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Wealth Management Research

Jeremy A. Zirin, CFA, Chief Equity Strategist, jeremy.zirin@ubs.com David Lefkowitz, CFA, Senior Equity Strategist, david.lefkowitz@ubs.com Joseph A. Sawe, Equity Strategist, joseph-anthony.sawe@ubs.com

3 January 2010

U.S. Top 25 Stock List
January Update
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The UBS WMR US Top 25 Stock List rose 1.9% (total return) in December, while the S&P 500 rose 1.9%. For 2009, the Top 25 list was up 29.5%, and the S&P 500 was up 26.5%. Since its inception on 18 January 2006, the list has outperformed the S&P 500 by 1,438 basis points, rising 8.9% versus the S&P 500’s decline of 5.5%. PMC Sierra (+9%), Apache (+8%), and Disney (+7%) were the top performers in December. Avon Products (-8%), Bank of America (-5%) and Travelers (-5%), were the weakest performers. We are making no changes to our list in today’s report. Fig.1 Performance of Top 25 Stock List
Since inception on 18 January 2006
Period 2006* 2007 2008 2009 December 2009 Since inception (1/18/06) Top 25 15.8% 20.7% -39.8% 29.5% 1.9% 8.9% S&P 500 12.4% 5.5% -37.0% 26.5% 1.9% -5.5% Relative Performance +3.4% +15.2% -2.8% +3.0% -0.1% 14.4%

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The S&P 500 continued to grind higher, rising 1.9% in December and capping a remarkable 65% rally off its 9 March bottom. After the S&P 500 declined by 889 points from its October 2007 peak to the March 2009 lows (from 1565 to 676), the index has now recouped nearly 50% of its collapse having rallied 439 points but remains 29% below its prior peak. Despite this strong performance, we remain constructive on the equity market outlook given still-reasonable market valuations, positive corporate profit momentum, and supportive monetary and fiscal policy conditions. More specifically, we expect S&P 500 profits to rise 26% powered by: 1) a rebound in Financial sector profits off a highly depressed base, 2) the need to replace and upgrade aging technology infrastructure to lift Technology sector profits, and 3) solid emerging market demand to support rising commodity prices underpinning Energy and Materials profits. While we believe this backdrop will be supportive for further equity market gains, the likelihood of another 20%+ year in 2010 appears low as valuations are closer to fair value and the economic recovery still faces several challenges. Figure 2: UBS WMR U.S. Top 25 Stock List
Ameriprise (AMP) Apache (APA) Apple (AAPL) AstraZeneca (AZN)+ Avon Products (AVP) Bank of America (BAC) Cisco Systems (CSCO) Coca-Cola (KO) Colgate-Palmolive (CL) Cooper Industries (CBE) CSX (CSX) Disney (DIS) Freeport McMoRan (FCX) Google (GOOG) HSBC (HBC)+

* 2006 data include the total return from the list’s inception on 18 Jan. 2006. Source: DataStream, UBS WMR, as of 31 December 2009

Hess Corp (HES) Hewlett-Packard (HPQ) Microsoft (MSFT) Monsanto (MON) PMC Sierra (PMCS)

Teva Pharmaceuticals (TEVA)+ Thermo Fisher Sci (TMO)+ Total (TOT)+ Travelers (TRV) YUM! Brands (YUM)

Stocks which are only covered by UBS Investment Research (IR) are annotated as such with a “+” sign. These stocks have a 12-month rated Buy or Neutral recommendation. UBS IR is part of UBS Investment Bank (the UBS business group that includes, among others, UBS Securities LLC). Source: UBS WMR, as of 31 December 2009

This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosures begin on page 8. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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Overview
As we turn the page on 2009, we take stock of our full-year performance and review what ideas worked and which did not pan out as well as we had expected. The big picture—300 basis points of outperformance At a very high level, one of the biggest contributors to our positive relative performance versus the S&P 500 in 2009 was our underweight stance in the Financials sector during the early months of the year. However, we were admittedly a bit too slow to embrace the sector’s recovery following its trough in March and the confidence-boosting results of the government “stress test” in May. With our current Financial sector positions, Bank of America, Ameriprise, HSBC and Travelers, we believe we are well positioned with companies that can benefit from decelerating credit losses and a pickup in capital market activity. Our pro-cyclical sector bias since the second quarter of 2009 was also a major contributor to our relative outperformance. Economically sensitive stocks such as Google, Cognizant, CSX, Union Pacific, Goldman Sachs, Freeport McMoRan, and Disney were all significant contributors to the list. Our bias towards names with material exposure to non-US markets (such as positions in Google, Freeport McMoRan, Coca-Cola and Total) also boosted our performance given the dollar weakness experienced in the last nine months of the year. However, we were also a bit slow to reduce exposure to defensive names during the earlier stages of the market’s recovery as stocks on our list such as Genzyme, ExxonMobil, AT&T, Wal-Mart and CVS all lagged the market. Tech leads the gainers, defensives lag the market At the stock level, positions that contributed the most to our relative performance in 2009 were Google, Cognizant, Thermo Fisher, Apache and CSX. Given the strong performance of the Technology sector in 2009, it is not surprising that our two best-performing stocks were from the tech sector (see Figures 3-4). We look for continued outperformance for the Technology sector in 2010; companies such as Google, Cisco and Hewlett-Packard should benefit from a pickup in enterprise spending on IT products. Stocks that detracted the most from our relative performance were New York Community Bank, Genzyme, Monsanto, ExxonMobil, and AT&T. Given that the market rally from the March lows was led by lower-quality, higher-beta, and cyclical stocks, our defensive stocks significantly lagged the market. Out of these five stocks only Monsanto remains on our list heading into 2010. We believe that the company’s strong product pipeline will outweigh the already well-known pricing pressure at the company’s herbicide business. Higher than normal turnover not expected to remain Primarily due to the high level of volatility in the equity markets, turnover on our list in 2009 was above 2006-08 levels. We made 26 changes to the list last year compared to 15 in 2006, 16 in 2007, and 18 in 2008. The results of making more changes to our list this past year were generally mixed. In some cases we did not allow ample time for our investment theses to play out (most notably New York Community Bank, Cognizant, Schlumberger and DirecTV all outperformed after we removed them from our list). In other instances, our swap ideas proved more successful; the additions of CSX, Disney and Darden were particularly well timed. UBS FS

Figure 3: Cyclical sectors outperformed in 2009; we expect continued gains from the Tech sector
S&P 500 performance by sector, 2009
70% 60% 50% 40% 30% 20% 10% 0% Healthcare Cons Disc Industrials Materials ConsStaples Utilities Financials Technology S&P 500 Telecom Energy

Source: Bloomberg and UBS WMR, as of 31 December 2009

Figure 4: Top 25 2009 performance attribution
Biggest contributors and detractors to the Top 25 Stock List’s relative performance versus the S&P 500 in 2009

Largest positive contributors to performance Google Cognizant* Thermo Fisher Scientific Apache CSX

Largest negative contributors to performance New York Community* Genzyme* Monsanto Exxon Mobil* AT&T*

* no longer on Top 25 List. Source: FactSet and UBS WMR, as of 31 December 2009

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Top 25 News and Views
YUM! Brands (Consumer Discretionary) YUM! 2009 earnings guidance was reconfirmed by management in a press release prior to its analyst day last month. However, management’s full-year estimates implied 4Q09 earnings below Street estimates (USD 0.44 vs. USD 0.46). 2010 earnings were modestly lowered as well, to 10% earnings growth, from prior guidance of “at least” 10%. Continued weakness in the US and an expected 3% sales decline in China in the upcoming quarter drove the lower estimates. Despite its near-term troubles, we believe YUM! remains an attractive investment. YUM! fits well with our strategic theme of focusing on US stocks that can benefit from emerging market growth. Over one-third of company revenues are derived in China. The company’s Chinese business is actually more profitable than its US businesses. YUM! is trading at 15x next-year earnings estimates despite strong secular growth opportunities in the Chinese and international marketplace. Bank of America (Financials) Bank of America repaid all USD 45 billion of its TARP preferreds to the US Government last month which was partially funded by issuance of USD 19.3 billion in common stock equivalents. The repayment and capital raising removes a major uncertainty, likely reduces government involvement, eliminates USD 3.6 billion annual preferred stock costs and strengthens an already strong balance sheet. Tier 1 common for Bank of America moves up to 8.4% from 7.3%. This compares favorably to some of the other large-cap US banks, including JPMorgan at 8.2%, US Bancorp at 6.8% and Wells Fargo at 6.2%. The company also named Brian Moynihan as Ken Lewis’ successor as CEO on 16 December. Microsoft (Technology) The Microsoft and Yahoo! search deal, which was first unveiled in late July, was finalized. Based on the 10-year agreement, Microsoft’s Bing search platform will be the exclusive search engine for Yahoo!, while Yahoo! will have the right to sell advertising on some Microsoft websites. The announcement stated that Microsoft would not include an “upfront payment” to Yahoo! Microsoft’s US search market share increases to about 30% on the heels of the deal. We believe Microsoft will be a prime beneficiary of the rebound in tech spending in 2010. The combination of weak enterprise technology spending over the past few years (which has led to an aged installed base of personal computers) coupled with a strong product cycle should drive strong earnings growth through 2011.

Figure 5: YUM! Brands is a global growth story
Sales by region, as of 2009 Q3

Int'l 24% China 38%

US 38%

Source: Bloomberg and UBS WMR

Figure 6: Underinvestment in Technology spending indicates source of pent-up demand
As a percentage of GDP
0.9% 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% 1950 1960 1970 1980 1990 2000 2010

Equipment and Software spending as % of GDP
Note: Black line is exponential trendline Source: Thomson Financial and UBS WMR, as of 31 December 2009

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UBS WMR U.S. Top 25 Stock List
Name Ticker Reason to Own Combination of high-quality, differentiated assets—such as ESPN (30% of profits) and theme parks—and reasonable valuation should allow shares to outperform. Yum! Is a global growth story; over a third of company revenues are derived in China alone. We believe Avon is one of the most attractive pure plays on emerging markets among US multinationals. Innovation in its core products has helped rejuvenate sales growth. With 75% of sales derived outside the US, Coke should continue benefiting from exposure to emerging markets. Derives 80% of profits outside North America and 45% from higher-growth emerging markets. Exploration and production company with well-diversified operations by product, region, and reserve life. Attractive growth prospects are not fully incorporated into the valuation, in our view. Higher oil price leverage and stronger oil production growth potential relative to its peers. Total’s operating metrics—solid volume growth and cash flow generation—combined with its reasonable valuation and high dividend yield are attractive. Trading at just 11x 2010 consensus earnings and 1.1x book value, the stock appears inexpensive compared to its peers and a lower-risk way to play rising equity markets, in our view. An undervalued recovering credit play—the stock is trading at five times our estimate of “normalized” earnings. HSBC’s non-performing loans appear to have peaked. The bank’s exposure to Asian markets should also help support future earnings power. Travelers maintains a strong capital position with ample excess capital and stands to gain market share following the dislocations in the P&C market. P/E of just 8x and a dividend yield of 4.5%, we believe that the market is not sufficiently rewarding AZN for its solid near-term EPS growth, emerging market exposure, and pipeline. Increasing focus on reducing health care costs through greater generic utilization should benefit the global leader in generic pharmaceuticals. A market-leading one-stop supplier of scientific and lab equipment. Positioned to benefit as pharma companies consolidate vendors. Thermo offers the most attractive end-to-end solution. 60% of Cooper’s sales mix falls in the early-to-middle stages of the business/investment cycle, which should drive an earnings recovery. CSX is the cheapest rail on many metrics and currently trades at a 10% discount to its peers. We are bullish on copper prices. Freeport derives roughly 75% of its revenues from this metal. We like Monsanto’s strong secular growth profile, high returns on capital and reasonable valuation. Strong secular growth and market share opportunities in both the smartphone handset and PC end-markets. A direct play on a pickup in enterprise IT infrastructure spending. Google offers good long-term growth prospects as it benefits from the structural shift of advertising dollars from traditional to online media. Enterprise spending on equipment and software is well below-trend, implying there is scope for a meaningful tech replacement cycle. At a P/E of just 12x, risk-reward is very favorable, in our view. Windows 7, which has low hardware requirements relative to Microsoft’s previous OS upgrades, should drive outperformance. Attractively valued relative to the market. Demand for its communication semiconductors should be underpinned by the fiber-to-the-home build-out across Asia and the need for increased infrastructure investment for wireless 3G in China.

Consumer Discretionary Disney YUM! Brands Consumer Staples Avon Products Coca Cola Colgate-Palmolive Energy Apache Hess Total Financials Ameriprise Bank of America HSBC Travelers Health Care AstraZeneca Teva Pharmaceuticals Thermo Fisher Scientific Industrials Cooper Industries CSX Materials Freeport McMoran Monsanto Technology Apple Cisco Systems Google Hewlett-Packard Microsoft PMC Sierra CBE CSX FCX MON AAPL CSCO GOOG HPQ MSFT PMCS AZN (ADR) TEVA (ADR) TMO AMP BAC HBC (ADR) TRV DIS YUM AVP KO CL APA HES TOT (ADR)

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UBS WMR U.S. Top 25 Financial Highlights and Performance
Name Ticker Date of Industry / Sub Industry addition Consensus Consensus Total 12 month 2009E EPS 2010E EPS Return forward PE Growth Growth December Total Return Since Addition

Consumer Discretionary Disney YUM! Brands Consumer Staples Avon Products Coca-Cola Colgate-Palmolive Energy Apache Hess Total Financials Ameriprise Bank of America ( c ) HSBC Travelers Health Care AstraZeneca Teva Thermo Fisher Scientific Industrials Cooper Industries CSX Information Technology Apple Cisco Google Hewlett-Packard Microsoft PMC Sierra Materials Freeport McMoran Monsanto FCX MON 07/31/09 Metals & Mining 04/23/09 Fertilizers & Ag Chemicals 11 22 -7% 21% 40% -25% -3% 1% 23% 1% AAPL CSCO GOOG HPQ MSFT PMCS 11/20/09 Computer Hardware 11/20/09 Communications Equipment 06/16/08 Internet Software & Services 08/31/09 Computer Hardware 06/30/09 Systems Software 09/30/09 Semiconductors 26 16 23 12 16 15 17% -13% 17% 6% -9% 9% 24% 6% 16% 13% 8% 17% 5% 2% 6% 5% 4% 9% 2% 0% 9% 18% 28% -6% CBE CSX 10/30/09 Capital Goods 05/29/09 Railroads 16 15 -33% -19% 12% 15% 0% 2% 11% 45% AZN (ADR) TEVA (ADR) TMO 09/30/09 Pharmaceuticals 07/31/08 Pharmaceuticals 03/10/06 Health Care Equipment 8 12 14 26% 18% -4% -5% 34% 12% 5% 6% 1% 7% 24% 38% AMP BAC HBC (ADR) TRV 09/30/09 Asset Management 10/30/09 Diversified Financial Services 08/31/09 Banks 01/10/07 Property & Casualty Insurance 11 18 10 9 5% -94% -58% 7% 38% 2438% 41% 0% 2% -5% -3% -5% 6% 3% 10% 5% APA HES TOT (ADR) 09/01/08 Exploration and Production 06/30/09 Integrated Oil 01/21/09 Integrated Oil 11 15 10 -51% -74% -43% 73% 114% 30% 8% 5% 3% -2% 14% 45% AVP KO CL 11/06/09 Personal Products 03/31/08 Soft Drinks 06/01/07 Household Products 14 17 17 -16% -3% 12% 29% 12% 13% -8% 0% -2% -6% -2% 29% DIS YUM 06/30/09 Media 07/22/09 Restaurants 16 15 -20% 13% 5% 10% 7% -1% 39% 4%

WMR Top 25 (a) S&P 500 (b) Relative Performance
(a) Valuation and earnings growth data is median for the stocks currently on the list. (b) Based on current consensus bottom-up estimates. (c) Bank of America 2009 consensus earnings estimates are USD 0.03 and USD 0.80 for 2010. Source: Bloomberg, FactSet, Datastream, UBS WMR, as of 31 December 2009

15 15

-4% -6%

15% 26%

+1.9% +1.9% -0.1%

+8.9% -5.5% +14.4%

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Appendix
Term / Abbreviation
1H, 2H, etc. or 1H07, 2H07, etc. 2007E, 2008E, etc. ADR AUM bn bp or bps BVPS CAGR Capex CFO CFPS Cost/Inc Ratio (%) CPI CR CY DCF DDM Dividend Yield (%) DPS EBIT EBIT Margin (%) EBIT(D)A EBITDA Margin (%) EBITDA/Net Interest EBITDAR EFVR EmV EPS Equity Ratio (%) EV FCF FCF Yield (%) FFO FY GDP GF Gross Margin (%) h/h Interbank Ratio Interest Coverage Interest exp ISIN LLP/Net Int Inc (%) LLR/Gross Loans (%) m/m mn n.a. or NA NAV Net Debt

Description / Definition
First half, second half, etc. or first half 2007, second half 2007, etc. 2007 estimate, 2008 estimate, etc. American depositary receipt Assets under management = total value of own and third-party assets managed Billion (109) Basis point or basis points (100 bps = 1 percentage point) Book value per share = shareholders' equity divided by the number of shares Compound annual growth rate Capital expenditures 1) Cash flow from operations; 2) Chief financial officer Cash flow per share Costs as a percentage of income Consumer price index Combined ratio = ratio of claims and expenses as a percentage of premiums (for insurance companies) Calendar year Discounted cash flow Dividend discount model Dividend per share divided by price per share Dividend per share Earnings before interest and taxes EBIT divided by revenues Earnings before interest, taxes, (depreciation) and amortization EBITDA divided by revenues EBITDA divided by net interest expense Earnings before interest, taxes, depreciation, amortization and rental expense Estimated fair value range Embedded value = net asset value + present value of forecasted future profits (for life insurers) Earnings per share Shareholders' equity divided by total assets Enterprise value = market value of equity, preferred equity, outstanding net debt and minorities Free cash flow = cash a company generates above outlays required to maintain/expand its asset base Free cash flow divided by market capitalization Funds from operations Fiscal year / financial year Gross domestic product Grandfathered status Gross profit divided by revenues Half-year over half-year; half on half Interbank deposits due from banks divided by interbank deposits due to banks Ratio that expresses the number of times interest expenses are covered by earnings Interest expense International securities identification number Loan loss provisions divided by net interest income Loan loss reserves divided by gross loans Month-over-month; month on month Million (106) Not available or not applicable Net asset value Short- and long-term interest-bearing debt minus cash and cash equivalents

1Q, 2Q, etc. or 1Q07, 2Q07, etc. First quarter, second quarter, etc. or first quarter 2007, second quarter 2007, etc.

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Appendix
Term / Abbreviation
Net Int Margin (%) Net Margin (%) n.m. or NM NPL Op Margin (%) p.a. P/BV P/CFPS P/E P/E Relative P/EmV PEG Ratio PPI Prim Bal/Cur Rev (%) Profit Margin (%) q/q ROA (%) ROCE (%) ROE (%) ROAE (%) ROIC (%) Solvency Ratio (%) Tier 1 Ratio (%) tn WACC UBS WMR y/y YTD

Description / Definition
Net interest income divided by average interest-bearing assets Net income divided by revenues Not meaningful Non-performing loans Operating income divided by revenues Per annum (per year) Price to book value Price/Cash flow per share Price to earnings P/E relative to the market Price to embedded value P/E ratio divided by earnings growth Producer price index Primary balance divided by current revenue (total revenue minus capital revenue) Net income divided by revenues Quarter-over-quarter; quarter on quarter Return on assets Return on capital employed = EBIT divided by difference between total assets & current liabilities Return on equity Return on average equity Return on invested capital Ratio of shareholders' equity to net premiums written (for insurance companies) Tier 1 capital divided by risk-weighted assets; describes a bank's capital adequacy Trillion (1012) Weighted average cost of capital UBS Wealth Management Research Year-over-year; year on year Year-to-date

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Appendix
Statement of Risk Equity markets are difficult to forecast because of fluctuations in the economy, investor psychology, geopolitical conditions, and other important variables.

Description and Methodology
To be added to the WMR U.S. Top 25, stocks must have a market capitalization of at least USD 2 billion and: 1. be listed on either the Sector Outperform or Sector Marketperform List from Wealth Management Research (WMR), or 2. where WMR does not include the stock on either its Sector Outperform or Sector Marketperform List, a 12-month rated Buy or Neutral recommendation by UBS Investment Research. UBS Investment Research is part of UBS Investment Bank (the UBS business group that includes, among others, UBS Securities LLC). Stocks which are only covered by UBS Investment Research are annotated as such with a “+” sign. Stocks will remain eligible for continued inclusion on the list if: 1. it is included on either the Sector Outperform or Sector Marketperform List from Wealth Management Research (WMR), or 2. only where WMR does not include the stock on either its Sector Outperform or Sector Marketperform List, a 12-month rated Buy or Neutral recommendation by UBS Investment Research. The list of 25 stocks represents our top absolute return ideas from a risk/reward perspective over the next 12 months. Stocks are chosen for inclusion on the list combining top-down analysis of anticipated investment themes and bottom-up company analysis emphasizing valuation relative to estimated secular earnings growth. Changes to the list will occur when other stocks are judged to offer more attractive risk/reward tradeoffs. The indicated performance is based on capital appreciation plus dividends of an equal weight portfolio, but does not include transaction costs, such as commissions, fees, margin interest, and interest charges. Actual transactions adjusted for such transaction costs will result in reduced total returns. Prices of stocks in this performance reflect closing prices one trading day after the addition or deletion to ensure that changes to the list are announced in a manner that allows clients to match the list's performance. A complete record of all the recommendations upon which the report is based is available from UBS Financial Services Inc. upon written request. Past performance is not an indication of future results. Since its inception, the list has included 100 stocks, of which 58 advanced and 42 declined while on the list.

Treatment of Top 25 Stocks on the Firm’s Restricted List
Where securities are included on the Firm’s Restricted List (explained in more detail below) the securities are annotated as such with an asterisk, but have been left in the Top 25 list for performance tracking purposes only. At the time the security was added to the Top 25 list, and until the time it was added to the Restricted List, it met the WMR criteria for inclusion described above. However, while it is on the Restricted List the firm and authors of this publication, are prohibited from expressing their ongoing view of the security. As a matter of course this should neither be necessarily construed positively or negatively, or as a recommendation to buy, hold or sell the security. The security remains on the Top 25 list until such time as the security is removed from the Restricted List at which time the analyst will either re-affirm his/her ongoing inclusion on the Top 25 list or remove it in accordance with the normal rules for changes to the list outlined above when other stocks are judged to offer more attractive risk/reward tradeoffs. The Firm’s Restricted List The principal reasons that issuers are included on the Firm’s Research Restricted list are that one or more legal entities within the UBS group are involved as an advisor and/or underwriter in a publicly announced corporate transaction. Dependent on relevant security regulations / laws, firm policy , the management of conflicts of interest and to avoid the appearance of impropriety, there may be a requirement for all or a combination of the following: restrictions on the publication of new research, suspensions of research ratings and forecasts, prohibitions on making recommendations to clients, restrictions on placing securities into discretionary accounts and prohibitions on proprietary and/or personal account trading in respect of names on the list.

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Appendix
Required Disclosures
Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. For a complete set of Required Disclosures relating to the companies that are the subject of this report, please mail a request to UBS Wealth Management Research Business Management, 1285 Avenue of the Americas, 13th Floor, New York, NY 10019. UBS WMR U.S. Top 25 Stock List
Name Ticker Sector Price (12/31/2009)

Ameriprise Apache Apple AstraZeneca Avon Products Bank of America Cisco Coca-Cola Colgate-Palmolive Cooper Industries CSX Disney Freeport McMoran Google Hess Hewlett-Packard HSBC Microsoft Monsanto PMC Sierra Teva Thermo Fisher Scientific Total Travelers YUM! Brands

AMP Financials APA Energy AAPL Information Technology AZN Health Care AVP Health Care BAC Financials CSCO Information Technology KO Consumer Staples CL Consumer Staples CBE Industrials CSX Industrials DIS Consumer Discretionary FCX Materials GOOG Information Technology HES Energy HPQ Information Technology HBC Financials MSFT Information Technology MON Materials PMCS Information Technology TEVA Health Care TMO Health Care TOT Energy TRV Financials YUM Consumer Discretionary

$38.82 $103.17 $210.73 $46.94 $31.50 $15.06 $23.94 $57.00 $82.15 $42.64 $48.49 $32.25 $80.29 $619.98 $60.50 $51.51 $57.09 $30.48 $81.75 $8.66 $56.18 $47.69 $64.04 $49.86 $34.97

Source: Bloomberg, as of 31 December 2009

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Appendix
Stock Recommendation System Wealth Management Research Analysts provide a relative rating, which is based on the stock’s total return potential against the total estimated return of the appropriate sector benchmark over the next 12 months. Industry Sector Relative Stock View Outperform (OUT) Marketperform (MKT) Underperform (UND) Expected to outperform the sector benchmark over the next 12 months. Expected to perform in line with the sector benchmark over the next 12 months. Expected to underperform the sector benchmark over the next 12 months.

Under review Upon special events that require further analysis, the stock rating may be flagged as "Under review" by the analyst. Restricted Issuing of research on a company by WMR can be restricted due to legal, regulatory, contractual or best business practice obligations which are normally caused by UBS Investment Bank's involvement in an investment banking transaction in regard to the concerned company. Sector bellwethers, or stocks that are of high importance or relevance to the sector, that are not placed on either the outperform or underperform list (i.e., are not expected to either outperform or underperform the sector benchmark) will be classified as marketperform. Additionally, when stocks that are not deemed to be of high importance or relevance to the sector are not expected to outperform or underperform the sector benchmark, they will simply be removed from the lists and will not be assigned a WMR rating. UBS Investment Research For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. Global Equity Rating Allocations UBS 12-Month Rating Rating Category Coverage1 IB Services2 Buy Buy 44% 39% Neutral Hold/Neutral 40% 35% Sell Sell 15% 27% 1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 30 September 2009. Global Equity Rating Definitions UBS 12-Month Rating Buy Neutral Sell Definition FSR is > 6% above the MRA. FSR is between -6% and 6% of the MRA. FSR is > 6% below the MRA.

Key Definitions Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Exceptions and Special Cases Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Companies Mentioned or Company Disclosure table in the relevant research piece.

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Appendix
Disclaimer
In certain countries UBS AG is referred to as UBS SA. This publication is for our clients’ information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation and needs of any specific recipient. We recommend that recipients take financial and/or tax advice as to the implications of investing in any of the products mentioned herein. We do not provide tax advice. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Other than disclosures relating to UBS AG, its subsidiaries and affiliates, all information expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness. All information and opinions are current only as of the date of this report, and are subject to change without notice. This publication is not intended to be a complete statement or summary of the securities, markets or developments referred to in the report. Opinions may differ or be contrary to those expressed by other business areas or groups of UBS AG, its subsidiaries and affiliates. UBS Wealth Management Research (UBS WMR) is written by Wealth Management & Swiss Bank and Wealth Management Americas. UBS Investment Research is written by UBS Investment Bank. The research process of UBS WMR is independent of UBS Investment Research. As a consequence research methodologies applied and assumptions made by UBS WMR and UBS Investment Research may differ, for example, in terms of investment horizon, model assumptions, and valuation methods. Therefore investment recommendations independently provided by the two UBS research organizations can be different. 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U.S. Top 25 Stock List

Commodities Authority, the Dubai Financial Market, the Abu Dhabi Securities market or any other UAE exchange. UK: Approved by UBS AG, authorised and regulated in the UK by the Financial Services Authority. A member of the London Stock Exchange. This publication is distributed to private clients of UBS London in the UK. Where products or services are provided from outside the UK they will not be covered by the UK regulatory regime or the Financial Services Compensation Scheme. USA: Distributed to US persons by UBS Financial Services Inc., a subsidiary of UBS AG. UBS Securities LLC is a subsidiary of UBS AG and an affiliate of UBS Financial Services Inc. UBS Financial Services Inc. accepts responsibility for the content of a report prepared by a non-US affiliate when it distributes reports to US persons. All transactions by a US person in the securities mentioned in this report should be effected through a US-registered broker dealer affiliated with UBS, and not through a non-US affiliate. Version as per October 2009. © 2010. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

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