Global Asset Management

The cost / income ratio rose to 56.3% in fourth quarter 2005, up 2.2 percentage points from third quarter 2005. This increase was mainly driven by higher general and administrative expenses, reflecting project and business expansion costs in the real estate and traditional investment platforms, higher IT costs, premises expenses in fund services, travel and entertainment and professional fees.

Institutional

Institutional invested assets were CHF 441 billion on 31 December 2005, up by CHF 16 billion from 30 September 2005. The increase was mainly a result of positive market performance as well as the inflow of net new money.

Net new money in the quarter was CHF 4.3 billion compared with CHF 9.2 billion in third quarter 2005. Excluding movements related to money market funds, net new money was CHF 5.2 billion. Major inflows were seen in traditional investments, mainly in equities and asset allocation mandates, real estate and multi-manager products of alternative and quantitative investments. The third quarter result included stronger inflows in fixed income and alternative investments. In full-year 2005, net new money was CHF 21.3 billion, down from CHF 23.7 billion a year earlier. Although traditional investments saw higher inflows year on year, the decline reflected lower inflows into alternative and quantitative investments compared to 2004.

The gross margin was 36 basis points in fourth quarter 2005, an increase of 1 basis point from the prior quarter, primarily due to higher performance fees.

Wholesale intermediary

Invested assets were CHF 324 billion on 31 December 2005, up by CHF 12 billion from 30 September 2005, mainly due to net new money inflows as well as rising markets.

Net new money was CHF 6.6 billion in fourth quarter 2005, down from CHF 10.7 billion in third quarter 2005. Excluding flows related to money market funds, net new money was CHF 7.7 billion. Strong inflows were seen into asset allocation funds in all regions as well as into equities in Europe. Though slightly lower than third quarter, which included new bond fund launches, significant inflows were also recorded in fixed income in Europe. In full-year 2005, net new money was CHF 28.2 billion, up from an outflow of CHF 4.5 billion a year earlier, which included the last major outflows related to UBS Bank USA.

The gross margin was 39 basis points in fourth quarter, a decrease of 2 basis points compared with third quarter. This was mainly a result of slightly lower performance fees, combined with the effects of strong market performance and net new money, which increased towards the end of the year, prompting asset levels to rise without a full impact on fourth quarter revenues.