File No. 333-35615
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 21
B. Name of Depositor:
PAINEWEBBER INCORPORATED
C. Complete address of Depositor's principal executive office:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
D. Name and complete address of agents for service:
PAINEWEBBER INCORPORATED
Attention: Mr. Robert E. Holley
1200 Harbor Blvd.
Weehawken, New Jersey 07087
(x) Check if it is proposed that this filing should become effective
(immediately upon filing or on April 29, 1999) pursuant to paragraph
(b) 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 $19,973.48 was
paid on March 29, 1999 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.
PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 21
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 TWENTY ONE
(Power Grab)
(A Unit Investment Trust)
7,754,832 Units
Portfolio of Common Stocks
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 APRIL 29, 1999
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 - 4
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 - 1
Risk Factors and Special Considerations...B - 3
Federal Income Taxes......................B - 4
Public Offering of Units..................B - 5
Public Offering Price..................B - 5
Sales Charge and Volume Discount.......B - 5
Employee Discount......................B - 6
Exchange Option........................B - 6
Conversion Option......................B - 7
Distribution of Units..................B - 8
Secondary Market for Units.............B - 8
Sponsor's Profits......................B - 8
Redemption................................B - 9
Valuation.................................B - 10
Comparison of Public Offering Price and
Redemption Value.................. B - 10
Expenses of the Trust.....................B - 10
Rights of Unitholders.....................B - 11
Distributions.............................B - 12
Reinvestment Plan.........................B - 12
Administration of the Trust...............B - 12
Accounts........................... B - 12
Reports and Records....................B - 13
Portfolio Supervision..................B - 13
Amendment of the Indenture................B - 14
Termination of the Trust..................B - 14
Sponsor...................................B - 14
Trustee...................................B - 15
Independent Auditors......................B - 15
Legal Opinions.......................... B - 15
PAINEWBBER EQUITY TRUST, GROWTH STOCK SERIES
TWENTY ONE
(Power Grab) - 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 a variety of domestic
companies.
PaineWebber selected the stocks in the Trust's
Portfolio on January 8, 1998 by choosing stocks
it believed were "growth stocks", meaning those
stocks whose earnings growth rate is greater than
that of the market as a whole, as measured
against the Standard & Poor's 500 Index*.
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 December 31, 1998, 100% of the Trust's
Portfolio was invested in common stocks as
described briefly below.
2. Brief Description of the Trust's Portfolio.
The Trust plans to hold until its termination a
diversified portfolio of stocks which PaineWebber
selected on January 8, 1998, the first day of the
Trust. As of that date, PaineWebber believed that
the stocks selected were issued by companies
which presented attractive opportunities as
potential acquisition candidates. PaineWebber
identified two major ways, as of January 8, 1998,
to invest in the trend towards strong merger &
acquisition activity: by investing in companies
that (a) are adept at growing via acquisition and
(b) are likely to be acquired at a premium to
their market prices. Unless terminated sooner,
the Trust is scheduled to terminate on January
30, 2003 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 December 31, 1998, the aggregate market value
of the Trust Portfolio was $67,144,041. 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.
Approximate Percent
of Aggregate
Market Value
Primary Industry Source of the Trust
Appliances .27%
Applications Software 4.25%
Auto/Truck Parts & Equipment 5.05%
Cellular Communication 1.46%
Computers 2.25%
Containers 3.29%
Data Processing/Management .47%
Direct Marketing 2.42%
Drug Delivery Systems 1.65%
(Continued)
* The Standard & Poor's 500 Index is an unmanaged
index which, in PaineWebber's opinion,
constitutes a broadly diversified, representative
segment of the market of publicly traded stocks
in the United States.
Approximate Percent
of Aggregate
Market Value
Primary Industry Source of the Trust
Electric 6.17%
Electronics 3.59%
Finance 7.95%
Food 1.94%
Gas Distribution 3.25%
Internet Software 10.24%
Machinery 1.27%
Medical 14.25%
Networking Products 9.10%
Oil 2.95%
Publishing 3.13%
Seismic Data Collection .61%
Soap & Cleaning Preparations 4.38%
Telecommunications 10.06%
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
which PaineWebber selected for their growth
potential. 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. PaineWebber
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.
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 December 31, 1998
Sponsor: PaineWebber Incorporated
Trustee: Investors Bank & Trust Co.
Initial Date of Deposit: January 8, 1998
<S> <C>
Aggregate Market Value of Securities in Trust: $67,144,041
Number of Units: 7,754,832
Fractional Undivided Interest in the Trust Represented by
Each Unit: 1/7,754,832nd
Calculation of Public Offering Price Per Unit*:
Aggregate Value of Net Assets in Trust $67,152,001
Divided by 7,754,832 Units $8.6594
Plus Sales Charge of 3.75% of Public Offering Price $.3374
Public Offering Price per Unit $8.9968
Redemption Value per Unit: $8.6594
Excess of Public Offering Price over Redemption Value per Unit: $.3374
Sponsor's Repurchase Price Per Unit: $8.6594
Excess of Public Offering over Sponsor's Repurchase Price per Unit: $.3374
Evaluation Time: 4 P.M. New York Time
Income Account Distribution Dates* *: January 20, April 20, July 20,
October 20
Capital Account Distribution Dates* *: January 20, 1999 and annually
thereafter.
Record Dates: March 31, June 30, September 30,
December 31
Mandatory Termination Date: January 30, 2003
Discretionary Liquidation Amount: 50% of the value of the Securities
upon completion of the deposit of
the Securities.
Estimated Annual Expenses of the Trust* * * $.0254 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 TRUSTEE
THE PAINEWEBBER EQUITY TRUST, GROWTH STOCK SERIES
TWENTY ONE:
We have audited the accompanying statement of
financial condition of The PaineWebber Equity
Trust, Growth Stock Series Twenty One, including
the schedule of investments, as of December 31,
1998 and the related statements of operations and
changes in net assets for the period from January
8, 1998 (initial date of deposit) to December 31,
1998. These financial statements are the
responsibility of the Trustee. 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 December 31, 1998,
as shown in the statement of financial condition
and schedule of investments, by correspondence
with the Trustee. An audit also includes
assessing the accounting principles used and
significant estimates made by the Trustee, as
well as evaluating the overall financial
statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material
respects, the financial position of The
PaineWebber Equity Trust, Growth Stock Series
Twenty One at December 31, 1998 and the results
of its operations and changes in its net assets
for the period from January 8, 1998 to December
31, 1998, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New York, New York
April 15, 1999
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY ONE
STATEMENT OF FINANCIAL CONDITION
December 31, 1998
<CAPTION>
ASSETS
<S> <C> <C>
Common Stock - at market value (Cost $64,956,059)
(note 1 to schedule of investments) $67,144,041
Dividends receivable 43,597
Accounts Receivable - Securities Sold 583,130
Prepaid organizational expenses 80,396
Cash 31,342
Total Assets $67,882,506
LIABILITIES AND NET ASSETS
Accounts Payable - Units Redeemed $585,682
Distribution payable (note E) 116,668
Accrued expenses payable 28,155
Total Liabilities $730,505
Net assets (7,754,832 units of fractional undivided interest outstanding):
Cost of 7,754,832 units (note B) $67,486,815
Less sales charge (note C) (2,530,756)
Net amount applicable to investors 64,956,059
Net unrealized market appreciation (note D) 2,187,982
Net amount applicable to unitholders 67,144,041
Undistributed investment income-net 8,238
Overdistributed proceeds from securities sold (278)
Net assets 67,152,001
Total liabilities and net assets $67,882,506
Net asset value per Unit $8.6594
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY ONE
STATEMENT OF OPERATIONS
<CAPTION>
For the Period
from January 8,
1998 (initial date
of deposit) to
December 31,
1998
<S> <C>
Operations:
Dividend Income $683,438
Total investment income 683,438
Less expenses:
Trustee's fees, expenses and evaluator's expense 214,310
Total expenses 214,310
Investment Income-net 469,128
Realized and unrealized gain (loss) on investments-net:
Net realized loss on securities transactions (379,173)
Net change in unrealized market appreciation 2,187,982
Net realized and unrealized gain on investments 1,808,809
Net increase in net assets resulting from operations $2,277,937
See accompanying notes to financial statements.
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY ONE
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
from January 8,
1998 (initial date
of deposit) to
December 31,
1998
<S> <C>
Operations:
Investment income-net $469,128
Net realized loss on securities transactions (379,173)
Net change in unrealized market appreciation 2,187,982
Net increase in net assets resulting from operations 2,277,937
Less: Distributions to Unitholders (Note E)
Principal 17,702,023
Investment Income 503,344
Total Distributions 18,205,367
Less: Units Redeemed By Unitholders (Note F)
Value of units redeemed at date of redemption 11,615,004
Undistributed income at date of redemption 16,115
Total Redemptions 11,631,119
Decrease in net assets (27,558,549)
Net Assets:
Beginning of Period ---
Supplemental Deposits 94,710,550
End Of Period $67,152,001
See accompanying notes to financial statements.
</TABLE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(A) The financial statements of the Trust are
prepared on the accrual basis of accounting.
Security transactions are accounted for on the
date the securities are purchased or sold.
(B) Cost to investors represents the initial
public offering price as of the initial date of
deposit, and the value of units through
supplemental deposits computed on the basis set
forth under "Public Offering Price of Units".
(C) Sales charge in the Initial Public Offering
period was 3.75% (3.90% of the net amount
invested). See "Public Offering of Units - Sales
Charge and Volume Discount", for information
relating to the secondary market.
(D) At December 31, 1998, the gross unrealized
market appreciation was $14,845,266 and the gross
unrealized market depreciation was ($12,657,284).
The net unrealized market appreciation was
$2,187,982.
(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 January 8,
1998 (initial date
of deposit) to
December 31,
1998
<S> <C>
Total number of units redeemed 1,477,000
Redemption amount $11,631,119
The following units were sold through supplemental deposits:
Number of units sold 9,131,832
Value of amount, net of sales charge $93,748,050
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY ONE
SCHEDULE OF INVESTMENTS
As of December 31, 1998
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value(1)
<C> <C> <C>
Appliances: (.27%)
Sunbeam Corporation 26,089 $182,623
Applications Software: (4.25%)
Clarify, Inc.* 80,573 1,969,003
PeopleSoft, Inc.* 30,695 581,287
The Vantive Corporation* 37,603 300,824
Auto/Truck Parts & Equipment: (5.05%)
Arvin Industries, Inc. 32,266 1,345,089
Excel Industries, Inc. 57,559 1,007,282
The Standard Products Company 39,138 797,437
Walbro Corporation* 37,696 240,312
Cellular Communication: (1.46%)
Nextel Communications, Inc.* 41,442 979,067
Computers: (2.25%)
Cabletron Systems, Inc.* 70,600 591,275
Data General Corporation* 56,021 920,845
Containers: (3.29%)
Bemis Company, Inc. 24,559 931,707
Shorewood Packaging Corporation* 62,162 1,274,321
Data Processing/Management: (.47%)
Baan Company, N.V.* 29,923 314,191
Direct Marketing: (2.42%)
Catalina Marketing Corporation* 23,788 1,626,504
Drug Delivery Systems: (1.65%)
Alkermes, Inc.* 49,897 1,107,090
Electric: (6.17%)
IDACORP, Inc. 29,160 1,055,228
Energy East Corporation 31,461 1,777,546
NIPSCO Industries, Inc. 42,972 1,307,960
Electronics: (3.59%)
Credence Systems Corporation* 39,907 738,279
Etec Systems, Inc.* 24,555 982,200
Genus, Inc.* 134,298 138,502
LTX Corporation* 216,410 554,551
Finance: (7.95%)
Fleet Financial Group, Inc. 29,163 1,303,222
Golden State Bancorp, Inc.* 30,695 510,304
Mellon Bank Corporation 17,652 1,213,575
Southtrust Corporation 26,474 977,883
State Street Corporation 19,189 1,334,835
Food: (1.94%)
Hannaford Brothers Company 24,555 1,301,415
Gas Distribution: (3.25%)
Consolidated Natural Gas Company 18,424 994,896
MCN Energy Group Inc. 28,394 541,261
Sonat, Inc. 23,788 643,763
Internet Software: (10.24%)
America Online, Inc. 42,982 6,877,131
Machinery: (1.27%)
Harnischfeger Industries, Inc. 28,394 289,264
New Holland N.V. 41,359 566,101
(Continued)
</TABLE>
<TABLE>
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES TWENTY ONE
SCHEDULE OF INVESTMENTS
As of December 31, 1998
<CAPTION>
COMMON STOCKS (100%)
Name of Issuer Number of Shares Market Value(1)
<C> <C> <C>
Medical: (14.25%)
CardioThoracic Systems, Inc.* 87,484 $606,920
Eclipse Surgical Technologies, Inc.* 79,810 583,611
Genzyme Transgenics Corporation* 100,531 565,487
Heartport, Inc.* 44,511 261,502
Schering-Plough Corporation 33,761 1,865,295
Sofamor Danek Group, Inc.* 16,114 1,961,880
St. Jude Medical, Inc.* 33,765 934,868
Texas Biotechnology Corporation* 179,577 886,661
Warner-Lambert Company 25,321 1,903,823
Networking Products: (9.10%)
Ascend Communications, Inc.* 58,650 3,856,237
FORE Systems, Inc.* 62,159 1,138,287
Xylan Corporation* 63,693 1,118,608
Oil: (2.95%)
Nuevo Energy Company* 28,394 326,531
Santa Fe Energy Resources, Inc.* 112,039 826,288
Unocal Corporation 28,394 828,750
Publishing: (3.13%)
Knight-Ridder, Inc. 19,189 981,038
The Readers Digest Association, Inc. 44,511 1,121,121
Seismic Data Collection: (.61%)
Veritas DGC, Inc.* 31,461 408,993
Soap & Cleaning Preparations: (4.38%)
Church & Dwight Co., Inc. 36,835 1,323,758
The Clorox Company 13,816 1,613,881
Telecommunications: (10.06%)
Airtouch Communications, Inc.* 25,323 1,826,421
Century Telephone Enterprises, Inc. 31,006 2,092,905
GTE Corporation 20,720 1,346,800
U.S. West Communications Group 23,019 1,487,603
TOTAL INVESTMENTS $67,144,041
(1) Valuation of Securities was made by the
Trustee as described in "Valuation".
* Non-income producing.
</TABLE>
PAINEWEBBER EQUITY TRUST
GROWTH STOCK SERIES 21
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 21 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
In constructing the Trust's portfolio on January
8, 1998, PaineWebber believed that M&A (merger
and acquisition) activity was strong and was
likely to become even stronger-probably
surpassing the late 1980s peak levels-because
acquisitions offer a source of sales growth at a
time when a muted business cycle and deflationary
pressures make it very difficult to raise prices.
PaineWebber identified two ways to invest in this
trend: a) companies that are adept at growing via
acquisition and b) companies that are likely to
be acquired at a premium to their market price.
M&A activity should accelerate because companies
need to do deals to grow sales, and they have the
ability to do them.
And with PaineWebber's forecast that S&P
(Standard & Poor's 500) earnings growth will slow
in 1998 and a concomitant rise in the number of
company-specific earnings disappointments, two
other drivers of M&A activity-albeit somewhat
spurious-would be:
acquisitions undertaken by firms anxious to
deflect attention from their deteriorating
financial results, and
mergers initiated by managers who realize that,
if they cannot "fix" their firm's earnings
problems, then selling out is the best route for
them as shareholders and option holders.
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, as Trustee (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. Of course, there can be no
assurance that the objective of the Trust will be
achieved.
On the Initial Date of Deposit, the Sponsor
deposited with the Trustee confirmations of
contracts for the purchase of Stocks together
with an irrevocable letter or letters of credit
of a commercial bank or banks in an amount at
least equal to the purchase price. The value of
the 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). 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,
*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.
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".)
The Stocks have been selected for their capital
appreciation potential in light of the Sponsor's
opinion, on the Initial Date of Deposit, that the
issuers of such 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.
Because the Stocks have been selected with a
view to potential acquisition, the Indenture sets
forth criteria to be applied in the event of a
tender offer, merger or reorganization. The Trust
is not managed and has been structured with
certain automatic provisions contained in the
Indenture. The foregoing may interfere with the
Trust's ability to maximize its objectives and,
consequently, a Unitholder's value. In such case,
Unitholders shall have no rights against the
Trust, the Sponsor, the Trustee or any other
party associated with the Trust. The foregoing is
not a disclaimer of responsibilities under
Section 36 of the Investment Company Act of 1940.
In the event a tender offer is made for a Stock,
on the third business day prior to the expiration
of the best tender offer then in effect, as
determined by the Sponsor, the Sponsor will
instruct the Trustee, and the Trustee will,
tender the Stock; provided, however that the
Trustee will sell the Stock on such date if it
can realize at least 90% of the value of the
price to be paid pursuant to the tender offer
(such value to be determined by the Sponsor)
except where the best tender offer is an offer
for any and all outstanding Stock and is not
conditioned upon the offeror's receipt of
financing. In the event the Trustee has tendered
and, in Sponsor's opinion, a better offer is made
prior to the expiration of the prior offer, the
Trustee will use its best efforts to exercise its
withdrawal rights and follow the procedures set
forth in the preceding sentence. Upon
consummation of the tender offer, in the event
any of the Stock tendered is not purchased (which
could occur if such Stock is excluded due to pro
rationing) the Trustee will sell the Stock as
soon as practicable. Any securities received
pursuant to a consummated tender offer will be
sold by the Trustee as soon as practicable. If a
tender offer fails, the Stock will be returned to
the Trust. The Trustee, pursuant to the terms of
the Indenture, will not tender or sell any Stock
subject to a tender offer during any period in
which the Trustee is purchasing Stock to create
additional Units, except in those cases where,
pursuant to the Reinvestment Plan, the Trustee
creates additional Units on an Income Account
Distribution Date. In such event, the Trustee
shall not include such Stock subject to sale or
tender on such date in the deposit of additional
Securities but shall adjust the Percentage Ratios
so that the Trust's percentage ownership shall be
allocated on a pro-rata basis to the remaining
Securities held in the Trust Fund.
In the event an issuer of a Stock announces a
proposed merger into another company and certain
compensation is to be paid in exchange for the
Stock, or in the event the issuer of a Stock
announces a sale of substantially all of its
assets, the Trustee will sell the Stock if it can
realize 90% of the value to be received by
shareholders upon completion of the merger or
sale (such value to be determined by the
Sponsor). If the Trust holds the Stock upon
completion of the merger, any securities received
as compensation will be sold by the Trustee as
soon as practicable. In the event an issuer of
Stock announces that another company will be
merged into it, the Stock of such issuer will be
retained unless the Sponsor directs the Trustee
to sell the Stock for reasons set forth under the
heading "Administration of the Trust-Portfolio
Supervision." In the event of a corporate
reorganization any securities received by the
Trust will be sold as soon as practicable.
In its investment banking, underwriting or
merchant banking activities the Sponsor may
acquire material non-public information about an
issuer of Stocks in the Trust. Use of this
information by the Sponsor in connection with the
Trust may constitute a violation of the federal
securities laws. Therefore, in order to avoid the
possible use of this information there may be
circumstances where the Sponsor is unable to give
advice to the Trust, including advice on the
value of a transaction or whether an offer is the
best offer. In such case the Sponsor shall
immediately advise the Trustee of its inability
and, in such event, (a) with respect to a tender
offer, the Trustee is required to sell the
applicable Stock as close to the opening of the
stock exchanges as is practicable on the last
business day a tender offer is in effect and (b)
with respect to a sale of substantially all of an
issuer's assets or its merger into another
issuer, the Trust will continue to hold the
Stocks.
In most circumstances the Trust has been
structured to provide for the sale of Stock at
90% of the value to be received upon completion
of a tender, merger or acquisition in order to
provide the Trust a price close to the price
which could be received in the future if certain
conditions to such completion are met. The
percentage accommodates a discount reflecting the
time value of money and the uncertainties of the
tender, merger or acquisition taking place.
There is no guarantee that there will be a
tender offer for any of the Stocks, or merger or
acquisition of any of the issuers whose stock is
contained in the Trust. In addition, it is
possible that legislation or regulations
affecting merger and acquisition activity in the
future may be passed and, if passed, the Sponsor
cannot predict the impact upon the Trust. There
is also no guarantee that the price received upon
sale or pursuant to an acquisition will be the
best price which could be received by the Trust
at any time. For example, after stock is sold,
the value may increase due to general market
factors or due to subsequent tender offers.
Additionally, the price of a Stock may decline
for Stocks not taken up pursuant to a tender
offer or in the event a merger or acquisition is
not completed.
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.
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.
In the event a contract to purchase a Stock to
be deposited on the Initial Date of Deposit or
any other date fails, cash held or available
under a letter or letters of credit, attributable
to such failed contract may be reinvested in
another stock or stocks having characteristics
sufficiently similar to the Stocks originally
deposited (in which case the original
proportionate relationship shall be adjusted) or,
if not so reinvested, distributed to Unitholders
of record on the last day of the month in which
the failure occurred. The distribution will be
made twenty days following such record date and,
in the event of such a distribution, the Sponsor
will refund to each Unitholder the portion of the
sales charge attributable to such failed
contract.
Because the Trust is organized as a unit
investment trust, rather than as a management
investment company, the Trustee and the Sponsor
do not have authority to manage the Trust's
assets fully in an attempt to take advantage of
various market conditions to improve the Trust's
net asset value, but may dispose of Securities
only under limited circumstances. (See the
discussion above under the caption "The Trust"
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".)
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, subject to certain
conditions and requirements, the Trust will not
be subject to federal income tax to the extent
its income is distributed to Unitholders in a
timely manner. Any undistributed income may be
subject to tax, including a four percent (4%)
excise tax imposed by Section 4982 of the Code on
certain undistributed income of a regulated
investment company that does not distribute to
shareholders in a timely manner at least
ninety-eight percent (98%) of its taxable income
(including capital gains). 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
qualify 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 "net capital gain" will be taxable to
Unitholders as long-term capital gain, 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.
Under the Taxpayer Relief Act of 1997, capital
gains realized on the sale of property held for
more than one year but not more than eighteen
months are considered "mid-term gains." In the
case of individuals, mid-term gains are taxed at
lower rates than ordinary income, but not as
favorably as capital gains on property held for
more than eighteen months. The Trustee will
identify in the annual tax information statement
mailed to Unitholders the portion of capital gain
dividends which are considered mid-term gains.
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".) The
Public Offering Price on the Initial Date of
Deposit or on any subsequent date will vary from
the Public Offering Price calculated on the
business day prior to the Initial Date of Deposit
due to fluctuations in the value of the Stocks
among other factors.
Sales 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 during the initial public offering
period and for secondary market sales are set
forth below. A discount in the sales charge is
available to volume purchasers of Units due to
economies of scale in sales effort and sales
related expenses relating to volume purchases.
The sales charge applicable to volume purchasers
of Units is reduced on a graduated scale for
sales to any person of at least $50,000 or 5,000
Units, applied on whichever basis is more
favorable to the purchaser.
Initial Public Offering Period and Secondary Market
Thereafter
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 $9,999....3.50 3.63
$100,000 to $99,999..3.25 3.36
$200,000 to $99,999..2.75 2.83
$400,000 to $99,999..2.50 2.56
$500,000 to $99,999..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 on either 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 Series (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 Municipal
Bond Trust, Insured Series (the "Insured
Series"); The Corporate Bond Trust, (the
"Corporate Series"); The PaineWebber Pathfinders
Trust, (the "Pathfinders Series"), The
PaineWebber Federal Government Trust, (the
"Government 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. Unitholders of this
Trust are not eligible for the Exchange Option
into (1) any Exchange Trust designated as a
rollover series for the 30 day period prior to
termination of such Trust or (2) any Exchange
Trust subject to a deferred sales charge. 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 expense 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 sales charge that was less than
the per Unit sales charge of the series of
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.
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 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's. Day,
Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and other days that the New York
Stock Exchange is closed.
The value of Stocks shall be determined by the
Trustee in good faith in the following manner:
(1) if the domestic Stocks are listed on one or
more national securities exchanges or on the
National Market System maintained by the National
Association of Securities Dealers Automated
Quotations System, 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.
COMPARISON OF PUBLIC OFFERING PRICE AND REDEMPTION VALUE
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
Date of Deposit, the Public Offering Price per
Unit (which figure includes the sales charge)
exceeded the Redemption Value. (See "Essential
Information"). The prices of Stocks 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 $.0049
which include, but are not limited to
Organizational Expenses of $.0026 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 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 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 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 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,
except as discussed under "The Trust". 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, 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 under the following
circumstances:
(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 decrease in the Sponsor's internal
rating of the Security;
(7) if the sale of such Securities is desirable
to maintain the qualification of the Trust Fund
as a "regulated investment company"; or
(8) upon the happening of events which, in the
opinion of the Sponsor, negatively affect the
economic fundamentals of the issuer of the
Security or the industry of which it is a part.
Securities may also be tendered or sold in the
event of a tender offer, merger or acquisition in
the manner described under "The Trust." The
Trustee may also 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 Trustee is 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-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, The PaineWebber Equity Trust, Growth
Stock Series 21 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 29th day of April, 1999.
THE PAINEWEBBER EQUITY TRUST,
GROWTH STOCK SERIES 21
(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 29th day of April, 1999.
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.
April 29, 1999
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 21
(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. 333-35615) 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 (the "Trustee"), (the "Standard Terms");
(j) The Trust Indenture dated as of the Initial Date of Deposit, among
the Depositor, the Trustee 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
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption
"Independent Auditors" and to the use of our report dated
April 15, 1999, in the Registration Statement and related
Prospectus of the PaineWebber Equity Trust, Growth Stock
Series 21
/s/ ERNST & YOUNG LLP
New York, New York
April 28, 1999
