Filed Pursuant to Rule 424(b)(3)
Registration No. 333-46930
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 17, 2001)
Principal Protected Notes
UBS AG $6,900,000 NOTES LINKED TO THE DOW JONES INDUSTRIAL AVERAGE(SM)
DUE MAY 29, 2009
<Table>
Issuer: UBS AG
Maturity Date: May 29, 2009
Coupon: We will not pay you interest during the term of the Notes.
Linked Index: The return on the Notes is linked to the performance of the
Dow Jones Industrial Average(SM) (the "Index").
Principal Protection: 100% at maturity.
Payment at Maturity: We will pay you in cash the greater of:
-- 100% of the principal amount of your Notes
OR
-- 100% of the principal amount of your Notes plus a
supplemental redemption amount. The supplemental redemption
amount will be based on any increase in the value of the
Index, after reducing the value of the Index by an
adjustment factor of 2.3% per annum applied daily over
the term of the Notes.
For a further description of the manner in which the
adjustment factor will be calculated and how your payment
at maturity will be determined, see page S-1 and
"Specific Terms of the Notes--Payment at Maturity"
beginning on page S-20.
Listing: The Notes have been approved for listing on the American
Stock Exchange under the symbol "PPV.E".
Booking Branch: UBS AG, Jersey Branch
</Table>
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 FOR RISKS RELATED TO AN
INVESTMENT IN THE NOTES.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this prospectus supplement
and accompanying prospectus. Any representation to the contrary is
a criminal offense.
The Notes are not deposit liabilities of UBS AG and are not FDIC
insured.
<Table>
<Caption>
Underwriting Proceeds to
Price to Public Discount UBS AG
Per Note 100% 3.5% 96.5%
Total $6,900,000 $241,500 $6,658,500
</Table>
UBS WARBURG UBS PAINEWEBBER INC.
Prospectus Supplement dated May 23, 2002 [UBS LOGO]
Prospectus Supplement Summary
The following is a summary of terms of the Notes, as well as a discussion of
things you should consider before purchasing the Notes. The information in this
section is qualified in its entirety by the more detailed explanations set forth
elsewhere in this prospectus supplement and in the accompanying prospectus.
Please note that references to "UBS," "we," "our" and "us" refer only to UBS AG
and not to its consolidated subsidiaries.
WHAT ARE THE NOTES AND WHAT ARE THEIR FEATURES?
+ POTENTIAL RETURN--The Notes are issued by UBS for investors who seek to
participate in the potential appreciation of the Index, while protecting
principal at maturity.
+ PRINCIPAL PROTECTION--100% at maturity.
+ PAYMENT AT MATURITY--We will pay you in cash the greater of:
-- 100% of the principal amount of your Notes
or
-- 100% of the principal amount of your Notes, plus the supplemental
redemption amount.
The "supplemental redemption amount" for the Notes will equal:
<Table>
adjusted ending value -- starting value
principal amount x --------------------------------------------------
starting value
</Table>
The "starting value" equals 10,216.08.
The "ending value" will equal the average of the closing Index values on the
five Index Business Days up to and including the final valuation date.
The "annual adjustment factor" is a fixed percentage equal to 2.3% per year
which will be applied daily over the entire term of the Notes. The
cumulative effect of the annual adjustment factor is to reduce the ending
value of the Index by 14.88%.
The "adjusted ending value" will equal the ending value reduced by the
cumulative effect of the annual adjustment factor applied over the term of
the Notes.
For the definition of an Index Business Day and a further description of how
your payment at maturity will be determined, see "Specific Terms of the
Notes--Payment at Maturity" beginning on page S-20.
+ NO INTEREST PAYMENTS--We will not pay you interest during the term of the
Notes.
+ ANNUAL TAX DUE ON IMPUTED INCOME--While you will not receive any payments
until maturity, you will be obligated to pay income tax at ordinary income
rates on the Notes each year based on an estimated yield of the Notes
determined under Treasury Regulations. Thus, assuming that the estimated
yield with respect to the Notes is 5.23% and you are a calendar year taxpayer
that is subject to a 39.1% marginal income tax rate with respect to the
Notes, you will generally be required to pay between $21.35 and $27.64 in
U.S. tax with respect to an investment of $1,000 in Notes in each complete
year prior to maturity even though you will not receive any distributions
with respect to your Notes in those years. This estimated yield is neither a
prediction nor a guarantee of what the actual supplemental redemption amount
will be, or that the actual supplemental redemption amount will even exceed
zero. The specific tax consequences that are applicable to your ownership of
the Notes may depend upon your specific circumstances. We urge you to review
the discussion under "Supplemental Tax Considerations" beginning on page S-28
for a more comprehensive discussion of the tax consequences of ownership of
the Notes.
+ EXCHANGE LISTING--The Notes have been approved for listing on the American
Stock Exchange under the symbol "PPV.E".
S- 1
SEE "EXAMPLES" ON PAGE S-4, "RETURN PROFILE AT MATURITY" ON PAGE S-7 AND
"SPECIFIC TERMS OF THE NOTES" ON PAGE S-20.
WHAT ARE SOME OF THE RISKS OF THE NOTES?
An investment in the Notes involves risks. Some of these risks are summarized
here, but we urge you to read the more detailed explanation of risks in "Risk
Factors" beginning on page S-9.
+ MARKET RISKS
- Your principal is only protected if you hold your Notes until maturity.
If you sell your Notes prior to maturity, you may have to sell them at a
discount to the principal amount. You should be willing to hold the
Notes to maturity.
- Your investment in the Notes may not perform as well as an investment in
a security whose return is based solely on the value of the Index.
- You will not earn a return on your investment at maturity unless the
Index appreciates by more than 17.5%. This will be true even if the
Index appreciates by more than 17.5% at some time during the life of the
Notes but does not exceed the starting value by 17.5% at maturity.
- The return on your Notes may not reflect the return you would realize if
you had purchased a fixed income investment of a comparable maturity
paying a market rate of interest that was issued by a company with a
comparable credit rating. For example, the current annualized return on
a comparable seven year note issued by UBS would be approximately 5.23%,
which would result in a total return at maturity of 43.5%, assuming
semiannual compounding, on the comparable note.
- The return on your Notes will not reflect the return you would realize
if you actually owned the stocks included in the Index and received the
dividends paid on those stocks because of: (1) the cumulative effect of
the reduction caused by the annual adjustment factor and (2) the value
of the Index is calculated without taking into consideration the value
of dividends paid on the stocks included in the Index.
+ LIQUIDITY
- There may be little or no secondary market for the Notes. While UBS
Warburg LLC and other affiliates of UBS intend to make a market in the
Notes, they are not required to do so and may stop making a market at
any time.
ARE THE NOTES THE RIGHT INVESTMENT FOR YOU?
The Notes may be a suitable investment for you if:
+ You seek an investment linked to the performance of the Index that will
protect your principal at maturity and offer the possibility of a positive
return.
+ You believe that the adjusted ending value of the Index will be substantially
higher than the starting value.
The Notes may not be a suitable investment for you if:
+ You believe that the adjusted ending value of the Index will not
substantially exceed the starting value.
+ You prefer the lower risk and therefore accept the potentially lower returns
of traditional fixed income investments with comparable maturities issued by
companies with comparable credit ratings.
+ You seek current income.
S- 2
WHAT ARE THE TAX CONSEQUENCES OF THE NOTES?
+ In the opinion of our counsel, Sullivan & Cromwell, you will generally be
required to pay taxes on ordinary income from the Notes over their term based
upon a comparable yield of the Notes, even though you will not receive any
payments from us until maturity. You will be subject to this treatment
because the Notes will be treated as a single debt instrument subject to
special rules governing contingent payment obligations for United States
federal income tax purposes. We have determined that the comparable yield is
equal to 5.23% per annum, compounded semiannually. This comparable yield is
neither a prediction nor a guarantee of what the actual supplemental
redemption amount will be, or that the actual supplemental redemption amount
will even exceed zero.
For a more complete discussion of the United States federal income tax
consequences of your investment in the Notes, including tax consequences
applicable to non-United States persons and persons who purchase the Notes in
the secondary market, please see the discussion under "Supplemental Tax
Considerations--Supplemental U.S. Tax Considerations" on page S-28.
S- 3
EXAMPLE 1
In this example, we assume that the adjusted ending value of the Index is below
the starting value. This would result in a return of the principal amount of the
Notes only.
HYPOTHETICAL ASSUMPTIONS:
- --------------------------------------------------------------------------------
<Table>
Principal amount: $1,000
Annual adjustment factor: 2.30%
Starting value of Index: 10,216.08
Ending value of Index: 7,500
Adjusted ending value of Index: 6,384.00 (7,500 reduced by 14.88%, which is the
cumulative effect of the annual adjustment factor)
</Table>
- --------------------------------------------------------------------------------
CALCULATIONS:
- --------------------------------------------------------------------------------
<Table>
Payout at maturity (greater Principal amount
of):
OR
Principal amount + supplemental redemption amount
</Table>
<Table>
adjusted ending value - starting value
Supplemental redemption amount: Principal amount X ( -------------------------------------- )
starting value
</Table>
<Table>
Payout at maturity (greater Principal amount: $1,000.00
of):
OR
6,384.00 - 10,216.08
$1,000 + $1,000 X ( ) $624.90
--------------------
10,216.08
</Table>
Investor receives $1,000 at maturity (0% total return on investment in the
Notes).
S- 4
EXAMPLE 2
In this example, we assume that the adjusted ending value of the Index is above
the starting value. This would result in a return of the principal amount of the
Notes plus the supplemental redemption amount.
HYPOTHETICAL ASSUMPTIONS:
- --------------------------------------------------------------------------------
<Table>
Principal amount: $1,000
Annual adjustment factor: 2.30%
Starting value of Index: 10,216.08
Ending value of Index: 22,500
Adjusted ending value of Index: 19,152.00 (22,500 reduced by 14.88%, which is the
cumulative effect of the annual
adjustment factor)
</Table>
- --------------------------------------------------------------------------------
CALCULATIONS:
- --------------------------------------------------------------------------------
<Table>
Payout at maturity (greater of): Principal amount
OR
Principal amount + supplemental redemption amount
</Table>
<Table>
adjusted ending value - starting value
Supplemental redemption amount: Principal amount X ( -------------------------------------- )
starting value
</Table>
<Table>
Payout at maturity (greater of): Principal amount: $1,000.00
OR
19,152.00 - 10,216.08
$1,000 + $1,000 X ( ) $1,874.69
---------------------
10,216.08
</Table>
Investor receives $1,874.69 at maturity (87% total return on investment in the
Notes, or a 9.2% annualized pre-tax return).
S- 5
EXAMPLE 3
In this example, we assume that the ending value of the Index is above the
starting value. However, the adjusted ending value falls below the starting
value, resulting in a return of the principal amount of the Notes only.
HYPOTHETICAL ASSUMPTIONS:
- --------------------------------------------------------------------------------
<Table>
Principal amount: $1,000
Annual adjustment factor: 2.30%
Starting value of Index: 10,216.08
Ending value of Index: 11,000
Adjusted ending value of Index: 9,363.20 (11,000 reduced by 14.88%, which is the
cumulative effect of the annual
adjustment factor)
</Table>
- --------------------------------------------------------------------------------
CALCULATIONS:
- --------------------------------------------------------------------------------
<Table>
Payout at maturity (greater Principal amount
of):
OR
Principal amount + supplemental redemption amount
</Table>
<Table>
adjusted ending value - starting value
Supplemental redemption amount: Principal amount X ( -------------------------------------- )
starting value
</Table>
<Table>
Payout at maturity (greater Principal amount: $1,000.00
of):
OR
9,363.20 - 10,216.08
$1,000 + $1,000 X ( ) $916.52
--------------------
10,216.08
</Table>
Investor receives $1,000 at maturity (0% total return on investment in the
Notes).
S- 6
RETURN PROFILE AT MATURITY
The hypothetical return profile at maturity of the Notes versus the Index is
presented in the table and graph below. This analysis assumes Index performance
from -100% to 200%.
- --------------------------------------------------------------------------------
ASSUMPTIONS
- --------------------------------------------------------------------------------
<Table>
Underlying Index Dow Jones Industrial Average(SM)
Starting Value of the Index 10,216.08
Principal Protection 100%
Annual Adjustment Factor 2.30%
Cumulative Effect of Annual
Adjustment Factor 14.88%
Term of Notes 7 years
Principal Amount $1,000
Dividend Yield on Stocks in Index 1.77%
</Table>
TABLE OF RETURN PROFILE
<Table>
<Caption>
PRETAX
PRETAX ANNUALIZED
ANNUALIZED RATE OF RETURN
ADJUSTED PAYMENT RATE OF RETURN ON STOCKS
ENDING ENDING INDEX AT TOTAL RETURN ON THE INCLUDED IN
INDEX VALUE % CHANGE VALUE(a) MATURITY ON NOTES NOTES(b) THE INDEX(b)(c)
- ----------- -------- ------------ -------- ------------ -------------- ---------------
30,648 200% 26,088 $2,554 156% 13.9% 17.6%
28,000 174% 23,834 $2,333 133% 12.5% 16.2%
26,000 155% 22,131 $2,166 117% 11.4% 15.1%
24,000 135% 20,429 $2,000 100% 10.2% 13.9%
22,000 115% 18,726 $1,833 83% 8.8% 12.6%
20,000 96% 17,024 $1,666 67% 7.4% 11.2%
18,000 76% 15,322 $1,500 50% 5.9% 9.7%
16,000 57% 13,619 $1,333 33% 4.1% 8.0%
14,000 37% 11,917 $1,166 17% 2.2% 6.1%
12,002 17.5% 10,216 $1,000 0% 0.0% 3.9%
10,216.08 0% 8,696 $1,000 0% 0.0% 1.7%
8,000 -22% 6,810 $1,000 0% 0.0% -1.6%
6,000 -41% 5,107 $1,000 0% 0.0% -5.3%
4,000 -61% 3,405 $1,000 0% 0.0% -10.3%
2,000 -80% 1,702 $1,000 0% 0.0% -18.0%
0 -100% 0 $1,000 0% 0.0% -36.5%
</Table>
(a) The adjusted ending values in this column are approximately 14.88% less than
the ending values as a result of the application of the assumed annual
adjustment factor of 2.30% over the term of the Notes.
(b) The annualized rates of return in the preceding table are calculated on a
semi-annual bond equivalent basis.
(c) The dividend yield of the stocks in the Index is assumed to be 1.77% per
year over the term of the Notes. Dividends are assumed paid at the end of
each quarter assuming the Index increases or decreases by the same amount
each quarter from the starting value of the Index to the assumed ending
value.
STEPS TO CALCULATE PAYMENT AT MATURITY PER NOTE:
1) DETERMINE ENDING VALUE OF THE INDEX (assume 24,000 for this example):
The average of the closing values of the Index on the five Index Business
Days up to and including the final valuation date.
2) CALCULATE ADJUSTED ENDING VALUE OF THE INDEX:
24,000 REDUCED BY THE CUMULATIVE EFFECT OF THE 2.30% ANNUAL ADJUSTMENT
FACTOR.
24,000 - (24,000 X 14.88%) = 24,000 - 3,571.20 = 20,428.80
- -------------------------------------------------------
- -------------------------------------------------------
S- 7
3) CALCULATE SUPPLEMENTAL REDEMPTION AMOUNT:
<Table>
adjusted ending value - starting value
Principal amount X --------------------------------------
starting value
</Table>
<Table>
20,428.80 - 10,216.08
$1,000 X --------------------- = $999.67
10,216.08 -------
-------
</Table>
4) CALCULATE PAYMENT AT MATURITY:
Principal amount + supplemental redemption amount
<Table>
$1,000 + $999.67 = $1,999.67
---------
---------
</Table>
You receive $1,999.67 at maturity.
This represents a 10% annualized return and a 100% total return.
[GRAPH OF RETURN PROFILE]
<Table>
200 155.00
184 142.00
174 133.00
164 125.00
155 117.00
145 108.00
135 100.00
125 92.00
115 83.00
106 75.00
96 67.00
86 58.00
76 50.00
66 42.00
57 33.00
47 25.00
37 17.00
27 8.00
17 0.00
8 0.00
0 0.00
- -12 0.00
- -22 0.00
- -31 0.00
- -41 0.00
- -51 0.00
- -61 0.00
- -71 0.00
- -80 0.00
- -90 0.00
- -100 0.00
</Table>
S- 8
- --------------------------------------------------------------------------------
Risk Factors
The return on the Notes is linked to the performance of the Index. Investing in
the Notes is NOT equivalent to investing directly in the Index or in the stocks
of the companies that comprise the Index. This section describes the most
significant risks relating to the Notes. WE URGE YOU TO READ THE FOLLOWING
INFORMATION ABOUT THESE RISKS, TOGETHER WITH THE OTHER INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, BEFORE INVESTING IN THE
NOTES.
YOUR PRINCIPAL IS ONLY PROTECTED IF YOU HOLD THE NOTES TO MATURITY
If you sell your Notes in the secondary market prior to maturity you may have to
do so at a discount from the principal amount, and as a result you may suffer
losses. The principal amount of your Notes is only protected if you hold your
Notes to maturity.
THE MARKET PRICE OF STOCKS INCLUDED IN THE INDEX WILL AFFECT THE MARKET VALUE OF
THE NOTES
The Index at any time generally reflects the price changes of companies included
in the Index. The stock prices of some of the companies included in the Index
have been and may continue to be volatile. The stock prices could be, at any
given time, subject to wide price fluctuations in response to a variety of
factors, including the following:
+ general market fluctuations and economic conditions,
+ actual or anticipated variations in the operating results of such companies,
+ changes in the dividends or dividend policies of such companies,
+ announcements of technological innovations or new services offered by
competitors of such companies,
+ changes in financial estimates for such companies by securities analysts,
+ regulatory or legal developments, including significant litigation matters,
affecting such companies or affecting the industries in which they operate,
+ announcements by competitors of such companies of significant acquisitions,
strategic partnerships, joint ventures or capital commitments,
+ the perception by the market of the accuracy of financial information that is
available regarding such companies, and
+ departures of key personnel of such companies.
Your Notes may trade differently than the stocks included in the Index. Changes
in the market price of the stocks included in the Index may not result in
comparable changes in the market value of your Notes.
THE RETURN ON YOUR NOTES MAY BE LIMITED TO THE REPAYMENT OF YOUR PRINCIPAL. THIS
COULD BE THE CASE EVEN IF THE INDEX RISES MODESTLY OVER THE TERM OF THE NOTES
You will not earn a return on your investment at maturity unless the Index
appreciates by more than 17.5%. This will be true even if the Index appreciates
by more than 17.5% at some time during the term of the Notes but does not exceed
the starting value by 17.5% at maturity. The return on your Notes may not
reflect the return you would have realized if you had purchased a fixed income
investment of a comparable maturity paying a market rate of interest that was
issued by a company
S- 9
RISK FACTORS
- --------------------------------------------------------------------------------
with a comparable credit rating. For example, the current annualized return on a
comparable seven year note issued by UBS would be approximately 5.23%, which
would result in a total return at maturity of 43.5%, assuming semiannual
compounding, on the comparable note.
YOU WILL NOT RECEIVE THE SAME RETURN ON YOUR NOTES THAT YOU WOULD RECEIVE BY
OWNING THE STOCKS INCLUDED IN THE INDEX OR A SECURITY DIRECTLY LINKED TO THE
PERFORMANCE OF THE INDEX
The return on your Notes will not reflect the return you would realize if you
actually owned the stocks included in the Index or a security directly linked to
the performance of the Index because:
-- the cumulative effect of the annual adjustment factor will reduce the
ending value of the Index; and
-- the value of the Index is calculated by reference to the prices of the
stocks included in the Index without taking into consideration the value of
dividends paid on those stocks.
If the value of the Index has increased at maturity, your gain, if any, will be
less than the return on the Index.
THERE MAY NOT BE AN ACTIVE TRADING MARKET IN THE NOTES--SALES IN THE SECONDARY
MARKET MAY RESULT IN SIGNIFICANT LOSSES
You should be willing to hold your Notes until maturity. There may be little or
no secondary market for the Notes. Although the Notes have been approved for
listing on the American Stock Exchange, it is not possible to predict whether a
secondary market will develop for the Notes. Even if a secondary market for the
Notes develops, it may not provide significant liquidity or trade at prices
advantageous to you. UBS Warburg LLC and other affiliates of UBS intend to make
a market for the Notes, although we and they are NOT required to do so. UBS
Warburg LLC or any other affiliate of UBS may stop making a market in the Notes
at any time.
As a result, if you sell your Notes before maturity, you may have to do so at a
discount from the issue price and you may suffer losses.
THE MARKET VALUE OF THE NOTES MAY BE INFLUENCED BY UNPREDICTABLE FACTORS
The market value of the Notes may fluctuate between the date you purchase them
and the final valuation date when the calculation agent determines the amount to
be paid to you at maturity. Several factors, many of which are beyond our
control, will influence the market value of the Notes. WE EXPECT THAT GENERALLY
THE VALUE OF THE INDEX AND THE FREQUENCY AND MAGNITUDE OF CHANGES IN THE VALUE
OF THE INDEX WILL AFFECT THE MARKET VALUE OF THE NOTES MORE THAN ANY OTHER
SINGLE FACTOR. Other factors that may influence the market value of the Notes
include, but are not limited to:
-- interest rates in the market;
-- supply and demand for the Notes;
-- economic, financial, political, regulatory, judicial or other events that
affect stock markets generally and the value of the Index; and
-- our creditworthiness.
These factors, among others, may influence the price you will receive if you
sell your Notes prior to maturity. See also "Valuation of the Notes" on page
S-19.
S- 10
RISK FACTORS
- --------------------------------------------------------------------------------
YOU WILL BE REQUIRED TO PAY TAXES ON THE NOTES EACH YEAR
If you are a U.S. person, you generally will be required to pay taxes on
ordinary income from the Notes over their term based upon an estimated yield for
the Notes, even though you will not receive any payments from us until maturity.
The estimated yield is determined solely to calculate the amounts you will be
taxed on prior to maturity and is neither a prediction nor a guarantee of what
the actual yield will be. In addition, any gain you may recognize upon the sale
or maturity of the Notes will be taxed as ordinary interest income. If you
purchase the Notes at a time other than the original issuance date, the tax
consequences to you may be different.
For further information, you should refer to "Supplemental Tax Considerations"
beginning on page S-28.
YOU WILL NOT RECEIVE INTEREST PAYMENTS ON YOUR NOTES
You will not receive interest payments on your Notes. Even if the value of the
Index has appreciated, the return you earn on your Notes may be less than you
would have earned by investing in a debt security that bears interest at a
prevailing market rate.
TRADING AND OTHER TRANSACTIONS BY UBS OR ITS AFFILIATES MAY ADVERSELY AFFECT THE
MARKET VALUE OF THE NOTES
As described below under "Use of Proceeds and Hedging," we or our affiliates may
hedge our obligations under the Notes by purchasing options or futures on the
Index or other derivative instruments with returns linked to or related to
changes in the value of the Index. We may adjust any such hedges by, among other
things, purchasing or selling any of the foregoing at any time and from time to
time. Although they are not expected to, any of these hedging activities may
adversely affect the value of the Index and, therefore, the market value of the
Notes. It is possible that we or our affiliates could receive substantial
returns from these hedging activities while the market value of the Notes may
decline.
We or our affiliates may also engage in trading in instruments linked to the
Index on a regular basis as part of our general broker-dealer and other
businesses, for proprietary accounts, for other accounts under management or to
facilitate transactions for customers, including block transactions. Any of
these activities could adversely affect the value of the Index and, therefore,
the market value of the Notes. We or our affiliates may also issue or underwrite
other securities or financial or derivative instruments with returns linked or
related to changes in the value of the Index. By introducing competing products
into the marketplace in this manner, we or our affiliates could adversely affect
the market value of the Notes.
UBS Warburg LLC and other affiliates of UBS also currently intend to make a
secondary market in the Notes. As market makers, UBS Warburg LLC and other
affiliates of UBS may, by trading the Notes, become long or short the Notes in
their inventory. The supply and demand for the Notes, including inventory
positions of market makers, may affect the secondary market price for the Notes.
BUSINESS ACTIVITIES BY UBS MAY CREATE CONFLICTS OF INTEREST BETWEEN YOU AND US
We or our affiliates may, at present or in the future, engage in trading
activities related to the Index that are not for the account of holders of the
Notes or on their behalf. These activities may present a conflict between our or
our affiliates' obligations and your interests as a holder of the Notes.
Moreover, we or one or more of our affiliates have published, and may in the
future publish, research reports on the equity markets generally or on one or
more of the issuers of securities in the Index. This
S- 11
RISK FACTORS
- --------------------------------------------------------------------------------
research is modified from time to time without notice and may express opinions
or provide recommendations that are inconsistent with purchasing or holding the
Notes. Any of these activities may affect the value of the Index and, therefore,
the market value of the Notes.
UBS AND ITS AFFILIATES HAVE NO AFFILIATION WITH DOW JONES AND ARE NOT
RESPONSIBLE FOR ITS PUBLIC DISCLOSURE OF INFORMATION
We and our affiliates are not affiliated with Dow Jones & Company, Inc. ("Dow
Jones") in any way (except for licensing arrangements discussed below in
"Historical Performance of the Index--License to Use the Index" on page S-18)
and have no ability to control or predict its actions, including any errors in
or discontinuation of disclosure regarding its methods or policies relating to
the calculation of the Index. Dow Jones is not involved in the offer of the
Notes in any way and has no obligation to consider your interest as an owner of
the Notes in taking any actions that might affect the market value of your
Notes.
Neither we nor any of our affiliates assumes any responsibility for the adequacy
or accuracy of the information about the Index or Dow Jones contained in this
prospectus supplement. YOU, AS AN INVESTOR IN THE NOTES, SHOULD MAKE YOUR OWN
INVESTIGATION INTO THE INDEX AND DOW JONES.
THERE ARE POTENTIAL CONFLICTS OF INTEREST BETWEEN YOU AND THE CALCULATION AGENT
Our affiliate, UBS Warburg LLC, will serve as the calculation agent. UBS Warburg
LLC will, among other things, determine the amount paid out to you on the Notes
at maturity. For a fuller description of the calculation agent's role, see
"Specific Terms of the Notes--Role of Calculation Agent" on page S-25. The
calculation agent will exercise its judgment when performing its functions. For
example, the calculation agent may have to determine whether a market disruption
event affecting the Index has occurred at the time of calculation. This
determination may, in turn, depend on the calculation agent's judgment whether
the event has materially interfered with our ability to unwind our hedge
positions. Since these determinations by the calculation agent may affect the
market value of the Notes, the calculation agent may have a conflict of interest
if it needs to make any such decision.
CHANGES THAT AFFECT THE INDEX WILL AFFECT THE MARKET VALUE OF THE NOTES AND THE
AMOUNT YOU WILL RECEIVE AT MATURITY
The policies of Dow Jones concerning the calculation of the Index will affect
the value of the Index and, therefore, will affect the market value of the Notes
and the amount payable at maturity. If Dow Jones discontinues or suspends
calculation or publication of the Index it may become difficult to determine the
market value of the Notes or the amount payable at maturity. If this occurs, the
calculation agent will determine the value of the Notes in its sole discretion.
As a result, the calculation agent's determination of the value of the Notes
will affect the amount you will receive at maturity. In addition, if Dow Jones
discontinues or suspends calculation of the Index at any time prior to the final
valuation date and a successor index is not available or is not acceptable to
the calculation agent in its sole discretion, then the calculation agent will
determine the amount payable on the maturity date by reference to a group of
stocks and a computation methodology that the calculation agent determines in
its sole discretion will as closely as reasonably possible replicate the Index.
The value of the Index is only one of the factors that will affect this
determination and the value of the Notes prior to maturity. See "Valuation of
the Notes" on page S-19.
S- 12
RISK FACTORS
- --------------------------------------------------------------------------------
THE CALCULATION AGENT CAN POSTPONE THE MATURITY DATE IF A MARKET DISRUPTION
EVENT OCCURS AT ANY TIME DURING THE FIVE BUSINESS DAYS UP TO AND INCLUDING THE
FINAL VALUATION DATE
If the calculation agent determines that a market disruption event has occurred
or is continuing at any time during the five business days up to and including
the final valuation date, the final valuation date will be postponed until the
occurrence of five business days on which no market disruption event occurs or
is continuing. If such a postponement occurs, then the calculation agent will
use the ending value on the next Index Business Day on which no market
disruption event occurs or is continuing. In no event, however, will the final
valuation date be postponed by more than ten business days. As a result, the
maturity date for the Notes could also be postponed, although not by more than
ten business days. If the final valuation date is postponed to the last possible
day, but a market disruption event occurs or is continuing on that day, that day
will nevertheless be the final valuation date. If the ending value is not
available on the last possible final valuation date either because of a market
disruption event or for any other reason, the calculation agent will make a good
faith estimate based on its assessment, made in its sole discretion, of the
ending value that would have prevailed in the absence of the market disruption
event or such other reason. See "Specific Terms of the Notes--Market Disruption
Event" on page S-22.
S- 13
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE OF THE INDEX
UBS has derived all information regarding the Index contained in this prospectus
supplement from publicly available information. That information reflects the
policies of, and is subject to change by, Dow Jones. Dow Jones owns the
copyright and all other rights to the Index. Dow Jones has no obligation to
continue to publish, and may discontinue publication of, the Index. We do not
assume any responsibility for the accuracy or completeness of such information.
THE DOW JONES INDUSTRIAL AVERAGE(SM)
Unless otherwise stated, all information herein on the Index is derived from Dow
Jones or other publicly available sources. This information reflects the
policies of Dow Jones as stated in the publicly available sources and the
policies are subject to change by Dow Jones. Dow Jones is under no obligation to
continue to publish the Index and may discontinue publication of the Index at
any time.
STATED OBJECTIVE
The Index is a benchmark of performance for leading companies in the U.S. stock
market. The Index consists of 30 "blue-chip" U.S. stocks, although this has not
always been the case. The number of stocks in the Index was 12 in 1896, rose to
20 in 1916, then to 30 in 1928, and has been at that level ever since.
CALCULATION METHODOLOGY
The Index is calculated by adding up the prices of the 30 constituent stocks and
dividing the total by a divisor. The divisor is now an arbitrary number that
reflects adjustments over time resulting from spin-offs, stock splits, stock
dividends and other corporate actions, as well as additions and deletions to the
Index. The adjustments to the divisor also allow the Index calculation to remain
comparable over time.
INDEX MANAGEMENT & MAINTENANCE
According to Dow Jones, the composition of the Index is determined at the
discretion of the editors of The Wall Street Journal. There are no
pre-determined criteria except that components should be established U.S.
companies that are leaders in their industries. The Index is not limited to
traditionally defined industrial stocks. Instead, the Index serves as a measure
of the entire U.S. market, covering such diverse industries as financial
services, technology, retail, entertainment and consumer goods.
For the sake of continuity, changes to the composition of the Index are rare,
and generally occur only after corporate acquisitions or other dramatic shifts
in a component's core business. When such an event necessitates that one
component be replaced, the entire Index is reviewed by the editors of The Wall
Street Journal. As a result, multiple component changes are often implemented
simultaneously.
S- 14
HISTORICAL PERFORMANCE OF THE INDEX
- --------------------------------------------------------------------------------
BELOW IS A BREAKDOWN OF THE STOCKS INCLUDED IN THE INDEX BY INDUSTRY GROUP AS OF
THE CLOSE OF MARKET ON MAY 1, 2002
<Table>
<Caption>
WEIGHT IN
THE
STOCKS INCLUDED IN THE INDEX - BREAKDOWN BY INDUSTRY INDEX(1)
- ---------------------------------------------------------------------------
CONSUMER DISCRETIONARY
Eastman Kodak Company..................................... 2.2%
General Motors Corporation................................ 4.5%
The Home Depot, Inc. ..................................... 3.2%
McDonald's Corporation.................................... 2.0%
The Walt Disney Company................................... 1.7%
Wal-Mart Stores, Inc. .................................... 3.9%
-----
Total............................................. 17.5%
CONSUMER STAPLES
The Coca-Cola Company..................................... 4.0%
Philip Morris Companies Inc. ............................. 3.8%
The Procter & Gamble Company.............................. 6.3%
-----
Total............................................. 14.1%
ENERGY
Exxon Mobil Corporation................................... 2.8%
-----
Total............................................. 2.8%
FINANCIAL
American Express Company.................................. 2.9%
Citigroup Inc. ........................................... 3.0%
J.P. Morgan Chase & Co. .................................. 2.4%
-----
Total............................................. 8.3%
HEALTH CARE
Johnson & Johnson......................................... 4.4%
Merck & Co., Inc. ........................................ 3.8%
-----
Total............................................. 8.2%
INDUSTRIAL
3M Company................................................ 8.6%
The Boeing Company........................................ 3.1%
Caterpillar Inc. ......................................... 3.7%
General Electric Company.................................. 2.2%
Honeywell International Inc. ............................. 2.5%
United Technologies Corporation........................... 4.9%
-----
Total............................................. 25.0%
MATERIALS
Alcoa Inc................................................. 2.3%
E. I. du Pont de Nemours and Company...................... 3.1%
International Paper Company............................... 2.9%
-----
Total............................................. 8.3%
</Table>
S- 15
HISTORICAL PERFORMANCE OF THE INDEX
- --------------------------------------------------------------------------------
<Table>
<Caption>
WEIGHT IN
THE
STOCKS INCLUDED IN THE INDEX - BREAKDOWN BY INDUSTRY INDEX(1)
- ---------------------------------------------------------------------------
TECHNOLOGY
Hewlett-Packard Company................................... 1.2%
Intel Corporation......................................... 2.0%
International Business Machines Corporation............... 5.8%
Microsoft Corporation..................................... 3.6%
-----
Total............................................. 12.6%
TELECOMMUNICATIONS
AT&T Corp................................................. 1.0%
SBC Communications Inc. .................................. 2.2%
-----
Total............................................. 3.2%
Index Total................................................. 100.0%
</Table>
- ---------------
Source: Bloomberg
(1) Industry totals may be less than or greater than the amounts stated due to
the rounding of individual weights.
HISTORICAL DATA ON THE INDEX
The following table sets forth the closing value of the Index at the end of each
quarter, in the period from March 1979 through March 2002. These historical data
on the Index are not necessarily indicative of the future performance of the
Index or what the value of the Notes may be. Any historical upward or downward
trend in the closing value of the Index during any period set forth below is not
any indication that the Index is more or less likely to increase or decline at
any time during the term of the Notes.
<Table>
<Caption>
MARCH JUNE SEPTEMBER DECEMBER
--------- --------- --------- ---------
1979...................................... 862.18 841.98 878.58 838.74
1980...................................... 785.75 867.92 932.42 963.98
1981...................................... 1,003.87 976.87 849.98 875.00
1982...................................... 822.77 811.94 896.25 1,046.55
1983...................................... 1,130.03 1,221.95 1,233.12 1,258.64
1984...................................... 1,164.89 1,132.41 1,206.70 1,211.56
1985...................................... 1,266.78 1,335.46 1,328.63 1,546.67
1986...................................... 1,818.61 1,892.72 1,767.58 1,895.95
1987...................................... 2,304.70 2,418.50 2,596.30 1,938.80
1988...................................... 1,988.06 2,141.71 2,112.70 2,168.60
1989...................................... 2,293.62 2,440.06 2,692.82 2,753.20
1990...................................... 2,707.21 2,880.69 2,452.48 2,633.66
1991...................................... 2,913.86 2,906.75 3,016.77 3,168.83
1992...................................... 3,235.47 3,318.52 3,271.66 3,301.11
1993...................................... 3,435.11 3,516.08 3,555.12 3,754.09
1994...................................... 3,635.96 3,624.96 3,843.19 3,834.44
1995...................................... 4,157.69 4,556.10 4,789.08 5,117.12
1996...................................... 5,587.14 5,654.63 5,882.17 6,448.27
1997...................................... 6,583.48 7,672.79 7,945.26 7,908.25
</Table>
S- 16
HISTORICAL PERFORMANCE OF THE INDEX
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARCH JUNE SEPTEMBER DECEMBER
--------- --------- --------- ---------
1998...................................... 8,799.81 8,952.02 7,842.62 9,181.43
1999...................................... 9,786.16 10,970.80 10,336.95 11,497.12
2000...................................... 10,921.92 10,447.89 10,650.92 10,786.85
2001...................................... 9,878.78 10,502.40 8,847.56 10,021.50
2002...................................... 10,403.94 *
</Table>
* The closing value of the Index on May 23, 2002 was 10,216.08.
- ---------------
Source: Bloomberg
The following graph sets forth the historical performance of the Index daily
from February 1, 1979 through May 23, 2002. The vertical axis has a range of
numbers from 0 to 12,000 in increments of 2,000. The horizontal axis has a range
of dates over the same period.
(GRAPH)
- ---------------
Source: Bloomberg
PAST MOVEMENTS OF THE INDEX ARE NOT INDICATIVE OF FUTURE INDEX VALUES.
S- 17
HISTORICAL PERFORMANCE OF THE INDEX
- --------------------------------------------------------------------------------
LICENSE TO USE THE INDEX
We have entered into a non-exclusive license agreement with Dow Jones, which
grants us a license in exchange for a fee to use the Index in connection with
the issuance of certain securities, including the Notes.
"Dow Jones", "Dow Jones Industrial Average(SM)" and "DJIA(SM)" are service marks
of Dow Jones & Company, Inc. Dow Jones has no relationship to UBS, other than
the licensing of the Dow Jones Industrial Average (DJIA) and its service marks
for use in connection with the Notes.
DOW JONES DOES NOT:
- - Sponsor, endorse, sell or promote the Notes.
- - Recommend that any person invest in the Notes or any other financial products.
- - Have any responsibility or liability for or make any decisions about the
timing, amount or pricing of the Notes.
- - Have any responsibility or liability for the administration, management or
marketing of the Notes.
- - Consider the needs of the Notes or the owners of the Notes in determining,
composing or calculating the DJIA or have any obligation to do so.
DOW JONES WILL NOT HAVE ANY LIABILITY IN CONNECTION WITH THE
NOTES. SPECIFICALLY,
- - DOW JONES DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AND DOW JONES
DISCLAIMS ANY WARRANTY ABOUT:
- - THE RESULTS TO BE OBTAINED BY THE NOTES, THE OWNER OF THE NOTES OR ANY OTHER
PERSON IN CONNECTION WITH THE USE OF THE DJIA AND THE DATA INCLUDED IN THE
DJIA;
- - THE ACCURACY OR COMPLETENESS OF THE DJIA OR ITS DATA;
- - THE MERCHANTABILITY AND THE FITNESS FOR A PARTICULAR PURPOSE OR USE OF THE
DJIA OR ITS DATA;
- - DOW JONES WILL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS IN
THE DJIA OR ITS DATA;
- - UNDER NO CIRCUMSTANCES WILL DOW JONES BE LIABLE FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF DOW
JONES KNOWS THAT THEY MIGHT OCCUR.
THE LICENSING RELATING TO THE USE OF THE INDEXES AND TRADEMARKS REFERRED TO
ABOVE BY UBS IS SOLELY FOR THE BENEFIT OF UBS, AND NOT FOR ANY OTHER THIRD
PARTIES.
S- 18
- --------------------------------------------------------------------------------
VALUATION OF THE NOTES
AT MATURITY.
At maturity, we will pay you in cash the greater of:
-- 100% of the principal amount of your Notes
or
-- an amount equal to:
100% of the principal amount of your Notes, plus the supplemental
redemption amount.
The "supplemental redemption amount" for the Notes will be determined by the
calculation agent and will equal:
<Table>
adjusted ending value -- starting value
principal amount x
------------------------------------------------------
starting value
</Table>
For a discussion of these terms and the manner in which your payment at maturity
will be determined, see "Specific Terms of the Notes--Payment at Maturity".
PRIOR TO MATURITY. The market value of the Notes will be affected by a number
of interrelated factors including, but not limited to, supply and demand, the
value and volatility of the Index, the level of interest rates and other
economic conditions, as well as the perceived creditworthiness of UBS. You
should understand that the market value of the Notes is driven by a range of
interrelated factors and that while the value and volatility of the Index are
important variables, they cannot be used as the sole measures to approximate the
value of this investment. You should not use any single variable to approximate
the value of this investment.
S-19
- --------------------------------------------------------------------------------
SPECIFIC TERMS OF THE NOTES
In this section, references to "holders" mean those who own the Notes registered
in their own names, on the books that we or the trustee maintain for this
purpose, and not those who own beneficial interests in the Notes registered in
street name or in the Notes issued in book-entry form through The Depository
Trust Company or another depositary. Owners of beneficial interests in the Notes
should read the section entitled "Description of Notes We May Offer--Legal
Ownership of Notes" in the accompanying prospectus.
The Notes are part of a series of debt securities entitled "Medium Term Notes,
Series A" that we may issue under the indenture from time to time. This
prospectus supplement summarizes specific financial and other terms that apply
to the Notes. Terms that apply generally to all Medium Term Notes, Series A are
described in "Description of Notes We May Offer" in the accompanying prospectus.
The terms described here (i.e., in this prospectus supplement) supplement those
described in the accompanying prospectus and, if the terms described here are
inconsistent with those described there, the terms described here are
controlling.
Please note that the information about the price to public and net proceeds to
UBS on the front cover relates only to the initial sale of the Notes. If you
have purchased the Notes in a market-making transaction after the initial sale,
information about the price and date of sale to you will be provided in a
separate confirmation of sale.
We describe the terms of the Notes in more detail below.
COUPON
We will not pay you interest during the term of the Notes.
PAYMENT AT MATURITY
We will pay you in cash the greater of:
-- 100% of the principal amount of your Notes
or
-- an amount equal to:
100% of the principal amount of your Notes, plus a supplemental
redemption amount. The supplemental redemption amount will be based on
any increase in the value of the Index, after reducing the value of the
Index by an adjustment factor of 2.3% per annum applied daily over the
term of the Notes.
The "supplemental redemption amount" for the Notes will equal:
<Table>
adjusted ending value--starting value
principal amount x
------------------------------------------
starting value
</Table>
The "starting value" equals 10,216.08.
The "ending value" will equal the average of the closing Index values on the
five Index Business Days up to and including the final valuation date.
The "annual adjustment factor" is a fixed percentage equal to 2.3% per year
which will be applied daily over the entire term of the Notes. We will reduce
the value of the Index by this percentage on a
S- 20
SPECIFIC TERMS OF THE NOTES
- --------------------------------------------------------------------------------
pro-rata basis on a 365-day year applied over the entire term of the Notes. The
cumulative effect of the annual adjustment factor is to reduce the ending value
of the Index by 14.88%.
The "adjusted ending value" will equal the ending value reduced by the
cumulative effect of the annual adjustment factor applied over the term of the
Notes.
The following steps illustrate the method used to calculate the cumulative
effect of the annual adjustment factor on the ending index value:
1) CONVERT THE ANNUAL ADJUSTMENT FACTOR TO A DAILY EQUIVALENT ASSUMING A 2.30%
ANNUAL ADJUSTMENT FACTOR FOR THIS EXAMPLE.
<Table>
2.30% annual adjustment factor .006301370%
Daily Equivalent = = ---------------
------------------------------
365 days
</Table>
2) DETERMINE THE NUMBER OF DAYS DURING THE SEVEN YEAR TERM OF THE NOTES.
(7 years x 365 days) + 2 days for leap years = 2,557 DAYS
3) CALCULATE THE COMPOUNDED EFFECT OF THE DAILY EQUIVALENT ON THE INDEX.
(Number of Days)
(1 - daily equivalent) =
(2,557)
(1 - .006301370%) =85.12%
4) APPLY THE COMPOUNDED EFFECT OF THE DAILY EQUIVALENT TO THE ENDING VALUE OF
THE INDEX.
Index ending value x 85.12% = Adjusted ending value
Therefore the cumulative effect of the annual adjustment factor is to reduce the
ending index value by:
(1 - 85.12%) = 14.88%
The "calculation period" means the five Index Business Days up to and including
the final valuation date. The value of the Index will be averaged during the
calculation period to determine the ending value.
An "Index Business Day" means any day on which the AMEX and the NYSE are open
for trading and the Index or any successor index is calculated and published.
MATURITY DATE
The maturity date will be May 29, 2009 unless that day is not a business day, in
which case the maturity date will be the next following business day. If the
third business day before this applicable day does not qualify as the final
valuation date referred to below, then the maturity date will be the third
business day following the final valuation date. The calculation agent may
postpone the final valuation date--and therefore the maturity date--if a market
disruption event occurs or is continuing on a day that would otherwise be the
final valuation date. We describe market disruption events below under "--Market
Disruption Event."
FINAL VALUATION DATE
The final valuation date will be the third Index Business Day prior to May 29,
2009, unless the calculation agent determines that a market disruption event
occurs or is continuing at any time during the calculation period. In that
event, the final valuation date will be the next Index Business Day following
the occurrence of five business days on which the calculation agent determines
that a market disruption event does not occur and is not continuing. In no
event, however, will the final valuation
S- 21
SPECIFIC TERMS OF THE NOTES
- --------------------------------------------------------------------------------
date be postponed more than ten business days, as described below under
"--Market Disruption Event."
MARKET DISRUPTION EVENT
As described above, we will calculate the amount you receive at maturity based
on the supplemental redemption amount. If a market disruption event occurs or is
continuing on any business day during the calculation period, then the
calculation agent will use the closing value on the first Index Business Day
following the occurrence of five business days on which no market disruption
event occurs or is continuing. In no event, however, will the final valuation
date be postponed by more than ten business days.
If the final valuation date is postponed to the last possible day, but a market
disruption event occurs or is continuing on that day or has occurred at any time
during the calculation period, that day will nevertheless be the final valuation
date or the extended final valuation date, as the case may be. If it is not
possible to determine the ending value at that time, either because of a market
disruption event or for any other reason, the calculation agent will make a good
faith estimate of the ending value that would have prevailed in the absence of
the market disruption event.
Any of the following will be a market disruption event if, in the opinion of the
calculation agent, the event materially affects the Index:
-- a suspension, absence or material limitation of trading in a material
number of securities included in the Index for more than two hours or
during the one-half hour before the close of trading in that market, as
determined by the calculation agent in its sole discretion
-- a suspension, absence or material limitation of trading in futures, option
contracts or exchange-traded funds relating to the Index in the primary
market for those instruments for more than two hours of trading or during
the one-half hour before the close of trading in that market, as
determined by the calculation agent in its sole discretion
-- the Index is not published, as determined by the calculation agent in its
sole discretion
or, in any of these events, the calculation agent determines in its sole
discretion that the event materially interferes with our ability or the ability
of any of our affiliates to unwind all or a material portion of a hedge with
respect to the Notes that we or our affiliates have effected or may effect as
described below under "Use of Proceeds and Hedging."
The following events will not be market disruption events:
-- a limitation on the hours or numbers of days of trading, but only if the
limitation results from an announced change in the regular business hours
of the relevant market
-- a decision to permanently discontinue trading in the option contracts
relating to the Index.
For this purpose, an "absence of trading" in the primary securities market on
which option contracts related to the Index are traded will not include any time
when that market is itself closed for trading under ordinary circumstances.
DISCONTINUANCE OR MODIFICATION OF THE INDEX
If Dow Jones discontinues publication of the Index and it or any other person or
entity publishes a substitute index that the calculation agent determines is
comparable to the Index and approves as a successor index, then the calculation
agent will determine the amount payable on the maturity date by reference to
such successor index.
If the calculation agent determines that the publication of the Index is
discontinued and that there is no successor index, or that the level of the
Index is not available on the final valuation date because of
S- 22
SPECIFIC TERMS OF THE NOTES
- --------------------------------------------------------------------------------
a market disruption event or for any other reason, the calculation agent will
determine the amount payable on the maturity date by reference to a group of
stocks and a computation methodology that the calculation agent determines will
as closely as reasonably possible replicate the Index.
If the calculation agent determines that the Index, the stocks comprising the
Index or the method of calculating the Index has been changed at any time in any
respect that causes the Index not to fairly represent the value of the Index had
such changes not been made, then the calculation agent may make adjustments in
the Index or the method of calculating the Index that it believes are
appropriate to ensure that the ending value used to determine the amount payable
on the maturity date is equitable.
All determinations and adjustments to be made by the calculation agent with
respect to the Index may be made by the calculation agent in its sole
discretion.
DEFAULT AMOUNT ON ACCELERATION
If an event of default occurs and the maturity of the Notes is accelerated, we
will pay the default amount in respect of the principal of the Notes at
maturity. We describe the default amount below under "--Default Amount."
For the purpose of determining whether the holders of our Series A medium-term
notes, of which the Notes are a part, are entitled to take any action under the
indenture, we will treat the outstanding principal amount of the Notes as the
outstanding principal amount of that note. Although the terms of the Notes may
differ from those of the other Series A medium-term notes, holders of specified
percentages in principal amount of all Series A medium-term notes, together in
some cases with other series of our debt securities, will be able to take action
affecting all the Series A medium-term notes, including the Notes. This action
may involve changing some of the terms that apply to the Series A medium-term
notes, accelerating the maturity of the Series A medium-term notes after a
default or waiving some of our obligations under the indenture. We discuss these
matters in the attached prospectus under "Description of Notes We May
Offer--Default, Remedies and Waiver of Default" and "--Modification and Waiver
of Covenants."
DEFAULT AMOUNT
The default amount for the Notes on any day will be an amount, in U.S. Dollars
for the principal of the Notes, equal to the cost of having a qualified
financial institution, of the kind and selected as described below, expressly
assume all our payment and other obligations with respect to the Notes as of
that day and as if no default or acceleration had occurred, or to undertake
other obligations providing substantially equivalent economic value to you with
respect to the Notes. That cost will equal:
-- the lowest amount that a qualified financial institution would charge to
effect this assumption or undertaking, plus
-- the reasonable expenses, including reasonable attorneys' fees, incurred by
the holders of the Notes in preparing any documentation necessary for this
assumption or undertaking.
During the default quotation period for the Notes, which we describe below, the
holders of the Notes and/or we may request a qualified financial institution to
provide a quotation of the amount it would charge to effect this assumption or
undertaking. If either party obtains a quotation, it must notify the other party
in writing of the quotation. The amount referred to in the first bullet point
above will equal the lowest--or, if there is only one, the only--quotation
obtained, and as to which notice is so given, during the default quotation
period. With respect to any quotation, however, the party not obtaining the
quotation may object, on reasonable and significant grounds, to the assumption
or undertaking by the qualified financial institution providing the quotation
and notify the other party in
S- 23
SPECIFIC TERMS OF THE NOTES
- --------------------------------------------------------------------------------
writing of those grounds within two business days after the last day of the
default quotation period, in which case that quotation will be disregarded in
determining the default amount.
DEFAULT QUOTATION PERIOD
The default quotation period is the period beginning on the day the default
amount first becomes due and ending on the third business day after that day,
unless:
-- no quotation of the kind referred to above is obtained, or
-- every quotation of that kind obtained is objected to within five business
days after the due date as described above.
If either of these two events occurs, the default quotation period will continue
until the third business day after the first business day on which prompt notice
of a quotation is given as described above. If that quotation is objected to as
described above within five business days after that first business day,
however, the default quotation period will continue as described in the prior
sentence and this sentence.
In any event, if the default quotation period and the subsequent two business
day objection period have not ended before the final valuation date, then the
default amount will equal the principal amount of the Notes.
QUALIFIED FINANCIAL INSTITUTIONS
For the purpose of determining the default amount at any time, a qualified
financial institution must be a financial institution organized under the laws
of any jurisdiction in the United States of America, Europe or Japan, which at
that time has outstanding debt obligations with a stated maturity of one year or
less from the date of issue and rated either:
-- A-1 or higher by Standard & Poor's Ratings Group or any successor, or any
other comparable rating then used by that rating agency, or
-- P-1 or higher by Moody's Investors Service, Inc. or any successor, or any
other comparable rating then used by that rating agency.
MANNER OF PAYMENT AND DELIVERY
Any payment on or delivery of the Notes at maturity will be made to accounts
designated by you and approved by us, or at the office of the trustee in New
York City, but only when the Notes are surrendered to the trustee at that
office. We also may make any payment or delivery in accordance with the
applicable procedures of the depositary.
BUSINESS DAY
When we refer to a business day with respect to the Notes, we mean a day that
meets all of the requirements for a business day as that term is defined on page
35 in the attached prospectus as well as being a day on which all of the
securities comprising the Index are quoted or traded and a day on which the
Index is calculated and published by Dow Jones.
MODIFIED BUSINESS DAY
As described in the attached prospectus, any payment on the Notes that would
otherwise be due on a day that is not a business day may instead be paid on the
next day that is a business day, with the same effect as if paid on the original
due date, except as described under "Maturity Date" and "Final Valuation Date"
above.
S- 24
SPECIFIC TERMS OF THE NOTES
- --------------------------------------------------------------------------------
ROLE OF CALCULATION AGENT
The calculation agent will make all determinations regarding the value of the
Notes at maturity, the adjusted ending value, market disruption events, Index
Business Days, the default amount and the amount payable in respect of your
Notes. Absent manifest error, all determinations of the calculation agent will
be final and binding on you and us, without any liability on the part of the
calculation agent.
Please note that the firm named as the calculation agent in this prospectus
supplement is the firm serving in that role as of the original issue date of the
Notes. We may change the calculation agent after the original issue date without
notice.
BOOKING BRANCH
The Notes will be booked through UBS AG, Jersey Branch.
S- 25
- --------------------------------------------------------------------------------
USE OF PROCEEDS AND HEDGING
We will use the net proceeds we receive from the sale of the Notes for the
purposes we describe in the attached prospectus under "Use of Proceeds." We or
our affiliates may also use those proceeds in transactions intended to hedge our
obligations under the Notes as described below.
In anticipation of the sale of the Notes, we or our affiliates expect to enter
into hedging transactions involving purchases of securities included in or
linked to the Index and listed and/or over-the-counter options on the Index
prior to and on the trade date. From time to time, we or our affiliates may
enter into additional hedging transactions or unwind those we have entered into.
In this regard, we or our affiliates may:
-- acquire or dispose of securities of companies included in the Index,
-- take or dispose of positions in listed or over-the-counter options or other
instruments based on the value of the Index,
-- take or dispose of positions in listed or over-the-counter options or other
instruments based on the value of other similar market indices, or
-- any combination of the three.
We or our affiliates may acquire a long or short position in securities similar
to the Notes from time to time and may, in our or their sole discretion, hold or
resell those securities.
We or our affiliates may close out our or their hedge on or before the final
valuation date. That step may involve sales or purchases of instruments based on
indices designed to track the performance of the Index or other components of
the U.S. equity market.
The hedging activity discussed above may adversely affect the market value of
the Notes from time to time. See "Risk Factors" beginning on page S-9 for a
discussion of these adverse effects.
S-26
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Capitalization of UBS
The following table sets forth the consolidated capitalization of UBS in
accordance with International Accounting Standards and translated into U.S.
dollars.
<Table>
<Caption>
AS OF MARCH 31, 2002 (UNAUDITED) CHF USD
- -------------------------------------------------------------------------------
(IN MILLIONS)
Debt
Debt issued(1)............................................ 155,251 92,527
------- -------
Total Debt................................................ 155,251 92,527
Minority Interest(2)........................................ 4,116 2,453
Shareholders' Equity........................................ 44,769 26,682
------- -------
Total capitalization........................................ 204,136 121,662
======= =======
</Table>
- ---------------
(1) Includes Money Market Paper and Medium Term Notes as per Balance Sheet
position.
(2) Includes Trust preferred securities.
Swiss franc (CHF) amounts have been translated into U.S. dollars (USD) at the
rate of CHF 1 = USD 0.59598307.
S- 27
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Supplemental Tax Considerations
The following is a general description of certain United States and Swiss tax
considerations relating to the Notes. It does not purport to be a complete
analysis of all tax considerations relating to the Notes. Prospective purchasers
of the Notes should consult their tax advisers as to the consequences under the
tax laws of the country of which they are resident for tax purposes and the tax
laws of Switzerland and the United States of acquiring, holding and disposing of
the Notes and receiving payments of interest, principal and/or other amounts
under the Notes. This summary is based upon the law as in effect on the date of
this prospectus supplement and is subject to any change in law that may take
effect after such date.
SUPPLEMENTAL U.S. TAX CONSIDERATIONS
The discussion below supplements the discussion under "U.S. Tax Considerations"
in the attached prospectus and is subject to the limitations and exceptions set
forth therein. Except as otherwise noted under "Non-United States Holders"
below, this discussion is only applicable to you if you are a United States
holder (as defined in the accompanying prospectus).
In the opinion of Sullivan & Cromwell, the Notes will be treated as a single
debt instrument subject to special rules governing contingent payment
obligations for United States federal income tax purposes. Under those rules,
the amount of interest you are required to take into account for each accrual
period will be determined by constructing a projected payment schedule for the
Notes, and applying the rules similar to those for accruing original issue
discount on a hypothetical noncontingent debt instrument with that projected
payment schedule. This method is applied by first determining the yield at which
we would issue a noncontingent fixed rate debt instrument with terms and
conditions similar to the Notes (the "comparable yield") and then determining a
payment schedule as of the issue date that would produce the comparable yield.
These rules will generally have the effect of requiring you to include amounts
in respect of the Notes prior to your receipt of cash attributable to that
income.
We have determined that the comparable yield is equal to 5.23% per annum,
compounded semiannually, with a projected payment at maturity of $1,435.33 based
on an investment of $1,000. Based upon this comparable yield, if you are an
initial holder that holds the Note until maturity and you pay your taxes on a
calendar year basis, you would be required to pay taxes on the following amounts
of ordinary income from the Note each year: $30.77 in 2002, $54.61 in 2003,
$57.51 in 2004, $60.55 in 2005, $63.76 in 2006, $67.14 in 2007, $70.70 in 2008,
and $30.28 in 2009. However, in 2009, the amount of ordinary income that you
would be required to pay taxes on from owning each Note may be greater or less
than $30.28, depending upon the payment at maturity you receive. Also, if the
payment at maturity were less than $1,405.05, you would have a net loss in 2009.
THE COMPARABLE YIELD AND PROJECTED PAYMENT AMOUNTS SET FORTH ABOVE MAY DIFFER
FROM THE HYPOTHETICAL VALUES STATED ABOVE. YOU ARE REQUIRED TO USE THE
COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE SET FORTH ABOVE IN DETERMINING
YOUR INTEREST ACCRUALS IN RESPECT OF THE NOTES, UNLESS YOU TIMELY DISCLOSE AND
JUSTIFY ON YOUR FEDERAL INCOME TAX RETURN THE USE OF A DIFFERENT COMPARABLE
YIELD AND PROJECTED PAYMENT SCHEDULE.
THE COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE ARE NOT PROVIDED TO YOU FOR
ANY PURPOSE OTHER THAN THE DETERMINATION OF YOUR INTEREST ACCRUALS IN RESPECT OF
THE NOTES, AND WE MAKE NO REPRESENTATIONS REGARDING THE AMOUNT OF CONTINGENT
PAYMENTS WITH RESPECT TO THE NOTES.
If you purchase the Notes for an amount that differs from the Notes' adjusted
issue price at the time of the purchase, you must determine the extent to which
the difference between the price you paid for the Notes and its adjusted issue
price is attributable to a change in expectations as to the projected
S- 28
SUPPLEMENTAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
payment schedule, a change in interest rates, or both, and allocate the
difference accordingly. If the Notes are listed on the American Stock Exchange,
you may (but are not required to) allocate the difference pro rata to interest
accruals over the remaining term of the Notes to the extent that the yield on
the Notes, determined after taking into account amounts allocated to interest,
is not less than the U.S. federal short-term rate. This rate is determined
monthly by the U.S. Secretary of Treasury and is intended to approximate the
average yield on short-term U.S. government obligations. The adjusted issue
price of the Notes will equal the Notes' original issue price plus any interest
deemed to be accrued on the Notes (under the rules governing contingent payment
obligations) as of the time you purchased the Notes.
If the adjusted issue price of the Notes is greater than the price you paid for
the Notes, you must make positive adjustments increasing the amount of interest
that you would otherwise accrue and include in income each year, and the amount
of ordinary income (or decreasing the amount of ordinary loss) recognized upon
maturity by the amounts allocated to each of interest and projected payment
schedule. If the adjusted issue price of the Notes is less than the price you
paid for the Notes, you must make negative adjustments, decreasing the amount of
interest that you must include in income each year, and the amount of ordinary
income (or decreasing the amount of ordinary loss) recognized upon maturity by
the amounts allocated to each of interest and projected payment schedule.
Adjustments allocated to the interest amount are not made until the date the
daily portion of interest accrues.
Because any Form 1099-OID that you receive will not reflect the effects of
positive or negative adjustments resulting from your purchase of the Notes at a
price other than the adjusted issue price determined for tax purposes, you are
urged to consult with your tax advisor as to whether and how adjustments should
be made to the amounts reported on any Form 1099-OID.
You will recognize gain or loss upon the sale or maturity of the Notes in an
amount equal to the difference, if any, between the amount of cash you receive
at such time and your adjusted basis in the Notes. In general, your adjusted
basis in the Notes will equal the amount you paid for the Notes, increased by
the amount of interest you previously accrued with respect to the Notes (in
accordance with the comparable yield and the projected payment schedule for the
Notes) and increased or decreased by the amount of any positive or negative
adjustment, respectively, that you are required to make if you purchased the
Notes at a price other than the adjusted issue price determined for tax
purposes.
Any gain you recognize upon the sale or maturity of the Notes will be ordinary
interest income. Any loss you recognize at such time will be ordinary loss to
the extent of interest you included as income in the current or previous taxable
years in respect of the Notes, and thereafter, capital loss.
Non-United States Holders. If you are not a United States holder, you will not
be subject to United States withholding tax with respect to payments on your
Notes but you will be subject to generally applicable information reporting and
backup withholding requirements with respect to payments on your Notes unless
you comply with certain certification and identification requirements as to your
foreign status.
SUPPLEMENTAL TAX CONSIDERATIONS UNDER THE LAWS OF SWITZERLAND
TAX ON PRINCIPAL AND INTEREST
Under present Swiss law, payment of interest, if any, on and repayment of
principal of the Notes by us are not subject to Swiss withholding tax (Swiss
Anticipatory Tax), and payments to holders of the Notes who are non-residents of
Switzerland and who during the taxable year have not engaged in trade or
business through a permanent establishment within Switzerland will not be
subject to any Swiss Federal, Cantonal or Municipal income tax.
S- 29
SUPPLEMENTAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GAINS ON SALE OR REDEMPTION
Under present Swiss Law, a holder of the Notes who is a non-resident of
Switzerland and who during the taxable year has not engaged in trade or business
through a permanent establishment within Switzerland will not be subject to any
Swiss Federal, Cantonal or Municipal income or other tax on gains realized
during the year on the sale or redemption of a Note.
STAMP, ISSUE AND OTHER TAXES
There is no tax liability in Switzerland in connection with the issue and
redemption of the Notes. However, the Notes sold through a bank or other dealer
resident in Switzerland or Liechtenstein are subject to Turnover Tax.
RESIDENTS OF SWITZERLAND
For residents of Switzerland, for tax purposes, that portion of the annual
interest payment representing interest, if any, shall be treated as income and
that portion of the annual interest payment representing an option premium, if
any, shall be treated as a capital gain.
S- 30
- --------------------------------------------------------------------------------
ERISA Considerations
We, UBS Warburg LLC, UBS PaineWebber Inc. and other of our affiliates may each
be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a "disqualified
person" (within the meaning of Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code")) with respect to an employee benefit plan that is
subject to ERISA and/or an individual retirement account that is subject to the
Code ("Plan"). The purchase of the Notes by a Plan with respect to which UBS
Warburg LLC, UBS PaineWebber Inc. or any of our affiliates acts as a fiduciary
as defined in Section 3(21) of ERISA and/or Section 4975 of the Code
("Fiduciary") would constitute a prohibited transaction under ERISA or the Code
unless acquired pursuant to and in accordance with an applicable exemption. The
purchase of the Notes by a Plan with respect to which UBS Warburg LLC, UBS
PaineWebber Inc. or any of our affiliates does not act as a Fiduciary but for
which any of the above entities does provide services could also be prohibited,
but one or more exemptions may be applicable. Any person proposing to acquire
any Notes on behalf of a Plan should consult with counsel regarding the
applicability of the prohibited transaction rules and the applicable exemptions
thereto. Upon purchasing the Notes, the Plan will be deemed to have represented
that an exemption to the prohibited transaction rule applies. The discussion
above supplements the discussion under "ERISA Considerations" in the attached
prospectus.
S- 31
- --------------------------------------------------------------------------------
Supplemental Plan of Distribution
UBS has agreed to sell to UBS Warburg LLC and UBS PaineWebber Inc., and UBS
Warburg LLC and UBS PaineWebber Inc. have agreed to purchase from UBS, the
aggregate principal amount of the Notes specified on the front cover of this
prospectus supplement. UBS Warburg LLC and UBS PaineWebber Inc. intend to resell
the offered Notes at the original issue price applicable to the offered Notes to
be resold. UBS Warburg LLC and UBS PaineWebber Inc. may resell Notes to
securities dealers at a discount of up to 3.5% from the original issue price
applicable to the offered Notes. In the future, we or our affiliates may
repurchase and resell the offered Notes in market-making transactions. For more
information about the plan of distribution and possible market-making
activities, see "Plan of Distribution" in the attached prospectus.
UBS may use this prospectus supplement and accompanying prospectus in the
initial sale of any Notes. In addition, UBS, UBS Warburg LLC, UBS PaineWebber
Inc. or any other affiliate of UBS may use this prospectus supplement and
accompanying prospectus in a market-making transaction for any Notes after its
initial sale. Unless UBS or its agent informs the purchaser otherwise in the
confirmation of sale, this prospectus supplement and accompanying prospectus are
being used in a market-making transaction.
S- 32
You should rely only on the information incorporated by reference or provided in
this prospectus supplement or the accompanying prospectus. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus supplement is accurate
as of any date other than the date on the front of the document.
TABLE OF CONTENTS
- ---------------------------------------------
PROSPECTUS SUPPLEMENT
<Table>
Prospectus Supplement Summary......... S-1
Risk Factors.......................... S-9
Historical Performance of the Index... S-14
Valuation of the Notes................ S-19
Specific Terms of the Notes........... S-20
Use of Proceeds and Hedging........... S-26
Capitalization of UBS................. S-27
Supplemental Tax Considerations....... S-28
ERISA Considerations.................. S-31
Supplemental Plan of Distribution..... S-32
PROSPECTUS
Prospectus Summary.................... 3
Cautionary Note Regarding Forward-
Looking Information................. 7
Where You Can Find More Information... 8
Incorporation of Information About
UBS................................. 8
Presentation of Financial
Information......................... 9
Limitations on Enforcement of U.S.
Laws Against UBS AG, Its Management
and Others.......................... 10
Capitalization of UBS................. 10
UBS................................... 11
Use of Proceeds....................... 13
Description of Notes We May Offer..... 14
Considerations Relating to Indexed
Notes............................... 51
Considerations Relating to Notes
Denominated or Payable In or Linked
to a Non-U.S. Dollar Currency....... 54
U.S. Tax Considerations............... 57
Tax Considerations Under The Laws of
Switzerland......................... 68
ERISA Considerations.................. 69
Plan of Distribution.................. 70
Validity of the Notes................. 72
Experts............................... 72
</Table>
[UBS AG LOGO]
Principal
Protected Notes
UBS AG $6,900,000
NOTES LINKED TO THE
DOW JONES INDUSTRIAL AVERAGE(SM) DUE MAY 29, 2009
PROSPECTUS SUPPLEMENT
MAY 23, 2002
(TO PROSPECTUS DATED MAY 17, 2001)
UBS WARBURG
UBS PAINEWEBBER INC.