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Investor Optimism Retreats in May Following Surge Last Month, According to UBS Index

| Media Releases Americas

Investors Cite Prolonged Economic Downturn as Top Threat to Investment Climate

NEW YORK, May 27, 2003 - Investor optimism declined in May following a dramatic increase in April, as investors expressed concerns about the state of the nation's economy and the job market, according to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization.

Currently at 42, the overall Index fell 24 points this month from 66 in April. Conducted monthly, the Index had a baseline of 124 when it was established in 1996.

This month, investors are less confident about prospects for the unemployment rate over the next 12 months, with just 33 percent of those surveyed expressing optimism, compared with 41 percent in April. Likewise, 46 percent of those surveyed are optimistic about economic growth in the coming year, down from 49 percent in April.

Despite this gloomier economic outlook, investors say they expect an average 7.9 percent return on their personal portfolio over the next 12 months, up slightly from 7.3 percent in April. Indeed, 58 percent of those surveyed say they believe now is a good time to invest in the financial markets, up from 54 percent last month, and reaching its highest level since June 2002. Substantial investors, those with more than $100,000 in investable assets are more likely to share this view, with 64 percent agreeing that now is a good time to invest, compared with 54 percent among average investors, those with $10,000 - $100,000 in investable assets.

Importantly, nearly half of those surveyed, 45 percent, continue to believe the economy has not yet hit bottom, down from 61 percent in March, when overall investor optimism sunk to its lowest level in the UBS Index's six-year history. Two-thirds of investors, 66 percent say they expect the economy to slowly improve over time, compared with 33 percent who believe the nation's economy will first get worse before it gets better.

In May, investors were also polled about current situations that can negatively impact the U.S. investment climate. Perhaps not surprisingly, a prolonged economic downturn ranked as the top concern, with 28 percent of those surveyed citing it as the most important threat. This is followed by major terrorist attacks, 20 percent; instability in the Middle East, 20 percent; strained relations between the U.S. and some European countries, 14 percent; a potential conflict with North Korea, 11 percent; and the spreading of SARS, 4 percent.

These findings are part of the 61st Index of Investor Optimism, which was conducted from May 1 to May 14. To track and measure Index changes on an ongoing basis, new samplings are taken monthly. Dennis J. Jacobe, research director for Gallup, said the sampling included 1,001 investors randomly selected from across the country. For this study, the American investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. Nearly 40 percent of American households have at least this amount of savings and investments. The sampling error in the results is plus or minus three percentage points.

In January 2002, UBS established the Index of Investor Optimism - EU 5, the European counterpart to the U.S. survey covering France, Germany, Great Britain, Italy and Spain. This month, 1,000 investors across these EU markets were polled from May 1 to May 15. Overall optimism registered at negative (-17) in May, up from negative (-29) last month.

For more than 60 years, the Gallup Organization has been a recognized leader in the measurement and analysis of people's attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup's current activities consist largely of providing marketing and management research, advisory services and education to the world's largest corporations and institutions.

UBS AG is a leading global financial services firm with 69,000 employees worldwide, providing a wide range of services to a client base that includes affluent individuals, corporations, institutions and governments. Headquartered in Switzerland, the bank has significant operations in all of the world's major financial centers and is comprised of four business groups; UBS Warburg, UBS PaineWebber, UBS Wealth Management and Business Banking, and UBS Global Asset Management.
Additional information about the Index of Investor Optimism can be found here.