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Investor Optimism drops slightly, according to UBS Index

| Media Releases Americas

Investors Divided Over the Privatization of Social Security

New York, January 24, 2004 - Optimism dropped slightly this month, with investors expressing some concern over the economy and their personal investments, according to the UBS Index of Investor Optimism, a joint effort of UBS and the Gallup Organization.

Currently at 76, the overall index dropped 3 points this month, down from 79 in December. Conducted monthly, the Index had an initial baseline of 124 when it was established in 1996.

The decrease can be attributed to a 3-point decrease in the Index's personal dimension, which measures investors' confidence in their ability to reach investment targets and maintain income, all of which scored lower this month. The Index's economic dimension, which measures investors' sentiment on economic growth, unemployment, stock market performance and inflation remained the same this month.

According to the Index, 57 percent of those polled consider the economy to be in either a sustained expansion or recovery, while 42 percent see the economy in either a slowdown or recession. Of those who characterize the economy as being in a slowdown or recession, 76 percent say a recovery won't happen for at least two years. This represents a slight increase from last month when 73 percent of investors expected a two-year wait for recovery. Among those polled, 63 percent believe now is a good time to invest in the financial markets.

This month, investors were polled about the privatization of Social Security. When asked if they would prefer to privatize Social Security or continue with the current system, investors were divided. 49 percent reported that they favor putting a portion of their Social Security takes into a personal savings account, and 46 percent preferred to retain the current system. These findings contrast with a similar survey conducted in June 2000, which found that 60 percent of investors polled were in favor of privatizing Social Security and 36 percent wanted to keep the current system.

In addition, investors were asked about their personal expectations of our current Social Security system. When asked if Social Security benefits would be a major source of their retirement income, 19 percent said it would be a major source while 17 percent reported not at all. This differentiates from Investors polled in 1998, when a similar 17 percent said it would be a major source but 30 percent of Investors said not at all. Investors were also asked if they thought they would receive all of their Social Security benefits upon retirement. Only 15 percent reported that they thought they would receive no benefits, compared to 25 percent in 1997.

When those investors saying they favored private accounts were questioned on how important it is for Congress and the President to address the issue of private retirement accounts within the Social Security system, an overwhelming 81 percent reported that it was important. Five years ago, a poll in June 2000 found that only 61 percent of these investors expressed that view.

Despite increased concern about the U.S. government addressing the issue, investors today are somewhat more optimistic than they were five years ago about the state of Social Security. Today, 53 percent of investors say the system needs major changes compared to 2000 when 61 percent held that view.

On the issue of how to fix our current Social Security system, 64 percent of investors reported that it was a bad idea to raise Social Security taxes and 87 percent disapprove of reducing benefits for all recipients. In addition, 70 percent reported that it would be a bad idea to gradually extend the age at which benefits can be received to 70 years old. However, 73 percent of investors reported that it would be a good idea to raise taxes for people with incomes of $500,000 a year or more in order to ensure that the current social Security System can continue indefinitely.

These findings are part of the 81st Index of Investor Optimism, which was conducted January 1 to January 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 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 a leading financial firm, combining financial strength with a reputation for innovation and a global culture that embraces change.

UBS is one of the world's largest wealth managers, a premier investment banking and securities firm, and one of the largest global asset managers. In Switzerland, UBS is a market leader in retail and commercial banking.

Headquartered in Zurich and Basel, UBS employs around 66,000 people, and has operations in over 50 countries and in all major financial centers.

Additional information about the Index of Investor Optimism can be found at

month

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

December

79

104

52

88

106

174

141

151

November

69

93

41

84

130

148

125

October

62

69

29

86

132

139

124

September

74

54

60

50

147

160

147

151

August

77

61

52

76

160

149

July

88

54

46

74

143

166

June

95

77

72

85

149

146

160

152

May

71

42

90

90

155

163

April

73

66

89

81

140

168

March

85

5

121

82

150

151

161

February

97

9

92

77

168

167

158

January

76

108

38

115

96

178