Private Banking Americas Investment Strategy & Advisory Group The Investment Landscape July 2011

Table of Contents Key Focus: Asset Allocation/Outlook Appendix Small Cap, Big Impact Asset Allocation/Outlook Appendix Key Forecasts Global Returns Dashboard Historic Snapshots 2

Key Focus: Small Cap, Big Impact 3

Key Focus: Small Cap, Big Impact Small capitalization stocks had the highest return of all major asset classes in 2010 – up 27%. The DRIVER framework captures the major catalysts of small cap performance, and can help in determining large cap vs. small cap portfolio split. Small cap valuations currently trade near a record- high premium relative to large caps. Small cap co’s typically very correlated to the US economy – only 17% of sales come from abroad, vs. half of sales for large caps. Small Cap DRIVERs Framework   Key Indicator(s) D Deals Merger & Acquisition (M&A) activity R Revisions Up/downward earnings revisions as % of total I Investor Sentiment VIX Volatility Index & high yield spreads V Valuation Absolute valuations & valuations relative to large cap E Economy Inflation/US dollar outlook & non-US sales exposure Retail Flows ETF/Mutual fund money flows Source: Credit Suisse Small/Mid Cap Equity Strategy Team Small Cap vs. Large Cap Valuations Read more about Small Cap in this month’s key focus article: “Small Cap, Big Impact.” Contact your Relationship Manager for more information. Source: Credit Suisse Small/Mid Cap Equity Strategy, Russell BNY/Mellon 4

Key Focus: Small Cap, Big Impact Large cap companies are on average covered by 25 equity research analysts – small cap co’s are only covered by about 7. ETF/mutual fund flows into small cap generally strongest in the beginning of year, taper off in summer months – may signal soft performance. S&P 500 corporate balance sheets are flush with cash. Could lead to increased M&A activity, which should benefit small cap. Our neutral position for US equity is 75% large cap / 25% small cap. Our current recommendation based largely on valuations is a split of 80% large cap / 20% small cap. Equity Research Analyst Coverage Source: The BLOOMBERG PROFESSIONAL Service S&P 500 Sector Cash Levels (as of Q1-2011) Read more about Small Cap in this month’s key focus article: “Small Cap, Big Impact.” Contact your Relationship Manager for more information. Source: The BLOOMBERG PROFESSIONALTM service 5

Asset Allocation & Economic Outlook 6

Cycle Clock The Cycle Clock framework breaks the economic cycle into 4 phases (Overheating, Slowdown, Contraction & Recovery). For each of the 4 phases we examine which asset classes perform best. GDP robust Unemployment low Tighter rate policy Inflation rising GDP dropping Employment slowing Tight rate policy Inflation slowing GDP contracting Unemployment high Easier rate policy Inflation low GDP picking up Employment off Easy rate policy Inflation tame Source: PB Global Research 7

Outlook Summary:                   Cash Equity Jun Jul. Cash   Underweight due to unfavorable investment returns Equity - USA - Non-US Developed - Emerging Markets   Markets rebound on improved economic data, progress on Greek debt issues   Economic momentum slowing, expected to reaccelerate in H2-11   European sovereign debt issues persist, contagion risks remain   Inflation pressures have eased, monetary policy remains supportive Fixed Income - US Tax-Exempt - US Taxable - Non-USD   Improvement in market sentiment and rising yields negative for sector   Local government fiscal issues & rising interest rates warrant caution   Quality credit fundamentals expected to peak; Greek debt rollover still an issue   EM valuations appear fair, credit selection remains key k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: PB Americas Investment Strategy & Advisory 8

Outlook Summary:       Alternative Investments - Commodities Jun Jul. Alternative Investments - Commodities - Gold - Hedge Funds - Private Equity - Real Estate   Global Macro funds poised to outperform during H2 2011 reacceleration   Current negative sentiment creates opportunity for long-term investors   Remains strong cyclically and technically with further upside Global Macro remains top opportunity in the space Private equity funds currently holding record amounts of cash – buyout activity may flourish. Suggest diversified exposure; current opportunities in US commercial property, Asia k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: PB Americas Investment Strategy & Advisory 9

Guidance Allocations The proposed Benchmark and Strategic Asset Allocations for each of the risk budgets referenced above are created by the Private Banking Americas Investments Strategy & Advisory group. The Benchmark Asset Allocation (BAA), for a 3-7 year time horizon, is the neutral position reflecting the predefined risk budgets and meets investment objectives over a full market cycle. The Strategic Asset Allocation (SAA), for a 6-12+ month time horizon, expresses views resulting in temporary deviations from the BAA to generate expected excess returns or reduce risk. Alternative investments are typically high-risk investment vehicles which are available only to qualified individuals or entities that are willing to assume above average risk and sustain limited liquidity with a portion of their net worth. Please refer to the attached “Important Legal Information” for important disclosure relating to alternative investments. Source: PB Americas Investment Strategy & Advisory 10

Economics Recent weak economic data mask strong global fundamentals; H2 reacceleration projected a Temporarily soft economic data turning more positive, second half 2011 reacceleration gaining traction. Lower gas prices and easing agriculture commodity prices point to decreased inflationary pressure. Greece’s near-term funding issue appears solved. Medium-term support and possible private sector participation still being negotiated. Japan’s industrial production is rebounding and alleviating some global supply chain bottlenecks caused by the natural disaster earlier this year. China tightening is unlikely to result in a hard landing as increased wages and government spending support growth. US Gas Prices Decline: Freeing Up Income Source: The BLOOMBERG PROFESSIONALTM service Japan: V-Shaped Recovery Source: The BLOOMBERG PROFESSIONALTM service 11

Equities  Markets rebound on improved economic data, progress on Greek debt issues Despite recent uptick in markets, valuations remain compelling, particularly in the US. Some clarity reached in Greek sovereign debt situation, though ultimate solution yet to be reached, volatility could persist. Valuations attractive in Emerging Asia and Russia, momentum strong in Russia as well, despite oil trading well off 2011 highs. Small caps look richly valued vs. large caps, and benefit relatively less from global reacceleration – prefer large cap. As reacceleration thesis plays out, cyclicals should outperform (e.g. Technology and Materials). Regional Outlook Developed Markets Emerging Markets USA  Asia  Asia Pacific ex-Japan  Latin America  Canada  Europe, Mid East, Africa  UK  Japan  Europe ex-UK  Source: Credit Suisse Investment Strategy & Advisory Sector Outlook Information Technology  Financials  Materials  Health Care  Consumer Discretionary  Industrials  Consumer Staples  Telecomm Services  Energy  Utilities  k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: Credit Suisse Investment Strategy & Advisory 12

Fixed Income  Improvement in market sentiment and rising yields negative for sector With economic growth reaccelerating in second half of ’11 and corporate leverage expected to further increase, prospect of add’l spread tightening limited. Risk averse investors: focus on short-to- medium term maturities in A to BBB space HY default rates likely to bottom in the next 2- 3 quarters. Specific opportunities still offer value. Improvement in market sentiment with more transparency around Greece and economic reacceleration could benefit the EM space. Local government fiscal issues and rising rates calls for caution in muni space. Exposure to select IG credits may offer value. Favor financials. IG Spread: Further Compression Unlikely Source: The BLOOMBERG PROFESSIONALTM service Fixed Income Outlook Emerging Markets  US Treasury Inflation Protected  US Securitized  US Investment Grade Corp.  US High Yield  US Treasuries  US Municipal  k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: PB Americas Investment Strategy & Advisory 13

Currencies USD stabilizes, but still likely to weaken over the medium term Wide interest rate gap in favor of EUR is offset by risk premium. EUR remains overvalued, but supports remains in place. Commodity currencies (AUD, NZD) overvalued, but commodity prices warrant current level. Bank of England rate hike less certain and hike to occur later than anticipated. Improving risk sentiment may weigh on JPY vs. other currencies. Narrow rate spreads at short end of curve. EM currencies expected to outperform against USD. Low US yields and ample liquidity projected to lead to further EM capital inflows. CAD: Lower oil price may pressure currency Source: The BLOOMBERG PROFESSIONALTM service FX Outlook USD vs. CAD  USD vs. CHF  GBP vs. USD  NZD vs. USD  USD vs. JPY  AUD vs. USD  USD vs. BRL  USD vs. MXN  EUR vs. USD  k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: PB Americas Investment Strategy & Advisory 14

Commodities  Current negative sentiment creates opportunity for long-term investors Further downside risk to commodities limited as macro environment improves and various markets tighten. Current levels present a good entry point. Despite recent selling pressure, palladium likely to perform well as a result of Russian supply shortages and increasing car production. Natural gas remains attractive due to favorable valuation and supply constraints. Above average summer temperatures requires increased power to run air conditioning – benefits nat gas. Agriculture prices closer to bottom, but overvaluations remain an issue, upside will be capped. Palladium: Poised for Growth Source: The BLOOMBERG PROFESSIONALTM service Commodities Outlook Precious Metals  Industrial Metals  Livestock  Agriculture  Energy  k Positive* mNegative* gNeutral* * Arrows represent the current PB Americas Investment Strategy & Advisory absolute market view for 6-12 months. Source: PB Americas Investment Strategy & Advisory 15

Alternatives Global Macro funds poised to outperform during H2 2011 reacceleration Mixed economic indicators and increased volatility have kept hedge fund capital on sidelines on fears of a double-dip recession and/or Greek default – neither of which is likely. Remain constructive on global macro funds, despite recent performance issues, given prospect of H2 2011 reacceleration. Private equity funds currently holding record amounts of cash – buyout activity may continue to flourish. Real property remains a key part of a global asset allocation. Focus on select parts of US and Asia. ISM Manufacturing Index: Turning Up Source: The BLOOMBERG PROFESSIONALTM service Greek 5yr CDS: Elevated Levels on Default Fear Source: The BLOOMBERG PROFESSIONALTM service 16

Appendix Key Forecasts Global Returns Historic Snapshots 17

Key Forecasts* Global Equity Indices Commodities Real GDP (In %) 6/30/11 12M US (S&P 500) 1,321 1,404 Euro Area (Euro Stoxx 50) 2,849 3,061 UK (FTSE 100) 5,946 6,236 Japan (Nikkei 225) 9,816 10,500 Asia Ex-Japan (MSCI Asia AC ex-Japan) 567 655 Year-end Brazil (Bovespa) 62,404 85,000 Mexico (IPC) 36,558 40,000 Commodities 6/30/11 3M 12M Energy WTI Crude Oil (USD/barrel) 95.42 98 105 US Natural Gas (USD/mmbtu) 4.37 4.50 5.50 Precious Metals (Spot, USD/ounce) Gold 1,500.35 1600 1700 Silver 34.69 34 31 Platinum 1720.20 1850 1950 Base Metals (Spot, USD/pound) Aluminum 1.15 1.25 1.30 Copper 4.28 4.17 4.80 Agriculture ($/bushel) Wheat 5.85 7.50 7.10 Corn 6.29 7.70 7.20 Real GDP (In %) 2011E 2012E Inflation 11E Global 4.40 3.70 US 2.70 2.50 Euro Area 2.30 2.10 2.60 Japan 0.20 Non-Japan Asia 7.80 7.60 5.40 Latin America 4.30 3.90 7.00 Interest Rates (10-yr Gov.) 6/30/11 3M 12M 3.16 3.2 – 3.4% 3.3 – 3.5% 3.03 3.0 – 3.2% 3.1 – 3.3% UK 3.38 3.7 – 3.9% 1.14 1.0 – 1.2% 1.2 – 1.4% Currencies (USD vs.) 6/30/11 3M 12M Euro** 1.45 1.44 1.42 Japanese Yen 80.56 84.00 87.00 British Pound** 1.61 1.65 1.67 Swiss Franc 0.84 0.88 0.92 Canadian Dollar 0.96 1.00 1.02 Australian Dollar** 1.07 1.05 New Zealand Dollar** 0.83 0.79 Mexican Peso 11.71 11.50 11.40 Brazilian Real 1.56 1.57 1.60 Source: PB Global Research, The BLOOMBERG PROFESSIONALTM service, Thompson Reuters DataStream *3month, 12month, or Year-end forecasts as indicated; **Level with USD as counter currency, price change with USD as base currency 18

Global Returns Dashboard Global Equities (TR, Local Currency) Jun-11 YTD S&P 500 -1.7% 6.0% Canada (Toronto Stock Exchange) -3.3% 0.2% Euro Area (Euro Stoxx 50) -0.3% 4.6% UK (FTSE 100) -0.4% 2.7% MSCI Asia/Pacific ex-Japan -2.7% 0.0% Japan (Nikkei 225) 1.3% -3.0% MSCI EM Asia -2.2% 1.5% MSCI EM Europe, Middle East/Africa -1.0% 2.2% Brazil (Bovespa) -3.4% -10.0% Mexico (IPC) 2.1% -4.4% Fixed Income (TR, USD) Jun-11 YTD Barclays US Government Bond -0.3% 2.2% Barclays US Municipal Bond 0.3% 4.4% Barclays US Inflation Linked (TIPS) 0.8% 5.8% Barclays US Mortgage-backed 0.1% 2.9% Barclays US Investment Grade -0.9% 3.2% Barclays US High Yield -1.0% 5.0% JP Morgan Emerging Markets 1.3% Barclays Global Aggregate Commodities (TR) Jun-11 YTD DJ-UBS Commodities Index -5.0% -2.6% DJ-UBS Agriculture Sub-index -8.2% -7.1% DJ-UBS Energy Sub-index -6.4% -1.7% DJ-UBS Industrial Metals Sub-index -0.4% -3.5% DJ-UBS Precious Metals Sub-index -4.1% 6.9% WTI Crude Oil (USD/barrel) 4.4% Gold (USD/ounce) -2.3% 5.6% Currencies (USD vs.) Jun-11 YTD Euro* -0.7% -7.7% Japanese Yen -1.2% British Pound* 2.5% -2.7% Swiss Franc -1.6% -10.1% Canadian Dollar -0.5% -3.5% Mexican Peso 1.2% -5.1% Brazilian Real -1.1% -5.9% Australian Dollar* -4.6% New Zealand Dollar* -0.6% Source: The BLOOMBERG PROFESSIONALTM service, Thompson Reuters Datastream *Level with USD as counter currency, price change with USD as base currency 19

Historic Snapshots S&P 500 & MSCI Emerging Markets Index S&P 500 & MSCI Emg Mkts 12M Fwd P/E Ratio US 10-Year Tsy Yield & Consumer Price Index US GDP Growth & Unemployment Rate Source: The BLOOMBERG PROFESSIONAL TM service,, Thompson Reuters DataStream 20

Historic Snapshots S&P/Case-Shiller Home Price Index Gold & WTI Crude Oil Price DJ-UBS Commodity Index US Dollar Trade Weighted Index Source: The BLOOMBERG PROFESSIONALTM service,, Thompson Reuters DataStream 21

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