File No. 333-15797
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities of
Unit Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust:
PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES 20
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] It is proposed that this filing will become effective 60 days after
filing pursuant to paragraph (a)(1) of Rule 485.
E. Total and amount of securities being registered:
An indefinite number of units of Beneficial Interest pursuant to Rule
24f-2 under the Investment Company Act of 1940.
F. Proposed maximum offering price to the public of the securities being
registered:
Indefinite pursuant to Rule 24f-2
G. Amount of filing fee, computed at one-thirty-fourth of 1 percent of the
proposed maximum aggregate offering price to the public:
In accordance with Rule 24f-2, a fee in the amount of $54,369.95 was paid
on March 20, 1998 in connection with the filing of the Rule 24f-2 Notice
for the Trust's most recent fiscal year.
H. Approximate date of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.
[ ] Check box if it is proposed that this filing will become effective on
[date], at [time] pursuant to paragraph (b) of Rule 485.
PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 20
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 20
(Converging Technologies)
(A Unit Investment Trust)
22,075,000 Units
Portfolio of Common Stocks in the Information
Technology Sector
Designed for Above-Average Capital Appreciation
Annual Capital Distributions
This Prospectus consists of two parts: Part A and
Part B. Parts A and B should both be attached for
this Prospectus to be complete.
The Securities and Exchange Commission has not
approved or disapproved these Securities or
passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal
offense.
SPONSOR:
PAINEWEBBER INCORPORATED
PROSPECTUS PART A DATED DECEMBER 17, 1998
No person is authorized to give any information or make any
representations about this Trust not contained in this
Prospectus, and you should not rely on any other information.
Read and keep both parts of this prospectus for future
reference.
Table of Contents
Part A Page
Brief Description of the Trust's Investment Portfolio A - 3
Is this Trust Appropriate for You? A - 3
Summary of Risks A - 4
Essential Information Regarding the Trust A - 6
Report of Independent Auditors A - 7
Statement of Financial Condition A - 8
Statement of Operations A - 9
Statement of Changes in Net Assets A - 10
Notes to Financial Statements A - 11
Schedule of Investments A - 12
Part B
The Composition of the Trust's Portfolio B - 1
About the Trust B - 4
Risk Factors and Special Considerations B - 5
Federal Income Taxes B - 6
Public Offering of Units B - 7
Public Offering Price B - 7
Sales Charge and Volume Discount B - 7
Employee Discount B - 8
Exchange Option B - 8
Conversion Option B - 9
Distribution of Units B - 10
Secondary Market for Units B - 10
Sponsor's Profits B - 10
Redemption B - 11
Valuation B - 12
Comparison of Public Offering Price and
Redemption Value B - 12
Expenses of the Trust B - 13
Rights of Unitholders B - 13
Distributions B - 14
Reinvestment Plan B - 14
Administration of the Trust B - 15
Accounts B - 15
Reports and Records B - 15
Portfolio Supervision B - 15
Amendment of the Indenture B - 16
Termination of the Trust B - 16
Sponsor B - 17
Trustee B - 17
Independent Auditors B - 18
Legal Opinions B - 18
PAINEWBBER EQUITY TRUST, GROWTH STOCK SERIES 20
(Converging Technologies) - PART A
Brief Description of the Trust's Investment
Portfolio
1. The Trust's Objective.
The Trust seeks to provide capital appreciation
through an investment primarily in a portfolio of
common stocks issued by domestic companies
involved in the information technology sector of
the economy. PaineWebber selected the stocks in
the Trust's Portfolio on September 4, 1997 by
choosing stocks it believed would benefit from
the convergence of computer, communications,
consumer and retail applications.
PaineWebber chose these stocks for their capital
appreciation potential, not for their income
potential. Many of the stocks currently pay
little or no dividend income.
As of August 31, 1998, 97.57% of the Trust's
Portfolio was invested in common stocks as
described briefly below and 2.43% in United
States Treasury obligations.
2. Brief Description of the Trust's Portfolio.
The Trust plans to hold until its termination a
diversified portfolio of stocks which PaineWebber
believes are likely to benefit from the growth in
the information technology sector. Unless
terminated sooner, the Trust is scheduled to
terminate on September 30, 2002 regardless of
market conditions at the time.
The Trust is a unit investment trust which means
that, unlike a mutual fund, the Trust's Portfolio
is not managed and stocks are not sold because of
market changes.
On August 31, 1998, the aggregate market value of
the Trust Portfolio was $193,196,693 The common
stocks in the Trust's Portfolio have been issued
by companies who receive income and derive
revenues from multiple industry sources, but
whose primary industry is listed in the "Schedule
of Investments" in this Prospectus Part A. A
brief description of these issuers can be found
in Part B of this Prospectus.
Approximate Percent
of Aggregate
Primary Industry Source Market Value
Primary Industry Source of the Trust
Commercial Services 1.81%
Computer Software 7.89%
Computers-Memory Devices 10.58%
Computers-Micro 6.33%
Computers-Mini 3.00%
Data Processing/Management 2.04%
Electronics/Semi-Conductor 7.21%
Internet Software 12.37%
Multimedia/Entertainment 14.83%
Networking Products 11.50%
Publishing-Newspapers 4.69%
Retail-Office Supplies 6.62%
Telecommunications 5.06%
Telecommunications Equipment 3.64%
Is this Trust Appropriate for You?
Yes, if you are seeking capital
appreciation over the life of the Trust by
investing in common stocks issued by companies in
the information technology sector of the market.
You will benefit from a professionally selected
portfolio whose risk is reduced by investing in
stocks of several different issuers.
No, if you want a speculative investment
that changes to take advantage of market
movements, if you are unable or unwilling to
assume the risks involved generally with equity
investments or if you need current income.
Summary of Risks
You can lose money by investing in the
Trust. This can happen for various reasons. A
further discussion of the risks summarized below
can be found in Part B of this Prospectus.
1. Risks of Investing in the Trust
Certain risks are involved with an
investment in a unit trust which holds common
stocks. For example:
The Trust, unlike a mutual fund, is not "managed"
and stocks will not be sold by the Trust to take
advantage of market fluctuations.
The Trust Portfolio may not remain constant
during the life of the Trust. The Trustee may be
required to sell stocks to pay Trust expenses, to
tender stocks under certain circumstances or to
sell stocks in the event certain negative events
occur.
The sale of stocks from 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 you receive upon termination may be less
than the amount you paid.
If many investors sell their Units, the Trust
will have to sell stocks. This could reduce the
diversification of your investment and increase
your share of Trust expenses.
The price of your Units depends upon the full
range of economic and market influences including
the prices of equity securities, the condition of
the stock markets and other economic influences
that affect the global or United States economy.
Assuming no changes occur in the prices of the
stocks held by the Trust, the price you paid for
your Units will generally be less than the price
you paid because your purchase price included a
sales charge.
The stocks in the Trust's Portfolio will
generally trade on a domestic stock exchange or
in the over-the-counter market. We cannot assure
you that a liquid trading market will exist. The
value of the Trust's Portfolio, and of your
investment, may be reduced if trading in one or
more stocks is limited or absent.
Additional stocks and Treasury obligations may be
acquired by the Trust when additional Units are
to be offered to the public. Costs incurred in
acquiring such additional stocks and Treasury
obligations will be borne by the Trust.
Unitholders will experience a dilution of their
investment as a result of such brokerage fees and
other expenses paid by the Trust during the
additional deposits of securities purchased by
the Trustee with cash or cash equivalents.
2. Risks of Investing in Stocks
Investing always involves risk. The risks
described below are the most significant risks
associated with investing in the stocks held by
the Trust.
Holders of common stocks such as those held by
the Trust have rights that are generally inferior
to the holders of debt obligations or preferred
stocks.
Common stocks are not obligations of the issuer.
Therefore, they do not provide any assurance of
income or provide the degree of protection of
debt securities.
The stocks held by the Trust can be expected to
fluctuate in value depending on a wide variety of
factors, such as economic and market influences
affecting corporate profitability, financial
condition of issuers, changes in worldwide or
national economic conditions, the prices of
equity securities in general and the Trust's
stocks in particular.
The Trust is said to be "concentrated" because it
invests 25% or more of it's assets in a
particular stock or a particular industry, which
makes the Trust less diversified. Here is what
you should know about the Trust's concentration
in stocks of issuers that manufacture and market
personal computers or computer components:
these companies are rapidly
developing and tend to be relatively
volatile compared to other types of
investments;
certain of these companies may be
small and relatively new with limited
product lines, markets, financial
resources, management and marketing
personnel;
these companies are subject to
intense international and domestic
competition, both for their products
and for the services of qualified
professional and technical personnel;
and
these companies often require a high
degree of investment to remain
competitive and are sensitive to
scientific and technological
developments as well as governmental
regulation and rapidly occurring
product obsolescence.
Year 2000 Problem Risk
Many computer systems were designed in such a way
that they may be unable to distinguish between
the year 2000 and the year 1900 and therefore may
not properly process and calculate date-related
information and data (commonly known as the "Year
2000 Problem"). As with all investment and
financial companies, the Year 2000 Problem may
have an adverse impact upon the Trust. The
Sponsor and the Trustee are taking steps to
address the year 2000 Problem with respect to the
computer systems they use and to obtain
reasonable assurances that similar steps are
being taken by the Trust's other service
providers. At this time, however, there can be no
assurance that these steps will be sufficient to
avoid any adverse impact to the Trust. The year
2000 Problem is expected to have an impact on all
corporations, including those whose stocks are
contained in the Trust's Portfolio. The Sponsor
cannot predict what impact, if any, the year 2000
Problem will have on the stocks in the Trust.
<TABLE>
ESSENTIAL INFORMATION REGARDING THE TRUST
<CAPTION>
As of August 31, 1998
Sponsor: PaineWebber Incorporated
Co-Trustees: Investors Bank & Trust Co. and
The First National Bank of Chicago
Initial Date of Deposit: September 4, 1997
<S> <C>
Aggregate Market Value of Securities in Trust: $193,196,693
Number of Units: 22,075,000
Fractional Undivided Interest in the Trust Represented by Each Unit: 1/22,075,000th
Calculation of Public Offering Price Per Unit*
Aggregate Value of Net Assets in Trust $193,282,562
Divided by 22,075,000 Units $8.7557
Plus Sales Charge of 3.75% of Public Offering Price $ .3412
Public Offering Price per Unit $9.0969
Redemption Value per Unit: $8.7557
Excess of Public Offering Price over Redemption Value per Unit: $.3412
Sponsor's Repurchase Price Per Unit: $8.7557
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.3412
Evaluation Time: 4 P.M. New York Time
Distribution Dates* *: January 20, April 20,
July 20, October 20
Record Dates: March 31, June 30,
September 30, December 31
Mandatory Termination Date: September 30, 2002
Discretionary Liquidation Amount: 50% of the value of the
Securities upon completion
of the deposit of the Securities
Estimated Annual Expenses of the Trust* * * $.0255 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
TWENTY:
We have audited the accompanying statement of
financial condition of The PaineWebber Equity
Trust, Growth Stock Series Twenty, including the
schedule of investments, as of August 31, 1998
and the related statements of operations and
changes in net assets for the period from
September 4, 1997 (initial date of deposit) to
August 31, 1998. These financial statements are
the responsibility of the Co-Trustees. Our
responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. Our procedures included confirmation
of the securities owned as of August 31, 1998, as
shown in the statement of financial condition and
schedule of investments, by correspondence with
the Co-Trustees. An audit also includes assessing
the accounting principles used and significant
estimates made by the Co-Trustees, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material
respects, the financial position of The
PaineWebber Equity Trust, Growth Stock Series
Twenty at August 31, 1998 and the results of its
operations and changes in its net assets for the
period from September 4, 1997 to August 31, 1998,
in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
December 7, 1998
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY
STATEMENT OF FINANCIAL CONDITION
August 31, 1998
<CAPTION>
ASSETS
<S> <C> <C>
Common Stock - at market value (Cost $202,401,464)
(note 1 to schedule of investments) $188,501,084
Treasury Obligation - at market value (Cost $4,286,923)
(note 1 to schedule of investments) $4,695,609
Dividends receivable 45,190
Interest receivable 13,032
Accounts receivable-supplemental deposits 490,039
Prepaid organizational expenses 80,177
Cash 752,227
Total Assets $194,577,358
LIABILITIES AND NET ASSETS
Accounts Payable - Securities Purchased $1,166,616
Accrued expenses payable 128,180
Total Liabilities $1,294,796
Net assets (22,075,000 units of fractional undivided
interest outstanding):
Cost of 22,075,000 units (note B) $214,741,181
Less sales charge (note C) (8,052,794)
Net amount applicable to investors 206,688,387
Net unrealized market depreciation (note D) (13,491,694)
Net amount applicable to unitholders 193,196,693
Undistributed investment income-net 75,557
Undistributed proceeds from securities sold 10,312
Net assets 193,282,562
Total liabilities and net assets $194,577,358
Net asset value per Unit $8.7557
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY
STATEMENT OF OPERATIONS
<CAPTION>
For the Period
From September 4,
1997 (Initial Date
Of Deposit) to
August 31,
1998
<S> <C>
Operations:
Dividend Income $380,393
Interest Income 220,625
Total investment income 601,018
Less expenses:
Trustee's fees, expenses and evaluator's expense 515,217
Total expenses 515,217
Investment Income-net 85,801
Realized and unrealized gain (loss) on investments-net:
Net realized gain on securities transactions 1,787,302
Net change in unrealized market depreciation (13,491,694)
Net realized and unrealized loss on investments (11,704,392)
Net decrease in net assets resulting from operations ($11,618,591)
See accompanying notes to financial statements
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
From September 4,
1997 (Initial Date
Of Deposit) to
August 31,
1998
<S> <C>
Operations:
Investment income-net $85,801
Net realized gain on securities transactions 1,787,302
Net change in unrealized market depreciation (13,491,694)
Net decrease in net assets resulting from operations (11,618,591)
Less: Distributions to Unitholders (Note E)
Investment Income 12,953
Total Distributions 12,953
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 13,740,760
Undistributed income at date of redemption 119
Total Redemptions 13,740,879
Decrease in net assets (25,372,423)
Net Assets:
Beginning of Period ---
Supplemental Deposits 218,654,985
End Of Period $193,282,562
See accompanying notes to financial statements.
</TABLE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting. Secu-
rity 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 in-
vested). See "Public Offering of Units - Sales
Charge and Volume Discount" in Part B, for infor-
mation relating to the secondary market.
(D) At August 31, 1998, the gross unrealized
market appreciation was $29,311,816 and the gross
unrealized market depreciation was ($42,803,510).
The net unrealized market depreciation was
($13,491,694).
(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>
For the Period
From September 4,
1997 (Initial Date
Of Deposit) to
August 31,
1998
<S> <C>
Total number of units redeemed 1,275,000
Redemption amount $13,740,879
The following units were sold through supplemental
deposits:
Number of units sold 23,250,000
Value of amount, net of sales charge $217,692,485
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY
SCHEDULE OF INVESTMENTS
As of August 31, 1998
<CAPTION>
COMMON STOCKS (97.57%)
Name of Issuer Number of Shares Market Value(1)
<C> <C> <C>
Commercial Services (1.81%)
Cendant Corporation 303,327 $3,507,218
Computer Software (7.89%)
Cognos, Inc. 231,970 4,015,981
Microsoft Corporation 117,071 11,231,499
Computers-Memory Devices (10.58%)
EMC Corporation* 286,161 12,930,900
Quantum Corporation 218,962 2,504,378
Seagate Technology, Inc. 208,124 3,642,170
Western Digital Corporation 164,767 1,359,328
Computers-Micro (6.33%)
Compaq Computer Corporation* 225,462 6,298,845
Sun Microsystems, Inc. 149,590 5,927,504
Computers-Mini (3.00%)
Hewlett-Packard Company* 119,239 5,790,544
Data Processing/Management (2.04%)
Oracle Corporation 197,279 3,933,250
Electronics/Semi-Conductor (7.21%)
Applied Materials, Inc. 147,413 3,620,832
Intel Corporation* 80,214 5,710,234
KLA-Tencor Corporation 106,231 2,257,409
Teradyne, Inc. 134,406 2,335,304
Internet Software (12.37%)
America Online, Inc. 221,307 18,133,342
Open Market, Inc. 674,233 5,773,120
Multimedia/Entertainment (14.83%)
The Walt Disney Company* 286,162 7,851,570
Gannett Company, Inc.* 151,757 8,953,663
Time Warner, Inc.* 147,424 11,849,204
Networking Products (11.50%)
Cisco Systems, Inc. 146,332 11,980,932
FORE Systems, Inc. 379,385 6,544,391
3Com Corporation 156,091 3,697,405
Publishing-Newspapers (4.69%)
New York Times Company* 312,179 9,053,191
Retail-Office supplies (6.62%)
Staples, Inc. 471,516 12,789,871
Telecommunications (5.06%)
WorldCom, Inc. 238,663 9,770,267
Telecommunications Equipment (3.64%)
Northern Telecom Limited* 147,408 7,038,732
TREASURY SECURITIES (2.43%)
$3,587,000 U.S. Treasury Note 7 7/8% due 2/15/2021 4,695,609
TOTAL INVESTMENTS $193,196,693
(1) Valuation of Securities was made by the
Co-Trustees as described in "Valuation".
* Income producing security.
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PAINEWEBBER EQUITY TRUST
GROWTH STOCK SERIES 20
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED
UNLESS ACCOMPANIED BY PART A.
Part B contains a description of the important
features of the PaineWebber Equity Trust Growth
Stock Series 20 and also includes a more detailed
discussion of the investment risks that a
Unitholder might face while holding Trust Units.
THE COMPOSITION OF THE PORTFOLIO
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 growth in the information technology
sector. In PaineWebber's view, the information
technology sector of the U.S. economy will be a
key source of economic growth for the next several
years. 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
information technology sector.
PaineWebber believes the relentless advance of
semiconductor technology converging with the
emergence of the installed PC base in office and
home, and the shift to inter-networking have laid
groundwork for the Information Age in which the
creation, distribution and manipulation of
information is a central wealth-creating activity.
To put this shift into perspective, some of the
previous evolutionary "tools" around which people
have reorganized their society include: the
factory, the steam engine, electricity and the
telephone. Perhaps the most appropriate historical
analogy to what is occurring today is, however,
the automobile. Although autos entered mass
production in the second decade of the 20th
century, they became much more ubiquitous after
World War II. The key reason for this was that it
was not until after World War II that a fully
integrated "auto infrastructure"--consisting of
interstate highways, shopping malls, and greatly
expanded suburbs--was built. Similarly, although
the personal computer has been around since the
1970s, today there is finally a widespread
installed base in the office and home. And it is
just recently that the "information age
infrastructure" consisting of networks, Internet
Service Providers and Web sites, has begun to be
built. In the last few years, U.S. firms have
poured money into the Information Age
infrastructure at an astonishing pace. Information
processing now accounts for about 45% of total
equipment investment, up from 15% in the early
1980s. Therefore, with the shift to the
Information Age just getting underway, it is the
investment implications of this shift that are the
focus of PaineWebber's opinion.
The next major Information Age development can be
summarized by "five Cs", or the Convergence of the
Computer, Communications, Consumer applications
and Content. The key factor that is enabling this
convergence is the shift to digital technology.
Digital technology makes it possible to convert
text, sound, graphics and moving images into coded
digital messages which can be combined, stored,
manipulated and transmitted quickly, efficiently
and in large volumes over wired and wireless
networks without loss of quality. As a result, the
computer broadcast, cable, telephone, satellite
and media entertainment industries are gradually
becoming part of one single market place. This
convergence will accelerate in coming years, so
that the leading growth companies of the future
will not be defined as software or hardware or
content or communications companies but rather as
information companies.
PaineWebber believes the key beneficiaries of
converging technologies in the Information Age
will be involved with:
PCs-To access information, some analysts have
predicted that there will be a single information
appliance which will be the primary device for
computing, communicating, entertaining, etc.
PaineWebber disagrees. Rather PaineWebber believes
there will be many smart devices most of which
will be linked together and many of which will
perform several functions. But while there will
not be one single information appliance, the PC
will be the single most important tool. It will be
the central, multipurpose consumer device adapting
to the mainstream needs of users for business,
communications and visual entertainment, becoming
the only device which performs all of these
functions easily and efficiently. The PC will be
as ubiquitous in the home as the telephone is
today.
If the PC is to become the central,
multipurpose device of the Information Age,
it must offer even greater power at even
lower cost than is the case today-in other
words, Moore's Law (Intel co-founder Gordon
Moore's prediction that transistor density
on integrated circuits would double every
two years) must hold true for many years to
come.
Internet-A key medium. Net is home to three
business models chasing three revenue sources:
entertainment (advertising/subscription revenues);
information (subscription revenues); commerce
(sales revenues). The most valuable Web sites will
be owned by companies with strong brands. The
Internet also offers huge cost savings
opportunities.
Data Management and Data Warehousing-With
information the basic economic resource, data
management and data warehousing are critical for
organizing and exploiting data.
Bandwidth-In order to truly move to an Information
Age, consumers at home must have significantly
higher connection speeds made available to them.
Bandwidth to the home will always be in short
supply as it lags advances in chip technology and
content.
Data Storage-When it comes to the area of storage
two things are very clear. First, there will be
huge demand for vast amounts of storage. Second,
the primary storage method is still likely to be
magnetic.
PaineWebber's research professionals have
selected certain stocks in the industries listed
in Part A of this Prospectus 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.
PaineWebber believes the following issuers will
be key beneficiaries of converging technologies in
the Information Age:
America Online-The company has the premier brand
name in interactive online services. It is
effectively leveraging this position to develop
the high margin, high growth areas of the
Internet, i.e., advertising and electronic
commerce.
Applied Materials-A leading "Moore's Law"
beneficiary. It is the principal independent
supplier of wafer fabrication systems to the
worldwide semiconductor industry.
Cisco Systems-A leading supplier of networking
equipment to the three key networking markets: the
service providers (who are constructing the
backbone of the Internet), corporations
(Intranets, Extranets), the home/consumer.
Cognos-A developer of retrieval and analysis tools
that make it easy for businesses to access and
analyze data. As the amount of raw data increases,
businesses will be challenged to understand and
use information constructively.
Compaq-A leading PC maker which is a key
beneficiary of the emergence of the PC as the
central, multipurpose consumer device. Heavy
corporate spending on the Internet and Intranets
is very positive for its server business.
Cendant Corporation (formerly CUC
International)-The company is a major franchiser
of hotels, car rental agencies and real estate
brokerage; provides direct marketing service via
it's shopping club and net market internet site.
Disney-One of the companies at the forefront of
the convergence of the computer, communications,
consumer applications and content. Acquired ABC;
establishing Web sites for many of its branded
products.
EMC Corp.-It benefits from strong demand for disk
storage because it buys disk drives and packages
them with specialized software to create a storage
subsystem for managing data in large corporations.
Fore Systems-Its products, ATM switches, are well
suited for carrying voice, video and data and are
popular devices among companies constructing the
backbone of the Internet.
Gannett-The company controls a vast array of news
and information content both in text and visual
form from its newspapers and local television
stations. It is already leveraging the USA Today
brand successfully on the Web.
Hewlett-Packard-Its dominance of the printer
market gives the company an important franchise.
And its acquisition of Verifone bolsters H-Ps
efforts to gain market share in the fast growing
Internet commerce and smart-card markets.
Intel-The supplier of one of the principal engines
of the Information Age-the X86 microprocessor
architecture. It is a key player in the
convergence of the PC and TV-its video/graphics
advances are enhancing the utility of the PC as a
visual entertainment device. INTC is also closely
involved in efforts to increase bandwidth to the
home.
KLA-Tencor-The company has a dominant position in
an essential corner of the semiconductor
chip-making industry: chip measurement and
inspection systems that enable semiconductor
manufacturers to improve yields.
Microsoft-Given its dominant position across the
entire Information Age spectrum, it is perhaps the
leading beneficiary of the convergence of the
computer, communications, consumer applications
and content.
New York Times-Owner of two of the major brand
names in the newspaper business: The New York
Times and Boston Globe. It has already had success
in creating dynamic Web sites for these and
several other of its newspaper properties.
Northern Telecom-The only large company with broad
exposure to data networking, telecommunications
and wireless.
Open Market-A software company whose products
facilitate commerce on the Internet.
Oracle-A key beneficiary of strong demand for data
management products. The amount of data that major
corporations store doubles about every 3-4 years,
and this will only accelerate as businesses
capture more customer data.
Quantum-As one of the largest providers of disk
drives to PC related companies, it will continue
to be a leading beneficiary of strong demand for
huge desktop storage capacity.
Seagate Technology-It has the largest market share
in the high end (servers, workstations) of the
storage market. Given the growth in Web based
activities, server growth is likely to continue to
exceed PC growth.
Staples-As the Information Age advances, many more
people will be teleworking and working out of the
home, which will spur even greater demand for home
office products ranging from paper clips to filing
cabinets.
Sun Microsystems-Arguably one of the top suppliers
of servers with the Internet and Intranet markets.
Server growth is likely to continue to exceed PC
growth given rapid expansion of the Internet and
Intranets.
Teradyne-A leading supplier of automatic test
equipment to the electronics industry. As device
speeds increase, even faster test equipment is
required.
Time Warner-One of the companies at the forefront
of the convergence of the computer,
communications, consumer applications and content.
Acquired TBS; establishing Web sites for many of
its branded products.
3COM Corp-A leading global data networking
company. Following its merger with US Robotics-a
leading modem and remote access vendor-the company
also has the dominant position at the "edge" of
the network.
Western Digital-As one of the largest providers of
disk drives to PC related companies, it is highly
focused on supplying low-cost, high quality disk
drives to the top PC vendors.
WorldCom-Through its UUNet subsidiary, the company
is the largest Internet access provider. It is a
key beneficiary of the emergence of the Internet
as a new medium and the associated demand for
high-bandwidth data transfers.
ABOUT 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 principally in equity stocks
having, in Sponsor's opinion on the Initial Date
of Deposit, potential for capital appreciation.
On the Initial Date of Deposit, the Sponsor
deposited with the Trustee confirmations of
contracts for the purchase of Stocks and Treasury
Obligations together with an irrevocable letter or
letters of credit of a commercial bank or banks in
an amount at least equal to the purchase price.
The value of the Securities was determined on the
basis described under "Valuation". In exchange for
the deposit of the contracts to purchase
Securities, the Trustee delivered to the Sponsor a
receipt for Units representing the entire
ownership of the Trust.
With the deposit on the Initial Date of Deposit,
the Sponsor established a proportionate
relationship between the Securities in the Trust
(determined by reference to the number of shares
of each issue of Stock and the face amount of the
Treasury Obligations). 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 or pursuant to the
Reinvestment Plan, maintaining as closely as
practicable the original percentage relationship
between the Securities deposited on the Initial
Date of Deposit and replicating any cash or cash
equivalents held by the Trust (net of expenses).
The original proportionate relationship is subject
to adjustment to reflect the occurrence of a stock
split or a similar event which affects the capital
structure of the issuer of a Stock but which does
not affect the Trust's percentage ownership of the
common stock equity of such issuer at the time of
such event, to reflect a sale or maturity of
Security or to reflect a merger or reorganization.
Stock dividends issued in lieu of cash dividends,
if any, received by the Trust will be sold by the
Trustee and the proceeds therefrom shall be added
to the Income Account. (See "Administration of the
Trust" and "Reinvestment Plan").
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 or pursuant to the Reinvestment Plan), the
aggregate value of Securities in the Trust will be
increased and the fractional undivided interest
represented by each Unit in the balance will be
decreased. If any Units are redeemed, the
aggregate value of Securities in the Trust will be
reduced, and the fractional undivided interest
represented by each remaining Unit in the balance
will be increased. Units will remain outstanding
until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or
until the termination of the Trust. (See
"Termination of the Trust".)
*Reference is hereby made to said Trust Indenture
and Agreement and any statements contained herein
are qualified in their entirety by the provisions
of said Trust Indenture and Agreement.
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 Stocks 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.
The Trust is considered "concentrated" in stocks
of issuers that manufacture and market personal
computers or computer components. These types of
companies are rapidly developing and highly
competitive, both domestically and
internationally, and tend to be relatively
volatile as compared to other types of
investments. Certain of these companies may be
smaller and newer companies with limited product
lines, markets or financial resources and limited
management or marketing personnel. These companies
typically require a high degree of investment to
maintain competitiveness and are affected by
international scientific and technological
developments and rapidly occurring product
obsolescence as well as government regulation,
increases in material or labor costs, changes in
distribution channels and the need to manage
inventory levels closely. Other risk factors
include short product life cycles, aggressive
pricing and reduced profit margins, dramatic and
often unpredictable changes in growth rates,
frequent new product introduction, the need to
enhance existing products, intense competition
from large established companies and potential
competition from small start up companies. These
companies are also dependent to a substantial
degree upon skilled professional and technical
personnel and there is considerable competition
for the services of qualified personnel in the
industry.
Investors should note that the creation of
additional Units subsequent to the Initial Date of
Deposit may have an effect upon the value of
previously existing Units. To create additional
Units the Sponsor may deposit cash (or cash
equivalents, e.g., a bank letter of credit in lieu
of cash) with instructions to purchase Securities
in amounts sufficient to maintain, to the extent
practicable, the percentage relationship among the
Securities based on the price of the Securities at
the Evaluation Time on the date the cash is
deposited. To the extent the price of a Security
increases or decreases between the time cash is
deposited with instructions to purchase the
Security and the time the cash is used to purchase
the Security, Units will represent less or more of
that Security and more or less of the other
Securities in the Trust. Unitholders will be at
risk because of price fluctuations during this
period since if the price of shares of a Security
increases, Unitholders will have an interest in
fewer shares of that Security, and if the price of
a Security decreases, Unitholders will have an
interest in more shares of that Security, than if
the Security had been purchased on the date cash
was deposited with instructions to purchase the
Security. In order to minimize these effects, the
Trust will attempt to purchase Securities as
closely as possible to the Evaluation Time or at
prices as closely 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 will be at the expense
of the Trust and will affect the value of every
Unitholder's Units.
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. In the
event of a tender offer for a Stock in the
Portfolio, the Sponsor may, but is not required
to, direct the Trustee to sell or tender such
Stock (see "Administration of the Trust-Portfolio
Supervision" herein).
FEDERAL INCOME TAXES
The Trust intends to qualify for and elect tax
treatment as a "regulated investment company"
under the Internal Revenue Code of 1986, as
amended (the "Code"). By qualifying for and
electing such treatment, the Trust will not be
subject to federal income tax on taxable income or
net capital gains distributed to Unitholders
provided it distributes 90% or more of its taxable
income (exclusive of net capital gains). However,
a 4% excise tax is imposed on regulated investment
companies that fail to distribute all but a de
minimis amount of their income and gain. The Trust
intends to distribute all of its income, including
capital gains, annually.
The gross income of the Trust typically will
include dividends, interest and gains on sales or
other dispositions of 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
herein 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 a 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
Unitholder 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 of taxation is a general
summary and relates only to certain aspects of the
federal income tax consequences of an investment
in the Trust for Unitholders that hold their Units
as capital assets. Unitholders may also be subject
to state and local taxation. Each Unitholder
should consult its own tax advisor regarding the
Federal, state and local tax consequences to it of
ownership of Units.
Investment in the Trust may be suited for
purchase by funds and accounts of individual
investors that are exempt from federal income
taxes such as Individual Retirement Accounts,
tax-qualified retirement plans including Keogh
Plans, and other tax-deferred retirement plans.
Unitholders desiring to purchase Units for
tax-deferred plans and IRA's should consult their
PaineWebber Investment Executive for details on
establishing such accounts. Units may also be
purchased by persons who already have
self-directed accounts established under
tax-deferred retirement plans.
PUBLIC OFFERING OF UNITS
Public Offering Price. The public offering price
per Unit is based on the aggregate market value of
the Securities, 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".)
Sales Charge and Volume Discount. The Public
Offering Price of Units of the Trust includes a
sales charge which varies based upon the number of
Units purchased by a single purchaser. (See the
sales charge schedule set forth below.) During the
initial public offering period, the sales charge
will be based on the number of Trust Units
purchased on the same or any preceding day by a
single purchaser. Such purchaser or his dealer
must notify the Sponsor at the time of purchase of
any previous purchase of Trust Units in order to
aggregate all such purchases and must supply the
Sponsor with sufficient information to permit
confirmation of such purchaser's eligibility;
acceptance of such purchase order is subject to
confirmation. Purchases of Units of other trusts
may not be aggregated with purchases of Trust
Units to qualify for this procedure. This
procedure may be amended or terminated at any time
without notice. In the event of such termination,
the procedure will revert to that stated under the
sales charge schedule referred to below.
Sales charges for secondary market sales are set
forth below. A discount in the sales charge is
available to volume purchasers of Units due to
economies of scale in sales effort and sales
related expenses relating to volume purchases. The
sales charge applicable to volume purchasers of
Units is reduced on a graduated scale for sales to
any person of at least $50,000 or 5,000 Units,
applied on whichever basis is more favorable to
the purchaser.
Secondary Market
Percent of 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 $199,999 3.25 3.36
$200,000 to $399,999 2.75 2.83
$400,000 to $499,999 2.50 2.56
$500,000 to $999,999 2.00 2.04
$1,000,000 or more 1.75 1.78
___________
*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.
No sales charge will be imposed on Units of the
Trust acquired by Unitholders in connection with
participation in the Reinvestment Plan (see
"Reinvestment Plan").
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 does not intend to impose
a sales charge on such employee sales.
Exchange Option. Unitholders may elect to
exchange any or all of their Units of this series
for units of one or more of any series of
PaineWebber Municipal Bond Fund (the "PaineWebber
Series"); The Municipal Bond Trust (the "National
Series"); The Municipal Bond Trust, Multi-State
Program (the "Multi-State Series"); The Municipal
Bond Trust, California Series (the "California
Series"); The Corporate Bond Trust (the "Corporate
Series"); PaineWebber Pathfinder's Trust (the
"Pathfinder's Trust"); the PaineWebber Federal
Government Trust (the "Government Series"); The
Municipal Bond Trust, Insured Series (the "Insured
Series"); or the PaineWebber Equity Trust (the
"Equity Series") (collectively referred to as the
"Exchange Trusts"), at a Public Offering Price for
the Units of the Exchange Trusts to be acquired
based on a reduced sales charge of $15 per Unit,
per 100 Units in the case of a trust whose Units
cost approximately $10 or per 1,000 units in the
case of a trust whose Units cost approximately one
dollar. Unitholders of this Trust are not eligible
for the Exchange Option into an Equity Trust,
Growth Stock Series designated as a rollover
series for the 30 day period prior to termination
of the Trust. The purpose of such reduced sales
charge is to permit the Sponsor to pass on to the
Unitholder who wishes to exchange Units the cost
savings resulting from such exchange of Units. The
cost savings result from reductions in time and
expense related to advice, financial planning and
operational expenses required for the Exchange
Option. Each Exchange Trust has different
investment objectives, therefore a Unitholder
should read the prospectus for the applicable
exchange trust carefully prior to exercising this
option. Exchange Trusts having as their objective
the receipt of tax-exempt interest income would
not be suitable for tax-deferred investment plans
such as Individual Retirement Accounts. A
Unitholder who purchased Units of a series and
paid a per Unit, per 100 Unit or per 1,000 Unit
sales charge that was less than the per Unit, per
100 Unit or per 1,000 Unit sales charge of the
series of the Exchange Trusts for which such
Unitholder desires to exchange into, will be
allowed to exercise the Exchange Option at the
Unit Offering Price plus the reduced sales charge,
provided the Unitholder has held the Units for at
least five months. Any such Unitholder who has not
held the Units to be exchanged for the five-month
period will be required to exchange them at the
Unit Offering Price plus a sales charge based on
the greater of the reduced sales charge, or an
amount which, together with the initial sales
charge paid in connection with the acquisition of
the Units being exchanged, equals the sales charge
of the series of the Exchange Trust for which such
Unitholder desires to exchange into, determined as
of the date of the exchange.
The Sponsor will permit exchanges at the reduced
sales charge provided there is either a primary
market for Units or a secondary market maintained
by the Sponsor in both the Units of this series
and units of the applicable Exchange Trust and
there are units of the applicable Exchange Trust
available for sale. While the Sponsor has
indicated that it intends to maintain a market for
the Units of the respective Trusts, there is no
obligation on its part to maintain such a market.
Therefore, there is no assurance that a market for
Units will in fact exist on any given date at
which a Unitholder wishes to sell his Units of
this series and thus there is no assurance that
the Exchange Option will be available to a
Unitholder. Exchanges will be effected in whole
Units only. Any excess proceeds from Unitholders'
Units being surrendered will be returned.
Unitholders will be permitted to advance new money
in order to complete an exchange to round up to
the next highest number of Units. An exchange of
Units pursuant to the Exchange Option generally
will constitute a "taxable event" under the Code,
i.e., a Unitholder will recognize a tax gain or
loss at the time of exchange. Unitholders are
urged to consult their own tax advisors as to the
tax consequences to them of exchanging Units in
particular cases.
The Sponsor reserves the right to modify, suspend
or terminate this Exchange Option at any time with
notice to Unitholders. In the event the Exchange
Option is not available to a Unitholder at the
time he wishes to exercise it, the Unitholder will
be immediately notified and no action will be
taken with respect to his Units without further
instruction from the Unitholder.
To exercise the Exchange Option, a Unitholder
should notify the Sponsor of his desire to
exercise the Exchange Option and to use the
proceeds from the sale of his Units to the Sponsor
of this series to purchase Units of one or more of
the Exchange Trusts from the Sponsor. If Units of
the applicable outstanding series of the Exchange
Trust are at that time available for sale, and if
such Units may lawfully be sold in the state in
which the Unitholder is resident, the Unitholder
may select the series or group of series for which
he desires his investment to be exchanged. The
Unitholder will be provided with a current
prospectus or prospectuses relating to each series
in which he indicates interest.
The exchange transaction will operate in a manner
essentially identical to any secondary market
transaction, i.e., Units will be repurchased at a
price based on the market value of the Securities
in the portfolio of the Trust next determined
after receipt by the Sponsor of an exchange
request and properly endorsed documents. Units of
the Exchange Trust will be sold to the Unitholder
at a price based upon the next determined market
value of the Securities in the Exchange Trust plus
the reduced sales charge. Exchange transactions
will be effected only in whole units; thus, any
proceeds not used to acquire whole units will be
paid to the selling Unitholder.
For example, assume that a Unitholder, who has
three thousand units of a trust with a current
price of $1.30 per unit, desires to sell his units
and seeks to exchange the proceeds for units of a
series of an Exchange Trust with a current price
of $890 per Unit based on the bid prices of the
underlying securities. In this example, which does
not contemplate any rounding up to the next
highest number of Units, the proceeds from the
Unitholder's Units would aggregate $3,900. Since
only whole units of an Exchange Trust may be
purchased under the Exchange Option, the
Unitholder would be able to acquire four Units in
the Exchange Trust for a total cost of $3,620
($3,560 for the Units and $60 for the sales
charge). If all 3,000 Units were tendered, the
remaining $280 would be returned to the
Unitholder.
Conversion Option. Owners of units of any
registered unit investment trust sponsored by
others which was initially offered at a maximum
applicable sales charge of at least 3.0% (a
"Conversion Trust") may elect to apply the cash
proceeds of the sale or redemption of those units
directly to acquire available units of any
Exchange Trust at a reduced sales charge of $15
per Unit, per 100 Units in the case of Exchange
Trusts having a Unit price of approximately $10,
or per 1,000 Units in the case of Exchange Trusts
having a Unit price of approximately $1, subject
to the terms and conditions applicable to the
Exchange Option (except that no secondary market
is required for Conversion Trust units). To
exercise this option, the owner should notify his
retail broker. He will be given a prospectus for
each series in which he indicates interest and for
which units are available. The dealer must sell or
redeem the units of the Conversion Trust. Any
dealer other than PaineWebber must certify that
the purchase of the units of the Exchange Trust is
being made pursuant to and is eligible for the
Conversion Option. The dealer will be entitled to
two thirds of the applicable reduced sales charge.
The Sponsor reserves the right to modify, suspend
or terminate the Conversion Option at any time
with notice, including the right to increase the
reduced sales charge applicable to this option
(but not in excess of $5 more per Unit, per 100
Units or per 1,000 Units, as applicable than the
corresponding fee then being charged for the
Exchange Option). For a description of the tax
consequences of a conversion reference is made to
the Exchange Option section herein.
Distribution of Units. The minimum purchase in
the initial public offering is $250. Only whole
Units may be purchased.
The Sponsor is the sole underwriter of the Units.
Sales may, however, be made to dealers who are
members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a
concession of $.30 per Unit at the highest sales
charge, subject to change from time to time. The
difference between the sales charge and the dealer
concession will be retained by the Sponsor. In the
event that the dealer concession is 90% or more of
the sales charge per Unit, dealers taking
advantage of such concession may be deemed to be
underwriters under the Securities Act of 1933.
The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of
Units. The Sponsor intends to qualify the Units in
all states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
Secondary Market for Units. While not obligated
to do so, the Sponsor intends to maintain a
secondary market for the Units and continuously
offer to purchase Units at the Trust Fund
Evaluation per Unit next computed after receipt by
the Sponsor of an order from a Unitholder. The
Sponsor may cease to maintain such a market at any
time, and from time to time, without notice. In
the event that a secondary market for the Units is
not maintained by the Sponsor, a Unitholder
desiring to dispose of Units may tender such Units
to the Trustee for redemption at the price
calculated in the manner set forth under
"Redemption". Redemption requests in excess of
$100,000 may be redeemed "in kind" as described
under "Redemption." The Sponsor does not in any
way guarantee the enforceability, marketability,
value or price of any of the stocks in the Trust,
nor that of the Units.
Investors should note the Trust Fund Evaluation
per Unit at the time of sale or tender for
redemption may be less than the price at which the
Unit was purchased.
The Sponsor may redeem any Units it has purchased
in the secondary market if it determines for any
reason that it is undesirable to continue to hold
these Units in its inventory. Factors which the
Sponsor may consider in making this determination
will include the number of units of all series of
all trusts which it holds in its inventory, the
saleability of the Units and its estimate of the
time required to sell the Units and general market
conditions.
A Unitholder who wishes to dispose of his Units
should inquire of his bank or broker as to current
market prices in order to determine if
over-the-counter prices exist in excess of the
redemption price and the repurchase price (see
"Redemption").
Sponsor's Profits. In addition to the applicable
sales charge, the Sponsor realizes a profit (or
sustains a loss) in the amount of any difference
between the cost of the Stocks to the Sponsor and
the price at which it deposits the Stocks in the
Trust in exchange for Units, which is the value of
the Stocks, determined by the Trustee as described
under "Valuation". The cost of Stock to the
Sponsor includes the amount paid by the Sponsor
for brokerage commissions. These amounts are an
expense of the Trust.
Cash, if any, received from Unitholders prior to
the settlement date for the purchase of Units or
prior to the payment for Securities upon their
delivery may be used in the Sponsor's business
subject to the limitations of Rule 15c3-3 under
the Securities and Exchange Act of 1934 and may be
of benefit to the Sponsor.
In selling any Units in the initial public
offering after the Initial Date of Deposit, the
Sponsor may realize profits or sustain losses
resulting from fluctuations in the net asset value
of outstanding Units during the period. In
maintaining a secondary market for the Units, the
Sponsor may realize profits or sustain losses in
the amount of any differences between the price at
which it buys Units and the price at which it
resells or redeems such Units.
REDEMPTION
Units may be tendered to Investors Bank & Trust
Company for redemption at its office in person, or
by mail at 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, Stocks 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 Stocks 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 Stocks distributed into
cash. The availability of redemption "in kind" is
subject to compliance with all applicable laws and
regulations, including the Securities Act of 1933,
as amended.
To the extent that Securities are redeemed in
kind or sold, the size and diversity of the Trust
will be reduced. Sales will usually be required at
a time when Securities would not otherwise be sold
and may result in lower prices than might
otherwise be realized. The price received upon
redemption may be more or less than the amount
paid by the Unitholder depending on the value of
the Securities in the portfolio at the time of
redemption. In addition, because of the minimum
amounts in which Securities are required to be
sold, the proceeds of sale may exceed the amount
required at the time to redeem Units; these excess
proceeds will be distributed to Unitholders on the
Distribution Dates.
The Trustee may, in its discretion, and will,
when so directed by the Sponsor, suspend the right
of redemption, or postpone the date of payment of
the Redemption Value, for more than seven calendar
days following the day of tender for any period
during which the New York Stock Exchange, Inc. is
closed other than for weekend and holiday
closings; or for any period during which the
Securities and Exchange Commission determined that
trading on the New York Stock Exchange, Inc. is
restricted or for any period during which an
emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably
practicable; or for such other period as the
Securities and Exchange Commission may by order
permit for the protection of Unitholders. The
Trustee is not liable to any person or in any way
for any loss or damages which may result from any
such suspension or postponement, or any failure to
suspend or postpone when done in the Trustee's
discretion.
VALUATION
The Trustee will calculate the Trust's value (the
"Trust Fund Evaluation") per Unit at the
Evaluation Time set forth under "Summary of
Essential Information Regarding the Trust" (1) on
each business day as long as the Sponsor is
maintaining a bid in the secondary market, (2) on
the business day on which any Unit is tendered for
redemption, (3) on any other day desired by the
Sponsor or the Trustee and (4) upon termination,
by adding (a) the aggregate value of the
Securities and other assets determined by the
Trustee as set forth below, (b) cash on hand in
the Trust, including dividends receivable on Stock
trading ex-dividend and income accrued and
interest received, if any, on the Treasury
Obligations held but not yet distributed (other
than any cash held in any reserve account
established under the Indenture or cash held for
the purchase of Contract Securities) and (c)
accounts receivable for Securities sold and any
other assets of the Trust not included in (a) and
(b) above, and deducting therefrom the sum of (v)
taxes or other governmental charges against the
Trust not previously deducted, (w) accrued fees
and expenses of the Trustee and the Sponsor
(including legal and auditing expenses) and other
Trust expenses (x) cash allocated for
distributions to Unitholders and (y) accounts
payable for Units tendered for redemption and any
other liabilities of the Trust Fund not included
in (v), (w), (x) and (y) above. The per Unit Trust
Fund Evaluation is calculated by dividing the
result of such computation by the number of Units
outstanding as of the date thereof. Business days
do not include Saturdays, Sundays, New Year's Day,
Martin Luther King, Jr. 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 such Stock.
During the initial offering period, the Treasury
Obligations are valued on the basis of their
offering prices; thereafter and for purposes of
determining Redemption Value, they are valued on
the basis of bid prices. The aggregate offering
and bid prices of the Treasury Obligations, is the
price obtained from investment dealers or brokers
(which may include the Sponsor) who customarily
deal in Treasury Obligations; or, if there is no
market for Treasury Obligations and bid and
offering prices are not available, on the basis of
current bid and offering prices for comparable
securities; or by appraisal; or by any combination
of the above, adjusted to reflect income accrued.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
While the Public Offering Price of Units during
the initial offering period is determined, in
part, on the basis of the current offering prices
of the Treasury Obligations as described above,
the Public Offering Price of Units in the
secondary market, and the Redemption Value is
determined, in part, on the basis of the current
bid prices of the Treasury Obligations. The Stocks
are valued on the same basis for the initial and
secondary markets and for purposes of redemptions.
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 bid and the offering prices of the Treasury
Obligations 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 $.0050
which include, but are not limited to
Organizational Expenses of $.0040 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 the 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 Trust 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
expenses).
The accounts of the Trust shall be audited not
less than annually by independent public
accountants selected by the Sponsor. The expenses
of the audit shall be an expense of the Trust. So
long as the Sponsor maintains a secondary market,
the Sponsor will bear any annual audit expense
which exceeds $.0050 per Unit. Unitholders covered
by the audit during the year may receive a copy of
the audited financial statements 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 and income
received on the Treasury Obligations 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 and
income received on the Treasury Obligations are
not sufficient to meet the expenses of the Trust,
the Trustee is authorized to sell Securities to
meet the expenses of the Trust. Securities will be
selected in the same manner as is set forth under
"Redemption".
RIGHTS OF UNITHOLDERS
Ownership of Units is evidenced by recordation on
the books of the Trustee. In order to avoid
additional operating costs and for investor
convenience, certificates will not be issued
unless a request, in writing with signature
guaranteed by an eligible guarantor institution or
in such other manner as may be acceptable to the
Trustee, is delivered by the Unitholder to the
Sponsor. Issued Certificates are transferable by
presentation and surrender to the Trustee at its
office in Boston, Massachusetts properly endorsed
or accompanied by a written instrument or
instruments of transfer. Uncertificated Units are
transferable by presentation to the Trustee at its
office in Boston of a written instrument of
transfer.
Certificates may be issued in denominations of
one Unit or any integral multiple thereof as
deemed appropriate by the Trustee. A Unitholder
may be required to pay $2.00 per certificate
reissued or transferred, and shall be required to
pay any governmental charge that may be imposed in
connection with each such transfer or interchange.
For new certificates issued to replace destroyed,
mutilated, stolen or lost certificates, the
Unitholder must furnish indemnity satisfactory to
the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be
surrendered to the Trustee for replacement.
DISTRIBUTIONS
The Trustee will distribute net dividends and
interest, if any, from the Income Account on the
quarterly Distribution Dates to Unitholders of
record on the preceding Record Date. Distributions
from the Capital Account will be made on annual
Distribution Dates to Unitholders of record on the
preceding Record Date. Distributions of less than
$.05 per Unit need not be made from the Capital
Account on any Distribution Date. See "Essential
Information". Whenever required for regulatory or
tax purposes, the Trustee will make special
distributions of any dividends or capital on
special Distribution Dates to Unitholders of
record on special Record Dates declared by the
Trustee.
If and to the extent that the Sponsor, on behalf
of the Trust, receives a favorable response to a
no-action letter request which it intends to
submit to the Division of Investment Management of
the Securities and Exchange Commission (the "SEC")
with respect to reinvesting cash proceeds received
by the Trust, the Trustee may reinvest such cash
proceeds in additional Securities held in the
Trust Fund at such time. Such reinvestment shall
be made so that each deposit of additional
Securities shall be made so as to match as closely
as practicable the percentage relationships of
shares of Stocks and Treasury Obligations, and
such reinvestment shall be made in accordance with
the parameters set forth in the no-action letter
response. If the Sponsor and the Trustee determine
that it shall be necessary to amend the Indenture
to comply with the parameters set forth in the
no-action letter response, such documents may be
amended without the consent of Unitholders. There
can be no assurance that the Sponsor will receive
a favorable no-action letter response.
Unitholders may elect to have their Income
Account and Capital Account distributions
automatically reinvested into additional Units of
the Trust at no sales charge. (See "Reinvestment
Plan").
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 of
the Trust".)
REINVESTMENT PLAN
Income Account and Capital Account distributions
on Units may be reinvested by participating in the
Trust's Reinvestment Plan (the "Reinvestment
Plan"). To participate in the Reinvestment Plan, a
Unitholder must contact his broker, dealer or
financial institution to determine whether he may
participate in the Reinvestment Plan. Under the
Reinvestment Plan, the Units acquired for current
Unitholders will be either Units already held in
inventory by the Sponsor or new Units created by
the Sponsor's deposit of additional Securities,
contracts to purchase additional Securities or
cash (or a bank letter of credit in lieu of cash)
with instructions to purchase additional
Securities. Deposits or purchases of additional
Securities will be made so as to maintain the
percentage relationships of shares of Stocks and
Treasury Obligations. Purchases made pursuant to
the Reinvestment Plan will be made without any
sales charge at the net asset value for Units of
the Trust. Under the Reinvestment Plan, the Trust
will pay the distributions to the Trustee which in
turn will purchase for those participating
Unitholders whole Units of the Trust at the price
determined as of the close of business on the
Distribution Date and will add such Units to the
Unitholder's account. The Unitholder's account
statement will reflect the reinvestment. The
Trustee will not issue fractional Units, thus any
cash remaining after purchasing the maximum number
of whole Units will be distributed to the
Unitholder. Unitholders wishing to terminate their
participation in the Reinvestment Plan must notify
their broker, dealer or financial institution of
such decision. The Sponsor reserves the right to
amend, modify or terminate the Reinvestment Plan
at any time without prior notice.
ADMINISTRATION OF THE TRUST
Accounts. All dividends and interest received on
Securities, proceeds from the sale of Securities
or other moneys received by the Trustee on behalf
of the Trust may be held in trust in non-interest
bearing accounts until required to be disbursed.
The Trustee will credit on its books to an Income
Account dividends, if any, and interest income, on
Securities in the Trust. All other receipts (i.e.,
return of principal and gains) are credited on its
books to a Capital Account. A record will be kept
of qualifying dividends within the Income Account.
The pro rata share of the Income Account and the
pro rata share of the Capital Account represented
by each Unit will be computed by the Trustee as
set forth under "Valuation".
The Trustee will deduct from the Income Account
and, to the extent funds are not sufficient
therein, from the Capital Account, amounts
necessary to pay expenses incurred by the Trust.
(See "Expenses and Charges.") In addition, the
Trustee may withdraw from the Income Account and
the Capital Account such amounts as may be
necessary to cover redemption of Units by the
Trustee. (See "Redemption.")
The Trustee may establish reserves (the "Reserve
Account") within the Trust for state and local
taxes, if any, and any other governmental charges
payable out of the Trust.
Reports and Records. With any distribution from
the Trust, Unitholders will be furnished with a
statement setting forth the amount being
distributed from each account.
The Trustee keeps records and accounts of the
Trust at its office in Boston, including records
of the names and addresses of Unitholders, a
current list of underlying Securities in the
portfolio and a copy of the Indenture. Records
pertaining to a Unitholder or to the Trust (but
not to other Unitholders) are available to the
Unitholder for inspection at reasonable times
during business hours.
Within a reasonable period of time after the end
of each calendar year, commencing with calendar
year 1997, the Trustee will furnish each person
who was a Unitholder at any time during the
calendar year an annual report containing the
following information, expressed in reasonable
detail both as a dollar amount and as a dollar
amount per Unit: (1) a summary of transactions for
such year in the Income and Capital Accounts and
any Reserves; (2) any Securities sold during the
year and the Securities held at the end of such
year; (3) the Trust Fund Evaluation per Unit,
based upon a computation thereof on the 31st day
of December of such year (or the last business day
prior thereto); and (4) amounts distributed to
Unitholders during such year.
Portfolio Supervision. The portfolio of the
Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are
governed solely by the provisions of the
Indenture. The Indenture provides that the Sponsor
may (but need not) direct the Trustee to dispose
of a Security (or tender a stock for cash in the
case of paragraph (6) below):
(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 or interest 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 or interest 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
Stock, or a merger or acquisition being announced
affecting a Stock that in the opinion of the
Sponsor make the sale or tender of the Stock in
the best interests of the Unitholders;
(7) upon a decrease in the Sponsor's internal
rating of the Security;
(8) if the sale of such Securities is desirable
to maintain the qualification of the Trust Fund as
a "regulated investment company"; or
(9) 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.
The Trustee may dispose of Securities where
necessary to pay Trust expenses or to satisfy
redemption requests as directed by the Sponsor and
in a manner necessary to maximize the objectives
of the Trust, or if not so directed in its own
discretion, and Stocks having the greatest
appreciation shall be sold first.
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 also be amended by the Trustee
and the Sponsor without the consent of any of the
Unitholders to implement a program to reinvest
cash proceeds received by the Trust in connection
with corporate actions and in other situations,
when and if the Sponsor receives a favorable
response to the no-action letter request which it
intends to submit to the Division of Investment
Management at the SEC discussed above (see
"Distributions"). There can be no assurance that a
favorable no-action letter response will be
received.
The Indenture may be amended in any respect by
the Sponsor and the Trustee with the consent of
the holders of 51% of the Units then outstanding;
provided that no such amendment shall (1) reduce
the interest in the Trust represented by a Unit or
(2) reduce the percentage of Unitholders required
to consent to any such amendment, without the
consent of all Unitholders.
The Trustee will promptly notify Unitholders of
the substance of any amendment affecting
Unitholders' rights or their interest in the
Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will
terminate on the Mandatory Termination Date. If
the value of the Trust as shown by any evaluation
is less than fifty per cent (50%) of the market
value of the Stocks upon completion of the deposit
of Stocks, the Trustee may in its discretion, and
will when so directed by the Sponsor, terminate
such Trust. The Trust may also be terminated at
any time by the written consent of 51% of the
Unitholders or by the Trustee upon the resignation
or removal of the Sponsor if the Trustee
determines termination to be in the best interest
of the Unitholders. In no event will the Trust
continue beyond the Mandatory Termination Date.
Unless advised to the contrary by the Sponsor,
approximately 20 days prior to the termination of
the Trust the Trustee will begin to sell the
Securities held in the Trust and will then, after
deduction of any fees and expenses of the Trust
and payment into the Reserve Account of any amount
required for taxes or other governmental charges
that may be payable by the Trust, distribute to
each Unitholder, after due notice of such
termination, such Unitholder's pro rata share in
the Income and Capital Accounts. Moneys held upon
the sale of Securities may be held in non-interest
bearing accounts created by the Indenture until
distributed and will be of benefit to the Trustee.
The sale of Securities in the Trust in the period
prior to termination may result in a lower amount
than might otherwise be realized if such sale were
not required at such time due to impending or
actual termination of the Trust. For this reason,
among others, the amount realized by a Unitholder
upon termination may be less than the amount paid
by such Unitholder.
SPONSOR
The Sponsor, PaineWebber Incorporated, is a
corporation organized under the laws of the State
of Delaware. The Sponsor is a member firm of the
New York Stock Exchange, Inc. as well as other
major securities and commodities exchanges and is
a member of the National Association of Securities
Dealers, Inc. The Sponsor is engaged in a security
and commodity brokerage business as well as
underwriting and distributing new issues. The
Sponsor also acts as a dealer in unlisted
securities and municipal bonds and in addition to
participating as a member of various selling
groups or as an agent of other investment
companies, executes orders on behalf of investment
companies for the purchase and sale of securities
of such companies and sells securities to such
companies in its capacity as a broker or dealer in
securities.
The Indenture provides that the Sponsor will not
be liable to the Trustee, the Trust or to the
Unitholders for taking any action or for
refraining from taking any action made in good
faith or for errors in judgment, but will be
liable only for its own willful misfeasance, bad
faith, gross negligence or willful disregard of
its duties. The Sponsor will not be liable or
responsible in any way for depreciation or loss
incurred by reason of the sale of any Securities
in the Trust.
The Indenture is binding upon any successor to
the business of the Sponsor. The Sponsor may
transfer all or substantially all of its assets to
a corporation or partnership which carries on the
business of the Sponsor and duly assumes all the
obligations of the Sponsor under the Indenture. In
such event the Sponsor shall be relieved of all
further liability under the Indenture.
If the Sponsor fails to undertake any of its
duties under the Indenture, becomes incapable of
acting, becomes bankrupt, or has its affairs taken
over by public authorities, the Trustee may either
appoint a successor Sponsor or Sponsors to serve
at rates of compensation determined as provided in
the Indenture or terminate the Indenture and
liquidate the Trust.
TRUSTEE
The Co-Trustees are The First National Bank of
Chicago, a national banking association with its
corporate trust office at One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126
(which is subject to supervision by the
Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors
of the Federal Reserve System) and Investors Bank
& Trust Company, a Massachusetts trust company
with its principal office at 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
governmental charges imposed upon or in respect of
the Securities or upon the interest thereon or
upon it as Trustee or upon or in respect of the
Trust which the Trustee may be required to pay
under any present or future law of the United
States of America or of any other taxing authority
having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the
liability of the Trustee. The Trustee will be
indemnified and held harmless against any loss or
liability accruing to it without gross negligence,
bad faith or willful misconduct on its part,
arising out of or in connection with its
acceptance or administration of the Trust,
including the costs and expenses (including
counsel fees) of defending itself against any
claim of liability.
INDEPENDENT AUDITORS
The Statement of Financial Condition and Schedule
of Investments audited by Ernst & Young LLP,
independent auditors, have been included in
reliance on their report given on their authority
as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Units offered hereby has been
passed upon by Carter, Ledyard & Milburn, 2 Wall
Street, New York, New York, as counsel for the
Sponsor.
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-27 Financial Data Schedule
EX-99.C2 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 20
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
17th day of December, 1998.
PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 20
(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 17th day of December, 1998.
PAINEWEBBER INCORPORATED
Name Office
Donald B. Marron Chairman, Chief Executive Officer
and Director of PaineWebber Incorporated*
Regina A. Dolan Executive Vice President,
Chief Financial Officer and
Director of PaineWebber Incorporated*
Joseph J. Grano, Jr. President and
Director of PaineWebber Incorporated*
Steve P. Baum Executive Vice President and
Director of PaineWebber Incorporated*
Robert H. Silver Executive Vice President and
Director of PaineWebber Incorporated*
Mark B. Sutton Executive Vice President and
Director of PaineWebber Incorporated*
Margo N. Alexander Executive Vice President and
Director of PaineWebber Incorporated*
Terry L. Atkinson Managing Director and
Director of PaineWebber Incorporated*
Brian M. Barefoot Executive Vice President and
Director of PaineWebber Incorporated*
Michael Culp Managing Director and
Director of PaineWebber Incorporated*
Edward M. Kerschner Managing Director and
Director of PaineWebber Incorporated*
James P. MacGilvray Executive Vice President and
Director of PaineWebber Incorporated*
By:/s/ ROBERT E. HOLLEY
Attorney-in-fact*
* Executed copies of the powers of attorney have been previously
filed with the Securities and Exchange Commission with the Post
Effective Amendment to the Registration Statement File No. 2-61279.
December 17, 1998
PaineWebber Incorporated
1200 Harbor Blvd.
Weehawken, New Jersey 07087
Ladies and Gentlemen:
We have served as counsel for PaineWebber Incorporated as
sponsor and depositor (the "Depositor") of PaineWebber
Equity Trust, Growth Stock Series 20 (hereinafter referred
to as the "Trust"). It is proposed that Post-Effective
Amendment No. 1 to the Trust's registration statement
("Post-Effective Amendment No. 1") will be filed with the Securities
and Exchange and dated as of the date hereof in connection with the
continued issuance by the Trust of an indefinite number of units of
fractional undivided interest in the Trust (hereinafter referred
to as the "Units") pursuant to Rule 24f-2 promulgated under the
provisions of the Investment Company Act of 1940, as amended.
In this regard, we have examined executed originals or copies of the
following:
(a) The Restated Certificate of Incorporation, as amended, and the
By-Laws of the Depositor, as amended;
(b) Resolutions of the Board of Directors of the Depositor adopted on
December 3, 1971 relating to the Trust and the sale of the Units;
(c) Resolutions of the Executive Committee of the Depositor adopted
on September 24, 1984;
(d) Powers of Attorney referred to in the Amendment;
(e) Post-Effective Amendment No. 1 to the Registration Statement on
Form S-6 (File No. 333-15797) 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
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> EQUITY TRUST, GROWTH STOCK SERIES
<MULTIPLIER> 1
<CURRENCY> U.S.Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-04-1997
<PERIOD-END> AUG-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 206,688,387
<INVESTMENTS-AT-VALUE> 193,196,693
<RECEIVABLES> 548,261
<ASSETS-OTHER> 832,404
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 194,577,358
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,294,796
<TOTAL-LIABILITIES> 1,294,796
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 22,075,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 75,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,312
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (13,491,694)
<NET-ASSETS> 193,282,562
<DIVIDEND-INCOME> 380,393
<INTEREST-INCOME> 220,625
<OTHER-INCOME> 0
<EXPENSES-NET> 515,217
<NET-INVESTMENT-INCOME> 85,801
<REALIZED-GAINS-CURRENT> 1,787,302
<APPREC-INCREASE-CURRENT> (13,491,694)
<NET-CHANGE-FROM-OPS> (11,618,591)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,953
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 1,275,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (25,372,423)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated
December 7, 1998, in the Registration Statement and related
Prospectus of the PaineWebber Equity Trust, Growth Stock
Series 20
/s/ ERNST & YOUNG LLP
New York, New York
December 17, 1998
