File No. 33-59119
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 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 Blvd.
Weehawken, New Jersey 07087
(x) Check if it is proposed that this filing should become effective
(immediately upon filing or on December 13, 1996) pursuant to
paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
364,168 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$4,239,134.02**
* Estimated solely for the purpose of calculating the registration fee, at
$11.64 per unit.
G. Amount of filing fee, computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
THE REGISTRANT HEREBY TERMINATES ITS ELECTION MADE PURSUANT TO RULE 24f-2.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
* The method of calculation is made pursuant to Rule 24e-2 under the
Investment Company Act of 1940.The total amount of units redeemed or
repurchased during the previous fiscal year ending 1995 is 335,821.
There
have been no previous filings of post-effective amendments during the
current fiscal year 335,821 redeemed or repurchased units are being
used
to reduce the filing fee for this amendment.
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 ) Back Cover
Depositor
3. Name and address of ) Back Cover
Trustee
4. Name and address of ) Back Cover
Principal
Underwriter )
5. Organization of Trust ) The Trust
6. Execution and ) The Trust
termination of
Trust Agreement ) Termination of the Trust
7. Changes of name ) *
8. Fiscal Year ) *
9. Litigation ) *
II. General Description of the Trust and Securities of the Trust
10. General Information ) The Trust;
regarding
Trust's Securities and ) Rights of Unit
Rights
of Holders ) holders
(a) Type of Securities ) The Trust
(Registered or Bearer) )
(b) Type of Securities ) The Trust
(Registered or Bearer) )
* Not applicable, answer
negative or not required.
(c) Rights of Holders as to ) Rights of Unit
Withdrawal or ) holders
Redemption
) Redemption;
) Public Offering of Units-
) Secondary Market for Units
(d) Rights of Holders as to ) Secondary Market for
conversion, transfer, etc. ) Units Exchange Option
(e) Rights of Trust issues )
periodic payment plan ) *
certificates )
(f) Voting rights as to ) Rights of Unit
Securi-
ties, under the Indenture ) holders
(g) Notice to Holders as to )
change in )
(1)Assets of Trust ) Amendment of the
Indenture
(2)Terms and Conditions ) Administration of the
Trust-Portfolio Supervision
of Trust's Securities ) Investments
(3)Provisions of Trust ) Amendment of the
Indenture
(4)Identity of Depositor and ) Administration of the Trust
Trustee
(h) Consent of Security )
Holders
required to change )
(1)Composition of assets ) Amendment of the
Indenture
of Trust )
(2)Terms and conditions ) Amendment of the
Indenture
of Trust's Securities )
(3)Provisions of Indenture ) Amendment of the
Indenture
(4)Identity of Depositor ) Administration of the Trust
and Trustee )
11. Type of Securities ) The Trust
Comprising Units
12. Type of securities ) *
comprising
periodic payment )
certificates
13. (a)Load, fees, expenses, etc. ) Public Offering of
) Units; Expenses of the
) Trust
* Not applicable, answer
negative or not required.
(b)Certain information ) *
regarding periodic payment ) *
certificates )
(c)Certain percentages ) *
(d)Certain other fees, etc. ) Expenses of the Trust
payable by holders ) Rights of Unitholders
(e)Certain profits receivable ) Public Offering of
by depositor, principal ) Units
underwriters, trustee or ) Public Offering of Units
affiliated persons ) Market for Units
(f)Ratio of annual charges to ) *
income )
14. Issuance of Trust's ) The Trust
securities
) Public Offering of Units
15. Receipt and handling of ) *
payments from )
purchasers
16. Acquisition and ) The Trust; Administration
disposition of
underlying securities ) of the Trust; Termination
) of Trust
17. Withdrawal or ) Redemption
redemption
) Public offering of Units
) -Secondary Market for
) -Exchange Option
) -Conversion Option
18. (a)Receipt and disposition of ) Distributions of
income ) Unitholders
(b)Reinvestment of ) *
distributions
(c)Reserves or special fund ) Distributions to
) Unitholders; Expenses of
Trust
(d)Schedule of distribution ) *
19. Records, accounts and ) Distributions
report
) Administration
) of the Trust
20. Certain miscellaneous ) Administration of the Trust
pro-
visions of Trust )
agreement
21. Loans to security ) *
holders
22. Limitations on liability ) Sponsor, Trustee
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material ) *
provisions of
trust agreement )
* Not applicable, answer
negative or not required.
III. Organization
Personnel and Affiliated
Persons of Depositor
25. Organization of ) Sponsor
Depositor
26. Fees received by ) Public Offering of
Depositor
) Units Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of ) *
Depositor
30. Persons controlling ) Sponsor
Depositor
31. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
32. Payments by Depositor ) *
for
certain other services )
rendered to Trust )
33. Remuneration of ) *
employees of
Depositor for certain )
services
rendered to Trust )
34. Remuneration of other ) *
persons
for certain services )
rendered
to Trust )
IV. Distribution and Redemption of Securities
35. Distribution of Trust's ) Public Offering of Units
securities by states )
36. Suspension of sales of ) *
Trust's
securities )
37. Revocation of authority ) *
to
distribute )
38. (a)Method of distribution ) Public Offering of Units
(b)Underwriting agreements )
(c)Selling agreements ) Sponsor
* Not applicable, answer
negative or not required.
39. (a)Organization of principal ) Sponsor
underwriter )
(b)N.A.S.D. membership of ) Sponsor
principal underwriter )
40. Certain fees received by ) Public Offering Price of
principal underwriter ) Units
41. (a)Business of principal ) Sponsor
underwriter )
(b)Branch officers of ) *
principal underwriter )
(c)Salesman of principal ) *
underwriter )
42. Ownership of Trust's ) *
securities
by certain persons )
43. Certain brokerage ) *
commissions
received by principal )
underwriter )
44. (a)Method of valuation ) Public Offering Price of
) Units
(b)Schedule as to offering ) *
price )
(c)Variation in Offering ) Public Offering Price of
price to certain persons ) Units
45. Suspension of ) *
redemption rights
46. (a)Redemption valuation ) Public Offering of Units
) -Secondary Market for Units
) -Valuation
(b)Schedule as to redemption )
price )
V. Information concerning the Trustee or Custodian
47. Maintenance of position ) Public Offering of Units
in
underlying securities ) Redemption
) Trustee
) Evaluation of the Trust
48. Organization and )
regulation of
Trustee ) Trustee
49. Fees and expenses of ) Expenses of the Trust
Trustee
50. Trustee's lien ) Expenses of the Trust
* Not applicable, answer
negative or not required.
VI. Information
concerning Insurance of
Holders of Securities
51. (a)Name and address of ) *
Insurance Company )
(b)Type of policies ) *
(c)Type of risks insured and ) *
excluded )
(d)Coverage of policies ) *
(e)Beneficiaries of policies ) *
(f)Terms and manner of ) *
cancellation )
(g)Method of determining ) *
premiums )
(h)Amount of aggregate ) *
premiums paid )
(i)Who receives any part of ) *
premiums )
(j)Other material provisions ) *
of the Trust relating to )
insurance )
VII. Policy of Registrant
52. (a)Method of selecting and ) The Trust;
eliminating securities ) Administration of the Trust
from the Trust )
(b)Elimination of securities ) *
from the Trust )
(c)Policy of Trust regarding ) Portfolio Supervision
) Administration of Trust
substitution and
elimination of securities )
(d)Description of any funda- ) Administration of
mental policy of the Trust ) Trust
) Portfolio Supervision
53. (a)Taxable status of the ) Tax status of the Trust
Trust )
(b)Qualification of the Trust ) Tax status of the Trust
as a mutual investment )
company )
* Not applicable, answer
negative or not required.
VIII. Financial and
Statistical Information
54. Information regarding ) *
the
Trust's past ten fiscal )
years
55. Certain information ) *
regarding
periodic payment plan )
certificates )
56. Certain information ) *
regarding
periodic payment plan )
certificates )
57. Certain information ) *
regarding
periodic payment plan )
certificates )
58. Certain information ) *
regarding
periodic payment plan )
certi-
ficates )
59. Financial statements ) Statement of Financial
(Instruction 1(c) to ) Condition
Form S-6)
* Not applicable, answer
negative or not required.
PaineWebber Equity Trust
Growth Stock Series Eighteen
(Consumer Comeback)
2,574,000 Units
The investment objective of this Trust is to
provide for capital appreciation through an
investment in equity stocks having, in Sponsor's
opinion on the Initial Date of Deposit, an above-
average potential for capital appreciation. The
value of the Units will fluctuate with the value
of the portfolio of underlying securities.
The minimum purchase is $1,000, except that the
minimum purchase in connection with an Individual
Retirement Account (IRA) or other tax-deferred
retirement plan is $250. Only whole Units may be
purchased.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND 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.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST
HAS BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE
ISSUED AND OUTSTANDING UNITS WHICH HAVE BEEN
ACQUIRED BY THE SPONSOR EITHER BY PURCHASE FROM
THE TRUSTEE OF UNITS TENDERED FOR REDEMPTION OR
IN THE SECONDARY MARKET.
SPONSOR:
PaineWebber
Incorporated
Read and retain this prospectus for future
reference.
Prospectus dated December 13, 1996
ESSENTIAL INFORMATION REGARDING THE TRUST
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 out
performance 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. 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 captions "The Trust" and
"Administration of the Trust--Portfolio Supervi-
sion," herein.
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;
1987-96: Corporations restructure aggressively
and the survivors prosper; the resulting slow
down of employment growth coupled with reduced
wage gains and benefits hurt the
consumer, and the influence of government
continues to slip.
______________
*The Standard & Poor's 500 Index (the "S&P 500")
is an unmanaged index of 500 stocks calculated
under the auspices of Standard & Poor's, which,
in PaineWebber's view, constitutes a broadly
diversified, representative segment of the market
of publicly traded stocks in the United States.
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.
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
consump-
tion, 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 Invest-
ments."
Approximate Percentage
of Aggregate Net Asset
Value of the Trust
Primary Industry Source as of the Initial
Date of Deposit
Automobile Parts--Original Equipment............5.10%
Automobile & Trucks.............................5.83%
Broadcast, Radio & TV...........................1.09%
Commercial Services.............................4.85%
Computer Hardware/Software......................4.47%
Electronics--Semiconductor......................5.58%
Entertainment...................................9.18%
Financial Banks.................................4.75%
Financial Services..............................2.29%
Homebuilders....................................3.49%
Insurance--Property & Casualty..................2.03%
Medical--Hospital Management & Service..........2.96%
Miscellaneous Retail ...........................6.81%
Publishing......................................7.38%
Restaurant/Food Service.........................2.80%
Retail Apparel Stores...........................1.92%
Retail Food Stores..............................3.59%
Retail Furniture & Home Furnishings.............2.87%
Retail General Merchandise Stores...............6.26%
Telecommunications..............................3.38%
Textiles........................................3.10%
Tobacco.........................................1.98%
Transportation..................................4.70%
Wholesale Stationery & Office Supplies..........3.59%
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 not listed on any
national securities exchange will be borne by the
Trust. Investors purchasing Units during the
initial public offering period will experience a
dilution of their investment as a result of such
brokerage fees and other expenses paid by the
Trust during additional deposits of Securities
purchased by the Trustee with cash or cash
equivalents pursuant to instructions to purchase
such Securities. (See "The Trust" and "Risk
Factors and Special Considerations".)
Termination. Unless advised to the contrary by
the Sponsor, the Trustee will begin to sell the
Securities held in the Trust twenty days prior to
the Mandatory Termination Date. Moneys held upon
such sale or maturity of Securities will be held
in non-interest bearing accounts created by the
Indenture until distributed and will be of
benefit to the Trustee. During the life of the
Trust, Securities will not be sold to take
advantage of market fluctuations. The Trust will
terminate approximately five (5) years after the
Initial Date of Deposit regardless of market
conditions at the time. (See "Termination of the
Trust" and "Federal Income Taxes".)
Public Offering Price. The Public Offering Price
per Unit is computed by dividing the Trust Fund
Evaluation, including the U.S. dollar value of
the Foreign Stocks based on the applicable
currency exchange rate calculated at the
Evaluation Time, by the number of Units
outstanding and then adding a sales charge of
3.75% of the Public Offering Price (3.90% of the
net amount invested). The sales charge is reduced
on a graduated scale for volume purchasers and is
reduced for certain other purchasers. Units are
offered at the Public Offering Price computed as
of the Evaluation Time for all sales subsequent
to the previous evaluation. (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 rec-
ord 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, plus the applicable
sales charge. (See "Public Offering of Units--
Public Offering Price" and "Valuation".) If a
secondary market is not maintained, a Unitholder
may dispose of his Units only through redemption.
With respect to redemption requests in excess of
$100,000, the Sponsor may determine in its sole
discretion to direct the Trustee to redeem units
"in kind" by distributing Securities to the
redeeming Unitholder. (See "Redemption".)
THE TRUST
The Trust is one of a series of similar but
separate unit investment trusts created under New
York law by the Sponsor pursuant to a Trust
Indenture and Agreement* (the "Indenture") dated
as of the Initial Date of Deposit, between
PaineWebber Incorporated, as Sponsor and
Investors Bank & Trust Company and The First
National Bank of Chicago, N.A., as Co-Trustees
(the "Trustee"). The objective of the Trust is
capital appreciation through an investment in
equity stocks having, in Sponsor's opinion on the
Initial Date of Deposit, potential for capital
appreciation.
With the deposit on the Initial Date of Deposit,
the Sponsor established a proportionate
relationship between the Securities in the Trust
(determined by reference to the number of shares
of Stock). The Sponsor may, from time to time,
cause the deposit of additional Securities in the
Trust when additional Units are to be offered to
the public, maintaining as closely as practicable
the original percentage relationship between the
Securities deposited on the Initial Date of
Deposit and replicating any cash or cash
equivalents held by the Trust (net of expenses).
The original proportionate relationship is
subject to adjustment to reflect the occurrence
of a stock split or a similar event which affects
the capital structure of the issuer of a Stock
but which does not affect the Trust's percentage
ownership of the common stock equity of such
issuer at the time of such event, to reflect a
sale or maturity of Security or to reflect a
merger or reorganization. Stock dividends, if
any, received by the Trust will be sold by the
Trustee and the proceeds therefrom shall be
distributed on the next Income Account
Distribution Date.
On the Initial Date of Deposit each Unit
represented the fractional undivided interest in
the Securities and net income of the Trust set
forth under "Essential Information Regarding the
Trust". However, if additional Units are issued
by the Trust (through the deposit of additional
Securities for purposes of the sale of additional
Units), the aggregate value of Securities in the
Trust will be increased and the fractional
undivided interest represented by each Unit in
the balance will be decreased. If any Units are
redeemed, the aggregate value of Securities in
the Trust will be reduced, and the fractional
undivided interest represented by each remaining
Unit in the balance will be increased. Units will
remain outstanding until redeemed upon tender to
the Trustee by any Unitholder (which may include
the Sponsor) or until the termination of the
Trust. (See "Termination of the Trust".)
RISK FACTORS AND SPECIAL CONSIDERATIONS
An investment in Units of the Trust should be
made with an understanding of the risks inherent
in an investment in common stocks in general. The
general risks are associated with the rights to
receive payments from the issuer which are
generally inferior to creditors of, or holders of
debt obligations or preferred stocks issued by,
the issuer. Holders of common stocks have a right
to receive dividends only when and if, and in the
amounts, declared by the issuer's board of
directors and to participate in amounts available
for distribution by the issuer only after all
other claims against the issuer have been paid or
provided for. By contrast, holders of preferred
stocks have the right to receive dividends at a
fixed rate when and as declared by the issuer's
board of directors, normally on a cumulative
basis, but do not 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 ad-
versely 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 appre-
ciate 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
_______________
*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.
income, generally made by declaration of
dividends, is also dependent upon several
factors, including those discussed above in the
preceding sentence.
Investors should note that the creation of
additional Units subsequent to the Initial Date
of Deposit may have an effect upon the value of
previously existing Units. To create additional
Units the Sponsor may deposit cash (or cash
equivalents, e.g., a bank letter of credit in
lieu of cash) with instructions to purchase
Securities in amounts sufficient to maintain, to
the extent practicable, the percentage
relationship among the Securities based on the
price of the Securities at the Evaluation Time on
the date the cash is deposited. To the extent the
price of a Security 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 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 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) 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 be-
ing 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 (see "Administration of the
Trust-Portfolio Supervision" herein).
FEDERAL INCOME TAXES
The Trust intends to qualify for and elect tax
treatment as a "regulated investment company"
under the Internal Revenue Code of 1986, as
amended (the "Code"). By qualifying for and
electing such treatment, the Trust will not be
subject to federal income tax on taxable income
or net capital gains distributed to Unitholders
provided it distributes 90% or more of its
taxable income (exclusive of net capital gains).
However, a 4% excise tax is imposed on regulated
investment companies that fail to distribute all
but a de minimis amount of their income and gain.
The Trust intends to distribute all of its
income, including capital gains, annually.
In any taxable year, the distributions of any
ordinary income (such as dividends) and any net
short-term capital gain will be taxable as
ordinary income to Unitholders. A distribution
paid shortly after a purchase of shares may be
taxable even though, in effect, it may represent
a return of capital to Unitholders. A dividend
paid by the Trust in January will be considered
for federal income tax purposes to have been paid
by the Trust and received by the Unitholders on
the preceding December 31, if the dividend was
declared in the preceding October, November or
December to Unitholders of record in any one of
those months. Distributions which are taxable as
ordinary income to Unitholders will not
constitute dividends for purposes of the
dividends-received deduction for corporations
except, and only to the extent of, a specific
designation by the Trust.
The gross income of the Trust typically will
include dividends and gains on sales or other
dispositions of portfolio securities. In order to
maintain its qualification as a "regulated
investment company", the Trust must in the course
of a taxable year derive at least 90% of its
gross income from dividends, interest, gains on
sales or other dispositions of Securities and
certain other sources (referred to as "eligible
sources"), and must derive less than 30% of its
gross income from the sale or other disposition
of Stock, Securities and certain other assets
held for less than three months. If during a
taxable year it appears that less than 90% of the
Trust income will be derived from eligible
sources, the Sponsor may direct the Trustee to
sell Securities which, upon the realization of
sufficient aggregate gain, will enable the Trust
to maintain its qualification as a regulated
investment company.
Distributions by the Trust that are designated
by it as long-term capital gain distributions
will be taxable to Unitholders as long-term
capital gains, regardless of the length of time
the Units have been held by a Unitholder.
Distributions will not be taxable to Unitholders
to the extent that they represent a return of
capital; such distributions will, however, reduce
a Unitholder's basis in his Units, and to the
extent they exceed the basis of his Units will be
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 and to the
extent that 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 for Unitholders that hold their
Units as capital assets. Unitholders may also be
subject to state and local taxation. Each
Unitholder should consult its own tax advisor
regarding the Federal, state and local tax
consequences to it of ownership of Units.
Investment in the Trust may be suited for
purchase by funds and accounts of individual
investors that are exempt from federal income
taxes such as Individual Retirement Accounts,
tax-qualified retirement plans including Keogh
Plans, and other tax-deferred retirement plans.
Unitholders desiring to purchase Units for tax-
deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on
establishing such accounts. Units may also be
purchased by persons who already have self-
directed accounts established under tax-deferred
retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price
per Unit is based on the aggregate market value
of the Stocks, next determined after the receipt
of a purchase order, divided by the number of
Units outstanding plus the sales charge set forth
below. The public offering price per Unit is
computed by dividing the Trust Fund Evaluation,
next determined after receipt of a purchase order
by the number of Units outstanding plus the sales
charge. (See "Valuation".) The Public Offering
Price on the Initial Date of Deposit or on any
subsequent date will vary from the Public
Offering Price calculated on the business day
prior to the Initial Date of Deposit due to fluc-
tuations in the value of the Stocks among other
factors.
Sales charges for secondary market sales are set
forth below. A discount in the sales charge is
available to volume purchasers of Units due to
economies of scale in sales effort and sales
related expenses relating to volume purchases.
The sales charge applicable to volume purchasers
of Units is reduced on a graduated scale for
sales to any person of at least $50,000 or 5,000
Units, applied on whichever basis is more
favorable to the purchaser.
Secondary Market Sales Charges
Percent of
Public Percent of
Offering Net Amount
Aggregate Dollar Value of Units Price Invested
Less than $50,000.....................3.75% 3.90%
$50,000 to 99,999.....................3.50 3.63
$100,000 to 249,999...................3.25 3.36
$250,000 to 499,999...................2.75 2.83
$500,000 to 749,999...................2.25 2.30
$750,000 to 999,999...................2.00 2.04
$1,000,000 to 1,999,999...............1.50 1.52
$2,000,000 or more....................1.00 1.01
___________
* The sales charge applicable to volume
purchasers according to the table above will be
applied either on a dollar or Unit basis,
depending upon which basis provides a more
favorable purchase price to the purchaser.
The volume discount sales charge shown above
will apply to all purchases of Units on any one
day by the same person in the amounts stated
herein, and for this purpose purchases of Units
of this Trust will be aggregated with concurrent
purchases of any other trust which may be offered
by the Sponsor. Units held in the name of the
purchaser's spouse or in the name of a
purchaser's child under the age of 21 are deemed
for the purposes hereof to be registered in the
name of the purchaser. The reduced sales charges
are also applicable to a trustee or other
fiduciary purchasing Units for a single trust
estate or single fiduciary account.
Employee Discount. Due to the realization of
economies of scale in sales effort and sales
related expenses with respect to the purchase of
Units by employees of the Sponsor and its
affiliates, the Sponsor intends to permit
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 ad-
vance new money in order to complete an exchange
to round up to the next highest number of Units.
An exchange of Units pursuant to the Exchange
Option generally will constitute a "taxable
event" under the Code, i.e., a Unitholder will
recognize a tax gain or loss at the time of
exchange. Unitholders are urged to consult their
own tax advisors as to the tax consequences to
them of exchanging Units in particular cases.
The Sponsor reserves the right to modify,
suspend or terminate this Exchange Option at any
time with notice to Unitholders. In the event the
Exchange Option is not available to a Unitholder
at the time he wishes to exercise it, the
Unitholder will be immediately notified and no
action will be taken with respect to his Units
without further instruction from the Unitholder.
To exercise the Exchange Option, a Unitholder
should notify the Sponsor of his desire to
exercise the Exchange Option and to use the
proceeds from the sale of his Units to the
Sponsor of this series to purchase Units of one
or more of the Exchange Trusts from the Sponsor.
If Units of the applicable outstanding series of
the Exchange Trust are at that time available for
sale, and if such Units may lawfully be sold in
the state in which the Unitholder is resident,
the Unitholder may select the series or group of
series for which he desires his investment to be
exchanged. The 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 Ex-
change 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.
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 of the Stocks to the Sponsor and
the price at which it deposits the Stocks in the
Trust in exchange for Units, which is the value
of the Stocks, determined by the Trustee as
described under "Valuation". The cost of Stock to
the Sponsor includes the amount paid by the
Sponsor for brokerage commissions. These amounts
are an expense of the Trust.
Cash, if any, received from Unitholders prior to
the settlement date for the purchase of Units or
prior to the payment for Securities upon their
delivery may be used in the Sponsor's business
subject to the limitations of Rule 15c3-3 under
the Securities and Exchange Act of 1934 and may
be of benefit to the Sponsor.
In selling any Units in the initial public
offering after the Initial Date of Deposit, the
Sponsor may realize profits or sustain losses
resulting from fluctuations in the net asset
value of outstanding Units during the period. In
maintaining a secondary market for the Units, the
Sponsor may realize profits or sustain losses in
the amount of any differences between the price
at which it buys Units and the price at which it
resells or redeems such Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust
Company for redemption at its office in person,
or by mail at One Lincoln Plaza, 89 South Street,
Boston, MA 02111 upon payment of any transfer or
similar tax which must be paid to effect the
redemption. At the present time there are no such
taxes. No redemption fee will be charged by the
Sponsor or Trustee. If the Units are represented
by a certificate it must be properly endorsed ac-
companied 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 ac-
ceptable to the Trustee. In certain instances the
Trustee may require additional documents such as,
but not limited to, trust instruments,
certificates of death, appointments as executor
or administrator, or certificates of corporate
authority. Unitholders should contact the Trustee
to determine whether additional documents are
necessary. Units tendered to the Trustee for
redemption will be cancelled, if not repurchased
by the Sponsor.
Units will be redeemed at the Redemption Value
per Unit next determined after receipt of the
redemption request in good order by the Trustee.
The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number
of Units outstanding. (See "Valuation".)
A redemption request is deemed received on the
business day (see "Valuation" for a definition of
business day) when such request is received prior
to 4:00 p.m. If it is received after 4:00 p.m.,
it is deemed received on the next business day.
During the period in which the Sponsor maintains
a secondary market for Units, the Sponsor may
repurchase any Unit presented for tender to the
Trustee for redemption no later than the close of
business on the second business day following
such presentation and Unitholders will receive
the Redemption Value next determined after
receipt by the Trustee of the redemption request.
Proceeds of a redemption will be paid to the
Unitholder no later than the seventh calendar day
following the date of tender (or if the seventh
calendar day is not a business day on the first
business day prior thereto).
With respect to cash redemptions, amounts
representing income received shall be withdrawn
from the Income Account, and, to the extent such
balance is insufficient and for remaining
amounts, from the Capital Account. The Trustee is
empowered, to the extent necessary, to sell
Securities to meet redemptions. The Trustee will
sell Securities in such manner as is directed by
the Sponsor. In the event no such direction is
given, Stock will be sold pro rata, to the extent
possible, and if not possible Stocks having the
greatest amount of capital appreciation will be
sold first. (See "Administration of the Trust".)
However, with respect to redemption requests in
excess of $100,000, the Sponsor may determine in
its discretion to direct the Trustee to redeem
Units "in kind" by distributing Securities to the
redeeming Unitholder. When Stocks are so
distributed, a proportionate amount of each Stock
will be distributed, rounded to avoid the
distribution of fractional shares and using cash
or checks where rounding is not possible. The
Sponsor may direct the Trustee to redeem Units
"in kind" even if it is then maintaining a
secondary market in Units of the Trust.
Securities will be valued for this purpose as set
forth under "Valuation". A Unitholder receiving a
redemption "in kind" may incur brokerage or other
transaction costs in converting the Stock
distributed into cash. The availability of
redemption "in kind" is subject to compliance
with all applicable laws and regulations,
including the Securities Act of 1933, as amended.
To the extent that Securities are redeemed in
kind or sold, the size and diversity of the Trust
will be reduced. Sales will usually be required
at a time when Securities would not otherwise be
sold and may result in lower prices than might
otherwise be realized. The price received upon
redemption may be more or less than the amount
paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of re-
demption. 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, President's Day,
Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day and
other days that the New York Stock Exchange is
closed.
The 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, 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 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 in establishing the Trust.
The Sponsor will receive a fee, which is earned
for portfolio supervisory services, and which is
based upon the largest number of Units
outstanding during the calendar year. The
Sponsor's fee, which is 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 $.0170 per Unit, based on the largest
number of Units outstanding during the previous
month. In addition, the regular and recurring
expenses of the Trust are estimated to be $.0165
which include, but are not limited to Or-
ganizational Expenses of $.0080 per Unit, and
certain mailing, printing, and audit expenses.
Expenses in excess of this estimate will be borne
by the Trust. The Trustee could also benefit to
the extent that it may hold funds in non-interest
bearing accounts created by the Indenture.
The Sponsor's fee and Trustee's fee may be
increased without approval of the Unitholders by
an amount not exceeding a proportionate increase
in the category entitled "All Services Less Rent"
in the Consumer Price Index published by the
United States Department of Labor or, if the
Price Index is no longer published, a similar
index as determined by the Trustee and Sponsor.
In addition to the above, the following charges
are or may be incurred by each Trust and paid
from the Income Account, or, to the extent funds
are not available in such Account, from the
Capital Account (see "Administration of the
Trust--Accounts"): (1) fees for the Trustee for
extraordinary services; (2) expenses of the
Trustee (including legal and auditing expenses)
and of counsel; (3) various governmental charges;
(4) expenses and costs of any action taken by the
Trustee to protect the trusts and the rights and
interests of the Unitholders; (5) indemnification
of the Trustee for any loss, liabilities or
expenses incurred by it in the administration of
the Trust without gross negligence, bad faith or
wilful misconduct on its part; (6) brokerage
commissions and other expenses incurred in
connection with the purchase and sale of
Securities; and (7) expenses incurred upon termi-
nation 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. Muti-
lated certificates must be surrendered to the
Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute net dividends and
interest, if any, from the Income Account on the
quarterly Distribution Dates to Unitholders of
record on the preceding Record Date.
Distributions from the Capital Account will be
made on annual Distribution Dates to Unitholders
of record on the preceding Record Date.
Distributions of less than $.05 per Unit need not
be made from the Capital Account on any
Distribution Date. See "Essential Information".
Whenever required for regulatory or tax purposes,
the Trustee will make special distributions of
any dividends or capital on special Distribution
Dates to Unitholders of record on special Record
Dates declared by the Trustee.
Upon termination of the Trust, each Unitholder
of record on such date will receive his pro rata
share of the amounts realized upon disposition of
the Securities plus any other assets of the
Trust, less expenses of the Trust. (See
"Termination".)
ADMINISTRATION OF THE TRUST
Accounts. All dividends and interest received on
Securities, proceeds from the sale of Securities
or other moneys received by the Trustee on behalf
of the Trust may be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an
Income Account dividends, if any, and interest
income, on Securities in the Trust. All other
receipts (i.e., return of principal and gains)
are credited on its books to a Capital Account. A
record will be kept of qualifying dividends
within the Income Account. The pro rata share of
the Income Account and the pro rata share of the
Capital Account represented by each Unit will be
computed by the Trustee as set forth under
"Valuation".
The Trustee will deduct from the Income Account
and, to the extent funds are not sufficient
therein, from the Capital Account, amounts
necessary to pay expenses incurred by the Trust.
(See "Expenses and Charges.") In addition, the
Trustee may withdraw from the Income Account and
the Capital Account such amounts as may be
necessary to cover redemption of Units by the
Trustee. (See "Redemption.")
The Trustee may establish reserves (the "Reserve
Account") within the Trust for state and local
taxes, if any, and any other governmental charges
payable out of the Trust.
Reports and Records. With any distribution from
the Trust, Unitholders will be furnished with a
statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the
Trust at its office in Boston, including records
of the names and addresses of Unitholders, a
current list of underlying Securities in the
portfolio and a copy of the Indenture. Records
pertaining to a Unitholder or to the Trust (but
not to other Unitholders) are available to the
Unitholder for inspection at reasonable times
during business hours.
Within sixty (60) days after the end of each
calendar year, commencing with calendar year
1995, the Trustee will furnish each person who
was a Unitholder at any time during the calendar
year an annual report containing the following
information, expressed in reasonable detail both
as a dollar amount and as a dollar amount per
Unit: (1) a summary of transactions for such year
in the Income and Capital Accounts and any Re-
serves; (2) any Securities sold during the year
and the Securities held at the end of such year;
(3) the Trust Fund Evaluation per Unit, based
upon a computation thereof on the 31st day of
December of such year (or the last business day
prior thereto); and (4) amounts distributed to
Unitholders during such year.
Portfolio Supervision. The portfolio of the
Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are
governed solely by the provisions of the
Indenture. The Indenture provides that the
Sponsor may (but need not) direct the Trustee to
dispose of a Security:
(1) upon the failure of the issuer to declare or
pay anticipated dividends or interest;
(2) upon the institution of a materially adverse
action or proceeding at law or in equity seeking
to restrain or enjoin the declaration or payment
of dividends on any such Securities or the
existence of any other materially adverse legal
question or impediment affecting such Securities
or the declaration or payment of dividends on the
same;
(3) upon the breach of covenant or warranty in
any trust indenture or other document relating to
the issuer which might materially and adversely
affect either immediately or contingently the
declaration or payment of dividends on such
Securities;
(4) upon the default in the payment of principal
or par or stated value of, premium, if any, or
income on any other outstanding securities of the
issuer or the guarantor of such Securities which
might materially and adversely, either
immediately or contingently, affect the
declaration or payment of dividends on the Se-
curities;
(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;
(7) upon a decrease in the Sponsor's internal
rating of the Security; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the
economic fundamentals of the issuer of the
Security or the industry of which it is a part.
Securities may also be sold in the manner
described under "The Trust". The Trustee may
dispose of Securities where necessary to pay
Trust expenses or to satisfy redemption requests
as directed by the Sponsor, and the proceeds of
such sale may not be reinvested.
Cash received upon the sale of Stock (including
sales to meet redemption requests) and dividends
received will not be reinvested and will be held
in a non-interest bearing account until
distribution on the next Distribution Date to
Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and
the Sponsor without the consent of any of the
Unitholders to cure any ambiguity or to correct
or supplement any provision thereof which may be
defective or inconsistent or to make such other
provisions as will not adversely affect the
interest of the Unitholders.
The Indenture may be amended in any respect by
the Sponsor and the Trustee with the consent of
the holders of 51% of the Units then outstanding;
provided that no such amendment shall (1) reduce
the interest in the Trust represented by a Unit
or (2) reduce the percentage of Unitholders
required to consent to any such amendment,
without the consent of all Unitholders.
The Trustee will promptly notify Unitholders of
the substance of any amendment affecting
Unitholders' rights or their interest in the
Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will
terminate on the Mandatory Termination Date. If
the value of the Trust as shown by any evaluation
is less than fifty per cent (50%) of the market
value of the Stocks upon completion of the
deposit of Stocks, the Trustee may in its
discretion, and will when so directed by the
Sponsor, terminate such Trust. The Trust may also
be terminated at any time by the written consent
of 51% of the Unitholders or by the Trustee upon
the resignation or removal of the Sponsor if the
Trustee determines termination to be in the best
interest of the Unitholders. In no event will the
Trust continue beyond the Mandatory Termination
Date.
Unless advised to the contrary by the Sponsor,
approximately 20 days prior to the termination of
the Trust the Trustee will begin to sell the
Securities held in the Trust and will then, after
deduction of any fees and expenses of the Trust
and payment into the Reserve Account of any
amount required for taxes or other governmental
charges that may be payable by the Trust,
distribute to each Unitholder, after due notice
of such termination, such Unitholder's pro rata
share in the Income and Capital Accounts. Moneys
held upon the sale of Securities may be held in
non-interest bearing accounts created by the
Indenture until distributed and will be of
benefit to the Trustee. The sale of Securities in
the Trust in the period prior to termination may
result in a lower amount than might otherwise be
realized if such sale were not required at such
time due to impending or actual termination of
the Trust. For this reason, among others, the
amount realized by a Unitholder upon termination
may be less than the amount paid by such Uni-
tholder.
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 re-
lieved of all further liability under the
Indenture.
If the Sponsor fails to undertake any of its
duties under the Indenture, becomes incapable of
acting, becomes bankrupt, or has its affairs
taken over by public authorities, the Trustee may
either appoint a successor Sponsor or Sponsors to
serve at rates of compensation determined as
provided in the Indenture or terminate the
Indenture and liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of
Chicago, a national banking association with its
corporate trust office at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126
(which is subject to supervision by the
Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors
of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company
with its principal office at One Lincoln Plaza,
89 South Street, Boston, Massachusetts 02111,
toll-free number 800-356-2754 (which is subject
to supervision by the Massachusetts Commissioner
of Banks, the Federal Deposit Insurance
Corporation and the Board of Governors of the
Federal Reserve System).
The Indenture provides that the Trustee will not
be liable for any action taken in good faith in
reliance on properly executed documents or the
disposition of moneys, Securities or Certificates
or in respect of any valuation which it is
required to make, except by reason of its own
gross negligence, bad faith or willful
misconduct, nor will the Trustee be liable or
responsible in any way for depreciation or loss
incurred by reason of the sale by the Trustee of
any Securities in the Trust. In the event of the
failure of the Sponsor to act, the Trustee may
act and will not be liable for any such action
taken by it in good faith. The Trustee will not
be personally liable for any taxes or other
governmental charges imposed upon or in respect
of the Securities or upon the interest thereon or
upon it as Trustee or upon or in respect of the
Trust which the Trustee may be required to pay
under any present or future law of the United
States of America or of any other taxing
authority having jurisdiction. In addition, the
Indenture contains other customary provisions
limiting the liability of the Trustee. The
Trustee will be indemnified and held harmless
against any loss or liability accruing to it
without gross negligence, bad faith or willful
misconduct on its part, arising out of or in
connection with its acceptance or administration
of the Trust, including the costs and expenses
(including counsel fees) of defending itself
against any claim of liability.
INDEPENDENT AUDITORS
The financial statements, including the Schedule
of Investments, of the Trust in this prospectus
have been audited by Ernst & Young LLP,
independent auditors, and have been included in
reliance upon their report given on their
authority as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has
been passed upon by Orrick, Herrington &
Sutcliffe LLP, 666 Fifth Avenue, New York, New
York, as counsel for the Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of August 31, 1996
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Date of Deposit: September 13, 1995
<S> <C>
Aggregate Market Value of Securities in Trust: $26,262,167
Number of Units: 2,574,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/2,574,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Net Assets in Trust $26,289,550
Divided by 2,574,000 Units $10.2135
Plus Sales Charge of 3.75% of Public Offering Price $0.3979
Public Offering Price per Unit $10.6114
Redemption Value per Unit: $10.2135
Excess of Public Offering Price over Redemption Value per Unit: $.3979
Sponsor's Repurchase Price Per Unit: $10.2135
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.3979
Evaluation Time: 4 P.M. New York Time
Distribution Dates* *: January 20, and quarterly therafter
Record Dates: December 31, and quarterly therafter.
Mandatory Termination Date: September 20, 2000
Discretionary Liquidation Amount: 50% of the value of the Securities
upon completion of the deposit of
the Securities
Estimated Annual Expenses of the Trust* * * $.0370 per Unit
* The Public Offering Price will be based
upon the value of the Stocks next computed
following receipt of the
purchase order plus the applicable sales
charges. (See " Valuation " ).
* * See " Distributions "
* * * See " Expenses of Trust ". Estimated
dividends from the Stocks, based upon last
dividends actually paid,
are expected by the Sponsor to be sufficient
to pay estimated expenses of the Trust.
</TABLE>
<TABLE>
REPORT OF INDEPENDENT AUDITORS
<C> <S>
THE UNITHOLDERS, SPONSOR AND CO-TRUSTEES
THE PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES
EIGHTEEN:
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 August 31, 1996
and the related statements of operations and
changes in net assets for the period from
September 13, 1995 (date of deposit) to August
31, 1996. These financial statements are the
responsibility of the Co-Trustees. Our
responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. Our procedures included confirmation
of the securities owned as of August 31, 1996, as
shown in the statement of financial condition and
schedule of investments, by correspondence with
the Co-Trustees. An audit also includes assessing
the accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material
respects, the financial position of The
PaineWebber Equity Trust, Growth Stock Series
Eighteen at August 31, 1996 and the results of
its operations and changes in its net assets for
the period from September 13, 1995 to August 31,
1996, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New York, New York
December 2, 1996
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF FINANCIAL CONDITION
August 31, 1996
<CAPTION>
ASSETS
<S> <C> <C>
Common Stock - at market value (Cost $23,951,219)
(note 1 to schedule of investments) $26,262,167
Dividends receivable 23,708
Prepaid organizational expenses 80,707
Cash 5,668
Total Assets $26,372,250
LIABILITIES AND NET ASSETS
Accrued expenses payable $22,058
Advance from Trustee 60,642
Total Liabilities $82,700
Net assets (2,574,000 units of fractional undivided interest outstanding):
Cost to investors (note B) $24,884,383
Less sales charge (note C) (933,164)
Net amount applicable to investors 23,951,219
Net unrealized market appreciation (note D) 2,310,948
Net amount applicable to unitholders 26,262,167
Undistributed investment income-net 21,715
Undistributed proceeds from securities sold 5,668
Net assets 26,289,550
Total liabilities and net assets $26,372,250
Net asset value per Unit $10.21
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF OPERATIONS
<CAPTION>
Period from
September 13,
1995 (date of
deposit) to
August 31,
1996
<S> <C>
Operations:
Dividend Income $241,007
Total investment income 241,007
Less expenses:
Trustee's fees, expenses and evaluator's expense 86,716
Total expenses 86,716
Investment Income-net 154,291
Realized and unrealized gain (loss) on investments-net:
Net realized gain on securities transactions 596,927
Net change in unrealized market appreciation 2,310,948
Net realized and unrealized gain on investments 2,907,875
Net increase in net assets resulting from operations $3,062,166
See accompanying notes to financial statements
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period from
September 13,
1995 (date of
deposit) to
August 31,
1996
<S> <C>
Operations:
Investment income-net $154,291
Net realized gain on securities transactions 596,927
Net change in unrealized market appreciation 2,310,948
Net increase in net assets resulting from operations 3,062,166
Less: Distributions to Unitholders (Note E)
Principal 857,532
Investment Income 144,561
Total Distributions 1,002,093
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 2,683,653
Undistributed income at date of redemption 2,492
Total Redemptions 2,686,145
Decrease in net assets (626,072)
Net Assets:
Beginning of Period
Supplemental Deposits 26,915,622
End Of Period $26,289,550
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting.
Security transactions
are accounted for on the date the securities are
purchased or sold.
(B) Cost to investors represents the initial
public offering price as of the date of deposit,
and the value of units
through supplemental deposits computed on the
basis set forth under "Public Offering Price of
Units".
(C) Sales charge in the Initial Public Offering
period was 3.75% (3.90% of the net amount
invested). See "Public
Offering of Units - Sales Charge and Volume
Discount", for information relating to the
secondary market.
(D) At August 31, 1996, the gross unrealized
market appreciation was $3,497,054 and the gross
unrealized
market depreciation was ($1,186,106). The net
unrealized market appreciation was $2,310,948.
(E) Regular distributions of net income and
principal receipts not used for redemption of
units are made quarterly.
Special distributions may be made as the Sponsor
and Trustee deem necessary to comply with income
tax
regulations.
(F) The following units were redeemed with
proceeds of securities sold as follows:
<CAPTION>
Period from
September 13,
1995 (date of
deposit) to
August 31,
1996
<S> <C>
Total number of units redeemed 256,000
Redemption amount $2,686,145
The following units were sold through supplemental
deposits:
Number of units sold 2,730,000
Value of amount, net of sales charge $25,953,122
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
SCHEDULE OF INVESTMENTS
As of August 31, 1996
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Automobile Parts--Original Equipment: (5.10%)
Eaton Corporation 8,929 $494,443
Tower Automotive, Inc.* 35,223 845,352
Automobile & Trucks: (5.83%)
Chrysler Corporation 17,347 505,231
Ford Motor Company 15,823 530,071
General Motors Corporation 9,950 495,013
Broadcast, Radio & TV: (1.09%)
Viacom, Inc.* 9,182 286,938
Commercial Services: (4.85%)
CUC International, Inc.* 15,312 526,350
Service Corporation International 13,270 748,096
Computer Hardware/Software: (4.47%)
Compaq Computer Corporation* 9,693 548,866
Microsoft Corporation* 5,106 625,485
Electronics--Semiconductor: (5.58%)
Hewlett-Packard Company 11,737 513,494
Intel Corporation 7,656 611,044
Motorola, Inc. 6,380 340,532
Entertainment: (9.18%)
Carmike Cinemas, Inc.* 24,244 584,886
Walt Disney Company 8,673 494,361
Gaylord Entertainment Company 17,340 424,830
Lodgenet Entertainment Corporation * 44,664 496,887
Time Warner, Inc. 12,249 408,810
Financial Banks: (4.75%)
Fifth Third Bancorp 13,013 689,689
Republic New York Corporation 8,421 556,839
Financial Services: (2.29%)
Federal National Mortgage Association 19,397 601,307
Homebuilders: (3.49%)
Del Webb Corporation 25,777 463,986
Toll Brothers, Inc. * 26,030 452,271
Insurance--Property & Casualty: (2.03%)
MGIC Investment Corporation 8,421 533,681
Medical--Hospital Management & Service: (2.96%)
Apria Healthcare Group, Inc.* 16,589 418,872
Integrated Health Services, Inc. 15,568 358,064
Miscellaneous Retail: (6.81%)
Barnes & Noble* 11,997 394,401
Tiffany & Company 22,461 783,327
Zale Corporation * 33,690 610,631
Publishing: (7.38%)
Belo (A.H.) Corporation 13,270 532,459
Central Newspapers, Inc. 16,078 586,847
Gannett Company, Inc. 9,182 615,194
Thomas Nelson, Inc. 19,146 203,426
Restaurant/Food Service: (2.80%)
Starbucks Corporation * 22,463 735,663
Retail Apparel Stores: (1.92%)
The Men's Wearhouse, Inc.* 23,216 504,948
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
SCHEDULE OF INVESTMENTS
As of August 31, 1996
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Retail Food Stores: (3.59%)
General Nutrition Companies, Inc. * 21,948 $323,733
Tosco Corporation 12,896 619,008
Retail Furniture & Home Furnishings: (2.87%)
Bed Bath & Beyond, Inc.* 33,319 753,842
Retail General Merchandise Stores: (6.26%)
Federated Department Stores, Inc.* 16,844 583,224
Price/Costco, Inc.* 27,564 547,835
Wal-Mart Stores, Inc. 19,398 514,047
Telecommunications: (3.38%)
BellSouth Corporation 14,042 509,023
Paging Network, Inc.* 21,438 377,845
Textiles: (3.10%)
St. John Knits, Inc. 20,411 813,889
Tobacco: (1.98%)
UST, Inc. 17,356 520,680
Transportation: (4.70%)
American Medical Response, Inc.* 16,332 565,496
Rural/Metro Corporation * 19,398 669,231
Wholesale Stationery & Office Supplies: (3.59%)
OfficeMax, Inc.* 29,480 412,720
Staples, Inc.* 26,800 529,300
TOTAL INVESTMENTS $26,262,167
(1) Valuation of Securities was made by the
Co-Trustees as described in "Valuation".
* Non-income producing.
</TABLE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following
documents:
The facing sheet.
The Prospectus.
The signatures.
The following exhibits:
EX-99.C2 Opinion of Counsel as to legality of securities
being registered.
EX-27 Financial Data Schedule
EX-99.C1 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PaineWebber Equity Trust, Growth Stock Series 18
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this registration statement to be
signed on its behalf by the undersigned thereunto duly authorized,
and its seal to be hereunto affixed and attested, all in the City of
New York, and the State of New York on the 13th day of December,
1996.
PAINEWEBBER EQUITY TRUST, GROWTH
STOCK SERIES 18
(Registrant)
By: PaineWebber Incorporated
(Depositor)
/s/ ROBERT E. HOLLEY
Robert E. Holley
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of PaineWebber
Incorporated, the Depositor, by the following persons in the
following capacities and in the City of New York, and State of New
York, on this 13th day of December, 1996.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director and Member of the Executive
Committee *
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement for File No. 33-19786.
December 13, 1996
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber Equity
Trust, Growth Stock Series 18 (hereinafter referred to as the
"Trust"). The Depositor seeks by means of Post-Effective
Amendment No. 1 to register for reoffering 364,168 Units acquired
by the Depositor in the secondary market (hereinafter referred to as
the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 33-59119) to be filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "1933 Act") proposed to be filed on or about the
date hereof (the "Amendment");
(f) The Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as
amended (collectively, the "1940 Act") on Form N-8A, as
amended;
(g) The registration of the Trust filed with the Commission under the
1940 Act on Form N-8B-2 (File No. 811-3722), as amended;
(h) The prospectus included in the Amendment (the "Prospectus");
(i) The Standard Terms and Conditions of the Trust dated as of
July 10, 1990, as amended, among the Depositor, and
Investors Bank & Trust Company and The First National Bank of
Chicago (the "Trustee"), as successor Co-Trustee, (the "Standard
Terms");
(j) The Trust Indenture dated as of the Date of Deposit, among the
Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other
than the States of New York and California and the United States,
except to the extent necessary to render the opinion as to the
Depositor in paragraph (i) below with respect to Delaware law. As
you know we are not licensed to practice law in the State of
Delaware, and our opinion in paragraph (i) and (iii) as to Delaware
law is based solely on review of the official statutes of the State of
Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> EQUITY TRUST, GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-13-1995
<PERIOD-END> AUG-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 23,951,219
<INVESTMENTS-AT-VALUE> 26,262,167
<RECEIVABLES> 23,708
<ASSETS-OTHER> 5,668
<OTHER-ITEMS-ASSETS> 80,707
<TOTAL-ASSETS> 26,372,250
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82,700
<TOTAL-LIABILITIES> 82,700
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,574,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 21,715
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,668
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,310,948
<NET-ASSETS> 26,289,550
<DIVIDEND-INCOME> 241,007
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 86,716
<NET-INVESTMENT-INCOME> 154,291
<REALIZED-GAINS-CURRENT> 596,927
<APPREC-INCREASE-CURRENT> 2,310,948
<NET-CHANGE-FROM-OPS> 3,062,166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 144,561
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 857,532
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 256,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (626,072)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated December 2,
1996, in the Registration Statement and related Prospectus of the
PaineWebber Equity Trust, Growth Stock Series 18.
/s/ ERNST & YOUNG LLP
New York, New York
December 13, 1996
