Investment Philosophy: Price/Intrinsic Value

Intrinsic value is determined by the fundamentals that drive a security’s future cash flow

Discrepancies between market price and intrinsic value arise from market behavior and provide opportunities to outperform

A truly integrated global approach that produces superior research

Leading edge risk management and strong knowledge of clients which are critical for superior portfolio construction

Teams of investment specialists working together to deliver consistent results

Investor Behavior Creates Opportunities

Overview of Process

Numbers in parentheses represent number of research analysts per area

Risk Analysis

Singer (11)

Asset Allocation & Currency

Singer (23)

Global Portfolio Team

Madsen, Bertocci, McQueen, Miller, Lytle, von Streng, Pickard

ClientPortfolio

Global Equity Research

Fry (86)

Stock/sector recommendations

Estimate where risk budget is spent

Ensure portfolio incurs compensated risk

Currency decisions

Country recommendations

Bottom-up Proprietary Research Is the Key Driver

Investment Goals & Risk Parameters

Global Equity

Objective: Outperform MSCI WorldEquity (Free) Index by 225 basispoints per annum over market cycle

Tracking Error: Normal range 3% - 5%

Number of Equity Holdings: Approximately 125 to 175

Relative Exposures (Versus Benchmark)

Typical Maximum

Individual Stock Weights: ± 0.5 – 2% ± 5%

Sector Weights: ± 5% ± 10%

Regional Market Weights: ± 3 – 8% ± 25%

Investment Process & Global Research

Global Equity Valuation System

Sector Teams

Manage sector portfolios

Evaluate and communicate

Bonus linked to results

Centralized platform

Ranks stocks by valuation

Consistent world-wide

Global perspective

Uncommon research

In-depth, long-term financial models(GEVS)

86 Global Equity Analysts

Global Organization: The Driving Force Behind our Research

Global (Ex-US) Equity Portfolio: Strategy Summary

June 30, 2003

1 Largest over (+)/under (-) weights relative to benchmark MSCI Index as of 6/30/03.Totals may not add due to rounding

GLOBAL (EX-US)EQUITY PORTFOLIO

StockSpecific1 Sectors1 Common

CharacteristicsRegion/Country

+ Media +Pharmaceuticals+ Paper & Forest Products +Commercial Services+Food, Beverage & Tobacco- Financials- Metals & Mining- Industrial Conglomerates- Machinery- Utilities

+ Gallaher Group (UK)+VNU (Netherlands)+Reed Elsevier (Netherlands)+ Nestle (Switzerland)+ Aventis (France)- HSBC (UK)- UBS (Switzerland)- HBOS (UK)- Siemens (Germany)- National Australia Bank (Australia)

North America -2.6%Europe (Ex-UK) 0.7UK 6.0Japan -2.7Asia (Ex-Japan) -0.5Australia/ New Zealand -2.3Temp Cash 1.4

0.0%

= Value+ Size- Success = Variability in Markets

Active Strategy

Global (Ex-US) Equity: Sector Strategy

June 30, 2003

-4 -2 0 2 4

Media

Pharmaceuticals

Paper

CommercialServices

Food, Beverage& Tobacco

Utilities

Machinery

IndustrialConglomerates

Metals & Mining

Financials

Source: UBS Global Asset ManagemetLargest over (+)/under (-) weights relative to benchmark MSCI Index as of 6/30/03.

Media - A mix of electronic and traditional media companies. Publishers are expanding distribution by using the Internet.

Pharmaceuticals – Attractive valuations relative to other sectors with improving product pipelines in selected stocks after a period of R & D stagnation.

Paper – European paper industry shows rising cash flow, a strong competitive position in the industry and excellent capital controls.

Industrial Conglomerates – Acquisition led growth and opaque accounting are negatives for this sector.

Metals & Mining – A weak pricing environment coupled with overcapacity in most metals makes the environment very difficult.

Financials – Capital markets exposure, low commercial loan growth, and credit quality continue to be concerns for the sector.

Global (Ex-US) Equity: Current Views

June 30, 2003

There were no major changes to our sector bets over the quarter. Pharmaceuticals, banks and media remained significant overweights. Consumer durables dropped out of the top overweights to be replaced by food, beverages and tobacco

This addition to the food sector was driven at the stock level where we took an overweight position in Swiss food producer Nestle – the largest food company in the world. Nestle has superior sustainable growth to its competitors due to its exposure to faster growing divisions, such as Water. The group has a restructuring programme to focus on coordinating buying and selling on a global basis, which should lead to significant margin improvement. With interest cover of 16x there is also clear opportunity for share buybacks

Country positions wer also largely unchanged. We did halve the underweight to Japan. This does not reflect a change of view on the market as a whole – we still fail to see any positive signs of economic restructuring. Our positions in Japan continue to be concentrated on the exporters, over the quarter we topped up Nintendo, Honda and Toyota into weakness

Health care 2.1

Consumer discretionary 1.4

Energy 0.7

IT 0.6

Telecoms 0.3

Materials 0.1

Consumer Staples 0.1

Utilities -0.9

Industrials -2.1

Financials -2.2

Sector positions 1

Positive (overweight) %

Gallaher +1.76

VNU +1.66

Reed Elsevier +1.64

Nestle +1.63

Aventis +1.60

Stock positions 1

Negative (underweight) %

Royal Dutch -1.57

HSBC -1.26

UBS -1.07

HBOS -0.79

Siemens -0.64

1 Global ex US Equity Model