SecProbe.io

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[UBS LOGO]                                     UBS AG
                                               Postfach
                                               CH-8098 Zurich
                                               Tel. +41-44-234 11 11

                                               Clive Standish
                                               Chief Financial Officer
                                               Bahnhofstrasse 45,
                                               8001 Zurich
CONFIDENTIAL                                   Tel. +41-44 234-4046
                                               Fax  +41-44 234-2100
                                               clive.standish@ubs.com

                                               www.ubs.com
Ms. Cecilia D. Blye
Chief Office of Global Security Risk
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549-5546
United States of America

6 September 2006

UBS AG HAS CLAIMED CONFIDENTIAL TREATMENT OF PORTIONS OF THIS LETTER IN
ACCORDANCE WITH 17 C.F.R. 200.83

Dear Ms. Blye

We are responding to your letter of June 8, 2006 to our Chief Financial Officer
Mr. Clive Standish regarding our Forms 20-F for the fiscal years ending December
31, 2004 and 2005 and our letters to you dated November 16, 2005 and April 20,
2006.

The responses to the specific questions raised in your letter are set out below
in detail. We thought it may be helpful if we first offer a broad description of
UBS's overall approach to questions of global security risk more generally in
the context of our wider anti-money laundering (including counter terrorist
financing) efforts.

Like many banks and reflecting globally accepted anti-money laundering
standards, UBS AG and its consolidated subsidiaries (collectively referred to
here as "UBS") have implemented globally a systematic approach to evaluating and
mitigating the risks relating to clients and their activities based on their
country connections. This is in addition to, and in concert with, the evaluation
of other client specific risks such as whether they have connections to
sensitive industries or activities or are "politically exposed persons" and the
products used/transactions undertaken by the client.

UBS analyzes every country and assesses its political, social and economic
stability; the vulnerability of the country to financial crimes such as
corruption, organized crime, money laundering and terrorism finance, and the
response the country takes to address and fight against such crimes. To
structure this analysis we use a number of data sources, which we assess and
assign a numeric scale of 1 to 4 against each indicator. We then weight the
resulting aggregate scores, giving particular emphasis to terrorism, money
laundering, and corruption related indicators and a weighted average is
calculated for each country. If the resulting score is less than 2.49, the
country is considered "not sensitive," while a score of between 2.50 and 4.00
means that the country is regarded as "sensitive." The assessment of every
country is reviewed annually and, at present, over 100 countries are regarded as
"sensitive".

UBS will only enter into relationships involving parties connected to sensitive
countries (e.g. by reference to their domicile, place of business etc.) if we
are comfortable that appropriate controls are in place to monitor and manage the
relationship and where the nature of the relationship, the parties involved, and
the purpose of the activities have all been properly vetted. While the exact
nature of these controls depends on the country in question, the nature of the
client and the business they
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CONFIDENTIAL TREATMENT REQUESTED BY UBS AG                September 6, 2006
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propose to undertake with UBS, they include e.g. enhanced due diligence/
screening and additional levels of approvals before we will do business with
that party, enhanced monitoring of the relationship and the transactions
undertaken and more frequent reviews of the relationship generally.

In addition, and as referenced in our previous letters, UBS has also established
a comprehensive and global economics sanctions policy, which we believe is
unique amongst international financial institutions in its comprehensive scope
and global application. This policy combines the effects of U.S., E.U., U.N. and
Swiss restrictions imposed against countries, specific government regimes,
designated terrorists and others (such as identified narcotics traffickers, and
those identified as being involved in the proliferation of weapons of mass
destruction). These combined measures are then applied globally and also
supplemented by policy decisions taken by UBS as to the business we will and
will not do involving these countries (even if such business would otherwise be
permitted under all of the measures mentioned above). We refer to the overall
set of restrictions as "Extended Measures" under our group sanctions policy.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

By deliberately evaluating every country and weighting that evaluation heavily
around indicators focused on issues of terrorism, corruption, and
money-laundering, we are able to identify, isolate, and control the country
specific risks. We believe our approach to global security risk reflects the
concerns of investors, in the U.S. and elsewhere, for whom such risks are a
specific, significant, and important part of their investment decision-making.

With respect to your specific questions, we respond as follows (the numbers
introducing the paragraphs in bold type below cross-refer to the numbering of
your questions - but we have grouped parts of your questions together where we
believe this makes sense):

1.       WE NOTE THE STATEMENT IN YOUR [APRIL 20, 2006] RESPONSE THAT YOU WILL
         CONTINUE TO HAVE LIMITED CONTACTS WITH IRAN AND CUBA, INCLUDING "OTHER
         TRANSACTIONS FORMALLY LICENSED OR PERMITTED BY THE U.S. OFFICE OF
         FOREIGN ASSETS CONTROL ("OFAC") AND/OR U.S. LAW." PLEASE CLARIFY
         FURTHER FOR US THE TYPES OF TRANSACTIONS THAT MAY BE COVERED BY THIS
         REFERENCE; AND

4.       TO THE EXTENT THAT THE INFORMATION IN YOUR APRIL 20, 2006 RESPONSE
         REGARDING YOUR ANTICIPATED FUTURE CONTACTS WITH CUBA AND IRAN IS ALSO
         DESCRIPTIVE OF YOUR ANTICIPATED FUTURE CONTACTS WITH SYRIA, SUDAN, AND
         NORTH KOREA, PLEASE ADDRESS YOUR ANTICIPATED CONTACTS WITH THOSE
         COUNTRIES IN YOUR RESPONSE TO COMMENT 1 ABOVE.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

While one of the primary factors for determining whether a transaction or
relationship involving one of these countries may be permitted is whether it is
lawful under OFAC and/or U.S. law (whether or not a U.S. person is involved),
this is NOT the only factor. Even when the activity would be lawful under U.S.
law, the nature of the relationship, the parties and connected persons involved,
the ability to monitor activity, the underlying purpose of the relationship, and
the type of financial services to be provided are all also important parts of
every analysis involving one of these countries. Only under very limited
circumstances would UBS view activities involving these countries as acceptable.

Because the scope of business permitted under our "Extended Measures" is so
narrowly and carefully defined, our policy requires that ANY proposed business
activity involving these countries be the subject of a specific review by the
relevant business' Compliance Department and may only

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CONFIDENTIAL TREATMENT REQUESTED BY UBS AG                September 6, 2006
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be undertaken if agreed by them based on our globally applicable guidance. It is
beyond the scope of this letter to provide a comprehensive inventory of the
types of transactions that may be acceptable to UBS, but, by way of example,
this may include transactions involving these countries, to the extent they are
not restricted by any of these programs, such as the processing of payments to
the United Nations and other international organizations licensed by OFAC;
financial services related to the export of medicine, and medical supplies
(being consistent e.g. with OFAC licenses and regulations); and financial
transactions necessary and incidental to the performance of services to these
countries that are exempt from OFAC regulation such as the those related to the
free and open exchange of ideas and the export of humanitarian goods.

         IN THIS REGARD, WE NOTE THAT THE TRANSACTIONS OF THE TYPES YOU HAVE
         STATED YOU WILL TERMINATE MIGHT BE DEEMED TO BE "PERMITTED" BY U.S.
         LAW, TO THE EXTENT THEY ARE UNDERTAKEN BY YOUR NON-U.S. SUBSIDIARIES
         WITHOUT PARTICIPATION BY U.S. PERSONS.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

         WITH REGARD TO YOUR REFERENCE TO THE LEGALITY OF THE LIMITED CONTACTS
         YOU WILL CONTINUE TO HAVE WITH CUBA AND IRAN, WE NOTE THAT THE RISK
         THAT BUSINESS CONTACTS WITH TERRORIST-SPONSORING STATES WILL NEGATIVELY
         IMPACT A CORPORATION'S REPUTATION AND SHARE VALUE MAY EXIST WITH
         RESPECT TO CONTACTS THAT ARE LAWFUL. PLEASE EXPAND YOUR MATERIALITY
         ANALYSIS TO ADDRESS THE POSSIBILITY THAT YOUR ONGOING CONTACTS WITH
         CUBA AND IRAN MAY NEGATIVELY IMPACT YOUR REPUTATION AND SHARE VALUE,
         NOTWITHSTANDING THAT SUCH CONTACTS MAY BE LAWFUL.

As described above, the evaluation of "lawfulness" in this context relates to an
assessment of whether the activity is one that would be permissible under all
relevant U.S., Swiss, E.U and United Nations measures as well as under our own
internal, policy driven decisions. In this way, we couple the decisions of
relevant governments and supra-national organisations with our own policy
position and a case-by-case analysis of the nature of the transactions and the
parties involved. We believe that our approach of aggregating the views of key
government and supra-national organisations as expressed in the various measures
they implement and aligning our policy to reflect the views of all of these
bodies in aggregate provides significant protection against negative impacts to
our reputation. Further, in deciding whether or not to undertake any new
business (or in deciding to continue any existing business rather than exiting)
even if it is legally permissible under all of these regimes, there is a
specific review of that business. This review includes a qualitative assessment
of whether that contact may negatively impact our reputation - making the
assumption that such business was publicly disclosed. Thus we believe our
approach embodies a qualitative assessment of the nature of UBS's contacts with
these countries and the impact of any such contact for our investors, including
as to the potential significance of such business to our investors and the
impact of such business on the information we provide to our investors.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

2.       WE NOTE THAT IN YOUR MARCH 2006 TESTIMONY BEFORE THE U.S. HOUSE OF
         REPRESENTATIVE'S INTERNATIONAL RELATIONS COMMITTEE'S SUBCOMMITTEE ON
         OVERSIGHT AND INVESTIGATION YOU DISCUSS BUSINESS CONTACTS IN SYRIA,
         SUDAN, AND NORTH KOREA. IN LIGHT OF THE FACT THAT SYRIA, SUDAN, AND
         NORTH KOREA HAVE BEEN IDENTIFIED BY THE U.S. STATE DEPARTMENT AS STATE
         SPONSORS OF TERRORISM, AND ARE SUBJECT TO U.S. ECONOMIC SANCTIONS,
         PLEASE DESCRIBE FOR US THE EXTENT AND NATURE OF YOUR PAST, CURRENT, AND
         ANTICIPATED CONTACTS WITH SYRIA, SUDAN, AND NORTH KOREA, THROUGH
         SUBSIDIARIES, AFFILIATES, OR OTHER DIRECT OR INDIRECT ARRANGEMENTS.
         DESCRIBE ANY CONTACTS WITH THE GOVERNMENTS OF SYRIA, SUDAN, AND NORTH
         KOREA, AND/OR ENTITIES CONTROLLED BY OR AFFILIATED WITH EITHER
         GOVERNMENT.

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CONFIDENTIAL TREATMENT REQUESTED BY UBS AG                September 6, 2006
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[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

3.       PLEASE DISCUSS THE MATERIALITY TO YOU OF YOUR CONTACTS WITH SYRIA,
         SUDAN, AND NORTH KOREA, INDIVIDUALLY AND IN THE AGGREGATE, INCLUDING
         ALSO CONTACTS WITH IRAN AND CUBA, AND YOUR VIEW AS TO WHETHER THOSE
         CONTACTS, INDIVIDUALLY OR IN THE AGGREGATE, CONSTITUTE A MATERIAL
         INVESTMENT RISK FOR YOUR SECURITIES HOLDERS. PROVIDE BOTH YOUR
         CONCLUSIONS AND YOUR ANALYSIS.

[CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION]

Whether individually or in aggregate, we remain of the view that the activity
described in this and our previous letters does not constitute (either
individually or in the aggregate) a material investment risk for our securities
holders. As explained above, we believe our approach embodies a qualitative
assessment of the nature of UBS's contacts with these countries and the impact
of any such contact for our investors, including as to the potential
significance of such business to our investors and the impact of such business
on the information we provide to our investors. We do not believe that a
reasonable investor would consider the totality of all quantitative and
qualitative factors related to UBS's activities involving these countries as
significant or important in making an investment decision or that the totality
of all quantitative and qualitative information regarding UBS's activities would
significantly alter the total mix of information available to a reasonable
investor. Further, UBS does not believe that its contacts and activities with
the named countries, either individually or in the aggregate, would constitute a
material investment risk to our securities holders. In size and amount, the
activity is immaterial and of virtually no economic relevance to the Group. In
relation to the impact of the state legislation that you mention, we remain of
the view that UBS's approach to dealings with these countries has taken into
account the aims of the legislation and embedded it within our policy of exiting
relationships and dealings with these countries and is very much aligned in
spirit to the aims of these laws. As mentioned in our letter of 20 April, we
have discussed the public statements that we have made about our policy on
dealings with these countries with certain state authorities and certain clients
and other interested parties regarding specific state law requirements. As a
result of these discussions, it is clear that the specific terms of each state's
law can (and do) differ substantially. To date however, we have found either
that the specific laws do not, by their terms, affect the ability of an investor
to invest in (or client to deal with) UBS or, when we have discussed matters
fully with relevant parties, the policies and measures we have put in place and
described in this letter have been sufficient to address concerns. To date, we
are not aware that the very limited business involving these countries that we
have described in our letters to you has resulted in any investor having to
divest of their interest in UBS or that such activity has resulted in any
existing client ceasing to deal with us as a result of such activity.

CONCLUSIONS

As described, UBS has adopted and continues to implement policies in all of its
operations worl