Financial Statements

Statement of Changes in Equity

	For the year ended
CHF million	31.12.05	31.12.04	31.12.03
Share capital
Balance at the beginning of the year	901	946	1,005
Issue of share capital	2	2	2
Cancellation of second trading line treasury shares (2002 program)			(61)
Cancellation of second trading line treasury shares (2003 program)		(47)
Cancellation of second trading line treasury shares (2004 program)	(32)
Balance at the end of the year	871	901	946
Share premium
Balance at the beginning of the year	9,231	7,595	12,641
Change in accounting policy			660
Premium on shares issued and warrants exercised	295	325	103
Net premium / (discount) on treasury share and own equity derivative activity	(302)	(20)	(130)
Employee share and share option plans	768	1,331	(211)
Cancellation of second trading line treasury shares (2002 program) ¹			(5,468)
Balance at the end of the year	9,992	9,231	7,595
Net gains / (losses) not recognized in the income statement, net of tax
Foreign currency translation
Balance at the beginning of the year	(2,520)	(1,694)	(849)
Change in accounting policy			(50)
Movements during the year	2,088	(826)	(795)
Subtotal – balance at the end of the year ²	(432)	(2,520)	(1,694)
Net unrealized gains / (losses) on available-for-sale investments, net of tax
Balance at the beginning of the year	761	399	946
Change in accounting policy			(406)
Net unrealized gains / (losses) on available-for-sale investments	463	501	(108)
Impairment charges reclassified to the income statement	96	192	285
Realized gains reclassified to the income statement	(396)	(353)	(340)
Realized losses reclassified to the income statement	7	22	22
Subtotal – balance at the end of the year	931	761	399
Change in fair value of derivative instruments designated as cash flow hedges, net of tax
Balance at the beginning of the year	(322)	(144)	(256)
Net unrealized gains / (losses) on the revaluation of cash flow hedges	(474)	(223)	116
Net realized (gains) / losses reclassified to the income statement	115	45	(4)
Subtotal – balance at the end of the year	(681)	(322)	(144)
Balance at the end of the year	(182)	(2,081)	(1,439)
Revaluation reserve from step acquisitions, net of taxes
Balance at the beginning of the year	90
Movements during the year	11	90
Balance at the end of the year	101	90
Retained earnings
Balance at the beginning of the year	37,001	36,260	32,700
Change in accounting policy			(46)
Net profit attributable to UBS shareholders for the year	14,029	8,016	5,904
Dividends paid 3	(3,105)	(2,806)	(2,298)
Cancellation of second trading line treasury shares (2003 program) ¹		(4,469)
Cancellation of second trading line treasury shares (2004 program) ¹	(3,511)
Balance at the end of the year	44,414	37,001	36,260

1 In 2004 and 2005 the cancellation of second trading line treasury shares is made against retained earnings. In 2003 it was made against the share premium account. 2 Net of CHF (292) million, CHF 236 million and CHF 121 million of related taxes for the years ended 2005, 2004 and 2003, respectively. 3 Dividends of CHF 2.00 per share, CHF 2.60 per share and CHF 3.00 were paid on 23 April 2003, 20 April 2004 and 26 April 2005, respectively.

		For the year ended
CHF million		31.12.05	31.12.04	31.12.03
Equity classified as obligation to purchase own shares
Balance at the beginning of the year		(96)	(49)	(104)
Movements during the year		(37)	(47)	55
Balance at the end of the year		(133)	(96)	(49)
Treasury shares
Balance at the beginning of the year		(11,105)	(9,654)	(7,131)
Change in accounting policy				(1,474)
Acquisitions		(8,375)	(9,368)	(8,424)
Disposals		5,198	3,401	1,846
Cancellation of second trading line treasury shares (2002 program)				5,529
Cancellation of second trading line treasury shares (2003 program)			4,516
Cancellation of second trading line treasury shares (2004 program)		3,543
Balance at the end of the year		(10,739)	(11,105)	(9,654)
Equity attributable to UBS shareholders		44,324	33,941	33,659
Equity attributable to minority interests
Balance at the beginning of the year		5,426	3,879	3,529
Change in accounting policy				143
Issuance of preferred securities		1,539		372
Other increases		44	1,922	247
Decreases and dividend payments		(595)	(523)	(357)
Foreign currency translation		544	(306)	(404)
Minority interest in net profit		661	454	349
Balance at the end of the year		7,619	5,426	3,879
Total equity		51,943	39,367	37,538

Shares issued
	For the year ended			% change from
Number of shares	31.12.05	31.12.04	31.12.03	31.12.04
Balance at the beginning of the year	1,126,858,177	1,183,046,764	1,256,297,678	(5)
Issue of share capital	1,709,439	3,293,413	2,719,166	(48)
Cancellation of second trading line treasury shares (2002 program)			(75,970,080)
Cancellation of second trading line treasury shares (2003 program)		(59,482,000)
Cancellation of second trading line treasury shares (2004 program)	(39,935,094)
Balance at the end of the year	1,088,632,522	1,126,858,177	1,183,046,764	(3)

Treasury shares
		For the year ended		% change from
Number of shares	31.12.05	31.12.04	31.12.03	31.12.04
Balance at the beginning of the year	124,663,310	136,741,227	97,181,094	(9)
Change accounting policy			25,380,535
Acquisitions	78,218,035	96,139,004	116,080,976	(19)
Disposals	(58,686,377)	(48,734,921)	(25,931,298)	(20)
Cancellation of second trading line treasury shares (2002 program)			(75,970,080)
Cancellation of second trading line treasury shares (2003 program)		(59,482,000)
Cancellation of second trading line treasury shares (2004 program)	(39,935,094)
Balance at the end of the year	104,259,874	124,663,310	136,741,227	(16)

During the year a total of 39,935,094 shares acquired under the second trading line buyback program 2004 were cancelled. On 31 December 2005, a maximum of 1,823,501 shares can be issued against the future exercise of options from former PaineWebber employee option plans. These shares are shown as conditional share capital in the UBS AG (Parent Bank) disclosure. Out of the total number of 104,259,874 treasury shares, 33,885,000 shares (CHF 3,597 million) have been repurchased for cancellation. The Board of Directors will propose to the Annual General Meeting on 19 April 2006 to reduce the outstanding number of shares and the share capital by the number of shares purchased for cancellation. All issued shares are fully paid.