File No. 33-59119
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 2
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 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 November 24, 1997) pursuant to
paragraph
(b) of Rule 485.
E. Title and amount of securities being registered:
1,267,404 Units
F. Proposed maximum offering price to the public of the securities being
registered:
$18,218,425.54**
* Estimated solely for the purpose of calculating the registration fee, at
$14.37 per unit.
G. Amount of filing fee, computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public:
$100.00*
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
* The method of calculation is made pursuant to Rule 24e-2 under the
Investment Company Act of 1940.The total amount of units redeemed or
repurchased during the previous fiscal year ending 1996 is 1,244,448.
There have been no previous filings of post-effective amendments during
the current fiscal year 1,244,448 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)
1,879,000 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 COM-
MISSION 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 November 24, 1997
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 Investments."
Approximate Percentage of
Aggregate Net Asset Value
Primary Industry Source of the Trust
Automobile Parts--Original Equipment.. 6.64%
Automobile & Trucks 5.33
Broadcast, Radio & TV.................... .75
Commercial Services......................3.87
Computer Hardware/Software...............8.18
Electronics--Semiconductor...............7.24
Entertainment............................8.03
Financial Banks..........................5.69
Financial Services.......................2.38
Homebuilders.............................2.82
Insurance--Property & Casualty...........2.36
Medical--Hospital Management & Service...2.24
Miscellaneous Retail ....................6.40
Publishing...............................7.79
Restaurant/Food Service..................2.56
Retail Apparel Stores....................2.35
Retail Food Stores.......................5.26
Retail Furniture & Home Furnishings......2.88
Retail General Merchandise Stores........6.66
Telecommunications.......................2.32
Textiles.................................2.39
Tobacco..................................1.40
Transportation...........................1.49
Wholesale Stationery & Office Supplies...2.97
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, as closely as practicable, 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
record on such date his pro rata share of the
Trust's assets, less expenses. The sale of
Securities in the Trust in the period prior to
termination and upon termination may result in a
lower amount than might otherwise be realized if
such sale were not required at such time due to
impending or actual termination of the Trust. For
this reason, among others, the amount realized by
a Unitholder upon termination may be less than the
amount paid by such Unitholder.
Market for Units. The Sponsor, though not
obligated to do so, presently intends to maintain
a secondary market for Units. The public offering
price in the secondary market will be based upon
the value of the Securities next determined after
receipt of a purchase order, 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 Secu-
rity 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
adversely affect the ability and inclination of
the issuer to declare or pay dividends on its
common stock or the rights of holders of common
stock with respect to assets of the issuer upon
liquidation or bankruptcy. Unlike debt securities
which typically have a stated principal amount
payable at maturity, common stocks do not have a
fixed principal amount or a maturity.
Additionally, the value of the Stock in the Trust
may be expected to fluctuate over the life of the
Trust. In addition, there are investment risks
common to all equity issues. The Stocks may
appreciate or depreciate in value depending upon a
variety of factors, including the full range of
economic and market influences affecting corporate
profitability, the financial condition of issuers,
changes in national or worldwide economic
conditions, and the prices of equity securities in
general and the Stocks in particular.
Distributions of income, generally made by
declaration of dividends, is also dependent upon
several factors, including those discussed above
in the preceding sentence.
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
_______________
*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.
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 being tendered
and upon the obtaining of financing. There may be
other conditions to the tender offer as well.
Additionally, an offeror may only be willing to
accept a specified number of shares. In the event
a greater number of shares is tendered, the
offeror must take up and pay for a pro rata
portion of the shares deposited by each depositor
during the period the offer remains open. The
Agreement sets forth criteria to be applied in the
event of a tender offer, merger or reorganization
involving one or more of the Stocks in the Trust
(see "Administration of the Trust-Portfolio Super-
vision" 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.
The gross income of the Trust typically will
include dividends, interest and gains on sales or
other dispositions of portfolio securities. In order
to maintain its qualification as a "regulated
investment company", the Trust must, among other
things (1) in the course of a taxable year derive
at least 90% of its gross income from dividends,
interest, gains on sales or other dispositions of
Securities and certain other sources (referred to
as "eligible sources"), (2) meet certain
diversification tests, and (3) distribute in each
year at least 90% of its investment company
taxable income. If during a taxable year it
appears that less than 90% of the Trust income
will be derived from eligible sources, the Sponsor
may direct the Trustee to sell Securities which,
upon the realization of sufficient aggregate gain,
will enable the Trust to maintain its
qualification as a regulated investment company.
In any taxable year, the distributions of any
ordinary income (such as dividends) and the excess
of net short-term capital gains over net long-term
capital losses will be taxable as ordinary income
to Unitholders. A distribution paid shortly after
a purchase of shares may be taxable even though,
in effect, it may represent a return of capital to
Unitholders. A dividend paid by the Trust in
January will be considered for federal income tax
purposes to have been paid by the Trust and
received by the Unitholders on the preceding
December 31, if the dividend was declared in the
preceding October, November or December to
Unitholders of record in any one of those months.
Distributions which are taxable as ordinary income
to Unitholders will not constitute dividends for
purposes of the dividends-received deduction for
corporations except for, and only to the extent
of, a specific designation by the Trust.
Distributions by the Trust that are designated by
it as capital gain distributions will be taxable
to Unitholders as long-term capital gains,
regardless of the length of time the Units have
been held by a Unitholder. Distributions will not
be taxable to Unitholders to the extent that they
represent a return of capital; such distributions
will, however, reduce a Unitholder's basis in his
Units, and to the extent they exceed the basis of
his Units will be treated as gain from the sale of
his Units. Any loss realized by a Unitholder on
the sale or exchange of Units that are held by him
for not more than six months will be treated as a
long-term capital loss to the extent of any long-
term capital gain distributions paid to such Uni-
tholder with respect to such Units.
Long-term capital gains of individuals are
generally taxed at a maximum federal rate of 28%.
Under the recently enacted Taxpayer Relief Act of
1997, Unitholders who are individuals and have
held their Units for more than 18 months may be
entitled to a more favorable federal tax rate
(generally, 20%, but 10% for individuals otherwise
in the 15% bracket) for gains from the sale of
these Units. Prior to the issuance of relevant
regulations, it is not certain whether or how this
more favorable federal tax rate will be available
with respect to capital gain dividends paid by the
Trust. Unitholders should consult their own tax
advisers in this regard.
Unitholders will be taxed in the manner described
above regardless of whether distributions from the
Trust are actually received by the Unitholder or
are reinvested pursuant to the reinvestment plan.
Withholding For Citizen or Resident Investors. In
the case of any noncorporate Unitholder that is a
citizen or resident of the United States, a 31
percent "backup" withholding tax will apply to
certain distributions of the Trust unless the
Unitholder properly completes and files under
penalties of perjury, IRS Form W-9 (or its
equivalent).
The foregoing discussion is a general summary and
relates only to certain aspects of the federal
income tax consequences of an investment in the
Trust for Unitholders who hold their Units as
capital assets. Unitholders may also be subject to
state and local taxation. Each Unitholder should
consult its own tax advisor regarding the Federal,
state and local tax consequences to it of
ownership of Units.
Investment in the Trust may be suited for
purchase by funds and accounts of individual
investors that are exempt from federal income
taxes such as Individual Retirement Accounts, tax-
qualified retirement plans including Keogh Plans,
and other tax-deferred retirement plans.
Unitholders desiring to purchase Units for tax-
deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on
establishing such accounts. Units may also be
purchased by persons who already have self-
directed accounts established under tax-deferred
retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price
per Unit is based on the aggregate market value of
the Stocks, next determined after the receipt of a
purchase order, divided by the number of Units
outstanding plus the sales charge set forth below.
The public offering price per Unit is computed by
dividing the Trust Fund Evaluation, next
determined after receipt of a purchase order by
the number of Units outstanding plus the sales
charge. (See "Valuation".) The Public Offering
Price on the Initial Date of Deposit or on any
subsequent date will vary from the Public Offering
Price calculated on the business day prior to the
Initial Date of Deposit due to fluctuations in the
value of the Stocks 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 Percent of
Aggregate Dollar Public Offering Net Amount
Value of Units Price Invested
Less than $50,000.......3.75% 3.90%
$50,000 to 99,999.......3.50 3.63
$100,000 to 249,999.....3.25 3.36
$250,000 to 499,999.....2.75 2.83
$500,000 to 749,999.....2.25 2.30
$750,000 to 999,999.....2.00 2.04
$1,000,000 to 1,999,999.1.50 1.52
$2,000,000 or more......1.00 1.01
___________
* The sales charge applicable to volume
purchasers according to the table above will be
applied either on a dollar or Unit basis,
depending upon which basis provides a more
favorable purchase price to the purchaser.
The volume discount sales charge shown above will
apply to all purchases of Units on any one day by
the same person in the amounts stated herein, and
for this purpose purchases of Units of this Trust
will be aggregated with concurrent purchases of
any other trust which may be offered by the
Sponsor. Units held in the name of the purchaser's
spouse or in the name of a purchaser's child under
the age of 21 are deemed for the purposes hereof
to be registered in the name of the purchaser. The
reduced sales charges are also applicable to a
trustee or other fiduciary purchasing Units for a
single trust estate or single fiduciary account.
Employee Discount. Due to the realization of
economies of scale in sales effort and sales
related expenses with respect to the purchase of
Units by employees of the Sponsor and its
affiliates, the Sponsor intends to permit
employees of the Sponsor and its affiliates and
certain of their relatives to purchase units of
the Trust at a reduced sales charge of $5.00 per
100 Units.
Exchange Option. Unitholders may elect to
exchange any or all of their Units of this series
for units of one or more of any series of
PaineWebber Municipal Bond Fund (the "PaineWebber
Series"); The Municipal Bond Trust (the "National
Series"); The Municipal Bond Trust, Multi-State
Program (the "Multi-State Series"); The Municipal
Bond Trust, California Series (the "California
Series"); The 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 Uni-
tholder 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 indi-
cated that it intends to maintain a market for the
Units of the respective Trusts, there is no
obligation on its part to maintain such a market.
Therefore, there is no assurance that a market for
Units will in fact exist on any given date at
which a Unitholder wishes to sell his Units of
this series and thus there is no assurance that
the Exchange Option will be available to a
Unitholder. Exchanges will be effected in whole
Units only. Any excess proceeds from Unitholders'
Units being surrendered will be returned.
Unitholders will be permitted to advance new money
in order to complete an exchange to round up to
the next highest number of Units. An exchange of
Units pursuant to the Exchange Option generally
will constitute a "taxable event" under the Code,
i.e., a Unitholder will recognize a tax gain or
loss at the time of exchange. Unitholders are
urged to consult their own tax advisors as to the
tax consequences to them of exchanging Units in
particular cases.
The Sponsor reserves the right to modify, suspend
or terminate this Exchange Option at any time with
notice to Unitholders. In the event the Exchange
Option is not available to a Unitholder at the
time he wishes to exercise it, the Unitholder will
be immediately notified and no action will be
taken with respect to his Units without further
instruction from the Unitholder.
To exercise the Exchange Option, a Unitholder
should notify the Sponsor of his desire to
exercise the Exchange Option and to use the
proceeds from the sale of his Units to the Sponsor
of this series to purchase Units of one or more of
the Exchange Trusts from the Sponsor. If Units of
the applicable outstanding series of the Exchange
Trust are at that time available for sale, and if
such Units may lawfully be sold in the state in
which the Unitholder is resident, the Unitholder
may select the series or group of series for which
he desires his investment to be exchanged. The
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 Uni-
tholder.
Conversion Option. Owners of units of any
registered unit investment trust sponsored by
others which was initially offered at a maximum
applicable sales charge of at least 3.0% (a
"Conversion Trust") may elect to apply the cash
proceeds of the sale or redemption of those units
directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15
per Unit, per 100 Units in the case of Exchange
Trusts having a Unit price of approximately $10,
or per 1,000 Units in the case of Exchange Trusts
having a Unit price of approximately $1, subject
to the terms and conditions applicable to the
Exchange Option (except that no secondary market
is required for Conversion Trust units). To
exercise this option, the owner should notify his
retail broker. He will be given a prospectus for
each series in which he indicates interest and for
which units are available. The dealer must sell or
redeem the units of the Conversion Trust. Any
dealer other than PaineWebber must certify that
the purchase of the units of the Exchange Trust is
being made pursuant to and is eligible for the
Conversion Option. The dealer will be entitled to
two thirds of the applicable reduced sales charge.
The Sponsor reserves the right to modify, suspend
or terminate the Conversion Option at any time
with notice, including the right to increase the
reduced sales charge applicable to this option
(but not in excess of $5 more per Unit, per 100
Units or per 1,000 Units, as applicable than the
corresponding fee then being charged for the
Exchange Option). For a description of the tax
consequences of a conversion reference is made to
the Exchange Option section herein.
Distribution of Units. The minimum purchase
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 mem-
bers 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 Hancock Towers, 200 Clarendon Street,
Boston, MA 02116 upon payment of any transfer or
similar tax which must be paid to effect the
redemption. At the present time there are no such
taxes. No redemption fee will be charged by the
Sponsor or Trustee. If the Units are represented
by a certificate it must be properly endorsed
accompanied by a letter requesting redemption. If
held in uncertificated form, a written instrument
of redemption must be signed by the Unitholder.
Unitholders must sign exactly as their names
appear on the records of the Trustee with
signatures guaranteed by an eligible guarantor
institution or in such other manner as may be
acceptable to the Trustee. In certain instances
the Trustee may require additional documents such
as, but not limited to, trust instruments,
certificates of death, appointments as executor or
administrator, or certificates of corporate
authority. Unitholders should contact the Trustee
to determine whether additional documents are
necessary. Units tendered to the Trustee for
redemption will be cancelled, if not repurchased
by the Sponsor.
Units will be redeemed at the Redemption Value
per Unit next determined after receipt of the
redemption request in good order by the Trustee.
The Redemption Value per Unit is determined by
dividing the Trust Fund Evaluation by the number
of Units outstanding. (See "Valuation".)
A redemption request is deemed received on the
business day (see "Valuation" for a definition of
business day) when such request is received prior
to 4:00 p.m. If it is received after 4:00 p.m., it
is deemed received on the next business day.
During the period in which the Sponsor maintains a
secondary market for Units, the Sponsor may
repurchase any Unit presented for tender to the
Trustee for redemption no later than the close of
business on the second business day following such
presentation and Unitholders will receive the
Redemption Value next determined after receipt by
the Trustee of the redemption request. Proceeds of
a redemption will be paid to the Unitholder no
later than the seventh calendar day following the
date of tender (or if the seventh calendar day is
not a business day on the first business day prior
thereto).
With respect to cash redemptions, amounts
representing income received shall be withdrawn
from the Income Account, and, to the extent such
balance is insufficient and for remaining amounts,
from the Capital Account. The Trustee is
empowered, to the extent necessary, to sell
Securities to meet redemptions. The Trustee will
sell Securities in such manner as is directed by
the Sponsor. In the event no such direction is
given, Stock will be sold pro rata, to the extent
possible, and if not possible Stocks having the
greatest amount of capital appreciation will be
sold first. (See "Administration of the Trust".)
However, with respect to redemption requests in
excess of $100,000, the Sponsor may determine in
its discretion to direct the Trustee to redeem
Units "in kind" by distributing Securities to the
redeeming Unitholder. When Stocks are so
distributed, a proportionate amount of each Stock
will be distributed, rounded to avoid the
distribution of fractional shares and using cash
or checks where rounding is not possible. The
Sponsor may direct the Trustee to redeem Units "in
kind" even if it is then maintaining a secondary
market in Units of the Trust. Securities will be
valued for this purpose as set forth under
"Valuation". A Unitholder receiving a redemption
"in kind" may incur brokerage or other transaction
costs in converting the Stock distributed into
cash. The availability of redemption "in kind" is
subject to compliance with all applicable laws and
regulations, including the Securities Act of 1933,
as amended.
To the extent that Securities are redeemed in
kind or sold, the size and diversity of the Trust
will be reduced. Sales will usually be required at
a time when Securities would not otherwise be sold
and may result in lower prices than might
otherwise be realized. The price received upon
redemption may be more or less than the amount
paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of
redemption. In addition, because of the minimum
amounts in which Securities are required to be
sold, the proceeds of sale may exceed the amount
required at the time to redeem Units; these excess
proceeds will be distributed to Unitholders on the
Distribution Dates.
The Trustee may, in its discretion, and will,
when so directed by the Sponsor, suspend the right
of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar
days following the day of tender for any period
during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday
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 dis-
cretion.
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 $.0180
which include, but are not limited to
Organizational 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
termination of the Trust. In addition, to the
extent then permitted by the Securities and
Exchange Commission, the Trust may incur expenses
of maintaining registration or qualification of
the Trust or the Units under Federal or state
securities laws so long as the Sponsor is
maintaining a secondary market (including, but not
limited to, legal, auditing and printing ex-
penses).
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 instru-
ments of transfer. Uncertificated Units are
transferable by presentation to the Trustee at its
office in Boston of a written instrument of
transfer.
Certificates may be issued in denominations of
one Unit or any integral multiple thereof as
deemed appropriate by the Trustee. A Unitholder
may be required to pay $2.00 per certificate
reissued or transferred, and shall be required to
pay any governmental charge that may be imposed in
connection with each such transfer or interchange.
For new certificates issued to replace destroyed,
mutilated, stolen or lost certificates, the
Unitholder must furnish indemnity satisfactory to
the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be
surrendered to the Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute net dividends and
interest, if any, from the Income Account on the
quarterly Distribution Dates to Unitholders of
record on the preceding Record Date. Distributions
from the Capital Account will be made on annual
Distribution Dates to Unitholders of record on the
preceding Record Date. Distributions of less than
$.05 per Unit need not be made from the Capital
Account on any Distribution Date. See "Essential
Information". Whenever required for regulatory or
tax purposes, the Trustee will make special
distributions of any dividends or capital on
special Distribution Dates to Unitholders of
record on special Record Dates declared by the
Trustee.
Upon termination of the Trust, each Unitholder of
record on such date will receive his pro rata
share of the amounts realized upon disposition of
the Securities plus any other assets of the Trust,
less expenses of the Trust. (See "Termination".)
ADMINISTRATION OF THE TRUST
Accounts. All dividends and interest received on
Securities, proceeds from the sale of Securities
or other moneys received by the Trustee on behalf
of the Trust may be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income
Account dividends, if any, and interest income, on
Securities in the Trust. All other receipts (i.e.,
return of principal and gains) are credited on its
books to a Capital Account. A record will be kept
of qualifying dividends within the Income Account.
The pro rata share of the Income Account and the
pro rata share of the Capital Account represented
by each Unit will be computed by the Trustee as
set forth under "Valuation".
The Trustee will deduct from the Income Account
and, to the extent funds are not sufficient
therein, from the Capital Account, amounts
necessary to pay expenses incurred by the Trust.
(See "Expenses and Charges.") In addition, the
Trustee may withdraw from the Income Account and
the Capital Account such amounts as may be neces-
sary to cover redemption of Units by the Trustee.
(See "Redemption.")
The Trustee may establish reserves (the "Reserve
Account") within the Trust for state and local
taxes, if any, and any other governmental charges
payable out of the Trust.
Reports and Records. With any distribution from
the Trust, Unitholders will be furnished with a
statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the
Trust at its office in Boston, including records
of the names and addresses of Unitholders, a
current list of underlying Securities in the
portfolio and a copy of the Indenture. Records
pertaining to a Unitholder or to the Trust (but
not to other Unitholders) are available to the
Unitholder for inspection at reasonable times
during business hours.
Within sixty (60) days after the end of each
calendar year, commencing with calendar year 1995,
the Trustee will furnish each person who was a
Unitholder at any time during the calendar year an
annual report containing the following
information, expressed in reasonable detail both
as a dollar amount and as a dollar amount per
Unit: (1) a summary of transactions for such year
in the Income and Capital Accounts and any
Reserves; (2) any Securities sold during the year
and the Securities held at the end of such year;
(3) the Trust Fund Evaluation per Unit, based upon
a computation thereof on the 31st day of December
of such year (or the last business day prior
thereto); and (4) amounts distributed to Unithold-
ers during such year.
Portfolio Supervision. The portfolio of the Trust
is not "managed" by the Sponsor or the Trustee;
their activities described herein are governed
solely by the provisions of the Indenture. The
Indenture provides that the Sponsor may (but need
not) direct the Trustee to dispose of a Security:
(1) upon the failure of the issuer to declare or
pay anticipated dividends or interest;
(2) upon the institution of a materially adverse
action or proceeding at law or in equity seeking
to restrain or enjoin the declaration or payment
of dividends on any such Securities or the
existence of any other materially adverse legal
question or impediment affecting such Securities
or the declaration or payment of dividends on the
same;
(3) upon the breach of covenant or warranty in
any trust indenture or other document relating to
the issuer which might materially and adversely
affect either immediately or contingently the
declaration or payment of dividends on such
Securities;
(4) upon the default in the payment of principal
or par or stated value of, premium, if any, or
income on any other outstanding securities of the
issuer or the guarantor of such Securities which
might materially and adversely, either immediately
or contingently, affect the declaration or payment
of dividends on the Securities;
(5) upon the decline in price or the occurrence
of any materially adverse credit factors, that in
the opinion of the Sponsor, make the retention of
such Securities not in the best interest of the
Unitholder;
(6) upon a public tender offer being made for a
Security, or a merger or acquisition being
announced affecting a Security that in the opinion
of the Sponsor make the sale or tender of the
Security in the best interests of the Unitholders;
(7) upon a decrease in the Sponsor's internal
rating of the Security; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the
economic fundamentals of the issuer of the
Security or the industry of which it is a part.
Securities may also be sold in the manner
described under "The Trust". The Trustee may
dispose of Securities where necessary to pay Trust
expenses or to satisfy redemption requests as
directed by the Sponsor, and the proceeds of such
sale may not be reinvested.
Cash received upon the sale of Stock (including
sales to meet redemption requests) and dividends
received will not be reinvested and will be held
in a non-interest bearing account until
distribution on the next Distribution Date to
Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and
the Sponsor without the consent of any of the
Unitholders to cure any ambiguity or to correct or
supplement any provision thereof which may be
defective or inconsistent or to make such other
provisions as will not adversely affect the
interest of the Unitholders.
The Indenture may be amended in any respect by
the Sponsor and the Trustee with the consent of
the holders of 51% of the Units then outstanding;
provided that no such amendment shall (1) reduce
the interest in the Trust represented by a Unit or
(2) reduce the percentage of Unitholders required
to consent to any such amendment, without the
consent of all Unitholders.
The Trustee will promptly notify Unitholders of
the substance of any amendment affecting
Unitholders' rights or their interest in the
Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will
terminate on the Mandatory Termination Date. If
the value of the Trust as shown by any evaluation
is less than fifty per cent (50%) of the market
value of the Stocks upon completion of the deposit
of Stocks, the Trustee may in its discretion, and
will when so directed by the Sponsor, terminate
such Trust. The Trust may also be terminated at
any time by the written consent of 51% of the
Unitholders or by the Trustee upon the resignation
or removal of the Sponsor if the Trustee
determines termination to be in the best interest
of the Unitholders. In no event will the Trust
continue beyond the Mandatory Termination Date.
Unless advised to the contrary by the Sponsor,
approximately 20 days prior to the termination of
the Trust the Trustee will begin to sell the
Securities held in the Trust and will then, after
deduction of any fees and expenses of the Trust
and payment into the Reserve Account of any amount
required for taxes or other governmental charges
that may be payable by the Trust, distribute to
each Unitholder, after due notice of such
termination, such Unitholder's pro rata share in
the Income and Capital Accounts. Moneys held upon
the sale of Securities may be held in non-interest
bearing accounts created by the Indenture until
distributed and will be of benefit to the Trustee.
The sale of Securities in the Trust in the period
prior to termination may result in a lower amount
than might otherwise be realized if such sale were
not required at such time due to impending or
actual termination of the Trust. For this reason,
among others, the amount realized by a Unitholder
upon termination may be less than the amount paid
by such Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a
corporation organized under the laws of the State
of Delaware. The Sponsor is a member firm of the
New York Stock Exchange, Inc. as well as other
major securities and commodities exchanges and is
a member of the National Association of Securities
Dealers, Inc. The Sponsor is engaged in a security
and commodity brokerage business as well as
underwriting and distributing new issues. The
Sponsor also acts as a dealer in unlisted
securities and municipal bonds and in addition to
participating as a member of various selling
groups or as an agent of other investment
companies, executes orders on behalf of investment
companies for the purchase and sale of securities
of such companies and sells securities to such
companies in its capacity as a broker or dealer in
securities.
The Indenture provides that the Sponsor will not
be liable to the Trustee, the Trust or to the
Unitholders for taking any action or for
refraining from taking any action made in good
faith or for errors in judgment, but will be li-
able only for its own willful misfeasance, bad
faith, gross negligence or willful disregard of
its duties. The Sponsor will not be liable or
responsible in any way for depreciation or loss
incurred by reason of the sale of any Securities
in the Trust.
The Indenture is binding upon any successor to
the business of the Sponsor. The Sponsor may
transfer all or substantially all of its assets to
a corporation or partnership which carries on the
business of the Sponsor and duly assumes all the
obligations of the Sponsor under the Indenture. In
such event the Sponsor shall be relieved of all
further liability under the Indenture.
If the Sponsor fails to undertake any of its
duties under the Indenture, becomes incapable of
acting, becomes bankrupt, or has its affairs taken
over by public authorities, the Trustee may either
appoint a successor Sponsor or Sponsors to serve
at rates of compensation determined as provided in
the Indenture or terminate the Indenture and
liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of
Chicago, a national banking association with its
corporate trust office at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126
(which is subject to supervision by the
Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors
of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company
with its principal office at Hancock Towers, 200
Clarendon Street, Boston, Massachusetts 02116,
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 govern-
mental 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 Carter, Ledyard & Milburn, 2 Wall
Street, New York, New York, as counsel for the
Sponsor.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of August 31, 1997
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Initial Date of Deposit: September 13, 1995
<S> <C>
Aggregate Market Value of Securities in Trust: $26,175,090
Number of Units: 1,879,000
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/1,879,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Net Assets in Trust $26,188,562
Divided by 1,879,000 Units $13.9377
Plus Sales Charge of 3.75% of Public Offering Price $0.5430
Public Offering Price per Unit $14.4807
Redemption Value per Unit: $13.9377
Excess of Public Offering Price over Redemption Value per Unit: $0.5430
Sponsor's Repurchase Price Per Unit: $13.9377
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $0.5430
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* * * $.0385 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 Eighteen, including the
schedule of investments, as of August 31, 1997 and
the related statements of operations and changes
in net assets for the year ended August 31, 1997,
and for the period from September 13, 1995
(initial 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 audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. Our
procedures included confirmation of the securities
owned as of August 31, 1997, as shown in the
statement of financial condition and schedule of
investments, by correspondence with the Co-
Trustees. An audit also includes assessing the
accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of The PaineWebber Equity
Trust, Growth Stock Series Eighteen at August 31,
1997 and the results of its operations and changes
in its net assets for the year ended August 31,
1997, and 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
November 14, 1997
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
STATEMENT OF FINANCIAL CONDITION
August 31, 1997
<CAPTION>
ASSETS
<S> <C> <C>
Common Stock - at market value (Cost $17,133,723)
(note 1 to schedule of investments) $26,175,090
Dividends receivable 12,439
Accounts Receivable - Securities Sold 577,633
Prepaid Organizational Expenses 60,814
Total Assets $26,825,976
LIABILITIES AND NET ASSETS
Accounts Payable - Units Redeemed $577,120
Advance from Trustee 36,026
Accrued expenses payable 24,268
Total Liabilities $637,414
Net assets (1,879,000 units of fractional undivided interest outstanding):
Cost of 1,879,000 units (note B) $17,801,270
Less sales charge (note C) (667,547)
Net amount applicable to investors 17,133,723
Net unrealized market appreciation (note D) 9,041,367
Net amount applicable to unitholders 26,175,090
Undistributed investment income-net 17,820
Overdistributed proceeds from securities sold (4,348)
Net assets 26,188,562
Total liabilities and net assets $26,825,976
Net asset value per Unit $13.94
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 (initial date
Year Ended of deposit) to
August 31, August 31,
1997 1996
<S> <C> <C>
Operations:
Dividend Income $235,138 $241,007
Total investment income 235,138 241,007
Less expenses:
Trustee's fees, expenses and evaluator's expense 91,646 86,716
Total expenses 91,646 86,716
Investment Income-net 143,492 154,291
Realized and unrealized gain on investments-net:
Net realized gain on securities transactions 2,356,426 596,927
Net change in unrealized market appreciation 6,730,419 2,310,948
Net realized and unrealized gain on investments 9,086,845 2,907,875
Net increase in net assets resulting from operations $9,230,337 $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 (initial date
Year Ended of deposit) to
August 31, August 31,
1997 1996
<S> <C> <C>
Operations:
Investment income-net $143,492 $154,291
Net realized gain on securities transactions 2,356,426 596,927
Net change in unrealized market appreciation 6,730,419 2,310,948
Net increase in net assets resulting from operations 9,230,337 3,062,166
Less: Distributions to Unitholders (Note E)
Principal 583,390 857,532
Investment Income 143,036 144,561
Total Distributions 726,426 1,002,093
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 8,600,549 2,683,653
Undistributed income at date of redemption 4,350 2,492
Total Redemptions 8,604,899 2,686,145
Decrease in net assets (100,988) (626,072)
Net Assets:
Beginning of Period 26,289,550 ---
Supplemental Deposits --- 26,915,622
End Of Period $26,188,562 $26,289,550
See accompanying notes to financial statements.
</TABLE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting.
Security transactions
are accounted for on the date the securities are
purchased or sold.
(B) Cost to investors represents the initial
public offering price as of the initial 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, 1997, the gross unrealized
market appreciation was $9,715,616 and the gross
unrealized
market depreciation was ($674,249). The net
unrealized market appreciation was $9,041,367.
(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 (initial date
Year Ended of deposit) to
August 31, August 31,
1997 1996
<S> <C> <C>
Total number of units redeemed 695,000 256,000
Redemption amount $8,604,899 $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, 1997
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Automobile Parts--Original Equipment: (6.64%)
Eaton Corporation 6,511 $586,397
Tower Automotive, Inc.* 25,679 1,152,345
Automobile & Trucks: (5.33%)
Chrysler Corporation 12,647 444,226
Ford Motor Company 11,535 496,005
General Motors Corporation 7,255 455,251
Broadcast, Radio & TV: (.75%)
Viacom, Inc.* 6,694 197,473
Commercial Services: (3.87%)
CUC International, Inc.* 16,745 393,507
Service Corporation International 19,349 619,168
Computer Hardware/Software: (8.18%)
Compaq Computer Corporation 17,664 1,156,959
Microsoft Corporation* 7,445 984,136
Electronics--Semiconductor: (7.24%)
Hewlett-Packard Company 8,556 524,590
Intel Corporation 11,165 1,028,576
Motorola, Inc. 4,652 341,340
Entertainment: (8.03%)
Carmike Cinemas, Inc.* 17,674 556,731
Walt Disney Company 6,322 485,609
Gaylord Entertainment Company 12,643 294,740
Lodgenet Entertainment Corporation * 32,562 305,269
Time Warner, Inc. 8,931 459,946
Financial Banks: (5.69%)
Fifth Third Bancorp 14,233 832,630
Republic New York Corporation 6,140 657,364
Financial Services: (2.38%)
Federal National Mortgage Association 14,141 622,204
Homebuilders: (2.82%)
Del Webb Corporation 18,793 328,878
Toll Brothers, Inc. * 18,977 408,006
Insurance--Property & Casualty: (2.36%)
MGIC Investment Corporation 12,279 617,787
Medical--Hospital Management & Service: (2.24%)
Apria Healthcare Group, Inc.* 12,093 211,627
Integrated Health Services, Inc. 11,349 374,517
Miscellaneous Retail: (6.40%)
Barnes & Noble* 8,746 406,142
Tiffany & Company 16,376 741,014
Zale Corporation * 24,561 528,062
Publishing: (7.79%)
Belo (A.H.) Corporation 9,675 414,816
Central Newspapers, Inc. 11,721 797,761
Gannett Company, Inc. 6,694 652,247
Thomas Nelson, Inc. 13,958 174,475
Restaurant/Food Service: (2.56%)
Starbucks Corporation * 16,378 671,498
Retail Apparel Stores: (2.35%)
The Men's Wearhouse, Inc.* 16,926 614,625
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES EIGHTEEN
SCHEDULE OF INVESTMENTS
As of August 31, 1997
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value
<C> <C> <C>
Retail Food Stores: (5.26%)
General Nutrition Companies, Inc. * 16,002 $444,055
Tosco Corporation 28,204 932,495
Retail Furniture & Home Furnishings: (2.88%)
Bed Bath & Beyond, Inc.* 24,289 752,959
Retail General Merchandise Stores: (6.66%)
Federated Department Stores, Inc.* 12,281 515,802
Price/Costco, Inc.* 20,092 724,568
Wal-Mart Stores, Inc. 14,142 502,041
Telecommunications: (2.32%)
BellSouth Corporation 10,237 450,428
Paging Network, Inc.* 15,630 158,254
Textiles: (2.39%)
St. John Knits, Inc. 14,880 626,820
Tobacco: (1.40%)
UST, Inc. 12,653 365,355
Transportation: (1.49%)
Rural/Metro Corporation * 14,142 388,905
Wholesale Stationery & Office Supplies: (2.97%)
OfficeMax, Inc.* 21,490 318,321
Staples, Inc.* 19,539 459,166
TOTAL INVESTMENTS $26,175,090
(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.C1 Opinion of Counsel as to legality of securities
being registered
EX-99.C2 Opinion of Counsel as to certain tax aspects of
of the Trust
EX-27 Financial Data Schedule
EX-99.C3 Consent of Independent Auditors
FINANCIAL STATEMENTS
1. Statement of Condition of the Trust as shown in
the current Prospectus for this series.
2. Financial Statements of the Depositor.
PaineWebber Incorporated - Financial Statements
incorporated by reference to Form 10-k and
Form 10-Q (File No. 1-7367) respectively.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, PaineWebber Equity Trust, Growth Stock Series 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 24th day of November,
1997.
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 24th day of November, 1997.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer,
Director & Member of the Executive
Committee *
Regina A. Dolan Senior Vice President, Chief Financial Officer
and Director *
Joseph J. Grano, Jr. President, Retail Sales & Marketing,
Director and Member of the Executive
Committee *
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been filed with the
Securities and Exchange Commission in connection with the Registration
Statement for File No. 33-19786.
November 24, 1997
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber Equity
Trust, Growth Stock Series 18 (hereinafter referred to as the
"Trust"). The Depositor seeks by means of Post-Effective
Amendment No. 2 to register for reoffering 1,267,404 Units acquired
by the Depositor in the secondary market (hereinafter referred to as
the "Units").
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 2 to the Registration Statement on
Form S-6 (File No. 33-59119) 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 Initial Date of Deposit, among
the Depositor, the Co-Trustees and the Evaluator (the "Trust
Indenture" and, collectively with the Standard Terms, the
"Indenture and Agreement");
(k) The form of certificate of ownership for units (the "Certificate") to
be issued under the Indenture and Agreement; and
(l) Such other pertinent records and documents as we have deemed
necessary.
With your permission, in such examination, we have assumed
the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of
all documents submitted to us as copies; (c) the truth, accuracy,
and completeness of the information, representations, and warranties
contained in the records, documents, instruments and certificates we
have reviewed; (d) except as specifically covered in the opinions set
forth below, the due authorization, execution, and delivery on behalf
of the respective parties thereto of documents referred to herein and
the legal, valid, and binding effect thereof on such parties; and (e)
the absence of any evidence extrinsic to the provisions of the written
agreement(s) between the parties that the parties intended a
meaning contrary to that expressed by those provisions. However,
we have not examined the securities deposited pursuant to the
Indenture and Agreement (the "Securities") nor the contracts for the
Securities.
We express no opinion as to matters of law in jurisdictions other
than the State of New York (except "Blue Sky" laws) and the federal laws
of the United States, except to the extent necessary to render the
opinion as to the Depositor in paragraph (i) below with respect to
Delaware law. As you know we are not licensed to practice law in the
State of Delaware, and our opinion in paragraph (i) and (iii) as to
Delaware law is based solely on review of the official statutes of the
State of Delaware.
Based upon such examination, and having regard for legal
considerations which we deem relevant, we are of the opinion that:
(i) The Depositor is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
corporate power to conduct its business as described in the
Prospectus;
(ii) The Depositor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;
(iii)The terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;
(iv) The consummation of the transactions contemplated under the
Indenture and Agreement and the fulfillment of the terms thereof
will not be in violation of the Depositor's Restated Certificate of
Incorporation, as amended, or By-Laws, as amended and will not
conflict with any applicable laws or regulations applicable to the
Depositor in effect on the date hereof; and
(v) The Certificates to be issued by the Trust, when duly executed by
the Depositor and the Trustee in accordance with the Indenture
and Agreement, upon delivery against payment therefor as
described in the Prospectus will constitute fractional undivided
interests in the Trust enforceable against the Trust in accordance
with their terms, will be entitled to the benefits of the Indenture
and Agreement and will be fully paid and non-assessable.
Our opinion that any document is valid, binding, or enforceable in
accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights
generally;
(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and
(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby represent that the Amendment contains no disclosure
which would render it ineligible to become effective immediately
upon filing pursuant to paragraph (b) of Rule 485 of the
Commission.
We hereby consent to the filing of this opinion as an exhibit to
the Amendment and to the use of our name wherever it appears in
the Amendment and the Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
November 24, 1997
PaineWebber Incorporated
1200 Harbor Boulevard
Weehawken, New Jersey 07087
Dear Sirs:
As counsel for PaineWebber Incorporated (the
"Depositor"), we have examined an executed copy of the
Trust Indenture and Agreement dated as of the Initial
Date of Deposit (the "Indenture") which incorporates the
Standard Terms and Conditions of Trust, (the "Agreement"),
both between the Depositor, and Investors Bank & Trust
Company and the First National Bank of Chicago as
Co-Trustees (the "Trustee"). The Indenture established a
trust called The PaineWebber Equity Trust, Growth Stock
Series 18 (the "Trust") into which the Depositor deposited
certain stocks (the "Securities"), and moneys to
be held by the Trustee upon the terms and conditions
set forth in the Indenture and Agreement. Under the
Indenture, units were issued representing fractional
undivided interests in the Trust (the "Units").
Based upon the foregoing and upon an examination of
such other documents and an investigation of such
matters of law as we have deemed necessary, we are of
the opinion that, under existing statutes and
decisions:
1. The Trust intends to qualify for and elect tax
treatment as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code").
Assuming that such election is made and the Trust so
qualifies, the Trust would not be subject to federal
income tax on such part of its net income and capital
gain, if any, as is timely distributed to Unitholders.
2. The Trust will be subject to New York State and New
York City franchise and income tax. However, in any fiscal
year in which the Trust qualifies as a regulated investment
company under Section 851 of the Code, and in which the
Trust distributes all of its net income and capital gains
to Unitholders, the sum of such New York State and New York
City tax to which the Trust will be subject will not
exceed $2,055.00.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-59119)
relating to the Units referred to above and to the use of
our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
/s/ CARTER, LEDYARD & MILBURN
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> EQUITY TRUST, GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> AUG-31-1997 AUG-31-1996
<PERIOD-START> SEP-01-1996 SEP-13-1995
<PERIOD-END> AUG-31-1997 AUG-31-1996
<EXCHANGE-RATE> 1 1
<INVESTMENTS-AT-COST> 17,133,723 0
<INVESTMENTS-AT-VALUE> 26,175,090 0
<RECEIVABLES> 590,072 0
<ASSETS-OTHER> 60,814 0
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 26,825,976 0
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 637,414 0
<TOTAL-LIABILITIES> 637,414 0
<SENIOR-EQUITY> 0 0
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<SHARES-COMMON-STOCK> 1,879,000 0
<SHARES-COMMON-PRIOR> 2 574,000 0
<ACCUMULATED-NII-CURRENT> 17,820 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 0 0
<OVERDISTRIBUTION-GAINS> (4,348) 0
<ACCUM-APPREC-OR-DEPREC> 9,041,367 0
<NET-ASSETS> 26,188,562 0
<DIVIDEND-INCOME> 235,138 241,007
<INTEREST-INCOME> 0 0
<OTHER-INCOME> 0 0
<EXPENSES-NET> 91,646 86,716
<NET-INVESTMENT-INCOME> 143,492 154,291
<REALIZED-GAINS-CURRENT> 2,356,426 596,927
<APPREC-INCREASE-CURRENT> 6,730,419 2,310,948
<NET-CHANGE-FROM-OPS> 9,230,337 3,062,166
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> 143,036 144,561
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 583,390 857,532
<NUMBER-OF-SHARES-SOLD> 0 0
<NUMBER-OF-SHARES-REDEEMED> 695,000 256,000
<SHARES-REINVESTED> 0 0
<NET-CHANGE-IN-ASSETS> (100,988) (626,072)
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 0 0
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 0 0
<AVERAGE-NET-ASSETS> 0 0
<PER-SHARE-NAV-BEGIN> 0 0
<PER-SHARE-NII> 0 0
<PER-SHARE-GAIN-APPREC> 0 0
<PER-SHARE-DIVIDEND> 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 14 0
<EXPENSE-RATIO> 0 0
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated
November 14, 1997, in the Registration Statement and related
Prospectus of the PaineWebber Equity Trust, Growth Stock
Series 18.
/s/ ERNST & YOUNG LLP
New York, New York
November 24, 1997
