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UBS Institutional Consulting

A strategic approach for institutional investors

UBS Institutional Consulting provides the vast resources of a global financial servicesleader with hands-on guidance from yourown local dedicated consulting team

Our Consulting Process

UBS Institutional Consulting Process

Today’s institutional investors face newchallenges in investment management. To meet your strategic goals, be it creating or revising an investment policy statement,managing risk/return objectives, changingyour asset allocation or evaluating investmentmanagers, you must sort through anunprecedented number of investmentproducts and strategies. Structuring andmaintaining an optimal investment program is an on-going concern.

Our experienced Institutional Consultantsunderstand the issues facing institutions and are committed to finding customizedsolutions that address your objectives and goals. We bring all of the extensiveresources, expertise, services and strategiesthat UBS has to offer to our clients.

UBS Institutional Consulting concentrates on the four primary investment managementneeds of institutional investors:

• Investment Policy Planning Assistance

• Asset Allocation Modeling

• Manager Search, Identification andRecommendation

• Ongoing Consulting and PerformanceMeasurement

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We are committed to combiningour experience, knowledge andenergy to provide customizedsolutions that address yourobjectives and goals.

• Assess CurrentSituation

• Risk/Reward Profile• Assistance with

Investment PolicyDevelopment and Review

• Asset AllocationAnalysis

• Overall PortfolioDesign

InvestmentPolicyPlanningAssistance

InstitutionalConsultingClients

AssetAllocationModeling

• Portfolio and Manager Reviews

• Portfolio Rebalancing• Develop Further

Action Plans asNeeded

• Committee Education

• Investment Managerand Mutual FundSearch, Evaluationand Recommendation

• Strategy Integration• Cost Analysis

OngoingConsulting andPerformanceMeasurement

Manager Search,Identification andRecommendation

UBS Institutional Consulting provides advisoryservices and has been serving the investmentconsulting needs of institutional investorssince 1984. Our institutional clients includecorporations, private and public retirementplans, Taft-Hartley plans, municipalities,foundations and endowments.

UBS Institutional Consulting consists of a select group of consultants who serveinstitutional clients from locations around the country. Because of the unique and often complicated investment needs of theinstitutional investor, our InstitutionalConsultants must satisfy certain educationaland experience requirements before they canprovide Institutional Consulting services.

In addition, Institutional Consultants are required to maintain the designation of Certified Investment Management Analyst (CIMA®) or Chartered FinancialAnalyst (CFA®).

Our Consultants differentiate themselvesthrough an unwavering dedication to clientservice and success in the development oflong-term relationships with their clients.

Institutional Consultants take a disciplinedapproach to pursuing your investmentobjectives. Our Consultants have significantexperience in helping to understand theneeds and objectives of each client. Ourability to convert this understanding into a customized investment plan enables ourclients to effectively pursue their goals.

In addition to the high level of service providedby your Consultant, each is supported by thefirm’s investment research professionals whoare specialists in a variety of areas.

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UBS Institutional Consulting

We combine the advantagesof an attentive “boutique”structure with the vastresources of a leading globalfinancial firm.

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Investment Policy Planning Assistance

Your Institutional Consultant can assist you in the development of a written investmentpolicy statement. It is important that theinvestment policy statement provide clear andcomprehensive guidelines. The investmentpolicy should specify goals and objectives, anddetail the acceptable investment vehicles thatmay be used to pursue your goals.

The investment policy also provides a means for effective internal and externalcommunication of the investment goals. A written investment policy statement can be an invaluable guide to disciplined,systematic decision making.

At its basic level, an investment policystatement provides specific definitions ofinvestment goals, objectives, risk toleranceand any appropriate time horizon. It alsodefines asset allocation parameters andacceptable investments, and specifiesrebalancing strategies. It can also establishappropriate indexes and/or peer groups to beused as benchmarks in evaluating investmentperformance. Without this guidance, it isdifficult to analyze performance or identifywhich investment managers should be hiredto pursue your needs.

The starting point for developing aninvestment policy statement is the risk profile.In order to build a profile of your return andrisk requirements, your Consultant will discussthoroughly with you your required return,your needed liquidity levels, and yourexpectations with respect to returns. As partof the consulting process, you may be askedto answer a series of questions to gauge yourrisk tolerance level. You may also be asked to choose from hypothetical portfolios, eachwith different risk and return characteristics.After analyzing this information, we candetermine potential asset mixes suitable foryour objectives and risk comfort level.

A clearly defined investmentpolicy is an important part of awell-executed investment plan.

UBS Institutional Consulting takes a strategicapproach to asset allocation. We combine thepower of portfolio optimization technologyand the knowledge and experience of thefirm’s senior investment professionals andresearchers with the hands-on guidance ofyour experienced Institutional Consultant.

Our asset allocation process is consistent with modern portfolio theory and is based on mean-variance optimization models. These models are fine-tuned to reflect long-term assumptions regarding capitalmarkets and the economy, as well as newdevelopments in asset allocation technologyand academic research.

Our approach begins with the identification of major assets classes, which may includealternative investments such as hedge funds,private equity, real estate and managedfutures. For each of these asset classes, capitalmarket assumptions—the expected risk,return and correlation—are determined.

We view asset classes not only by their specificcharacteristics, but also by their potentialeffect upon the total portfolio. The relativerisk/return characteristics of each asset class are analyzed, as well as the correlationbetween them. This is important in attemptingto reduce total portfolio volatility, the key tomore stable investment results. UBS hasdeveloped an industry-leading assumptionsdevelopment process designed to accommodateboth traditional and alternative asset classesin an integrated and consistent manner.

Over time, portfolio allocations will shift fromtheir targets due to varying performance bydifferent asset classes. We will work with youto rebalance the portfolio. When UBS updatesits capital market assumptions, this may alsonecessitate revisiting your target portfolioweightings in order to enhance results andminimize risk.

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Asset Allocation Modeling

After developing guidelines and objectiveswith you, your Institutional Consultant can begin to evaluate current managers. Ascreening process involving both qualitativeand quantitative measures is used toobjectively identify the most suitable managercandidates. We evaluate managers againsttheir benchmarks and peers and use a varietyof statistics to evaluate style purity and riskprofile. The end result is a portfolio ofcomplementary managers who enable theclient to manage investment goals withappropriate risk.

The UBS proprietary database used by your Institutional Consultant to conduct a manager search is generated by theManager Research Group of InvestmentSolutions.

Manager Research uses a proprietary, multi-step process to screen prospectivemanagers. It is a carefully crafted anddisciplined process focused on selectingappropriate managers to fulfill specificinvestment mandates. Manager Researchconsiders 50 different criteria in every search.

An integral part of the investment managerselection process is the “due diligence” effort.The managers selected by Manager Researchmust pass certain due diligence standards.Once accepted into our database, managersmust continue to meet these criteria to remainin good standing.

Independent manager databases are alsosubscribed to which provide information on thousands of investment strategies. The data collected spans from basic, firm-levelinformation to detailed, product-specificinformation, and tracks dozens of managercharacteristics.

Your Institutional Consultant screens theappropriate asset classes, including alternativeinvestments, for manager candidates thatmeet performance requirements outlined inyour investment policy statement. YourConsultant will utilize multiple quantitativemetrics such as peer ranking, manager tenureand asset size. The remaining universe ofmanagers will then be reviewed using qualitativescreens such as quality of organization andpersonnel, repeatable investment process,sound investment philosophy, disciplined buy and sell decisions, risk management and objectivity.

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Manager Search, Identification and Recommendation

The manager search process is a collaborative effort betweenUBS research professionals andyour Institutional Consultant.

Considerable value is gained by reviewingperformance on a regular basis. OurInstitutional Consultants use their knowledgeof the global capital markets, investmentsectors and the styles of the investmentmanagers to analyze performance.

Backed by technology and resources, yourInstitutional Consultant can employ well-known analytical systems to help analyzeinvestment performance. Benchmarks may becustomized in order to select the mostappropriate reference vehicles against whichthe specific investments will be measured.

You will receive a Quarterly PerformanceReport that analyzes the performance of both the total portfolio and each investmentmanager’s segment. This report containsdetailed graphical and statistical dataregarding performance. Where applicable, the report provides:

• A summary of assets at the beginning andend of the reporting period, including anyadditions or withdrawals, and industrystandard time-weighted rates of return.

• A graphic and tabular representation ofinvestment performance that may includecomparisons to appropriate market indexes,inflation and your stated goals, as well as comparisons to a universe of similarlymanaged portfolios, market cyclecomparisons, performance attribution and risk and return analysis.

Your Institutional Consultant will help youobjectively evaluate each manager’sinvestment results on both an absolute and arelative basis. Together, you can evaluate thetotal performance of your investments andany factors that may require an adjustment toyour investment strategy. Should a change ofmanager be warranted, your InstitutionalConsultant can assist you in conducting anew manager search.

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Ongoing Consulting and Performance Measurement

Performance measurement is critical to overseeing and adjustingyour investment strategy.

UBS Institutional Consulting offerscomprehensive consulting services designed to meet the needs of a wide range of institutional clients.

Committee EducationConsulting to any organization is not just about managing assets. It is also abouteducating the various groups associated with the organization.

Our Institutional Consultants are available for staff training and board meetings. Everymeeting is an opportunity to provide boardmembers with ongoing developmentopportunities on a wide variety of topicsrelating to investment management, assetallocation, and capital market updates. We provide a continuous stream of currentglobal and domestic research, as well as in-depth analysis of both the capital marketsand global trends based on information from UBS Wealth Management Research or other UBS affiliates.

Additional ServicesInstitutional Consultants may provide thefollowing additional consulting services:

• Assistance in Foundation and EndowmentSpending Policy Formulation/Review

• Performance Attribution Analysis of ExistingPortfolio Structure

• Asset/Liability Analysis

• Identification of Custodial Services

• 401(k) Services: – Employee Education and Communication– Assistance in Fund Identification – Fund Performance Monitoring– Identification of Third-party

Administrators or Record Keepers

While we do not provide tax or legal advice,we can coordinate our services with otherfirms you may have retained to provideadministrative, legal and/or accountingsupport, in order to help you oversee yourinvestments more efficiently and effectively.

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Comprehensive Consulting Services

Wealth management services in the United States are provided by UBS Financial Services Inc., a registered broker-dealeroffering securities, trading, brokerage and related products and services.

It is important that you understand the ways in which we conduct business and the applicable laws and regulations thatgovern us. As a firm providing wealth management services to clients in the U.S., we are registered with the U.S.Securities and Exchange Commission (SEC) as an investment adviser and a broker-dealer, offering both investmentadvisory and brokerage services. Though there are similarities among these services, the investment advisory programsand brokerage accounts we offer are separate and distinct, differ in material ways and are governed by different lawsand separate contracts.

It is important that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. While we strive to ensure the nature of our services is clear in the materials we publish, if at anytime you seek clarification on the nature of your accounts or the services you receive, please speak with yourInstitutional Consultant.

For more information, please visit our website at www.ubs.com/workingwithus.

UBS Institutional Consulting Services are advisory services and clients should read the ADV Disclosure Documentapplicable to UBS Institutional Consulting carefully before entering into a Consulting Services Agreement with UBS Institutional Consulting.

UBS AG is the world’s largest wealthmanager—a global financial services firm withpresence in 50 countries. It serves a diverseclient base that includes affluent individuals,corporations, institutions and governments.

As an integrated firm, UBS creates addedvalue for clients by drawing on the combinedresources and expertise of all its businesses.Named “World’s Largest Wealth Manager” by Scorpio Partnership in June 2007; “Best atRelationship Management” by Euromoney inJanuary 2007; “Best Provider of Equities andFixed Income Portfolio Management” byEuromoney in January 2007; “Best provider ofHedge Fund Investments” by Euromoney inJanuary 2007; and “Best Global Private Bank”by Euromoney in January 2007.

With headquarters in Zurich and Basel,Switzerland, UBS has significant operations inall of the world’s major financial centers. Itsshares are listed on the Swiss Stock Exchange(SWX), the New York Stock Exchange (NYSE)and the Tokyo Stock Exchange (TSE).

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About UBS

UBS Financial Services Inc.www.ubs.com/financialservicesinc080214-0468-I270

UBS Financial Services Inc. is a subsidiary of UBS AG.

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©2008 UBS Financial Services Inc. All Rights Reserved. Member SIPC.

CFA and Chartered Financial Analyst are trademarks owned by the CFA Institute.CIMA is a registered certification mark of the Investment Management Consultants Association, Inc. in the United States of America and worldwide.