that 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 dif-
ferentials 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 predict-
ing 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.
The foreign exchange transactions may be conducted by the
Trustee with foreign exchange dealers acting as principals either on
a spot (i.e., cash) buying basis or on a forward foreign exchange
transaction on the date the Trust is due to receive the applicable
foreign currency, e.g., a dividend payment date for a Foreign Stock.
These forward foreign exchange transactions will generally be of as
short a duration as practicable and will generally settle on the date
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<PAGE>
of receipt of the applicable foreign currency involving specific
receivables or payables of the Trust accruing in connection with the
purchase and sale of its Foreign Stocks and income received on the
Foreign Stocks. These transactions are accomplished by contracting
to purchase or sell a specific currency at a future date and price set
at the time of the contract. The cost to the Trust of engaging in
these foreign currency transactions varies with such factors as the
currency involved, the length of the contract period and the market
conditions then prevailing. The relevant exchange rate used for
evaluations of Foreign Stocks will include the cost of buying or
selling, as the case may be, any forward foreign exchange contract
in the relevant security, if any are purchased or sold.
In general, foreign securities are not registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of the Act. Sales of non-exempt securities in United
States securities markets are subject to severe restrictions and may
not be practicable. Accordingly, sales of Foreign Stocks will gen-
erally be effected by the Trustee only in foreign securities markets.
Although the Sponsor does not believe that the Trust will encounter
obstacles in disposing of the Foreign Stocks, investors should
realize that the Foreign Stocks may be traded in foreign countries
where the securities markets are not as developed or efficient and
may not be as liquid as those in the United States. Even though the
Foreign Stocks are listed, the principal trading market for such
Foreign Stocks may be in the over-the-counter market. As a result,
the existence of a liquid trading market for the Foreign Stocks may
depend on whether dealers will make a market in the Foreign
Stocks. There can be no assurance that a market will be made for
any of the Foreign Stocks, that any market for the Foreign Stocks
will be maintained or that there will be sufficient liquidity of the
Foreign Stocks in any markets so made. The price at which the
Foreign Stocks may be sold to meet redemptions and hence the
value of the Trust may be adversely affected if trading markets for
the Foreign Stock are limited or absent.
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 per-
centage 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 currency
exchange rate 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
11 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, Unithol-
12
<PAGE>
ders 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 ex-
change (due to differentials between bid and offer prices for the
Securities) and brokerage fees, stamp taxes and other costs asso-
ciated with foreign trading incurred in purchasing Foreign 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 Stock to be deposited on
the Initial Date of Deposit or any other date fails, cash held or
available under a letter or letters of credit, attributable to such failed
contract may be reinvested in another stock or stocks having
characteristics sufficiently similar to the Stocks originally deposited
(in which case the original proportionate relationship shall be
adjusted) or, if not so reinvested, distributed to Unitholders of
record on the last day of the month in which the failure occurred.
The distribution will be made twenty days following such record
date and, in the event of such a distribution, the Sponsor will
refund to each Unitholder the portion of the sales charge attrib-
utable to such failed contract.
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 Trusts
assets fully in an attempt to take advantage of various market
conditions to improve the Trusts net asset value, but may dis-
pose of Securities only under limited circumstances. (See the
discussion below relating to disposition of stocks which may be
the subject of a tender offer, merger or reorganization and also
the discussion under the caption "Administration of the Trust-
-Portfolio Supervision".)
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 financ-
ing. 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
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<PAGE>
remains open. The Agreement sets forth criteria to be applied in the
event of a tender offer, merger or reorganization involving one or
more of the Stocks in the Trust.
FEDERAL INCOME TAXES
The Trust intends to qualify for and elect tax treatment as a
"regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). By qualifying for and electing
such treatment, the Trust will not be subject to federal income tax
on taxable income or net capital gains distributed to Unitholders
provided it distributes 90% or more of its taxable income (exclusive
of net capital gains). However, a 4% excise tax is imposed on
regulated investment companies that fail to distribute all but a de
minimis amount of their income and gain. The Trust intends to
distribute all of its income, including capital gains, annually.
In any taxable year, the distributions of any ordinary income
(such as dividends) and any net short-term capital gain will be
taxable as ordinary income to Unitholders. A distribution paid
shortly after a purchase of shares may be taxable even though, in
effect, it may represent a return of capital to Unitholders. A dividend
paid by the Trust in January will be considered for federal income
tax purposes to have been paid by the Trust and received by the
Unitholders on the preceding December 31, if the dividend was
declared in the preceding October, November or December to
Unitholders of record in any one of those months. Distributions
which are taxable as ordinary income to Unitholders will not
constitute dividends for purposes of the dividends-received deduc-
tion for corporations except, and only to the extent of, a specific
designation by the Trust.
The gross income of the Trust typically will include dividends
and gains on sales or other dispositions of portfolio securities. In
order to maintain its qualification as a "regulated investment com-
pany", the Trust must in the course of a taxable year derive at least
90% of its gross income from dividends, interest, gains on sales or
other dispositions of Securities and certain other sources (referred
to as "eligible sources"), and must derive less than 30% of its
gross income from the sale or other disposition of Stock, Securities
and certain other assets held for less than three months. If during a
taxable year it appears that less than 90% of the Trust income will
be derived from eligible sources, the Sponsor may direct the
Trustee to sell Securities which, upon the realization of sufficient
aggregate gain, will enable the Trust to maintain its qualification as
a regulated investment company.
Distributions by the Trust that are designated by it as long-term
capital gain distributions will be taxable to Unitholders as long-term
capital gains, regardless of the length of time the Units have been
held by a Unitholder. Distributions of proceeds derived from the
sale or redemption of Securities in the Trust portfolio (exclusive of
net capital gain) will not be taxable to Unitholders to the extent that
they represent a return of capital; such distributions will, however,
reduce a Unitholder's basis in his Units, and to the extent they
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<PAGE>
exceed the basis of his Units will be taxed as capital gain. Any loss
realized by a Unitholder on the sale or exchange of Units that are
held by him for not more than six months will be treated as a
long-term capital loss if a long-term capital gain distribution had
been paid to such Unitholder with respect to such Units.
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 Invest-
ment 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. Public Offering Price. The public offering
price per Unit is based on the aggregate market value of the Stocks,
including the U.S. dollar value of the Foreign Stocks based on the
applicable currency exchange rate calculated at the Evaluation Time,
next determined after the receipt of a purchase order, divided by the
number of Units outstanding plus the sales charge set forth below.
The public offering price per Unit is computed by dividing the Trust
Fund Evaluation, next determined after receipt of a purchase order
by the number of Units outstanding plus the sales charge. (See
"Valuation".) The Public Offering Price on the Initial Date of Deposit
or on any subsequent date will vary due to fluctuations in the value
of the Stocks, the currency exchange rates and costs associated
with foreign trading.
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 scale in sales effort and sales related expenses relating to
volume purchases. The sales charge applicable to volume pur-
chasers of Units is reduced on a graduated scale for sales to any
person of at least $50,000 or 5,000 Units, applied on whichever
basis is more favorable to the purchaser.
15
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Initial Public Offering Period and Secondary Market Thereafter
Percent of
Public Percent of
Aggregate Dollar Offering Net Amount
Value of Units* Price Invested
Less than $50,000 3.75% 3.90%
$50,000 to 99,999 3.50 3.63
$100,000 to 249,999 3.25 3.36
$250,000 to 499,999 2.75 2.83
$500,000 to 749,999 2.25 2.30
$750,000 to 999,999 2.00 2.04
$1,000,000 to 1,999,999 1.50 1.52
$2,000,000 or more 1.00 1.01
* The sales charge applicable to volume purchasers according
to the table above will be applied either on a dollar or Unit basis,
depending upon which basis provides a more favorable purchase
price to the purchaser.
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 100 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 Cor-
porate Bond Trust (the "Corporate Series"); PaineWebber Path-
finder'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
16
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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 Ac-
counts. 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 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 Unithol-
der. Exchanges will be effected in whole Units only. Any excess
proceeds from Unitholders' Units being surrendered will be re-
turned. 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 generally will constitute a "taxable event" under the Code,
i.e., a Unitholder will recognize a tax gain or loss at the time of
exchange. 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 with notice to Unitholders. In the
event the Exchange Option is not available to a Unitholder at the
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<PAGE>
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 documents.
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 trans-
actions 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 others 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, 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 ex-
ercise 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
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the units of the Conversion Trust. Any dealer other than PaineWeb-
ber must certify that the purchase of the 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 with notice,
including the right to increase the reduced sales charge applicable
to this option (but not in excess of $5 more per Unit, 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 herein.
Distribution of Units. The minimum purchase in the initial
public offering is 100 Units, except that the minimum purchase is
25 Units for purchases made in connection with Individual Retire-
ment Accounts or other tax-deferred retirement plans. Only whole
Units may be purchased.
The Sponsor is the sole underwriter of the Units. Sales may,
however, be made to dealers who are members of the National
Association of Securities Dealers, Inc. ("NASD") at prices which
include a concession of $.30 per Unit at the highest sales charge,
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 conces-
sion 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 of the 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 un-
desirable to continue to hold these Units in its inventory. Factors
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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.
A Unitholder who wishes to dispose of his Units should
inquire of his bank or broker as to current market prices in order
to determine if over-the-counter prices exist in excess of the
redemption price and the repurchase price (see "Redemption").
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 Stocks to the Sponsor and
the price at which it deposits the Stocks in the Trust in exchange
for Units, which is the value of the Stocks, determined by the
Trustee as described under "Valuation". The cost of Stock to the
Sponsor includes the amount paid by the Sponsor for brokerage
commissions. These amounts are not an expense of the Trust.
Cash, if any, received from Unitholders prior to the settlement
date for the purchase of Units or prior to the payment for Securities
upon their delivery may be used in the Sponsor's business subject
to the limitations of Rule 15c3-3 under the Securities and Exchange
Act of 1934 and may be of benefit to the Sponsor.
In selling any Units in the initial public offering after the Initial
Date of Deposit, the Sponsor may realize profits or sustain losses
resulting from fluctuations in the net asset value of outstanding
Units during the 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 Trustee. If the 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. Un-
itholders 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 ten-
dered 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
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the Trustee. The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number of Units outstand-
ing. (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
the Trustee for redemption no later than the close of business on
the second business day following such presentation and Unithol-
ders 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 no later than 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 in-
come received shall be withdrawn from the Income Account, and, to
the extent such balance is insufficient and for remaining amounts,
from the Capital Account. The Trustee is empowered, to the extent
necessary, to sell Securities to meet redemptions. The Trustee will
sell Securities in such manner as is directed by the Sponsor. In the
event no such direction is given, Stock will be sold pro rata, to the
extent possible, and if not possible Stocks having the greatest
amount of capital appreciation will be sold first. (See "Administra-
tion 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 Securi-
ties to the redeeming Unitholder. When Stocks are so distributed, a
proportionate amount of each 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 Stock 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.
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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 discre-
tion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund
Evaluation") per Unit at the Evaluation Time set forth under "Sum-
mary of Essential Information Regarding the Trust" (1) on each
business day as long as the Sponsor is maintaining a bid in the
secondary market, (2) on the business day on which any Unit is
tendered for redemption, (3) on any other day desired by the
Sponsor or the Trustee and (4) upon termination, by adding (a) the
aggregate value of the Securities and other assets determined by
the Trustee as set forth below and (b) cash on hand in the Trust
and dividends receivable on Stock trading ex-dividend (other than
any cash held in any reserve account established under the Inden-
ture) and deducting therefrom the sum of (x) taxes or other
governmental charges against the Trust not previously deducted, (y)
accrued fees and expenses of the Trustee and the Sponsor (includ-
ing legal and auditing expenses) and other Trust expenses. 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, Wash-
ington's Birthday, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day and other days
that the New York Stock Exchange is closed.
The value of Stocks shall be determined by the Trustee in good
faith in the following manner: (1) if the domestic Stocks are listed
on one or more national securities exchanges or on the National
Market System maintained by the National Association of Securities
Dealers Automated Quotations System or if the Foreign Stocks are
listed on a similar securities exchange or system, 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 in the case of the domestic
Stocks if such Stocks are listed thereon), (2) if there is no such
appropriate closing sales price on such exchange or system, at the
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mean between the closing bid and asked prices on such exchange
or system (unless the Trustee deems such price inappropriate as a
basis for evaluation), (3) if the Stocks 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 in 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 Stock in
good faith on the bid side of the market or (d) by any combination
thereof. The evaluation of Foreign Stocks will be based on the U.S.
dollar equivalent calculated at the relevant exchange rate for such
Stocks. The relevant exchange rate used for such evaluations will
include the cost of any forward foreign exchange contract in the
relevant currency, if any, purchased by the Trustee pursuant to the
terms of the agreement.
The tender of a Stock pursuant to a tender offer will not affect
the method of valuing Stock.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION
VALUE
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
prices of the Securities are 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 Indenture and
this Prospectus, the initial fees of the Trustee, advertising expenses
and expenses incurred in establishing the Trust, including legal and
auditing fees, are paid by the Sponsor and not by the Trust. The
Sponsor will receive no fee from the Trust for its services as
Sponsor.
The Sponsor will receive a fee, which is earned for portfolio
supervisory services, and which is based upon the largest number
of Units outstanding during the calendar year. The Sponsor's fee,
which is not to exceed $.0025 per Unit per calendar year, 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 Equity Trust in any calendar year exceed the ag-
gregate cost to it of supplying such services in such year.
For its services as Trustee and Evaluator, the Trustee will be
paid in monthly installments, annually $.0170 per Unit, based on
the largest number of Units outstanding during the previous month.
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In addition, the regular and recurring expenses of the Trust are
estimated to be $.0125 per Unit annually which include, but are not
limited to certain mailing, printing, and audit expenses. Expenses in
excess of this estimate will be borne by the Trust. The Trustee
could also benefit to the extent that it may hold funds in non-
interest bearing accounts created by the Indenture.
The Sponsor's fee and Trustee's fee may be increased without
approval of the Unitholders by an amount not exceeding a propor-
tionate increase in the category entitled "All Services Less Rent" in
the Consumer Price Index published by the United States Depart-
ment 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; (7) expenses
incurred in holding and trading Foreign Stocks outside the United
States; and (8) expenses incurred upon termination of the Trust. In
addition, to the extent then permitted by the Securities and Ex-
change Commission, the Trust may incur expenses of maintaining
registration or qualification of the Trust or the Units under Federal
or state securities laws so long as the Sponsor is maintaining a
secondary market (including, but not limited to, legal, auditing and
printing expenses).
The accounts of the Trust shall be audited not less than
annually by independent public accountants selected by the Spon-
sor. 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 annual audit expense which exceeds $.0050 per Unit.
Unitholders covered by the audit during the year may receive a
copy of the audited financials upon request.
The fees and expenses set forth above are payable out of the
Trust and when unpaid will be secured by a lien on the Trust.
Based upon the last dividend paid prior to the Initial Date of
Deposit, dividends on the Stocks are expected to be sufficient to
pay the entire amount of 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 au-
thorized to sell Securities to meet the expenses of the Trust.
Securities will be selected in the same manner as is set forth under
"Redemption".
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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 re-
quest, 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 in Boston 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, mu-
tilated, stolen or lost certificates, the Unitholder must furnish indem-
nity satisfactory to the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be surrendered to the
Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute net dividends and interest, if any,
from the Income Account on the quarterly Distribution Dates to
Unitholders of record on the preceding Record Date. Distributions
from the Capital Account will be made on annual Distribution Dates
to Unitholders of record on the preceding Record Date. Distributions
of less than $.05 per Unit need not be made from the Capital
Account on any Distribution Date. See "Essential Information".
Whenever required for regulatory or tax purposes, the Trustee will
make special distributions of any dividends or capital on special
Distribution Dates to Unitholders of record on special Record Dates
declared by the Trustee.
Upon termination of the Trust, each Unitholder of record on
such date will 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 and interest received on Securities,
proceeds from the sale of Securities or other moneys received by
the Trustee on behalf of the Trust may 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
dividends, if any, and interest income, on Securities in the Trust. All
other receipts (i.e., return of principal and gains) are credited on its
books to a Capital Account. 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
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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 any distribution 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 sixty (60) days after the end of each calendar year, the
Trustee will furnish each person who was a Unitholder at any time
during the calendar year an annual report containing the following
information, expressed in reasonable detail both as a dollar amount
and as a dollar amount per Unit: (1) a summary of transactions for
such year in the Income and Capital Accounts and any Reserves;
(2) any Securities sold during the year and the Securities held at
the end of such year; (3) the Trust Fund Evaluation per Unit, based
upon a computation thereof on the 31st day of December of such
year (or the last business day prior thereto); and (4) amounts
distributed to Unitholders during such year.
Portfolio Supervision. The portfolio of the Trust is not "man-
aged" 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 a materially adverse action or
proceeding at law or in equity seeking to restrain or enjoin the
declaration or payment of dividends on any such Securities or the
existence of any other materially adverse legal question or impedi-
ment affecting such Securities or the declaration or payment of
dividends 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 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 outstand-
ing securities of the issuer or the guarantor of such Securities
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which might materially and adversely, either immediately or contin-
gently, affect the declaration or payment of dividends on the
Securities;
(5) upon the decline in price or the occurrence of any materi-
ally adverse 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 (as further described under
"Risk Factors and Special Considerations" herein);
(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.
Securities may also be sold in the manner described under
"The Trust". The Trustee may dispose of Securities where neces-
sary to pay Trust expenses or to satisfy redemption requests as
directed by the Sponsor, and the proceeds of such sale may not be
reinvested.
Cash received upon the sale of Stock (including sales to meet
redemption requests) and dividends received will not be reinvested
and will be held in a non-interest bearing account until distribution
on the next Distribution Date to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Spon-
sor 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 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 on the
Mandatory Termination Date. If the value of the Trust as shown by
any evaluation is less than fifty per cent (50%) of the market value
of the Stocks upon completion of the deposit of Stocks, 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
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determines termination to be in the best interest of the Unitholders.
In no event will the Trust continue beyond the Mandatory Termina-
tion Date.
Unless advised to the contrary by the Sponsor, approximately
20 days prior to the termination of the Trust the Trustee will begin
to sell the Securities held 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 gov-
ernmental charges that may be payable by the Trust, distribute to
each Unitholder, after due notice of such termination, such Unithol-
der's pro rata share in the Income and Capital Accounts. Moneys
held upon the sale of Securities may be held in non-interest bearing
accounts created by the Indenture until distributed and will be of
benefit to the Trustee. The sale of Securities in the Trust in the
period prior to 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 or-
ganized 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 com-
panies in its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to
the Trustee, the Trust or to the Unitholders for taking any action or
for refraining from taking any action made in good faith or for
errors in judgment, but will be liable only for its own willful
misfeasance, bad faith, gross negligence or willful disregard of its
duties. The Sponsor will not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Securities
in the Trust.
The Indenture is binding upon any successor to the business
of the Sponsor. The Sponsor may transfer all or substantially all of
its assets to a corporation or partnership which carries on the
business of the Sponsor and duly assumes all the obligations of the
Sponsor under the Indenture. In such event the Sponsor shall be
relieved of all further liability under the Indenture.
If the Sponsor fails to undertake any of its duties under the
Indenture, becomes incapable of acting, becomes bankrupt, or has
its affairs taken over by public authorities, the Trustee may either
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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 Com-
pany, a Massachusetts trust company with its principal office at
One Lincoln Plaza, 89 South Street, Boston, Massachusetts 02111,
toll-free number 800-356-2754 (which is subject to supervision by
the Massachusetts Commissioner of Banks, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal
Reserve System).
The Indenture provides that the Trustee will not be liable for
any action taken in good faith in reliance on properly executed
documents or the disposition of moneys, Securities or Certificates
or in respect of any valuation which it is required to make, except
by reason of its own gross negligence, bad faith or willful mis-
conduct, nor will the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee
of any Securities in the Trust. In the event of the failure of the
Sponsor to act, the Trustee may act and will not be liable for any
such action taken by it in good faith. The Trustee will not be
personally liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee or upon or in respect of the Trust
which the Trustee may be required to pay under any present or
future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee. The
Trustee will be indemnified and held harmless against any loss or
liability accruing to it without gross negligence, bad faith or willful
misconduct on its part, arising out of or in connection with its
acceptance or administration of the Trust, including the costs and
expenses (including counsel fees) of defending itself against any
claim of liability.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule of Invest-
ments audited by Ernst & Young LLP, independent auditors, have
been included in reliance on 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, 666 Fifth Avenue, New York, New
York, as counsel for the Sponsor.
29
<PAGE>
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of October 31, 1995
<CAPTION>
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank and Trust Company and
The First National Bank of Chicago
Date of Deposit: November 10, 1994
<S> <C>
Aggregate Market Value of Securities in Trust: $8,505,828
Number of Units: 730,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/730,000th
Calculation of Public Offering Price Per Unit:
Net Assets in Trust $8,506,446
Divided by 730,000 Units $11.6527
Plus Sales Charge of 3.75% of Public Offering Price
(3.90% of net amount invested per Unit) $.4540
Public Offering Price per Unit $12.1067
Redemption Value Per Unit: $11.6527
Excess of Public Offering Price over Redemption Value per Unit: $.4540
Sponsors Repurchase Price Per Unit: $11.6527
Excess of Public Offering price over Sponsors Repurchase price per $.4540
Unit:
Evaluation Time: 4 P.M. New York Time
Distribution Dates*: January 20, April 20, July 20,
October 20
Record Dates: March 31, June 30, September 30,
December 31
Mandatory Termination Date: January 20, 2000
Discretionary Liquidation Amount: 50% of the value of the
Securities upon completion
of the deposit of the Securities
Estimated Annual Expenses of the Trust** $.0370 per Unit
*See "Distributions".
**See "Expenses of the Trust". Estimated dividends from the Stocks, based upon last dividends actually paid, are
expected by the Sponsor to be sufficient to pay estimated expenses of the Trust.
</TABLE>
<PAGE>
<TABLE>
REPORT OF INDEPENDENT AUDITORS
<C> <S>
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES SIXTEEN:
We have audited the accompanying statement of financial condition of The PaineWebber Equity Trust, Growth
Stock Series Sixteen, including the schedule of investments, as of October 31, 1995 and the related statements of
operations and changes in net assets for the period from November 10, 1994 (date of deposit) to October 31, 1995.
These financial statements are the responsibility of the Co-Trustees. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of the securities owned as of October
31, 1995, as shown in the statement of financial condition and schedule of investments, by correspondence with the
Co-Trustees. An audit also includes assessing the accounting principles used and significant estimates made by the
Co-Trustees, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of The PaineWebber Equity Trust, Growth Stock Series Sixteen at October 31, 1995 and the results of its
operations and changes in its net assets for the period from November 10, 1994 to October 31, 1995, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
January 19, 1996
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
October 31, 1995
<CAPTION>
ASSETS
<S> <C>
Common Stock - at market value (Cost $7,020,340)
(note 1 to schedule of investments) $8,505,828
Accounts receivable securities sold 65,218
Dividends receivable 2,226
Total Assets $8,573,272
LIABILITIES AND NET ASSETS
Trustee advance payable $66,718
Accrued expenses payable 108
Total Liabilities 66,826
Net Assets (730,000 units of fractional undivided interest outstanding):
Cost to investors (note B) 7,293,860
Less sales charge (note C) (273,520)
Net amount applicable to investors 7,020,340
Net unrealized market appreciation (note D) 1,485,488
Net amount applicable to unitholders 8,505,828
Overdistributed investment income-net (1,451)
Undistributed proceeds from securities sold 2,069
Net assets 8,506,446
Total liabilities and net assets $8,573,272
Net asset value per Unit $11.65
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF OPERATIONS
<CAPTION>
Period from
November 10,
1994 (date of
deposit ) to
October 31,
1995
<S> <C>
Operations:
Dividend income $37,232
Total investment income 37,232
Less expenses:
Trustee's fees, expenses and evaluator's expense 19,179
Total expenses 19,179
Investment income-net 18,053
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 27,699
Net change in unrealized market appreciation 1,485,488
Net realized and unrealized gain on investments 1,513,187
Net increase in net assets resulting from operations $1,531,240
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period from
November 10,
1994 (date of
deposit) to
October 31,
1995
<S> <C>
Operations:
Investment income-net $18,053
Net realized gain on securities transactions 27,699
Net change in unrealized market appreciation 1,485,488
Net increase in net assets resulting from operations 1,531,240
Less: Distributions to Unitholders (Note E)
Principal 42,349
Investment income 22,053
Total Distributions 64,402
Net Assets:
Increase in net assets 1,466,838
Supplemental Deposits 7,039,608
End of Period $8,506,446
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
(A) The financial statements of the Trust are prepared on the accrual basis of accounting. Security transactions
are accounted for on the date the securities are purchased or sold.
(B) Cost to investors represents the initial public offering price as of the date of deposit, and the value of units
through supplemental deposits computed on the basis set forth under "Public Offering Price of Units".
(C) Sales charge in the Initial Public Offering period was 3.75% (3.90% of the net amount invested). See "Public
Offering of Units - Sales Charge and Volume Discount", for information relating to the secondary market.
(D) At October 31, 1995, the gross unrealized market appreciation was $1,824,596 and the gross unrealized
market depreciation was $339,108. The net unrealized market appreciation was $1,485,488.
(E) Regular distributions of net income and principal receipts not used for redemption of units are made
quarterly. Special distributions may be made as the Sponsor and Trustee deem necessary to comply with income tax
regulations.
(F) The following units were redeemed with proceeds of securities sold as follows:
<CAPTION>
Period from
November 10,
1994
(date of
deposit) to
October 31,
1995
<S> <C>
Total number of units redeemed ---
Redemption amount ---
The following units were sold through supplemental
deposits:
Number of units sold 630,000
Value of amount, net of sales charge $6,074,588
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of October 31, 1995
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value (1)
<S> <C> <C>
Advertising: (2%)
Omnicom Group, Inc. 2,223 $141,994
Banking/Finance: (2%)
Barnett Banks, Inc. 2,799 154,645
Biotechnology: (9%)
Amgen, Inc.* 4,161 199,728
Biogen, Inc.* 3,015 184,669
Chiron Corp.* 1,629 148,239
Genzyme Corp.-General Division*^ 3,877 225,835
Genzyme Corp.-Tissue Repair*^ 526 9,402
Building Materials: (1%)
Ply-Gem Industries, Inc. 6,108 105,363
Cellular/Paging Communication:
(5%)
Grupo Iusacell S.A.*~ 3,877 46,039
Paging Network, Inc.* 7,321 168,383
Rogers Cantel Mobile 3,733 77,460
Communications*
Vodafone Group plc~ 3,445 140,814
Construction: (1%)
Empresas ICA Sociedad
Controladora
S.A. de C.V. ~ 3,733 35,464
Computer Hardware/Software: (6%)
Compaq Computer Corp.* 2,942 164,017
Microsoft Corp.* 1,865 186,500
Oracle Corp.* 3,987 173,933
Consumer/Household Products:
(4%)
Gillette Company 3,206 155,090
Procter & Gamble Company 1,865 151,065
Consumer Finance: (3%)
World Acceptance Corp.* 16,381 212,953
Electrical: (2%)
Emerson Electric Company 1,865 132,881
Electronics/Semi-Conductors: (10%)
Hewlett-Packard Company 1,973 182,749
Intel Corp. 3,873 270,626
Littlefuse, Inc.* 4,594 149,305
Motorola, Inc. 2,008 131,775
Nokia Corp.~ 2,720 151,640
Entertainment: (5%)
Walt Disney Company 2,726 157,086
Time Warner, Inc. 3,374 123,151
Viacom, Inc.* 2,942 146,365
Food/Beverage: (3%)
<PAGE>
The Coca-Cola Company 2,295 164,953
Wrigley (WM) Jr. Company 2,512 116,808
Food Retailer: (5%)
General Nutrition Companies, 8,333 207,283
Inc.*
Starbucks Corp.* 4,167 163,555
Whole Foods Market, Inc.* 7,186 88,029
Healthcare/Hospitals: (3%)
Columbia/HCA Healthcare Corp. 2,942 144,526
Integrated Health Services, Inc. 3,087 70,615
Investment Conglomerate: (1%)
Swire Pacific Ltd. (2) 16,000 120,022
(Continued)
</TABLE>
<PAGE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of October 31, 1995
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value (1)
<S> <C> <C>
Machinery: (2%)
AlliedSignal, Inc. 3,445 $146,413
Medical Delivery Services: (9%)
Apria Healthcare Group, Inc.*^ 8,745 189,111
Boston Scientific Corp.* 7,259 305,785
Medtronic, Inc. 4,589 265,015
Motor Vehicle Parts: (4%)
Special Devices, Inc.* 6,324 102,765
Superior Industries International, 3,923 110,334
Inc.
TRW, Inc. 1,721 113,156
Packaging: (2%)
Buenos Aires Embotelladora~ 2,871 65,674
Crown Cork & Seal Company, 3,015 105,148
Inc.*
Power Utility: (1%)
China Light & Power Company 23,500 125,222
Ltd. (2)
Publishing: (2%)
A.H. Belo Corp. 4,305 149,061
Radio Network: (2%)
Grupo Radio Centro S.A. de 7,690 54,791
C.V.~
Heftel Broadcasting Corp.* 7,690 140,342
Real Estate Development: (1%)
Sun Hung Kai Properties Ltd. (2) 16,000 127,784
Specialty Retailer: (5%)
Barnes & Noble* 4,167 152,095
CUC International, Inc.* 5,815 201,327
Home Shopping Network, Inc.* 10,278 83,509
Telecommunications: (1%)
Telecom Argentina S.A. Cl.B (2) 18,142 69,854
Telefonos de Mexico S.A.~ 2,080 57,200
Television/Cable Networks: (5%)
Bell Cablemedia plc*~ 4,739 70,493
Capital Cities/ABC, Inc. 1,433 169,990
United Video Satellite Group, 5,819 149,839
Inc.*
Water Treatment: (4%)
Ionics, Inc.* 3,987 162,470
US Filter Corp.* 7,978 185,488
TOTAL INVESTMENTS $8,505,828
<PAGE>
(1)Valuation of Securities was made by the Co-Trustees as described in "Valuation".
(2)Foreign Stock.
*Non-income producing.
~American Depositary Receipts.
^Of the original 59 stocks in the portfolio, Homedco Group and
Genzyme Corp. have restructured. Homedco Group merged to form
Apria Healthcare and Genzyme spun off its Tissue Repair Division.
</TABLE>
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.2 Opinion of Counsel as to legality of securities
being registered.
EX-27 Financial Data Schedule
EX-99.C1 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PaineWebber Equity Trust, Growth Stock Series 16
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned thereunto duly authorized,
and its seal to be hereunto affixed and attested, all in the City of
New York, and the State of New York on the 7th day of February,
1996.
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 16
(Registrant)
By: PaineWebber Incorporated
(Depositor)
/s/ ROBERT E. HOLLEY
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of PaineWebber
Incorporated, the Depositor, by the following persons in the
following capacities and in the City of New York, and State of New
York, on this 7th day of February, 1996.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director and Member of the Executive
Committee *
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement for File No. 33-19786.
<PAGE>
<PAGE>
February 7, 1996
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber Equity
Trust, Growth Stock Series 16 (hereinafter referred to as the
"Trust"). The Depositor seeks by means of Post-Effective
Amendment No. 1 to register for reoffering 120,900 Units acquired
by the Depositor in the secondary market (hereinafter referred to as
the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 33-54569) to be filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "1933 Act") proposed to be filed on or about the
date hereof (the "Amendment");
(f) The Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as
amended (collectively, the "1940 Act") on Form N-8A, as
amended;
(g) The registration of the Trust filed with the Commission under the
1940 Act on Form N-8B-2 (File No. 811-3722), as amended;
(h) The prospectus included in the Amendment (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of
July 10, 1990, as amended, among the Depositor, and
Investors Bank & Trust Company and The First National Bank of
Chicago (the "Trustee"), as successor Co-Trustee, (the "Standard
Terms");
(j) The Trust Indenture dated as of the Date of Deposit, among the
Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
<PAGE>
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
Depositor in paragraph (i) below with respect to Delaware law. As
you know we are not licensed to practice law in the State of
Delaware, and our opinion in paragraph (i) and (iii) as to Delaware
law is based solely on review of the official statutes of the State of
Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> EQUITY GROWTH STOCK
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-10-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7,020,340
<INVESTMENTS-AT-VALUE> 8,505,828
<RECEIVABLES> 67,444
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,573,272
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,826
<TOTAL-LIABILITIES> 66,826
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 730,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,451)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,485,488
<NET-ASSETS> 8,506,446
<DIVIDEND-INCOME> 37,232
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 19,179
<NET-INVESTMENT-INCOME> 18,053
<REALIZED-GAINS-CURRENT> 27,699
<APPREC-INCREASE-CURRENT> 1,485,488
<NET-CHANGE-FROM-OPS> 1,531,240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 64,402
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,466,838
<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> 12
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated January 19,
1996, in the Registration Statement and related Prospectus of the
PaineWebber Equity Trust, Growth Stock Series 16.
/s/ ERNST & YOUNG LLP
New York, New York
February 7, 1996
