File No. 33-54569
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 3
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, 1998) pursuant to paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
435,406 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$6,558,651.20**
* Estimated solely for the purpose of calculating the registration fee, at
$15.06 per unit.
G. Amount of filing fee, computed at one-thirty-fourth 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.
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)
502,000 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, 1998
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 should continue to decline slightly
over the next few years. PaineWebber forecasts
that, as interest rates fall, the relative price
to earnings ratio (P/E) of growth stocks should
expand. As the P/E of the entire market expands
with falling rates, growth stocks should benefit
from both the rise in the market's P/E and an
increasing relative P/E for growth. Stocks with
growth rates greater than the market's should get
a P/E benefit from lower interest rates that is
more than the benefit for the overall market.
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 acces-
sible 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, because 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 tur-
moil 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
Primary of Aggregate Market
Industry Source Value of the Trust
Advertising 2.67%
Banking/Finance 3.28
Biotechnology 6.35
Cellular/Paging Communication 3.50
Construction .42
Computer Hardware/Software 10.83
Consumer/Household Products 4.58
Consumer Finance .75
Electrical 1.66
Electronic/Semi-Conductor 12.62
Entertainment 5.31
Food/Beverage 3.75
Food Retailer 6.96
Healthcare/Hospitals 1.89
Investment Conglomerate .73
Machinery 2.11
Medical Delivery Services; 7.33
Motor Vehicle Parts 3.80
Packaging 1.16
Power Utility 1.02
Publishing 1.73
Radio Network .83
Real Estate Development .96
Specialty Retailer 5.57
Telecommunications 2.13
Television/Cable Networks 2.68
Water Treatment 5.38
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, Special Devices, Starbucks,
Whole Foods Market, World Acceptance
Healthcare: Amgen, Apria Healthcare, Biogen, Boston
Scientific, Chiron, Columbia/HCA, Genzyme,
Genzyme-Tissue Repair, Integrated Health,
Medtronic
Emerging Markets Consumerism: 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: Cable & Wireless, Compaq, Cendant Corporation,
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, as
closely as practicable, 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 purchasing Units during the initial
public offering period will experience a dilution
of their investment as a result of such brokerage
fees and other expenses paid by the Trust during
additional deposits of Securities purchased by the
Trustee with cash or cash equivalents pursuant to
instructions to purchase such Securities. (See
"The Trust" and "Risk Factors and Special
Considerations".)
Termination. Unless advised to the contrary by
the Sponsor, the Trustee will begin to sell the
Securities held in the Trust twenty days prior to
the Mandatory Termination Date. Moneys held upon
such sale or maturity of Securities will be held
in non-interest bearing accounts created by the
Indenture until distributed and will be of benefit
to the Trustee. During the life of the Trust,
Securities will not be sold to take advantage of
market fluctuations. The Trust will terminate
approximately five (5) years after the Initial
Date of Deposit regardless of market conditions at
the time. (See "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. (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 exchange rates for the
relevant currency in which the Foreign Stocks and
the shares underlying the ADRs are denominated.
PaineWebber observes that most foreign currencies
have fluctuated widely in value against the U.S.
dollar for many reasons, including the soundness
of the world economy, supply and demand of the
relevant currency, and the strength of the
relevant regional economy as compared to the
economies of the United States and other
countries. Exchange rate fluctuations are also
dependent, in part, on a number of economic
factors including economic conditions within the
relevant country, interest rate 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
inflation and deficits in the balance of trade.
The foreign exchange transactions may be
conducted by the Trustee with foreign exchange
dealers acting as principals either on a spot
(i.e., cash) buying basis or on a forward foreign
exchange transaction on the date the Trust is due
to receive the applicable foreign currency, e.g.,
a dividend payment date for a Foreign Stock. These
forward foreign exchange transactions will
generally be of as short a duration as practicable
and will generally settle on the date 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 limited or
absent.
Investors should note that the creation of
additional Units subsequent to the Initial Date of
Deposit may have an effect upon the value of
previously existing Units. To create additional
Units the Sponsor may deposit cash (or cash
equivalents, e.g., a bank letter of credit in lieu
of cash) with instructions to purchase Securities
in amounts sufficient to maintain, to the extent
practicable, the 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 addi-
tion, 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.
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, among other
things (1) 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"), (2) meet certain diversifi-
cation tests, and (3) distribute in each year at
least 90% of its investment company taxable
income. 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.
In any taxable year, the distributions of any
ordinary income (such as dividends) and the excess
of net short-term capital gains over net long-term
capital losses 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 for, and only to the extent
of, a specific designation by the Trust.
Distributions by the Trust that are designated by
it as capital gain distributions will be taxable
to Unitholders as long-term capital gains,
regardless of the length of time the Units have
been held by a Unitholder. Distributions 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 treated as gain from the sale of
his Units. 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 to the extent of any long-
term capital gain distributions paid to such Uni-
tholder with respect to such Units.
Long-term capital gains of individuals are
generally taxed at a maximum federal rate of 28%.
Under the recently enacted Taxpayer relief Act of
1997, Unitholders who are individuals and have
held their Units for more than 18 months may be
entitled to a more favorable federal tax rate
(generally, 20%, but 10% for individuals otherwise
in the 15% bracket) for gains from the sale of
these Units. Prior to the issuance of relevant
regulations, it is not certain whether or how this
more favorable federal tax rate will be available
with respect to capital gain dividends paid by the
Trust. Unitholders should consult their own tax
advisers in this regard.
Unitholders will be taxed in the manner described
above regardless of whether distributions from the
Trust are actually received by the Unitholder or
are reinvested pursuant to the reinvestment plan.
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 for Unitholders who hold their Units as
capital assets. 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 purchaser's
spouse or in the name of a purchaser's child under
the age of 21 are deemed for the purposes hereof
to be registered in the name of the purchaser. The
reduced sales charges are also applicable to a
trustee or other fiduciary purchasing Units for a
single trust estate or single fiduciary account.
Employee Discount. Due to the realization of
economies of scale in sales effort and sales
related expenses with respect to the purchase of
Units by employees of the Sponsor and its
affiliates, the Sponsor intends to permit 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 approximately $10 or per 1,000 units in the
case of a trust whose Units cost approximately one
dollar. Unitholders of this Trust are not eligible
for the Exchange Option into an Equity Trust,
Growth Stock Series designated as a rollover
series for the 30 day period prior to termination
of the Trust. The purpose of such reduced sales
charge is to permit the Sponsor to pass on to the
Unitholder who wishes to exchange Units the cost
savings resulting from such exchange of Units. The
cost savings result from reductions in time and
expense related to advice, financial planning and
operational expenses required for the Exchange
Option. Each Exchange Trust has different
investment objectives, therefore a Unitholder
should read the prospectus for the applicable
exchange trust carefully prior to exercising this
option. Exchange Trusts having as their objective
the receipt of tax-exempt interest income would
not be suitable for tax-deferred investment plans
such as Individual Retirement Accounts. A
Unitholder who purchased Units of a series and
paid a per Unit, per 100 Unit or per 1,000 Unit
sales charge that was less than the per Unit, per
100 Unit or per 1,000 Unit sales charge of the
series of the Exchange Trusts for which such
Unitholder desires to exchange into, will be
allowed to exercise the Exchange Option at the
Unit Offering Price plus the reduced sales charge,
provided the Unitholder has held the Units for at
least five months. Any such Unitholder who has not
held the Units to be exchanged for the five-month
period will be required to exchange them at the
Unit Offering Price plus a sales charge based on
the greater of the reduced sales charge, or an
amount which, together with the initial sales
charge paid in connection with the acquisition of
the Units being exchanged, equals the sales charge
of the series of the Exchange Trust for which such
Unitholder desires to exchange into, determined as
of the date of the exchange.
The Sponsor will permit exchanges at the reduced
sales charge provided there is either a primary
market for Units or a secondary market maintained
by the Sponsor in both the Units of this series
and units of the applicable Exchange Trust and
there are units of the applicable Exchange Trust
available for sale. While the Sponsor has
indicated that it intends to maintain a market for
the Units of the respective Trusts, there is no
obligation on its part to maintain such a market.
Therefore, there is no assurance that a market for
Units will in fact exist on any given date at
which a Unitholder wishes to sell his Units of
this series and thus there is no assurance that
the Exchange Option will be available to a
Unitholder. Exchanges will be effected in whole
Units only. Any excess proceeds from Unitholders'
Units being surrendered will be returned.
Unitholders will be permitted to advance new money
in order to complete an exchange to round up to
the next highest number of Units. An exchange of
Units pursuant to the Exchange Option generally
will constitute a "taxable event" under the Code,
i.e., a Unitholder will recognize a tax gain or
loss at the time of exchange. Unitholders are
urged to consult their own tax advisors as to the
tax consequences to them of exchanging Units in
particular cases.
The Sponsor reserves the right to modify, suspend
or terminate this Exchange Option at any time with
notice to Unitholders. In the event the Exchange
Option is not available to a Unitholder at the
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 Uni-
tholder 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 aggregate $3,900. Since
only whole units of an Exchange Trust may be
purchased under the Exchange Option, the
Unitholder would be able to acquire four Units in
the Exchange Trust for a total cost of $3,620
($3,560 for the Units and $60 for the sales
charge). If all 3,000 Units were tendered, the
remaining $280 would be returned to the
Unitholder.
Conversion Option. Owners of units of any
registered unit investment trust sponsored by
others which was initially offered at a maximum
applicable sales charge of at least 3.0% (a
"Conversion Trust") may elect to apply the cash
proceeds of the sale or redemption of those units
directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15
per Unit, per 100 Units in the case of Exchange
Trusts having a Unit price of approximately $10,
or per 1,000 Units in the case of Exchange Trusts
having a Unit price of approximately $1, subject
to the terms and conditions applicable to the
Exchange Option (except that no secondary market
is required for Conversion Trust units). To
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 Ex-
change 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 retire-
ment 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 Hancock Towers, 200 Clarendon Street,
Boston, MA 02116 upon payment of any transfer or
similar tax which must be paid to effect the
redemption. At the present time there are no such
taxes. No redemption fee will be charged by the
Sponsor or 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 receipt by
the Trustee of the redemption request. Proceeds of
a redemption will be paid to the Unitholder no
later than the seventh calendar day following the
date of tender (or if the seventh calendar day is
not a business day on the first business day prior
thereto).
With respect to cash redemptions, amounts
representing 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 clos-
ings; 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
Saturdays, Sundays, New Year's Day, Martin Luther
King, Jr.'s Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and other days
that the New York Stock Exchange is closed.
The 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 such 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 $.0260
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 Inden-
ture.
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 Securities 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 guaran-
teed 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 Unitholders
(as further described under "Risk Factors and
Special Considerations" herein);
(7) upon a decrease in the Sponsor's internal
rating of the Security; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the
economic fundamentals of the issuer of the
Security or the industry of which it is a part.
Securities may also be sold in the manner
described under "The Trust". The Trustee may
dispose of Securities where 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 liq-
uidate 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 Carter, Ledyard & Milburn, 2
Wall Street, New York, New York, as counsel for
the Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of October 31, 1997
<CAPTION>
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: $7,716,725
Number of Units: 502,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/502,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Net Assets in Trust $7,714,961
Divided by 502,000 Units $15.3684
Plus Sales Charge of 3.75% of Public Offering Price $.5988
Public Offering Price per Unit $15.9672
Redemption Value per Unit: $15.3684
Excess of Public Offering Price over Redemption Value per Unit: $.5988
Sponsor's Repurchase Price Per Unit: $15.3684
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.5988
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* * * $.0455 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, 1997
and the related statements of operations and
changes in net assets for the years ended October
31, 1997, 1996, and for the period from November
10, 1994 (initial 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 material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. Our
procedures included confirmation of the securities
owned as of October 31, 1997, as shown in the
statement of financial condition and schedule of
investments, by correspondence with the Co-
Trustees. An audit also includes assessing the
accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our 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,
1997 and the results of its operations and changes
in its net assets for the years ended October 31,
1997, 1996, and for the period from November 10,
1994 to October 31, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 2, 1998
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
STATEMENT OF FINANCIAL CONDITION
October 31, 1997
<CAPTION>
ASSETS
<S> <C> <C>
Common Stock - at market value (Cost $4,377,774)
(note 1 to schedule of investments) $7,716,725
Dividends receivable 2,780
Cash 4,198
Total Assets $7,723,703
LIABILITIES AND NET ASSETS
Accrued expenses payable $8,742
Total Liabilities $8,742
Net assets (502,000 units of fractional undivided interest outstanding):
Cost to investors (note B) $4,548,336
Less sales charge (note C) (170,562)
Net amount applicable to investors 4,377,774
Net unrealized market appreciation (note D) 3,338,951
Net amount applicable to unitholders 7,716,725
Undistributed investment income-net 8,143
Overdistributed proceeds from securities sold (9,907)
Net assets 7,714,961
Total Liabilities and Net Assets $7,723,703
Net asset value per Unit $15.3684
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 (initial
date
Year Ended Year Ended of deposit) to
October 31, October 31, October 31,
1997 1996 1995
<S> <C> <C> <C>
Operations:
Dividend Income $55,448 $60,106 $37,232
Total investment income 55,448 60,106 37,232
Less expenses:
Trustee's fees, expenses and evaluator's expense 15,801 44,838 19,179
Total expenses 15,801 44,838 19,179
Investment Income-net 39,647 15,268 18,053
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 397,464 644,534 27,699
Net change in unrealized market appreciation 1,279,379 574,084 1,485,488
Net realized and unrealized gain on investments 1,676,843 1,218,618 1,513,187
Net increase in net assets resulting from operations $1,716,490 $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 (initial
date
Year Ended Year Ended of deposit) to
October 31, October 31, October 31,
1997 1996 1995
<S> <C> <C> <C>
Operations:
Investment income-net $39,647 $15,268 $18,053
Net realized gain on securities transactions 397,464 644,534 27,699
Net change in unrealized market appreciation 1,279,379 574,084 1,485,488
Net increase in net assets resulting from operations 1,716,490 1,233,886 1,531,240
Less: Distributions to Unitholders (Note E)
Principal 457,949 267,394 42,349
Investment Income 31,101 13,284 22,053
Total Distributions 489,050 280,678 64,402
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 832,817 2,138,395 ---
Undistributed income at date of redemption 574 347 ---
Total Redemptions 833,391 2,138,742 ---
Increase (decrease) in net assets 394,049 (1,185,534) 1,466,838
Net Assets:
Beginning of Period 7,320,912 8,506,446 ---
Supplemental Deposits --- --- 7,039,608
End Of Period $7,714,961 $7,320,912 $8,506,446
See accompanying notes to financial statements.
</TABLE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting.
Security transactions are
accounted for on the date the securities are
purchased or sold.
(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, 1997, the gross unrealized
market appreciation was $3,557,506 and the gross
unrealized market
depreciation was ($218,555). The net unrealized
market appreciation was $3,338,951.
(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
(initial date
Year Ended Year Ended of deposit)
October 31, October 31, to October 31,
1997 1996 1995
<S> <C> <C> <C>
Total number of units redeemed 56,000 172,000 ---
Redemption amount $833,391 $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, 1997
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Advertising: (2.67%)
Omnicom Group, Inc. 2,914 $205,801
Banking/Finance: (3.28%)
Barnett Banks, Inc. 3,670 253,230
Biotechnology: (6.35%)
Amgen, Inc.* 2,728 134,354
Biogen, Inc,* 3,956 132,526
Chiron Corporation* 4,271 82,217
Genzyme Corp.-General Division*(3) 5,085 139,202
Genzyme Corp.-Tissue Repair*(3) 152 1,311
Cellular/Paging Communication: (3.50%)
Grupo Iusacell S.A.~* 2,543 45,774
Paging Network, Inc.* 4,799 59,388
Rogers Cantel Mobil Communications* 2,447 41,293
Vodafone Group plc ~ 2,259 123,963
Construction: (.42%)
Empresas ICA Sociedad Controladora
S.A. de C.V. ~ 2,447 32,576
Computer Hardware/Software: (10.83%)
Compaq Computer Corporation 4,822 307,402
Microsoft Corporation* 2,447 318,110
Oracle Corporation* 5,884 210,537
Consumer/Household Products: (4.58%)
Gillette Company 2,101 187,120
Procter & Gamble Company 2,448 166,464
Consumer Finance: (.75%)
World Acceptance Corporation* 10,741 57,733
Electrical: (1.66%)
Emerson Electric Company 2,447 128,315
Electronics/Semi-Conductors: (12.62%)
Hewlett-Packard Company 2,588 159,647
Intel Corporation 5,080 391,160
Littelfuse, Inc.* 6,024 184,485
Motorola, Inc. 1,316 81,263
Nokia Corporation ~* 1,783 157,350
Entertainment: (5.31%)
Walt Disney Company 2,728 224,378
Time Warner, Inc. 2,213 127,662
Viacom, Inc.* 1,929 57,629
Food/Beverage: (3.75%)
The Coca-Cola Company 3,010 170,065
Wrigley (WM) Jr. Company 1,647 119,202
Food Retailer: (6.96%)
General Nutrition Companies, Inc.* 5,464 172,116
Starbucks Corporation* 5,464 180,312
Whole Foods Market, Inc.* 4,712 184,946
Healthcare/Hospitals: (1.89%)
Columbia/HCA Healthcare Corporation 2,893 81,727
Integrated Health Services, Inc. 2,023 64,230
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES SIXTEEN
SCHEDULE OF INVESTMENTS
As of October 31, 1997
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Investment Conglomerate: (.73%)
Swire Pacific Ltd. (2) 10,500 $56,103
Machinery: (2.11%)
AlliedSignal, Inc. 4,518 162,648
Medical Delivery Services: (7.33%)
Apria Healthcare Group, Inc.*(3) 5,732 87,055
Boston Scientific Corporation* 4,759 216,534
Medtronic, Inc. 6,018 261,783
Motor Vehicle Parts: (3.80%)
Special Devices, Inc.* 4,147 95,899
Superior Industries International, Inc. 2,565 68,453
TRW, Inc. 2,255 129,099
Packaging: (1.16%)
Crown Cork & Seal Company, Inc. 1,978 89,134
Power Utility: (1.02%)
China Light & Power Company Ltd.(2) 15,000 78,982
Publishing: (1.73%)
A.H. Belo Corporation 2,824 133,434
Radio Network: (.83%)
Grupo Radio Centro S.A. de C.V. ~ 5,043 64,298
Real Estate Development: (.96%)
Sun Hung Kai Properties Ltd.(2) 10,000 73,743
Specialty Retailer: (5.57%)
Barnes & Noble* 5,464 139,673
Cendant Corporation* 5,716 168,622
HSN, Inc.* 3,032 121,280
Telecommunications: (2.13%)
Cable & Wireless Communications plc~*(3) 2,156 39,204
Telecom Argentina S.A. Cl.B (2) 13,000 66,339
Telefonos de Mexico S.A. ~ 1,364 58,993
Television/Cable Networks: (2.68%)
United Video Satellite Group, Inc.* 7,631 206,991
Water Treatment: (5.38%)
Ionics, Inc*. 2,614 100,149
US Filter Corporation* 7,846 314,821
TOTAL INVESTMENTS $7,716,725
(1) Valuation of Securities was made by the Co-
Trustees as described in "Valuation".
(2) Foreign Stock.
(3) Homedco Group merged with Abbey Healthcare
to form Apria Healthcare; Genzyme spun off its
Tissue Repair Division; Bell Cablemedia was
acquired by Cable & Wireless Communications plc.
* Non-income producing.
~ American Depositary Receipts.
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.C1 Opinion of Counsel as to legality of securities
being registered
EX-99.C2 Opinion of Counsel as to certain tax aspects of
of the Trust
EX-27 Financial Data Schedule
EX-99.C3 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, 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, 1998.
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, 1998.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer
and Director of PaineWebber Incorporated*
Regina A. Dolan Executive Vice President,
Chief Financial Officer and
Director of PaineWebber Incorporated*
Joseph J. Grano, Jr. President and
Director of PaineWebber Incorporated*
Steve P. Baum Executive Vice President and
Director of PaineWebber Incorporated*
Robert H. Silver Executive Vice President and
Director of PaineWebber Incorporated*
Mark B. Sutton Executive Vice President and
Director of PaineWebber Incorporated*
Margo N. Alexander Executive Vice President and
Director of PaineWebber Incorporated*
Terry L. Atkinson Managing Director and
Director of PaineWebber Incorporated*
Brian M. Barefoot Executive Vice President and
Director of PaineWebber Incorporated*
Michael Culp Managing Director and
Director of PaineWebber Incorporated*
Edward M. Kerschner Managing Director and
Director of PaineWebber Incorporated*
James P. MacGilvray Executive Vice President and
Director of PaineWebber Incorporated*
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been previously
filed with the Securities and Exchange Commission with the Post
Effective Amendment to the Registration Statement File No. 2-61279.
February 11, 1998
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. 3 to register for reoffering 435,406 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. 3 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 Initial Date of Deposit, among
the Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other
than the State of New York (except "Blue Sky" laws) and the federal laws
of the United States, except to the extent necessary to render the
opinion as to the Depositor in paragraph (i) below with respect to
Delaware law. As you know we are not licensed to practice law in the
State of Delaware, and our opinion in paragraph (i) and (iii) as to
Delaware law is based solely on review of the official statutes of the
State of Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
February 11, 1998
PaineWebber Incorporated
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Dear Sirs:
As counsel for PaineWebber Incorporated (the
"Depositor"), we have examined an executed copy of the
Trust Indenture and Agreement dated as of the Initial
Date of Deposit (the "Indenture") which incorporates the
Standard Terms and Conditions of Trust, (the "Agreement"),
both between the Depositor, and Investors Bank & Trust
Company and the First National Bank of Chicago as
Co-Trustees (the "Trustee"). The Indenture established a
trust called The PaineWebber Equity Trust, Growth Stock
Series 16 (the "Trust") into which the Depositor deposited
certain stocks (the "Securities"), and moneys to
be held by the Trustee upon the terms and conditions
set forth in the Indenture and Agreement. Under the
Indenture, units were issued representing fractional
undivided interests in the Trust (the "Units").
Based upon the foregoing and upon an examination of
such other documents and an investigation of such
matters of law as we have deemed necessary, we are of
the opinion that, under existing statutes and
decisions:
1. The Trust intends to qualify for and elect tax
treatment as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code").
Assuming that such election is made and the Trust so
qualifies, the Trust would not be subject to federal
income tax on such part of its net income and capital
gain, if any, as is timely distributed to Unitholders.
2. The Trust will be subject to New York State and New
York City franchise and income tax. However, in any fiscal
year in which the Trust qualifies as a regulated investment
company under Section 851 of the Code, and in which the
Trust distributes all of its net income and capital gains
to Unitholders, the sum of such New York State and New York
City tax to which the Trust will be subject will not
exceed $2,055.00.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-54569)
relating to the Units referred to above and to the use of
our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> EQUITY TRUST, GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR OTHER
<FISCAL-YEAR-END> OCT-31-1997 OCT-31-1996 OCT-31-1995
<PERIOD-START> NOV-01-1996 NOV-01-1995 NOV-10-1994
<PERIOD-END> OCT-31-1997 OCT-31-1996 OCT-31-1995
<EXCHANGE-RATE> 1 1 1
<INVESTMENTS-AT-COST> 4,377,774 0 0
<INVESTMENTS-AT-VALUE> 7,716,725 0 0
<RECEIVABLES> 2,780 0 0
<ASSETS-OTHER> 4,198 0 0
<OTHER-ITEMS-ASSETS> 0 0 0
<TOTAL-ASSETS> 7,723,703 0 0
<PAYABLE-FOR-SECURITIES> 0 0 0
<SENIOR-LONG-TERM-DEBT> 0 0 0
<OTHER-ITEMS-LIABILITIES> 8,742 0 0
<TOTAL-LIABILITIES> 8,742 0 0
<SENIOR-EQUITY> 0 0 0
<PAID-IN-CAPITAL-COMMON> 0 0 0
<SHARES-COMMON-STOCK> 502,000 0 0
<SHARES-COMMON-PRIOR> 558,000 0 0
<ACCUMULATED-NII-CURRENT> 8,143 0 0
<OVERDISTRIBUTION-NII> 0 0 0
<ACCUMULATED-NET-GAINS> 0 0 0
<OVERDISTRIBUTION-GAINS> (9,907) 0 0
<ACCUM-APPREC-OR-DEPREC> 3,338,951 0 0
<NET-ASSETS> 7,714,961 0 0
<DIVIDEND-INCOME> 55,448 60,106 37,232
<INTEREST-INCOME> 0 0 0
<OTHER-INCOME> 0 0 0
<EXPENSES-NET> 15,801 44,838 19,179
<NET-INVESTMENT-INCOME> 39,647 15,268 18,053
<REALIZED-GAINS-CURRENT> 397,464 644,534 27,699
<APPREC-INCREASE-CURRENT> 1,279,379 574,084 1,485,488
<NET-CHANGE-FROM-OPS> 1,716,490 1,233,886 1,531,240
<EQUALIZATION> 0 0 0
<DISTRIBUTIONS-OF-INCOME> 457,949 267,394 42,349
<DISTRIBUTIONS-OF-GAINS> 0 0 0
<DISTRIBUTIONS-OTHER> 31,101 13,284 22,053
<NUMBER-OF-SHARES-SOLD> 0 0 0
<NUMBER-OF-SHARES-REDEEMED> 56,000 172,000 0
<SHARES-REINVESTED> 0 0 0
<NET-CHANGE-IN-ASSETS> 394,049 (1,185,534) 1,466,838
<ACCUMULATED-NII-PRIOR> 0 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0 0
<OVERDISTRIB-NII-PRIOR> 0 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0 0
<GROSS-ADVISORY-FEES> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<GROSS-EXPENSE> 0 0 0
<AVERAGE-NET-ASSETS> 0 0 0
<PER-SHARE-NAV-BEGIN> 0 0 0
<PER-SHARE-NII> 0 0 0
<PER-SHARE-GAIN-APPREC> 0 0 0
<PER-SHARE-DIVIDEND> 0 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0 0
<RETURNS-OF-CAPITAL> 0 0 0
<PER-SHARE-NAV-END> 15 0 0
<EXPENSE-RATIO> 0 0 0
<AVG-DEBT-OUTSTANDING> 0 0 0
<AVG-DEBT-PER-SHARE> 0 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 2, 1998, 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, 1998
