Notes to the Financial Statements

Accounting standards require separate disclosure of net interest income and net trading income (see the tables on the next page). This required disclosure, however, does not take into account that net interest and trading income are generated by a range of different business activities. In many cases, a particular business activity can generate both net interest and trading income. Fixed income trading activity, for example, generates both trading profits and coupon income. UBS management therefore analyzes net interest and trading income according to the business activity generating it. The first table below (labeled Net interest and trading income) provides information that corresponds to this management view. For example, net income from trading activities is further broken down into the four sub-components of Equities, Fixed income, Foreign exchange and Other. These activities generate both types of income (interest and trading revenue) and therefore this analysis is not comparable to the breakdown provided in the third table on the next page (Net trading income only).

Interest includes forward points on foreign exchange swaps used to manage short-term interest rate risk on foreign currency loans and deposits.

Included in the Net trading income table are fair value changes of CHF (1,183) million for the quarter ended 30 Septem- ber 2006, CHF 2,902 million for the quarter ended 30 June 2006, and CHF (1,747) million for the quarter ended 30 September 2005 related to Financial liabilities designated at fair value. For the quarter ended 30 September 2006, CHF (293) million of the total fair value change was attributable to changes in fair value of embedded derivatives, while CHF (890) million was attributable to changes in LIBOR. The exposure from embedded derivatives is economically hedged with derivatives whose change in fair value is also reported in Net trading income, offsetting the fair value changes related to Financial liabilities designated at fair value.