Dear Shareholders,

Marcel Ospel and Peter Wuffli

Success in the financial services industry depends on the expertise and talent of human beings. That is why this year, our best ever, the Annual Review is about employees. The pages that follow show you how we work, giving you an idea of the spirit and commitment of the people that make up today’s UBS.

Last year was an excellent one for our industry as well as UBS. Although markets helped, we believe our strong performance also reflects UBS’s sustainable earnings power. In 2005, we took a number of important steps. We integrated our global wealth management business by bringing our US, Swiss and international units, along with our Swiss corporate and retail banking, into one Business Group. Last summer, we also announced our plan to launch a new alternative investment management business – Dillon Read Capital Management. This new business will meet increasing client demand for long-term alternative investment opportunities. We have passed some important strategic milestones in China. We have agreed to develop Chinese investment banking and securities products with the Bank of China and have received the approval of China’s State Council for a proposal to restructure Beijing Securities, together with Beijing SASAC (State-owned Assets Supervision and Administration Commission) and the International Finance Corporation (IFC).

We also signed agreements to sell our 55.6% stake in Motor-Columbus to a Swiss-led consortium for CHF 1.3 billion, which – at closure – is anticipated to result in a gain for UBS of around CHF 350 million. In December, we completed the sale of Private Banks & GAM to Julius Baer, resulting in a net gain of CHF 3,705 million.

Attributable profit from continuing operations in our financial businesses in 2005 was CHF 9,442 million, up 18% from a year earlier (pre-goodwill). When the operating result and sale proceeds of Private Banks & GAM are included, along with the contribution of industrial holdings, net profit attributable to UBS shareholders was CHF 14,029 million.

All core financial businesses recorded a stronger performance in 2005. Our wealth and asset management businesses, in particular, had excellent years. The net new money inflow (excluding Private Banks & GAM) was CHF 148 billion. This, along with rising markets, drove invested assets up 25% on the year and, in turn, strengthened our asset-based fees. Revenues from advising corporate and institutional clients also rose to a record high. This reflected strong capital market activity in 2005 – with our Investment Bank continuing to establish itself as a preferred partner for many major corporations and institutional investors. Buoyant markets, particularly in the second half of the year, pushed trading revenues up. Profits were also helped by another year of credit-loss recoveries.

At the same time, costs were kept under control. Overall, expenses increased less than revenues, and our financial businesses finished the year with a cost / income ratio of 70.1% for 2005. Pre-goodwill, the ratio improved by 1.3 percentage points from a year earlier. We were also, as in previous years, disciplined in our use of capital. Return on equity from continuing operations was a strong 27.6% in 2005 while earnings per share rose 22% from 2004.

Our approach to deploying our earnings is unchanged – they should mainly be reinvested for growth. This can be through investments in employees and teams or in strategic projects, or through bolt-on acquisitions. After this, we intend to continue to return any excess capital to you, our shareholders, through both dividends and share buybacks. The Board of Directors is recommending a total payout of CHF 3.80 per share to the Annual General Meeting (AGM). The payout comprises a regular dividend of CHF 3.20, up 7% from a year earlier, plus a one-time par value repayment of CHF 0.60 per share, partly reflecting the gain realized from the sale of Private Banks & GAM.

We are optimistic about the outlook for UBS – for 2006 and beyond. We are also extremely proud of recently being named overall winner and financial industry leader in the Financial Times “Best of European Business” awards. According to the newspaper, we “won over the jury with asset growth and a focus on value, including share buyback programs” as well as our overall strategy. We believe the awards are recognition of our strong competitive position in all our priority businesses, and growth in our chosen areas of focus – among them European wealth management, alternative investments, investment banking, prime brokerage and all business lines in Asia Pacific. These are becoming major revenue contributors, allowing us to invest in other opportunities that fit our strategy. This will help us sustain growth and remain attractive to clients, employees and investors well into the future.

21 March 2006

Marcel Ospel
Chairman

Peter Wuffli
Chief Executive Officer