Filed by Paine Webber Group Inc.
Pursuant to Rule 425 under the Securities Act of 1933
-----------------------------------------------------
Subject Company: Paine Webber Group Inc.
Commission File No. 1-7367
October 16, 2000
As in most presentations, all the following discussions today contain
forward-looking statements, and our actual results may differ materially from
those discussed here. Additional information concerning factors that could
cause such a difference can be found in our most recent quarterly reports and
other publicly disclosed financial reports. Any forward-looking statements
made with regard to PaineWebber in these presentations are subject to the
successful completion of the merger.
This communication is not a solicitation of a proxy from any security
holder of Paine Webber Group, Inc. UBS and PaineWebber have filed with the
Securities and Exchange Commission a proxy statement/prospectus mailed to
PaineWebber security holders and other relevant documents concerning the
planned merger of PaineWebber into a subsidiary of UBS. WE URGE INVESTORS IN
PAINEWEBBER TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION.
<PAGE>
1
PaineWebber
Strategy Seminar Presentation
October 16, 2000
<PAGE>
2
Joseph J. Grano, Jr.
President,
PaineWebber Incorporated
<PAGE>
3
Why PaineWebber?
--------------------------------------------------------------------------------
PaineWebber is widely recognized as one of the leading financial
services powerhouses in the U.S. wealth management market.
o Power of the brand
o Focus on largest and fastest growing market of investors
o Unique approach and process for serving the affluent segment
o Aggressive use of technology to leverage relationships between
clients and advisors
o History of successful execution in penetrating our target
markets
<PAGE>
4
A Growth Firm in a Growth Industry
--------------------------------------------------------------------------------
Over the past 10 years, PaineWebber has more than doubled its market
share in what continues to be the world's fastest growing financial
market.
U.S. Household PaineWebber
Financial Assets ($ Trillions) Client Assets ($ Billions)
- Liquid Financial Assets(1)
- All Other
CAGR: 10% CAGR: 22%
--------- ---------
$35 $484
$22 [GRAPHIC OMITTED] $216
$14
$74
1990 1995 2Q00 1990 1995 2Q00
PaineWebber's Market Share: 1990 1995 2Q00
--------------------------- ---- ---- ----
Of Total H/H Financial Assets 0.5% 1.0% 1.4%
Of Liquid Financial Assets(1) 0.9% 1.8% 2.5%
(1) Excludes discretionary pension assets, defined benefit plan assets,
life insurance reserves, and equity in non-corporate businesses.
Source: Federal Reserve
<PAGE>
5
U.S. Target Market (Trillions)
--------------------------------------------------------------------------------
PaineWebber's marketing strategy is uniquely focused on the core
affluent market - the segment with the largest, fastest growing pool
of investable assets.
$19.2 Investable Assets $31.6 Investable Assets
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Affluent $14.6 Affluent $27.6
Core Core
Affluent Affluent
$12.5 Core Affluent $24.6
CAGR = 18%
1999 2003
Core 7% of households Core 11% of households
Affluent = 65% of investable assets Affluent = 78% of investable assets
Note: Affluent: Households with $100,000 income and/or $500,000 in
net worth
Core Affluent: Households with $500,000+ in investable assets
Source: Spectrem Group/PSI, Federal Reserve
<PAGE>
6
Trillion Dollar Opportunities
--------------------------------------------------------------------------------
PaineWebber is uniquely positioned to capitalize on the demographic
trends that will continue to influence the flow of investable assets
into the wealth sector.
Projected Value of Bequests Estimated Dollars in 401(k)
Received by U.S. Baby Boomers Plans to be Rolled Over or
Cashed Out
($ Billions) ($ Billions)
Cumulative Opportunity = $3.8 Cumulative Opportunity = $1.5
Trillion Trillion
$246 $118
[CHART OMITTED] [CHART OMITTED]
$92
$34
1995 2000 2005 2010 2015 2000 2005 2010 2015 2020
Source: Avery & Rendall, Cornell Dept. Source: VIP Forum estimates
of Consumer Economics & Housing; for retirees
VIP Forum Baby Boomers include Adjusted for inflation
those born in the US between 1946
and 1964 inheritances discounted
two percent for inflation and
adjusted for estate taxes
<PAGE>
7
Strong Momentum
--------------------------------------------------------------------------------
Our principal strategy has been one of asset gathering, enabling us to
grow the size of our franchise while broadening relationships with our
clients.
Key Strategic Drivers
---------------------
Client Assets ($ Billions) Fee-Based Assets ($ Billions)
CAGR: 19% CAGR: 23%
[CHART OMITTED] [CHART OMITTED]
$480 $209
$423 $169
$352 $132
$297 $108
$245 $89
$216 $78
1995 1996 1997 1998 1999 3Q00 1995 1996 1997 1998 1999 3Q00
Wrap Fee Assets ($ Billions) RMA Accounts(1) (Thousands)
CAGR: 43% CAGR: 21%
[CHART OMITTED] [CHART OMITTED]
$6 770
$47 625
$31 502
$21 423
$15 361
$11 315
1995 1996 1997 1998 1999 3Q00 1995 1996 1997 1998 1999 3Q00
(1) PaineWebber's central asset account for clients
<PAGE>
8
Building a Stable Revenue Stream
--------------------------------------------------------------------------------
In offering PaineWebber clients the choice of a variety of attractive
fee-based products and pricing alternatives, we continue to grow
recurring fee income, resulting in more predictable revenue flows and
reduction in the volatility of earnings.
Recurring Fees ($ Millions) Recurring Fees and Net Margin
Interest as a Percent
of Fixed Expenses(1)
CAGR: 26%
[CHART OMITTED] [CHART OMITTED]
110%
$1,477 99%
$1,148 91%
$921 78%
$700 69%
$571 62%
$498
1995 1996 1997 1998 1999 3Q00 1995 1996 1997 1998 1999 3Q00
*YTD Annualized
(1) Includes salary, payroll-related, communications, occupancy, computer-
related and amortization and depreciation
<PAGE>
9
Strong Momentum
--------------------------------------------------------------------------------
PaineWebber has produced record earnings in four of the last five years
and seven of the last nine years, indicative of a growth firm in a
growth industry.
Key Financial Results(1)
----------------------------
Net Revenue ($ Millions) Pre-Tax Earnings ($ Millions)(2)
CAGR: 12%(3) CAGR: 33%(3)
[CHART OMITTED] [CHART OMITTED]
$5,290
$4,405 $4,451 $1,035
$4,112
$3,735 $715 $722
$3,350 $673
$560
$333
1995 1996 1997 1998 1999 9 Months 1995 1996 1997 1998 1999 9 Months
2000 2000
Return on Common Equity Book Value Per Common Share
[CHART OMITTED] [CHART OMITTED]
$22.77
21.9% 22.4% 22.6% $20.04
19.6% $16.76
19.1% $13.80
13.1% $12.19
$10.41
1995 1996 1997 1998 1999 9 Months 1995 1996 1997 1998 1999 3Q00
2000
(1) Excludes one-time charges
(2) Before taxes and minority interest
(3) Compound annual growth rate (1995-1999)
<PAGE>
10
A Changing World
<PAGE>
11
Evolving Trends
--------------------------------------------------------------------------------
o U.S. = one half of the world's investable assets
o Defined benefit to defined contribution is being embraced by Europe
o Multiple listings are spreading to various countries
o The Euro, the Dollar and the Yen are the dominant currencies
o Consolidation accelerating
- UBS Warburg-PaineWebber
- CSFB-DLJ
- Dresdner-Wasserstein
- Chase-JP Morgan
o Technology and foreign stocks globalize investors
o Asset allocation models shift toward regional diversity
<PAGE>
12
Financial Market Triad
--------------------------------------------------------------------------------
[GRAPHIC OMITTED -MAP-]
<PAGE>
13
Leading Client Base in All Major Wealth Centers
--------------------------------------------------------------------------------
The combination of UBS and PaineWebber will create the premier global
private client distribution and wealth advisor network focused on the
high net worth and affluent client segments.
Proforma assets by client domicile(1)
----------------------------------
UBS UBS and PaineWebber Combined
[PIE CHART OMITTED] [PIE CHART OMITTED]
4% 37%
49%
27% ----->
69% 14%
Europe & rest of World Switzerland USA
NOTE:
(1) High net worth and affluent clients only
SOURCE: UBS Group analysis
<PAGE>
14
The Top Five Countries Account for 82% of Wealth Households
--------------------------------------------------------------------------------
UBSW will leverage PaineWebber's success and know-how to further develop
a global model for the private client market, as many of the same
dynamics that have fueled investment growth in the U.S. have begun to
impact the wealth markets in Europe.
TOTAL EUROPEAN WEALTH BY COUNTRY, 1999 - 2002E
----------------------------------------------
1999 2002E
$14.3 Trillion $20.1 Trillion
43.5 M Affluent Households 54.4 M Affluent Households
[PIE CHART OMITTED] [PIE CHART OMITTED]
12%
CAGR
Belgium Belgium
Austria Austria
Sweden 18% Sweiden 19%
Switzerland Switzerland Germany
Denmark Denmark 26%
Netherlands Netherlands
Germany 81%
Spain 26% Spain
7% 7%
82%
Italy Italy UK
12% UK 12% 21%
21%
France France
16% 15%
Affluent = 73% of Investable Assets Affluent = 77% of Investable Assets
Note: 1999 data estimated based on 1997 Datamonitor survey and projected 1997-
2002 growth rate
Affluent segment defined as having USD 100K or greater in investable
assets
Source: Datamonitor estimate 1999 (not yet published)
<PAGE>
15
European Wealth Management Strategy
--------------------------------------------------------------------------------
UBSW, together with PaineWebber, is developing a European wealth
management strategy.
o An efficient, proprietary, on-shore advisor-centric distribution
model in key European markets
o Strategic relationships with key intermediaries in European markets
to service affluent investors
o Single technology/operations platform across Europe with fully
integrated processing and front-end systems tailored to each
country's specific needs
<PAGE>
16
E-Services Considerations
--------------------------------------------------------------------------------
Consistent with UBSW's global strategy, e-services will be developed to
combine high level technology applications with the involvement of a
financial advisor to facilitate a targeted approach to high net worth
and affluent investors in Europe.
o Single pan-European business
o Consistent front-end for clients, client advisors and intermediaries
o Single legal entity
o Outsource execution, clearing and settlement where appropriate
o No geographical or legal constraints with the EU on where we place
our data or call centers
o Build capacity to allow 1-2 acquisitions per year
<PAGE>
17
Global Private Client Strategy
--------------------------------------------------------------------------------
UBSW is sensitive to the early mover advantage, but not to the detriment
of a well developed, fully tested, high quality e-services offering on
the level we require for ourselves and our clients.
Timeline
--------
11/30/00 12/31/00 6/30/01
o-------------------------o---------------------o
o Completion of o Completion of o Completion of
UBSW/PWJ UBSW/PWJ integrated Pacific
Merger business integration Rim strategic plan
o Completion of
integrated European
Strategic Plan
o Completion of
e-services
repositioning plan
<PAGE>
18
A Powerful Strategic Fit
--------------------------------------------------------------------------------
The combination of the two organizations, UBSW and PaineWebber,
leverages the considerable global institutional clout of UBSW
together with the PaineWebber private client distribution strength to
create the pre-eminent globally integrated investment services firm.
o The premier global institution serving private clients
o Leading institutional client franchise
o Excellent blend of content and distribution and mutually enhancing
businesses
o Shared business philosophy: commitment to clients' interests and
personal service
o Growth and high quality earnings
- top line revenue growth
- quality fee-based revenue stream
- strong asset growth
o Import/export of content and knowledge
<PAGE>
19
Leveraging UBSW Content to Enhance Our Offering to Customers
--------------------------------------------------------------------------------
PaineWebber will be able to leverage UBSW core capabilities to create
strong franchise businesses to better serve the core affluent.
[GRAPHIC OMITTED]
Foreign Equity Risk management Banking
Exchange Products for HNW Products
Global ADR
Securities Common/
Preferred
Franchise Stock
Businesses
Domestic Domestic
Preferred Common
Stock Stock
Convertibles/Equity Linked Alternative Municipal
Investments Investments Securities
<PAGE>
20
The Power of Distribution
--------------------------------------------------------------------------------
Mark B. Sutton
President, Private Client Group
<PAGE>
21
Private Client Group
--------------------------------------------------------------------------------
Goal
----
To be the premier, most
productive, national
full-service
securities firm
serving the wealth
management needs of
the affluent segment
of the private client
market.
<PAGE>
22
Private Client Group
--------------------------------------------------------------------------------
PaineWebber's broker-centric model, where the financial advisor is at
the forefront of all interaction with the client, is what makes
PaineWebber unique, and drives us to provide the highest quality
training and support for our financial advisors.
8,688
o One of the largest distribution
forces in the U.S. with presence
in all regions 7,576
o A company that fosters the success
of its financial advisors through 6,951
a professional environment and a
relationship with clients
6,249
o Active recruiter of high caliber
financial advisors targeted to meet 6,095
the needs of affluent investors
o Ongoing professional development at
all levels of experience 1996 1997 1998 1999 3Q00
<PAGE>
23
A Leader in Productivity
--------------------------------------------------------------------------------
PaineWebber is among the industry leaders in productivity per financial
advisor. This is driven by our focus on an affluent client base, highly
trained financial advisors and technology applications that provide maximum
support to our professionals and clients.
Assets per Financial Advisor (1) Productivity per Financial Advisor (1)
($ Millions) ($ Thousands)
$80 $600
$79 $567
$60 $450
$45 $375
$40
$300
1996 1997 1998 1999 3Q00 1996 1997 1998 1999 3Q00
(1) Excludes trainees and FAs with less than 3 years experience
[GRAPHICS OMITTED]
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24
Payoff on Trainee Investment
--------------------------------------------------------------------------------
PaineWebber believes in financial advisor training at all levels of
experience, including an investment in the aggressive recruiting and
training of new financial advisors.
Number of Trainees Hired 1999 Production ($ Thousands)
1,341
1,216 $200
1,200
$120
652
579 $55
1996 1997 1998 1999 2000E 1998 1997 1996
Trainee Trainee Trainee
Class Class Class
[GRAPHICS OMITTED]
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25
Accelerate Asset Growth
--------------------------------------------------------------------------------
Investors vote with their money...PaineWebber continues to attract net new
assets from clients.
Net New Client Assets per Day
($ millions)
$160
$141
$95 $98
$60
1996 1997 1998 1999 9 Months
2000
[GRAPHICS OMITTED]
<PAGE>
26
Benefits of Fee-Based Approach
--------------------------------------------------------------------------------
PaineWebber's strategy to derive a higher percentage of fee-based revenues
has resulted in an increasing amount of our client relationships
transitioning from a transactional nature.
<TABLE>
<CAPTION>
<S> <C>
o Fee-based assets now Fee-Based Assets ($ Billions)
over 40% of client assets
$240
o Increased stability of $209
earnings with reduced $180 Total Fee-Based Assets
reliance on more volatile
businesses $120 CAGR: 23%
$78
o Enhances relationship $ 60 Wrap Fee Assets $61
between financial advisor $11
and client $ 0 CAGR: 43%
1995 1996 1997 1998 1999 3Q00
o Affluent clients continue to
embrace fee-based
products (managed Fee-Based Revenues (1) as a Percentage
accounts, InsightOne, of Retail Net Revenues
PACE, etc.)
40%
36.0%
30%
23.5%
20%
1995 1996 1997 1998 1999 3Q00
(1) Including Net Margin Interest
</TABLE>
[GRAPHICS OMITTED]
<PAGE>
27
Fusing of Advisor & Client & Technology
--------------------------------------------------------------------------------
PaineWebber's clients have embraced the PaineWebber EDGE, our state of the art
online service, which when combined with our financial advisor, our client and
our technology, enables PaineWebber to deliver the value proposition our
clients expect.
PaineWebber EDGE
EDGE Client Assets EDGE Client Households
($ Billions) (Thousands)
CAGR: 151% CAGR: 160%
1997 1997
----- ----
1Q $ 9 1Q 11
2Q $16 2Q 20
3Q $22 3Q 28
4Q $26 4Q 35
1998 1998
---- ----
1Q $32 1Q 43
2Q $37 2Q 51
3Q $45 3Q 59
4Q $60 4Q 71
1999 1999
---- ----
1Q $ 74 1Q 86
2Q $ 89 2Q 103
3Q $ 99 3Q 124
4Q $140 4Q 176
2000 2000
---- ----
1Q $166 1Q 208
2Q $184 2Q 249
3Q $226 3Q 312
Average Assets Per EDGE Household: $724,000
46% of Client Assets are Online Via the EDGE
[GRAPHICS OMITTED]
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28
Leveraging UBSW Content to Enhance Our Offering to Customers
Research Products
--------------------------------------------------------------------------------
o Over 600 Equity o Structured Products
Analysts Covering
4,000 Companies o Foreign Exchange
Products
o International Research
Expertise (UBSW ranked o Liability Vehicles
4th globally, 3rd in both Europe
and Asia by Institutional
Investor)
[GRAPHICS OMITTED]
<PAGE>
29
Merger Benefits for Private Client Group
--------------------------------------------------------------------------------
The ever-increasing sophistication in the wealth management needs of the
PaineWebber affluent investor requires a global framework, one that will
combine research, creativity in investment products and the highest levels of
financial advice. This merger delivers that global scale.
o Opportunity to leverage UBS Warburg underwriting product flow
o Distribution of global product and research
o Increased capability to offer specialized credit-enhanced and structured
products to affluent clients
o Continued mandate to be leader in developing and deploying technology to
enhance client relationships
o Newly enhanced global hiring platform
[GRAPHICS OMITTED]
<PAGE>
30
Leveraging Technology to Enhance
Client Relationships
--------------------------------------------------------------------
Marten S. Hoekstra
Director of Marketing, Private Client Group
[GRAPHICS OMITTED]
<PAGE>
31
Strategic Marketing Goal
--------------------------------------------------------------------------------
Further strengthen the relationship between
clients and their financial advisors by offering
the
best combination of advisors
and online services to households with
investable assets of $500K+
[GRAPHICS OMITTED]
<PAGE>
32
Affluent Investor Value Chain
--------------------------------------------------------------------------------
PaineWebber understands that the needs and wants of the affluent investor are
unique and differ greatly from other investor classes.
Peace of Mind: the most sought-after end-state
Financial Security: the most important
psycho-social benefit
Smart Investment Decisions: the most
important direct benefit
FA Attributes (70%) Company Attributes (30%)
Confidence and trust Confidence and trust
Someone who understands their goals Product choices
A long-term relationship Customized statements
Someone with their best interests at heart Strong reputation and financial
stability
[GRAPHICS OMITTED]
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33
Financial Advisors Dominate the Investment Services Landscape
--------------------------------------------------------------------------------
Online brokerage assets will represent approximately 10 percent of the total
investable assets of U.S. households in 2003, while almost 90% of household
assets will be in the hands of financial advisors.
U.S. Online Assets by 2003
$40
o Online Brokerage Assets
o Total Household Investable Assets
$30 $31.6
Trillions
$20 $19.2
$10
$4.0
$1.5
$ 0
2000E 2003E
Sources: Federal Reserve Household Balance Sheet
Forrester Research, Piper Jaffray, Jupiter Communications
[GRAPHICS OMITTED]
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34
Key Drivers to Accelerate Business Growth
--------------------------------------------------------------------------------
PaineWebber will drive business growth by focusing on four key levers that
will help build our market presence with core affluent investors.
o Building a differentiated brand image
o Drive usage of our best-of-breed investment services
o Aggressive application of technology designed to strengthen financial
advisor/client relationships
o Leveraging technology to build a comprehensive financial management
platform to spur client asset consolidation
[GRAPHICS OMITTED]
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35
Most Distinctive & Compelling Attributes
--------------------------------------------------------------------------------
Potential Attributes
o Best Advisors
o Latest Technology
o Performance
o Fee-Based
o Trusted Company
o On-line Trading
o New Products
o Firm for Affluent
o Caring and Friendly
o Value
o Best Research
o Reliable
o Best Training
Most
Compelling
Attributes
o Financial advisors take the time to understand clients' needs and goals
o Helps you make decisions based on what is right for you - not thousands
of generic investors
[GRAPHICS OMITTED]
<PAGE>
36
PaineWebber Brand Positioning
--------------------------------------------------------------------------------
At PaineWebber we understand that the best investment decisions are the ones
that are right for you, not thousands of generic investors. We take the time
to understand your goals and needs so that you feel confident in the
investment decisions you make. This is why PaineWebber clients experience a
unique peace of mind when it comes to their financial well-being and are
inclined to say...
"Thank you PaineWebber"
[GRAPHICS OMITTED]
<PAGE>
37
Meeting the Need for Advice
--------------------------------------------------------------------------------
Core affluent investors are demanding a best-of-breed advice-based offering
from their financial providers to help them make the right financial
decisions.
Approximately 70% of core affluent investors* say that an advisor
cannot be truly objective unless he/she sells or recommends a wide
range of products and services offered by many providers.
- 1999 Spectrem/PSI Affluent Survey
As A Result,
Our Focus
Is To
Deliver:
Comprehensive Unbiased Investment Advice
* $ 500K - 1MM in investable assets
[GRAPHICS OMITTED]
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38
PaineWebber's Best-of-Breed Investment Services Offering
--------------------------------------------------------------------------------
We are committed to offering a comprehensive array of product and service
choices which give PaineWebber clients access to the financial management
services best suited to meet their goals.
o PACE
-- Mutual fund consulting program providing investor profiling, asset
allocation, portfolio selection, variety of investments, and ongoing
performance measurement
o ACCESS
-- Institutional management of individual accounts through fixed
income, balanced, equity, global and international equity portfolios
by leading institutional money managers
o Portfolio Management Program (PMP)
-- Program in which certified financial advisors manage equity,
balanced or fixed income investments on an advisory basis
o SELECTIONS
-- Equity management program in which specially trained financial
advisors manage portfolios on an advisory basis, using PaineWebber
Research "1" and "2" rated stocks
o InsightOne
-- A fee-based, non-discretionary account that blends the best
products, services and technology with the insight of a personal
financial advisor.
o Non-Proprietary Mutual Fund Sources
-- Distribution of leading, high quality non-PaineWebber mutual funds
on a preferred vendor basis
[GRAPHICS OMITTED]
<PAGE>
39
Marketing Technology Strategy
--------------------------------------------------------------------------------
The seamless integration of online capabilities with the "offline" financial
advisor/client relationship deepens and broadens the client experience.
Channel Channel Distributing
Conflict Mixing Relationships
Online
1998 Feb 1999 June 1999
The successful integration of technology and advice provides both the
client and the financial advisor with a more personalized and collaborative
PaineWebber experience.
[GRAPHICS OMITTED]
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40
New Business Opportunity -- Corporate Employee Services
--------------------------------------------------------------------------------
Value Proposition
Provide education, along with guidance and advice, to the employees of
our corporate clients geared towards helping them navigate through the
process of managing and building wealth.
Enable access to a set of proprietary and non-proprietary online/offline
product and service solutions.
Portal
Provide access to:
benefits information,
education, appropriate
decision support tools
and commensurate
executional capabilities
FA Network eBranch
Provide face-to-face Provide remote advice
advice and guidance for and servicing to clients
clients with >= $200K in with < $200K in
investable assets investable assets
Corporations
& their
Employees
[GRAPHICS OMITTED]
<PAGE>
41
Strategic Online Services (EDGE)
--------------------------------------------------------------------------------
PaineWebber is leveraging technology to build a comprehensive financial
management platform offering personalized content and services, designed to
spur client asset consolidation.
Past 2000+ Beyond
Respond to Online Redefine The Central
Account Access Asset Account
Needs
<TABLE>
<CAPTION>
Key RMA-1980s PaineWebber PaineWebber Online Services
Features EDGE 1997 2000 + Beyond
<S> <C> <C> <C>
Personalization None Mass E-lerts
Customization FA/client control content & experience
Date Aggregation None None Across accounts
Across institutions
Center of Client Some None Bill payment across institutions
Cash Flow EFT
Bill Presentment
Decision Support None Limited PW Research
Third Party Content
Financial Planning Tools
Reporting
Portfolio Management Tools
</TABLE>
[GRAPHICS OMITTED]
<PAGE>
42
PaineWebber Online Services
--------------------------------------------------------------------------------
PaineWebber's Online Services enhance the advisor/client relationship by
focusing on the unique needs of core affluent investors.
[GRAPHICS OMITTED]
<PAGE>
43
PaineWebber
[GRAPHICS OMITTED]
