Item 1

Annual report, Group and Parent Bank accounts for
financial year 2011
Reports of the auditors

1.1. Approval of annual report and Group and Parent Bank accounts

A. Motion
The Board of Directors proposes that the report on the financial year 2011 and the Group and Parent Bank accounts for 2011 be approved.

B. Explanation
The “Financial information” section of UBS’s annual report 2011 contains the consolidated financial statements of the UBS Group and the financial statements of UBS AG, the Parent Bank. Additional information on the strategy, organization and activities of the Group and the business divisions, as well as on risk management and control, may be found in the sections “Operating environment and strategy,” “Financial and operating performance” and “Risk, treasury and capital management” of the annual report 2011. Information relating to corporate governance as required by the applicable Swiss laws and regulations, in particular the SIX Swiss Exchange’s Directive on Information Relating to Corporate Governance and the Swiss Code of Obligations, can be found in the section “Corporate governance, responsibility and compensation” of the annual report 2011. The annual report 2011 is also available on the Internet at www.ubs.com/investors. Shareholders registered in the share register in Switzerland will receive the abovementioned reporting as per their individual orders. Shareholders in the US who are registered with Computershare will receive a copy of the review 2011, which contains the most important information relating to UBS AG’s performance in 2011.

The Group income statement shows total operating income of CHF 27,788 million and total operating expenses of CHF 22,439 million, resulting in an operating profit from continuing operations before tax of CHF 5,350 million and a net profit attributable to UBS shareholders of CHF 4,159 million. Total consolidated assets stood at CHF 1,419.2 billion on 31 December 2011. Equity attributable to UBS shareholders increased by CHF 6.6 billion to CHF 53.4 billion in 2011.

Parent Bank profit for the period was CHF 5,440 million. Total operating income of CHF 18,023 million and total operating expenses of CHF 12,690 million resulted in an operating profit of CHF 5,333 million. Impairment, depreciation, provisions and losses amounted to CHF 899 million, while extraordinary income was CHF 1,888 million. Extraordinary expenses totaled CHF 649 million and the tax expense
amounted to CHF 232 million.

In their reports to the Annual General Meeting, Ernst & Young Ltd., Basel, as auditors, recommended without qualification that the Group and Parent Bank accounts be approved. The auditors confirm that, in their opinion, the Group financial statements accurately reflect the consolidated financial position of UBS AG and the consolidated results of operations and cash flows, in conformity with the International Financial Reporting Standards (IFRS), and that they comply with Swiss law. With respect to the Parent Bank, the auditors confirm that the financial statements and the proposal of the Board of Directors relating to the proposed appropriation of results comply with Swiss law and with the Articles
of Association of UBS AG.

1.2. Advisory vote on the compensation report 2011

A. Motion
The Board of Directors proposes that the compensation report 2011 be ratified in a non-binding advisory vote.

B. Explanation
The compensation report 2011 is a chapter in the annual report 2011. It explains the governance and principles behind the compensation structure at UBS AG, including the link between pay and performance. It contains information on the total reward principles for all employees, which were re-affirmed on 19 October 2011 by the Board of Directors’ Human Resources and Compensation Committee and approved on 1 December 2011 by the Board of Directors. The compensation report also sets out the compensation of the management and Board of Directors in accordance with all applicable laws and regulations.

The vote on the compensation report 2011 of UBS AG is advisory in nature.