PAINE WEBBER GROUP INC, 424B5, 1995-04-25

PAINE WEBBER GROUP INC
424B5, 1995-04-25
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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<PAGE>
Rule 424(b)(5)
File No. 33-53776

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 20, 1994)
1,050,000 WARRANTS
PAINE WEBBER GROUP INC.
U.S. Dollar Increase Warrants on the Japanese Yen
Expiring April 30, 1996
------------------------

Each Warrant will entitle the holder thereof to receive from Paine Webber
Group Inc. (the 'Company'), upon exercise (including automatic exercise), an
amount in U.S. dollars calculated by reference to decreases in the value of the
Japanese yen relative to the U.S. dollar. Such amount (the 'Cash Settlement
Value') will equal the greater of (i) zero and (ii) the amount (rounded down to
the nearest cent) computed by subtracting from U.S. $100 an amount equal to the
product of U.S. $100 times a fraction, the numerator of which is yen 83.25 per
U.S. $1.00 (the 'Strike Rate') and the denominator of which is the spot exchange
rate of the Japanese yen for the U.S. dollar (expressed as a number of Japanese
yen per U.S. dollar and determined by the Spot Rate Reference Agent (as
hereinafter defined) as provided herein) on the applicable valuation date (the
'Spot Rate'). If the Strike Rate is equal to or exceeds the Spot Rate for such
valuation date, the Cash Settlement Value will be zero; in which case, the
Warrantholder will be permitted, subject to certain exceptions, to re-exercise
such Warrant prior to the Expiration Date (as hereinafter defined) or the
Delisting Date (as hereinafter defined). The Strike Rate is equal to the spot
exchange rate of the Japanese yen for the U.S. dollar quoted by the Spot Rate
Reference Agent at approximately 7:30 P.M., New York City time, on April 24,
1995, and, accordingly, the Cash Settlement Value of the Warrants as of such
time was zero.

The Warrants will be exercisable immediately upon issuance and may be
exercised until 3:00 P.M., New York City time, on the New York Business Day (as
hereinafter defined) immediately preceding the expiration date for the Warrants,
which is April 30, 1996 (the 'Expiration Date'), or until their earlier
expiration on the last New York Business Day prior to the effective date of
their delisting from, or permanent suspension from trading on, the New York
Stock Exchange (the 'NYSE') and failure to list the Warrants on another national
securities exchange (the 'Delisting Date'). Any Warrant not exercised at or
before 3:00 P.M., New York City time, on such
(Continued on following page)

THE WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING FOREIGN EXCHANGE
RISKS AND THE RISK OF EXPIRING WORTHLESS IF THE U.S. DOLLAR DOES NOT APPRECIATE,
OR IF IT DEPRECIATES, AGAINST THE JAPANESE YEN. IN ADDITION, IN THE ABSENCE OF
COUNTERVAILING FACTORS, SUCH AS AN APPRECIATION OF THE U.S. DOLLAR AGAINST THE

JAPANESE YEN, THE MARKET VALUE OF THE WARRANTS IS EXPECTED TO DECREASE AS THE
TIME REMAINING TO THE EXPIRATION DATE DECREASES. SEE 'RISK FACTORS--CERTAIN
FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS' IN THE PROSPECTUS.
PURCHASERS SHOULD BE PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF
THEIR WARRANTS AND ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION UNDER
'CERTAIN RISK FACTORS RELATING TO THE WARRANTS' AND 'EXCHANGE RATES' HEREIN AND
'RISK FACTORS' IN THE PROSPECTUS, AS WELL AS THE OTHER INFORMATION HEREIN AND IN
THE PROSPECTUS.

The Warrants have been approved for listing on the NYSE, subject to
official notice of issuance. The NYSE symbol for the Warrants is PWP.WS.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
<S> <C> <C> <C>
Per Warrant......... $5.45 $.27 $5.18
Total............... $5,722,500 $283,500 $5,439,000
</TABLE>

(1) See 'Underwriting' herein.
(2) Before deducting expenses estimated at $185,000, which are payable by the
Company.
------------------------

The Warrants are offered by the Underwriters, subject to prior sale, when,
as and if delivered to and accepted by the Underwriters, and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Warrants will be made in New York City on or about May 1, 1995.
------------------------
PAINEWEBBER INCORPORATED OPPENHEIMER & CO., INC.
------------------------

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS APRIL 24, 1995.

<PAGE>
(Continued from previous page)

New York Business Day will be automatically exercised on such date. See
'Description of the Warrants--Exercise and Settlement of Warrants' herein.

The valuation of and payment for any exercised Warrant may be postponed as
a result of the exercise of a number of Warrants exceeding the limits on
exercise described herein under 'Description of the Warrants--Maximum Exercise
Amount', in which case the Warrantholder will receive a Cash Settlement Value
for such Warrant determined as of a later date. See 'Description of the
Warrants--Maximum Exercise Amount' herein.

A Warrantholder may exercise no fewer than 500 Warrants at any one time,
except in the event of automatic exercise. A Warrantholder tendering Warrants
for exercise will have the option of specifying that such Warrants are not to be
exercised if the Spot Rate for the applicable valuation date has declined by
five or more Japanese yen per U.S. dollar from the Spot Rate for the applicable
exercise date. All exercises of Warrants (other than on the Expiration Date for
the Warrants or on the Delisting Date) are subject, at the Company's option, to
the limitation that not more than 1,000,000 Warrants in total may be exercised
on any exercise date for the Warrants and not more than 250,000 Warrants may be
exercised by or on behalf of any person or entity, either individually or in
concert with any other person or entity, on any exercise date for the Warrants.
See 'Certain Risk Factors Relating to the Warrants' and 'Description of the
Warrants' herein and 'Description of Warrants' in the Prospectus.

As discussed in greater detail under 'Risk Factors--Certain Factors
Affecting Value and Trading Price of Warrants' and '--Effect of Credit Rating
Reduction' in the Prospectus, the trading price of a Warrant at any time is
expected to be affected by the creditworthiness of the Company and a number of
interrelated factors including, among others, (i) the prevailing Spot Rate, (ii)
the volatility of the exchange rate of the Japanese yen per U.S. dollar, (iii)
the time remaining to the Expiration Date of the Warrants and (iv) the interest
rate differential between U.S. dollar and Japanese yen fixed income instruments.

------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE WARRANTS OFFERED HEREBY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

------------------------

FOR NORTH CAROLINA INVESTORS ONLY: THE COMMISSIONER OF INSURANCE OF THE
STATE OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS
THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.

------------------------

S-2

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in the Prospectus and this Prospectus Supplement
and in the documents incorporated therein and herein by reference. Appendix A
hereto ('Index of Terms') contains a listing of defined terms and pages on which
they are defined in this Prospectus Supplement.

PAINE WEBBER GROUP INC.

Paine Webber Group Inc. (the 'Company') is a holding company which,
together with its operating subsidiaries, forms one of the largest full-service
securities and commodities firms in the industry. Founded in 1879, the Company
employs approximately 16,600 people in 338 offices worldwide after giving effect
to the recent acquisition of certain net assets and specific businesses of
Kidder, Peabody Group Inc., which was consummated in a series of transactions in
late 1994 and early 1995.

The Company's principal line of business is to serve the investment and
capital needs of individual, corporate, institutional and public agency clients
through its broker-dealer subsidiary, PaineWebber Incorporated ('PaineWebber'),
and other specialized subsidiaries. The Company is comprised of interrelated
business groups, including the Private Client Group, International,
Institutional Fixed Income Sales and Trading, Institutional Equity Sales and
Trading, Municipal Securities Group, Investment Banking, Asset Management, Real
Estate, Research and Transaction Services, which utilize common operational and
administrative personnel and facilities.

See 'Paine Webber Group Inc. Recent Developments' herein for certain
selected information concerning the Company's earnings and financial condition.

THE OFFERING

<TABLE>
<S> <C>
SECURITIES
OFFERED........ 1,050,000 U.S. Dollar Increase Warrants on the Japanese Yen
Expiring April 30, 1996 (the 'Warrants').
DETERMINATION OF
CASH SETTLEMENT
VALUE
OF WARRANTS.... Each Warrant will entitle the holder thereof to receive from
the Company, upon exercise (including automatic exercise), an
amount in U.S. dollars calculated by reference to decreases in
the value of the Japanese yen relative to the U.S. dollar.
Such amount (the 'Cash Settlement Value') will equal the
greater of (i) zero and (ii) the amount (rounded down to the
nearest cent) computed by subtracting from U.S. $100 an amount
equal to the product of U.S. $100 times a fraction, the
numerator of which is yen 83.25 per U.S. dollar (the 'Strike
Rate') and the denominator of which is the Noon Buying Rate

(as hereinafter defined) on the applicable valuation date, as
determined by the Spot Rate Reference Agent as described
herein, or, if such Noon Buying Rate is not available, such
other rate as described herein on such valuation date (the
'Spot Rate'). This amount is described by the following
formula:
</TABLE>

CASH SETTLEMENT VALUE = THE GREATER OF

[ ( YEN 83.25/U.S. $1.00 )]
(i) $0 AND (ii) $100 -- [ $100 X (--------------------- )]
[ ( SPOT RATE )]

If the Strike Rate is equal to or exceeds the Spot Rate for
such valuation date, the Cash Settlement Value will be zero;
in which case, the Warrantholder will be permitted, subject to
certain exceptions, to re-exercise such Warrant prior to the
Expiration Date or the Delisting Date. The Strike Rate is
equal to the spot exchange rate of the Japanese yen for the
U.S. dollar quoted by the Spot Rate Reference Agent at
approximately

</TABLE>
S-3

<PAGE>

<TABLE>
<S> <C>
7:30 P.M., New York City time, on April 24, 1995, and,
accordingly, the Cash Settlement Value of the
Warrants as of such time was zero. See 'Description of the
Warrants--Determination of Cash Settlement Value of Warrants'
herein for the method by which the Spot Rate and the Cash
Settlement Value will be calculated.
PRICE............ $5.45 per Warrant.
EXERCISE OF
WARRANTS....... The Warrants will be exercisable immediately upon issuance and
may be exercised until 3:00 P.M., New York City time, on the
New York Business Day (as hereinafter defined) immediately
preceding the expiration date for the Warrants, which is April
30, 1996 (the 'Expiration Date'), or until their earlier
expiration on the last New York Business Day prior to the
effective date of their delisting from, or permanent
suspension from trading on, the New York Stock Exchange (the
'NYSE') and failure to list the Warrants on another United
States national securities exchange (the 'Delisting Date').
Any Warrant not exercised at or before the Expiration Date or
any Delisting Date will be automatically exercised on such
date. See 'Description of the Warrants--Exercise and
Settlement of Warrants' herein.

EXERCISE
AMOUNT......... A Warrantholder may exercise no fewer than 500 Warrants at any
one time, except in the event of automatic exercise. See
'Description of the Warrants--Minimum Exercise Amount' herein.
All exercises of Warrants (other than on the Expiration Date
or the Delisting Date) are subject, at the Company's option,
to the limitation that not more than 1,000,000 Warrants in
total may be exercised on any Exercise Date and not more than
250,000 Warrants may be exercised by or on behalf of any
person or entity, either individually or in concert with any
other person or entity, on any Exercise Date. See 'Description
of the Warrants--Maximum Exercise Amount' herein.
CERTAIN RISK
FACTORS........ The Warrants are highly speculative and involve a high degree
of risk, including (but not limited to) foreign exchange risks
and the risk of expiring worthless if the U.S. dollar does not
appreciate, or if it depreciates, against the Japanese yen. In
addition, in the absence of countervailing factors, such as an
appreciation of the U.S. dollar against the Japanese yen, the
trading value of the Warrants is expected to decrease as the
time remaining to the Expiration Date decreases. See 'Risk
Factors--Certain Factors Affecting Value and Trading Price of
Warrants' in the Prospectus. If a Warrant is not exercised and
if at expiration one U.S. dollar is worth yen 83.25 or less,
the Warrant will expire worthless.
PROSPECTIVE PURCHASERS OF THE WARRANTS SHOULD RECOGNIZE THAT
THEIR WARRANTS MAY EXPIRE WORTHLESS. PURCHASERS SHOULD BE
PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF
THEIR WARRANTS. WARRANTHOLDERS WILL BEAR THE FOREIGN EXCHANGE
RISKS OF THE U.S. DOLLAR AS COMPARED TO THE JAPANESE YEN. THE
WARRANTS ARE APPROPRIATE INVESTMENTS ONLY FOR INVESTORS WHO
ARE ABLE TO UNDERSTAND AND BEAR THE RISK OF A SPECULATIVE
INVESTMENT IN THE WARRANTS. See 'Risk Factors' in the
Prospectus and 'Certain Risk Factors Relating to the
Warrants', 'Description of the Warrants', 'Exchange Rates' and
'Certain United States Federal Income Tax Considerations'
herein.
</TABLE>

S-4
<PAGE>

<TABLE>
<S> <C>
As discussed in greater detail under 'Risk Factors--Certain
Factors Affecting Value and Trading Price of Warrants' and
'--Effect of Credit Rating Reduction' in the Prospectus, the
trading price of a Warrant at any time is expected to be
affected by the creditworthiness of the Company and a number
of interrelated factors including, among others, (i) the
prevailing Spot Rate, (ii) the volatility of the exchange rate
of the Japanese yen per U.S. dollar, (iii) the time remaining
to the Expiration Date of the Warrants and (iv) the interest
rate differential between U.S. dollar and Japanese yen fixed

income instruments.
Warrantholders will be subject to foreign exchange risk which
may have important economic and tax consequences to them. See
'Exchange Rates' and 'Certain United States Federal Income Tax
Considerations' herein.
It is not possible to predict how the Warrants will trade in
the secondary market or whether such market will be liquid or
illiquid. To the extent Warrants are exercised, the number of
Warrants outstanding will decrease, resulting in a decrease in
the liquidity of the Warrants. In addition, the Company or one
or more of its affiliates may from time to time purchase
Warrants resulting in a decrease in the liquidity of the
Warrants.
The Warrants have been approved for listing on the NYSE,
subject to official notice of issuance. In the event the
Warrants are delisted from, or permanently suspended from
trading on (within the meaning of the Securities Exchange Act
of 1934 and the rules and regulations thereunder), the NYSE
and not accepted at the same time for listing on another
national securities exchange, Warrants not previously
exercised will be deemed automatically exercised on the
Delisting Date, and the Cash Settlement Value, if any, shall
be calculated and settled as provided below under 'Description
of the Warrants--Delisting of Warrants'. In the event of a
delisting or suspension of trading on the NYSE, the Company
will use its best efforts to list the Warrants on another
United States national securities exchange.
Except in the event of automatic exercise, a Warrantholder
must tender at least 500 Warrants at any one time in order to
exercise his Warrants. Thus, except in such an event,
Warrantholders with fewer than 500 Warrants will need either
to sell their Warrants or to purchase additional Warrants,
incurring transaction costs in each case, in order to realize
upon their investment.
A Warrantholder will not be able to determine, at the time of
exercise of a Warrant, the Spot Rate that will be used in
calculating the Cash Settlement Value of such Warrant (and
will thus be unable to determine such Cash Settlement Value).
In addition, the Valuation Date for exercised Warrants may be
postponed as a result of the exercise of a number of Warrants
exceeding the limits on exercise described below under
'Description of the Warrants--Maximum Exercise Amount'. Any
downward movement in the value of the U.S. dollar relative to
the Japanese yen between the time a Warrantholder submits an
Exercise Notice and the time the Spot Rate for such exercise
is determined (which period will, at a minimum, represent an
entire New York Business Day (as hereinafter defined) and, in
the case of a postponement of a Valuation Date resulting from
the exercise of a number of Warrants exceeding limits on
exercise described below under 'Description of the
Warrants--Maximum Exercise Amount', may be substantially
longer) will result, subject to such
</TABLE>

S-5
<PAGE>

<TABLE>
<S> <C>
Warrantholder's previous election to use the Limit Option (as
hereinafter defined; see 'Description of the Warrants--Limit
Option' herein), in such Warrantholder receiving a Cash
Settlement Value that is less than the Cash Settlement Value
anticipated by such Warrantholder (including a zero Cash
Settlement Value) based on the Spot Rate most recently
reported prior to exercise.
INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE FOREGOING RISK
FACTORS AND THE RISKS AND OTHER MATTERS DISCUSSED UNDER 'RISK
FACTORS' IN THE PROSPECTUS AND 'CERTAIN RISK FACTORS RELATING
TO THE WARRANTS', 'DESCRIPTION OF THE WARRANTS', 'EXCHANGE
RATES' AND 'CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS' HEREIN PRIOR TO PURCHASING THE WARRANTS.
WHO SHOULD
INVEST......... The NYSE recommends that the Warrants be sold only to
investors whose accounts have been approved for options
trading, and further requires that its members and member
organizations and registered employees thereof make certain
suitability determinations before recommending transactions in
Warrants. As indicated above, investors should be prepared to
sustain a total loss of the purchase price of the Warrants.
Investment decisions relating to exchange rate currency
warrants, such as the Warrants offered hereby, require an
investor to predict the direction of movements in the relevant
currency exchange rate as well as the amount and timing of
those movements. Exchange rate currency warrants may change
substantially in value, or lose all of their value, with
relatively small movements in the relevant currency exchange
rate. Moreover, an exchange rate currency warrant is a
'wasting asset' in that, in the absence of countervailing
factors, such as an offsetting movement in the level of the
relevant currency exchange rate, the market value of an
exchange rate currency warrant will tend to decrease over time
and the warrant will have no market value after the time for
exercise has expired. Accordingly, exchange rate currency
warrants, such as the Warrants offered hereby, involve a high
degree of risk and are not appropriate for every investor.
Investors who are considering purchasing the Warrants should
be able to understand and bear the risk of a speculative
investment in the Warrants, be experienced with respect to
options and option transactions and understand the risks of
foreign exchange transactions. Such investors should reach an
investment decision only after careful consideration with
their advisers of the suitability of the Warrants in light of
their particular financial circumstances and the information
set forth in this Prospectus Supplement and the Prospectus.
See 'Certain Risk Factors Relating to the Warrants' herein. As
indicated above, investors should be prepared to sustain a
total loss of the purchase price of the Warrants.

LISTING.......... New York Stock Exchange
WARRANT TRADING
SYMBOL......... PWP.WS
CUSIP NUMBER..... 695629 31 1
WARRANT AGENT.... Citibank, N.A.
SPOT RATE
REFERENCE
AGENT.......... PaineWebber Incorporated
</TABLE>

S-6

<PAGE>
REFERENCES

References herein to 'U.S. dollar', 'dollar', 'U.S. $' or '$' are to the
lawful currency of the United States of America. References to 'Japanese yen' or
'yen' are to the lawful currency of Japan. As used herein, 'New York Business
Day' means any day other than a Saturday or Sunday or a day on which the New
York Stock Exchange (the 'NYSE') is not open for securities trading or
commercial banks in New York City are required or authorized by law or executive
order to remain closed.

PAINE WEBBER GROUP INC.

Paine Webber Group Inc. is a holding company which, together with its
operating subsidiaries, forms one of the largest full-service securities and
commodities firms in the industry. Founded in 1879, the Company employs
approximately 16,600 people in 338 offices worldwide after giving effect to the
recent acquisition of certain net assets and specific businesses of Kidder,
Peabody Group Inc., which was consummated in a series of transactions in late
1994 and early 1995.

The Company's principal line of business is to serve the investment and
capital needs of individual, corporate, institutional and public agency clients
through its broker-dealer subsidiary, PaineWebber, and other specialized
subsidiaries. The Company holds memberships in all major securities and
commodities exchanges in the United States, and makes a market in many
securities traded on the Automated Quotations System of the National Association
of Securities Dealers, Inc. or in other over-the-counter markets. Additionally,
PaineWebber is a primary dealer in U.S. government securities.

The Company is comprised of interrelated business groups, including the
Private Client Group, International, Institutional Fixed Income Sales and
Trading, Institutional Equity Sales and Trading, Municipal Securities Group,
Investment Banking, Asset Management, Real Estate, Research and Transaction
Services, which utilize common operational and administrative personnel and
facilities.

The Private Client Group consists primarily of a domestic branch office
system and consumer product groups through which PaineWebber and certain other
subsidiaries provide clients with financial services and products, including the
purchase and sale of securities, option contracts, commodity and financial
futures contracts, direct investments, selected insurance products, fixed income
instruments and mutual funds. The Company may act as a principal or agent in
providing these services. Fees charged vary according to the size and complexity
of a transaction, and the activity level of a client's account.

Through the International, Institutional Fixed Income Sales and Trading and
Institutional Equity Sales and Trading groups, the Company places securities
for, and executes trades on behalf of, institutional clients both domestically
and internationally. In addition, the Company takes positions in both listed and
unlisted equity and fixed income securities to facilitate client transactions or
for the Company's own account.

The Municipal Securities Group originates, underwrites, sells and trades

taxable and tax-exempt issues for municipal and public agency clients.

Through the Investment Banking group, the Company provides financial advice
to, and raises capital for, a broad range of domestic and international
corporate clients. Investment Banking manages and underwrites public and private
offerings, participates as an underwriter in syndicates of public offerings
managed by others, and provides advice in connection with mergers and
acquisitions, lease financings and debt restructurings.

The Asset Management group is comprised of Mitchell Hutchins Asset
Management Inc. ('MHAM'), Mitchell Hutchins Institutional Investors Inc.
('MHII') and Mitchell Hutchins Investment Advisory division ('MHIA'). MHAM and
MHII provide investment advisory and portfolio management services to pension
and endowment funds. MHAM also provides investment advisory and portfolio
management services to individuals and mutual funds. MHIA provides portfolio
management services to individuals, trusts and institutions.

The Real Estate group provides a full range of capital market services to
real estate clients, including underwriting of debt and equity securities,
principal lending activity, debt restructuring, property sales and bulk sales
services, and a broad range of other advisory services.

The Research group provides investment advice to institutional and
individual investors, and other business areas of the Company, on approximately
890 companies in 62 industry sectors.

The Transaction Services group includes correspondent services, prime
brokerage and securities lending businesses, and specialist trading. Through
Correspondent Services Corporation, the Company provides execution

S-7
<PAGE>
and clearing services to broker-dealers in the U.S. and overseas. The Company
also acts as a specialist responsible for executing transactions and maintaining
an orderly market in certain securities.

The Company's businesses operate in one of the nation's most highly
regulated industries. Violations of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines, and
the suspension or expulsion of a firm, its officers or employees. The Company's
business is regulated by various agencies, including the Securities and Exchange
Commission, the New York Stock Exchange, the Commodity Futures Trading
Commission and the National Association of Securities Dealers, Inc. ('NASD').

The Company's principal executive offices are located at 1285 Avenue of the
Americas, New York, New York 10019 (Telephone (212) 713-2000).

For purposes of the foregoing description, all references to the 'Company'
refer collectively to Paine Webber Group Inc. and its operating subsidiaries
unless the context otherwise requires.

PAINE WEBBER GROUP INC. RECENT DEVELOPMENTS

On April 20, 1995, the Company announced operating results for the quarter

ended March 31, 1995. Those results and the results for the comparable quarter
of the prior year are as follows:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
-----------------------
1995 1994
---------- ----------
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Total Revenues........................... $1,233,910 $1,082,448
Net Revenues............................. 725,784 752,077
Earnings Before Income Taxes............. 52,785 92,747
Net Earnings............................. 34,310 55,648
Earnings Per Share:
Primary............................. $0.27 $0.71
Fully Diluted....................... $0.27 $0.70
</TABLE>

On April 19, 1995, in an unrelated development, Moody's Investors Service,
Inc. announced that it lowered its ratings on the Company's senior debt from A3
to Baa1 and on its subordinated debt from Baa1 to Baa2. Moody's confirmed the
Company's Prime-2 commercial paper rating.

USE OF PROCEEDS

A substantial portion of the proceeds to be received by the Company from
the sale of the Warrants will be used by the Company, or one or more of its
subsidiaries, in connection with hedging the Company's obligations under the
Warrants. Depending on future market conditions (including the prevailing
Japanese yen/U.S. dollar exchange rate from time to time) and the actual amount
of Warrants outstanding from time to time, among other things, the Company
expects that it or its subsidiaries may (i) take positions in listed and
over-the-counter Japanese yen or U.S. dollar currency option contracts, (ii)
take positions in Japanese yen or U.S. dollar currency forward contracts, (iii)
take positions in Japanese yen or U.S. dollar currency spot contracts and (iv)
enter into currency swap arrangements, in each case, other than exchange traded
options, in privately negotiated transactions with institutional counterparties.
The remainder of the proceeds, if any, will be used for general corporate
purposes. See 'Use of Proceeds' in the Prospectus.

CERTAIN RISK FACTORS RELATING TO THE WARRANTS

GENERAL MARKET AND TIMING RISKS

The beneficial owner of a Warrant (a 'Warrantholder')* will receive a cash
payment from Paine Webber Group Inc. (the 'Company'), upon exercise (including
automatic exercise), only if such Warrant has a Cash Settlement Value greater
than zero at such time. The 'Cash Settlement Value' of a Warrant will equal the
greater of (i) zero and (ii) the amount (rounded down to the nearest cent)
computed by subtracting from U.S. $100 an amount equal to the product of U.S.
$100 times a fraction, the numerator of which is yen 83.25 per U.S. dollar (the

'Strike Rate') and the denominator of which is the Noon Buying Rate (as
hereinafter defined) on the

- ------------------
* Refer to 'Index of Terms' attached hereto as Appendix A for a listing of
defined terms and pages on which they are defined in this Prospectus
Supplement.

S-8
<PAGE>
applicable valuation date, as determined by the Spot Rate Reference Agent as
described herein, or, if such Noon Buying Rate is not available, such other rate
as described herein on such valuation date (the 'Spot Rate'). If the Strike Rate
is equal to or exceeds the Spot Rate for such valuation date, the Cash
Settlement Value will be zero; in which case, the Warrantholder will be
permitted, subject to certain exceptions, to re-exercise such Warrant prior to
the Expiration Date or the Delisting Date (both as hereinafter defined). The
Strike Rate is equal to the spot exchange rate of the Japanese yen for the U.S.
dollar quoted by the Spot Rate Reference Agent at approximately 7:30 P.M., New
York City time, on April 24, 1995, and, accordingly, the Cash Settlement Value
of the Warrants as of such time was zero. See 'Description of the
Warrants--Determination of Cash Settlement Value of Warrants' herein.

Warrantholders will be subject to foreign exchange risk which may have
important economic and tax consequences to them. See 'Exchange Rates' and
'Certain United States Federal Income Tax Considerations' herein.

Investment decisions relating to exchange rate currency warrants, such as
the Warrants offered hereby, require the investor to predict the direction of
movements in the relevant currency exchange rate as well as the amount and
timing of those movements. Exchange rate currency warrants may change
substantially in value, or lose all of their value, with relatively small
movements in the relevant currency exchange rate. Moreover, an exchange rate
currency warrant is a 'wasting asset' in that, in the absence of countervailing
factors, such as an offsetting movement in the relevant currency exchange rate,
the market value of an exchange rate currency warrant will tend to decrease over
time and the warrant will have no market value after the time for exercise has
expired. Accordingly, exchange rate currency warrants, such as the Warrants
offered hereby, involve a high degree of risk and are not appropriate for every
investor. Investors who are considering purchasing the Warrants must be able to
understand and bear the risk of a speculative investment in the Warrants, be
experienced with respect to options and option transactions and understand the
risks of foreign exchange transactions. Such investors should reach an
investment decision only after careful consideration, with their advisers, of
the suitability of the Warrants in light of their particular financial
circumstances and the information set forth in this Prospectus Supplement and in
the Prospectus.

RISKS ASSOCIATED WITH EXCHANGE RATE OF JAPANESE YEN PER U.S. DOLLAR

greater Cash Settlement Value. Conversely, depreciation of the U.S. dollar
against the Japanese yen (i.e., appreciation of the Japanese yen against the
U.S. dollar) will result in a lesser or zero Cash Settlement Value.
Warrantholders will thus bear the foreign exchange risk of the U.S. dollar as
compared to the Japanese yen. Significant and unpredictable fluctuations in the
Japanese yen/U.S. dollar exchange rate have occurred in the past, and it is
impossible to predict the direction, magnitude or frequency of any fluctuations
in that rate that may occur over the term of the Warrants. See 'Exchange Rates'
herein.

The spot exchange rate of the Japanese yen as compared to the U.S. dollar
is at any moment a result of the supply of and demand for the two currencies,
and changes in the rate result over time from the interaction of many diverse
factors directly or indirectly affecting economic and political conditions in
Japan and the United States, including, without limitation, economic and
political developments in other countries. Of particular importance are the
relative rates of inflation, interest rate levels, the balance of payments and
the extent of governmental surpluses or deficits in Japan and the United States,
all of which are in turn sensitive to the monetary, fiscal and trade policies
pursued by the governments of Japan, the United States and other countries
important to international trade and finance. See 'Risk Factors' in the
Prospectus.

The Spot Rate on any given day will determine whether the Warrants have a
Cash Settlement Value greater than zero on such day. The Warrants will be
'at-the-money' (i.e., their Cash Settlement Value will be zero) when initially
offered and on any given day if the Spot Rate is equal to the Strike Rate, will
be 'out-of-the-money' (i.e., their Cash Settlement Value will be zero) on any
given day if the Spot Rate is below the Strike Rate and will be 'in-the-money'
(i.e., their Cash Settlement Value will be greater than zero) on any given day
only if the Spot Rate exceeds the Strike Rate. An increase in the positive
difference, if any, between the Spot Rate and the Strike Rate will result in a
greater Cash Settlement Value, and a decrease in such difference will result in
a lesser or zero Cash Settlement Value. Potential profit or loss upon exercise
(including automatic

S-9
<PAGE>
exercise) of a Warrant will be a function of the Cash Settlement Value of such
Warrant upon exercise, the purchase price of such Warrant and any related
transaction costs.

RISKS AND COSTS ASSOCIATED WITH CONVERSION AND EXERCISE OF WARRANTS

The Warrants initially will be issued as certificates in registered form.
Warrantholders cannot, however, hold certificated positions through CEDEL or
Euroclear (as such terms are hereinafter defined). Accordingly, a beneficial
owner of Warrants holding such Warrants indirectly (for instance, through a
broker that holds such Warrants in 'street' name) may exercise such Warrants
only through such owner's registered holder. In the case of a beneficial owner
holding Warrants through his broker in 'street' name, such beneficial owner must
direct his broker, who may in turn need to direct another intermediary, to
deliver an Exercise Notice (as hereinafter defined) and the related Warrants to
the Warrant Agent (as hereinafter defined). To ensure that an Exercise Notice

and the related Warrants will be delivered to the Warrant Agent before 3:00
P.M., New York City time, on a given New York Business Day, a beneficial holder
of Warrants may have to give exercise instructions to his broker or other
intermediary substantially earlier than 3:00 P.M., New York City time, on such
day. Different brokerage firms may have different cut-off times for accepting
and implementing exercise instructions from their customers. Therefore,
Warrantholders should consult with their brokers or other intermediaries, if
applicable, as to applicable cut-off times and other exercise mechanics. See
'Description of the Warrants--Exercise and Settlement of Warrants' and '--Limit
Option' herein.

Forty-five calendar days after the closing of the offering (which closing
is expected to be May 1, 1995), each registered holder of a Warrant will have
the option to convert the form in which such Warrantholder holds his Warrants
from certificated to book-entry form (the 'Conversion Option') within a
forty-five calendar day period. Such conversion will occur only through the
facilities of The Depository Trust Company, New York, New York ('DTC', which
term, as used herein and in the Prospectus, includes any successor depository
selected by the Company). See 'Description of the Warrants--Book-Entry
Conversion' herein and 'Description of the Warrants--Book-Entry Procedures and
Settlement' in the Prospectus. To exercise Warrants, a registered holder of a
Warrant who has utilized the Conversion Option must direct a broker, who may, in
turn, need to direct a participating organization in DTC (a 'Participant'), to
transfer Warrants held by DTC on behalf of such Warrantholder and to submit an
Exercise Notice to the Warrant Agent. A Warrantholder may desire that the New
York Business Day on which his Warrants and an Exercise Notice are delivered on
his behalf to the Warrant Agent will constitute the Exercise Date for the
Warrants being exercised (for example, to utilize the Limit Option most
effectively). To achieve such objective, a Warrantholder holding Warrants in
book-entry form must cause such Warrants to be transferred free on the records
of DTC to, and such Exercise Notice to be received by, the Warrant Agent at or
prior to 3:00 P.M., New York City time, on such New York Business Day; provided,
however, that in the case of Warrants in book-entry form held through CEDEL or
Euroclear, the Warrants must be transferred to the Warrant Agent prior to 3:00
P.M., New York City time, on the applicable Valuation Date. To ensure that such
Warrants and Exercise Notice will be received by the Warrant Agent at or prior
to such time, such Warrantholder must give the appropriate direction to his
broker before such broker's (and, if such broker is not a Participant, the
applicable Participant's) cut-off time for accepting exercise instructions from
customers for that day. Different brokerage firms may have different cut-off
times for accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders holding their Warrants in book-entry form should
consult with their brokers or other intermediaries, if applicable, as to
applicable cut-off times and other exercise mechanics. Under no circumstances
may Warrants in certificated form be exercised through the facilities of CEDEL
or Euroclear. The Company has been informed by CEDEL and Euroclear that such
clearing agencies will only clear, and facilitate exercises of, Warrants in
book-entry form. See 'Description of the Warrants--Exercise and Settlement of
Warrants', '--CEDEL and Euroclear' and '--Limit Option' herein. Forms of
Exercise Notice for Warrants held in book-entry form may be obtained at the
Warrant Agent's Office (as hereinafter defined), during the Warrant Agent's
normal business hours. See 'Description of the Warrants--General' herein.

A Warrantholder may exercise no fewer than 500 Warrants at any time, except

in the event of automatic exercise. Accordingly, except in the event of
automatic exercise of the Warrants, Warrantholders with fewer than 500 Warrants
will need either to sell their Warrants or to purchase additional Warrants,
thereby incurring transaction costs, in order to realize upon their investment.

S-10
<PAGE>
If a Warrant is not exercised prior to 3:00 P.M., New York City time, on
the earlier of (i) the New York Business Day preceding the Expiration Date and
(ii) the Delisting Date, and if the Strike Rate equals or exceeds the Spot Rate
on the appropriate Valuation Date, such Warrant will expire worthless and the
Warrantholder will have sustained a total loss of the purchase price of such
Warrant. See 'Risk Factors' in the Prospectus.

RISKS DUE TO DELAY OR POSTPONEMENT OF VALUATION OF WARRANTS

Except under the circumstances described in the next paragraph, the
Valuation Date for an exercised Warrant will be the first New York Business Day
after the related Exercise Date. The Exercise Date for an exercised Warrant,
subject to certain exceptions described under 'Exercise and Settlement of
Warrants', 'Limit Option' and 'Automatic Exercise' under 'Description of the
Warrants' herein, will be the New York Business Day on which such Warrant and an
Exercise Notice in proper form are received by the Warrant Agent if received at
or prior to 3:00 P.M., New York City time, on such day; if such Warrant and
Exercise Notice are received after such time, the Exercise Date will be the next
succeeding New York Business Day. See 'Description of the Warrants--Exercise and
Settlement of Warrants' herein.

The Valuation Date for an exercised Warrant will occur after the Exercise
Date (see 'Description of the Warrants--Exercise and Settlement of Warrants'
herein). Therefore, a Warrantholder will not be able to determine, at the time
of exercise of a Warrant, the Spot Rate that will be used in calculating the
Cash Settlement Value of such Warrant (and will thus be unable to determine such
Cash Settlement Value). In addition, the Valuation Date for exercised Warrants
may be postponed as a result of the exercise of a number of Warrants exceeding
the limits on exercise described below under 'Description of the
Warrants--Maximum Exercise Amount'.

Any downward movement in the value of the U.S. dollar relative to the
Japanese yen between the time a Warrantholder submits an Exercise Notice and the
time the Spot Rate for such exercise is determined (which period will, at a
minimum, represent an entire New York Business Day and, in the case of a
Valuation Date postponed as a result of there being exercised a number of
Warrants exceeding the maximum permissible amount, may be substantially longer)
will, subject to the Limit Option described in the next paragraph and under
'Description of the Warrants--Limit Option' herein, result in such Warrantholder
receiving a Cash Settlement Value that is less than the Cash Settlement Value
anticipated by such Warrantholder (including a zero Cash Settlement Value) based
on the Spot Rate most recently reported prior to exercise.

Except in the event of automatic exercise, a Warrantholder may be able to
limit to some extent the risk associated with any downward movement in the value
of the U.S. dollar relative to the Japanese yen between an Exercise Date and the
applicable Valuation Date if such Warrantholder, in connection with an exercise

of Warrants, elects the Limit Option. Pursuant to the Limit Option, Warrants
tendered for exercise will not be exercised if the Spot Rate for the applicable
Valuation Date has declined by five or more Japanese yen per U.S. dollar from
the Spot Rate for the applicable Exercise Date. See 'Description of the
Warrants--Limit Option' herein.

INVESTOR SUITABILITY

The NYSE recommends that the Warrants be sold only to investors whose
accounts have been approved for options trading. In addition, the NYSE requires
that its members and member organizations and registered employees thereof make
certain suitability determinations before recommending transactions in the
Warrants. Before making any investment in the Warrants, it is important that a
prospective investor become informed about and understand the nature of the
Warrants in general, the specific terms of the Warrants and the nature of the
relevant currency exchange rate. An investor should understand the consequences
of liquidating his investment in a Warrant by exercising it as opposed to
selling it. It is especially important for an investor to be familiar with the
procedures governing the exercise of Warrants, since a failure to properly
exercise a Warrant prior to its expiration could result in the loss of his
entire investment. This includes knowing when Warrants are exercisable and how
to exercise them.

OTHER CONSIDERATIONS

The initial offering price of the Warrants is expected to be in excess of
the aggregate price that a commercial user of Japanese yen might pay in the
interbank market for a comparable option involving significantly larger amounts
of underlying currencies.

It is not possible to predict how the Warrants will trade in the secondary
market or whether such market will be liquid or illiquid. To the extent Warrants
are exercised, the number of Warrants outstanding will decrease,

S-11
<PAGE>
resulting in a decrease in the liquidity of the Warrants. In addition, during
the life of the Warrants, the Company or one or more of its affiliates may from
time to time purchase and exercise the Warrants, resulting in a decrease in the
liquidity of the Warrants.

The Warrants have been approved for listing on the NYSE, subject to
official notice of issuance. In the event the Warrants are delisted from, or
permanently suspended from trading on (within the meaning of the Securities
Exchange Act of 1934 and the rules and regulations thereunder), the NYSE and not
accepted at the same time for listing on another United States national
securities exchange, Warrants not previously exercised will be deemed
automatically exercised on the Delisting Date, and the Cash Settlement Value, if
any, shall be calculated and settled as provided under 'Description of the
Warrants--Delisting of Warrants' herein. In the event of a delisting or
suspension of trading on the NYSE, the Company will use its best efforts to list
the Warrants on another United States national securities exchange.

PaineWebber and its affiliates will be the writers of the hedge of the

Company's obligations under the Warrants and will be obligated to pay to the
Company upon exercise of Warrants an amount equal to the value of the exercised
Warrants. See 'Use of Proceeds' in the Prospectus and 'Use of Proceeds' herein.

INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE FOREGOING RISK FACTORS AND
THE RISKS AND OTHER MATTERS DISCUSSED UNDER 'RISK FACTORS' IN THE PROSPECTUS AND
'CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS' HEREIN, AS WELL AS THE
OTHER INFORMATION IN THE PROSPECTUS AND HEREIN, PRIOR TO PURCHASING THE
WARRANTS.

S-12

<PAGE>
DESCRIPTION OF THE WARRANTS

GENERAL

The Warrants will be issued pursuant to a Warrant Agreement (the 'Warrant
Agreement'), to be dated as of May 1, 1995, between the Company, Citibank, N.A.,
as Warrant Agent (the 'Warrant Agent'), and PaineWebber Incorporated, as Spot
Rate Reference Agent. The following summaries of certain provisions of the
Warrants and the Warrant Agreement do not purport to be complete and reference
is made to all the provisions of the Warrant Agreement (including the form of
Warrant Certificate and global Warrant certificate attached as exhibits
thereto). The Warrant Agreement will be available for inspection by any
Warrantholder at the office of the Warrant Agent (the 'Warrant Agent's Office')
which is currently located at 111 Wall Street, 5th Floor, New York, New York
10043, during the Warrant Agent's normal business hours. See 'Description of
Warrants' in the Prospectus.

The aggregate number of Warrants to be issued is set forth on the cover
page of this Prospectus Supplement and is subject to the right of the Company to
'reopen' the issue of Warrants and issue additional Warrants with substantially
identical terms at a later time.

A Warrant will not require or entitle a Warrantholder to purchase U.S.
dollars from, or sell Japanese yen to, the Company. Upon exercise of a Warrant,
the Company will make only a U.S. dollar cash payment in the amount of the Cash
Settlement Value, if any, of such Warrant. The Company is under no obligation
to, nor will it, sell U.S. dollars to, or purchase Japanese yen from,
Warrantholders in connection with the exercise of any Warrants. Warrantholders
will not receive any interest on any Cash Settlement Value.

DETERMINATION OF CASH SETTLEMENT VALUE OF WARRANTS

Each Warrant will entitle the Warrantholder to receive, upon exercise
(including automatic exercise), the Cash Settlement Value of such Warrant. The
'Cash Settlement Value' of a Warrant will equal an amount in U.S. dollars
(rounded down to the nearest cent) which is the greater of (i) zero and (ii) the
amount computed by subtracting from U.S. $100 an amount equal to the product of
U.S. $100 times a fraction, the numerator of which is yen 83.25 per U.S. $1.00
(the 'Strike Rate') and the denominator of which is the Spot Rate (as defined
below). This amount is described by the following formula:

<TABLE>
<S> <C>
[ ( YEN 83.25/U.S. $1.00 )]
CASH SETTLEMENT VALUE = THE GREATER OF (i) $0 AND (ii) $100 -- [ $100 X ( -------------------- )]
[ ( SPOT RATE )]
</TABLE>

The 'Spot Rate' on any Valuation Date will be determined by the Spot Rate
Reference Agent and will equal (i) the noon buying rate per U.S. $1.00 in The
City of New York on such Valuation Date for cable transfers in Japanese yen as
certified for customs purposes by the Federal Reserve Bank of New York (the
'Noon Buying Rate'), as reported on page 1FEE of The Reuter Monitor Money Rates
Service (or such page as may replace that page), or (ii) if the Noon Buying Rate
does not appear on such page by 1:00 P.M., New York City time, on such Valuation
Date, the Noon Buying Rate on such Valuation Date as otherwise announced by the
Federal Reserve Bank of New York, or (iii) if the Federal Reserve Bank of New
York has not quoted such Noon Buying Rate by 1:30 P.M., New York City time, on
such Valuation Date, the offered spot rate of Japanese yen per U.S. $1.00 on
such Valuation Date, which offered spot rate shall be calculated by the Spot
Rate Reference Agent by (a) obtaining at approximately 1:30 P.M., New York City
time, a quote for a transaction amount approximately equivalent to U.S. $100
times the aggregate number of Warrants which were properly exercised on the
related Exercise Date from each of five leading market makers (other than
PaineWebber) in the foreign exchange markets for Japanese yen selected by the
Spot Rate Reference Agent, (b) discarding the highest and lowest quotes obtained
and (c) averaging the three remaining quotes to determine such offered spot
rate. Because more favorable rates are generally obtained in large transactions,
the offered spot rate that will be calculated, if necessary, pursuant to clause
(iii) above in the event the Noon Buying Rate is not available in connection
with the exercise of a small aggregate number of Warrants may be less favorable
than the rate that will be calculated if a greater number of Warrants were
exercised. No assurance can be given as to the aggregate number of Warrants
which may be exercised on any given day.

S-13
<PAGE>
The Spot Rate used to determine the Cash Settlement Value on any Valuation
Date will be rounded to the second decimal place (e.g., 84.00), rounding up if
the next succeeding decimal place, without regard to rounding, is five or
higher. Any such Cash Settlement Value will be rounded down, if necessary, to
the nearest cent.

HYPOTHETICAL WARRANT VALUES ON EXERCISE

Set forth below is an illustrative example demonstrating the Cash
Settlement Values of a Warrant based on various hypothetical Spot Rates. The
illustrative Cash Settlement Values in the table do not reflect any 'time value'
for a Warrant, which may be reflected in trading value, and are not necessarily
indicative of potential profit or loss, which are also affected by purchase
price and transaction costs.

<TABLE>
<CAPTION>
HYPOTHETICAL CASH SETTLEMENT VALUE

SPOT RATE (ALSO KNOWN AS 'INTRINSIC
(YEN /U.S. $1.00) VALUE') OF A WARRANT
- ----------------- -------------------------

<S> <C>
100.00 ................................... U.S. $ 16.75
97.00 ................................... 14.17
95.00 ................................... 12.36
90.00 ................................... 7.50
89.00 ................................... 6.46
88.00 ................................... 5.39
85.00 ................................... 2.05
83.25 (Strike Rate) or below............. 0.00
</TABLE>

WARRANT CERTIFICATES

The Warrants initially will be issued as certificates in registered form
(each, a 'Warrant Certificate'). The Warrant Agent will from time to time
register the transfer of any outstanding Warrant Certificate upon surrender
thereof at the Warrant Agent's Office duly endorsed by, or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent duly executed by, the registered holder thereof, a duly appointed
legal representative or a duly authorized attorney. Such signature must be
guaranteed by a bank or trust company having a correspondent office in New York
City or by a member of a national securities exchange. A new Warrant Certificate
will be issued to the transferee upon any such registration of transfer.

At the option of a registered holder of a Warrant, Warrant Certificates may
be exchanged for other Warrant Certificates representing an equal number of
Warrants, upon surrender to the Warrant Agent at the Warrant Agent's Office of
the Warrant Certificates to be exchanged. The Company will thereupon execute,
and the Warrant Agent will countersign and deliver, one or more new Warrant
Certificates representing such equal number of Warrants.

In the event that, after any exercise of Warrants evidenced by a Warrant
Certificate, the number of Warrants exercised is fewer than the total number of
Warrants evidenced by such Certificate, a new Warrant Certificate evidencing the
number of Warrants not exercised will be issued to the registered holder or his
assignee. See 'Minimum Exercise Amount' below.

If any Warrant Certificate is mutilated, lost, stolen or destroyed, the
Company may in its discretion execute, and the Warrant Agent may countersign and
deliver, in exchange and substitution for such mutilated Warrant Certificate or
in replacement for such lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate representing an equal number of Warrants, but only (in the
case of loss, theft or destruction) upon receipt of evidence satisfactory to the
Company and the Warrant Agent of loss, theft or destruction of such Warrant
Certificate and security or indemnity, if requested, satisfactory to them.
Warrantholders requesting replacement Warrant Certificates must also comply with
such other reasonable regulations and pay such reasonable charges as the Company
or the Warrant Agent may prescribe. In the event that all the Warrants
represented by any such mutilated, lost, stolen or destroyed Warrant Certificate
have been or are about to be exercised (including upon automatic exercise), the

Company in its discretion may, instead of issuing a new Warrant Certificate,
direct the Warrant Agent to treat such Warrant Certificate as if the Warrant
Agent had received an Exercise Notice in proper form in respect thereof or as
being subject to automatic exercise, as the case may be.

No service charge will be made for any registration of transfer or exchange
of Warrant Certificates, but the Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection therewith, other than exchanges not involving any transfer. In the
case of the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates, the Company may require the payment of a sum

S-14
<PAGE>

sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Warrant Agent) connected therewith.

Warrantholders may not hold certificated positions through CEDEL or
Euroclear, but may hold Warrants in book-entry form through the facilities of
CEDEL or Euroclear after they have been converted from certificated to
book-entry form. See '--Book-Entry Conversion' and '--CEDEL and Euroclear'
herein.

BOOK-ENTRY CONVERSION

Forty-five calendar days after the closing of the offering (which closing
date is expected to be May 1, 1995), each registered holder of a Warrant will
have the option to convert the form in which such holder holds his Warrants from
certificated to book-entry form by utilizing the Conversion Option. The
Conversion Option will be available for forty-five calendar days (the
'Conversion Option Period') and is expected to run from June 15, 1995, through
July 29, 1995.

In order to be exchanged for a Warrant in book-entry form, the Warrant
Certificate evidencing such certificated Warrant must be delivered to DTC, in
proper form for deposit, by a Participant. Accordingly, a registered holder of a
Warrant who is not a Participant must deliver his Warrant Certificate, in proper
form for deposit, to a Participant, either directly or through an indirect
participant in DTC (such as a bank, brokerage firm, dealer or trust company that
clears through, or maintains a custodial relationship with, a Participant) or a
brokerage firm which maintains an account with a Participant, in order to have
his certificated Warrant exchanged for a Warrant in book-entry form.
Warrantholders who desire to exchange their certificated Warrants for Warrants
in book-entry form should contact their brokers or other Participants or
indirect participants to obtain information on procedures for submitting their
Warrant Certificates to DTC, including the proper form for submission, and
(during the Conversion Option Period) the cut-off times for same day and next
day exchange. Certificated Warrants which are held by a Warrantholder in nominee
or 'street' name may be automatically exchanged into book-entry form by the
broker or other entity in whose name the Warrant Certificates evidencing such
certificated Warrants are registered, without action of, or consent by, the
beneficial owner of such certificated Warrants. Under no circumstances may

certificated Warrants be converted into Warrants in book-entry form through the
facilities of CEDEL or Euroclear.

Certificated Warrants received by DTC for exchange during the Conversion
Option Period will be exchanged for Warrants in book-entry form by the close of
business on the New York Business Day that the Warrant Certificates evidencing
such certificated Warrants are received by DTC (if received by DTC at its then
applicable cut-off time for same day credit) or on the following New York
Business Day (if received by DTC at its then applicable cut-off time for next
day credit). After the last day of the Conversion Option Period, DTC will not be
required to accept delivery of certificated Warrants for exchange for book-entry
Warrants, but may permit certificated Warrants to be so exchanged on a
case-by-case basis. However, there can be no assurance that such certificated
Warrants would be accepted for exchange. Certificated Warrants surrendered at
any time for exchange for book-entry Warrants may not be exercised or delivered
for settlement of transfer until such exchange has been effected. Accordingly,
if an increase in the Spot Rate were to occur after a certificated Warrant had
been surrendered for exchange into book-entry form, a Warrantholder would not be
able to take advantage of the increase by exercising his Warrant until such
exchange had been effected. Because certificated Warrants are not required to be
exchanged for Warrants in book-entry form, it is likely that not all
certificated Warrants will be so exchanged. Accordingly, a Warrantholder
purchasing Warrants in secondary market trading after commencement of the
Conversion Option Period may wish to consult with his broker or another
Participant or indirect participant if he wishes to purchase Warrants only in
book-entry form and not certificated form.

The Company has been informed by CEDEL and Euroclear that such clearing
agencies will only clear Warrants in book-entry form.

Once a registered holder of a Warrant has elected the Conversion Option,
such holder may hold his Warrants only in book-entry form and will not be able
to change his election or withdraw from the book-entry system during the
Conversion Option Period or thereafter. Accordingly, except in certain limited
circumstances described in the Prospectus under 'Description of
Warrants--Book-Entry Procedures and Settlement', ownership of the Warrants in
certificated form will no longer be available to investors who have elected the
Conversion Option.

S-15
<PAGE>
CEDEL AND EUROCLEAR

Warrantholders may hold their Warrants only in book-entry form through
CEDEL or Euroclear if they are participants of such systems, or indirectly
through organizations which are participants in such systems. The common
security registration number used by CEDEL and Euroclear for the Warrants is
5723507. Certificated ownership of Warrants will not be available through such
systems.

CEDEL and Euroclear will hold omnibus book-entry positions on behalf of
their participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries which in turn
will hold such positions in customers' securities accounts in the names of the

nominees of the depositaries on the books of DTC. Citibank, N.A., New York
Office ('Citibank'), will act as depositary for CEDEL and Morgan Guaranty Trust
Company of New York, New York Office ('Morgan'), will act as depositary for
Euroclear (in such capacities, the 'Depositaries'). All securities in CEDEL or
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts.

Exercises of book-entry Warrants by persons holding through CEDEL or
Euroclear participants will be effected through DTC, in accordance with DTC
rules, on behalf of the relevant European international clearing system by its
Depositary; however, such transactions will require delivery of exercise
instructions to the relevant European international clearing system by the
participant in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the exercise meets its requirements,
deliver instructions to its Depositary to take action to effect its exercise of
the Warrants on its behalf by delivering Warrants through DTC and receiving
payment in accordance with its normal procedures for next-day funds settlement.
Payments with respect to the Warrants held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL participants or Euroclear participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. See '--Exercise and Settlement of the Warrants'
herein.

Centrale de Livraison de Valeurs Mobilieres S.A. ('CEDEL') is incorporated
under the laws of Luxembourg as a professional depositary. CEDEL holds
securities for its participating organizations and facilitates the clearance and
settlement of securities transactions between CEDEL participants through
electronic book-entry changes in accounts of CEDEL participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in CEDEL in any of 28 currencies, including U.S. dollars. CEDEL provides
to its participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. CEDEL interfaces with domestic markets in
several countries. As a professional depositary, CEDEL is subject to regulation
by the Luxembourg Monetary Institute. CEDEL participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters (as hereinafter defined).
Indirect access to CEDEL is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a CEDEL participant, either directly or indirectly.

The Euroclear System was created in 1968 to hold securities for
participants in the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 30 currencies, including U.S.
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by Morgan's Brussels,
Belgium office (the 'Euroclear Operator' or 'Euroclear'), under contract with

Euroclear Clearance System S.C., a Belgian cooperative corporation (the
'Cooperative'). Morgan is a member bank of the United States Federal Reserve
System. All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear participants. Euroclear
participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
participant, either directly or indirectly.

Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and

S-16
<PAGE>
applicable Belgian law (collectively, the 'Terms and Conditions'). The Terms and
Conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipt of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
participants, and has no record of or relationship with persons holding through
Euroclear participants.

All information herein on CEDEL and Euroclear is derived from CEDEL or
Euroclear, as the case may be, and reflects the policies of such organizations;
such policies are subject to change without notice.

EXERCISE AND SETTLEMENT OF WARRANTS

The Warrants will be immediately exercisable upon issuance and will expire
on April 30, 1996 (the 'Expiration Date'). Warrants not exercised (including by
reason of any postponed exercise) at or before 3:00 P.M., New York City time, on
the earlier of (i) the New York Business Day immediately preceding the
Expiration Date and (ii) the Delisting Date will be automatically exercised as
described under 'Automatic Exercise' below.

A Warrantholder may exercise certificated Warrants on any New York Business
Day during the period from the date of issuance of such Warrants until 3:00
P.M., New York City time, on the earlier of (i) the New York Business Day
immediately preceding the Expiration Date and (ii) the Delisting Date, by
delivering or causing to be delivered to the Warrant Agent in New York City the
Warrant Certificate representing such Warrants with the irrevocable notice of
exercise on the reverse thereof (or a notice of exercise in substantially
identical form delivered therewith) (such notice, an 'Exercise Notice') duly
completed and executed. The Warrant Agent's telephone number and facsimile
transmission number for this purpose are (212) 657-7269 and (212) 825-3483,
respectively.

In the case of book-entry Warrants held through the facilities of DTC, a

Warrantholder may exercise such Warrants on any New York Business Day during the
period from the date on which his certificated Warrants have been effectively
converted into book-entry form during the Conversion Option Period (which will
begin forty-five calendar days from the closing of the offering) until 3:00
P.M., New York City time, on the earlier of (i) the New York Business Day
immediately preceding the Expiration Date and (ii) the Delisting Date, by
causing (a) such Warrants to be transferred free to the Warrant Agent on the
records of DTC and (b) a duly completed and executed Exercise Notice to be
delivered on behalf of the Warrantholder by a Participant to the Warrant Agent.
Forms of Exercise Notice for Warrants held through the facilities of DTC may be
obtained from the Warrant Agent at the Warrant Agent's Office. The Warrant
Agent's telephone number and facsimile transmission number for this purpose are
(201) 262-5444 and (201) 262-7521, respectively.

In the case of book-entry Warrants held through the facilities of CEDEL or
Euroclear, a Warrantholder may exercise such Warrants on any New York Business
Day during the period from the date on which his certificated Warrants have been
effectively converted into book-entry form during the Conversion Option Period
(which will begin forty-five calendar days from the closing of the offering)
until 3:00 P.M., New York City time, on the earlier of (i) the New York Business
Day immediately preceding the Expiration Date and (ii) the Delisting Date, by
causing (a) such Warrants to be transferred free to the Warrant Agent on the
records of DTC, by giving appropriate instructions to the participant holding
such Warrants in either the CEDEL or Euroclear system, as the case may be, and
(b) a duly completed and executed Exercise Notice to be delivered on behalf of
the Warrantholder by CEDEL or Euroclear, as the case may be, to the Warrant
Agent. Forms of Exercise Notice for Warrants held through the facilities of
either CEDEL or Euroclear may be obtained from the Warrant Agent at the Warrant
Agent's Office or from CEDEL or Euroclear.

Except for Warrants subject to automatic exercise or held in book-entry
form through the facilities of CEDEL or Euroclear, and subject to the Limit
Option, the 'Exercise Date' for a Warrant will be (i) the New York Business Day
on which the Warrant Agent receives the Warrant and Exercise Notice in proper
form with respect to such Warrant, if received at or prior to 3:00 P.M., New
York City time, on such day, or (ii) if the Warrant Agent receives such Warrant
and Exercise Notice after 3:00 P.M., New York City time, on a New York Business
Day, then the New York Business Day next succeeding such New York Business Day.

In the case of Warrants held in book-entry form through the facilities of
CEDEL or Euroclear, except for Warrants subject to automatic exercise, and
subject to the Limit Option, the 'Exercise Date' for a Warrant will be (i) the
New York Business Day on which the Warrant Agent receives the Exercise Notice in
proper form with

S-17
<PAGE>
respect to such Warrant if such Exercise Notice is received at or prior to 3:00
P.M., New York City time, on such day, provided that the Warrant is received by
the Warrant Agent by 3:00 P.M., New York City time, on the Valuation Date, or
(ii) if the Warrant Agent receives such Exercise Notice after 3:00 P.M., New
York City time, on a New York Business Day, then the New York Business Day next
succeeding such New York Business Day, provided that the Warrant is received by
3:00 P.M., New York City time, on the Valuation Date relating to exercises of

Warrants on such succeeding New York Business Day. In the event that the Warrant
is received after 3:00 P.M., New York City time, on the Valuation Date, then the
Exercise Date for such Warrant will be the day on which such Warrant is received
or, if such day is not a New York Business Day, the next succeeding New York
Business Day. In the case of Warrants held in book-entry form through the
facilities of CEDEL or Euroclear, in order to ensure proper exercise on a given
New York Business Day, participants in CEDEL or Euroclear must submit exercise
instructions to CEDEL or Euroclear, as the case may be, by 10:00 A.M.,
Luxembourg time, in the case of CEDEL and by 10:00 A.M., Brussels time (by
telex), or 11:00 A.M., Brussels time (by EUCLID), in the case of Euroclear. In
addition, in the case of book-entry exercises by means of the Euroclear System,
(a) participants must also transmit, by facsimile (facsimile number (201)
262-7521), to the Warrant Agent a copy of the Exercise Notice submitted to
Euroclear by 3:00 P.M., New York City time, on the desired Exercise Date and (b)
Euroclear must confirm by telex to the Warrant Agent by 9:00 A.M., New York City
time, on the Valuation Date that the Warrants will be received by the Warrant
Agent on such date; provided, that if such telex communication is received after
9:00 A.M., New York City time, on the Valuation Date, the Company will be
entitled to direct the Warrant Agent to reject the related Exercise Notice or
waive the requirement for timely delivery of such telex communication.

To ensure that an Exercise Notice and the related Warrants will be
delivered to the Warrant Agent before 3:00 P.M., New York City time, on a given
New York Business Day, a Warrantholder may have to give exercise instructions to
his broker or other intermediary substantially earlier than 3:00 P.M., New York
City time, on such day. Different brokerage firms may have different cut-off
times for accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders should consult with their brokers or other
intermediaries, if applicable, as to applicable cut-off times and other exercise
mechanics. See 'Certain Risk Factors Relating to the Warrants--Risks and Costs
Associated with Conversion and Exercise of Warrants' herein.

Except in the case of Warrants subject to automatic exercise, if on any
Valuation Date the Cash Settlement Value for any Warrants then exercised would
be zero, then the attempted exercise of such Warrants will be void and of no
effect and, in the case of certificated Warrants, the Warrant Certificate
evidencing such Warrants will be returned to the registered holder by first
class mail at the Company's expense or, in the case of Warrants held through the
facilities of DTC, CEDEL or Euroclear, such Warrants will be transferred back to
the Participant (including the Depositaries) that submitted them free to the
Warrant Agent on the records of DTC, and, in any such case, such Warrantholder
will be permitted to re-exercise such Warrants prior to the Expiration Date or
the Delisting Date, as the case may be.

The 'Valuation Date' for a Warrant will be the first New York Business Day
following the Exercise Date, subject to postponement as a result of the exercise
of a number of Warrants exceeding the limits on exercise described below under
'Maximum Exercise Amount'. The following is an illustration of the timing of an
Exercise Date, the ensuing Valuation Date and the Limit Option Reference Rate
(as hereinafter defined), assuming (i) all relevant dates are New York Business
Days and (ii) the number of exercised Warrants does not exceed the maximum
permissible amount. If the Warrant Agent receives a Warrantholder's Warrants and
Exercise Notice in proper form at or prior to 3:00 P.M., New York City time, on
Tuesday, October 24, 1995, the Exercise Date for such Warrants will be Tuesday,

October 24, 1995, and the Valuation Date for such Warrants will be Wednesday,
October 25, 1995 (except that in the case of Warrants held through the
facilities of CEDEL or Euroclear, the Warrants must be received by 3:00 P.M.,
New York City time, on the Valuation Date; if such Warrants are received after
such time, then the Exercise Date for such Warrants will be the day on which
such Warrants are received or, if such day is not a New York Business Day, the
next succeeding New York Business Day, and the Valuation Date for such Warrants
will be the first New York Business Day following such Exercise Date and the
Limit Option Reference Rate will be the Spot Rate on such Exercise Date). The
Spot Rate used to determine the Cash Settlement Value of such Warrants will be
the Spot Rate on Wednesday, October 25, 1995. If the Warrantholder elected the
Limit Option in connection with the exercise of such Warrants, the Limit Option
Reference Rate would be the Spot Rate on Tuesday, October 24, 1995. If the
Warrant Agent were to receive such

S-18
<PAGE>
Warrantholder's Warrants and Exercise Notice after 3:00 P.M., New York City
time, on Tuesday, October 24, 1995 (except that in the case of Warrants held
through the facilities of CEDEL or Euroclear, if the Warrants are received after
3:00 P.M., New York City time, on Wednesday, October 25, 1995), then the
Exercise Date for such Warrants would instead be Wednesday, October 25, 1995,
the Valuation Date would be Thursday, October 26, 1995, and the applicable Limit
Option Reference Rate would be the Spot Rate on Wednesday, October 25, 1995.

Following receipt of Warrants and the related Exercise Notice in proper
form, the Warrant Agent will, not later than 5:00 P.M., New York City time, on
the applicable Valuation Date, (i) obtain from the Spot Rate Reference Agent the
Spot Rate, (ii) determine the Cash Settlement Value of such Warrants and (iii)
advise the Company of the aggregate Cash Settlement Value of the exercised
Warrants. In the case of certificated Warrants, if the Company has made adequate
funds available to the Warrant Agent in a timely manner as required by the
Warrant Agreement, the Warrant Agent will thereafter be responsible for making
payment available to each registered holder of a Warrant on the fifth New York
Business Day following the Valuation Date in the form of a cashier's check or
official bank check, or (in the case of payments of at least $100,000) by wire
transfer to a U.S. dollar bank account maintained by such holder in the United
States (at such holder's election as specified in the applicable Exercise
Notice), in an amount equal to the aggregate Cash Settlement Value of such
holder's exercised Warrants. In the case of book-entry Warrants, the Company
will be required to make available to the Warrant Agent, no later than 3:00
P.M., New York City time, on the fifth New York Business Day following the
Valuation Date, funds in an amount sufficient to pay the aggregate Cash
Settlement Value of the exercised Warrants. If the Company has made such funds
available by such time, the Warrant Agent will thereafter be responsible for
making funds available to each appropriate Participant (including Citibank and
Morgan, who, in turn, will disburse payments to CEDEL and Euroclear,
respectively, who will be responsible for disbursing such payments to each of
their respective participants, who, in turn, will be responsible for disbursing
payments to the Warrantholders they represent), and such Participant will be
responsible for disbursing such payments to the Warrantholders it represents and
to each brokerage firm for which it acts as agent. Each such brokerage firm will
be responsible for disbursing funds to the Warrantholders that it represents.

'Spot Rate Reference Agent' means PaineWebber or, in lieu thereof, another
firm selected by the Company to perform the functions of the Spot Rate Reference
Agent in connection with the Warrants.

MINIMUM EXERCISE AMOUNT

No fewer than 500 Warrants may be exercised by a Warrantholder at any one
time, except in the event of automatic exercise of the Warrants. Accordingly,
except in such event, Warrantholders with fewer than 500 Warrants will need
either to sell their Warrants or to purchase additional Warrants, thereby
incurring transaction costs, in order to realize upon their investment.
Warrantholders must satisfy the minimum exercise amount requirement described
above separately with respect to both certificated and book-entry Warrants even
if both kinds of Warrants are to be exercised at the same time. Thus, a
Warrantholder seeking to exercise both certificated and book-entry Warrants at
the same time must still exercise a minimum of 500 of each kind of Warrant in
order to satisfy such requirement. In addition, book-entry Warrants held through
one Participant (including participants in CEDEL or Euroclear) may not be
combined with book-entry Warrants held through another Participant in order to
satisfy the minimum exercise requirement.

MAXIMUM EXERCISE AMOUNT

All exercises of Warrants (other than on the Expiration Date or the
Delisting Date) are subject, at the Company's option, to the limitation that not
more than 1,000,000 Warrants in total may be exercised on any Exercise Date and
not more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date. If any New York Business Day would otherwise, under the terms
of the Warrant Agreement, be the Exercise Date in respect of more than 1,000,000
Warrants, then at the Company's election 1,000,000 of such Warrants shall be
deemed exercised on such Exercise Date (selected by the Warrant Agent on a pro
rata basis, but if, as a result of such pro rata selection, any registered
holders of Warrants would be deemed to have exercised fewer than 500 Warrants,
then the Warrant Agent shall first select additional Warrants of such holders so
that no such holder shall be deemed to have exercised fewer than 500 Warrants),
and the remainder of such Warrants (the 'Remaining Warrants') shall be deemed
exercised on the following New York Business Day (notwithstanding the minimum
exercise requirement and subject to successive applications of this provision);
provided that any Remaining Warrant for

S-19
<PAGE>
which an Exercise Notice was delivered on a given Exercise Date shall be deemed
exercised before any other Warrants for which an Exercise Notice was delivered
on a later Exercise Date. If any individual Warrantholder attempts to exercise
more than 250,000 Warrants on any New York Business Day, then at the Company's
election 250,000 of such Warrants shall be deemed exercised on such New York
Business Day and the remainder shall be deemed exercised on the following New
York Business Day (subject to successive applications of this provision). As a
result of any postponed exercise as described above, Warrantholders will receive
a Cash Settlement Value determined as of a date later than the otherwise
applicable Valuation Date. In any such case, as a result of any such
postponement and subject to the Limit Option, the Cash Settlement Value actually

received by Warrantholders may be lower than the otherwise applicable Cash
Settlement Value if the Valuation Date of the Warrants had not been postponed.

LIMIT OPTION

Except for Warrants subject to automatic exercise, each Warrantholder, in
connection with any exercise of Warrants, will have the option (the 'Limit
Option') to specify that such Warrants are not to be exercised if the Spot Rate
that would otherwise be used to determine the Cash Settlement Value of such
Warrants has declined by five or more Japanese yen per U.S. dollar from the Spot
Rate for the day specified below (such Rate, the 'Limit Option Reference Rate').
A Warrantholder's election of the Limit Option must be specified in the
applicable Exercise Notice delivered to the Warrant Agent. If such Exercise
Notice in proper form, together with the related Warrants, is received by the
Warrant Agent by 3:00 P.M., New York City time, on a given day (which must be a
New York Business Day), the Limit Option Reference Rate will be the Spot Rate
for such day. If an Exercise Notice and the related Warrants are received after
3:00 P.M., New York City time, on a given day, the applicable Limit Option
Reference Rate will be the Spot Rate for the next day that is also a New York
Business Day.

To ensure that the Limit Option will have its intended effect of limiting
the risk of any downward movement in the value of the U.S. dollar relative to
the Japanese yen between the date on which a Warrantholder submits an Exercise
Notice and the related Valuation Date, such Exercise Notice and the related
Warrants must be received by the Warrant Agent not later than 3:00 P.M., New
York City time, on the New York Business Day on which they are submitted. See
the illustration under 'Exercise and Settlement of Warrants' above and 'Certain
Risk Factors Relating to the Warrants--Risks Due to Delay or Postponement of
Valuation of Warrants' herein.

Following receipt of an Exercise Notice and the related Warrants subject to
the Limit Option, the Warrant Agent will obtain the applicable Limit Option
Reference Rate from the Spot Rate Reference Agent and will determine whether
such Warrants will not be exercised because of the Limit Option. Warrants that
are not exercised will be treated as not having been tendered for exercise, and
either the Warrant Certificate evidencing such Warrants will be returned to the
registered holder by first-class mail at the Company's expense or, in the case
of Warrants held through the facilities of DTC, CEDEL or Euroclear, such
Warrants will be transferred to the account at DTC, CEDEL or Euroclear, as the
case may be, from which they were transferred to the Warrant Agent. To exercise
such Warrants, a Warrantholder will be required to cause the Warrants and a
related Exercise Notice to be submitted again to the Warrant Agent.

Once elected by a Warrantholder in connection with an exercise of Warrants,
the Limit Option will continue to apply, on the basis of the Limit Option
Reference Rate as initially determined for such Warrants, even if the Valuation
Date for such Warrants is postponed, except when such Valuation Date is
postponed until the Expiration Date or the Delisting Date. Pursuant to the Limit
Option, such Warrants will either (i) be exercised on a delayed basis if the
Spot Rate on any applicable postponed Valuation Date is not less than the Limit
Option Reference Rate by five or more Japanese yen per U.S. dollar or (ii) be
excluded from being exercised if, on any applicable postponed Valuation Date,
the Spot Rate is less than the Limit Option Reference Rate by five or more

Japanese yen per U.S. dollar.

In connection with any exercise of 500 or more Warrants, a Warrantholder
may elect to subject the exercise of only a portion of such Warrants to the
Limit Option, provided that the number of Warrants subject to the Limit Option
and the number of Warrants not subject to the Limit Option shall in each case
not be less than 500. A Warrantholder may not combine certificated and
book-entry Warrants in order to meet the 500-Warrant minimum requirement. See
'Minimum Exercise Amount' above.

S-20
<PAGE>
AUTOMATIC EXERCISE

All Warrants for which the Warrant Agent has not received a valid Exercise
Notice at or prior to 3:00 P.M., New York City time, on the earlier of (i) the
New York Business Day immediately preceding the Expiration Date and (ii) the
Delisting Date, or for which the Warrant Agent has received a valid Exercise
Notice but with respect to which timely delivery of the relevant Warrants has
not been made, will be automatically exercised on such date. The Exercise Date
for such Warrants will be the Expiration Date or the Delisting Date, as the case
may be, or, if such Date is not a New York Business Day, the next succeeding New
York Business Day. The Warrant Agent will obtain from the Spot Rate Reference
Agent the Spot Rate (determined as of the first New York Business Day following
such Date, which will be the Valuation Date for such Warrants) and will
determine the Cash Settlement Value, if any, of such Warrants.

In the case of certificated Warrants subject to automatic exercise, if the
Company has made adequate funds available to the Warrant Agent in a timely
manner as required by the Warrant Agreement, the Warrant Agent will thereafter
be responsible for making a payment available to each registered holder of a
Warrant in the form of a cashier's check or official bank check, or (in the case
of payments of at least $100,000) by wire transfer to a U.S. dollar account
maintained by such holder in the United States (at such holder's election) after
3:00 P.M., New York City time, on the fourth New York Business Day after such
Valuation Date against receipt by the Warrant Agent at the Warrant Agent's
Office of such holder's Warrant Certificates. Such payment will be in an amount
equal to the aggregate Cash Settlement Value of the Warrants evidenced by such
Warrant Certificates.

In the case of book-entry Warrants subject to automatic exercise, the
Company will be required to make available to the Warrant Agent, no later than
3:00 P.M., New York City time, on the fourth New York Business Day after such
Valuation Date, funds in an amount sufficient to pay the aggregate Cash
Settlement Value of such Warrants. If the Company has made such funds available
by such time, the Warrant Agent will thereafter be responsible for making funds
available to DTC in an amount sufficient to pay the aggregate Cash Settlement
Value of the Warrants. DTC will be responsible for disbursing such funds to each
appropriate Participant (including Citibank and Morgan, who, in turn, will
disburse payments to CEDEL and Euroclear, respectively, who will be responsible
for disbursing such payments to each of their respective participants, who, in
turn, will be responsible for disbursing payments to the Warrantholders they
represent), and such Participant will be responsible for disbursing such
payments to the Warrantholders it represents and to each brokerage firm for

which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the Warrantholders it represents.

LISTING

The Warrants have been approved for listing on the NYSE, subject to
official notice of issuance. The NYSE symbol for the Warrants is PWP.WS. The
NYSE expects to cease trading the Warrants on such Exchange as of the close of
business on the Expiration Date. See 'Certain Risk Factors Relating to the
Warrants--Other Considerations' herein.

DELISTING OF WARRANTS

In the event the Warrants are delisted from, or permanently suspended from
trading on (within the meaning of the Securities Exchange Act of 1934 and the
rules and regulations thereunder), the NYSE and not accepted at the same time
for listing on another United States national securities exchange, Warrants not
previously exercised will be deemed automatically exercised on the last New York
Business Day prior to the effective date of such delisting or trading suspension
(the 'Delisting Date'), and the Cash Settlement Value, if any, shall be
calculated and settled as provided above under 'Automatic Exercise'. The Company
will notify Warrantholders as soon as practicable of such delisting or trading
suspension. However, if the Company first receives notice of the delisting or
suspension on the same day on which the Warrants are delisted or suspended, such
day will be deemed the Delisting Date. The Company will covenant in the Warrant
Agreement that it will not seek delisting of the Warrants from, or suspension of
their trading on, the NYSE unless the Company has, at the same time, arranged
for listing of the Warrants on another United States national securities
exchange.

S-21

<PAGE>
EXCHANGE RATES

EXCHANGE RATES

The following table sets forth the average for the months (and partial
month) indicated, as calculated by the Spot Rate Reference Agent, of the daily
noon buying rates per U.S. $1.00 for Japanese yen in New York City based on data
obtained from the Federal Reserve Bank of New York.

<TABLE>
<CAPTION>
YEN /U.S.$1
-----------
<S> <C> <C>
1989: January.................... 127.36
February................... 127.74
March...................... 130.55
April...................... 132.04
May........................ 137.86
June....................... 143.98
July....................... 140.42

August..................... 141.31
September.................. 145.07
October.................... 142.21
November................... 143.53
December................... 143.69

1990: January.................... 144.98
February................... 145.70
March...................... 153.31
April...................... 158.46
May........................ 154.04
June....................... 153.74
July....................... 149.04
August..................... 147.68
September.................. 138.45
October.................... 129.59
November................... 129.22
December................... 133.89

1991: January.................... 133.70
February................... 130.54
March...................... 137.39
April...................... 137.12
May........................ 138.22
June....................... 139.75
July....................... 137.83
August..................... 136.82
September.................. 134.30
October.................... 130.77
November................... 129.63
December................... 128.04

1992: January.................... 125.46
February................... 127.70
March...................... 132.86
April...................... 133.49
May........................ 130.77
June....................... 126.84
July....................... 125.88
August..................... 126.23
September.................. 122.60
October.................... 121.17
November................... 123.88
December................... 124.04
</TABLE>

S-22
<PAGE>
<TABLE>
<CAPTION>
YEN /U.S.$1
-----------
1993: January.................... 124.99
<S> <C> <C>

February................... 120.76
March...................... 117.02
April...................... 112.41
May........................ 110.34
June....................... 107.41
July....................... 107.69
August..................... 103.77
September.................. 105.57
October.................... 107.02
November................... 107.88
December................... 109.87

1994: January.................... 111.44
February................... 106.30
March...................... 105.10
April...................... 103.48
May........................ 103.75
June....................... 102.53
July....................... 98.45
August..................... 99.94
September.................. 98.77
October.................... 98.35
November................... 98.04
December................... 100.18

1995: January.................... 99.77
February................... 98.24
March...................... 90.52
April (through April 24)... 83.79
</TABLE>

The following graph sets forth the movement in such monthly average noon
buying rates for the months (and partial month) presented above:

JAPANESE YEN PER U.S. DOLLAR

MONTHLY AVERAGE NOON BUYING RATES

[GRAPH]

The actual exchange rates for Japanese yen per U.S. $1.00, and the spot
exchange rate determined pursuant to the Warrant Agreement upon exercise of the
Warrants, could materially differ from the noon buying rates as reported by the
Federal Reserve Banks.

S-23

<PAGE>
The information presented in this Prospectus Supplement relating to the
exchange rate of the Japanese yen as compared to the U.S. dollar is furnished as
a matter of information only. Significant and unpredictable fluctuations in the
Japanese yen/U.S. dollar exchange rate have occurred in the past, and it is

impossible to predict the direction, magnitude or frequency of any fluctuations
in that rate that may occur over the term of the Warrants.

The spot exchange rate of the Japanese yen as compared to the U.S. dollar
will be used in calculating the Cash Settlement Value of a Warrant upon
exercise. Appreciation of the U.S. dollar against the Japanese yen (i.e.,
depreciation of the Japanese yen against the U.S. dollar) will result in a
greater Cash Settlement Value. Conversely, depreciation of the U.S. dollar
against the Japanese yen (i.e., appreciation of the Japanese yen against the
U.S. dollar) will result in a lesser or zero Cash Settlement Value.
Warrantholders will thus bear the foreign exchange risk of the U.S. dollar as
compared to the Japanese yen. In addition, in the absence of countervailing
factors, such as an appreciation of the U.S. dollar against the Japanese yen,
the trading value of the Warrants is expected to decrease as the time remaining
to the Expiration Date decreases. See 'Risk Factors--Certain Factors Affecting
Value and Trading Price of Warrants' in the Prospectus.

EXCHANGE CONTROLS

The amended Foreign Exchange and Foreign Trade Control Law of Japan, which
came into effect in 1980, has deregulated external transactions in principle.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes material United States Federal income tax
consequences of the ownership and disposition of a Warrant as of the date hereof
and represents the opinion of Latham & Watkins, special tax counsel to the
Company. Such summary deals only with Warrants held as capital assets by United
States Holders (as defined below) and does not deal with those with special
situations, such as dealers in options or persons who hold a Warrant in the
ordinary course of business, financial institutions, life insurance companies or
purchasers holding Warrants as a part of an integrated transaction such as a
hedging transaction, a straddle or a conversion transaction involving a capital
asset. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the 'Code'), and regulations, rulings
and judicial decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified so as to result in Federal income tax
consequences different from those discussed below. PERSONS CONSIDERING THE
PURCHASE, OWNERSHIP OR DISPOSITION OF WARRANTS SHOULD CONSULT WITH THEIR OWN TAX
ADVISERS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY

OTHER TAXING JURISDICTION.

As used herein, a 'United States Holder' of a Warrant means a holder that
is a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof, or an estate or trust the income of which is
subject to United States Federal income taxation regardless of its source.

TAXATION OF WARRANTS HELD AT THE CLOSE OF TAXABLE YEAR

Each Warrant will be treated as a 'section 1256 contract' which must be
'marked-to-market' (i.e., treated as sold at fair market value) on the last
business day of each taxable year. Under these marked-to-market rules, a United
States Holder of a Warrant will recognize gain or loss equal to the difference
between the fair market

S-24
<PAGE>
value of the Warrant on the last business day of each taxable year (as
determined by the Warrant's trading price) and the United States Holder's tax
basis for the Warrant. A United States Holder's tax basis in a Warrant will
equal the amount paid for the Warrant, plus or minus the net gain or loss
recognized under the marked-to-market rules by the United States Holder in
respect of the Warrant in prior taxable years. As a result of these marked-to-
market rules, a United States Holder might incur Federal income tax liability on
an annual basis in respect of an increase in the value of the Warrant without
the receipt of cash attributable thereto.

SALE, EXCHANGE AND EXERCISE OF WARRANTS

Upon sale, exchange or exercise (including automatic exercise) of a
Warrant, a United States Holder will recognize gain or loss equal to the
difference between the amount realized, if any, and the United States Holder's
tax basis in the Warrant. A holder of a Warrant which expires out-of-the-money
will recognize loss equal to the tax basis of the Warrant.

CHARACTER OF GAIN OR LOSS

In the absence of a section 988 election as described below, any gain or
loss (described above) will be capital gain or loss and will be 60% long-term
capital gain or loss and 40% short-term capital gain or loss. With respect to a
corporate United States Holder, capital losses for a taxable year are allowed
only to the extent of the holder's capital gains for such year, but may be
carried back for three taxable years and carried foward for five taxable years.
With respect to individual United States Holders, in general, capital losses for
the taxable year are allowed only to the extent of the holder's capital gains
for the taxable year plus a maximum of $3,000, but may be carried forward
indefinitely against net capital gains. An individual may elect, however, to
carry net capital losses from section 1256 contracts for the taxable year back
against net capital gains from section 1256 contracts for the three preceding
taxable years. Net long-term capital gains of individuals are generally taxed at
lower rates than items of ordinary income.

A United States Holder may elect under section 988 of the Code (a 'section

988 election') to treat any gain or loss described above as ordinary income or
loss. If made, this election will apply to certain other section 1256 contracts,
such as regulated futures contracts and other nonequity options, held by such
United States Holder during the taxable year for which the election is made or
any succeeding taxable year and may not be revoked without the consent of the
Internal Revenue Service. Such election for any taxable year should be made on
or before the first day of such year or, if later, on or before the first day
during such year on which the United States Holder holds a section 1256
contract. United States Holders should consult with their own tax advisers
concerning the procedures for, and consequences of, making this election.

BACKUP WITHHOLDING

The proceeds received from a sale, exchange or exercise (including
automatic exercise) of a Warrant will be subject to a 31 percent backup
withholding tax if the United States Holder thereof (other than certain exempt
recipients such as corporations which, when required, demonstrate this fact)
fails to supply an accurate taxpayer identification number or otherwise comply
with applicable information reporting or certification requirements. Any amount
of backup withholding tax will be creditable against the Holder's United States
Federal income tax liability.

S-25
<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement
dated the date hereof (the 'Underwriting Agreement'), the Company has agreed to
sell to each of the underwriters named below (the 'Underwriters'), and each of
the Underwriters has severally agreed to purchase, the number of Warrants set
forth opposite its name.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS WARRANTS
- --------------------------------------------- ----------
<S> <C>
PaineWebber Incorporated..................... 525,000
Oppenheimer & Co., Inc....................... 525,000
----------
Total.............................. 1,050,000
----------
----------
</TABLE>

The Underwriters have advised the Company that they propose to offer the
Warrants to the public initially at the offering price set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less a
concession not in excess of $.16 per Warrant. The Underwriters may allow and
such dealers may reallow a concession not in excess of $.10 per Warrant to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed.

The Underwriters have taken certain actions to discourage short-term
trading of the Warrants during a period of time following the initial offering
date. Included in these actions is the withholding of the concession to dealers
in connection with the Warrants which were sold by such dealers and which are
repurchased for the account of the Underwriters during such period. In addition,
physical delivery of Warrant Certificates evidencing the Warrants is required to
transfer ownership of such Warrants during such period.

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all the Warrants if any are purchased.

The Company has agreed to indemnify the Underwriters against, and to
contribute to losses arising out of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.

PaineWebber Incorporated is a wholly owned subsidiary of the Company. The
participation of PaineWebber Incorporated in the offer and sale of the Warrants
complies with the requirements of Schedule E of the By-Laws of the NASD
regarding underwriting securities of an affiliate. Under the provisions of
Schedule E, when a NASD member such as PaineWebber Incorporated distributes
securities of an affiliate, the price of the securities can be no higher than
that recommended by a 'qualified independent underwriter', as such term is
defined in Schedule E, meeting certain standards. In accordance with such
requirements, Oppenheimer & Co., Inc. has agreed to serve as 'qualified
independent underwriter' and has conducted due diligence and has recommended a
price for the Warrants in compliance with the requirements of Schedule E.

Each Underwriter has represented that (i) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Warrants in, from or otherwise
involving the United Kingdom and (ii) it has only issued or passed on, and will
only issue or pass on, in the United Kingdom any document received by it in
connection with the issue of the Warrants to a person who is of a kind described
in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1988 or is a person to whom the document may otherwise
lawfully be issued or passed on.

LEGAL OPINIONS

The validity of the Warrants will be passed upon for the Company by
Cravath, Swaine & Moore, New York, New York, and for the Underwriters by Latham
& Watkins, New York, New York.

S-26

<PAGE>
APPENDIX A

INDEX OF TERMS

<TABLE>
<CAPTION>
PAGE ON WHICH
TERM TERM IS DEFINED
---------------------------------------- ---------------

<S> <C>
Cash Settlement Value................... S-13
CEDEL................................... S-16
Citibank................................ S-16
Code.................................... S-24
Company................................. S-8
Conversion Option....................... S-10
Conversion Option Period................ S-15
Cooperative............................. S-16
Delisting Date.......................... S-21
Depositaries............................ S-16
DTC..................................... S-10
Euroclear............................... S-16
Euroclear Operator...................... S-16
Exercise Date........................... S-17
Exercise Notice......................... S-17
Expiration Date......................... S-17
Limit Option............................ S-20
Limit Option Reference Rate............. S-20
Morgan.................................. S-16
NASD.................................... S-8
New York Business Day................... S-7
Noon Buying Rate........................ S-13
NYSE.................................... S-7
PaineWebber............................. S-3
Participant............................. S-10
Remaining Warrants...................... S-19
Spot Rate............................... S-13
Spot Rate Reference Agent............... S-19
Strike Rate............................. S-13
Underwriters............................ S-26
Underwriting Agreement.................. S-26
Valuation Date.......................... S-18
Warrant Agent........................... S-13
Warrant Agent's Office.................. S-13
Warrant Agreement....................... S-13
Warrant Certificate..................... S-14
Warrantholder........................... S-8
Warrants................................ S-3
</TABLE>

A-1

<PAGE>
PROSPECTUS

PAINE WEBBER GROUP INC.
EXCHANGE RATE CURRENCY WARRANTS
------------------------

Paine Webber Group Inc. (the 'Company') intends to issue from time to time
up to $56,082,500 of its exchange rate currency warrants entitling the holders
thereof to receive from the Company, upon exercise, the cash settlement value,
if any, in U.S. dollars of the right to purchase ('Currency Call Warrants') or
to sell ('Currency Put Warrants') an amount of non-U.S. currency or currencies
for a specified amount of U.S. dollars, as determined by the Company at the time
of the offering. Such amount will be based on either (i) the rate of exchange of
the U.S. dollar as compared to a specified non-U.S. currency or units of two or
more specified non-U.S. currencies (the 'Reference Currency') or (ii) the rate
of exchange of the U.S. dollar determined by reference to an index of two or
more specified non-U.S. currencies or currency units (the 'Index Currencies')
(such an index of Index Currencies being referred to hereinafter as a 'Currency
Index'). In the case of a particular Currency Index, additions, deletions or
substitutions of Index Currencies included therein may occur if, in the view of
the publisher of such Currency Index, a particular Index Currency is no longer
appropriate for inclusion therein. See 'Risk Factors -- Potential Modifications
of Currency Indices' herein. The Currency Call Warrants and the Currency Put
Warrants are hereinafter collectively referred to as the 'Warrants'. The
Warrants will be offered on specific terms to be determined at the time of sale.

With regard to the Warrants in respect of which this Prospectus is being
delivered, the Prospectus Supplement sets forth (i) the aggregate amount and
offering price of such Warrants, (ii) the particular Reference Currency or
Currency Index (including each Index Currency included therein), as applicable,
to which the cash settlement value of such Warrants is related, (iii) whether
such Warrants are Currency Put Warrants or Currency Call Warrants, (iv) the date
on which the right to exercise such Warrants commences and the expiration date
of such Warrants, (v) the manner in which such Warrants may be exercised and any
restrictions on, or other special provisions relating to, the exercise of such
Warrants, (vi) whether and under what circumstances such Warrants may be
cancelled by the Company prior to their expiration date, (vii) the method of
determining the amount payable in connection with the exercise or cancellation
of such Warrants, including, if the Warrants relate to a particular Currency
Index, the predetermined amount to which the level of the Currency Index upon
exercise of such Warrants is compared and the method of translating movements in
the level of the Currency Index into a cash amount in U.S. dollars, (viii) the
amount payable on cancellation of such Warrants, if applicable (the
'Cancellation Amount'), and the predetermined sum or range of sums (the 'Minimum
Expiration Value'), if any, payable in certain circumstances upon expiration or
exercise of such Warrants, (ix) any national securities exchange on which such
Warrants will be listed, (x) certain U.S. Federal income tax consequences
relating to such Warrants and (xi) any other specific terms of, or information
regarding, such Warrants.

The Warrants are unsecured contractual obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness of the

Company.

THE WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING FOREIGN EXCHANGE
RISKS. PURCHASERS SHOULD RECOGNIZE THAT THEIR WARRANTS, OTHER THAN WARRANTS
HAVING A MINIMUM EXPIRATION VALUE, MAY EXPIRE WORTHLESS. PURCHASERS SHOULD BE
PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF THEIR WARRANTS, AND
ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION UNDER 'RISK FACTORS' HEREIN
AND THE INFORMATION REGARDING THE WARRANTS AND, IN THE CASE OF WARRANTS RELATING
TO A PARTICULAR CURRENCY INDEX, THE CURRENCY INDEX SET FORTH IN THE PROSPECTUS
SUPPLEMENT.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

The Warrants may be sold by the Company directly to purchasers, through
agents designated from time to time, through underwriting syndicates led by one
or more managing underwriters or through one or more underwriters. Any such
managing underwriters, underwriters or agents may include PaineWebber
Incorporated ('PaineWebber'). If underwriters or agents are involved in the
offering of any Warrants, the names of such underwriters or agents will be set
forth in the Prospectus Supplement. If an underwriter, agent or dealer is
involved in the offering of any Warrants, the underwriter's discount, agent's
commission or dealer's purchase price will be set forth in, or may be calculated
from the information set forth in, the Prospectus Supplement, and the net
proceeds to the Company from such offering will be the public offering price of
the Warrants less such discount in the case of an offering through an agent, and
less, in each case, the other expenses of the Company associated with the
issuance and distribution of the Warrants.

PaineWebber expects to offer and sell issued Warrants from time to time in
the course of its business as a broker-dealer. PaineWebber may act as principal
or agent in such transactions. This Prospectus and the related Prospectus
Supplement may be used by PaineWebber in connection with such transactions. See
'Plan of Distribution' herein.

------------------------

PAINEWEBBER INCORPORATED
------------------------

The date of this Prospectus is July 20, 1994.

<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). Reports, proxy statements

and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained upon
written request addressed to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports,
proxy statements and other information concerning the Company may be inspected
at the offices of The New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005, and The Pacific Stock Exchange, 115 Sansome Street, Suite 1004,
San Francisco, California 94104.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act'), relating to the Warrants. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act are incorporated herein by reference: (i) the
Annual Report on Form 10-K (including the portions of the Company's annual
report to stockholders incorporated by reference therein) for the year ended
December 31, 1993 (the '1993 Form 10-K'); (ii) the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994; and (iii) the Current Reports on Form 8-K
dated January 27, 1994, March 17, 1994, March 18, 1994 and June 15, 1994.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Warrants shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.

Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, on the written
or oral request of any such person, a copy of any or all of the documents
incorporated herein by reference, except the exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to Assistant Secretary, Paine Webber
Group Inc., 1285 Avenue of the Americas, New York, New York 10019; telephone
(212) 731-2722.

------------------------

References herein to 'U.S. dollar', 'dollar', 'U.S.$' or '$' are to the
lawful currency of the United States of America.

2
<PAGE>
RISK FACTORS

The Warrants involve a high degree of risk, including foreign exchange
risks. Prospective purchasers of the Warrants should recognize that their
Warrants, other than any Warrants having a Minimum Expiration Value, may expire
worthless. Purchasers should be prepared to sustain a total loss of the purchase
price of their Warrants. Prospective purchasers of the Warrants should be
experienced with respect to options and options transactions, should understand
the risks of foreign currency transactions and should reach an investment
decision only after careful consideration, with their advisers, of the
suitability of the Warrants in light of their particular financial
circumstances, the information set forth below and under 'Description of
Warrants' herein and the information regarding the Warrants and, in the case of
Warrants relating to a particular Currency Index, the Currency Index set forth
in the Prospectus Supplement.

POSSIBLE ILLIQUIDITY OF SECONDARY MARKET

It is not possible to predict the price at which the Warrants will trade in
the secondary market or whether such market will be liquid or illiquid. If
additional warrants or options relating to particular non-U.S. currencies or
particular currency indices are subsequently offered to the public, the supply
of warrants and options relating to such non-U.S. currencies or currency
indices, as applicable, in the market will increase, which could cause the price
at which the Warrants and such other warrants and options trade in the secondary
market to decline significantly. The Company intends to list the Warrants of
each issue on a national securities exchange. In the event of a delisting or
suspension of trading on such exchange, the Company will use its best efforts to
list the Warrants on another national securities exchange. If the Warrants are
not listed or traded on any securities exchange, pricing information for the
Warrants may be more difficult to obtain and the liquidity of the Warrants may
be adversely affected. To the extent Warrants are exercised, the number of
Warrants outstanding will decrease, resulting in a lessening of the liquidity of
the Warrants. A lessening of the liquidity of the Warrants may cause, in turn,
an increase in volatility associated with the price of the Warrants.

RELATIONSHIP BETWEEN CASH SETTLEMENT VALUE AND FOREIGN EXCHANGE RATE OR CURRENCY
INDEX LEVEL

Each Warrant will entitle the beneficial owner thereof (the
'Warrantholder') to receive from the Company upon exercise thereof a cash value
(the 'Cash Settlement Value') that (i) in the case of a Currency Put Warrant,
will be determined by reference to the amount, if any, by which a predetermined
exchange rate of a Reference Currency as compared to the U.S. dollar or a
predetermined level or range of levels of a Currency Index, as applicable (the
'Strike Rate'), exceeds the then-current spot exchange rate of such Reference

Currency as compared to the U.S. dollar or the then-current level or range of
levels of such Currency Index, as applicable (the 'Spot Rate'), and (ii) in the
case of a Currency Call Warrant, will be determined by reference to the amount,
if any, by which the Spot Rate at the time of exercise of such Warrant exceeds
the Strike Rate. However, a Warrantholder will receive a cash payment upon
exercise only if the Warrants are 'in-the-money' -- that is, having a Cash
Settlement Value greater than zero at the time -- except that, in the case of
any Warrants having a Minimum Expiration Value, in certain circumstances the
Warrantholder will receive upon expiration or exercise a cash payment in an
amount equal to the greater of the applicable Cash Settlement Value and such
Minimum Expiration Value. The Cash Settlement Value of a Currency Put Warrant
will be greater than zero only if the Spot Rate on the applicable valuation date
following exercise is less than the Strike Rate for such Warrant (that is, if
the Reference Currency or the Index Currencies (on average), as applicable,
appreciates against the U.S. dollar). The Cash Settlement Value of a Currency
Call Warrant will be greater than zero only if the Spot Rate for such Warrant is
greater than the Strike Rate on the applicable valuation date following exercise
(that is, if the Reference Currency or the Index Currencies (on average), as
applicable, depreciates against the U.S. dollar).

EXTRAORDINARY EVENTS; EXERCISE LIMITATION EVENTS; CANCELLATION OF WARRANTS;
DELAYED EXERCISE

If so specified in the Prospectus Supplement, the Warrants of an issue may
be cancelled by the Company upon the occurrence of one or more events
('Extraordinary Events') described in the Prospectus Supplement. In such event,
Warrantholders will have the right to receive only the Cancellation Amount,
which may be a

3
<PAGE>
predetermined amount, or an amount to be determined in accordance with a
predetermined formula, specified in such Prospectus Supplement. Certain events
that may constitute Extraordinary Events and therefore lead to cancellation of
the Warrants of an issue may be events that would tend to increase the Cash
Settlement Value otherwise applicable to the Warrants of such issue. In
addition, if so specified in the Prospectus Supplement, any exercise of the
Warrants may be suspended by the Company, and the valuation of and payment for
such Warrants may be postponed and/or the determination of the Cash Settlement
Amount thereof may be made on a different basis, upon the occurrence of an
Extraordinary Event or certain other events ('Exercise Limitation Events')
specified in the Prospectus Supplement.

CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS

Unless otherwise specified in the Prospectus Supplement, the Warrants of
each issue will have a Cash Settlement Value of zero at the time of the initial
public offering of such Warrants. The Cash Settlement Value of the Warrants at
any time prior to expiration is expected typically to be less than the trading
price of the Warrants at that time. The difference between the trading price and
the Cash Settlement Value will reflect, among other things, a 'time value' for
the Warrants. The 'time value' of the Warrants will depend partly upon the
length of the period remaining to expiration and expectations concerning the
value of the Reference Currency or Index Currencies, as applicable, as compared

to the U.S. dollar during such period. Unless otherwise specified in the
applicable Prospectus Supplement, the expiration date of the Warrants of a
particular issue will be accelerated should such Warrants be delisted from, or
should there be a permanent suspension of their trading on, any national
securities exchange on which such Warrants are traded, unless such Warrants
simultaneously are accepted for listing on another national securities exchange.
Any such acceleration would result in the total loss of any otherwise remaining
'time value', and could occur when such Warrants are out-of-the-money, thus
resulting in the total loss of the purchase price of such Warrants.

Warrantholders should be aware that PaineWebber and its affiliates take
positions in various non-U.S. currencies, including, from time to time, a
Reference Currency or one or more Index Currencies, as applicable, to facilitate
client transactions and as principal positions for PaineWebber's or such
affiliates' own accounts. Through such activities, PaineWebber and its
affiliates may take positions in a Reference Currency or one or more Index
Currencies, as applicable, that are inconsistent with an investment in the
Warrants.

Before exercising or selling Warrants, Warrantholders should carefully
consider, among other things, (i) the trading price of the Warrants, (ii) the
exchange rate or rates of the Reference Currency or Index Currencies, as
applicable, as compared to the U.S. dollar at such time, (iii) the time
remaining to expiration, (iv) the probable range of Cash Settlement Values, (v)
any Minimum Expiration Value and (vi) any related transaction costs.

The trading price of a Warrant at any time is expected to be dependent on
(i) the relationship between the Strike Rate and the Spot Rate at such time,
(ii) any Minimum Expiration Value and (iii) a number of other interrelated
factors, including those listed below. The relationship among these factors is
complex. However, the expected effect on the trading price of a Warrant of each
of the factors listed below, assuming in each case that all other factors are
held constant, is as follows:

(1) The prevailing Spot Rate of the Reference Currency or any Index
Currency. If the value of the Reference Currency or any Index Currency, as
applicable, falls in relation to the U.S. dollar, the trading price of a
Currency Call Warrant is expected to increase and the trading price of a
Currency Put Warrant is expected to decrease; if the value of the Reference
Currency or any Index Currency, as applicable, rises in relation to the
U.S. dollar, the trading price of a Currency Call Warrant is expected to
decrease and the trading price of a Currency Put Warrant is expected to
increase.

(2) The volatility of the exchange rate of the Reference Currency or
any Index Currency. If the volatility of the exchange rate of the Reference
Currency or any Index Currency, as applicable, as compared to the U.S.
dollar, increases, the trading price of both Currency Put and Call Warrants
is expected to increase; if such volatility decreases, the trading price of
both Currency Put and Call Warrants is expected to decrease.

4
<PAGE>
(3) The time remaining to the expiration date of the Warrants. As the

time remaining to the expiration date of the Warrants decreases, the
trading price of the Warrants is expected to decrease.

(4) The interest rate differential between U.S. dollar and Reference
Currency or Index Currency fixed income instruments. If interest rates
applicable to fixed income instruments denominated in a Reference Currency
or any Index Currency, as applicable, increase relative to interest rates
applicable to fixed income instruments denominated in U.S. dollars, the
value of the Reference Currency or Index Currency, as applicable, in
relation to the U.S. dollar is expected to increase and, as a result, the
trading price of Currency Put Warrants is expected to increase and the
trading price of Currency Call Warrants is expected to decrease. If
interest rates applicable to fixed income instruments denominated in U.S.
dollars increase relative to interest rates applicable to fixed income
instruments denominated in a Reference Currency or any Index Currency, as
applicable, the trading price of Currency Put Warrants is expected to
decrease and the trading price of Currency Call Warrants is expected to
increase.

As noted above, these hypothetical scenarios are based on the assumption that
all other factors are held constant. In reality, it is unlikely that only one
factor would change in isolation, because changes in one factor usually cause,
or result from, changes in others. Some of the factors referred to above are in
turn influenced by various political, economic and other factors referred to
herein and in the Prospectus Supplement.

TIME LAG AFTER EXERCISE AND POTENTIAL INTERIM CHANGES IN SPOT RATE

Unless otherwise specified in the Prospectus Supplement, in the case of
any exercise of Warrants, there will be a time lag between the time a
Warrantholder gives instructions to exercise and the time the Spot Rate relating
to such exercise, and thus the Cash Settlement Value, is determined. Unless
otherwise specified in the Prospectus Supplement, the delay will, at a minimum,
amount to an entire day and could be significantly longer, particularly in the
case of a delay in exercise of Warrants arising from any daily maximum exercise
limitation, as described in the immediately following paragraph, or following
the occurrence of an Extraordinary Event or an Exercise Limitation Event, as
described under 'Extraordinary Events; Exercise Limitation Events; Cancellation
of Warrants; Delayed Exercise' above. The Spot Rate may change significantly
during any such period, and such movement or movements could decrease the Cash
Settlement Value of the Warrants being exercised and may result in such Cash
Settlement Value being zero.

LIMITATIONS ON EXERCISE

If so indicated in the Prospectus Supplement, the Company will have the
option to limit the number of Warrants exercisable on any date to the maximum
number specified in the Prospectus Supplement and, in conjunction with such
limitation, to limit the number of Warrants exercisable by any person or entity
on such date. In the event that the total number of Warrants being exercised on
any date exceeds such maximum number and the Company elects to limit the number
of Warrants exercisable on such date, a Warrantholder may not be able to
exercise on such date all Warrants that such holder desires to exercise.
Warrants to be exercised on such date will be selected on a pro rata basis or in

any other manner specified in the Prospectus Supplement. Unless otherwise
specified in the Prospectus Supplement, the Warrants tendered for exercise but
not exercised on such date will be automatically exercised on the next date on
which Warrants may be exercised, subject to the same daily maximum limitation
and delayed exercise provisions described in this paragraph. Unless otherwise
specified in the Prospectus Supplement, any such limitation will not apply in
the event of automatic exercise, including at expiration.

MINIMUM EXERCISE AMOUNT

If so indicated in the Prospectus Supplement, a Warrantholder must tender a
specified minimum number of Warrants at any one time in order to exercise
(except in the event of automatic exercise, including at expiration). Thus,
except in such an event, Warrantholders with fewer than the specified minimum
number of Warrants will either have to sell their Warrants or purchase
additional Warrants, incurring transaction costs in each case, in

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<PAGE>
order to realize upon their investment. Furthermore, such Warrantholders incur
the risk that there may be differences between the trading price of the Warrants
and the Cash Settlement Value of such Warrants.

OFFERING PRICE OF WARRANTS

The initial offering price of Warrants may be in excess of the price that a
commercial user of a Reference Currency or Index Currencies, as applicable,
might pay in the interbank market for a comparable option involving
significantly larger amounts of underlying non-U.S. currencies.

CERTAIN RISK CONDITIONS

The purchaser of a Warrant may lose his entire investment except, if so
indicated in the Prospectus Supplement, to the extent of any Minimum Expiration
Value attributable to such Warrant. This risk reflects the nature of a Warrant
as an asset which, other factors held constant, tends to decline in value over
time and which may, depending on the prevailing Spot Rate as compared to the
Strike Rate, become worthless when it expires (except to the extent of any
Minimum Expiration Value). Assuming all other factors are held constant, the
more a Warrant is 'out-of-the-money' and the shorter its remaining term to
expiration, the greater the risk that a purchaser of the Warrant will lose all
or part of his investment. This means that if (a) in the case of a Currency Put
Warrant, the Spot Rate at expiration is greater than or equal to the Strike Rate
or (b) in the case of a Currency Call Warrant, the Spot Rate at expiration is
less than or equal to the Strike Rate, then a Warrantholder who has not sold his
Warrant in the secondary market prior to expiration will necessarily lose his
entire investment in the Warrant upon expiration (except to the extent of any
Minimum Expiration Value).

The risk of the loss of some or all of the purchase price of a Warrant upon
expiration means that, in order to recover and realize a return upon his
investment, a purchaser of a Warrant must generally be correct about both the
direction, timing and magnitude of an anticipated change in the value of the
relevant Reference Currency or Index Currencies, as applicable, in relation to

the U.S. dollar. If the Spot Rate as compared to the Strike Rate does not
decline, in the case of a Currency Put Warrant, or does not rise, in the case of
a Currency Call Warrant, before the Warrant expires to an extent sufficient to
cover a purchaser's cost of the Warrant (i.e., the purchase price plus
transaction costs, if any), the purchaser will lose all or part of his
investment in such Warrant upon expiration. Warrantholders will thus bear the
foreign exchange risks of the U.S. dollar in relation to the relevant Reference
Currency or Index Currencies, as applicable.

CERTAIN FACTORS AFFECTING CURRENCY INDICES

With regard to a Warrant relating to a particular Currency Index, the Cash
Settlement Value of such Warrant at any time will depend primarily on the level
of such Currency Index at such time in relation to the Strike Rate, which level
in turn will be based primarily on the rates of exchange of the relevant Index
Currencies as compared to the U.S. dollar. Prospective purchasers of Warrants
should familiarize themselves with the basic features of the relevant Currency
Index, including the Index Currencies included therein and the general method of
calculation of such Currency Index. The general method of calculation of a
Currency Index can influence significantly the relationship between movements in
the rates of exchange of the Index Currencies included in such Currency Index as
compared to the U.S. dollar and changes in the level of such Currency Index. For
example, the weight accorded to a particular Index Currency within a Currency
Index can alter such relationship. To illustrate this point, assuming that a
particular Currency Index included within it the Australian dollar and the Swiss
franc as its Index Currencies, if the Australian dollar was more heavily
weighted than the Swiss franc within such Currency Index, movements in the rate
of exchange of the Australian dollar as compared to the U.S. dollar would have a
greater influence on the level of such Currency Index than would corresponding
movements in the rate of exchange of the Swiss franc as compared to the U.S.
dollar. Alternatively, in the foregoing illustration, if the Australian dollar
and the Swiss franc were equally weighted in such Currency Index, movements in
the rates of exchange of the Australian dollar and the Swiss franc as compared
to the U.S. dollar would influence the level of such Currency Index equally.
Consequently, prospective purchasers are advised to consider carefully the

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<PAGE>
information set forth in the Prospectus Supplement regarding the Currency Index,
the Index Currencies and the method of calculation of the Currency Index.

The rates of exchange of the Index Currencies as compared to the U.S.
dollar primarily will determine the level of the related Currency Index.
Prospective purchasers of Warrants relating to a particular Currency Index
should recognize that it is impossible to predict whether the level of such
Index will rise or fall. As noted below under 'Certain Foreign Currency Exchange
Risks', the rates of exchange of the Index Currencies as compared to the U.S.
dollar will be influenced by the complex and interrelated political, economic,
financial and other factors that can affect the interbank market in currencies
generally.

EFFECT OF CREDIT RATING REDUCTION

The value of the Warrants is expected to be affected, in part, by

investors' general appraisal of the Company's creditworthiness. Such perceptions
are generally influenced by the ratings accorded to the Company's outstanding
securities by the standard statistical rating services, such as Moody's
Investors Service, Inc. and Standard & Poor's Corporation. A reduction in the
rating, if any, accorded to outstanding debt securities of the Company by one of
these rating agencies could result in a reduction in the trading value of the
Warrants.

WARRANTS ARE UNSECURED OBLIGATIONS

The Warrants are unsecured contractual obligations of the Company and will
rank on a parity with the Company's other unsecured contractual obligations and
with the Company's unsecured and unsubordinated debt. The Company may issue
several issues of Warrants relating to various Reference Currencies or Currency
Indices. However, no assurance can be given that the Company will issue any
Warrants other than the Warrants to which a particular Prospectus Supplement
relates. At any given time the number of Warrants outstanding may be
substantial. Options and warrants provide opportunities for investment and pose
risks to investors as a result of fluctuations in the value of the underlying
investment. In general, certain of the risks associated with the Warrants are
similar to those generally applicable to other options or warrants of private
corporate issuers. However, unlike options or warrants on equities or debt
securities, which are priced primarily on the basis of the value of a single
underlying security, the trading value of a Warrant is likely to reflect
primarily present and expected rates of exchange of the Reference Currency or
Index Currencies, as applicable, as compared to the U.S. dollar.

The Warrants are not standardized foreign currency options of the type
issued by the Options Clearing Corporation (the 'OCC'), a clearing agency
regulated by the Commission. For example, unlike purchasers of OCC standardized
options who have the credit benefits of guarantees and margin and collateral
deposits by OCC clearing members to protect the OCC from a clearing member's
failure, purchasers of Warrants must look solely to the Company for performance
of its obligations to pay the Cash Settlement Value or, if applicable, the
Minimum Expiration Value upon the exercise or expiration of the Warrants. In
addition, OCC standardized options provide for physical delivery of the
underlying foreign currency (rather than cash settlement in U.S. dollars), and
permit immediate determination of value upon exercise. Further, the market for
the Warrants is not expected to be generally as liquid as the market for some
OCC standardized options.

POTENTIAL MODIFICATIONS OF CURRENCY INDICES

With regard to Warrants relating to a particular Currency Index, such Index
may be compiled and published by either a third party or the Company or an
affiliate of the Company. If such Index is compiled and published by the Company
or any such affiliate, such Index will be based on a group of Index Currencies
selected by the Company or such affiliate solely in connection with the issuance
of such Warrants. The policies of the publisher of the Currency Index concerning
additions, deletions and substitutions of Index Currencies and the manner in
which Currency Index calculations take account of certain changes affecting the
Index Currencies can significantly affect the performance of such Currency
Index. Additions, deletions or substitutions of Index Currencies may be
occasioned by the publisher's view that a particular Index Currency is no longer

appropriate

7
<PAGE>
for inclusion in the applicable Currency Index due to, for example, the
absorption of such Index Currency into a currency or monetary unit comprising
one or more other non-U.S. currencies. Although in the Company's view the
absorption of any Index Currency is unlikely to occur, the European Economic
Community has been seeking the approval of each of its member nations to issue a
new currency -- the European Currency Unit or ECU -- that would absorb and
replace the individual currencies issued by such member nations. To the extent a
particular Currency Index includes an Index Currency issued by any such member
nation at the time, if at all, such Index Currency is absorbed into and replaced
by the ECU, the publisher of such Currency Index could choose to replace such
absorbed Index Currency with another Index Currency and assign either the weight
previously accorded to the replaced Index Currency to the replacement Index
Currency or a greater or lesser weight, or it could choose not to replace such
absorbed Index Currency and re-weight the remaining Index Currencies within such
Currency Index equally or otherwise, depending on its policies. Although a
Currency Index is normally calculated in a manner intended to ensure that such
additions, deletions, substitutions and changes do not, by themselves,
instantaneously change the level of the Currency Index, the level of the
Currency Index over time may be influenced by changes in the composition and
characteristics of the Index Currencies. Whether to add, delete or substitute
Index Currencies, and the method of adjusting the Currency Index in respect of
changes affecting the Index Currencies, are typically solely within the
discretion of the publisher of the Currency Index. In contrast to standardized
stock index options of the type issued by the OCC, the terms of which may be
adjusted if the publisher of the related stock index changes the composition or
method of calculation of such stock index in a manner that causes a significant
discontinuity in the index level, the terms of the Warrants will not be adjusted
as a result of changes in the related Currency Index.

The publisher of a Currency Index may replace such Currency Index with a
successor index or may cease publishing such Index entirely. The Prospectus
Supplement specifies how the Cash Settlement Value of the related Warrants will
be determined in such circumstances. Although the method used will generally be
intended to enable Cash Settlement Values to be determined on as consistent a
basis as practicable, discontinuities may arise in such circumstances. Moreover,
information regarding the current level of certain substitute indices may not be
readily available to Warrantholders, which may adversely affect the trading
market for their Warrants.

CERTAIN CONSIDERATIONS REGARDING HEDGING

Prospective purchasers intending to purchase Warrants to hedge against the
market risk associated with investing in a Reference Currency or Index
Currencies, as applicable, should recognize the complexities of utilizing
Warrants in this manner. For example, the value of the Warrants may not exactly
correlate with the value of the Reference Currency or Index Currencies, as
applicable. Due to fluctuating supply and demand for the Warrants, there is no
assurance that their value will correlate with movements of the Reference
Currency or Index Currencies, as applicable, until their expiration.

CERTAIN FOREIGN CURRENCY EXCHANGE RISKS

The value of any currency, including the U.S. dollar and any Reference
Currency or Index Currency designated in the applicable Prospectus Supplement,
may be affected by complex political and economic factors. The spot exchange
rate of any Reference Currency or Index Currency as compared to the U.S. dollar
is at any moment a result of the supply of and demand for such Currency, and
changes in such rate result over time from the interaction of many factors
directly or indirectly affecting economic and political conditions in the
foreign country which has such Currency as its currency and in the United
States, including economic and political developments in other countries. Of
particular importance are the relative rates of inflation, interest rate levels,
the balance of payments and the extent of governmental surpluses or deficits in
the relevant foreign country and in the United States, all of which are in turn
sensitive to the monetary, fiscal and trade policies pursued by the governments
of the relevant foreign country, the United States and other countries important
to international trade and finance.

Such information relating to any relevant foreign country may not be as
well known or as rapidly or thoroughly reported in the United States as
comparable United States developments. Prospective purchasers of

8
<PAGE>
Warrants should be aware of the possible lack of availability of important
information that can affect the value of any Reference Currency or Index
Currency in relation to the U.S. dollar and must be prepared to make special
efforts to obtain such information on a timely basis.

Foreign exchange rates can either be fixed by sovereign governments or
float. Exchange rates of most economically developed nations, including each
foreign country which has a Reference Currency or an Index Currency as its
currency, are permitted to fluctuate in value relative to the U.S. dollar.
Governments, however, sometimes do not allow their currencies to float freely in
response to economic forces. Sovereign governments in fact use a variety of
techniques, such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of their currencies.
Governments may also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by devaluation or
revaluation of a currency. Thus, a special risk in purchasing Warrants is that
their liquidity, trading value and Cash Settlement Value could be affected by
governmental actions which could change or interfere with theretofore freely
determined currency valuation, fluctuations in response to other market forces
and the movement of currencies across borders. There will be no adjustment or
change in the terms of the Warrants in the event that exchange rates should
become fixed, or in the event of any devaluation or revaluation or imposition of
exchange or other regulatory controls or taxes, or in the event of other
developments affecting any Reference Currency or Index Currency, the U.S. dollar
or any other currency. In contrast, the OCC has reserved the authority to adjust
the terms of its standardized options for certain governmental actions and to
impose special exercise settlement procedures.

The interbank market in foreign currencies is a global, around-the-clock
market. Therefore, the hours of trading for the Warrants will not conform to the

hours during which any Reference Currency or Index Currency and the U.S. dollar
are traded. To the extent that any national securities exchange on which the
Warrants are traded is closed while the market for a particular Reference
Currency or Index Currency remains open, significant price and rate movements
may take place in the underlying foreign exchange markets that will not be
reflected immediately in the price of a Warrant on such exchange. The
possibility of such movements should be taken into account in relating closing
prices for the Warrants on such exchange to prices and rates in the underlying
foreign exchange markets.

There is no systematic reporting of last-sale information for foreign
currencies. Reasonably current bid and offer information is available on the
floor of any exchange where foreign currency is traded, in certain brokers'
offices, in bank foreign currency trading offices, and to others who wish to
subscribe for this information, but such information will not necessarily
reflect the particular quoted rate, which is designated in the applicable
Prospectus Supplement, used to calculate the Spot Rate. There is no regulatory
requirement that available bid and offer information be firm or revised on a
timely basis. The absence of last-sale information and the limited availability
of quotations to individual investors may make it difficult for many investors
to obtain timely, accurate data about the state of the underlying foreign
exchange market. In addition, the quotation information that is available is
representative of very large round lot or 'wholesale' transactions in the
interbank market and does not reflect exchange rates for smaller odd lot or
'retail' transactions. Because more favorable rates are generally obtained in
large transactions, the rate that will be obtained at any given time in
connection with the exercise of a small aggregate number of Warrants is likely
to be less favorable than the rates reported in quotation information generally
available to investors at such time.

In general, a wholesale, round lot quote would be obtained in a transaction
valued at approximately $5 million or more and a retail, odd lot quote would be
obtained in a transaction valued at less than approximately $5 million.
Furthermore, the difference between a wholesale, round lot quote and a retail,
odd lot quote generally would not be expected to exceed approximately one
percent. However, on any given day and in the context of any particular
transaction, the distinction between, and the size of, a wholesale, round lot
transaction and a retail, odd lot transaction and the variation of the
difference between the related quotes can vary, in some cases materially,
because of the many factors that influence the foreign exchange market, as more
fully discussed above. Accordingly, no assurance can be given as to whether the
aggregate number of Warrants exercised on any day will constitute a wholesale,
round lot transaction or a retail, odd lot transaction or as to the quotes to be
obtained in connection therewith.

9
<PAGE>
PAINE WEBBER GROUP INC.

Paine Webber Group Inc. is a holding company which, together with its
operating subsidiaries, forms one of the largest full-service securities and
commodities firms in the industry. Founded in 1879, the Company employs
approximately 14,400 people in 281 offices worldwide. The Company's principal
line of business is to serve the investment and capital needs of individual,

corporate, institutional and public agency clients through its broker-dealer
subsidiary, PaineWebber Incorporated ('PaineWebber'), and other specialized
subsidiaries. The Company holds memberships in all major securities and
commodities exchanges in the United States, and makes a market in many
securities traded on the Automated Quotation System of the National Association
of Securities Dealers, Inc. ('NASD') or in other over-the-counter markets.
Additionally, PaineWebber is a primary dealer in U.S. government securities.

The Company is comprised of four interrelated core business groups --
Retail Sales and Marketing, Institutional Sales and Trading, Investment Banking
and Asset Management -- which utilize common operational and administrative
personnel and facilities.

Retail Sales and Marketing consists primarily of a domestic branch office
system and consumer product groups through which PaineWebber and certain other
subsidiaries provide clients with financial services and products, including the
purchase and sale of securities, option contracts, commodity and financial
futures contracts, direct investments, selected insurance products, fixed income
instruments and mutual funds. The Company may act as principal or agent in
providing these services. Fees charged vary according to the size and complexity
of a transaction, and the activity level of the client's account.

Institutional Sales and Trading is comprised of five businesses: Fixed
Income, U.S. Equity, International, Derivatives and Research. The Company places
securities with, and executes trades on behalf of, institutional clients both
domestically and internationally. In addition, the Company takes positions in
both listed and unlisted equity and fixed income securities to facilitate client
transactions or for the Company's own account.

Through the Investment Banking group, the Company provides financial advice
to, and raises capital for, a broad range of domestic and international
corporate clients. Corporate Finance manages and underwrites public offerings,
participates as an underwriter in syndicates of public offerings managed by
others, and provides advice in connection with mergers and acquisitions, lease
financings and debt restructurings. The Municipal Securities group originates,
underwrites, sells and trades taxable and tax-exempt issues for municipal and
public agency clients.

The securities business is one of the nation's most highly regulated
industries. Violations of applicable regulations can result in the revocation of
broker-dealer licenses, the imposition of censures or fines, and the suspension
or expulsion of a firm, its officers or employees. The Company's securities
business is regulated by various agencies, including the Commission, the New
York Stock Exchange, the Commodity Futures Trading Commission and the NASD.

The Company's principal executive offices are located at 1285 Avenue of the

Americas, New York, New York 10019 (Telephone (212) 713-2000).

For purposes of the foregoing description, all references to the 'Company'
refer collectively to Paine Webber Group Inc. and its operating subsidiaries
unless the context otherwise requires.

<PAGE>
USE OF PROCEEDS

As may be described in further detail in the Prospectus Supplement, a
substantial portion of the proceeds to be received by the Company from the sale
of each issue of Warrants may be used by the Company or one or more of its
subsidiaries to hedge currency risks with respect to such Warrants. The
remainder of such proceeds, if any, will be used by the Company or its
subsidiaries for general corporate purposes.

DESCRIPTION OF WARRANTS

The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions do not apply
to the Warrants so offered will be described in such Prospectus Supplement.

Each issue of Warrants will be issued under a separate warrant agreement
(each, a 'Warrant Agreement') to be entered into between the Company and a bank
or trust company, as warrant agent (the 'Warrant Agent'), all as described in
the Prospectus Supplement relating to such Warrants. A single bank or trust
company may act as Warrant Agent for more than one issue of Warrants. The
Warrant Agent will act solely as the agent of the Company under the applicable
Warrant Agreement and will not assume any obligation or relationship of agency
or trust for or with any holders of such Warrants. An example of a Warrant
Agreement, including warrant certificates, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrants and the Warrant Agreements do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of each issue of Warrants and the related Warrant Agreement.

The Company will have the right to 'reopen' a previous issue of Warrants
and to issue additional Warrants of such issue.

GENERAL

Each Warrant will entitle the Warrantholder to receive from the Company
upon exercise the Cash Settlement Value of such Warrant, which will be a cash
amount in U.S. dollars (i) in the case of a Currency Put Warrant, determined by
reference to the amount, if any, by which the Spot Rate is less than the Strike
Rate on the applicable valuation date following exercise and (ii) in the case of
a Currency Call Warrant, determined by reference to the amount, if any, by which
the Spot Rate on the applicable valuation date following exercise exceeds the
Strike Rate. The Prospectus Supplement for an issue of Warrants will set forth
the formula pursuant to which the Cash Settlement Value of such Warrants will be

determined. The Strike Rate may either be a fixed amount or an amount that
varies during the term of such Warrants in accordance with a schedule or
formula. Certain Warrants will, if specified in the Prospectus Supplement,
entitle the Warrantholder to receive from the Company, upon automatic exercise
at expiration and under any other circumstances specified in the Prospectus
Supplement, an amount equal to the greater of the applicable Cash Settlement
Value and the Minimum Expiration Value of such Warrants. In addition, if so
specified in the Prospectus Supplement, following the occurrence of an
Extraordinary Event or an Exercise Limitation Event, the Cash Settlement Value
of a Warrant may, at the option of the Company, be determined on a different
basis, including in connection with automatic exercise at expiration.

A Warrant will be settled only in U.S. dollars and, accordingly, will not
require or entitle a Warrantholder to sell, deliver, purchase or take delivery
of any non-U.S. currency to or from the Company, and the Company will be under
no obligation to, nor will it, purchase or take delivery of or sell or deliver
any non-U.S. currency from or to Warrantholders pursuant to the Warrants.

Unless otherwise specified in the Prospectus Supplement, the Warrants will
be deemed to be automatically exercised upon expiration. Upon such automatic
exercise, Warrantholders will be entitled to receive the Cash Settlement Value
of the Warrants, if any, except that holders of any Warrants having a Minimum
Expiration Value will be entitled to receive an amount equal to the greater of
such Cash Settlement Value and the applicable Minimum Expiration Value. The
Minimum Expiration Value may be either a fixed amount or an amount that varies
during the term of the Warrants in accordance with a schedule or formula. Any
Minimum Expiration

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<PAGE>
Value applicable to an issue of Warrants, as well as any additional
circumstances resulting in the automatic exercise of such Warrants, will be
specified in the related Prospectus Supplement.

If so specified in the Prospectus Supplement, the Warrants may be cancelled
by the Company upon the occurrence of an Extraordinary Event. Any Extraordinary
Events or Exercise Limitation Events relating to an issue of Warrants will be
set forth in the related Prospectus Supplement. Upon such cancellation, the
related Warrantholders will be entitled to receive only the applicable
Cancellation Amount specified in such Prospectus Supplement. The Cancellation
Amount may be either a fixed amount or an amount that varies during the term of
the Warrants in accordance with a schedule or formula.

Reference is hereby made to the Prospectus Supplement relating to the
particular issue of Warrants offered thereby for the terms of such Warrants,
including, where applicable: (i) the aggregate amount of such Warrants; (ii) the
offering price of such Warrants; (iii) either (a) the Reference Currency, which
may be a non-U.S. currency or units of two or more non-U.S. currencies, or (b)
the Currency Index (including each Index Currency included therein), which may
be compiled and published by a third party or by the Company or an affiliate of
the Company, in either case relating to such Warrants; (iv) whether such
Warrants are Currency Put Warrants or Currency Call Warrants; (v) the date on
which the right to exercise such Warrants may be exercised; (vi) the manner in
which such Warrants may be exercised; (vii) the minimum number, if any, of such

Warrants that are exercisable by a Warrantholder at any one time; (viii) the
maximum number, if any, of such Warrants that may, subject to the Company's
election, be exercised by all Warrantholders (or by any person or entity) on any
day; (ix) any provisions permitting a Warrantholder to condition an exercise
notice on the absence of certain specified changes in the Spot Rate after the
exercise date, any provisions permitting the Company to suspend exercise of such
Warrants or to redeem such Warrants based on market conditions or other
circumstances and any special provisions relating to the exercise of such
Warrants; (x) any provisions for the automatic exercise of such Warrants other
than at expiration; (xi) any provisions permitting the Company to cancel such
Warrants upon the occurrence of certain events; (xii) the method of determining
the amount payable in connection with the exercise or cancellation of such
Warrants, including (a) the Strike Rate, (b) the method of determining the Spot
Rate, (c) the method of expressing movements in either (1) the exchange rate of
the applicable Reference Currency in relation to U.S. dollars as a cash amount
in U.S. dollars or (2) the level of the applicable Currency Index as a cash
amount in U.S. dollars, and (d) any Cancellation Amount or Minimum Expiration
Value applicable to such Warrants; (xiii) the time or times at which amounts
will be payable in respect of such Warrants following exercise or automatic
exercise; (xiv) any national securities exchange on which such Warrants will be
listed; (xv) any provisions for issuing such Warrants in certificated form from
the perspective of Warrantholders; (xvi) if such Warrants are not issued in
book-entry form, the place or places at which payment of the Cash Settlement
Value, Cancellation Amount, if any, and Minimum Expiration Value, if any, of
such Warrants is to be made by the Company; and (xvii) any other material terms
of such Warrants.

Prospective purchasers of Warrants should be aware of special United States
Federal income tax considerations applicable to instruments such as the
Warrants. The Prospectus Supplement relating to each issue of Warrants will
describe such tax considerations. The summary of United States Federal income
tax considerations contained in the Prospectus Supplement will be presented for
informational purposes only, however, and will not be intended as legal or tax
advice to prospective purchasers. Prospective purchasers of Warrants are urged
to consult their own tax advisers prior to any acquisition of Warrants.

BOOK-ENTRY PROCEDURES AND SETTLEMENT

Unless otherwise specified in the Prospectus Supplement, the Warrants
offered thereby will be issued in book-entry form from the perspective of
Warrantholders. Such Warrants will be issued in the form of a single global
certificate representing all the Warrants (the 'global certificate') registered
in the name of the nominee of the depository, The Depository Trust Company
('DTC', which term, as used herein, includes any successor depository selected
by the Company).

DTC is a limited-purpose trust company which was created to hold securities
for its participating organizations (the 'Participants') and to facilitate the
clearance and settlement of securities transactions between Participants in such
securities through electronic book-entry changes in accounts of its
Participants. Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other

<PAGE>
organizations. Access to DTC's system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ('indirect
participants'). Persons who are not Participants may beneficially own securities
held by DTC only through Participants or indirect participants.

DTC's nominee for all purposes will be considered the sole owner or holder
of the Warrants under the related Warrant Agreement. Owners of beneficial
interests in the global certificate will not be entitled to have Warrants
registered in their names, will not receive or be entitled to receive physical
delivery of Warrants in definitive form and will not be considered the holders
thereof under the related Warrant Agreement, except in certain limited
circumstances discussed below.

Neither the Company nor the Warrant Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global certificate, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

A Warrantholder's ownership of a Warrant will be recorded on or through the
records of the brokerage firm or other entity that maintains such
Warrantholder's account. In turn, the total number of Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
DTC in the name of such brokerage firm (or in the name of a Participant or
indirect participant that acts as agent for the Warrantholder's brokerage firm
if such firm is not a Participant or indirect participant). Therefore, a
Warrantholder must rely upon the foregoing procedures to evidence such
Warrantholder's ownership of a Warrant. Transfer of ownership of any Warrant may
be effected only through the selling Warrantholder's brokerage firm.

The Cash Settlement Value and, if applicable, the Cancellation Amount or
Minimum Expiration Value payable in respect of the Warrants will be paid by the
Warrant Agent to DTC. DTC will be responsible for crediting the amount of such
payments to the accounts of the Participants or indirect participants in
accordance with its standard procedures, which currently provide for payments in
next-day funds settled through the New York Clearing House. Each Participant or
indirect participant will be responsible for disbursing such payments to the
beneficial owners of the Warrants that it represents and to each brokerage firm
for which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the owners of the Warrants that it represents. It is
suggested that any purchaser of Warrants with accounts at more than one
brokerage firm only effect transactions in the Warrants, including exercises,
through the brokerage firm or firms that hold such purchaser's Warrants.

If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days, the Company
will issue Warrants in definitive form in exchange for the global certificate.
In addition, the Company may at any time determine not to have the Warrants
represented by a global certificate and, in such event, will issue Warrants in
definitive form in exchange for such global certificate. In either instance, an
owner of a beneficial interest in the global certificate will be entitled to
have Warrants equal in aggregate amount to such beneficial interest registered

in its name and will be entitled to physical delivery of such Warrants in
definitive form.

LISTING

Unless otherwise indicated in the Prospectus Supplement, the Warrants will
be listed on a national securities exchange as specified in the Prospectus
Supplement. It is expected that such exchange will cease trading an issue of
Warrants as of the close of business on the related expiration date of such
Warrants.

MODIFICATION

The Warrant Agreement and the terms of the related Warrants may be amended
by the Company and the Warrant Agent, without the consent of the holders of any
Warrants, for the purpose of curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained therein,
maintaining the listing of such Warrants on any national securities exchange or
registration of such Warrants under the Exchange Act, permitting the issuance of
individual Warrant certificates to Warrantholders, reflecting the issuance by
the Company of additional Warrants of the same issue or reflecting the
appointment of a successor depository, or in

13
<PAGE>
any other manner which the Company may deem necessary or desirable and which, as
determined by the Company in its sole discretion, will not materially and
adversely affect the interests of the Warrantholders.

The Company and the Warrant Agent also may modify or amend the Warrant
Agreement and the terms of the related Warrants, with the consent of the holders
of not less than a majority in number of the then outstanding Warrants affected
by such modification or amendment, for any purpose, provided that no such
modification or amendment that (i) in the case of Currency Put Warrants,
decreases the Strike Rate or, in the case of Currency Call Warrants, increases
the Strike Rate, (ii) otherwise changes the determination of the Cash Settlement
Value or Cancellation Amount, if any, or Minimum Expiration Value, if any, of
the Warrants (or any aspects of such determination) so as to reduce the amount
receivable upon exercise, cancellation or expiration, (iii) shortens the period
of time during which the Warrants may be exercised, (iv) decreases the Minimum
Expiration Value, if any, or (v) otherwise materially and adversely affects the
exercise rights of the Warrantholders or reduces the percentage of the number of
outstanding Warrants the consent of whose holders is required for modification
or amendment of the Warrant Agreement or the terms of the related Warrants, may
be made without the consent of each Warrantholder affected thereby.

MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS

If at any time there is a merger or consolidation involving the Company or
a sale, transfer, conveyance or other disposition of all or substantially all of
the assets of the Company, then the successor or assuming corporation will
succeed to and be substituted for the Company under the Warrant Agreement and
the related Warrants, with the same effect as if it had been named in such
Warrant Agreement and Warrants as the Company. The Company will thereupon be

relieved of any further obligation under such Warrant Agreement and Warrants
and, in the event of any such sale, transfer, conveyance (other than by way of
lease) or other disposition, the Company as the predecessor corporation may
thereupon or at any time thereafter be dissolved, wound up or liquidated.

ENFORCEABILITY OF RIGHTS BY WARRANTHOLDERS

Any Warrantholder may, without the consent of the Warrant Agent or any
other Warrantholder, enforce by appropriate legal action on his own behalf his
right to exercise, and to receive payment for, his Warrants.

PLAN OF DISTRIBUTION

The Company may sell the Warrants in any of three ways: (i) through
underwriters; (ii) directly to one or more purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Warrants being offered thereby
sets forth the terms of the offering of such Warrants, including the names of
any underwriters, the purchase price of such Warrants and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers and any national securities
exchange on which such Warrants will be listed. Only underwriters so named in
the Prospectus Supplement are deemed to be underwriters in connection with the
Warrants offered thereby.

If underwriters are used in the sale, the Warrants will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Warrants may be
offered to the public either through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Such managing
underwriters or underwriters may include PaineWebber. Unless otherwise set forth
in the Prospectus Supplement, the obligations of the underwriters to purchase
such Warrants will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the Warrants offered by the
Prospectus Supplement if any of such Warrants are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.

Warrants may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agents involved in the offer or
sale of the Warrants will be named, and any commissions payable by the Company
to such agents will be set forth, in the Prospectus Supplement. Such agents may
include

14
<PAGE>
PaineWebber. Unless otherwise indicated in the Prospectus Supplement, any such
agent is acting on a best-efforts basis for the period of its appointment.

The Warrants, including additional Warrants of a previous issue, may be
sold on any national securities exchange on which the Warrants are listed.

Agents and underwriters may be entitled under agreements entered into with

the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Company or its affiliates in the ordinary
course of business.

PaineWebber expects to offer and sell previously issued Warrants from time
to time in the course of its business as a broker-dealer. PaineWebber may act as
principal or agent in such transactions. The Warrants may be offered or sold in
such transactions on any national securities exchange on which the Warrants are
listed. Sales will be made at prices related to prevailing prices at the time of
sale.

PaineWebber is a wholly owned subsidiary of the Company. The participation
of PaineWebber in the offer and sale of the Warrants will comply with the
requirements of Schedule E of the By-Laws of the NASD regarding underwriting
securities of an affiliate. Under the provisions of Schedule E, when a NASD
member such as PaineWebber distributes securities of an affiliate, the price of
the securities can be no higher than that recommended by a 'qualified
independent underwriter', as such term is defined in Schedule E, meeting certain
standards. In accordance with such requirement, PaineWebber will select a
'qualified independent underwriter' in connection with each issue of Warrants to
conduct due diligence and recommend a price for such Warrants in compliance with
the requirements of Schedule E.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
imposes certain restrictions on employee benefit plans ('Plans') which are
subject to ERISA, and on those persons who are fiduciaries with respect to such
Plans. In accordance with ERISA's general fiduciary requirements, a fiduciary
with respect to any such Plan who is considering the purchase of Warrants on
behalf of such Plan should determine whether such purchase is permitted under
the governing Plan documents, is prudent and is appropriate for the Plan in view
of its overall investment policy and the composition and diversification of its
portfolio. See 'Risk Factors' herein. Other provisions of ERISA and section 4975
of the Internal Revenue Code of 1986, as amended (the 'Code'), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ('parties in interest' within the meaning of
ERISA or 'disqualified persons' within the meaning of section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of Warrants should consider
whether such a purchase might constitute or result in a prohibited transaction
under ERISA or section 4975 of the Code.

The Company and PaineWebber may each be considered a 'party in interest' or
a 'disqualified person' with respect to many Plans. The purchase of Warrants by
a Plan that is subject to the fiduciary responsibility provisions of ERISA or
the prohibited transaction provisions of section 4975 of the Code (including
individual retirement arrangements and other plans described in section
4975(e)(1) of the Code) and with respect to which the Company or PaineWebber is
a service provider (or otherwise is a 'party in interest' or 'disqualified
person') may constitute or result in a nonexempt prohibited transaction under
ERISA or section 4975 of the Code, unless such Warrants are acquired pursuant to

and in accordance with an applicable exemption, such as Prohibited Transaction
Class Exemption ('PTCE') 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 84-14 (an exemption for
certain transactions determined by an independent qualified professional asset
manager) or PTCE 91-38 (an exemption for certain transactions involving bank
collective investment funds). Any pension or other employee benefit plan
proposing to acquire any Warrants should consult with its counsel.

15
<PAGE>
EXPERTS

The consolidated financial statements of the Company incorporated by
reference in the 1993 Form 10-K have been audited by Ernst & Young, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

LEGAL OPINIONS

The validity of the Warrants will be passed upon for the Company by
Cravath, Swaine & Moore, New York, New York.

<PAGE>

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No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus Supplement and the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Underwriters. Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the dates as of which information is given in this
Prospectus Supplement and the Prospectus or that the information contained in
this Prospectus Supplement and the Prospectus is correct as of any time
subsequent to the dates as of which information is given in this Prospectus
Supplement and the Prospectus. This Prospectus Supplement and the Prospectus do
not constitute an offer to sell or a solicitation of an offer to buy such
securities in any circumstances in which such an offer or solicitation is
unlawful.

------------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary................................... S-3
References........................................... S-7
Paine Webber Group Inc............................... S-7
Paine Webber Group Inc. Recent Developments.......... S-8
Use of Proceeds...................................... S-8
Certain Risk Factors Relating to the Warrants........ S-8
Description of the Warrants.......................... S-13
Exchange Rates....................................... S-22
Certain United States Federal Income Tax
Considerations..................................... S-24
Underwriting......................................... S-26
Legal Opinions....................................... S-26
Appendix A: Index of Terms........................... A-1

<CAPTION>
PROSPECTUS
<S> <C>
Available Information................................ 2
Documents Incorporated by Reference.................. 2
Risk Factors......................................... 3
Paine Webber Group Inc............................... 10
Use of Proceeds...................................... 11
Description of Warrants.............................. 11
Plan of Distribution................................. 14
ERISA Considerations................................. 15

Experts.............................................. 16
Legal Opinions....................................... 16
</TABLE>

------------------------

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- --------------------------------------------------------------------------------

PAINEWEBBER (Trademark)

1,050,000 WARRANTS

PAINE WEBBER GROUP INC.

U.S. DOLLAR INCREASE WARRANTS
ON THE JAPANESE YEN
EXPIRING APRIL 30, 1996

---------------------
PROSPECTUS SUPPLEMENT
---------------------

PAINEWEBBER INCORPORATED
OPPENHEIMER & CO., INC.

---------------------

April 24, 1995

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL

Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material omitted
from this EDGAR Submission File due to ASCII-incompatibility and cross-
references this material to the location of each occurrence in the text.

DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
---------------------- -------------------

In the paper format version of this Appears on page S-23
Prospectus Supplement there appears
a graph depicting the average movement
of the daily noon buying rates per U.S.
$1.00 for Japanese yen in New York City
for each month from January 1989 through
March 1995 and for the partial month
beginning April 1, 1995 and ending
April 24, 1995. The information conveyed
by such graphic information is described in
tabular form in the Prospectus Supplement
on pages S-22 through S-23 under the heading
"Exchange Rates".