THE 2003 REUTERS INSTITUTIONAL INVESTOR EUROPEAN EQUITIES SURVEY PUBLISHED TODAY

LONDON - Institutional Investor Research Group and Reuters today published
their second annual Reuters Institutional Investor European Equities Report.
The full results are available at website. This is one of a series of equity market surveys being developed by Institutional Investor Research Group and sponsored by Reuters.

The report reflects the aggregated opinion of Europe's key investment
decision-makers:
- Our buy-side ranking of sell-side research profiles Institutional Investor magazine's 2003 All-Europe Research Team. There were 1,866 individuals from 496 buy-side firms naming 3,230 analysts at 201 sell-side firms. In total, 322 institutions voted in our sales rankings. The trading/execution poll is based on the opinions of head traders from 127 of the largest European asset management firms.
- In our company ranking of the buy side, 330 European firms nominated 562 buy-side individuals at 157 asset management firms.
- A total of 631 European sell-side analysts from 38 sell-side firms and 127 buy-side responses provided views of corporate investor relations, as well as insights into their own job structure and content.

Overall rankings

Institutional Investor magazine ranking: 1st Place Winner
The Leaders: The All-Europe Research Team
UBS Warburg

Reuters Institutional Investor European Equities Awards: 1st Place Winners

Overall buy-side ranking:
Pan-European research
Credit Suisse First Boston

Overall buy-side ranking:
Pan-European sales
UBS Warburg

Overall buy-side ranking:
Pan-European trading & execution
Morgan Stanley

Overall corporate ranking:
The buy side
Fidelity Investments

Overall corporate ranking:
Investment banking - Equities
Morgan Stanley

Overall corporate ranking:
Investment banking - Debt
Citigroup/SSSB

Key findings
The All-Europe Research Team: variations on the pan-European theme
Although coverage of pan-European industries is now the prevalent model for
stock research, distinctly different approaches to this structure continue
to evolve. In addition to those very large firms covering all sectors-led by
Credit Suisse First Boston-sector boutiques such as Fox-Pitt, Kelton are
maintaining a strong buy-side following. Smaller firms become even more
visible in country sector rankings, as a result of the support of a small,
but committed, core of investors seeking a combination of industry and
country research. But global player UBS Warburg tops the aggregated rankings
that comprise the 2003 All-Europe Research Team.

The momentum toward global sectors in research, sales and trading
Across all 2003 surveys, our findings suggest that the fastest-growing
structural change is toward global sectors, and this extends across the
entire European equities franchise. Buy-side voters predict that within two
years, global sector research will be used by more European institutions
than the current pan-European model. Meanwhile, some observers of the
pan-European specialist sales function see many top specialist people
beginning to take on global responsibilities in their sectors. Trading desk
structures are still in transition to pan-European sectors from countries,
or from the U.K. versus Continent split that's still common in the U.K. But
buy-side traders who recently made the switch to pan-European dealing desks
are increasingly conscious of the need to understand the impact of U.S.
stocks on their European counterparts in a given sector.

The importance of specialist sales
The quality of specialist sales is the third most important factor in the
buy side's selection of sell-side firms. And as shown by our inaugural
specialist sales rankings, the specific expertise of particular sales teams
is what counts more than dominance by any one brokerage firm. The voracious
information needs of hedge funds, which pay rich commissions to their top
brokers, have led to a new lease on life for the institutional sales
function. The expertise of top specialist sales teams is in more demand than
ever.

Key success factors for trading and execution
There is sharp debate between portfolio managers and traders over their
relative importance to the commissions allocation process. However, a
consensus exists around the sell-side's need to improve the quality of
service and execution, while minimizing transaction costs.

The interdependence of buy-side and broker research
More than 40 percent of polled asset management firms say that their
in-house research team expanded last year. This was driven in part by an
effort to reduce dependence on sell-side research now under heavy fire for
investment banking bias. But despite this buildup, the buy side admits to a
continuing need for sell-side input in their equity investment decisions-if
not for specific buy/sell recommendations, then for the industry and company
knowledge that helps the buy side make its own investment decisions. And
even as investors insist that stock picking is the buy side's job, they cite
the need for sell-side input to understand market consensus and broad stock
price movements.

Investor relations: different company rankings by the buy and sell side. This year, for the first time, our investor relations rankings include 127 buy-side responses, together with the traditional vote from 631 sell-side analysts. While the two sides agree on the best companies for IR in some sectors; in others, there is little or no overlap, perhaps the result of differing criteria for evaluating companies. Equally striking are the disparate views of companies in specific countries concerning the need for improved corporate governance.

Investment banking
In comparison to last year, the same four firms are stealing the equity show. However, there's been a complete switch in some rankings, with Morgan Stanley moving up from fourth to first place for equity transactions and Goldman Sachs International dropping from first to fourth. Citigroup/SSSB leads the pack for corporate debt with a sizable margin. Deal flow looks set to remain depressed, with just 23 percent of companies planning to raise capital in 2003.

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