Fair value disclosure of options

The fair value of options granted in 2004 was CHF 508 million (pre-tax: CHF 543 million) compared to CHF 439 million (pre-tax: CHF 576 million) in the same period a year ago. The after-tax increase was driven by a higher UBS share price, a lower pro-forma tax benefit, and adjusted assumptions for the valuation of options. In fact, significantly fewer option grants were made in 2004 (down nearly 40% from 2003), in line with our strategy of granting options more selectively.

While most stock options are granted in the first half of the year, the pre-tax increase of CHF 16 million in fourth quarter 2004 reflects additional grants made primarily under the Equity Plus program, an employee participation program under which voluntary investments in UBS shares are matched with option awards.

Our option valuation model will change for 2005 due to work we are undertaking in connection with the implementation of the new IFRS 2 standard. For further details, please refer to page 7.