File No. 33-59119
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2
A. Exact name of Trust:
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 18
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Copy to:
ORRICK, HERRINGTON & SUTCLIFFE
Attention: Donald J. Robinson, Esq.
599 Lexington Avenue
New York, New York 10022
E. Total and amount of securities being registered:
An indefinite number of Units pursuant to Rule 24f-2
under the Investment Company Act of 1940.
F. Proposed maximum offering price to the public
of the securities being registered:
Indefinite
G. Amount of filing fee, computed at one-twenty-ninth of 1
percent of the proposed maximum aggregate offering price
to the public:
pursuant to Rule 24f-2
$500 (paid with preliminary registration)
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
THE REGISTRATION STATEMENT
The registrant hereby amends this registration statement
on such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall
become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
THE PAINEWEBBER EQUITY TRUST
GROWTH STOCK SERIES 18
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction 1
as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Trust ) Front Cover
(b) Title of securities issued )
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and termination of ) The Trust
Trust Agreement ) Termination of the
) Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust
and Securities of the Trust
10. General Information regarding )The Trust
Trust's Securities and Rights of ) Rights of Unitholders
Holders
- ---------
* Not applicable, answer negative or not required.
(a) Type of Securities ) The Trust
(Registered or Bearer) )
(b) Type of Securities ) The Trust
(Cumulative or Distributive) )
(c) Rights of Holders as to ) Rights of Unitholders
Withdrawal or Redemption ) Redemption
) Public Offering of
) Units-Secondary
) Market for Units
) Exchange Option
(d) Rights of Holders as to ) Public Offering of
conversion, transfer, etc. ) Units-Administration
) of the Trust
(e) Rights of Trust issues periodic ) *
payment plan certificates )
(f) Voting rights as to Securities, ) Rights of Unitholders
under the Indenture ) Amendment of the Trust
) Termination of the
) Trust
(g) Notice to Holders as to )
change in )
(1) Assets of Trust ) Amendment of the Indenture
(2) Terms and Conditions ) Supervision of Trust
of Trust's Securities ) Investments
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor ) Administration of the Trust
and 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 )
(4) Identity of Depositor and ) Amendment of the Indenture
Trustee )
11. Type of securities comprising ) The Trust Rights of Unit-
security holder's interest ) holders Administration of
) the Trust-Portfolio
) Supervision-Reinvestment
- ----------
* Not applicable, answer negative or not required.
12. Information concerning periodic ) *
payment certificates )
13. (a) Load, fees, expenses, etc. ) Public Offering Price of
) Units, Administration of
) the Trust, Expenses of the
) Trust
(b) Certain information regarding ) *
periodic payment certificates )
(c) Certain percentages ) Public offering of Units
(d) Certain other fees, etc. )
payable by holders ) Rights of Unitholders
(e) Certain profits receivable by ) Public Offering of Units-
depositor, principal under- ) Public Offering Price;
writers, trustee or ) -Sponsor's Profit-Secondary
affiliated persons ) Market for Units
(f) Ratio of annual charges to ) *
income )
14. Issuance of trust's securities ) The Trust
) Public Offering of Units
15. Receipt and handling of payments ) Public Offering of Units
from purchasers )
16. Acquisition and disposition of ) The Trust, Administration
Underlying Securities ) of the Trust, Amendment of
) the Indenture, Termination
) of the Trust
17. Withdrawal or redemption ) Public Offering of Units
) Administration of the Trust
18. (a) Receipt and disposition of ) Distributions, The Trust,
income ) Distributions, Administra-
) tion of the Trust
(b) Reinvestment of distributions ) *
(c) Reserves or special fund ) Distributions, Redemption,
) Expenses of the Trust,
) Termination of the Trust,
) Amendment of the Indenture
- ----------
* Not applicable, answer negative or not required.
(d) Schedule of distribution ) *
19. Records, accounts and report ) Distributions, Adminstra-
) tion of the Trust
20. Certain miscellaneous provisions ) Trustee, Sponsor Termina-
of trust agreement ) tion of the Trust, Amend-
) ment of the Indenture
21. Loans to security holders ) *
22. Limitations on liability ) Sponsor, Trustee, Redemp-
) tion
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material provisions of ) *
trust agreement )
III. Organization Personnel and
Affiliated Persons of Depositor
25. Organization of Depositor ) Sponsor
26. Fees received by Depositor ) Public Offering Price of
) Units, Expenses of the
) Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of Depositor ) *
30. Persons controlling Depositor ) Sponsor
31. Payments by Depositor for certain ) *
other services trust )
32. Payments by Depositor for ) *
certain other services )
rendered to trust )
33. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
- ----------
* Not applicable, answer negative or not required.
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 ) The Trust, Administration
(c) Selling agreements ) of The Trust
39. (a) Organization of principal ) Sponsor
Underwriter )
(b) N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering of Units,
principal underwriter ) Expenses of the Trust
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 of Units
) Valuation
(b) Schedule as to offering price ) *
(c) Variation in offering ) Public Offering of Units
Price to certain persons ) Administration of the Trust
- ----------
* Not applicable, answer negative or not required.
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Public Offering of Units
) -Public Offering Price
) -Secondary Market for Units
) Valuation; Redemption
(b) Schedule as to redemption ) *
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position in ) Redemption, Public Offering
underlying securities ) of Units-Public Offering
) Price
48. Organization and regulation of ) Trustee
Trustee )
49. Fees and expenses of Trustee ) Expenses of the Trust
50. Trustee's lien ) Expenses of the Trust
VI. Information concerning Insurance of Holders of Securities
51. (a) Name and address of Insurance ) *
Company )
(b) Type of policies ) *
(c) Type of risks insured and ) *
excluded )
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of ) *
cancellation )
(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
- ----------
* Not applicable, answer negative or not required.
VII. Policy of Registrant
52. (a) Method of selecting and ) The Trust, Administration
eliminating securities from ) of the Trust
the Trust )
(b) Elimination of securities ) *
from the Trust )
(c) Policy of Trust regarding ) The Trust, Administration
substitution and elimination ) of the Trust
of securities )
(d) Description of any funda- ) The Trust, Administration
mental policy of the Trust ) of the Trust-Portfolio
) Supervision
53. (a) Taxable status of the Trust ) Federal Income Taxes
(b) Qualification of the Trust as )
a regulated investment company )
VIII. Financial and Statistical Information
54. Information regarding the Trust's ) *
past ten fiscal years )
55. Certain information regarding ) *
periodic payment plan certificates )
56. Certain information regarding ) *
periodic payment plan certificates )
57. Certain information regarding ) *
periodic payment plan certificates )
58. Certain information regarding ) *
periodic payment plan certificates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to Form S-6) ) Condition
- ----------
* Not applicable, answer negative or not required.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of
the Securities Exchange Act of 1934, the undersigned registrant
hereby undertakes to file with the Securities and Exchange
Commission such supplementary and periodic information, documents
and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES.
PRELIMINARY, SUBJECT TO CHANGE DATED AUGUST 31, 1995
PAINEWEBBER EQUITY TRUST
Growth Stock Series 18
[LOGO]
- -----------------------------------------------------------------------------
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 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -----------------------------------------------------------------------------
SPONSOR:
PAINEWEBBER INCORPORATED
Read and retain this prospectus for future reference.
PROSPECTUS DATED , 1995
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
AS OF , 1995(1)
<TABLE>
<CAPTION>
<S> <C>
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Company
The First National Bank of Chicago
</TABLE>
Initial Date of Deposit: , 1995
<TABLE>
<CAPTION>
<S> <C>
Aggregate Value of Securities in Trust: ................ $
Number of Units: .......................................
Fractional Undivided Interest in the Trust Represented 1/ th
by Each Unit: .........................................
Calculation of Public Offering Price Per Unit(2)
Aggregate Value of Underlying Securities in Trust ......... $
Divided by Units ...................................... $
Plus Sales Charge of 3.75% of Public Offering Price
(3.90% of net amount invested per Unit) .............. $.375
Public Offering Price per Unit ........................ $10.00
Redemption Value: ........................................... $9.625
Evaluation Time: ............................................ 4:00 P.M. New York time.
Income Account Distribution Dates(3): ....................... and quarterly thereafter and on the
Mandatory Termination Date.
Capital Account Distribution Dates(3): ...................... January 20, 1996 and annually
thereafter and on the Mandatory
Termination Date. No distributions of
less than $.05 per Unit need be made
from the Capital Account on any
Distribution Date.
Record Dates: ............................................... December 31, 1995 and quarterly
thereafter.
Mandatory Termination Date: .................................
Discretionary Liquidation Amount: ........................... 50% of the value of Securities upon
completion of the deposit of
Securities.
Estimated Annual Expenses of the Trust(4): .................. $. per Unit.
<FN>
- ---------------
(1) The date prior to the Initial Date of Deposit.
(2) 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. The aggregate value of the Foreign Stocks
(as defined herein) in the Trust will be represented as the U.S.
dollar value based on the currency exchange rates for the [applicable
foreign currency], calculated at the Evaluation Time each day that a
purchase order is received. Following the Initial Date of Deposit,
costs other than commissions incurred in connection with the
acquisition of additional Stocks listed on any national securities
exchange will be at the expense of the Trust. (See "Essential
Information Regarding the Trust--Additional Deposits," "Risk Factors
and Special Considerations" and "Valuation").
(3) See "Distributions".
(4) See "Expenses of the Trust". Estimated dividends from the Stocks,
based upon last dividends actually paid, are expected by the Sponsor
to be sufficient to pay estimated expenses of the Trust.
</TABLE>
2
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST (CONTINUED)
THE TRUST. The objective of the PaineWebber Equity Trust, Growth Stock
Series 18 (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.* In PaineWebber's view,
the consumer sector of the U.S. economy will be the driving force behind the
economic growth of the next decade. PaineWebber has therefore identified
certain trends discussed briefly below which it believes will help highlight
those companies which should benefit from the growth potential in the
consumer sector.
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 Trust may invest in the American Depositary Receipts ("ADRs")
and, the equity securities of foreign issuers ("Foreign Stocks"). The ADRs
and the 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 Standard & Poor's 500 Index (the "S&P 500") is an unmanaged index of
500 stocks calculated under the auspices of Standard & Poors, which, in
PaineWebber's view, constitutes a broadly diversified, representative segment
of the market of publicly traded stocks in the United States.
3
<PAGE>
THE COMPOSITION OF THE PORTFOLIO.
PaineWebber forecasts that investors should return to investments in
growth stocks. In PaineWebber's view, the consumer sector will be the driving
force behind the growth experienced by the U.S. economy in the next decade.
PaineWebber observes that historically the role of "driver" of the U.S.
economy over the last 50 years has rotated among the government, corporate
and consumer sectors; a brief summary of the economic activity during the
past five decades as set forth below shows this rotation:
1940-1952: Word War II government military spending propels the economy out
of the depression;
1952-60: Corporations restructure from wartime operations and prosper, while
Eisenhower curbs government spending and the consumer is hurt by
frequent recessions;
1960-67: Strong consumer spending propels rapid growth in the U.S. economy;
1967-82: Government spending expands due to the Vietnam War and Great Society
programs, while the resulting rising taxes and accelerating
inflation and weak productivity growth hurt both corporations and
consumers;
1982-87: Consumer spending is bolstered by tax cuts and lowered inflation,
while Reagan curbs government spending and corporations are hurt by
disinflation, a strong dollar and foreign competition;
1987-95: Corporations restructure aggressively and the survivors prosper; the
resulting slowdown of employment growth coupled with reduced wage
gains and benefits hurt the consumer, and the influence of
government continues to slip.
PaineWebber believes that the consumer sector will be the driving force
behind growth in the U.S. economy during the coming decade because
restructured corporations have few areas of excess left to trim and
the current political environment does not appear disposed towards the
rebirth of "Big Government". In PaineWebber's view, after 20 years of
stagnation, real wages should climb for several reasons: (1) the demand for
labor should be healthy as the U.S. avoids a severe recession, (2) the supply
of labor should grow more slowly than it did during the 1970s and 1980s
because women and "baby-boomers" have already entered the labor force, and
(3) corporations should be able to raise wages in order to attract skilled
workers, due to strong productivity growth, low unit labor cost increases and
slower benefits inflation.
PaineWebber observes that when the government sector drives the economy,
inflation tends to be high and resource-oriented stocks out-perform the
market as a whole, when the corporate sector leads, industrial/capital goods
stocks perform well, and when the consumer sector drives the economy,
consumer stocks outperform the market as a whole.
PaineWebber forecasts that as consumer income rises more rapidly than it
has in the past, and as the personal savings rate rises, interest rates will
fall to levels even lower than current interest rates. But PaineWebber notes
that consumer spending will also rise during this time period, although more
slowly than the rise in incomes. PaineWebber cautions that investing to
benefit from these developments will not be merely a matter of choosing the
most obvious consumer trends and brand names, such cyclical
automotive/housing/retail stocks or "power brand" growth stocks. Rather, in
PaineWebber's view, a new set of investment opportunities will result from a
new consumer profile which PaineWebber believes is likely to be "older and
wiser," not the "ebullient youth" of the 1960s nor the "conspicuous consumer"
of the 1980s.
4
<PAGE>
Accordingly, PaineWebber's research professionals have identified certain
trends listed below which they believe will highlight companies which may be
poised to benefit from growth prospects in the consumer section. These trends
are briefly summarized as follows:
1. A Bifurcated Market. PaineWebber believes that the focus should be on
companies that serve the extremes of the income distribution, either
at the high end or the low end rather than on companies serving the
middle income level consumer (with the exception of certain companies
which may still benefit from restructurings or consolidations).
2. Maturing and More Sophisticated Consumers. PaineWebber expects that
consumers will spend more on jewelry, entertainment and books, as
well as sensible work clothing, rather than high-fashion apparel. As
such consumers age, PaineWebber expects that they will become
increasingly health conscious and likely to spend more on vitamins and
nonalcoholic beverages such as coffee than on alcohol.
3. The Golden Years. With rapid growth occurring in the over-75 age
group, PaineWebber asserts that there will be rising demand for
nursing homes, ambulance companies, funeral service providers and
other companies who serve the needs of the elderly.
4. Home Improvement. As "baby-boomers" continue to purchase their own
homes, PaineWebber believes that they will spend more to make their
homes comfortable and will increasingly create home offices, leading
to purchases of personal computers and other home office products.
5. The Country Western Consumer. PaineWebber expects that the South
should continue to prosper, and that country western culture will
become more "mainstream", a trend that will influence companies in
the consumer sector.
6. The Savings Surge. It is PaineWebber's opinion that income should
rise faster than consumption, which will have a positive effect on
trust-oriented banks, brokers, mutual fund companies and other
investment service providers.
PaineWebber's research professionals have selected certain stocks in the
industries listed below which they believe will benefit from one or more of
the trends listed above. In PaineWebber's search for such potential growth
stocks, there was no particular bias toward large capitalization or small
capitalization issues. 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."
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE OF
AGGREGATE NET ASSET VALUE
OF THE TRUST AS OF THE
PRIMARY INDUSTRY SOURCE INITIAL DATE OF DEPOSIT
- --------------------------- --------------------------
<S> <C>
</TABLE>
5
<PAGE>
ADDITIONAL DEPOSITS. After the first deposit on the Initial Date of
Deposit the Sponsor may, from time to time, cause the deposit of additional
Securities in the Trust where additional Units are to be offered to the
public, maintaining the original percentage relationships between the number
of shares of Stock deposited on the Initial Date of Deposit, subject to
certain adjustments. Costs incurred in acquiring such additional Stocks which
are either not listed on any national securities exchange or are ADRs or
Foreign Stocks, including brokerage fees, stamp taxes and certain costs
associated with foreign trading incurred in purchasing such additional
Stocks, will be borne by the Trust. Investors 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 four (4) years after the
Initial Date of Deposit regardless of market conditions at the time. (See
"Termination of the Trust" and "Federal Income Taxes".)
PUBLIC OFFERING PRICE. The Public Offering Price per Unit is computed by
dividing the Trust Fund Evaluation, including the U.S. dollar value of the
Foreign Stocks based on the applicable currency exchange rate calculated at
the Evaluation Time, by the number of Units outstanding and then adding a
sales charge of 3.75% of the Public Offering Price (3.90% of the net amount
invested). The sales charge is reduced on a graduated scale for volume
purchasers and is reduced for certain other purchasers. Units are offered at
the Public Offering Price computed as of the Evaluation Time for all sales
subsequent to the previous evaluation. The Public Offering Price on the
Initial Date of Deposit, and on subsequent dates, will vary from the Public
Offering Price set forth on page 2. (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".)
6
<PAGE>
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".)
- ---------------
*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.
7
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
An investment in Units of the Trust should be made with an understanding
of the risks inherent in an investment in common stocks in general. The
general risks are associated with the rights to receive payments from the
issuer which are generally inferior to creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Holders of common
stocks have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims
against the issuer have been paid or provided for. By contrast, holders of
preferred stocks have the right to receive dividends at a fixed rate when and
as declared by the issuer's board of directors, normally on a cumulative
basis, but do not participate in other amounts available for distribution by
the issuing corporation. 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
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<PAGE>
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 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
9
<PAGE>
may deposit cash (or cash equivalents, e.g., a bank letter of credit in lieu
of cash) with instructions to purchase Securities in amounts sufficient to
maintain, to the extent practicable, the percentage relationship among the
Securities based on the price of the Securities at the Evaluation Time on the
date the cash is deposited. To the extent the price of a Security or the
relevant currency exchange rate increases or decreases between the time cash
is deposited with instructions to purchase the Security and the time the cash
is used to purchase the Security, Units will represent less or more of that
Security and more or less of the other Securities in the Trust. Unitholders
will be at risk because of price and currency fluctuations during this period
since if the price of shares of a Security increases, Unitholders will have
an interest in fewer shares of that Security, and if the price of a Security
decreases, Unitholders will have an interest in more shares of that Security,
than if the Security had been purchased on the date cash was deposited with
instructions to purchase the Security. In order to minimize these effects,
the Trust will attempt to purchase Securities as close as possible to the
Evaluation Time or at prices as close as possible to the prices used to
evaluate the Trust at the Evaluation Time. Thus price and currency
fluctuations during this period will affect the value of every Unitholder's
Units and the income per Unit received by the Trust. In addition, costs
incurred in connection with the acquisition of Securities not listed on any
national securities exchange (due to differentials between bid and offer
prices for the Securities) and brokerage fees, stamp taxes and other costs
associated with foreign trading incurred in purchasing Foreign Stocks will be
at the expense of the Trust and will affect the value of every Unitholder's
Units.
In the event a contract to purchase a Stock to be deposited on the Initial
Date of Deposit or any other date fails, cash held or available under a
letter or letters of credit, attributable to such failed contract may be
reinvested in another stock or stocks having characteristics sufficiently
similar to the Stocks originally deposited (in which case the original
proportionate relationship shall be adjusted) or, if not so reinvested,
distributed to Unitholders of record on the last day of the month in which
the failure occurred. The distribution will be made twenty days following
such record date and, in the event of such a distribution, the Sponsor will
refund to each Unitholder the portion of the sales charge attributable to
such failed contract.
BECAUSE THE TRUST IS ORGANIZED AS A UNIT INVESTMENT TRUST, RATHER THAN AS
A MANAGEMENT INVESTMENT COMPANY, THE TRUSTEE AND THE SPONSOR DO NOT HAVE
AUTHORITY TO MANAGE THE TRUST'S ASSETS FULLY IN AN ATTEMPT TO TAKE ADVANTAGE
OF VARIOUS MARKET CONDITIONS TO IMPROVE THE TRUST'S NET ASSET VALUE, BUT MAY
DISPOSE OF SECURITIES ONLY UNDER LIMITED CIRCUMSTANCES. (SEE 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
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<PAGE>
treatment, the Trust will not be subject to federal income tax on taxable
income or net capital gains distributed to Unitholders provided it
distributes 90% or more of its taxable income (exclusive of net capital
gains). However, a 4% excise tax is imposed on regulated investment companies
that fail to distribute all but a de minimis amount of their income and gain.
The Trust intends to distribute all of its income, including capital gains,
annually.
In any taxable year, the distributions of any ordinary income (such as
dividends) and any net short-term capital gain will be taxable as ordinary
income to Unitholders. A distribution paid shortly after a purchase of shares
may be taxable even though, in effect, it may represent a return of capital
to Unitholders. A dividend paid by the Trust in January will be considered
for federal income tax purposes to have been paid by the Trust and received
by the Unitholders on the preceding December 31, if the dividend was declared
in the preceding October, November or December to Unitholders of record in
any one of those months. Distributions which are taxable as ordinary income
to Unitholders will not constitute dividends for purposes of the
dividends-received deduction for corporations except, and only to the extent
of, a specific designation by the Trust.
The gross income of the Trust typically will include dividends and gains
on sales or other dispositions of portfolio securities. In order to maintain
its qualification as a "regulated investment company", the Trust must in the
course of a taxable year derive at least 90% of its gross income from
dividends, interest, gains on sales or other dispositions of Securities and
certain other sources (referred to as "eligible sources"), and must derive
less than 30% of its gross income from the sale or other disposition of
Stock, Securities and certain other assets held for less than three months.
If during a taxable year it appears that less than 90% of the Trust income
will be derived from eligible sources, the Sponsor may direct the Trustee to
sell Securities which, upon the realization of sufficient aggregate gain,
will enable the Trust to maintain its qualification as a regulated investment
company.
Distributions by the Trust that are designated by it as long-term capital
gain distributions will be taxable to Unitholders as long-term capital gains,
regardless of the length of time the Units have been held by a Unitholder.
Distributions of proceeds derived from the sale or redemption of Securities
in the Trust portfolio (exclusive of net capital gain) will not be taxable to
Unitholders to the extent that they represent a return of capital; such
distributions will, however, reduce a Unitholder's basis in his Units, and to
the extent they exceed the basis of his Units will be taxed as capital gain.
Any loss realized by a Unitholder on the sale or exchange of Units that are
held by him for not more than six months will be treated as a long-term
capital loss if a long-term capital gain distribution had been paid to such
Unitholder with respect to such Units.
Withholding For Citizen or Resident Investors. In the case of any
noncorporate Unitholder that is a citizen or resident of the United States, a
31 percent "backup" withholding tax will apply to certain distributions of
the Trust unless the Unitholder properly completes and files under penalties
of perjury, IRS Form W-9 (or its equivalent).
The foregoing discussion is a general summary and relates only to certain
aspects of the federal income tax consequences of an investment in the Trust.
Unitholders may also be subject to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the Federal, state and local tax
consequences to it of ownership of Units.
Investment in the Trust may be suited for purchase by funds and accounts
of individual investors that are exempt from federal income taxes such as
Individual Retirement Accounts, tax-qualified retirement plans including
Keogh Plans, and other tax-deferred retirement plans. Unitholders desiring to
purchase
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<PAGE>
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 (as set forth on page 2 hereof) due to
fluctuations in the value of the Stocks, the currency exchange rates and
costs associated with foreign trading.
Sales charges during the initial public offering period and for secondary
market sales are set forth below. A discount in the sales charge is available
to volume purchasers of Units due to economies of scale in sales effort and
sales related expenses relating to volume purchases. The sales charge
applicable to volume 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.
INITIAL PUBLIC OFFERING PERIOD AND SECONDARY MARKET THEREAFTER
<TABLE>
<CAPTION>
PERCENT OF
PUBLIC PERCENT OF
OFFERING NET AMOUNT
AGGREGATE DOLLAR VALUE OF UNITS* PRICE INVESTED
- -------------------------------- ------------ ------------
<S> <C> <C>
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
<FN>
- ---------------
* 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.
</TABLE>
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.
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<PAGE>
Employee Discount. Due to the realization of economies of scale in sales
effort and sales related expenses with respect to the purchase of Units by
employees of the Sponsor and its affiliates, the Sponsor intends to permit
employees of the Sponsor and its affiliates and certain of their relatives to
purchase units of the Trust at a reduced sales charge of $5.00 per 100 Units.
Exchange Option. Unitholders may elect to exchange any or all of their
Units of this series for units of one or more of any series of PaineWebber
Municipal Bond Fund (the "PaineWebber Series"); The Municipal Bond Trust (the
"National Series"); The Municipal Bond Trust, Multi-State Program (the
"Multi-State Series"); The Municipal Bond Trust, California Series (the
"California Series"); The 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.
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<PAGE>
The Sponsor reserves the right to modify, suspend or terminate this
Exchange Option at any time with notice to Unitholders. In the event the
Exchange Option is not available to a Unitholder at the time he wishes to
exercise it, the Unitholder will be immediately notified and no action will
be taken with respect to his Units without further instruction from the
Unitholder.
To exercise the Exchange Option, a Unitholder should notify the Sponsor of
his desire to exercise the Exchange Option and to use the proceeds from the
sale of his Units to the Sponsor of this series to purchase Units of one or
more of the Exchange Trusts from the Sponsor. If Units of the applicable
outstanding series of the Exchange Trust are at that time available for sale,
and if such Units may lawfully be sold in the state in which the Unitholder
is resident, the Unitholder may select the series or group of series for
which he desires his investment to be exchanged. The Unitholder will be
provided with a current prospectus or prospectuses relating to each series in
which he indicates interest.
The exchange transaction will operate in a manner essentially identical to
any secondary market transaction, i.e., Units will be repurchased at a price
based on the market value of the Securities in the portfolio of the Trust
next determined after receipt by the Sponsor of an exchange request and
properly endorsed documents. Units of the Exchange Trust will be sold to the
Unitholder at a price based upon the next determined market value of the
Securities in the Exchange Trust plus the reduced sales charge. Exchange
transactions will be effected only in whole units; thus, any proceeds not
used to acquire whole units will be paid to the selling Unitholder.
For example, assume that a Unitholder, who has three thousand units of a
trust with a current price of $1.30 per unit, desires to sell his units and
seeks to exchange the proceeds for units of a series of an Exchange Trust
with a current price of $890 per Unit based on the bid prices of the
underlying securities. In this example, which does not contemplate any
rounding up to the next highest number of Units, the proceeds from the
Unitholder's Units would 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 Exchange Option). For a
description of the tax consequences of a conversion reference is made to the
Exchange Option section herein.
Distribution of Units. The minimum purchase in the initial public offering
is 100 Units, except that the minimum purchase is 25 Units for purchases made
in connection with Individual Retirement Accounts or other tax-deferred
retirement plans. Only whole Units may be purchased.
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<PAGE>
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 includes the amount paid by the Sponsor for brokerage
commissions. These amounts are an expense of the Trust.
Cash, if any, received from Unitholders prior to the settlement date for
the purchase of Units or prior to the payment for Securities upon their
delivery may be used in the Sponsor's business subject to the limitations of
Rule 15c3-3 under the Securities and Exchange Act of 1934 and may be of
benefit to the Sponsor.
In 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.
15
<PAGE>
REDEMPTION
Units may be tendered to Investors Bank & Trust Company for redemption at
its office in person, or by mail at One Lincoln Plaza, 89 South Street,
Boston, MA 02111 upon payment of any transfer or similar tax which must be
paid to effect the redemption. At the present time there are no such taxes.
No redemption fee will be charged by the Sponsor or Trustee. If the Units are
represented by a certificate it must be properly endorsed accompanied by a
letter requesting redemption. If held in uncertificated form, a written
instrument of redemption must be signed by the Unitholder. Unitholders must
sign exactly as their names appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor institution or in such other
manner as may be acceptable to the Trustee. In certain instances the Trustee
may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or
administrator, or certificates of corporate authority. Unitholders should
contact the Trustee to determine whether additional documents are necessary.
Units tendered to the Trustee for redemption will be cancelled, if not
repurchased by the Sponsor.
Units will be redeemed at the Redemption Value per Unit next determined
after receipt of the redemption request in good order by the Trustee. The
Redemption Value per Unit is determined by dividing the Trust Fund Evaluation
by the number of Units outstanding. (See "Valuation".)
A redemption request is deemed received on the business day (see
"Valuation" for a definition of business day) when such request is received
prior to 4:00 p.m. If it is received after 4:00 p.m., it is deemed received
on the next business day. During the period in which the Sponsor maintains a
secondary market for Units, the Sponsor may repurchase any Unit presented for
tender to the Trustee for redemption no later than the close of business on
the second business day following such presentation and Unitholders will
receive the Redemption Value next determined after 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
16
<PAGE>
at the time of redemption. In addition, because of the minimum amounts in
which Securities are required to be sold, the proceeds of sale may exceed the
amount required at the time to redeem Units; these excess proceeds will be
distributed to Unitholders on the Distribution Dates.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar days following the day of
tender for any period during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday closings; or for any period during
which the Securities and Exchange Commission determined that trading on the
New York Stock Exchange, Inc. is restricted or for any period during which an
emergency exists as a result of which disposal or evaluation of the
Securities is not reasonably practicable; or for such other period as the
Securities and Exchange Commission may by order permit for the protection of
Unitholders. The Trustee is not liable to any person or in any way for any
loss or damages which may result from any such suspension or postponement, or
any failure to suspend or postpone when done in the Trustee's discretion.
VALUATION
The Trustee will calculate the Trust's value (the "Trust Fund Evaluation")
per Unit at the Evaluation Time set forth under "Summary of Essential
Information Regarding the Trust" (1) on each business day as long as the
Sponsor is maintaining a bid in the secondary market, (2) on the business day
on which any Unit is tendered for redemption, (3) on any other day desired by
the Sponsor or the Trustee and (4) upon termination, by adding (a) the
aggregate value of the Securities and other assets determined by the Trustee
as set forth below and (b) cash on hand in the Trust and dividends receivable
on Stock trading ex-dividend (other than any cash held in any reserve account
established under the Indenture) and deducting therefrom the sum of (x) taxes
or other governmental charges against the Trust not previously deducted, (y)
accrued fees and expenses of the Trustee and the Sponsor (including legal and
auditing expenses) and other Trust expenses. The per Unit Trust Fund
Evaluation is calculated by dividing the result of such computation by the
number of Units outstanding as of the date thereof. Business days do not
include New Year's Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day and other
days that the New York Stock Exchange is closed.
The value of Stocks shall be determined by the Trustee in good faith in
the following manner: (1) if the domestic Stocks are listed on one or more
national securities exchanges or on the National Market System maintained by
the National Association of Securities Dealers Automated Quotations System or
if the Foreign Stocks are listed on a similar securities exchange or system,
such evaluation shall be based on the closing sale price on that day (unless
the Trustee deems such price inappropriate as a basis for evaluation) on the
exchange which is the principal market thereof (deemed to be the New York
Stock Exchange in the case of the domestic Stocks if such Stocks are listed
thereon), (2) if there is no such appropriate closing sales price on such
exchange or system, at the mean between the closing bid and asked prices on
such exchange or system (unless the Trustee deems such price inappropriate as
a basis for evaluation), (3) if the Stocks are not so listed or, if so listed
and the principal market therefor is other than on such exchange or there are
no such appropriate closing bid and asked prices available, such evaluation
shall be made by the Trustee in good faith based on the closing sale price in
the over-the-counter market (unless the Trustee deems such price
inappropriate as a basis for evaluation) or (4) if there is no such
appropriate closing price, then (a) on the basis of current bid prices, (b)
if bid prices are not available, on the basis of current bid prices for
comparable securities, (c) by the Trustee's appraising the value of the Stock
in good faith on the bid side of the market or (d) by any combination
thereof. The evaluation of
17
<PAGE>
Foreign Stocks will be based on the U.S. dollar equivalent calculated at the
relevant exchange rate for such Stocks. The relevant exchange rate used for
such evaluations will include the cost of any forward foreign exchange
contract in the relevant currency, if any, purchased by the Trustee pursuant
to the terms of the agreement.
The tender of a Stock pursuant to a tender offer will not affect the
method of valuing Stock.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
On the business day prior to the Initial Date of Deposit, the Public
Offering Price per Unit (which figure includes the sales charge) exceeded the
Redemption Value (see "Essential Information"). The prices of the Securities
are expected to vary. For this reason and others, including the fact that the
Public Offering Price includes the sales charge, the amount realized by a
Unitholder upon redemption of Units may be less than the price paid by the
Unitholder for such Units.
EXPENSES OF THE TRUST
The cost of the preparation and printing of the Indenture and this
Prospectus, the initial fees of the Trustee and the Trustee's counsel, and
expenses incurred in establishing the Trust, including legal and auditing
fees (the "Organizational Expenses"), will be paid by the Trust, as is common
for mutual funds. Historically, the Sponsors of Unit Trusts have paid all
organizational expenses. 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 $.0035
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 $. 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 $. per Unit annually
which include, but are not limited to certain mailing, printing, and audit
expenses. Expenses in excess of this estimate will be borne by the Trust. The
Trustee could also benefit to the extent that it may hold funds in
non-interest bearing accounts created by the Indenture.
The Sponsor's fee and Trustee's fee may be increased without approval of
the Unitholders by an amount not exceeding a proportionate increase in the
category entitled "All Services Less Rent" in the Consumer Price Index
published by the United States Department of Labor or, if the Price Index is
no longer published, a similar index as determined by the Trustee and
Sponsor.
In addition to the above, the following charges are or may be incurred by
each Trust and paid from the Income Account, or, to the extent funds are not
available in such Account, from the Capital Account (see "Administration of
the Trust--Accounts"): (1) fees for the Trustee for extraordinary services;
(2) expenses of the Trustee (including legal and auditing expenses) and of
counsel; (3) various governmental charges; (4) expenses and costs of any
action taken by the Trustee to protect the trusts and the rights and
interests of the Unitholders; (5) indemnification of the Trustee for any
loss, liabilities or expenses incurred by it in the administration of the
Trust without gross negligence, bad faith or wilful misconduct on its part;
(6) brokerage commissions and other expenses incurred in connection with the
purchase and sale of
18
<PAGE>
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 guaranteed by an eligible guarantor institution or in such
other manner as may be acceptable to the Trustee, is delivered by the
Unitholder to the Sponsor. Issued Certificates are transferable by
presentation and surrender to the Trustee at its office in Boston,
Massachusetts properly endorsed or accompanied by a written instrument or
instruments of transfer. Uncertificated Units are transferable by
presentation to the Trustee at its office in Boston of a written instrument
of transfer.
Certificates may be issued in denominations of one Unit or any integral
multiple thereof as deemed appropriate by the Trustee. A Unitholder may be
required to pay $2.00 per certificate reissued or transferred, and shall be
required to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. For new certificates issued to
replace destroyed, mutilated, stolen or lost certificates, the Unitholder
must furnish indemnity satisfactory to the Trustee and must pay such expenses
as the Trustee may incur. Mutilated certificates must be surrendered to the
Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute net dividends and interest, if any, from the
Income Account on the quarterly Distribution Dates to Unitholders of record
on the preceding Record Date. Distributions from the Capital Account will be
made on annual Distribution Dates to Unitholders of record on the preceding
Record Date. Distributions of less than $.05 per Unit need not be made from
the Capital Account on any Distribution Date. See "Essential Information".
Whenever required for regulatory or tax purposes, the Trustee will make
special distributions of any dividends or capital on special Distribution
Dates to Unitholders of record on special Record Dates declared by the
Trustee.
Upon termination of the Trust, each Unitholder of record on such date will
receive his pro rata share of the amounts realized upon disposition of the
Securities plus any other assets of the Trust, less expenses of the Trust.
(See "Termination".)
19
<PAGE>
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;
20
<PAGE>
(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.
21
<PAGE>
Unless advised to the contrary by the Sponsor, approximately 20 days prior
to the termination of the Trust the Trustee will begin to sell the Securities
held in the Trust and will then, after deduction of any fees and expenses of
the Trust and payment into the Reserve Account of any amount required for
taxes or other governmental charges that may be payable by the Trust,
distribute to each Unitholder, after due notice of such termination, such
Unitholder's pro rata share in the Income and Capital Accounts. Moneys held
upon the sale of Securities may be held in non-interest bearing accounts
created by the Indenture until distributed and will be of benefit to the
Trustee. The sale of Securities in the Trust in the period prior to
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time due to impending or actual
termination of the Trust. For this reason, among others, the amount realized
by a Unitholder upon termination may be less than the amount paid by such
Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a corporation organized under
the laws of the State of Delaware. The Sponsor is a member firm of the New
York Stock Exchange, Inc. as well as other major securities and commodities
exchanges and is a member of the National Association of Securities Dealers,
Inc. The Sponsor is engaged in a security and commodity brokerage business as
well as underwriting and distributing new issues. The Sponsor also acts as a
dealer in unlisted securities and municipal bonds and in addition to
participating as a member of various selling groups or as an agent of other
investment companies, executes orders on behalf of investment companies for
the purchase and sale of securities of such companies and sells securities to
such companies in its capacity as a broker or dealer in securities.
The Indenture provides that the Sponsor will not be liable to the Trustee,
the Trust or to the Unitholders for taking any action or for refraining from
taking any action made in good faith or for errors in judgment, but will be
liable only for its own willful misfeasance, bad faith, gross negligence or
willful disregard of its duties. The Sponsor will not be liable or
responsible in any way for depreciation or loss incurred by reason of the
sale of any Securities in the Trust.
The Indenture is binding upon any successor to the business of the
Sponsor. The Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on the business of the Sponsor and
duly assumes all the obligations of the Sponsor under the Indenture. In such
event the Sponsor shall be relieved of all further liability under the
Indenture.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over
by public authorities, the Trustee may either appoint a successor Sponsor or
Sponsors to serve at rates of compensation determined as provided in the
Indenture or terminate the Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of Chicago, a national banking
association with its corporate trust office at One First National Plaza,
Suite 0126, Chicago, Illinois 60670-0126 (which is subject to supervision by
the Comptroller of the Currency, the Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company with its principal office at
One Lincoln Plaza, 89 South Street, Boston, Massachusetts 02111, toll-free
number 800-356-2754 (which is subject to supervision by the Massachusetts
Commissioner of Banks, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System).
The Indenture provides that the Trustee will not be liable for any action
taken in good faith in reliance on properly executed documents or the
disposition of moneys, Securities or Certificates or in
22
<PAGE>
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 Statement of Financial Condition and Schedule of Investments audited
by Ernst & Young LLP, independent auditors, have been included in reliance on
their report given on their authority as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Orrick,
Herrington & Sutcliffe, 599 Lexington Avenue, New York, New York, as counsel
for the Sponsor.
23
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 18
We have audited the accompanying Statement of Financial Condition of The
PaineWebber Equity Trust, Growth Stock Series 18, including the Schedule of
Investments, as of , 1995. This financial statement is the
responsibility of the Co-Trustees. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. Our
procedures included confirmation with Investors Bank & Trust Company, a
Co-Trustee, of an irrevocable letter of credit deposited for the purchase of
securities, as shown in the financial statement as of , 1995. An
audit also includes assessing the accounting principles used and significant
estimates made by the Co-Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of The PaineWebber Equity
Trust, Growth Stock Series 18 at , 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
, 1995
24
<PAGE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 18
STATEMENT OF FINANCIAL CONDITION
AS OF INITIAL DATE OF DEPOSIT, , 1995
<TABLE>
<CAPTION>
<S> <C>
TRUST PROPERTY
--------------
Sponsor's Contracts to Purchase underlying Securities backed by
irrevocable letter of credit (a) ................................. $
--------------
Organizational Expenses (b) .......................................
--------------
Total ......................................................... $
==============
INTEREST OF UNITHOLDERS
-----------------------
Units outstanding:
Cost to investors (c) ............................................ $
Less: Gross underwriting commissions (d) ......................... ( )
Accrued Liability (b) ............................................. $
Net amount applicable to investors ............................ $
--------------
Total ......................................................... $
==============
<FN>
- ---------------
(a) The aggregate cost to the Trust of the securities listed under
"Schedule of Investments" is determined by the Co-Trustees on the basis set
forth above under "Public Offering of Units--Public Offering Price." See also
the column headed Cost of Securities to Trust under "Schedule of
Investments." Pursuant to contracts to purchase securities, an irrevocable
letter of credit drawn on in the amount of $ has been
deposited with the Co-Trustees, Investors Bank & Trust Company and The First
National Bank of Chicago, for the purchase of $ aggregate value of
Securities in the initial deposit and for the purchase of Securities in
subsequent deposits.
(b) Organizational Expenses incurred by the Trust have been deferred and
will be amortized over years. Organizational Expenses have been estimated
on projected total assets of $ million. To the extent the Trust is
larger or smaller, the estimate may vary.
(c) The aggregate public offering price is computed on the basis set forth
under "Public Offering of Units--Public Offering Price."
(d) Sales charge of 3.75% of the Public Offering Price per Unit is
computed on the basis set forth under "Public Offering of Units--Sales Charge
and Volume Discount."
</TABLE>
25
<PAGE>
THE PAINEWEBBER EQUITY TRUST
GROWTH STOCK SERIES 18
SCHEDULE OF INVESTMENTS
AS OF DATE OF DEPOSIT, , 1995
COMMON STOCKS (1)
<TABLE>
<CAPTION>
NUMBER OF COST OF SECURITIES TO
NAME OF ISSUER SHARES TRUST(2)
- ------------------ ------------- ----------------------
<S> <C> <C>
</TABLE>
26
<PAGE>
THE PAINEWEBBER EQUITY TRUST
GROWTH STOCK SERIES 18
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF DATE OF DEPOSIT, , 1995
COMMON STOCKS (1)
<TABLE>
<CAPTION>
NUMBER OF COST OF SECURITIES TO
NAME OF ISSUER SHARES TRUST(2)
- ------------------ ------------- ----------------------
<S> <C> <C>
<FN>
- ---------------
(1) All Securities are represented entirely by contracts to purchase
Securities.
(2) Valuation of the Securities by the Co-Trustees was made as
described in "Valuation" as of the close of business on the business
day prior to the Date of Deposit.
(3) The profit (loss) to the Sponsor on the date of deposit is $ .
(4) Foreign Stock
(5) American Depositary Receipts.
* Non-income producing security.
</TABLE>
27
<PAGE>
PaineWebber Equity Trust
Growth Stock Series 18
[LOGO]
CO-TRUSTEES:
INVESTORS BANK & TRUST COMPANY
89 South Street,
Boston, Mass. 02111
(800) 356-2754
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza,
Suite 0126
Chicago, Illinois 60670-0126
SPONSOR:
PAINEWEBBER INCORPORATED
1200 Harbor Boulevard,
Weehawken, N.J. 07087
(201) 902-3000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Essential Information Regarding the Trust 2
The Trust .............................. 7
Risk Factors and Special Considerations 8
Federal Income Taxes ................... 10
Public Offering of Units ............... 12
Public Offering Price ................ 12
Employee Discount .................... 13
Exchange Option ...................... 13
Conversion Option .................... 14
Distribution of Units ................ 14
Secondary Market for Units ........... 15
Sponsor's Profits .................... 15
Redemption ............................. 16
Valuation .............................. 17
Comparison of Public Offering Price and
Redemption Value ...................... 18
Expenses of the Trust .................. 18
Rights of Unitholders .................. 19
Distributions .......................... 19
Administration of the Trust ............ 20
Accounts ............................. 20
Reports and Records .................. 20
Portfolio Supervision ................ 20
Amendment of the Indenture ............. 21
Termination of the Trust ............... 21
Sponsor ................................ 22
Trustee ................................ 22
Independent Auditors ................... 23
Legal Opinions ......................... 23
Report of Independent Auditors ......... 24
Statement of Financial Condition ....... 25
Schedule of Investments ................ 26
</TABLE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEE OR THE SPONSOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
THIS PROSPECTUS CONTAINS INFORMATION CONCERNING THE TRUST AND THE SPONSOR,
BUT DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE TRUST'S
REGISTRATION STATEMENTS, AMENDMENTS AND EXHIBITS RELATING THERETO, WHICH HAVE
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, AND
TO WHICH REFERENCE IS HEREBY MADE.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The Undertaking to file reports.
The signatures.
The following exhibits:
+ 1. Copy of Trust Indenture and Agreement
between PaineWebber Incorporated, Depositor,
and Investors Bank & Trust Company and The
First National Bank of Chicago, as
Co-Trustees, incorporating by reference
Standard Terms and Conditions of Trust dated
as of July 10, 1990.
2. Standard Terms and Conditions of Trust dated
as of July 10, 1990 between PaineWebber
Incorporated, Depositor and Investors Bank &
Trust Company and The First National Bank of
Chicago, as Co-Trustees, (incorporated by
reference to Exhibit 2 in File No. 33-30404).
3. Certificate of Incorporation of PaineWebber
Incorporated, as amended (incorporated by
reference to Exhibit 8 in File No. 2-88344).
4. By-Laws of PaineWebber Incorporated, as
amended (incorporated by reference to
Exhibit A(6)(a) in File No. 811-3722).
+ 5. Opinion of Counsel as to legality of
securities being registered.
+ 6. Opinion of Counsel as to income tax status
of securities being registered.
+ 7. Consent of Ernst & Young, Independent
Auditors.
----------
+ To be filed by amendment.
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 Group-Financial Statements incorporated by reference
to Form 10-K and Form 10-Q. (File No. 1-7367).
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 31st day of August, 1995.
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK, SERIES 18
(Registrant)
By: PaineWebber Incorporated
(Depositor)
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of PaineWebber Incorporated
the Depositor by the following persons who constitute a majority of the
Executive Committee of its Board of Directors in the following capacities
and in the City of New York, and State of New York, on this 31st day of
August, 1995.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive
By Officer, Director & Member of
the Executive Committee
Robert E. Holley
Attorney-in-Fact*
Regina Dolan Senior Vice President,
By Chief Financial Officer & Director*
Robert E. Holley
Attorney-in-fact*
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
By Director & Member of the Executive
Committee*
Robert E. Holley
Attorney-in-fact*
----------
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement No. 33-19786.
