Targets

UBS’s performance is reported in accordance with International Financial Reporting Standards (IFRS). Additionally, we provide comments and analysis on an adjusted basis which excludes from the reported amounts certain items we term significant financial events (SFEs). An additional adjustment we use in our results discussion is the exclusion of the amortization of goodwill and other acquired intangible assets.

These adjustments reflect our internal approach to analyzing our results and managing the company, in which SFE-adjusted figures before the amortization of goodwill and intangibles are used to assess performance against peers and to estimate future growth potential. In particular, our financial targets have been set in terms of adjusted results, excluding SFEs and the amortization of goodwill and intangibles. All the analysis provided in our internal management accounting is based on operational SFE-adjusted performance. This helps us to illustrate the underlying operational performance of our business, insulated from the impact of individual gain or loss items that are not relevant to our management’s business planning decisions. A policy approved by the Group Executive Board (GEB) defines which items are classified as SFEs. We focus on four key performance targets, designed to deliver continually improving returns to our shareholders. These targets are evaluated on this adjusted basis.

This is the first quarter that we have split the commentary of our results between Financial Businesses and Industrial Holdings. The first two of our four targets, return on equity and earnings per share, will continue to be calculated on a full UBS basis. Our cost / income ratio target will now be limited to our Financial Businesses, to avoid the distortion from Industrial Holdings, which this quarter represent over 16% of UBS’s revenues and operate at a 96% cost / income ratio.

Before goodwill and adjusted for significant financial events:

Our wealth management businesses had another excellent quarter, attracting strong net new money of CHF 16.7 billion for the quarter, bringing total inflows in the first nine months of this year to CHF 46.1 billion. The Wealth Management unit posted its second best net new money result ever, attracting CHF 11.4 billion in third quarter 2004 compared to net new money of CHF 8.2 billion in the previous quarter. Healthy inflows were recorded from clients in Asia and the Americas and into our domestic European wealth management business, which saw net new money of CHF 3.2 billion. In our Wealth Management USA business, net new money was CHF 5.3 billion in third quarter 2004, up from CHF 2.2 billion in second quarter 2004.

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