EQUITY TRUST GROWTH STOCK SERIES 22

Transcription

1 EQUITY TRUST GROWTH STOCK SERIES 22

2 1. INFORMATION AGE VERSUS INDUSTRIAL AGE The Information Revolution is pushing the economy into the Information Age, when capturing and effectively exploiting information is the key to improving customer service, and therefore corporate performance. The Information Revolution contrasts with the First and Second Industrial Revolutions, when the competitive landscape was altered by innovations in transportation, not communication. These innovations generated enormous incremental demand for raw materials. By contrast, the rise of the information economy is not generating much incremental demand for most commodities. Poised to Benefit: Information infrastructure builders and owners of the network, leading Internet portals. Cisco Systems, IBM, Lucent, Microsoft, Sun Microsystems, AT&T, America Online, Level 3 Communications, MCI WorldCom, Microsoft, Nextel Communications, Qwest Communication, Time Warner, Yahoo. 2. ENTRENCHED COMPANIES VERSUS START-UP COMPANIES The Web threatens entrenched companies because it facilitates the expansion of industry capacity at relatively low cost. Web sites are inexpensive to build and Web start-ups have access to cheap capital. Entrenched companies should respond to the Web by embracing innovations even if they hurt the bottom line initially. Poised to Benefit: Early adopters; firms with strong brand and/or limited geographic reach. Amazon.com, America Online, Costco, Dell, ebay, Gap, Mattel, Office Depot, Priceline.com, Sotheby s Holdings. 3. PRODUCERS VERSUS DISTRIBUTORS Although each industry and company must be analyzed on a case-by-case basis, it is broadly true that the Web increases the power of producers. Some distributors and middlemen will be disintermediated as producers communicate with customers over the Web and, in some industries, deliver product as well. Poised to Benefit: Manufacturers and service providers with strong market positions; efficient auto insurers and airlines. Carnival, Dell, Walt Disney Company, Estee Lauder, Tommy Hilfiger, Allstate, AMR, Geico (Berkshire Hathaway), Progressive Corp, SABRE Group. 4. E-TAILING (I.E., ELECTRONIC RETAILING) VERSUS BRICK AND MORTAR RETAILING For established retailers, the Web represents both a threat and an opportunity. The theoretical threat is that a new company backed by venture capitalists can create a presence on the Web and steal customers. But although the Net facilitates new entrants, the biggest barrier to entry is distribution. The opportunity then is that the Net provides a new sales channel for an established distribution system. Poised to Benefit: Companies with strong brands and sophisticated distribution systems. Companies with fragmented supplier bases. Catalog retailers. Abercrombie & Fitch, Ann Taylor, Costco, FDX Corp, Gap, Home Depot, Lowe s, Office Depot, Staples, Talbots, Tiffany, Victoria s Secret (Intimate Brands), Wal-Mart, Zale, Lands End, Lillian Vernon, Spiegel. 5. NEW BRANDS VERSUS ESTABLISHED BRANDS The Web further fragments media, making it harder to establish a new brand. Although established brands have an initial advantage over new brands, longer term, the Net could threaten some established brands because it makes comparison shopping much easier. Easy comparison shopping is a threat to retailers selling product-based brands, which includes most department stores. But companies that offer lifestyle brands could be less vulnerable. Poised to Benefit: Radio; lifestyle brands. Clear Channel Communications, Infinity Broadcasting, Yahoo, Gap, Gucci, LVMH (Louis Vuitton Moet Hennessy), Starbucks, Tiffany.

3 6. DOMINANT VERSUS SMALLER SIZED COMPANIES Many small companies are battling for a place on the Web by giving something away for free. But while the barriers to entry are remarkably low, the barriers to profitable prosperity and growth on the Web are extremely high. While some small Internet companies will survive and become profitable niche businesses, most will be overpowered by the handful of dominant Net companies. Poised to Benefit: Dominant Net companies. America Online, Microsoft, Yahoo. 7. COMMODITIZED INFORMATION VERSUS PROPRIETARY CONTENT VERSUS SPECIALIZED INSIGHT In addition to disseminating information that heretofore was not freely available, the Web also makes available, for free, huge quantities of information that consumers once had to pay for. Commoditization of information will be negative for many traditional providers of information. Proprietary content will be valuable if consumers pay for it companies that offer free or low-cost proprietary content on the Net risk cannibalizing other revenue sources. Consumers will be willing to pay for insight tailored to their specific needs. Poised to Benefit: Proprietary content companies; selected consumer banks; processing banks; top-tier brokers and insurance firms. Walt Disney Company, Time Warner, Citigroup, Wells Fargo, Bank of New York, State Street, Donaldson, Lufkin & Jenrette, Hartford Life, Merrill Lynch, Morgan Stanley Dean Witter, Nationwide Financial. 8. PAPER VERSUS PAPERLESS The Web is fundamentally, but subtly, changing the relationship between people, paper and words. Computers clearly are not going to replace paper as a medium for actually reading long passages of text. The convenience of paper combined with human nature will prevent a paperless world. But selective printing will replace mass storage of paper-based content. Poised to Benefit: Computer printers, digital copiers. Lexmark, Xerox. 9. CYBERSPACE VERSUS REAL ESTATE The use of the Net is expected to result in lower demand for retail space, higher demand for warehouse space (as manufacturers who want to make fast, convenient deliveries to Web shoppers will need warehouses scattered around the country), and unchanged demand for office space. Poised to Benefit: Warehouse REITs (real estate investment trusts). AMB Property, EastGroup Properties. R E S U L T S O F 1. Creation, distribution and manipulation of Digitizable GDP is the central wealth-creating activity. 2. Information is commoditized, but proprietary content and specialized insight are scarce resources. 3. Technological progress fosters benign deflation. 4. Most industries capacity can be expanded at relatively low cost. 5. A less commodity-intensive economy. 6. A new, more efficient business model: low volatility, low margins, and high turnover. 7. Excess inventories need never exist. 8. A further/finer division of labor, combined with international labor arbitrage. 9. A 24-hour global workday. 10. A silicon age of higher productivity, rising global living standards.

4 HERE S HOW YOU CAN PARTICIPATE IN THE INFORMATION REVOLUTION WARS PaineWebber s new Equity Trust Growth Stock Series 22, The Information Revolution Wars, is a five-year Unit Investment Trust that can help you tap into the potential capital appreciation of the 64 companies mentioned above without committing a large amount of capital to purchase each stock individually. Other Investor Benefits Include: Professional Selection. Each stock has been carefully selected by PaineWebber s Investment Strategy Team. Deferred Sales Charge. Investors purchasing the Trust from the Initial Date of Deposit through April 5, 2001 pay an initial sales charge of about 1% when they buy. In addition, all investors pay a deferred sales charge in six monthly installments of $2.50 per 100 units, deducted from the Trust s net asset value in Years 1 & 2. As a % of Public Amt. Per Offer Price 100 Units Initial Sales Charge 1.00% $10.00 Deferred Sales Charge Year % $15.00 Deferred Sales Charge Year % $15.00 Maximum Sales Charge 4.00% $40.00 If you sell your units before the final deferred sales charge installment in either the first or second year, the remaining balance of your deferred sales charge for that year will be deducted. Volume Purchase Discounts. For larger purchases, the overall sales charges are reduced. Amount Purchased Total Two-year Sales Charge as a % of Public Offering Price Less than $50, % $50,000 to $99, % $100,000 to $249, % $250,000 to $499, % $500,000 to $999, % $1,000,000 or more negotiable Daily Liquidity. You may redeem your Trust units at any time through PaineWebber s secondary market or through the trustee bank at the then-current net asset value. Any remaining deferred sales charge installments will be deducted from the amount you receive. Depending on market conditions, the amount you receive may be more or less than your original investment. Reinvestment Option. Dividends, if any, will be paid quarterly. Investors may elect to reinvest dividend and capital distributions, if any, into the Trust at the then-current net asset value with no initial sales charge. Such units will be subject to the deferred sales charges remaining on units received. DEFINING YOUR RISKS: IS THIS INVESTMENT RIGHT FOR YOU? The Trust is designed for investors who can assume the risks associated with equity investments. The value of your investment will fluctuate with the prices of the underlying stocks in the Trust. Stock prices can be volatile. This Trust may not be suitable for investors seeking current income. Unit Investment Trusts are not actively managed. Therefore, stocks in the Trust will not be sold to take advantage of various market conditions to improve the Trust s net asset value. There can be no assurance that any of the stocks included in the Trust will appreciate or not depreciate in price during the life of the Trust. There can be no assurance that the Trust will meet its objective. HOW TO GET STARTED The minimum purchase price is $250. If you would like more information about the PaineWebber Equity Trust Growth Stock Series 22, The Information Revolution Wars, contact your PaineWebber Financial Advisor today. Ask for a free prospectus containing more complete information including sales charges and expenses. Please read the prospectus carefully before investing.

5 PaineWebber observes that the First and Second Industrial Revolutions were violent upheavals marked by many simultaneous wars between competing interests, technologies and business models. For example, railroads supplanted canals as a means of transporting goods; the catalog retailer spelled the end for many country stores. So too, PaineWebber argues, will the Information Revolution witness many wars in which some firms perish while others flourish. Phase I of the Information Revolution consisted of the digitization of individual enterprises which created networks of increasingly ubiquitous computers: mainframes in the 1950s and 1960s, minicomputers in the 1970s and 1980s, and PCs in the 1980s and 1990s. This process mainly increased the speed and efficiency of conducting traditional ways of doing business. The Internet represents Phase II of the Information Revolution, during which electronic devices will proliferate and will all be digitally linked to each other. More than just a communication tool, the Internet is a revolutionary technology that will create a different and better economy, a genuinely new model, not simply a more efficient version of the old model. Understanding who is likely to survive and thrive in a digital economy will be a key for successful investing. Here s a look at what PaineWebber believes will be the wars of the Information Revolution along with those sectors and companies which are expected to prosper.

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