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Investor optimism rises slightly to highest levels in 22 months, according to UBS Index

| Media Releases Americas

Balancing Federal Budget, Reforming Social Security and Providing Health Insurance Deemed Highest Priorities for Congress and President

NEW YORK, January 26, 2004 - Overall optimism rose slightly to a 22-month high, with investors continuing to express confidence in the stock market's performance along with increased concerns over the unemployment rate, according to the UBS Index of Investor OptimismĀ®, a joint effort of UBS and the Gallup Organization.

Currently at 108, the overall Index increased by four points this month, up from 104 in December, reaching its highest levels since March 2002. Conducted monthly, the Index had a baseline of 124 when it was established in 1996.

In January, 67 percent report they are optimistic about the performance of the stock market in the coming 12 months, up from 38 percent one year ago, and notably, 91 percent of investors surveyed believe the stock market will be the same or higher a year from now. Among those surveyed, 68 percent of investors say now is a good time to invest in the financial markets, up from 65 percent one month ago and 50 percent one year ago. Substantial investors, those with more than $100,000 in investable assets, are more likely to view the current environment as a buying opportunity, with 76 percent of this group saying now is good time to invest, compared with 63 percent of average investors, those with $10,000 to $100,000 in investable assets.

Expectations for short-term return, over the next 12 months, climbed to 12.0 percent from 10.4 percent last month and 6.7 percent one year ago. This increase can be attributed to investors with less time in the market, those with investment experience of five years or less, whose expectations rose to 14.1, compared to more experienced investors, whose reported expectations of 11.7 percent.

According to the Index, 67 percent consider the economy to be in either a sustained expansion or recovery, compared with 71 percent last month and 36 percent one year ago. Interestingly, 62 percent of investors surveyed are optimistic about the outlook for economic growth, down from 67 percent last month. However, when compared to last month, investors were less optimistic about the unemployment rate, with optimism dropping to 44 percent from 52 percent in December.

This month, investors were asked about the Federal Reserve's interest rate policy and a majority, 59 percent, expect the Fed to hold interest rates at the same level during the next three months, compared with 33 percent who believe rates will be increased and 5 percent who anticipate a rate cut. Among those investors with an opinion on the subject, 87 percent say they approve of the Fed's current interest rate and 71 percent agree the Fed should hold the interest rate through the first quarter.

Investors were also asked which issues Congress and the President should consider top priorities for the next legislative session. Perhaps surprisingly, providing health insurance for Americans who do not have it and balancing the federal budget deficit rank first among the issues investors believe policymakers should address, with 36 percent saying they should be top priorities. These are followed by reforming Social Security, 33 percent; enacting stricter accounting regulations for businesses and corporations, 29 percent; and increasing funds for Homeland Security, 21 percent.

These findings are part of the 69th Index of Investor Optimism, which was conducted January 1 to January 15. 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 801 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 in savings and investments. The sampling error in the results is plus or minus four percentage points.

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 is the world's leading wealth management business. In the U.S., it is the third largest private client business with a client base of more than 2 million investors. Its American network of more than 8,200 financial advisors manages roughly 600 billion Swiss francs in invested assets and provides sophisticated services through consultative relationships with affluent and high net worth clients. In Switzerland and internationally, UBS has more than 140 years of private banking experience, an extensive global network of 164 offices and nearly 650 billion Swiss francs in invested assets. More than 3,200 client advisors provide a comprehensive range of services customized for wealthy individuals, ranging from asset management to estate planning and from corporate finance to art banking.

Additional information about the Index of Investor Optimism can be found at www.ubs.com/investoroptimism.

UBS Index of Investor Optimism overall trend

Overall Index
04 January 108
03 December 104
03 November 93
03 October 69
03 September 54
03 August 61
03 July 54
03 June 77
03 May 42
03 April 66
03 March 5
03 February 9
03 January 38
02 December 52
02 November 41
02 October 29
02 September 60
02 August 52
02 July 46
02 June 72
02 May 90
02 April 89
02 March 121
02 February 92
02 January 115
01 December 88
01 November 84
01 October 86
01 September 50
01 August 76
01 July 74
01 June 85
01 May 90
01 April 81
01 March 82
01 February 77
01 January 96
00 December 106
00 November 130
00 October 132
00 September 147
00 August 160
00 July 143
00 June 149
00 May 155
00 April 140
00 March 150
00 February 168
00 January 178
99 December 174
99 November 148
99 October 139
99 September 160
99 August 149
99 July 166
99 June 146
99 May 163
99 April 168
99 March 151
99 February 167
98 December 141
98 September 147
98 June 160
98 March 161
97 December 151
97 September 151
97 June 152
97 February 128
96 November 125
96 October 124