-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GkNeTY1d5McMj/mvkQyQoUa2cmEeVn9t0NyOdbKLtD9jso+yqtGb+SGB7rgJmH7q XA0tvuhETkMade/N20riXQ== 0000950123-02-004452.txt : 20020501 0000950123-02-004452.hdr.sgml : 20020501 ACCESSION NUMBER: 0000950123-02-004452 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20020501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UBS AG CENTRAL INDEX KEY: 0001114446 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-46930 FILM NUMBER: 02629949 BUSINESS ADDRESS: STREET 1: BAHNHOFSTRASSE CITY: ZURICH STATE: V8 ZIP: 45 MAIL ADDRESS: STREET 1: BAHNHOFSTRASSE CITY: ZURICH STATE: V8 ZIP: 45 424B2 1 y60103pse424b2.txt PROSPECTUS SUPPLEMENT TO 05-17-01 PROSPECTUS PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED MAY 17, 2001) Principal Protected Notes UBS AG $8,129,000 NOTES LINKED TO THE NASDAQ-100 INDEX(R) DUE NOVEMBER 3, 2005 Issuer: UBS AG Maturity Date: November 3, 2005 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 Nasdaq-100 Index(R) (the "Index"). Potential Return: Your maximum potential return at maturity is 100% in excess of the principal amount of your Notes. Your actual return at maturity will be at least the full principal amount of your Notes and will be calculated by reducing the maximum potential return by the sum of all negative monthly returns of the Index during the term of the Notes. See "Historical Performance of the Index" on page S-9. Negative Monthly Return: A negative monthly return occurs if the closing level of the Index on the last trading day of a month is less than the closing level of the Index on the last trading day of the prior month or, in the case of the first month, the Initial Index Level. A negative monthly return in any single month will be limited to a maximum of -10%. Initial Index Level: 1,277.07 Payment at Maturity: We will pay you in cash the greater of: -- the full principal amount of your Notes or: -- the full principal amount of your Notes, plus the full principal amount of your Notes X (100%, reduced by the sum of all negative monthly returns) Listing: The Notes have been approved for listing on the American Stock Exchange under the symbol "PPV.A". Booking Branch: UBS AG, Jersey Branch
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 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.
Underwriting Proceeds to Price to Public Discount UBS AG Per Note 100% 3% 97% Total 8,129,000 243,870 7,885,130
UBS WARBURG Prospectus Supplement dated April 30, 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 FEATURES OF THE NOTES AND HOW DO THEY WORK? + RETURN PROFILE--The Notes are issued by UBS and the return on the Notes is linked to the sum of all negative monthly returns of the Index. + POTENTIAL RETURN--Your maximum potential return at maturity is 100% in excess of the principal amount of your Notes. Your actual return at maturity will be at least the full principal amount of your Notes and will be calculated by reducing the maximum potential return by the sum of all negative monthly returns of the Index during the term of the Notes (subject to the limitations discussed below under "Negative Monthly Returns"). + PRINCIPAL PROTECTION--At maturity, you will receive, at a minimum, your full principal amount invested. We will pay you in cash the greater of: -- the full principal amount of your Notes or -- the full principal amount of your Notes, plus the full principal amount of your Notes X (100%, reduced by the sum of all negative monthly returns) + NEGATIVE MONTHLY RETURNS--We will calculate the sum of negative monthly returns by aggregating each negative monthly return over the term of the Notes (subject to the limitation discussed below). A negative monthly return will be deemed by the calculation agent to have occurred if the closing level of the Index on the last trading day of a month is less than the closing level of the Index on the last trading day of the prior month or, in the case of the first month, the Initial Index Level. We will disregard any positive monthly returns. A negative monthly return in any single month will be limited to a maximum of -10%. + COUPON--We will not pay you interest during the term of the Notes. + EXCHANGE LISTING--The Notes have been approved for listing on the American Stock Exchange under the symbol "PPV.A". SEE "EXAMPLES" ON PAGE S-3 AND "SPECIFIC TERMS OF THE NOTES" ON PAGE S-15. 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" on page S-5. + MARKET RISKS - Your investment in the Notes may not perform as well as an investment in a security whose return is based solely on the level of the Index or which takes into account positive monthly returns. If the Index is volatile, with frequent or large monthly declines, the sum of which S- 1 exceeds 100% over the term of the Notes, you will receive only the principal amount of your Notes at maturity. + LIQUIDITY - There may be little or no secondary market for the Notes. While UBS Warburg LLC intends to make a market in the Notes, they are not required to do so and may stop making a market at any time. If you need to sell your Notes prior to maturity and at a time when there is little or no secondary market in the Notes, you may have to sell them at a discount to the principal amount. You should be willing to hold the Notes to maturity. ARE THE NOTES THE RIGHT INVESTMENT FOR YOU? The Notes may be a suitable investment for you if: + You seek an investment that will protect your principal and offer the possibility of a positive return. + You do not believe that the Index will be volatile, with frequent or large monthly declines. The Notes may not be a suitable investment for you if: + You expect high levels of volatility of the Index, irrespective of whether you believe the level of the Index will increase or decrease over the term of the Notes. + You prefer the lower risk and therefore accept the potentially lower returns of fixed income investments that bear interest at a prevailing market rate. + You seek an investment for which there will be an active secondary market. WHAT ARE THE TAX CONSEQUENCES OF THE NOTES? + In the opinion of our counsel, 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 SUCH INCOME. 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-21. S- 2 EXAMPLE 1 The maximum potential return on the Notes at maturity is 100% in excess of the principal amount of your Notes. The maximum negative monthly return in any month is -10%. We assume that the sum of all negative monthly returns over the term of the Notes is -46.4% (as illustrated below). HYPOTHETICAL INDEX RETURNS:
2002 - 2003 2003 - 2004 2004 - 2005 -------------------------------------- ------------------------------------- ------------------------------------- CLOSING CUMULATIVE CLOSING CUMULATIVE CLOSING CUMULATIVE INDEX MONTHLY NEGATIVE INDEX MONTHLY NEGATIVE INDEX MONTHLY NEGATIVE LEVEL(1) RETURN RETURN LEVEL(1) RETURN RETURN LEVEL(1) RETURN RETURN April 1596 3.0% -- 1732 1.6% -- 1844 2.2% -- May 1644 3.0% -- 1776 2.5% -- 1886 2.3% -- June 1704 3.6% -- 1810 1.9% -- 1914 1.5% -- July 1785 4.8% -- 1821 0.6% -- 1761 -8.0% -34.9% August 1752 -1.8% -1.8% 1739 -4.5% -20.0% 1638 -7.0% -41.9% September 1612 -8.0% -9.8% 1710 -1.7% -21.7% 1602 -2.2% -44.1% October 1646 2.1% -- 1621 -5.2% -26.9% 1565 -2.3% -46.4% November 1712 4.0% -- 1626 0.3% -- 1570 0.3% -- December 1776 3.7% -- 1672 2.8% -- 1600 1.9% -- January 1725 -2.9% -12.7% 1698 1.6% -- 1614 0.9% -- February 1676 -2.8% -15.5% 1742 2.6% -- 1620 0.4% -- March 1704 1.7% -- 1804 3.6% -- 1635 0.9% --
2005 -------------------------------------- CLOSING CUMULATIVE INDEX MONTHLY NEGATIVE LEVEL(1) RETURN RETURN April 1642 0.4% -- May 1660 1.1% -- June 1668 0.5% -- July 1680 0.7% -- August 1692 0.7% -- September 1692 0.0% -- October 1702 0.6% -- -46.4% SUM OF ALL NEGATIVE MONTHLY RETURNS
(1) The closing level of the Index is given as of the last trading day of the month. - -------------------------------------------------------------------------------- ASSUMPTIONS: - -------------------------------------------------------------------------------- Principal Amount: $1,000 Sum of Negative Monthly Returns: -46.4%
- -------------------------------------------------------------------------------- CALCULATIONS: - -------------------------------------------------------------------------------- CALCULATION OF NOTES RETURN Payout at Maturity (Greater of): - Principal Amount: $1,000 OR - Principal Amount + Principal Amount X (100%, reduced by the sum of all negative monthly returns) $1,000 + $1,000 X (100% + (-46.4%)): $1,536
INVESTOR RECEIVES $1,536 AT MATURITY (53.6% TOTAL RETURN ON A HYPOTHETICAL INVESTMENT IN THE NOTES). S- 3 EXAMPLE 2 The maximum potential return of the Notes at maturity is 100% in excess of the principal amount of your Notes. The maximum negative monthly return in any month is -10%. We assume that the sum of all negative monthly returns over the term of the Notes is -116.1% (as illustrated below). HYPOTHETICAL INDEX RETURNS:
2002 - 2003 2003 - 2004 2004 - 2005 ------------------------------------- ------------------------------------- ------------------------------------- CLOSING CUMULATIVE CLOSING CUMULATIVE CLOSING CUMULATIVE INDEX MONTHLY NEGATIVE INDEX MONTHLY NEGATIVE INDEX MONTHLY NEGATIVE LEVEL(1) RETURN RETURN LEVEL(1) RETURN RETURN LEVEL(1) RETURN RETURN April 1684 8.6% -- 1618 -7.0% -36.0% 1601 5.9% -- May 1794 6.5% -- 1492 -7.8% -43.8% 1490 -6.9% -82.7% June 1922 7.1% -- 1411 -5.5% -49.3% 1399 -6.1% - 88.8% July 2006 4.4% -- 1325 -6.0% -55.3% 1312 -6.2% -95.0% August 2094 4.4% -- 1481 11.8% -- 1219 -7.1% -102.1% September 2004 -4.3% -4.3% 1592 7.5% -- 1148 -5.8% -107.9% October 1829 -8.7% -13.0% 1624 2.0% -- 1114 -3.0% -110.9% November 1712 -6.4% -19.4% 1796 10.6% -- 1056 -5.2% -116.1% December 1742 1.7% -- 1547 -13.9%(2) -65.3%(2) 1059 0.3% -- January 1844 5.9% -- 1684 8.8% -- 1071 1.1% -- February 1925 4.4% -- 1591 -5.5% -70.8% 1085 1.3% -- March 1740 -9.6% -29.0% 1512 -5.0% -75.8% 1090 0.5% --
2005 ------------------------------------- CLOSING CUMULATIVE INDEX MONTHLY NEGATIVE LEVEL(1) RETURN RETURN April 1120 2.8% -- May 1145 2.2% -- June 1170 2.2% -- July 1190 1.7% -- August 1240 4.2% -- September 1250 0.8% -- October 1275 2.0% -- -116.1% SUM OF ALL NEGATIVE MONTHLY RETURNS
(1) The closing level of the Index is given as of the last trading day of the month. (2) The maximum negative monthly return is -10.0%. As a result, only -10% is added to the cumulative negative return (instead of -13.9%). - -------------------------------------------------------------------------------- ASSUMPTIONS: - -------------------------------------------------------------------------------- Principal Amount: $1,000 Sum of Negative Monthly Returns: -116.1%
- -------------------------------------------------------------------------------- CALCULATIONS: - -------------------------------------------------------------------------------- CALCULATION OF NOTES RETURN Payout at Maturity (Greater of): - Principal Amount: $1,000 OR - Principal Amount + Principal Amount X (100%, reduced by the sum of all negative monthly returns) $1,000 + $1,000 X (100% + (-116.1%)): $839
INVESTOR RECEIVES $1,000.00 AT MATURITY (0% TOTAL RETURN ON A HYPOTHETICAL INVESTMENT IN THE NOTES). S- 4 - -------------------------------------------------------------------------------- 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. 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. THE RETURN ON YOUR NOTES MAY BE LIMITED TO THE REPAYMENT OF YOUR PRINCIPAL EVEN IF THE INDEX RISES SUBSTANTIALLY OVER THE TERM OF THE NOTES Each negative monthly return is deducted from the maximum potential return on the Notes. Positive monthly returns are not taken into account. Therefore, if the Index is volatile, with frequent or large monthly declines, your return at maturity may be limited to repayment of the principal amount of your Notes, even if the Index rises over the term of the Notes. Based on the historical performance of the Index, it is highly unlikely that you will receive, at maturity, the maximum potential return on your Notes. See "Historical Performance of the Index" on page S-9 for information regarding the historical monthly returns of the Index. YOUR PRINCIPAL IS ONLY PROTECTED IF YOU HOLD THE NOTES TO MATURITY The principal of the Notes will only be returned to you at maturity. Consequently, any sales of the Notes in the secondary market prior to maturity which are at a discount to the principal amount of the Notes will expose you to losses. THE VOLATILITY OF THE INDEX WILL AFFECT THE MARKET VALUE OF THE NOTES PRIOR TO MATURITY The market value of the Notes will depend primarily, at any time, upon the then cumulative sum of the negative monthly returns. Therefore, negative monthly returns will negatively impact the market value of the Notes prior to maturity. YOU WILL NOT RECEIVE THE SAME RETURN ON YOUR NOTES THAT YOU WOULD RECEIVE ON A SECURITY DIRECTLY LINKED TO THE OVERALL PERFORMANCE OF THE INDEX If the Index appreciates over the investment period, this does not necessarily mean you will earn a return in excess of your principal. Positive monthly returns are not taken into account in the calculation of the payment you will receive at maturity, unlike a security linked directly to the overall performance of the Index. CHANGES THAT AFFECT THE INDEX WILL AFFECT THE MARKET VALUE OF THE NOTES AND THE AMOUNT YOU WILL RECEIVE AT MATURITY The policies of Nasdaq(R) concerning the calculation of the Index will affect the level of the Index and, therefore, will affect the market value of the Notes and the amount payable at maturity. If Nasdaq 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, or if the Index level is not available on the last trading day of each month during the term of the Notes because of a market disruption event or for any other reason, the calculation agent will determine the closing Index level for such month. The calculation agent's determination of the Index level will affect the amount you will receive at maturity. S- 5 RISK FACTORS - -------------------------------------------------------------------------------- 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 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 as a result 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 FREQUENCY AND MAGNITUDE OF CHANGES IN THE LEVEL 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 and regulatory, judicial or other events that affect stock markets generally and the level 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-14. SIGNIFICANT ASPECTS OF THE TAX TREATMENT OF THE NOTES ARE UNCERTAIN If you are a U.S. individual or taxable entity, 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" on page S-21. YOU WILL NOT RECEIVE INTEREST PAYMENTS ON YOUR NOTES You will not receive interest payments on your Notes. Therefore, even if the level of the Index has appreciated, the return you earn on your Notes will depend primarily on the sum of negative monthly returns and 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. If the sum of the negative monthly returns exceeds 100%, you will receive the principal amount of your Notes at maturity but you will not receive any additional return on your Notes. S- 6 RISK FACTORS - -------------------------------------------------------------------------------- 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 level of the Index, and we may adjust these hedges by, among other things, purchasing or selling any of the foregoing at any time and from time to time including on or around the dates on which the closing level of the Index at the end of each month is determined. Although they are not expected to, any of these hedging activities may adversely affect the level of the Index at the end of each month, 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 level of the Index, and therefore, the market value of the Notes. We or one or more of our affiliates may also issue or underwrite other securities or financial or derivative instruments with returns linked or related to changes in the level of the Index. By introducing competing products into the marketplace in this manner, we or one or more of 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, trading of the Notes by UBS Warburg LLC, or other affiliates of UBS may cause them to be long or short the Notes in their inventory. The supply and demand for the Notes, including inventory positions of market makers, may affect the market value of 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 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 level of the Index at the end of each month and, therefore, the market value of the Notes. UBS AND ITS AFFILIATES HAVE NO AFFILIATION WITH NASDAQ(R) AND ARE NOT RESPONSIBLE FOR ITS PUBLIC DISCLOSURE OF INFORMATION We and our affiliates are not affiliated with Nasdaq in any way (except for licensing arrangements discussed below in "Historical Performance of the Index") 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. Nasdaq 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 Nasdaq contained in this prospectus supplement. YOU, AS AN INVESTOR IN THE NOTES, SHOULD MAKE YOUR OWN INVESTIGATION INTO THE INDEX AND NASDAQ. S- 7 RISK FACTORS - -------------------------------------------------------------------------------- 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, decide the amount, if any, of the return 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-18. 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 or is continuing on a day when the calculation agent will determine the closing level of the Index. This decision will, 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. THE CALCULATION AGENT CAN POSTPONE THE MATURITY DATE IF A MARKET DISRUPTION EVENT OCCURS ON THE FINAL VALUATION DATE If the calculation agent determines that, on the final valuation date, a market disruption event has occurred or is continuing, the final valuation date will be postponed until the first business day on which no market disruption event occurs or is continuing. If such a postponement occurs, then the calculation agent will instead use the closing level of the Index on the first business day after that 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 closing level of the Index 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 of the closing level of the Index based on its assessment, made in its sole discretion, 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-16. S- 8 - -------------------------------------------------------------------------------- HISTORICAL PERFORMANCE OF THE INDEX All information in this prospectus supplement regarding the Index is derived from publicly available information. That information reflects the policies of, and is subject to change by The Nasdaq Stock Market, Inc. or any of its affiliates ("Nasdaq"). Nasdaq owns the copyright and all other rights to the Index. Nasdaq 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 Index is a modified capitalization-weighted index of 100 of the largest and most actively traded stocks of non-financial companies listed on the Nasdaq National Market(R) tier of the National Market System. The Index was first published in January 1985 and includes companies across a variety of major industry groups. Current information regarding the market level of the Index is available from Nasdaq and from numerous market information services. The level of the Index is determined, comprised and calculated by Nasdaq without regard to the Notes. Certain Index values and percentages included in the charts below have been rounded so that the total negative monthly returns in each year may be less than or greater than the amounts stated. INDEX HISTORICAL MONTHLY RETURNS
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 28-FEB-85 123.52 29-MAR-85 117.36 -4.99% 30-APR-85 115.38 -1.69% 31-May-85 119.64 3.69% 28-Jun-85 122.14 2.09% 31-Jul-85 123.27 0.93% 30-AUG-85 118.30 -4.03% 30-SEP-85 110.62 -6.49% 31-Oct-85 115.48 4.39% 29-Nov-85 126.06 9.16% 31-Dec-85 132.29 4.94% 1985 NEGATIVE RETURNS: -17.20% 31-Jan-86 132.93 0.48% 28-Feb-86 140.43 5.64% 31-Mar-86 148.86 6.00% 30-Apr-86 154.91 4.06% 30-May-86 163.16 5.33% 30-JUN-86 162.62 -0.33% 31-JUL-86 144.52 -11.13% 29-Aug-86 151.70 4.97% 30-SEP-86 137.50 -9.36% 31-Oct-86 144.48 5.08% 28-Nov-86 147.94 2.39% 31-DEC-86 141.41 -4.41% 1986 NEGATIVE RETURNS: -25.24%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 30-Jan-87 166.68 17.87% 27-Feb-87 182.75 9.64% 31-Mar-87 186.04 1.80% 30-APR-87 184.83 -0.65% 29-May-87 188.77 2.13% 30-Jun-87 189.24 0.25% 31-Jul-87 196.35 3.76% 31-Aug-87 209.57 6.73% 30-SEP-87 205.50 -1.94% 30-OCT-87 150.07 -26.97% 30-NOV-87 137.13 -8.62% 31-Dec-87 156.25 13.94% 1987 NEGATIVE RETURNS: -38.18% 29-Jan-88 159.13 1.84% 29-Feb-88 172.64 8.49% 31-Mar-88 173.26 0.36% 29-Apr-88 175.92 1.54% 31-MAY-88 173.34 -1.47% 30-Jun-88 189.03 9.05% 29-JUL-88 181.16 -4.16% 31-AUG-88 171.00 -5.61% 30-Sep-88 179.37 4.89% 31-OCT-88 174.78 -2.56% 30-NOV-88 169.22 -3.20% 30-Dec-88 177.41 4.86% 1988 NEGATIVE RETURNS: -17.00%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 31-Jan-89 186.47 5.11% 28-FEB-89 183.79 -1.44% 31-Mar-89 185.87 1.13% 28-Apr-89 200.47 7.85% 31-May-89 214.55 7.02% 30-JUN-89 204.58 -4.65% 31-Jul-89 214.28 4.74% 31-Aug-89 222.01 3.61% 29-Sep-89 226.42 1.99% 31-OCT-89 222.61 -1.68% 30-Nov-89 224.44 0.82% 29-DEC-89 223.83 -0.27% 1989 NEGATIVE RETURNS: -8.04% 31-JAN-90 201.94 -9.78% 28-Feb-90 207.92 2.96% 30-Mar-90 213.15 2.52% 30-APR-90 205.81 -3.44% 31-May-90 236.15 14.74% 29-Jun-90 238.46 0.98% 31-JUL-90 223.39 -6.32% 31-AUG-90 193.61 -13.33% 28-SEP-90 177.06 -8.55% 31-OCT-90 172.56 -2.54% 30-Nov-90 192.66 11.65% 31-Dec-90 200.53 4.08% 1990 NEGATIVE RETURNS: -43.96%
S- 9 INDEX HISTORICAL MONTHLY RETURNS - --------------------------------------------------------------------------------
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 31-Jan-91 232.43 15.91% 28-Feb-91 250.11 7.61% 29-Mar-91 264.91 5.92% 30-APR-91 263.66 -0.47% 31-May-91 279.00 5.82% 28-JUN-91 254.22 -8.89% 31-Jul-91 272.16 7.07% 30-Aug-91 287.41 5.60% 30-Sep-91 287.54 0.05% 31-Oct-91 292.51 1.73% 29-NOV-91 284.79 -2.64% 31-Dec-91 330.85 16.17% 1991 NEGATIVE RETURNS: -12.00% 31-Jan-92 338.31 2.25% 28-Feb-92 345.88 2.24% 31-MAR-92 323.05 -6.60% 30-APR-92 307.86 -4.70% 29-May-92 315.30 2.42% 30-JUN-92 301.23 -4.46% 31-Jul-92 310.90 3.21% 31-AUG-92 299.26 -3.74% 30-Sep-92 313.18 4.65% 30-Oct-92 329.15 5.10% 30-Nov-92 350.96 6.63% 31-Dec-92 360.18 2.63% 1992 NEGATIVE RETURNS: -19.51%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 29-Jan-93 370.56 2.88% 26-FEB-93 351.14 -5.24% 31-Mar-93 359.42 2.36% 30-APR-93 339.94 -5.42% 31-May-93 368.11 8.29% 30-JUN-93 366.13 -0.54% 30-JUL-93 352.86 -3.62% 31-Aug-93 372.65 5.61% 30-Sep-93 382.71 2.70% 29-Oct-93 390.98 2.16% 30-NOV-93 386.76 -1.08% 31-Dec-93 398.28 2.98% 1993 NEGATIVE RETURNS: -15.90% 31-Jan-94 413.99 3.94% 28-FEB-94 412.17 -0.44% 31-MAR-94 382.96 -7.09% 29-APR-94 373.25 -2.54% 31-May-94 378.85 1.50% 30-JUN-94 360.30 -4.90% 29-Jul-94 370.16 2.74% 31-Aug-94 397.90 7.49% 30-SEP-94 393.85 -1.02% 31-Oct-94 413.05 4.87% 30-NOV-94 404.82 -1.99% 30-DEC-94 404.27 -0.14% 1994 NEGATIVE RETURNS: -18.10%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 31-Jan-95 405.33 0.26% 28-Feb-95 432.50 6.70% 31-Mar-95 447.15 3.39% 28-Apr-95 469.56 5.01% 31-May-95 488.10 3.95% 30-Jun-95 538.03 10.23% 31-Jul-95 568.88 5.73% 31-Aug-95 576.77 1.39% 29-Sep-95 585.08 1.44% 31-Oct-95 598.78 2.34% 30-NOV-95 593.72 -0.85% 29-DEC-95 576.23 -2.95% 1995 NEGATIVE RETURNS: -3.79% 31-Jan-96 591.82 2.71% 29-FEB-96 622.83 5.24% 29-MAR-96 609.69 -2.11% 30-Apr-96 666.73 9.36% 31-May-96 692.39 3.85% 28-JUN-96 677.30 -2.18% 31-JUL-96 636.01 -6.10% 30-Aug-96 663.57 4.33% 30-Sep-96 737.58 11.15% 31-Oct-96 751.99 1.95% 29-Nov-96 834.01 10.91% 31-DEC-96 821.36 -1.52% 1996 NEGATIVE RETURNS: -11.90%
S- 10 INDEX HISTORICAL MONTHLY RETURNS - --------------------------------------------------------------------------------
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 31-Jan-97 921.55 12.20% 28-FEB-97 850.46 -7.71% 31-MAR-97 797.06 -6.28% 30-Apr-97 874.74 9.75% 30-May-97 958.85 9.62% 30-JUN-97 957.30 -0.16% 31-Jul-97 1107.03 15.64% 29-AUG-97 1074.17 -2.97% 30-Sep-97 1097.17 2.14% 31-OCT-97 1019.62 -7.07% 28-Nov-97 1050.51 3.03% 31-DEC-97 990.80 -5.68% 1997 NEGATIVE RETURNS: -29.88% 30-Jan-98 1071.13 8.11% 27-Feb-98 1194.13 11.48% 31-Mar-98 1220.66 2.22% 30-Apr-98 1248.12 2.25% 29-MAY-98 1192.07 -4.49% 30-Jun-98 1337.34 12.19% 31-Jul-98 1377.26 2.99% 31-AUG-98 1140.34 -17.20% 30-Sep-98 1345.48 17.99% 30-Oct-98 1400.52 4.09% 30-Nov-98 1557.96 11.24% 31-Dec-98 1836.01 17.85% 1998 NEGATIVE RETURNS: -21.69%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 29-Jan-99 2127.19 15.86% 26-FEB-99 1925.28 -9.49% 31-Mar-99 2106.39 9.41% 30-Apr-99 2136.39 1.42% 31-MAY-99 2089.70 -2.19% 30-Jun-99 2296.77 9.91% 30-JUL-99 2270.93 -1.13% 31-Aug-99 2396.87 5.55% 30-Sep-99 2407.90 0.46% 29-Oct-99 2637.44 9.53% 30-Nov-99 2966.71 12.48% 31-Dec-99 3707.83 24.98% 1999 NEGATIVE RETURNS: -12.80% 31-JAN-00 3570.05 -3.72% 29-Feb-00 4266.94 19.52% 31-Mar-00 4397.84 3.07% 28-APR-00 3773.18 -14.20% 31-MAY-00 3324.08 -11.90% 30-Jun-00 3763.79 13.23% 31-JUL-00 3609.35 -4.10% 31-Aug-00 4077.59 12.97% 29-SEP-00 3570.61 -12.43% 31-OCT-00 3282.30 -8.07% 30-NOV-00 2506.54 -23.63% 29-DEC-00 2341.70 -6.58% 2000 NEGATIVE RETURNS: -84.64%
INDEX MONTHLY DATE VALUE RETURNS - ------------------------------------------- 31-Jan-01 2593.00 10.73% 28-FEB-01 1908.32 -26.40% 30-MAR-01 1573.25 -17.56% 30-Apr-01 1855.15 17.92% 31-MAY-01 1799.89 -2.98% 29-Jun-01 1830.19 1.68% 31-JUL-01 1683.61 -8.01% 31-AUG-01 1469.70 -12.71% 28-SEP-01 1168.37 -20.50% 31-Oct-01 1364.78 16.81% 30-Nov-01 1596.05 16.95% 31-DEC-01 1577.05 -1.19% 2001 NEGATIVE RETURNS: -89.35% 31-JAN-02 1550.17 -1.70% 28-FEB-02 1359.22 -12.32% 31-MAR-02 1452.81 6.89% 30-APR-02 1277.07 -12.10% 2002 YEAR-TO-DATE NEGATIVE RETURNS -26.12%
S- 11 INDEX HISTORICAL MONTHLY RETURNS - -------------------------------------------------------------------------------- INDEX HISTORICAL PERFORMANCE SINCE INCEPTION [CHART]
INDEX HISTORICAL PERFORMANCE SINCE INCEPTION -------------------------------------------- Feb-85 123.52 Mar-85 117.36 Apr-85 115.38 May-85 119.64 Jun-85 122.14 Jul-85 123.27 Aug-85 118.30 Sep-85 110.62 Oct-85 115.48 Nov-85 126.06 Dec-85 132.29 Jan-86 132.93 Feb-86 140.43 Mar-86 148.86 Apr-86 154.91 May-86 163.16 Jun-86 162.62 Jul-86 144.52 Aug-86 151.70 Sep-86 137.50 Oct-86 144.48 Nov-86 147.94 Dec-86 141.41 Jan-87 166.68 Feb-87 182.75 Mar-87 186.04 Apr-87 184.83 May-87 188.77 Jun-87 189.24 Jul-87 196.35 Aug-87 209.57 Sep-87 205.50 Oct-87 150.07 Nov-87 137.13 Dec-87 156.25 Jan-88 159.13 Feb-88 172.64 Mar-88 173.26 Apr-88 175.92 May-88 173.34 Jun-88 189.03 Jul-88 181.16 Aug-88 171.00 Sep-88 179.37 Oct-88 174.78 Nov-88 169.19 Dec-88 177.41 Jan-89 186.47 Feb-89 183.79 Mar-89 185.87 Apr-89 200.47 May-89 214.55 Jun-89 204.58 Jul-89 214.28 Aug-89 222.01 Sep-89 226.42 Oct-89 222.61 Nov-89 224.44 Dec-89 223.83 Jan-90 201.94 Feb-90 207.92 Mar-90 213.15 Apr-90 205.81 May-90 236.15 Jun-90 238.46 Jul-90 223.39 Aug-90 193.61 Sep-90 177.06 Oct-90 172.56 Nov-90 192.66 Dec-90 200.53 Jan-91 232.43 Feb-91 250.11 Mar-91 264.91 Apr-91 263.66 May-91 279.00 Jun-91 254.19 Jul-91 272.16 Aug-91 287.41 Sep-91 287.54 Oct-91 292.51 Nov-91 284.79 Dec-91 330.85 Jan-92 338.31 Feb-92 345.88 Mar-92 323.05 Apr-92 307.86 May-92 315.30 Jun-92 301.23 Jul-92 310.90 Aug-92 299.26 Sep-92 313.18 Oct-92 329.15 Nov-92 350.96 Dec-92 360.18 Jan-93 370.56 Feb-93 351.14 Mar-93 359.42 Apr-93 339.94 May-93 368.11 Jun-93 366.13 Jul-93 352.86 Aug-93 372.65 Sep-93 382.71 Oct-93 390.98 Nov-93 386.76 Dec-93 398.28 Jan-94 413.99 Feb-94 412.17 Mar-94 382.96 Apr-94 373.25 May-94 378.85 Jun-94 360.30 Jul-94 370.16 Aug-94 397.90 Sep-94 393.85 Oct-94 413.05 Nov-94 404.82 Dec-94 404.27 Jan-95 405.33 Feb-95 432.50 Mar-95 447.15 Apr-95 469.56 May-95 488.10 Jun-95 538.03 Jul-95 568.88 Aug-95 576.77 Sep-95 585.08 Oct-95 598.78 Nov-95 593.72 Dec-95 576.23 Jan-96 591.82 Feb-96 622.83 Mar-96 609.69 Apr-96 666.73 May-96 692.39 Jun-96 677.30 Jul-96 636.01 Aug-96 663.57 Sep-96 737.58 Oct-96 751.99 Nov-96 834.01 Dec-96 821.36 Jan-97 921.55 Feb-97 850.46 Mar-97 797.06 Apr-97 874.74 May-97 958.85 Jun-97 957.30 Jul-97 1107.03 Aug-97 1074.17 Sep-97 1097.17 Oct-97 1019.62 Nov-97 1050.51 Dec-97 990.80 Jan-98 1071.13 Feb-98 1194.13 Mar-98 1220.66 Apr-98 1248.12 May-98 1192.07 Jun-98 1337.34 Jul-98 1377.26 Aug-98 1140.34 Sep-98 1345.48 Oct-98 1400.52 Nov-98 1557.96 Dec-98 1836.01 Jan-99 2127.19 Feb-99 1925.28 Mar-99 2106.39 Apr-99 2136.39 May-99 2089.70 Jun-99 2296.77 Jul-99 2270.93 Aug-99 2396.87 Sep-99 2407.90 Oct-99 2637.44 Nov-99 2966.71 Dec-99 3707.83 Jan-00 3570.05 Feb-00 4266.94 Mar-00 4397.84 Apr-00 3773.18 May-00 3324.08 Jun-00 3763.79 Jul-00 3609.35 Aug-00 4077.59 Sep-00 3570.61 Oct-00 3282.30 Nov-00 2506.54 Dec-00 2341.70 Jan-01 2593.00 Feb-01 1908.32 Mar-01 1573.25 Apr-01 1855.15 May-01 1799.89 Jun-01 1830.19 Jul-01 1683.61 Aug-01 1469.70 Sep-01 1168.37 Oct-01 1364.78 Nov-01 1596.02 Dec-01 1577.05
We have entered into a non-exclusive license agreement with Nasdaq, 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. The Notes are not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market, Inc. (including its affiliates, "Nasdaq"). Nasdaq has not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Notes. Nasdaq makes no representation or warranty, express or implied, to the holders of the Notes or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly, or the ability of the Index to track general stock market performance. Nasdaq's only relationship to UBS is in the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) trademarks or service marks, and certain trade names of Nasdaq and the use of the Index which is determined, composed and calculated by Nasdaq without regard to UBS or the Notes. Nasdaq has no obligation to take the needs of UBS or the holders of the Notes into consideration in determining, composing or calculating the Index. Nasdaq is not responsible for and has not participated in the determination of the timing of, prices or quantities of the Notes to be issued or in the determination or calculation of the equation by which the Notes are to be converted into cash. Nasdaq has no liability in connection with the administration, marketing or trading of the Notes. S- 12 INDEX HISTORICAL MONTHLY RETURNS - -------------------------------------------------------------------------------- NASDAQ DOES NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE INDEX OR ANY DATA INCLUDED THEREIN. NASDAQ MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY UBS, HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. NASDAQ MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL NASDAQ HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. S- 13 - -------------------------------------------------------------------------------- VALUATION OF THE NOTES AT MATURITY. The amount we will pay you at maturity will be based on the sum of all negative monthly returns of the Index. The level of the Index is determined, comprised and calculated by Nasdaq without regard to the Notes. The calculation agent will calculate the monthly return of the Index as follows: closing level of the Index on the last closing level of the Index on the last % change = trading day of the month - trading day of the prior month(1) ------------------------------------------------------------------------------------- closing level of the Index on the last trading day of the prior month(1)
1 For the first month, the Initial Index Level will be used. The closing level of the Index will be determined based on the level of the Index at the close of business on the last trading day of the month as published by Nasdaq, unless a market disruption event occurs. In that case, the closing level will be determined by the calculation agent. See "Specific Terms of the Notes -- Market Disruption Event" on page S-16. At maturity, we will pay you in cash the greater of: -- the full principal amount of your Notes, or -- the full principal amount of your Notes, plus the full principal amount of your Notes X (100%, reduced by the sum of all negative monthly returns) 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, volatility of the Index, the level of interest rates and other economic conditions, as well as the perceived creditworthiness of UBS. Generally, the market value of the Notes will tend to rise with frequent positive Index monthly returns, while frequent or large monthly declines in the Index will negatively affect the market value of the Notes. In addition, rising interest rates will, on balance, negatively affect the market value of the Notes. You should understand that the market value of the Notes is driven by a range of interrelated factors and that while the volatility of the Index is an important variable, it cannot be used as the sole measure to approximate value of this investment. You should not use any single variable to approximate the value of this investment. S- 14 - -------------------------------------------------------------------------------- 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 terms of the Notes. PAYMENT AT MATURITY We will pay you in cash the greater of: -- the full principal amount of your Notes, or -- the full principal amount of your Notes, plus the full principal amount of your Notes X (100%, reduced by the sum of all negative monthly returns) A negative monthly return in any single month will be limited to a maximum of - -10%. MATURITY DATE The maturity date will be November 3, 2005 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 on page S-16 under "--Market Disruption Event." S- 15 SPECIFIC TERMS OF THE NOTES - -------------------------------------------------------------------------------- FINAL VALUATION DATE The final valuation date will be the third business day prior to November 3, 2005, unless the calculation agent determines that a market disruption event occurs or is continuing on that day. In that event, the final valuation date will be the first following business day 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 date be later than November 14, 2005 or, if November 14, 2005 is not a business day, later than the first business day after November 14, 2005. MARKET DISRUPTION EVENT As described above, we will calculate the amount you receive at maturity based on the sum of all negative monthly returns of the Index. If a market disruption event occurs or is continuing on a day that would otherwise be the last trading day of the month, then the calculation agent will instead use the closing level on the first business day after that day on which no market disruption event occurs or is continuing. The calculation agent will use this day for purposes of determining the last trading day of the month. In no event, however, will the determination of the closing level of the Index be postponed by more than ten business days, in the case of the final valuation date, and by more than five business days in the case of any other month. If the calculation of the closing level 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 trading day used by the calculation agent. If the closing level of the Index is not available on the trading day used by the calculation agent either because of a market disruption event or for any other reason, the calculation agent will make a good faith estimate of the closing level of the Index 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, such 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 option contracts relating to the Index in the primary market for those contracts 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 and, 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. S- 16 SPECIFIC TERMS OF THE NOTES - -------------------------------------------------------------------------------- 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 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, S- 17 SPECIFIC TERMS OF THE NOTES - -------------------------------------------------------------------------------- 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 is a business day of the kind described in the attached prospectus. 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. ROLE OF CALCULATION AGENT The calculation agent will make all determinations regarding the value of the Notes at maturity, the closing level of the Index on the last trading day of each month during the term of the Notes, the monthly return of the Index, market disruption events, business days, the default amount (only in the case of a market disruption event) 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- 18 - -------------------------------------------------------------------------------- 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 level of the Index, - - take or dispose of positions in listed or over-the-counter options or other instruments based on the level 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" on page S-5 for a discussion of these adverse effects. S- 19 - -------------------------------------------------------------------------------- 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.
AS OF FEBRUARY 28, 2002 (UNAUDITED) CHF USD - ------------------------------------------------------------------------------- (IN MILLIONS) Debt Debt issued(1)............................................ 166,497 97,509 ------- ------- Total Debt................................................ 166,497 97,509 Minority Interest(2)........................................ 4,215 2,469 Shareholders' Equity........................................ 44,068 25,808 ------- ------- Total capitalization........................................ 214,780 125,786 ======= =======
- --------------- (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 0.58565154. S- 20 - -------------------------------------------------------------------------------- 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 such income. We have determined that the comparable yield will equal 4.46% per annum, compounded semiannually, with a projected payment at maturity of $1,166.94. Based upon this comparable yield, if you are an initial holder and you pay your taxes on a calendar year basis and if you buy a Note for $1,000 and hold the Note until maturity, you will be required to pay taxes on the following amounts of ordinary income from the Note each year: $29.90 in 2002, $46.45 in 2003, $48.54 in 2004 and $42.06 in 2005. However, in 2005, the amount of ordinary income that you will be required to pay taxes on from owning each Note may be greater or less than $42.06, depending upon the payment at maturity you receive. Also, if the payment at maturity is less than $1,124.88, you may have a loss. You are required to use the comparable yield and projected payment schedule provided 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 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 S- 21 SUPPLEMENTAL TAX CONSIDERATIONS - -------------------------------------------------------------------------------- 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. If the contingent payment upon maturity becomes fixed more than six months before maturity, you will have to make an adjustment equal to the difference between the present value of the projected payment schedule (discounted based on the comparable yield) and the present value of the fixed payment. This adjustment must be taken into account in a reasonable manner over the remaining period of the Notes. 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 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 S- 22 SUPPLEMENTAL TAX CONSIDERATIONS - -------------------------------------------------------------------------------- business through a permanent establishment within Switzerland will not be subject to any Swiss Federal, Cantonal or Municipal income tax. 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 shall be treated as income and that portion of the annual interest payment representing an option premium shall be treated as a capital gain. S- 23 - -------------------------------------------------------------------------------- ERISA CONSIDERATIONS We, UBS Warburg LLC, 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, 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, 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. The discussion above supplements the discussion under "ERISA Considerations" in the attached prospectus. S- 24 - -------------------------------------------------------------------------------- SUPPLEMENTAL PLAN OF DISTRIBUTION UBS has agreed to sell to UBS Warburg LLC and UBS Warburg LLC has agreed to purchase from UBS, the aggregate principal amount of the Notes specified on the front cover of this prospectus supplement. UBS Warburg LLC intends to resell the offered Notes at the original issue price applicable to the offered Notes to be resold. UBS Warburg LLC may resell Notes to securities dealers at a discount of up to 3.0% 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, 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- 25 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 Prospectus Supplement Summary......... S-1 Risk Factors.......................... S-5 Historical Performance of the Index... S-9 Valuation of the Notes................ S-14 Specific Terms of the Notes........... S-15 Use of Proceeds and Hedging........... S-19 Capitalization of UBS................. S-20 Supplemental Tax Considerations....... S-21 ERISA Considerations.................. S-24 Supplemental Plan of Distribution..... S-25 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
[UBS AG LOGO] Principal Protected Notes UBS AG $8,129,000 NOTES LINKED TO THE NASDAQ-100 INDEX(R) DUE NOVEMBER 3, 2005 PROSPECTUS SUPPLEMENT APRIL 30, 2002 (TO PROSPECTUS DATED MAY 17, 2001) UBS WARBURG -----END PRIVACY-ENHANCED MESSAGE-----