Key Performance Indicators

Invested assets were CHF 639 billion on 31 December 2004, down 2% from CHF 654 billion on 30 September 2004. In US dollar terms, invested assets increased 7% in the quarter to a record high of USD 561 billion, reflecting positive inflows of net new money and the effects of market appreciation. Compared to fourth quarter a year earlier, invested assets were up 1%. In US dollar terms, invested assets were 10% higher on 31 December 2004 than they were on the same date a year earlier.

The inflow of net new money in fourth quarter was CHF 6.8 billion. While this was below the inflow of CHF 7.8 billion in fourth quarter 2003, it was still the best quarterly inflow of 2004 and higher than the CHF 5.3 billion reported last quarter. The result reflects the positive impact of recent hiring in our advisory force as well as the improved market environment.

Including interest and dividends, net new money in fourth quarter 2004 was CHF 11.3 billion, up from CHF 9.4 billion in third quarter 2004. Our net new money result in fourth quarter compares favourably to our peers.

In full-year 2004, net new money totaled CHF 17.1 billion, down from CHF 21.1 billion a year earlier, reflecting a slow asset-gathering performance at the beginning of the year as well as the US dollar’s weakening against the Swiss franc.

Gross margin on invested assets was 77 basis points in fourth quarter 2004, slightly higher than third quarter 2004. Gross margin on invested assets before acquisition costs (net goodwill funding costs) was 80 basis points, up from 78 basis points in third quarter 2004. The slight increase was the result of higher client transaction activity.

The cost / income ratio before acquisition costs was 85.4% in fourth quarter 2004, down from 86.7% in third quarter 2004, the second-lowest level since PaineWebber became part of UBS. The improvement reflects higher revenue from the private client business, with recurring fees at record levels in US dollars. Higher net interest income reflects the growth of UBS Bank USA, and higher trading volumes prompted transactional revenues to rise.

Recurring fees stood at CHF 494 million in fourth quarter 2004, 5% lower than the CHF 522 million recorded in third quarter 2004. Excluding the effects of currency fluctuations, recurring fees increased 3% in fourth quarter, to another record high, driven by rising asset levels in managed account “open architecture” products. Flows into managed account products were USD 3.8 billion in fourth quarter 2004 and USD 12.4 billion in full-year 2004, comparing favorably to the USD 10.2 billion flow for full-year 2003. Recurring fees combined with the net interest income from our lending business now represent around half of our total revenues.

Productivity per advisor increased in fourth quarter 2004 to CHF 162,000 from CHF 160,000 in third quarter as transaction volumes rose 19%. Our efforts to recruit advisors and renew our trainee program proved to be effective. Financial advisor headcount was 7,519 on 31 December 2004, up 176 from 7,343 on 30 September 2004.

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