DEFA14A 1 0001.txt SCHEDULE 14A INFORMATION SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(e)(2)) [ ] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Pursuant toss.240.14a-12 PAINE WEBBER GROUP INC. ............................................................................... (Name of Registrant as Specified in Its Charter) ............................................................................... (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ........................................................................ (2) Aggregate number of securities to which transaction applies: ........................................................................ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ........................................................................ (4) Proposed maximum aggregate value of transaction: ........................................................................ (5) Total fee paid: ........................................................................ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount previously paid: ...................................................................... (2) Form, Schedule or Registration Statement No.: ...................................................................... (3) Filing Party: ...................................................................... (4) Date Filed: ...................................................................... [Graphic Omitted] UBS UBS: The Power of Partnership September 2000 Safe harbor ------------------------------------------------------------------------------- As in most presentations, the following discussion contains 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 Second Quarter 2000 Report and other publicly disclosed financial reports. [Graphic Omitted] UBS 1 Content ------------------------------------------------------------------------------- 1 UBS Group 1.1 Positioning and Strategy 1.2 Key Facts and Figures 2 UBS Switzerland 2.1 Private Banking 2.2 Private and Corporate Clients 3 UBS Asset Management 3.1 Institutional Asset Management 3.2 Investment Funds / GAM 4 UBS Warburg 4.1 Corporate and Institutional Clients 4.2 UBS Capital 4.3 Private Clients 5 UBS & PaineWebber: Strategic Rationale 6 Financial Management 7 Market View 8 Summary [Graphic Omitted] UBS 2 UBS Group ------------------------------------------------------------------------------- SECTION 1 [Graphic Omitted] UBS Positioning and Strategy ------------------------------------------------------------------------------- SECTION 1.1 [Graphic Omitted] UBS UBS's roots ------------------------------------------------------------------------------- [CHART OMITTED] SBG Union Bank of Switzerland 1912 1945 1967 1989 Eidgenossische Bank 1862 Bk in Winterthur 1863 Toggenburger Bk Interhandel UBS Phillips & Drew 29.06.98 [CHART OMITTED] Basler BV SBV Swiss Bank Corporation 1872 1897 1990 1994 1995 1997 Frankfurter BV 3 CH-banks O'Connor & Associates Basle Bkg Group Brinson Partners S.G. Warburg Group Dillon Read [Graphic Omitted] UBS [Graphic Omitted] UBS 5
Top financial institutions ------------------------------------------------------------------------------- By market capitalization 18th September 2000 (USDbn) 250 200 150 [CHART OMITTED] 100 50 0 Citigroup HSBC MSDW BoA Wells UBS ING Chase Goldman Credit Bank of Tokyo Merrill Royal Bank Dautsche BSCH Fargo Sachs Suisse Misubishi Lynch of Scotland Bank Source: Bloomberg, UBS published data
[Graphic Omitted] UBS 6 Strategic vision ------------------------------------------------------------------------------- ...the pre-eminent [GRAPHIC OMITTED] global, integrated investment services firm and... ...the leading bank in Switzerland [GRAPHIC OMITTED] [Graphic Omitted] UBS 7 Key Group strategies ------------------------------------------------------------------------------- Be global Pursue scale Add distribution and scope The pre-eminent global, integrated investment services firm and the leading bank in Switzerland Open product Put advice at the Leverage choice center technology excellence [Graphic Omitted] UBS 8 Key Group strategies ------------------------------------------------------------------------------- Be global Pursue scale Add distribution and scope The pre-eminent global, integrated investment services firm and the leading bank in Switzerland Open product Put advice at the Leverage choice center technology excellence [Graphic Omitted] UBS 9 Key Group strategies ------------------------------------------------------------------------------- Be global Pursue scale Add distribution and scope The pre-eminent global, integrated investment services firm and the leading bank in Switzerland Open product Put advice at the Leverage choice center technology excellence [Graphic Omitted] UBS 10 Add distribution and open product choice ------------------------------------------------------------------------------- Bringing content excellence to an ever-wider client base [GRAPHIC OMITTED] Existing client New client franchises franchises UBS & 3rd party content [Graphic Omitted] UBS 11 Key Group strategies ------------------------------------------------------------------------------- Be global Pursue scale Add distribution and scope The pre-eminent global, integrated investment services firm and the leading bank in Switzerland Open product Put advice at the Leverage choice center technology excellence [Graphic Omitted] UBS 12 Leverage technology excellence ------------------------------------------------------------------------------- e-commerce [GRAPHIC OMITTED] Reach UBS Share of wallet Efficiency [Graphic Omitted] UBS 13 Key Facts and Figures ------------------------------------------------------------------------------- SECTION 1.2 [Graphic Omitted] UBS UBS Group structure ------------------------------------------------------------------------------- UBS UBS Switzerland UBS Asset UBS Warburg Management Private Banking Institutional Asset Corporate & Management Institutional Clients Private & Corporate Investment Funds Private Equity Clients (UBS Capital) GAM Private Clients e-services [Graphic Omitted] UBS 15 UBS financial targets ------------------------------------------------------------------------------- o RoE averaging 15-20%, across periods of varying market conditions o Double-digit average annual EPS growth, across periods of varying market conditions o Active, continuous focus and downward pressure on the Group cost-revenue ratio substantiated by divisional initiatives o Clear demonstration of a strong growth trend in net new money in the private client businesses [Graphic Omitted] UBS 16 Performance against targets ------------------------------------------------------------------------------- ROE(1) Basic EPS(2),(3) CHF 40% 7 6 30% 5 [CHART OMITTED] 4 [CHART OMITTED] 20% 3 2 10% 1 0 0% 3M99 6M99 9M99 12M99 3M00 6M00 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 Cost/Income(2) Net New Money(4) 80% CHFbn 6 60% [CHART OMITTED] 4 40% 2 [CHART OMITTED] 20% 0 0% 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 -2 -4 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 NOTES: 1 Annualized, before goodwill amortization and adjusted for significant financial events 2 Before goodwill amortization and adjusted for significant financial events 3 Adjusted to account for the recent stock split 4 Private Banking and Private Clients [Graphic Omitted] UBS 17 Key income statement figures ------------------------------------------------------------------------------- 2Q00/2Q99 (CHFm) 2Q00(1) 2Q99(2) % Operating income 9,200 6,565 40 Operating expenses 6,348 5,248 21 Net profit before tax 2,852 1,317 117 Net profit 2,207 926 138 NOTES: 1 Adjusted for US Global Settlement provision CHF 200m 2 Adjusted for divestment of Swiss Life/Rentenanstalt (CHF 1490m) and the sale of International Global Trade Finance (CHF 200m) [Graphic Omitted] UBS 18 Other key figures ------------------------------------------------------------------------------- (CHFbn) 06/00 12/99 [SYMBOL OMITTED] % ------------------------------------------------------------------------ Group AuM 1,711 1,744 (2) Risk-weighted assets 264.7 273.1 (3) BIS Tier 1 ratio (%) 12.1 10.6 - Total assets 946.3 898.9 5 Shareholders' equity 31.9 30.6 4 Market capitalization 98.8 92.6 7 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Group headcount 47,744 49,058 (3) ------------------------------------------------------------------------- [Graphic Omitted] UBS 19 Revenue trends ------------------------------------------------------------------------------- (CHF m) 10,000 8,000 6,000 [CHART OMITTED] 4,000 2,000 0 (2,000) 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 Credit loss Net interest income Net fee and commission income Net trading income Other income [Graphic Omitted] UBS 20 Cost trends ------------------------------------------------------------------------------- (CHF m) 10,000 8,000 6,000 [GRAPHIC OMITTED] 4,000 2,000 0 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 Other General & administrative Personnel Adjusted operating income before credit loss expense [Graphic Omitted] UBS 21 Balanced earnings mix ------------------------------------------------------------------------------- 2Q 2000 before tax, adjusted for significant financial events [CHART OMITTED] (CHF m) 3,000 135 2,852 (207) 2,500 1,420 2,000 98 1,500 885 1,000 500 526 0 PCC PB C&IC Other Group 2Q00 UBS UBS AM UBS Corporate Switzerland Warburg Center [Graphic Omitted] UBS 22 Integrated client service model ------------------------------------------------------------------------------- Corporate & Retail & Affluent & high institutional corporate clients net worth clients clients globally in Switzerland globally UBS Asset Private Clients Management Corporate & Products/services--> Private Banking Institutional Clients Private Equity FX/MM Private & Corporate Research Clients Securities Derivatives Funds [Graphic Omitted] UBS 23 UBS Switzerland ------------------------------------------------------------------------------- SECTION 2 [Graphic Omitted] UBS UBS Switzerland ------------------------------------------------------------------------------- UBS Switzerland o Private Banking offers comprehensive wealth management services for private banking clients from across the world Private Banking Private & Corporate Clients o PCC provides a complete set of banking and securities services for individual and corporate clients in Switzerland o Shared logistics unit & infrastructure [Graphic Omitted] UBS 25 Private Banking ------------------------------------------------------------------------------- SECTION 2.1 [Graphic Omitted] UBS The world's largest private bank ------------------------------------------------------------------------------- Client assets (USD bn) 500 422 400 288 180 [CHART OMITTED] 300 150 140 200 137 133 100 121 100 0 80 USB Credit Deutsche Chase Citibank Merrill AEN HSBC ENP JP Suisse Bank Manhattan Lynch(1) Amo Paribas Morgan NOTE: SOURCE: FT Research, July 2000 (1) International private clients only [Graphic Omitted] UBS 27 Private Banking ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99 vs2Q99 vs1Q00 ---------------------------------------------------------------------- Operating Income 1,634 1,826 1,380 18% (11%) Operating expenses 749 731 613 22% 2% Pre-tax profit 885 1,095 767 15% (19%) Cost/income ratio(1) 45% 39% 44% 2Q00 KPI's 2Q00 1Q00 vs1Q00 ---------------------------------------------- AuM (CHFbn) 683 698 (2%) Net new money (CHFbn) (2.8) 2.1 - Gross margin (bps) 95 107 (11%) Headcount 7,447 7,431 0% NOTE: 1 Pre-goodwill & credit loss expense [Graphic Omitted] UBS 28 Private Banking gross AuM margin development ------------------------------------------------------------------------------- (bps) 110 100 90 [CHART OMITTED] 80 70 60 50 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 [Graphic Omitted] UBS 29 Key Private Banking strategies ------------------------------------------------------------------------------- Comprehensive wealth management services for private banking clients from across the world Expand range of Focus on strong Leverage leading products and personal relationships edge services technology [Graphic Omitted] UBS 30 Private Banking - scope matters ------------------------------------------------------------------------------- Individual needs Client Delivery of tailor made solutions Corporate Advisor Estate Finance Advisory Credit Trust Business Global Financial Custody Planning Art Banking Active Portfolio Active Real Estate Portfolio Management Portfolio Management Supervision Advisory Scope Scale Margin Capture [Graphic Omitted] UBS 31 Private and Corporate Clients ------------------------------------------------------------------------------- SECTION 2.2 [Graphic Omitted] UBS Leading Swiss market position ------------------------------------------------------------------------------- Others 7% UBS Regional 27% Banks 8% [PIE CHART OMITTED] Raiffeisen Banks Credit Suisse 14% 11% Cantonal Banks 33% o Based on a nationwide survey of core relationships UBS Swiss Research 1999 [Graphic Omitted] UBS 33 Broad client base ------------------------------------------------------------------------------- Individual Clients o Private Clients 3,000,000 o Investment Clients 1,000,000 Corporate Clients o Top Corporates 160 o Large Corporates 7,500 o Small & Medium Businesses 180,000 Banks o Banks 1,800 [Graphic Omitted] UBS 34 Private & Corporate Clients ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99 vs2Q99 vs1Q00 ------------------------------------------------------------------ Operating income 1,701 1,690 1,520 12% 1% Operating expenses 1,175 1,198 1,224 (4%) (2%) Pre-tax profit 526 492 296 78% 7% Cost/income ratio(1) 62% 61% 68% 2Q00 KPI's 2Q00 1Q00 vs1Q00 ---------------------------------------------- AuM (CHFbn) 439 443 (1%) Net new money (CHFbn) 0.4 0.4 0% NPL ratio (%) 6.0% 6.3% Headcount 22,270 22,668 (2%) NOTE: 1 Pre-goodwill & credit loss expense [Graphic Omitted] UBS 35 PCC profitability growth ------------------------------------------------------------------------------- Pre-tax profit (CHF m) 600 500 400 [CHART OMITTED] 300 200 100 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 [Graphic Omitted] UBS 36 Cost/income ratio & headcount(1) development ------------------------------------------------------------------------------- 24,000 70% 23,000 [CHART OMITTED] 22,000 65% 21,000 20,000 60% 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 Headcount Transferred Trade Finance h/c Cost/income ratio NOTE: 1 Excludes Systor employees [Graphic Omitted] UBS 37 Key Private & Corporate Clients strategies ------------------------------------------------------------------------------- A complete set of banking and securities services for individual and corporate clients in Switzerland Focus on customer Enhanced Grow via multi- service profitability channel excellence distribution [Graphic Omitted] UBS 38 e-banking metrics UBS Switzerland ------------------------------------------------------------------------------- Contracts (000)s % securities transactions on-line 550 16% 14% 500 12% [CHART OMITTED] 10% [CHART OMITTED] 450 8% 6% 400 4% 2% 350 0% 300 Jun Aug Oct Dec Feb Apr Jun Aug Jun Aug Oct Dec Feb Apr Jun Aug 99 99 99 99 00 00 00 00 99 99 99 99 00 00 00 00 [Graphic Omitted] UBS 39 The whole of UBS Switzerland ... ------------------------------------------------------------------------------- ...through UBS e-banking UBS Quotes [GRAPHIC OMITTED] Fund Gate [GRAPHIC OMITTED] [GRAPHIC OMITTED] WAP [GRAPHIC OMITTED] MyUBS UBS Research online [GRAPHIC OMITTED] [GRAPHIC OMITTED] [Graphic Omitted] UBS 40 UBS Asset Management ------------------------------------------------------------------------------- SECTION 3 [Graphic Omitted] UBS UBS Asset Management ------------------------------------------------------------------------------- UBS Asset Management o Extensive globally integrated investment organisation for institutional clients Institutional Asset o Investment Funds provides mutual Management funds for the UBS Group and third parties Investment Funds o GAM, diversified and successful investment options for individual and institutional clients GAM [Graphic Omitted] UBS 42 Institutional Asset Management ------------------------------------------------------------------------------- SECTION 3.1 [Graphic Omitted] UBS One of the leading institutional asset managers ------------------------------------------------------------------------------- Total Institutional Assets (CHF bn) 700 600 500 [GRAPHIC OMITTED] 400 300 200 100 0 Deutsche JP Merrill UBSAM RMCO/ Goldman MSDW Credit Black Citigroup Morgan Lynch Allianz Sachs Suisse Rock SOURCE: 1999 Annual Reports [Graphic Omitted] UBS 44 Institutional Asset Management ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99 vs2Q99 vs1Q00 ---------------------------------------------------------------------- Operating income 325 313 279 16% 4% Operating expenses 266 234 197 35% 14% Pre-tax profit 59 79 82 (28%) (25%) Cost/income ratio(1) 69% 61% 60% 2Q00 KPI's (CHFbn) 2Q00 1Q00 vs1Q00 ---------------------------------------------- AuM 525 557 (6%) Institutional AuM 326 352 (7%) Net new money (20.2) (32.4) 38% Headcount 1,712 1,657 3% NOTE: 1 Pre-goodwill & credit loss expense [Graphic Omitted] UBS 45 Key Institutional Asset Management strategies ------------------------------------------------------------------------------- UBS Asset Management aims to become the premier global institutional asset management firm Protect and strengthen Pursue targeted Expand client franchise growth investment initiatives capability [Graphic Omitted] UBS 46 Diverse asset base ------------------------------------------------------------------------------- Institutional AuM by Client Mandate (CHF 326bn)(1) 10% 31% Private Markets Asset Allocation [PIE CHART OMITTED] Fixed Income Equity 34% 25% NOTE: 1 As of 30 June 2000 [Graphic Omitted] UBS 47 Diversified capabilities ------------------------------------------------------------------------------- Equity Asset Allocation o Global o Global Balanced o Country/Regional o Global Frontier Portfolio o Emerging Markets o Country/Regional Balanced o Specialized Sector Funds o Capital Preservation Portfolios o Structured Investments Fixed Income o Global o Country/Regional o Emerging Markets Private Markets o High Yield o Cash o Direct Investments o Oil & Gas o Partnership Investments o Real Estate O'Connor o Timber o Fund of Funds o FX and Interest Funds o Equity Derivatives [Graphic Omitted] UBS 48 Investment Funds / GAM ------------------------------------------------------------------------------- SECTION 3.2 [Graphic Omitted] UBS Investment Funds / GAM ------------------------------------------------------------------------------- Investment Funds GAM One of the biggest mutual fund Multi-manager selection increasing providers in Europe availability of different investment styles to Private Banking clients Almost exclusive in-house distribution CHF 22 billion assets under management CHF 197 billion assets under management 170 mutual funds and unit trusts Comprehensive range of 145 High reputation and good performance mutual funds track record - Asset Allocation funds - Money Market funds - Bond funds - Equity funds - Capital preservation funds - Real estate funds [Graphic Omitted] UBS 50 Investment Funds/GAM ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99 vs2Q99 vs1Q00 ------------------------------------------------------------------------------- Operating income 165 169 60 175% (2%) Operating expenses 131 139 50 162% (6%) Pre-tax profit 34 30 10 240% 13% ------------------------------------------------------------------------------- Cost/income ratio(1) 65% 69% 83% ------------------------------------------------------------------------------- 2Q00 KPI's (CHFbn) 2Q00 1Q00 vs1Q00 ------------------------------------------------------------------------------- AuM 225 232 (3%) Net new money 0.8 0.6 33% ------------------------------------------------------------------------------- Headcount 1,038 963 8% ------------------------------------------------------------------------------- NOTE: 1 Pre-goodwill & credit loss expense [Graphic Omitted] UBS 51 Key Investment Funds strategies ------------------------------------------------------------------------------- Expand third party distribution [Graphic Omitted] Third party clients Intermediaries UBS funds Existing UBS client franchises [Graphic Omitted] UBS 52 UBS Warburg ------------------------------------------------------------------------------- SECTION 4 [Graphic Omitted] UBS UBS Warburg ------------------------------------------------------------------------------- UBS Warburg o C&IC: innovation, research and advice, and complete access to the world's capital markets Corporate & Institutional o UBS Capital: global private Clients equity business Private Equity o Private Clients: on-shore (UBS Capital) investment services for high net worth clients globally Private Clients o e-services: will target affluent Europeans using a multi-channel approach e-services [Graphic Omitted] UBS 54 Corporate and Institutional Clients ------------------------------------------------------------------------------- SECTION 4.1 [Graphic Omitted] UBS UBS Warburg league table positions ------------------------------------------------------------------------------- Global M&A (completed transactions)(1) International Equity(2) 1 1 5 6 9 10 10 13 15 15 -------------------------------- -------------------------------- 1999 1Q2000 YTD 1999 1Q2000 YTD International Fixed Income(2) Eurobonds(2) 1 1 1 1 3 2 5 9 15 15 -------------------------------- -------------------------------- 1999 1Q2000 YTD 1999 1Q2000 YTD SOURCE: (1) Thomson Financial Securities Data (2) Capital Data Bondware [Graphic Omitted] UBS 56 UBS Warburg institutional franchise ------------------------------------------------------------------------------- [Graphic o Top tier secondary equity market share globally Omitted] o Leading fixed income distribution o Top tier global equity research house o #4 Global Research Team (Institutional Investor) o #2 Pan-European brokerage firm (Extel Research) o #18 US Research Team (Institutional Investor) o #3 All-European Research Team (Institutional Investor) o #3 All-Asia Research Team (excl. Japan) (Institutional Investor) o #4 Foreign Exchange House (Euromoney May 2000) [Graphic Omitted] UBS 57 Corporate & Institutional Clients ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99(2) vs2Q99 vs1Q00 ------------------------------------------------------------------------------- Operating income 4,821 4,975 3,355 44% (3%) Operating expenses 3,401 3,530 2,849 19% (4%) Pre-tax profit 1,420 1,445 506 181% (2%) ------------------------------------------------------------------------------- Cost/income ratio(1) 69% 69% 82% ------------------------------------------------------------------------------- 2Q00 KPI's 2Q00 1Q00 vs1Q00 ------------------------------------------------------------------------------- Compensation ratio 54% 55% NPL ratio 2.7% 2.4% VaR utilization (CHFm) 231 277 ------------------------------------------------------------------------------- Headcount 12,730 12,847 (1%) ------------------------------------------------------------------------------- NOTE: 1 Pre-goodwill & credit loss expense 2 Adjusted for sale of International Global Trade Finance business CHF 200m [Graphic Omitted] UBS 58 Record levels of profitability ------------------------------------------------------------------------------- (CHF m) (C/I ratio) 6,000 90% 5,000 4,000 [Graphic Omitted] 80% 3,000 2,000 70% 1,000 0 60% ------------------------------------------------------------- 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 Total operating income before credit loss expense Total operating expenses Cost/income ratio [Graphic Omitted] UBS 59 Corporate and Institutional Clients business areas ------------------------------------------------------------------------------- Focus on core business with attractive risk/returns and a solid basis for growth
Equity Fixed Income Treasury Corporate Finance Products o Origination, sales & o Origination, sales & o Sales & trading: o M&A advisory trading: trading: -FX - spot & o Equity and debt -European, North -Interest rate and derivatives origination American, Asian credit derivatives -Precious metals - o Leveraged finance cash & derivative -Gov't bonds spot & derivatives origination equity products -Investment grade -Short term interest o Country & global -Equity structured credit rate products sector coverage products -Emerging markets -Cash & derivatives o Economic, loans -ETDs corporate, sector & -Leveraged finance o Collateral trading & strategic research o Principal finance securities lending o Economic & credit o Group treasury research o Currency research
[Graphic Omitted] UBS 60 Key Corporate & Institutional Clients strategies ------------------------------------------------------------------------------- A leading global investment bank in terms of client franchise and financial servicing capabilities, with a return on equity consistent with industry leaders [Graphic [Graphic [Graphic Omitted] Omitted] Omitted] Build content Strengthen Leverage new leadership global client franchise technologies & execution & channels excellence [Graphic Omitted] UBS 61 The whole of UBSW effortlessly to any client ... ------------------------------------------------------------------------------- ... through Investment Banking OnLine (IBOL) Equities Fixed Income [Graphic Omitted] [Graphic Omitted] [Graphic Omitted] [Graphic Omitted] [Graphic Omitted] Treasury Products Corporate Finance [Graphic Omitted] UBS 62 UBS Capital ------------------------------------------------------------------------------- SECTION 4.2 [Graphic Omitted] UBS Global portfolio composition ------------------------------------------------------------------------------- CHF 3.8 billion book value (30 June 2000) Book value by sector Book value by region 17% 6% 22% 9% [Pie Chart 5% [Pie Chart Omitted] Omitted] 44% 9% 17% 10% 41% 20% o Consumer related o Diversified industrial o Europe o North America o Transportation o Communications o Asia o Latin America o Computer related o Energy o Others IRR p.a. of 50 - 60% since inception [Graphic Omitted] UBS 64 Experienced global team of 113 professionals ------------------------------------------------------------------------------- Our local presence & know-how is a competitive advantage [Graphic Omitted] London The Hague Munich Zurich Paris Milan Tokyo New York Seoul Hong Kong Singapore Sao Paulo Sydney Buenos Aires [Graphic Omitted] UBS 65 UBS Capital ------------------------------------------------------------------------------- 2Q00 2Q00 (CHFm) 2Q00 1Q00 2Q99 vs2Q99 vs1Q00 ------------------------------------------------------------------------------- Operating income 4 147 45 (91%) (97%) Operating expenses 47 33 36 31% 42% Pre-tax profit (43) 114 9 - - ------------------------------------------------------------------------------- 2Q00 KPI's 2Q00 1Q00 vs1Q00 ------------------------------------------------------------------------------- Book value (CHF bn) 3.8 3.4 12% ------------------------------------------------------------------------------- Headcount 113 107 6% ------------------------------------------------------------------------------- KPI's 1H00 1H99 ------------------------------------------------------------------------------- Value creation (CHF bn) 0.4 0.3 ------------------------------------------------------------------------------- [Graphic Omitted] UBS 66 UBS Capital investment targets ------------------------------------------------------------------------------- (CHF bn) 5.0 4.0 o Committed funds 3.0 o Target 2.0 3.8 1.0 2.0 0.0 ---------------------------------------------------- UBS Balance Sheet External Funds [Graphic Omitted] UBS 67 Private Clients ------------------------------------------------------------------------------- SECTION 4.3 [Graphic Omitted] UBS PaineWebber contributes global scale... ------------------------------------------------------------------------------- ... to the individual clients franchise of UBS Warburg UBS Warburg "Individual clients" Corporate & Private Clients Institutional UBS Capital e-services Mitchell Hutchins Asset Management Clearing Services o UBS o PaineWebber [Graphic Omitted] UBS 69 A growth firm in a growth industry ------------------------------------------------------------------------------- US household financial assets PaineWebber client assets (USD tr) (USD bn) CAGR = 8% CAGR = 21% $33 $500 $31 $423 $24 $245 $18 $139 $15 $74 -------------------------------- ------------------------------- 1990 1993 1996 1999 2000E 1990 1993 1996 1999 2000E o Liquid Financial Assets o All Other SOURCE: Federal Reserve [Graphic Omitted] UBS 70 Financial advisor to the affluent ------------------------------------------------------------------------------- Average retail account size PaineWebber Merrill Lynch Morgan Stanley DW SSB Schwab TD Waterhouse DLJDirect AmeriTrade E*Trade 0 50 100 150 200 Assets per active account ($000s) SOURCE: Goldman Sachs research report, February 14, 2000 [Graphic Omitted] UBS 71 EDGE: an internet asset gathering portal ------------------------------------------------------------------------------- EDGE client assets EDGE client households (USD bn) (000s) $140 176 CAGR: 171% CAGR: 174% $60 71 $26 35 [Graphic Omitted] ----------------------------- ---------------------------------- 1997 1998 1999 1997 1998 1999 Average assets per EDGE household: USD 798,000 38% of client assets online via the EDGE at June 2000 [Graphic Omitted] UBS 72 UBS & PaineWebber: Strategic Rationale ------------------------------------------------------------------------------- SECTION 5 [Graphic Omitted] UBS Strategic vision ------------------------------------------------------------------------------- UBS has been looking to leverage its broad range of content [Graphic Omitted] Existing client franchises New client franchises UBS & 3rd party content PaineWebber brings new affluent client franchises in the US [Graphic Omitted] UBS 74 A powerful strategic fit ------------------------------------------------------------------------------- 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 [Graphic Omitted] UBS 75 Reputation for content and service ------------------------------------------------------------------------------- Enhanced service for institutional Premium content for private clients clients o Leading edge wealth management o Powerful US equity distribution management techniques franchise o Expertise in the use of o Significant US institutional technology to enhance equities and fixed income relationships franchises o Access to private equity, o Access to additional capital for structured product solutions and client facilitation alternative investments o Wider asset management choice - "best of breed" ------------------------------------ --------------------------------------- o Leading global research platform and access to new issues globally [Graphic Omitted] UBS 76 Leading client base ------------------------------------------------------------------------------- Proforma assets by client domicile(1) UBS UBS and PaineWebber 4% 27% 37% [Pie Chart Omitted] 49% [Pie Chart Omitted] -----> 69% 14% SOURCE: UBS Group analysis o Europe & rest of world NOTE: o Switzerland 1 High Net Worth and Affluent Clients only o USA [Graphic Omitted] UBS 77 Positioned for higher market rating ------------------------------------------------------------------------------- Multiples at 5 January 1997(1) Multiples at 10 July 2000(2) 20.0x 11.5x 10.6x 10.5x 9.7x [Graphic Omitted] ------------------------------------------------------------------------------- PaineWebber Dean Witter Morgan PaineWebber MSDW Stanley o Global reach and scale o Combining premium content with private client & institutional distribution Notes: 1 Based on 1997 estimated earnings 2 Based on 2000 estimated earnings [Graphic Omitted] UBS 78 Financial Management ------------------------------------------------------------------------------- SECTION 6 [Graphic Omitted] UBS Strong, well-managed capital structure ------------------------------------------------------------------------------- (CHF m) [Graphic Omitted] 2,500 16% Long Term Rating 2,000 Moody's AA1 S&P AA+ 12% Fitch/IBCA AAA 1,500 8% 1,000 4% 500 0 0% -------------------------------------------------------------------- 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 o 'Second line' o Tier 1 ratio share buyback [Graphic Omitted] UBS 80 Loan portfolio development ------------------------------------------------------------------------------- (CHF bn) % 400 [Graphic Omitted] 5.0 350 4.5 300 4.0 250 3.5 200 3.0 150 2.5 100 2.0 50 1.5 1.0 0.5 0 0.0 ----------------------------------------------------------------- 30.06.98 31.12.98 30.06.99 31.12.99 30.06.00 o PCC loans (gross) o Other loans (gross) o NPL% [Graphic Omitted] UBS 81 VaR utilization & net trading income ------------------------------------------------------------------------------- UBS Warburg (CHF m) [Graphic Omitted] (CHF m) 3,500 300 3,000 250 2,500 200 2,000 150 1,500 100 1,000 50 500 0 0 ---------------------------------------------------------------- 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 0 Net trading income o VaR (UBS Warburg) [Graphic Omitted] UBS 82 Disclosure principles ------------------------------------------------------------------------------- o Achieve a fair market value by communicating transparently, openly and consistently with investors and the financial markets at all times o Multi-segmental reporting - quarterly analysis o Same KPIs used for internal performance measurement and external reporting o Disclosure improvements - prior consultation with analyst community - workshops to explain 2000 manager magazine: 'best annual report of the year' award [Graphic Omitted] UBS 83 Market View ------------------------------------------------------------------------------- SECTION 7 [Graphic Omitted] UBS UBS: Peer group valuation (18 September 2000) ------------------------------------------------------------------------------- P/E and EPS Estimates I/B/E/S - EPS estimates P/E multiples Peers 2000 2001 2000 2001 ------------------------------------------------------------------------------- Morgan Stanley Dean Witter (USD) 5.1 5.4 18.5 17.5 Merrill Lynch (USD) 3.9 4.0 16.8 16.4 Credit Suisse (CHF) 21.4 24.1 16.9 15.0 Deutsche Bank (EUR) 4.5 5.3 21.6 18.0 ------------------------------------------------------------------------------- Peer Group Average 18.4 16.7 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- UBS (CHF) 16.3 18.3 15.5 13.8 ------------------------------------------------------------------------------- SOURCE: Bloomberg [Graphic Omitted] UBS 85 UBS share price development ------------------------------------------------------------------------------- 125% 120% UBS 115% 110% [Graphic Omitted] 105% 100% 95% DJ EURO STOXX Banks 90% 85% -------------------------------------------------------------------------- Dec Jan Feb Mar Apr May Jun July Aug Sep 99 00 00 00 00 00 00 00 00 00 Source: Bloomberg [Graphic Omitted] UBS 86 Summary ------------------------------------------------------------------------------- SECTION 8 [Graphic Omitted] UBS UBS strengths ------------------------------------------------------------------------------- o Leading industry position across all core businesses o Strong ratings and capitalization o Unique client franchise and brand o Record of technological innovation o Risk management excellence o Proven expertise in mergers, acquisitions and integration o Culture which embraces change [Graphic Omitted] UBS 88 Additional information on UBS ------------------------------------------------------------------------------- http://www.ubs.com/investor-relations [Graphic Omitted] Tel: +41 1 234 4100 Fax: +41 1 234 3415 e:mail: SH-investorrelations@ubs.com [Graphic Omitted] UBS 89 Further information ------------------------------------------------------------------------------- This communication is not a solicitation of a proxy from any security holder of PaineWebber Group, Inc. UBS and PaineWebber will be filing with the Securities and Exchange Commission a proxy statement/prospectus to be 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 WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by UBS will be available free of charge from Investor Relations, UBS, Stockerstrasse 64, Zurich. Documents filed with the SEC by PaineWebber will be available free of charge from Geraldine Banyai, Assistant Secretary, 1285 Ave of the Americas, New York, New York 10019. PaineWebber and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the security holders of PaineWebber in favor of the merger. The directors and executive officers of PaineWebber include the following: D. B. Marron; M. Alexander; S. P. Baum; E. G. Bewkes, Jr.; R. Braun; R. A. Dolan; F. P. Doyle; J. T. Fadden; J. J. Grano, Jr.; J. W. Kinnear; R. N. Kiyono; T. A. Levine; R. M. Loeffler; E. Randall, III; H. Rossovsky; K. Sekiguchi; R. H. Silver; M. B. Sutton; and J. R. Torell III. Collectively, as of February 4, 2000, the directors and executive officers of PaineWebber may be deemed to beneficially own approximately 4.8% of the outstanding shares of PaineWebber common stock. Security holders of PaineWebber may obtain additional information regarding the interests of such participants by reading the proxy statement/prospectus when it becomes available. [Graphic omitted] UBS 90