File No. 33-54569
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 2
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 11, 1997) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
330,377 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$4,553,090.63**
* Estimated solely for the purpose of calculating the registration fee, at
$13.78 per unit.
G. Amount of filing fee, computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
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 1995 is 306,434.
There
have been no previous filings of post-effective amendments during the
current fiscal year 306,434 redeemed or repurchased units are being
used
to reduce the filing fee for this amendment.
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.
(c) Rights of Holders as to ) Rights of Unit
Withdrawal or ) holders
Redemption
) Redemption;
) Public Offering of Units-
) Secondary Market for Units
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units Exchange Option
(e) Rights of Trust issues )
periodic payment plan ) *
certificates )
(f) Voting rights as to ) Rights of Unit
Securi-
ties, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1)Assets of Trust ) Amendment of the
Indenture
(2)Terms and Conditions ) Administration of the
Trust-Portfolio Supervision
of Trust's Securities ) Investments
(3)Provisions of Trust ) Amendment of the
Indenture
(4)Identity of Depositor and ) Administration of the Trust
Trustee
(h) Consent of Security )
Holders
required to change )
(1)Composition of assets ) Amendment of the
Indenture
of Trust )
(2)Terms and conditions ) Amendment of the
Indenture
of Trust's Securities )
(3)Provisions of Indenture ) Amendment of the
Indenture
(4)Identity of Depositor ) Administration of the Trust
and Trustee )
11. Type of Securities ) The Trust
Comprising Units
12. Type of securities ) *
comprising
periodic payment )
certificates
13. (a)Load, fees, expenses, etc. ) Public Offering of
) Units; Expenses of the
) Trust
* Not applicable, answer
negative or not required.
(b)Certain information ) *
regarding periodic payment ) *
certificates )
(c)Certain percentages ) *
(d)Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e)Certain profits receivable ) Public Offering of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons ) Market for Units
(f)Ratio of annual charges to ) *
income )
14. Issuance of Trust's ) The Trust
securities
) Public Offering of Units
15. Receipt and handling of ) *
payments from )
purchasers
16. Acquisition and ) The Trust; Administration
disposition of
underlying securities ) of the Trust; Termination
) of Trust
17. Withdrawal or ) Redemption
redemption
) Public offering of Units
) -Secondary Market for
) -Exchange Option
) -Conversion Option
18. (a)Receipt and disposition of ) Distributions of
income ) Unitholders
(b)Reinvestment of ) *
distributions
(c)Reserves or special fund ) Distributions to
) Unitholders; Expenses of
Trust
(d)Schedule of distribution ) *
19. Records, accounts and ) Distributions
report
) Administration
) of the Trust
20. Certain miscellaneous ) Administration of the Trust
pro-
visions of Trust )
agreement
21. Loans to security ) *
holders
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material ) *
provisions of
trust agreement )
* Not applicable, answer
negative or not required.
III. Organization
Personnel and Affiliated
Persons of Depositor
25. Organization of ) Sponsor
Depositor
26. Fees received by ) Public Offering of
Depositor
) Units Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of ) *
Depositor
30. Persons controlling ) Sponsor
Depositor
31. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
32. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
33. Remuneration of ) *
employees of
Depositor for certain )
services
rendered to Trust )
34. Remuneration of other ) *
persons
for certain services )
rendered
to Trust )
IV. Distribution and Redemption of Securities
35. Distribution of Trust's ) Public Offering of Units
securities by states )
36. Suspension of sales of ) *
Trust's
securities )
37. Revocation of authority ) *
to
distribute )
38. (a)Method of distribution ) Public Offering of Units
(b)Underwriting agreements )
(c)Selling agreements ) Sponsor
* Not applicable, answer
negative or not required.
39. (a)Organization of principal ) Sponsor
underwriter )
(b)N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
41. (a)Business of principal ) Sponsor
underwriter )
(b)Branch officers of ) *
principal underwriter )
(c)Salesman of principal ) *
underwriter )
42. Ownership of Trust's ) *
securities
by certain persons )
43. Certain brokerage ) *
commissions
received by principal )
underwriter )
44. (a)Method of valuation ) Public Offering Price of
) Units
(b)Schedule as to offering ) *
price )
(c)Variation in Offering ) Public Offering Price of
price to certain persons ) Units
45. Suspension of ) *
redemption rights
46. (a)Redemption valuation ) Public Offering of Units
) -Secondary Market for Units
) -Valuation
(b)Schedule as to redemption )
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position ) Public Offering of Units
in
underlying securities ) Redemption
) Trustee
) Evaluation of the Trust
48. Organization and )
regulation of
Trustee ) Trustee
49. Fees and expenses of ) Expenses of the Trust
Trustee
50. Trustee's lien ) Expenses of the Trust
* Not applicable, answer
negative or not required.
VI. Information
concerning Insurance of
Holders of Securities
51. (a)Name and address of ) *
Insurance Company )
(b)Type of policies ) *
(c)Type of risks insured and ) *
excluded )
(d)Coverage of policies ) *
(e)Beneficiaries of policies ) *
(f)Terms and manner of ) *
cancellation )
(g)Method of determining ) *
premiums )
(h)Amount of aggregate ) *
premiums paid )
(i)Who receives any part of ) *
premiums )
(j)Other material provisions ) *
of the Trust relating to )
insurance )
VII. Policy of Registrant
52. (a)Method of selecting and ) The Trust;
eliminating securities ) Administration of the Trust
from the Trust )
(b)Elimination of securities ) *
from the Trust )
(c)Policy of Trust regarding ) Portfolio Supervision
) Administration of Trust
substitution and
elimination of securities )
(d)Description of any funda- ) Administration of
mental policy of the Trust ) Trust
) Portfolio Supervision
53. (a)Taxable status of the ) Tax status of the Trust
Trust )
(b)Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
* Not applicable, answer
negative or not required.
VIII. Financial and
Statistical Information
54. Information regarding ) *
the
Trust's past ten fiscal )
years
55. Certain information ) *
regarding
periodic payment plan )
certificates )
56. Certain information ) *
regarding
periodic payment plan )
certificates )
57. Certain information ) *
regarding
periodic payment plan )
certificates )
58. Certain information ) *
regarding
periodic payment plan )
certi-
ficates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to ) Condition
Form S-6)
* Not applicable, answer
negative or not required.
PaineWebber Equity Trust
Growth Stock Series Sixteen
(The New Growth Stocks)
558,000 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
DISAPPROVED BY THE SECURITIES AND COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO CONTRARY IS A CRIMINAL OFFENSE.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST
HAS BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE
ISSUED AND OUTSTANDING UNITS WHICH HAVE BEEN
ACQUIRED BY THE SPONSOR EITHER BY PURCHASE FROM
THE TRUSTEE OF UNITS TENDERED FOR REDEMPTION OR
IN THE SECONDARY MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for
future reference.
Prospectus dated February 11, 1997
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
alternatively as either the "Stocks" or the
"Securities").
The Trust will seek to achieve its objective of
capital appreciation 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.*
PaineWebber's Strategy Group, in conjunction with
PaineWebber's 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
developments 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 Factors
and Special Considerations" for a discussion of
these risks. The Trust's 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 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's economists forecast that bond
yields, near their peak, should 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.
PaineWebber asserts that the major challenge for
investors seeking to return to investments in
growth stock 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.
Below 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
prospects 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 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.
________________
* The Standard & Poor's 500 Index (the "S&P
500") is an unmanaged index of 500 stocks
calculated under the auspices of Standard &
Poor's, which, in PaineWebber's view, constitutes
a broadly diversified, representative segment of
the market of publicly traded stocks in the
United States.
In addition, PaineWebber sees a special
demographic opportunity 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 companies 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 consolidation 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
healthcare 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 products 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 recent past 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 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, be-
cause of characteristics found in many of these
emerging markets, 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 expects, 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 systems,
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 infrastructure 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 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."
Approximate Percentage of
Primary Industry Source Aggregate Market Value of the Trust
Advertising 2.31%
Banking/Finance 2.23
Biotechnology 8.43
Building Materials .78
Cellular/Paging Communication 3.92
Construction .51
Computer Hardware/Software 7.46
Consumer/Household Products 4.43
Consumer Finance 1.13
Electrical 1.74
Electronic/Semi-Conductor 10.53
Entertainment 5.18
Food/Beverage 4.00
Food Retailer 6.34
Healthcare/Hospitals 2.44
Investment Conglomerate 1.45
Machinery 2.36
Medical Delivery Services; 8.96
Motor Vehicle Parts 3.45
Packaging 1.68
Power Utility 1.14
Publishing 1.76
Radio Network .55
Real Estate Development 1.87
Specialty Retailer 4.76
Telecommunications 1.40
Television/Cable Networks 2.96
Water Treatment 6.23
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, Home Shopping Network,
Littelfuse, Ply-Gem Industries, Special
Devices, Starbucks, Whole Foods Market,
World Acceptance
Healthcare: Amgen, Apria Healthcare, Biogen, Boston
Scientific, Chiron, Columbia/HCA, Genzyme,
Integrated Health, Medtronic
Emerging Markets Consumerism: BAESA, Coca-Cola, Crown Cork, and
Seal, Walt Disney Company, Gillette, Grupo
Radio, Omnicom, Proctor & 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, Compaq, CUC International,
Walt Disney Company, Hewlett-Packard, Intel,
Microsoft, Motorola, Nokia, Oracle, Systems,
Paging Network, Rogers Cantel, Time Warner,
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 relationships between the
number of shares of Stock deposited on the
Initial Date of Deposit, subject to certain
adjustments. Costs incurred in acquiring such
additional Stocks which are either not listed on
any national securities exchange or are ADRs or
Foreign Stocks, including brokerage fees, stamp
taxes and certain costs associated with foreign
trading incurred in purchasing such additional
Stocks, will be borne by the Trust. Investors pur-
chasing 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 "Termination of the
Trust" and "Federal Income Taxes".)
Public Offering Price. The Public Offering Price
per Unit is computed by dividing the Trust Fund
Evaluation, 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 on the Initial Date of Deposit, and on
subsequent dates, will vary from the Public
Offering Price set forth on page 8. (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 Evaluation 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
discretion 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 commercial 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 Sponsor 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
equivalents held by the Trust (net of expenses).
The original proportionate relationship is
subject to adjustment to reflect the occurrence
of a stock split or a similar event which affects
the capital structure of the issuer of a Stock
but which does not affect the Trust's percentage
ownership of the common stock equity of such
issuer at the time of such event, 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 fractional undivided interest in
the Securities and net income of the Trust set
forth under "Essential Information Regarding the
Trust". However, if additional Units are issued
by the Trust (through the deposit of additional
Securities for purposes of the sale of additional
Units), the aggregate value of Securities in the
Trust will be increased and the fractional
undivided interest represented by each Unit in
the balance will be decreased. If any Units are
redeemed, the aggregate value of Securities in
the Trust will be reduced, and the fractional
undivided interest represented by each remaining
Unit in the balance will be increased. Units will
remain outstanding until redeemed upon tender to
the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of the
Trust. (See "Termination of the Trust".)
RISK FACTORS AND SPECIAL CONSIDERATIONS
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 anticipate in other amounts
available for distribution by the issuing
corporation. Dividends on cumulative preferred
stock must be paid before any dividends are paid
on common stock. Preferred stocks are also
entitled to rights on liquidation which are
senior to those of common stocks. For these
reasons, preferred stocks generally entail less
risk than common stocks.
Common stocks do not represent an obligation of
the issuer. Therefore they do not offer any
assurance of income or provide the degree of
protection of debt securities. The issuance of
debt securities or even preferred stock by an
issuer will create prior claims for payment of
principal, interest and dividends which could
adversely affect the ability and inclination of
the issuer to declare or pay dividends on its
common stock or the rights of holders of common
stock with respect to assets of the issuer upon
liquidation or bankruptcy. Unlike debt securities
which typically have a stated principal amount
payable at maturity, common stocks do not have a
fixed principal amount or a maturity.
Additionally, the value of the 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 condition of
issuers, changes in national or worldwide
economic conditions, 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 Investments" 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 establishment of exchange controls,
new or higher levels of taxation, or other
governmental actions which might adversely affect
the payment or receipt of payment of dividends on
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, requirements and practices such as are
applicable to domestic issuers. 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 currency. 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
foreign 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 ex-
change 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
differentials between currencies, the balance of
imports and exports of goods and services, and
transfer of income and capital from one country
to another. These economic factors in turn are
influenced by a particular country's monetary and
fiscal policies, perceived political stability
(particularly with respect to transfer of
capital) and investor psychology, especially that
of institutional investors predicting the future
relative
________________
*Reference is hereby made to said Trust Indenture
and Agreement and any statements contained herein
are qualified in their entirety by the provisions
of said Trust Indenture and Agreement.
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 infla-
tion 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
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 generally 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 lim-
ited 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 percentage
relationship among the Securities based on the
price of the securities at the Evaluation Time on
the date the cash is deposited. To the extent the
price of a Security or the relevant 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 fluctuations during this period since if
the price of shares of a Security increases,
Unitholders will have an interest in fewer shares
of that Security, and if the price of a Security
decreases, Unitholders will have an interest in
more shares of that Security, than if the
Security had been purchased on the date cash was
deposited with instructions to purchase the
Security. In order to minimize these effects, the
Trust will attempt to purchase Securities as
close as possible to the Evaluation Time or at
prices as close as possible to the prices used to
evaluate the Trust at the Evaluation Time. Thus
price and currency fluctuations during this
period will affect the value of every
Unitholder's Units and the income per Unit
received by the Trust. In addition, costs
incurred in connection with the acquisition of
Securities not listed on any national securities
exchange (due to differentials between bid and
offer prices for the Securities) and brokerage
fees, stamp taxes and other costs associated 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 attributable to such failed
contract.
Because the Trust is organized as a unit
investment trust, rather than as a investment
company, the Trustee and the Sponsor do not have
authority to manage the Trust's fully in an
attempt to take advantage of various market
conditions to improve the Trust's asset value,
but may dispose 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
financing. There may be other conditions to the
tender offer as well. Additionally, an offeror
may only be willing to accept a specified number
of shares. In the event a greater number of
shares is tendered, the offeror must take up and
pay for a pro rata portion of the shares
deposited by each depositor during the period the
offer remains open. The Agreement 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 deduction 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 company", 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. Dis-
tributions 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 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 Investment Executive for details on
establishing such accounts. Units may also be
purchased by persons who already have self-
directed accounts established under tax-deferred
retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price
per Unit 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 from
the Public Offering Price calculated on the
business day prior to the Initial Date of Deposit
due to fluctuations in the value of the Stocks,
the currency exchange rates and costs associated
with foreign trading.
Sales charges 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 purchasers
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.
Secondary Market
Percent of
Public Percent of
Offering Net Amount
Aggregate Dollar 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 pur-
chaser's spouse or in the name of a purchaser's
child under the age of 21 are deemed for the
purposes hereof to be registered in the name of
the purchaser. The reduced sales charges are also
applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or
single fiduciary account.
Employee Discount. Due to the realization of
economies of scale in sales effort and sales
related expenses with respect to the purchase of
Units by employees of the Sponsor and its
affiliates, the Sponsor intends to permit em-
ployees of the Sponsor and its affiliates and
certain of their relatives to purchase units of
the Trust at a reduced sales charge of $5.00 per
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 Corporate Bond Trust (the
"Corporate Series"); PaineWebber Pathfinder's
Trust (the "Pathfinder's Trust"); the PaineWebber
Federal Government Trust (the "Government
Series"); The Municipal Bond Trust, Insured
Series (the "Insured Series"); or the PaineWebber
Equity Trust (the "Equity Series") (collectively
referred to as the "Exchange Trusts"), at a
Public Offering Price for the Units of the
Exchange Trusts to be acquired based on a reduced
sales charge of $15 per Unit, per 100 Units in
the case of a trust whose Units cost ap-
proximately $10 or per 1,000 units in the case of
a trust whose Units cost approximately one
dollar. Unitholders of this Trust are not
eligible for the Exchange Option into an Equity
Trust, Growth Stock Series designated as a
rollover series for the 30 day period prior to
termination of the Trust. The purpose of such
reduced sales charge is to permit the Sponsor to
pass on to the Unitholder who wishes to exchange
Units the cost savings resulting from such
exchange of Units. The cost savings result from
reductions in time and expense related to advice,
financial planning and operational expenses
required for the Exchange Option. Each Exchange
Trust has different investment objectives,
therefore a Unitholder should read the prospectus
for the applicable exchange trust carefully prior
to exercising this option. Exchange Trusts having
as their objective the receipt of tax-exempt
interest income would not be suitable for tax-
deferred investment plans such as Individual
Retirement Accounts. A Unitholder who purchased
Units of a series and paid a per Unit, per 100
Unit or per 1,000 Unit sales charge that was less
than the per Unit, per 100 Unit or per 1,000 Unit
sales charge of the series of the Exchange Trusts
for which such Unitholder desires to exchange
into, will be allowed to exercise the Exchange
Option at the Unit Offering Price plus the
reduced sales charge, provided the Unitholder has
held the Units for at least five months. Any such
Unitholder who has not held the Units to be
exchanged for the five-month period will be
required to exchange them at the Unit Offering
Price plus a sales charge based on the greater of
the reduced sales charge, or an amount which,
together with the initial sales charge paid in
connection with the acquisition of the Units
being exchanged, equals the sales charge of the
series of the Exchange Trust for which such
Unitholder desires to exchange into, determined
as of the date of the exchange.
The Sponsor will permit exchanges at the reduced
sales charge provided there is either a primary
market for Units or a secondary market maintained
by the Sponsor in both the Units of this series
and units of the applicable Exchange Trust and
there are units of the applicable Exchange Trust
available for sale. While the Sponsor has
indicated that it intends to maintain a market
for the Units of the respective Trusts, there is
no obligation on its part to maintain such a
market. Therefore, there is no assurance that 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 avail-
able to a Unitholder. Exchanges will be effected
in whole Units only. Any excess proceeds from
Unitholders' Units being surrendered will be
returned. Unitholders will be permitted to
advance new money in order to complete an
exchange to round up to the next highest number
of Units. An exchange of Units pursuant to the
Exchange Option 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 par-
ticular 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 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 transactions will be effected only in
whole units; thus, any proceeds not used to
acquire whole units will be paid to the selling
Unitholder.
For example, assume that a Unitholder, who has
three thousand units of a trust with a current
price of $1.30 per unit, desires to sell his
units and seeks to exchange the proceeds for
units of a series of an Exchange Trust with a
current price of $890 per Unit based on the bid
prices of the underlying securities. In this
example, which does not contemplate any rounding
up to the next highest number of Units, the
proceeds from the Unitholder's Units would ag-
gregate $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
exercise this option, the owner should notify his
retail broker. He will be given a prospectus for
each series in which he indicates interest and
for which units are available. The dealer must
sell or redeem the units of the Conversion Trust.
Any dealer other than PaineWebber must certify
that the purchase of 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
Retirement Accounts or other tax-deferred re-
tirement 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 concession may
be deemed to be underwriters under the Securities
Act of 1933.
The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of
Units. The Sponsor intends to qualify the Units
in all states of the United States, the District
of Columbia and the Commonwealth of Puerto Rico.
Secondary Market for Units. While not obligated
to do so, the Sponsor intends to maintain a
secondary market for the Units and continuously
offer to purchase Units at the Trust Fund
Evaluation per Unit next computed after receipt
by the Sponsor of an order from a Unitholder. The
Sponsor may cease to maintain such a market at
any time, and from time to time, without notice.
In the event that a secondary market for the
Units is not maintained by the Sponsor, a
Unitholder desiring to dispose of Units may
tender such Units to the Trustee for redemption
at the price calculated in the manner set forth
under "Redemption". Redemption requests in excess
of $100,000 may be redeemed "in kind" as
described under "Redemption." The Sponsor does
not in any way guarantee the enforceability,
marketability, value or price of any 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 undesirable
to continue to hold these Units in its inventory.
Factors which the Sponsor may consider in making
this determination will include the number of
units of all series of all trusts which it holds
in its inventory, the saleability of the Units
and its estimate of the time required to sell the
Units and general market conditions.
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, including foreign currency
rates, of the Stocks to the Sponsor and the
price, including foreign currency rates, 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 in-
cludes the amount paid by the Sponsor for
brokerage commissions. These amounts are an
expense of the Trust.
Cash, if any, received from Unitholders prior to
the settlement date for the purchase of Units or
prior to the payment for Securities upon their
delivery may be used in the Sponsor's business
subject to the limitations of Rule 15c3-3 under
the Securities and Exchange Act of 1934 and may
be of benefit to the Sponsor.
In selling any Units in the initial public
offering after the Initial Date of Deposit, the
Sponsor may realize profits or sustain losses
resulting from fluctuations in the net asset
value of outstanding Units during 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.
Unitholders must sign exactly as their names
appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor
institution or in such other manner as may be
acceptable to the Trustee. In certain instances
the Trustee may require additional documents such
as, but not limited to, trust instruments,
certificates of death, appointments as executor
or administrator, or certificates of corporate
authority. Unitholders should contact the Trustee
to determine whether additional documents are
necessary. Units tendered to the Trustee for
redemption will be cancelled, if not repurchased
by the Sponsor.
Units will be redeemed at the Redemption Value
per Unit next determined after receipt of the
redemption request in good order by the Trustee.
The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number
of Units outstanding. (See "Valuation".)
A redemption request is deemed received on the
business day (see "Valuation" for a definition of
business day) when such request is received prior
to 4:00 p.m. If it is received after 4:00 p.m.,
it is deemed received on the next business day.
During the period in which the Sponsor maintains
a secondary market for Units, the Sponsor may
repurchase any Unit presented for tender to the
Trustee for redemption no later than the close of
business on the second business day following
such presentation and Unitholders will receive
the Redemption Value next determined after re-
ceipt 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 income 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 "Administration of the Trust".)
However, with respect to redemption requests in
excess of $100,000, the Sponsor may determine in
its discretion to direct the Trustee to redeem
Units "in kind" by distributing Securities to the
redeeming Unitholder. When 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.
The Trustee may, in its discretion, and will,
when so directed by the Sponsor, suspend the
right of redemption, or postpone the date of
payment of the Redemption Value, for more than
seven calendar days following the day of tender
for any period during which the New York Stock
Exchange, Inc. is closed other than for weekend
and holiday closings; or for any period during
which the Securities and Exchange Commission
determined that trading on the New York Stock
Exchange, Inc. is restricted or for any period
during which an emergency exists as a result of
which disposal or evaluation of the Securities is
not reasonably practicable; or for such other
period as the Securities and Exchange Commission
may by order permit for the protection of
Unitholders. The Trustee is not liable to any
person or in any way for any loss or damages
which may result from any such suspension or
postponement, or any failure to suspend or
postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value
(the "Trust Fund Evaluation") per Unit at the
Evaluation Time set forth under "Summary 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
Indenture) 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
(including 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, Washington's
Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas
Day and other days that the New York Stock
Exchange is closed.
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 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 Initial 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 aggregate cost to it of supplying such
services in such year.
For its services as Trustee and Evaluator, the
Trustee will be paid in monthly installments,
annually $.0170 per Unit, based on the largest
number of Units outstanding during the previous
month. In addition, the regular and recurring
expenses of the Trust are estimated to be $.0223
per Unit annually which include, but are not
limited to certain mailing, printing, and audit
expenses. Expenses in excess of this estimate
will be borne by the Trust. The Trustee could
also benefit to the extent that it may hold funds
in non-interest bearing accounts created by the
Indenture.
The Sponsor's fee and Trustee's fee may be
increased without approval of the Unitholders by
an amount not exceeding a proportionate increase
in the category entitled "All Services Less Rent"
in the Consumer Price Index published by the
United States Department of Labor or, if the
Price Index is no longer published, a similar
index as determined by the Trustee and Sponsor.
In addition to the above, the following charges
are or may be incurred by each Trust and paid
from the Income Account, or, to the extent funds
are not available in such Account, from the
Capital Account (see "Administration of the
Trust--Accounts"): (1) fees for the Trustee for
extraordinary services; (2) expenses of the
Trustee (including legal and auditing expenses)
and of counsel; (3) various governmental charges;
(4) expenses and costs of any action taken by the
Trustee to protect the trusts and the rights and
interests of the Unitholders; (5) indemnification
of the Trustee for any loss, liabilities or
expenses incurred by it in the administration of
the Trust without gross negligence, bad faith or
wilful misconduct on its part; (6) brokerage
commissions and other expenses incurred in
connection with the purchase and sale of
Securities; (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 Exchange Commission, the
Trust may incur expenses of maintaining
registration or qualification of the Trust or the
Units under Federal or state securities laws so
long as the Sponsor is maintaining a secondary
market (including, but not limited to, legal,
auditing and printing expenses).
The accounts of the Trust shall be audited not
less than annually by independent public
accountants selected by the Sponsor. The expenses
of the audit shall be an expense of the Trust. So
long as the Sponsor maintains a secondary market,
the Sponsor will bear any 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 authorized to sell Securi-
ties to meet the expenses of the Trust.
Securities will be selected in the same manner as
is set forth under "Redemption".
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation
on the books of the Trustee. In order to avoid
additional operating costs and for investor
convenience, certificates will not be issued
unless a request, in writing with signature
guaranteed by an eligible guarantor institution
or in such other manner as may be acceptable to
the Trustee, is delivered by the Unitholder to
the Sponsor. Issued Certificates are transferable
by presentation and surrender to the Trustee at
its office in Boston, Massachusetts properly
endorsed or accompanied by a written instrument
or instruments of transfer. Uncertificated Units
are transferable by presentation to the Trustee
at its office 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, mutilated, stolen or lost
certificates, the Unitholder must furnish
indemnity satisfactory to the Trustee and must
pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to 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 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, commencing with calendar year
1995, the Trustee will furnish each person who
was a Unitholder at any time during the calendar
year an annual report containing the following
information, expressed in reasonable detail both
as a dollar amount and as a dollar amount per
Unit: (1) a summary of transactions for such year
in the Income and Capital Accounts and any
Reserves; (2) any Securities sold during the year
and the Securities held at the end of such year;
(3) the Trust Fund Evaluation per Unit, based
upon a computation thereof on the 31st day of
December of such year (or the last business day
prior thereto); and (4) amounts distributed to
Unitholders during such year.
Portfolio Supervision. The portfolio of the
Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are
governed solely by the provisions of the
Indenture. The Indenture provides that the
Sponsor may (but need not) direct the Trustee to
dispose of a Security:
(1) upon the failure of the issuer to declare or
pay anticipated dividends or interest;
(2) upon the institution of 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 impediment 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 outstanding securities of the
issuer or the guarantor of such Securities which
might materially and adversely, either
immediately or contingently, affect the
declaration or payment of dividends on the
Securities;
(5) upon the decline in price or the occurrence
of any materially 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 Uni-
tholders (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 necessary 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 Sponsor without the consent of any of the
Unitholders to cure any ambiguity or to correct
or supplement any provision thereof which may be
defective or inconsistent or to make such other
provisions as will not 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 determines termination to be in the best
interest of the unitholders. In no event will the
Trust continue beyond the Mandatory Termination
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 governmental
charges that may be payable by the Trust,
distribute to each Unitholder, after due notice
of such termination, such Unitholder'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 organized under the laws of the State
of Delaware. The Sponsor is a member firm of the
New York Stock Exchange, Inc. as well as other
major securities and commodities exchanges and is
a member of the National Association of
Securities Dealers, Inc. The Sponsor is engaged
in a security and commodity brokerage business as
well as underwriting and distributing new issues.
The Sponsor also acts as a dealer in unlisted
securities and municipal bonds and in addition to
participating as a member of various selling
groups or as an agent of other investment
companies, executes orders on behalf of
investment companies for the purchase and sale of
securities of such companies and sells securities
to such companies in its capacity as a broker or
dealer in securities.
The Indenture provides that the Sponsor will not
be liable to the Trustee, 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 appoint a successor Sponsor or Sponsors to
serve at rates of compensation determined as
provided in the Indenture or terminate the
Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of
Chicago, a national banking association with its
corporate trust office at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126
(which is subject to supervision by the
Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors
of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company
with its 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
misconduct, nor will the Trustee be liable or
responsible in any way for depreciation or loss
incurred by reason of the sale by the Trustee of
any Securities in the Trust. In the event of the
failure of the Sponsor to act, the Trustee may
act and will not be liable for any such action
taken by it in good faith. The Trustee will not
be personally liable for any taxes or other
governmental charges imposed upon or in respect
of the Securities or upon the interest thereon or
upon it as Trustee or upon or in respect of the
Trust which the Trustee may be required to pay
under any present or future law of the United
States of America or of any other taxing
authority having jurisdiction. In addition, the
Indenture contains other customary provisions
limiting the liability of the Trustee. The
Trustee will be indemnified and held harmless
against any loss or liability accruing to it
without gross negligence, bad faith or willful
misconduct on its part, arising out of or in
connection with its acceptance or administration
of the Trust, including the costs and expenses
(including counsel fees) of defending itself
against any claim of liability.
INDEPENDENT AUDITORS
The financial statements, including the Schedule
of Investments, of the Trust in this prospectus
have been audited by Ernst & Young LLP,
Independent Auditors, and have been included
herein in reliance upon their report given on
their authority as experts in accounting and
auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has
been passed upon by Orrick, Herrington &
Sutcliffe LLP, 666 Fifth Avenue, New York, New
York, as counsel for the Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of October 31, 1996
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Initial Date of Deposit: November 10, 1994
<S> <C>
Aggregate Market Value of Securities in Trust: $7,316,091
Number of Units: 558,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/558,000th
Calculation of Public Offering Price Per Unit*:
Aggregate Value of Net Assets in Trust $7,320,912
Divided by 558,000 Units $13.1199
Plus Sales Charge of 3.75% of Public Offering Price $.5112
Public Offering Price per Unit $13.6311
Redemption Value per Unit: $13.1199
Excess of Public Offering Price over Redemption Value per Unit: $.5112
Sponsor's Repurchase Price Per Unit: $13.1199
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.5112
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* * * $.0418 per Unit
* The Public Offering Price will be based
upon the value of the Stocks next computed
following receipt of the
purchase order plus the applicable sales
charges. (See " Valuation " ).
* * See " Distributions "
* * * See " Expenses of 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>
<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, including the schedule of
investments, of The PaineWebber Equity Trust,
Growth Stock Series Sixteen as of October 31,
1996 and the related statements of operations and
changes in net assets for the year ended October
31, 1996, and 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 audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements are free of mate-
rial 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, 1996, as shown
in the statement of financial condition and
schedule of investments, by correspondence with
the Co-Trustees. An audit also includes assessing
the accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material
respects, the financial position of The
PaineWebber Equity Trust, Growth Stock Series
Sixteen at October 31, 1996 and the results of
its operations and changes in its net assets for
the year ended October 31, 1996, and for the
period from November 10, 1994 to October 31,
1995, in conformity with generally accepted ac-
counting principles.
ERNST & YOUNG LLP
New York, New York
February 4, 1997
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
October 31, 1996
<CAPTION>
ASSETS
<S> <C>
Common Stock - at market value (Cost $5,256,519)
(note 1 to schedule of investments) $7,316,091
Dividends receivable 2,930
Cash 19,602
Total Assets $7,338,623
LIABILITIES AND NET ASSETS
Accrued expenses payable $17,711
Total Liabilities 17,711
Net Assets (558,000 units of fractional undivided interest outstanding):
Cost to investors (note B) $5,461,318
Less sales charge (note C) (204,799)
Net amount applicable to investors 5,256,519
Net unrealized market appreciation (note D) 2,059,572
Net amount applicable to unitholders 7,316,091
Undistributed investment income-net 169
Undistributed proceeds from securities sold 4,652
Net assets 7,320,912
Total Liabilities and Net Assets $7,338,623
Net asset value per Unit $13.12
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF OPERATIONS
<CAPTION>
Period from
November 10,
1994 (date of
Year Ended deposit) to
October 31, October 31,
1996 1995
<S> <C> <C>
Operations:
Dividend Income $60,106 $37,232
Total investment income 60,106 37,232
Less expenses:
Trustee's fees, expenses and evaluator's expense 44,838 19,179
Total expenses 44,838 19,179
Investment Income-net 15,268 18,053
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 644,534 27,699
Net change in unrealized market appreciation 574,084 1,485,488
Net realized and unrealized gain on investments 1,218,618 1,513,187
Net increase in net assets resulting from operations $1,233,886 $1,531,240
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period from
November 10,
1994 (date of
Year Ended deposit) to
October 31, October 31,
1996 1995
<S> <C> <C>
Operations:
Investment income-net $15,268 $18,053
Net realized gain on securities transactions 644,534 27,699
Net change in unrealized market appreciation 574,084 1,485,488
Net increase in net assets resulting from operations 1,233,886 1,531,240
Less: Distributions to Unitholders (Note E)
Principal 267,394 42,349
Investment Income 13,284 22,053
Total Distributions 280,678 64,402
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 2,138,395 ---
Undistributed income at date of redemption 347 ---
Total Redemptions 2,138,742 ---
Increase (decrease) in net assets (1,185,534) 1,466,838
Net Assets:
Beginning of Period 8,506,446 ---
Supplemental Deposits --- 7,039,608
End Of Period $7,320,912 $8,506,446
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
(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, 1996, the gross unrealized
market appreciation was $2,449,782 and the gross
unrealized market
depreciation was ($390,210). The net unrealized
market appreciation was $2,059,572.
(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
Year Ended deposit) to
October 31, October 31,
1996 1995
<S> <C> <C>
Total number of units redeemed 172,000 ---
Redemption amount $2,138,742 ---
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>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of October 31, 1996
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<S> <C> <C>
Advertising: (2.31%)
Omnicom Group, Inc. 3,397 $169,001
Banking/Finance: (2.23%)
Barnett Banks, Inc. 4,279 163,137
Biotechnology: (8.43%)
Amgen, Inc.* 3,180 194,974
Biogen, Inc,* 2,306 171,797
Chiron Corporation* 4,979 113,895
Genzyme Corp.-General Division(3)* 5,928 136,344
Building Materials: (.78%)
Ply-Gem Industries, Inc. 4,669 57,195
Cellular/Paging Communication: (3.92%)
Grupo Iusacell S.A.~* 2,964 22,601
Paging Network, Inc.* 5,595 95,814
Rogers Cantel Mobil Communications* 2,853 66,689
Vodafone Group plc ~ 2,634 101,738
Construction: (.51%)
Empresas ICA Sociedad Controladora
S.A. de C.V. ~* 2,853 37,089
Computer Hardware/Software: (7.46%)
Compaq Computer Corporation* 2,249 156,587
Microsoft Corporation* 1,426 195,719
Oracle Corporation* 4,573 193,495
Consumer/Household Products: (4.43%)
Gillette Company 2,450 183,137
Procter & Gamble Company 1,426 141,174
Consumer Finance: (1.13%)
World Acceptance Corporation* 12,522 82,958
Electrical: (1.74%)
Emerson Electric Company 1,426 126,914
Electronics/Semi-Conductors: (10.53%)
Hewlett-Packard Company 3,016 133,081
Intel Corporation 2,961 325,340
Littelfuse, Inc.* 3,511 144,829
Motorola, Inc. 1,534 70,564
Nokia Corporation ~ 2,079 96,414
Entertainment: (5.18%)
Walt Disney Company 3,180 209,482
Time Warner, Inc. 2,579 96,068
Viacom, Inc.* 2,249 73,374
Food/Beverage: (4.00%)
The Coca-Cola Company 3,509 177,204
Wrigley (WM) Jr. Company 1,920 115,680
Food Retailer: (6.34%)
General Nutrition Companies, Inc.* 6,370 116,252
Starbucks Corporation* 6,370 207,025
Whole Foods Market, Inc.* 5,493 140,758
Healthcare/Hospitals: (2.44%)
Columbia/HCA Healthcare Corporation 3,374 120,603
Integrated Health Services, Inc. 2,359 58,090
Investment Conglomerate: (1.45%)
Swire Pacific Ltd. (2) 12,000 105,918
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of October 31, 1996
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<S> <C> <C>
Machinery: (2.36%)
AlliedSignal, Inc. 2,634 $172,527
Medical Delivery Services: (8.96%)
Apria Healthcare Group, Inc.(3)* 6,683 127,812
Boston Scientific Corporation* 5,548 301,672
Medtronic, Inc. 3,508 225,827
Motor Vehicle Parts: (3.45%)
Special Devices, Inc.* 4,835 60,438
Superior Industries International, Inc. 2,990 72,881
TRW, Inc. 1,315 119,008
Packaging: (1.68%)
Buenos Aires Embotelladora ~ 2,194 12,341
Crown Cork & Seal Company, Inc. 2,306 110,688
Power Utility: (1.14%)
China Light & Power Company Ltd.(2) 18,000 83,570
Publishing: (1.76%)
A.H. Belo Corporation 3,292 128,388
Radio Network: (.55%)
Grupo Radio Centro S.A. de C.V. ~* 5,878 40,411
Real Estate Development: (1.87%)
Sun Hung Kai Properties Ltd.(2) 12,000 136,570
Specialty Retailer: (4.76%)
Barnes & Noble* 3,185 105,503
CUC International, Inc.* 6,665 163,280
Home Shopping Network, Inc.* 7,856 79,542
Telecommunications: (1.40%)
Telecom Argentina S.A. Cl.B (2) 14,500 53,656
Telefonos de Mexico S.A. ~ 1,590 48,495
Television/Cable Networks: (2.96%)
Bell Cablemedia plc ~* 3,622 58,858
United Video Satellite Group, Inc.* 8,896 157,904
Water Treatment: (6.23%)
Ionics, Inc*. 3,048 140,208
US Filter Corporation* 9,147 315,572
TOTAL INVESTMENTS $7,316,091
(1) Valuation of Securities was made by the
Co-Trustees as described in "Valuation".
(2) Foreign Stock.
(3) Of the 57 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.
* Non-income producing.
~ American Depositary Receipts.
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.2 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.
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 11th day of February,
1997.
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 11th day of February, 1997.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director and Member of the Executive
Committee *
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement for File No. 33-19786.
February 11, 1997
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber Equity
Trust, Growth Stock Series 16 (hereinafter referred to as the
"Trust"). The Depositor seeks by means of Post-Effective
Amendment No. 2 to register for reoffering 330,377 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. 2 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
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 LLP
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> EQUITY TRUST, GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> OCT-31-1996 OCT-31-1995
<PERIOD-START> NOV-01-1995 NOV-10-1994
<PERIOD-END> OCT-31-1996 OCT-31-1995
<EXCHANGE-RATE> 1 1
<INVESTMENTS-AT-COST> 5,256,519 0
<INVESTMENTS-AT-VALUE> 7,316,091 0
<RECEIVABLES> 2,930 0
<ASSETS-OTHER> 19,602 0
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 7,338,623 0
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 17,711 0
<TOTAL-LIABILITIES> 17,711 0
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 0 0
<SHARES-COMMON-STOCK> 558,000 0
<SHARES-COMMON-PRIOR> 730,000 0
<ACCUMULATED-NII-CURRENT> 169 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 4,652 0
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 2,059,572 0
<NET-ASSETS> 7,320,912 0
<DIVIDEND-INCOME> 60,106 37,232
<INTEREST-INCOME> 0 0
<OTHER-INCOME> 0 0
<EXPENSES-NET> 44,838 19,179
<NET-INVESTMENT-INCOME> 15,268 18,053
<REALIZED-GAINS-CURRENT> 644,534 27,699
<APPREC-INCREASE-CURRENT> 574,084 1,485,488
<NET-CHANGE-FROM-OPS> 1,233,886 1,531,240
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 267,394 42,349
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 13,284 22,053
<NUMBER-OF-SHARES-SOLD> 0 0
<NUMBER-OF-SHARES-REDEEMED> 172,000 0
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> (1,185,534) 1,466,838
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 0 0
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 0 0
<AVERAGE-NET-ASSETS> 0 0
<PER-SHARE-NAV-BEGIN> 0 0
<PER-SHARE-NII> 0 0
<PER-SHARE-GAIN-APPREC> 0 0
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 13 0
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated
February 4, 1997, 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 11, 1997
