CAF UK Equity Growth Fund

CAF Financial BriefingUK Equity Growth Fund

20 May 2008

John Harrison – UK Chief Investment OfficerMark Powers – UK Portfolio Manager

STRICTLY CONFIDENTIAL

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CAF UK Equity Growth Fund

Invests in a range of UK Listed shares and related securities

Objective: +2% p.a. over rolling three year periods

Benchmark: FTSE All-Share Index UBS managing the fund since 1

February 2006 Fund size: £230.4m Yield: 4.14%¹ Price / value approach

Note: Information as at 31 March 2008. 2% p.a. objective is gross of fees Source: UBS Global Asset Management1 Projected annual yield, based on the four previous income distributions

Sell candidate

Buy candidate

Price

Time

Intrinsicvalue

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Performance so far – a very poor year

90

95

100

105

110

115

120

125

130

Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08

Fund Index

Wealth series

Source: UBS Global Asset Management

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What went wrong?

Too little in cyclical business– Resources– Cyclical services– Basic industries

Too much in financials– Banks

Performance attribution – year to 31 March 2008


1 Relative performance attribution in year to 31 March 2008

Total shortfall -10.8%

Largest negative contributors¹ Resources -4.8% Financials -3.9% Cyclical services -1.6% Basic industries -1.4%

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Your new Fund Manager

Portfolio Construction

Matt Cox

Brian Gallagher

Frank Manduca

Kevin Barker

Large Cap Research Small/Mid Cap Research

Team of 19 analysts Team of 11 analysts

Accountable for performance 22 years experience

Mark PowersPortfolio Manager

Since October 2007

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Absolute value focus

“The margin of safety is always dependent on the price paid. It will be large at one (low) price, small at some higher price, non-existent at some still higher price Benjamin Graham ”

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-20%

-10%

0%

10%

20%

30%

40%

-20% -10% 0% 10% 20% 30% 40%

Value +2%: 3 years rolling returns

Note: Data through 31 March 2008Value +2% vs FTSE All Share Index, annualized three-year rolling returns, quarterly data 1 January 1986 – 31 March 2008Past performance is no guarantee of future results. Results are presented gross of fees. See the additional disclosures at the end of this presentation


FTSE All Share Total Return (% returns)

Valu

e +2

% re

turn

Outperforming

Underperforming

Annualized returns 1 year Since inception Composite -13.38% 12.07% Benchmark -7.74% 10.76%

Performing when you need it most …

Q108

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Main UK Equity transactions since taking overRelative performance to 31 March 2008

Key: Red font: stocks that have detracted from performanceBlue font: stocks that have added to performance


Bought %

relative Added to %

relative

Premier Farnell +33 Tomkins +15 Psion +30 Aviva +8 HMV +25 DSG -5 Regus +22 Astra Zeneca -6 IMI +15 BP -6 AB Foods +13 Electros -9 HSBC +12 TNS -10 Carnival +10 Cattles -11 Unilever +6 Glaxo -2 SMG -17 British Airways -30

Reduced %

relative Sold %

relative

Compass +20 National Grid -5 RBS -10 SSL -5 Wolseley -10 Meggitt -5 HBoS -17 Galliform -8 Old Mutual -18 Tesco -8 DS Smith -28 Kingfisher -10 Rentokil -30 Lancashire -10

Home Retail -22

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Key themes for 2008

Continue to favour ‘mega’ over

mid/small cap

Favour beneficiaries of Sterling weakness

Position for unwinding of EM

‘de-coupling’ theory

Buy selective depressed cyclicals

Largest holdings remain BP, GlaxoSmithKline, Unilever, Vodafone

Recent purchases: BA, Carnival and Wolseley

Continue to avoid miners, Standard Chartered

Companies like Brixton, Cattles, DSG and IMI are discounting a full-blown recession

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Our largest relative viewsAs at 31 March 2008

1 The portfolio is not permitted to own tobacco companiesSource: UBS Global Asset Management

+5.7% +4.8% +4.4%

-2.0% -2.8%

-10.9%

Pharmaceuticals Mobile Telecoms Support Services

Aerospace Tobacco¹ Mining

Sect

or

+4.9% +4.4% +4.2%

-2.4% -2.5% -3.3%Vodafone GlaxoSmithKline BP

BG Anglo American Rio Tinto

Stoc

k

We like We don’t own for you

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Top 10 stocks offer compelling value

Source: Thomson Datastream1 Top 10 FTSE stocks by market capitalisation at end March 2007

FTSE Mid 250 and FTSE top 10 stocks dividend yield

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Dec-02 Apr-04 Aug-05 Nov-06 Mar-08

Divid

end

yield

%

Top 10¹ FTSE 250

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1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%De

c-94

Oct-9

5

Aug-

96

Jun-

97

Apr-9

8

Feb-

99

Dec-9

9

Oct-0

0

Aug-

01

Jun-

02

Apr-0

3

Feb-

04

Dec-0

4

Sep-

05

Jul-0

6

May

-07

Mar

-08

Yield

%

Value portfolio FTSE All Share Index +10%


Structural yield premiumValue +2% yield vs FTSE All Share yield +10%

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Summary

Relative performance in the year to March 2008 was very poor

We changed the portfolio manager last October

The portfolio is positioned for a more difficult economic environment– Large positions in defensive sectors– Selective exposure to cyclical businesses

The yield is well above the market– Income distributions should rise during 2008/09

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DisclaimerUBS Global Asset Management (UK) Ltd is a subsidiary of UBS AG.Registered in England, authorised and regulated by the Financial Services Authority: UBS Global Asset Management (UK) Ltd, UBS Global Asset Management Funds Ltd, UBS Global Asset Management Life Ltd. Telephone calls may be recorded.© UBS 2008. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.This document is for Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances.

This material supports the presentation(s) given. It is not intended to be read in isolation and may not provide a full explanation of all the topics that were presented and discussed. Care has been taken to ensure the accuracy of the content, but no responsibility is accepted for any errors or omissions.

Please note that past performance is not a guide to the future. The value of investments and the income from them may go down as well as up, and investors may not get back the original amount invested.This document is a marketing communication. Any market or investment views expressed are not intended to be investment research. The document has not been prepared in line with the FSA requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.The information contained in this document should not be considered a recommendation to purchase or sell any particular security and the opinions expressed are those of UBS Global Asset Management and are subject to change without notice. Furthermore, there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change frequently. This document does not create any legal or contractual obligation with UBS Global Asset Management. The recipient agrees that this information shall remain strictly confidential where it relates to the Investment Manager's business. The prior consent of UBS Global Asset Management (UK) Ltd should be obtained prior to the disclosure of commercially sensitive information to a third party (excluding the professional advisors of the recipient). Information reasonably deemed to be commercially sensitive and obtained from UBS Global Asset Management (UK) Ltd should not be disclosed. This information is supplied with a reasonable expectation that it will not be made public. If you receive a request under the Freedom of Information Act 2000 for information obtained from UBS Global Asset Management (UK) Ltd we ask that you consult with us. We also request that any information obtained from UBS Global Asset Management (UK) Ltd in your possession is destroyed as soon as it is no longer required.

CAF UK Equity Growth Fund

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