Global Asset Management

We had a very strong full-year result in 2005. Pre-tax profit was CHF 1,057 million, an increase of 55% from the 2004 pre-tax profit (before goodwill) of CHF 681 million. The increase was driven by higher operating income, which rose 23%, reflecting strong net new money inflows and rising financial markets that resulted in higher asset valuations and improved margins. In addition, performance fees, particularly in alternative and quantitative investments, increased. This was only partially offset by a slight rise in operating expenses, mainly due to higher personnel expenses, which followed business growth.

Pre-goodwill, the cost / income ratio decreased to 57.5%, down 8.8 percentage points from 2004.

Total net new money inflows in 2005 were CHF 49.5 billion, up an impressive 158% from CHF 19.2 billion in 2004, when the wholesale business was affected by the last major transfers of client funds to UBS Bank USA. In the institutional business, inflows increased into traditional investments but decreased in alternative and quantitative investments.

Invested assets for the Business Group totaled CHF 765 billion on 31 December 2005, up from CHF 601 billion at the end of 2004. The gross margin in our institutional business was 34 basis points, slightly above the 32 basis points in full-year 2004. In our wholesale intermediary business, the gross margin was 40 basis points, up 4 basis points from a year earlier, reflecting shifts into higher margin asset classes.