Letter to shareholders

Marcel Ospel & Peter Wuffli

Dear shareholders,

The year has started very well. Financial markets have continued to rise and trading conditions have been excellent. Our strong position in all focus areas allows us to take full advantage of the environment, and net profit from continuing operations was significantly higher compared with both fourth and first quarter 2005.

We took a number of strategic steps. Key among them was the agreement in April to acquire Piper Jaffray’s private client branch network, which will enhance our presence in US wealth management. Based in Minneapolis, Minnesota, the business manages client assets of USD 52 billion, has nearly 90 branch offices in 17 US states, and employs over 800 financial advisors serving 190,000 households. It is a comprehensive wealth manager, offering estate planning, retirement planning, brokerage and insurance services. It is a natural fit with our existing US business. The acquisition, expected to close in third quarter, will cost USD 500 million in cash and another USD 75 million at closing, dependent on certain criteria and business thresholds being met. The transaction also includes the assignment of a portfolio of client loans of approximately USD 300 million. The acquisition is part of our strategy to grow our US-based wealth management business, whose integration into Global Wealth Management & Business Banking is now largely completed – further assisting us in accelerating our targeted expansion into the wealthy client segment.

We are also making good progress in our efforts to launch the Dillon Read Capital Management (DRCM) alternative asset management business. A number of senior executives have been appointed, and 170 staff are working in the businesses the future DRCM will contain. We are currently finalizing the structure of the new business and continue to work towards a launch date in second quarter 2006.

Summary of first quarter results. Net profit for UBS totaled CHF 3,504 million. This includes an after-tax gain of CHF 290 million realized from the divestment of our stake in Motor-Columbus to a Swiss-led consortium. The sale, announced in September 2005, closed in first quarter following receipt of relevant regulatory approvals. The financial businesses contributed CHF 3,048 million to net profit, up 32% from the same quarter a year earlier and 17% higher than fourth quarter 2005 results (from continuing operations).

Overall, our performance was driven by a strong increase in revenues, with the growing asset base in our wealth and asset management businesses driving recurring income higher. Net new money inflows were very strong, reaching CHF 48 billion in first quarter 2006, compared with CHF 34.9 billion in the same period a year earlier and CHF 31.2 billion in fourth quarter 2005. Inflows from the wealth management units were at an unprecedented high of CHF 33.6 billion, with strong results in our domestic European business and sustained high contributions from Asian clients. Inflows of net new money in the asset management business, at CHF 12.6 billion, were also very strong and reflected the quality of our diversified investment management platform.

Our trading businesses benefited from buoyant markets and high levels of activity from both institutional and private clients. In particular, revenues from equities trading activities in first quarter rose 57% from the same period last year. This reflects our market leadership in the cash equities business as well as our increasingly strong competitive positions in derivatives and prime brokerage. In fixed income, rates and currencies, established businesses such as rates and foreign exchange performed well along with energy and precious metals trading. Corporate advisory revenues were up 87% from a year earlier, reflecting our continued involvement in major global transactions.

The cost / income ratio for the financial businesses stood at 68.4% in first quarter 2006, slightly improved from 69.5% in the same quarter a year ago. Costs rose with revenues and the growth of our business. The main impact came from the increase in personnel expenses, which rose on higher levels of staff and larger accruals for performance-related compensation. We also recorded a CHF 112 million provision for the settlement agreement with Sumitomo Corporation, announced on 7 April 2006.

Annualized return on equity from continuing operations was 30.6%, compared with our new objective of achieving 20% or more. Diluted earnings per share were CHF 3.08, up 32% from a year earlier (from continuing operations).

Our growth strategy has proven to be successful, increasing our confidence in our ambition to be the best global financial services provider. That is why we have renewed our vision of UBS and the values we share internally. Now, our colleagues around the world share our firmly held belief in performance, entrepreneurial spirit and high ethical standards, and can concentrate on what is the purpose of all our businesses: uncompromised client focus. In the eyes of individuals, corporations or financial institutions searching for advice on financial matters, this will continue to distinguish us from our competitors.

Outlook – The benign environment seen at the start of the year has continued, and our strong position in all businesses has been maintained or further improved. Deal pipelines remain promising, client flows healthy, capital markets active, and macroeconomic fundamentals stable.

We remain confident in the outlook for UBS, even if conditions change. To ensure we continue to make the most of business opportunities, whatever the environment, we will apply discipline towards both costs and management of all forms of risk, while further investing in our areas of strategic focus.

4 May 2006

UBS