Notes (unaudited)

Acquisitions announced in second quarter

VermogensGroep

In June 2008, UBS announced that it has signed an agreement with VermogensGroep, an independent Dutch wealth manager, to acquire VermogensGroep. VermogensGroep serves wealthy private clients, foundations and institutions in the Dutch market and will be integrated into UBS's wealth management business. It manages client assets of approximately EUR 4 billion. The transaction closed 1 August 2008.

Sale of an associate completed after balance sheet date

Sale of investment in Adams Street Partners

In August 2008, UBS Global Asset Management closed the sale announced in May 2008 of its 24.9% ownership interest in Adams Street Partners (ASP) to the remaining shareholders of ASP for a cash consideration of USD 156 million. The sale will result in a gain of approximately CHF 160 million being recognized in third quarter 2008. ASP was formed in January 2001 in connection with a management buyout of that business from Global Asset Management, with UBS retaining the now sold 24.9% stake. Global Asset Management will continue its close collaboration with ASP under an existing sub-advisory agreement in place since 2001.

Reorganizations and disposals

US Municipal Securities Business

In June 2008, UBS announced the closure of its Investment Bank's institutional municipal securities business with immediate effect. The retail operations of the municipal securities business, including secondary market activities, will be transferred to Wealth Management US in order to support private clients who hold municipal securities in their portfolios. In the context of this restructuring, approximately 70 employees and certain municipal bonds with a fair value of approximately CHF 0.4 billion (USD 0.4 billion) will be transferred from the Investment Bank to Wealth Management US.

The restructuring costs for the entire municipal securities business recorded in second quarter 2008 in the income statement, excluding impairment of goodwill, amount to CHF 56 million (USD 55 million). These costs mainly include termination costs for office space rental contracts, vendor contracts and severance payments to employees. Impairment of goodwill of CHF 341 million (USD 334 million) is presented separately in the income statement.

Sale of US residential mortgage-backed securities to BlackRock fund

On 20 May 2008, UBS completed the sale of a portfolio of US residential mortgage-backed securities (RMBS) for proceeds of USD 15 billion to the RMBS Opportunities Master Fund, LP (the "fund"), a third-party entity managed by BlackRock, Inc. The portfolio had a notional value of approximately USD 22 billion and comprised primarily Alt-A and sub-prime related assets, and a limited amount of prime securities according to UBS's classification of RMBS detailed in the "Risk management and control" section of the first quarter 2008 report. Based on fair value at the time of the transaction, approximately three-quarters of the assets sold consisted of 2006 and 2007 vintages. This transaction marked a significant step in UBS's continuing program to reduce its exposures to US RMBS.

The fund is capitalized with approximately USD 3.75 billion in equity raised by BlackRock from third-party investors. These investors will absorb any losses sustained by the fund up to a maximum of the equity investment. UBS has provided an eight-year amortizing USD 11.25 billion senior secured loan to the fund, collateralized by the RMBS assets held by the fund. The loan bears a commercial rate of interest with debt service being met from principal and interest received from the underlying mortgage pools. To date, the loan has amortized in line with expectations. UBS does not retain an equity interest in the fund. The USD 15 billion sale price was approximately in line with the fair value of the assets recorded by UBS at 31 March 2008.

UBS continues to monitor the development of the fund’s performance and would reassess the consolidation status if further deterioration of the underlying mortgage pools related to the US RMBS indiactes that UBS may not fully recover the loan granted to the fund.

Regulatory Considerations

UBS has been in active dialogue with its regulators concerning remedial actions that it is taking to address deficiencies in its risk management and control, funding and certain other processes and systems. UBS will for some period be subject to increased scrutiny by the Swiss Federal Banking Commission and its other major regulators, and accordingly will be subject to regulatory measures that might affect the implementation of its strategic plans.