An investment in the Notes involves
significant risks. Investing in the Notes is not equivalent to investing in the underlying indices. Some of the key risks that apply
to the Notes are summarized below, but we urge you to read the more detailed explanation of risks relating to the Notes in the
“Risk Factors” section of the accompanying product supplement. We also urge you to consult your investment, legal, tax,
accounting and other advisors before you invest in the Notes.
Example 1 — On the first Coupon Observation Date, UBS
calls the Notes.
Date
|
Closing Level
|
Payment (per Note)
|
First Coupon Observation Date
|
Underlying Index A: 2,500 (equal to or greater than Coupon Barrier)
Underlying Index B: 1,100 (equal to or greater than Coupon Barrier)
|
$1,025.00 (Call Settlement Amount)
|
|
Total Payment:
|
$1,025.00 (2.50% total return)
|
Because UBS elects to call the Notes on the
first coupon observation date and the closing level of each underlying index is equal to or greater than its coupon barrier on such
coupon observation date, UBS will pay on the call settlement date a total of $1,025.00 per Note (reflecting your principal amount
plus the applicable contingent coupon), a 2.50% total return on the Notes. You will not receive any further payments on the
Notes.
Example 2 — On the fourth Coupon Observation Date,
UBS calls the Notes.
Date
|
Closing Level
|
Payment (per Note)
|
First through Third Coupon Observation Date
|
Underlying Index A: Various (all equal to or greater than Coupon Barrier)
Underlying Index B: Various (all equal to or greater than Coupon Barrier)
|
$75.00 (Aggregate Contingent Coupons)
|
Fourth Coupon Observation Date
|
Underlying Index A: 2,200 (equal to or greater than Coupon Barrier)
Underlying Index B: 750 (less than Coupon Barrier)
|
$1,000.00 (Call Settlement Amount)
|
|
Total Payment:
|
$1,075.00 (7.50% total return)
|
Because UBS elects to call the Notes on the
fourth coupon observation date and the closing level of an underlying index is less than its coupon barrier on such coupon
observation date, UBS will pay on the call settlement date a total of $1,000.00 per Note (reflecting your principal amount). When
added to the contingent coupons of $75.00 received in respect of the prior coupon observation dates, you will have received a total
of $1,075.00, a 7.50% total return on the Notes. You will not receive any further payments on the Notes.
Example 3 — UBS does NOT call the Notes and a Trigger
Event does not occur.
Date
|
Closing Level
|
Payment (per Note)
|
First Coupon Observation Date
|
Underlying Index A: 2,300 (equal to or greater than Coupon Barrier)
Underlying Index B: 1,070 (equal to or greater than Coupon Barrier)
|
$25.00 (Contingent Coupon)
|
Second through Fifth Coupon Observation Dates
|
Underlying Index A: Various (all equal to or greater than
Coupon Barrier)
Underlying Index B: Various (all less than
Coupon Barrier)
|
$0.00
|
Final Valuation Date
|
Underlying Index A: 2,885 (equal to or greater than Coupon Barrier and Downside
Threshold)
Underlying Index B: 1,200 (equal to or greater than Coupon Barrier and Downside
Threshold)
|
$1,025.00 (Payment at Maturity)
|
|
Total Payment:
|
$1,050.00 (5.00% total return)
|
Because UBS does not elect to call the Notes
and the final level of each underlying index is equal to or greater than its downside threshold, a trigger event has not occurred.
At maturity, because the final level of each underlying index is also equal to or greater than its coupon barrier, UBS will pay a
total of $1,025.00 per Note (reflecting your principal amount plus the applicable contingent coupon). When added to the contingent
coupon of $25.00 received in respect of the prior coupon observation dates, UBS will have paid a total of $1,050.00, a 5.00% total
return on the Notes.
Example 4 — UBS does NOT call the Notes and a Trigger Event
occurs.
Date
|
Closing Level
|
Payment (per Note)
|
First Coupon Observation Date
|
Underlying Index A: 2,300 (equal to or greater than Coupon Barrier)
Underlying Index B: 1,080 (equal to or greater than Coupon Barrier)
|
$25.00 (Contingent Coupon)
|
Second through Fifth Coupon Observation Dates
|
Underlying Index A: Various (all less than Coupon Barrier)
Underlying Index B: Various (all equal to or greater than Coupon Barrier)
|
$0.00
|
Final Valuation Date
|
Underlying Index A: 2,900 (equal to or greater than Coupon Barrier and Downside Threshold)
Underlying Index B: 600 (less than Coupon Barrier and Downside Threshold)
|
$1,000.00 × [1 + Underlying Index Return of the Least Performing Underlying Index] =
$1,000.00 × [1 + (-60%)] =
$1,000.00 × 40% =
$400.00 (Payment at Maturity)
|
|
Total Payment:
|
$425.00 (57.50% loss)
|
Because UBS does not elect to call the Notes
and the final level of Underlying Index B is less than its downside threshold, a trigger event occurs. Additionally, because the
final level of an underlying index is less than its coupon barrier you will not receive any contingent coupon with respect to the
final valuation date. Therefore, at maturity, you will be exposed to the negative return of the least performing underlying index
and UBS will pay you $400.00 per Note. When added to the contingent coupon of $25.00 received in respect of the prior coupon
observation dates, UBS will have paid you $425.00 per Note for a loss on the Notes of 57.50%.
We make no representation or warranty as
to which of the underlying indices will be the least performing underlying index for the purposes of calculating your actual payment
at maturity.
Investing in the Notes involves
significant risks. The Notes differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full amount
of your initial investment. If the UBS does not elect to call the Notes, you may lose a significant portion or all of your
investment. Specifically, if UBS does not elect to call the Notes and a trigger event occurs, you will lose a percentage of your
principal amount equal to the underlying index return of the least performing underlying index and, in extreme situations, you could
lose all of your initial investment.
You will be exposed to the market risk of
each underlying index on each coupon observation dates and on the final valuation date and any decline in the level of one
underlying index may negatively affect your return and will not be offset or mitigated by a lesser decline or any potential increase
in the level of any other underlying index. UBS may elect to call the Notes at its discretion on any coupon observation date
regardless of the performance of the underlying indices. Any payment on the Notes, including any repayment of principal, is subject
to the creditworthiness of UBS. If UBS were to default on its payment obligations, you may not receive any amounts owed to you under
the Notes and you could lose all of your initial investment.
Information
About the Underlying Indices
All disclosures contained in this
document regarding each underlying index for the Notes are derived from publicly available information. UBS has not conducted any
independent review or due diligence of any publicly available information with respect to any underlying index. You should make your
own investigation into each underlying index.
Included on the following pages is a brief
description of each underlying index. This information has been obtained from publicly available sources. Set forth below is a graph
that illustrates the past performance for each underlying index. The information given below is for the period indicated. We
obtained the past performance information set forth below from Bloomberg Professional® service
(“Bloomberg”) without independent verification. You should not take the historical levels of the underlying indices as
an indication of future performance.
Russell 2000® Index
We have derived all information regarding
the Russell 2000® Index (“RTY”) contained in this document, including, without limitation, its make-up,
method of calculation and changes in its components, from publicly available information. Such information reflects the policies of,
and is subject to change by the Frank Russell Company (the “index sponsor” or “FTSE Russell”).
RTY is published by FTSE Russell, but FTSE
Russell has no obligation to continue to publish RTY, and may discontinue publication of RTY at any time. RTY is determined,
comprised and calculated by FTSE Russell without regard to the Notes.
As discussed more fully in the index
supplement under the heading “Underlying Indices and Underlying Index Publishers – Russell 2000®
Index,” RTY measures the composite price performance of the smallest 2,000 companies included in the Russell
3000® Index. The Russell 3000® Index is composed of the 3,000 largest United States companies by
market capitalization and represents approximately 98% of the market capitalization of the United States equity market. RTY’s
value is calculated by adding the market values of the index’s component stocks and then dividing the derived total market
capitalization by the “adjusted” capitalization of RTY on the base date of December 31, 1986.
Information from outside sources is not
incorporated by reference in, and should not be considered part of, this document or any document incorporated herein by reference.
UBS has not conducted any independent review or due diligence of any publicly available information with respect to RTY.
Historical Information
The graph below illustrates the performance
of RTY from January 1, 2010 through May 29, 2020, based on the daily closing levels as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from
Bloomberg. The closing level of RTY on May 29, 2020 was 1,394.035 (its “hypothetical initial level”). The dotted line
represents its hypothetical downside threshold and its hypothetical coupon barrier of 975.825, which is equal to 70.00% of its
hypothetical initial level. Its actual initial level, downside threshold and coupon barrier will be determined on the trade date.
Past performance of RTY is not indicative of the future performance of RTY during the term of the Notes.
S&P 500® Index
We have derived all information regarding the S&P
500® Index (“SPX”) contained in this document, including, without limitation, its make-up, method of
calculation and changes in its components, from publicly available information. Such information reflects the policies of, and is
subject to change by S&P Dow Jones Indices LLC (its “index sponsor” or “S&P Dow Jones”).
SPX is published by S&P Dow Jones, but S&P Dow Jones has
no obligation to continue to publish SPX, and may discontinue publication of SPX at any time. SPX is determined, comprised and
calculated by S&P Dow Jones without regard to the Notes.
As discussed more fully in the index supplement under the heading
“Underlying Indices and Underlying Index Publishers — S&P 500® Index”, SPX is intended to
provide an indication of the pattern of common stock price movement. The calculation of the value of SPX is based on the relative
value of the aggregate market value of the common stock of 500 companies as of a particular time compared to the aggregate average
market value of the common stocks of 500 similar companies during the base period of the years 1941 through 1943.
Eleven main groups of companies comprise SPX, with the percentage
weight of each group in the index as a whole as of May 29, 2020 as follows: Information Technology (26.2%), Health Care (15.2%),
Communication Services (11.0%), Consumer Discretionary (10.5%), Financials (10.4%), Industrials (8.0%), Consumer Staples (7.1%),
Utilities (3.2%), Energy (2.9%), Real Estate (2.8%) and Materials (2.5%). As of September 28, 2018, the index sponsor broadened the
current Telecommunication Services Sector and renamed it Communication Services. The renamed Sector includes the existing
telecommunication companies, as well as companies selected from the Consumer Discretionary Sector previously classified under the
Media Industry Group and the Internet & Direct Marketing Retail Sub-Industry, along with select companies previously classified
in the Information Technology Sector. These sector changes were effective for SPX as of the open of business on September 24, 2018
to coincide with the September 2018 quarterly rebalancing. Effective February 10, 2019, company additions to the SPX should have an
unadjusted company market capitalization of $8.2 billion or more (an increase from the previous requirement of an unadjusted company
market capitalization of $6.1 billion or more) and a security level float-adjusted market capitalization that is at least $4.1
billion.
Information from outside sources is not
incorporated by reference in, and should not be considered part of, this document or any document incorporated herein by reference.
UBS has not conducted any independent review or due diligence of any publicly available information with respect to SPX.
Historical Information
The graph below illustrates the performance
of SPX from January 1, 2010 through May 29, 2020, based on the daily closing levels as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from
Bloomberg. The closing level of SPX on May 29, 2020 was 3,044.31 (its “hypothetical initial level”). The dotted line
represents its hypothetical downside threshold and its hypothetical coupon barrier of 2,131.02, which is equal to 70.00% of its
hypothetical initial level. Its actual initial level, downside threshold and coupon barrier will be determined on the trade date.
Past performance of SPX is not indicative of the future performance of SPX during the term of the Notes.
Correlation
of the Underlying Indices
The graph below illustrates the daily
performance of the Russell 2000® Index and the S&P 500® Index from January 1, 2010 through May 29,
2020. For comparison purposes, each underlying index has been normalized to have a closing level of 100.00 on January 1, 2010
by dividing the closing level of that underlying index on each trading day by the closing level of that underlying index on January
1, 2010 and multiplying by 100.00. We obtained the closing levels used to determine the normalized closing levels set forth below
from Bloomberg, without independent verification.
The closer the relationship of the daily
returns of the underlying indices over a given period, the more positively correlated those underlying indices are. The lower (or
more negative) the correlation among the underlying indices, the less likely it is that those underlying indices will move in the
same direction and therefore, the greater the potential for the closing level or final level of one of those underlying indices to
be less than its coupon barrier or downside threshold on a coupon observation date or the trigger observation date, respectively.
This is because the less positively correlated the underlying indices are, the greater the likelihood that at least one of the
underlying indices will decrease in value. However, even if the underlying indices have a higher positive correlation, the closing
level or final level of one or more of the underlying indices might be less than its coupon barrier or downside threshold on a
coupon observation date or the trigger observation date, respectively, as the underlying indices may decrease in value together.
Although the correlation of the underlying indices’ performance may change over the term of the Notes, the correlations
referenced in setting the terms of the Notes are calculated using UBS’ internal models at the time when the terms of the Notes
are set and are not derived from the daily returns of the underlying indices over the period set forth below. A higher contingent
coupon rate is generally associated with lower correlation of the underlying indices, which reflects a greater potential for missed
contingent coupons and for a loss on your investment at maturity. See “Key Risks — A higher contingent coupon rate or
lower downside thresholds or coupon barriers may reflect greater expected volatility of each of the underlying indices, and greater
expected volatility generally indicates an increased risk of loss at maturity”, “— You are exposed to the market
risk of each underlying index” and “— Because the Notes are linked to the least performing underlying index, you
are exposed to a greater risk of no contingent coupons and losing a significant portion or all of your initial investment at
maturity than if the Notes were linked to a single underlying index” herein.
Past performance of the underlying indices
is not indicative of the future performance of the underlying indices.
What
Are the Tax Consequences of the Notes?
The U.S. federal income tax consequences of
your investment in the Notes are uncertain. There are no statutory provisions, regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of securities with terms that are substantially the same as the
Notes. Some of these tax consequences are summarized below, but we urge you to read the more detailed discussion in “Material
U.S. Federal Income Tax Consequences”, including the section “ — Securities Treated as Prepaid Derivatives or
Prepaid Forwards with Associated Contingent Coupons” of the accompanying product supplement and to discuss the tax
consequences of your particular situation with your tax advisor. This discussion is based upon the U.S. Internal Revenue Code of
1986, as amended (the “Code”), final, temporary and proposed U.S. Treasury Department (the “Treasury”)
regulations, rulings and decisions, in each case, as available and in effect as of the date hereof, all of which are subject to
change, possibly with retroactive effect. Tax consequences under state, local and non-U.S. laws are not addressed herein. No ruling
from the U.S. Internal Revenue Service (the “IRS”) has been sought as to the U.S. federal income tax consequences of
your investment in the Notes, and the following discussion is not binding on the IRS.
U.S. Tax Treatment. Pursuant to the
terms of the Notes, UBS and you agree, in the absence of a statutory or regulatory change or an administrative determination or
judicial ruling to the contrary, to characterize the Notes as prepaid derivative contracts with respect to the underlying indices.
If your Notes are so treated, any contingent coupon that is paid by UBS (including on the maturity date or call settlement date)
should be included in your income as ordinary income in accordance with your regular method of accounting for U.S. federal income
tax purposes.
In addition, excluding amounts attributable
to any contingent coupon, you should generally recognize gain or loss upon the taxable disposition of your Notes in an amount equal
to the difference between the amount you receive at such time (other than amounts or proceeds attributable to a contingent coupon or
any amount attributable to any accrued but unpaid contingent coupon) and the amount you paid for your Notes. Such gain or loss
should generally be long-term capital gain or loss if you have held your Notes for more than one year (otherwise, such gain or loss
should be short-term capital gain or loss if held for one year or less). The deductibility of capital losses is subject to
limitations. Although uncertain, it is possible that proceeds received from the taxable disposition of your Notes prior to a coupon
payment date, but that could be attributed to an expected contingent coupon, could be treated as ordinary income. You should consult
your tax advisor regarding this risk.
Based on certain factual representations
made by us, our counsel, Cadwalader, Wickersham & Taft LLP, is of the opinion that it would be reasonable to treat your Notes in
the manner described above. However, because there is no authority that specifically addresses the tax treatment of the Notes, it is
possible that your Notes could alternatively be treated for tax purposes as a single contingent payment debt instrument, or pursuant
to some other characterization, such that the timing and character of your income from the Notes could differ materially and
adversely from the treatment described above, as described further under “Material U.S. Federal Income Tax Consequences
— Securities Treated as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons” in the accompanying
product supplement unless and until such time as the IRS and the Treasury determine that some other treatment is more
appropriate.
Notice 2008-2. In 2007, the IRS
released a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and
similar instruments, which might include the Notes. Notice 2008-2 focuses in particular on whether to require holders of these
instruments to accrue income over the term of their investment. It also asks for comments on a number of related topics, including
the character of income or loss with respect to these instruments and the relevance of factors such as the nature of the underlying
property to which the instruments are linked. While the notice requests comments on appropriate transition rules and effective
dates, any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely
affect the tax consequences of an investment in the Notes, possibly with retroactive effect. U.S. holders should consult their tax
advisors regarding the U.S. federal income tax consequences of an investment in the Notes, including possible alternative treatments
and the issues presented by this notice. Non-U.S. holders should consult their tax advisors regarding the U.S. federal income tax
consequences of investing in the Notes, including the possible application of 30% U.S. withholding tax in respect of the contingent
coupons.
Medicare Tax on Net Investment
Income. U.S. holders that are individuals, estates or certain trusts are subject to an additional 3.8% tax on all or a portion
of their “net investment income,” which may include any income or gain realized with respect to the Notes, to the extent
of their net investment income that when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried
individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), or $125,000 for a married individual
filing a separate return or the dollar amount at which the highest tax bracket begins for an estate or trust. The 3.8% Medicare tax
is determined in a different manner than the income tax. U.S. holders should consult their tax advisors as to the consequences of
the 3.8% Medicare tax.
Specified Foreign Financial Assets.
Certain U.S. holders that own “specified foreign financial assets” in excess of an applicable threshold may be
subject to reporting obligations with respect to such assets with their tax returns, especially if such assets are held outside the
custody of a U.S. financial institution. U.S. holders are urged to consult their tax advisors as to the application of this
legislation to their ownership of the Notes.
Non-U.S. Holders. The U.S. federal
income tax treatment of the contingent coupons is unclear. Subject to Section 871(m) of the Code and FATCA, as discussed below, our
counsel is of the opinion that contingent coupons paid to a non-U.S. holder that provides us (and/or the applicable withholding
agent) with a fully completed and validly executed applicable IRS Form W-8 should not be subject to U.S. withholding tax and we do
not intend to withhold any tax on contingent coupons. However, it is possible that the IRS could assert that such payments are
subject to U.S. withholding tax, or that another withholding agent may otherwise determine that withholding is required, in which
case the other withholding agent may withhold up to 30% on such payments (subject to reduction or elimination of such withholding
tax pursuant to an applicable income tax treaty). We will not pay any additional amounts in respect of such withholding. Subject to
Section 897 of the Code and Section 871(m) of the Code, discussed below, gain realized from the taxable disposition of a Note
generally should not be subject to U.S. tax unless (i) such gain is effectively connected with a trade or business conducted by the
non-U.S. holder in the U.S., (ii) the non-U.S. holder is a non-resident alien individual and is present in the U.S. for 183 days or
more during the taxable year of such taxable disposition and certain other conditions are satisfied or (iii) the non-U.S. holder has
certain other present or former connections with the U.S.
Section 897. We will not attempt to
ascertain whether any underlying constituent issuer would be treated as a “United States real property holding
corporation” (“USRPHC”) within the meaning of Section 897 of the Code. We also have not attempted to determine
whether the Notes should be treated as “United States real property interests” (“USRPI”) as defined in
Section 897 of the Code. If any such entity and the Notes were so treated, certain adverse U.S. federal income tax consequences
could possibly apply, including subjecting any gain to a non-U.S. holder in respect of a Note upon a taxable disposition of the Note
to the U.S. federal income tax on a net basis, and the proceeds from such a taxable disposition to a 15% withholding tax. Non- U.S.
holders should consult their tax advisors regarding the potential treatment of any such entity as a USRPHC and the Notes as
USRPI.
Section 871(m). A 30% withholding tax
(which may be reduced by an applicable income tax treaty) is imposed under Section 871(m) of the Code on certain “dividend
equivalents” paid or deemed paid to a non-U.S. holder with respect to a “specified equity-linked instrument” that
references one or more dividend-paying U.S. equity securities or indices containing U.S. equity securities. The withholding tax can
apply even if the instrument does not provide for payments that reference dividends. Treasury regulations provide that the
withholding tax applies to all dividend equivalents paid or deemed paid on specified equity-linked instruments that have a delta of
one (“delta-one specified equity-linked instruments”) issued after 2016 and to all dividend equivalents paid or deemed
paid on all other specified equity-linked instruments issued after 2018. However, the IRS has issued guidance that states that the
Treasury and the IRS intend to amend the effective dates of the Treasury regulations to provide that withholding on dividend
equivalents paid or deemed paid will not apply to specified equity-linked instruments that are not delta-one specified equity-linked
instruments and are issued before January 1, 2023.
Based on our determination that the Notes
are not “delta-one” with respect to any underlying index or any underlying constituents, our counsel is of the opinion
that the Notes should not be delta-one specified equity-linked instruments and thus should not be subject to withholding on dividend
equivalents. Our determination is not binding on the IRS, and the IRS may disagree with this determination. Furthermore, the
application of Section 871(m) of the Code will depend on our determinations made upon issuance of the Notes. If withholding is
required, we will not make payments of any additional amounts.
Nevertheless, after issuance, it is possible
that your Notes could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting an underlying index,
an underlying constituent or your Notes, and following such occurrence your Notes could be treated as delta -one specified
equity-linked instruments that are subject to withholding on dividend equivalents. It is also possible that withholding tax or other
tax under Section 871(m) of the Code could apply to the Notes under these rules if a non-U.S. holder enters, or has entered, into
certain other transactions in respect of an underlying index, an underlying constituent or the Notes. A non-U.S. holder that enters,
or has entered, into other transactions in respect of an underlying index, an underlying constituent or the Notes should consult its
tax advisor regarding the application of Section 871(m) of the Code to its Notes in the context of its other transactions.
Because of the uncertainty regarding the
application of the 30% withholding tax on dividend equivalents to the Notes, you are urged to consult your tax advisor regarding the
potential application of Section 871(m) of the Code and the 30% withholding tax to an investment in the Notes.
Foreign Account Tax Compliance Act.
The Foreign Account Tax Compliance Act (“FATCA”) was enacted on March 18, 2010, and imposes a 30% U.S. withholding
tax on “withholdable payments” (i.e., certain U.S.-source payments, including interest (and original issue discount),
dividends, other fixed or determinable annual or periodical gain, profits, and income, and on the gross proceeds from a disposition
of property of a type which can produce U.S.-source interest or dividends) and “passthru payments” (i.e., certain
payments attributable to withholdable payments) made to certain foreign financial institutions (and certain of their affiliates)
unless the payee foreign financial institution agrees (or is required), among other things, to disclose the identity of any U.S.
individual with an account of the institution (or the relevant affiliate) and to annually report certain information about such
account. FATCA also requires withholding agents making withholdable payments to certain foreign entities that do not disclose the
name, address, and taxpayer identification number of any substantial U.S. owners (or do not certify that they do not have any
substantial U.S. owners) to withhold tax at a rate of 30%. Under certain circumstances, a holder may be eligible for refunds or
credits of such taxes.
Pursuant to final and temporary Treasury
regulations and other IRS guidance, the withholding and reporting requirements under FATCA will generally apply to certain
“withholdable payments”, will not apply to gross proceeds on a sale or disposition, and will apply to certain foreign
passthru payments only to the extent that such payments are made after the date that is two years after final regulations defining
the term “foreign passthru payment” are published. If withholding is required, we (or the applicable paying agent) will
not be required to pay additional amounts with respect to the amounts so withheld. Foreign financial institutions and non-financial
foreign entities located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to
different rules.
Investors should consult their tax advisors
about the application of FATCA, in particular if they may be classified as financial institutions (or if they hold their Notes
through a foreign entity) under the FATCA rules.
Proposed Legislation. In 2007,
legislation was introduced in Congress that, if it had been enacted, would have required holders of Notes purchased after the bill
was enacted to accrue interest income over the term of the Notes despite the fact that there may be no interest payments over the
term of the Notes.
Furthermore, in 2013, the House Ways and
Means Committee released in draft form certain proposed legislation relating to financial instruments. If it had been enacted, the
effect of this legislation generally would have been to require instruments such as the Notes to be marked to market on an annual
basis with all gains and losses to be treated as ordinary, subject to certain exceptions.
It is not possible to predict whether any
similar or identical bills will be enacted in the future, or whether any such bill would affect the tax treatment of your Notes. You
are urged to consult your tax advisor regarding the possible changes in law and their possible impact on the tax treatment of your
Notes.
Both U.S. and non-U.S. holders are urged to consult their tax
advisors concerning the application of U.S. federal income tax laws to their particular situations, as well as any tax consequences
of the purchase, beneficial ownership and disposition of the Notes arising under the laws of any state, local, non-U.S. or other
taxing jurisdiction.
Supplemental
Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
We will agree to sell to UBS Securities LLC
and UBS Securities LLC will agree to purchase, all of the Notes at the issue price to the public less the underwriting commissions
indicated on the cover hereof. UBS Securities LLC will agree to resell all of the Notes to one or more unaffiliated third-party
dealers and will pay all of the commissions it receives to such dealers. UBS Securities LLC may also pay any such third-party dealer
a structuring fee of $2.50 per Note with respect to some or all of the Notes it sells. This amount will be deducted from amounts
remitted to UBS. Certain other third-party dealers may resell the Notes to other securities dealers at the issue price to the public
less an underwriting discount up to the underwriting discount indicated on the cover hereof. Additionally, we or one of our
affiliates will pay a fee to an unaffiliated broker-dealer for providing certain electronic platform services with respect to this
offering.
Conflicts of Interest — UBS
Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in this offering within the meaning of
Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds
(excluding the applicable commissions and fees) from the initial public offering of the Notes, thus creating an additional conflict
of interest within the meaning of FINRA Rule 5121. Consequently, the offering is being conducted in compliance with the provisions
of FINRA Rule 5121. UBS Securities LLC is not permitted to sell Notes in this offering to an account over which it exercises
discretionary authority without the prior specific written approval of the account holder.
UBS Securities LLC and its affiliates may
offer to buy or sell the Notes in the secondary market (if any) at prices greater than UBS’ internal valuation — The
value of the Notes at any time will vary based on many factors that cannot be predicted. However, the price (not including UBS
Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any affiliate would offer
to buy or sell the Notes immediately after the trade date in the secondary market is expected to exceed the estimated initial value
of the Notes as determined by reference to our internal pricing models. The amount of the excess will decline to zero on a straight
line basis over a period ending no later than 6 months after the trade date, provided that UBS Securities LLC may shorten the period
based on various factors, including the magnitude of purchases and other negotiated provisions with selling agents. Notwithstanding
the foregoing, UBS Securities LLC and its affiliates intend, but are not required to make a market for the Notes and may stop making
a market at any time. For more information about secondary market offers and the estimated initial value of the Notes, see
“Key Risks — Fair value considerations” and “— Limited or no secondary market and secondary market
price considerations” of this document.
Prohibition of Sales to
EEA Retail Investors — The Notes are not intended to be offered, sold or otherwise made available to and should not be
offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these
purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of
Directive 2014/65/EU, as amended (“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended,
where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a
qualified investor as defined in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation
(EU) No 1286/2014, as amended (the “PRIIPs Regulation”), for offering or selling the Notes or otherwise making them
available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them
available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
You should rely only on the information
incorporated by reference or provided in this preliminary pricing supplement, the accompanying product supplement, the index
supplement or the accompanying prospectus. We have not authorized anyone to provide you with different information. We are not
making an offer of these Notes in any state where the offer is not permitted. You should not assume that the information in this
preliminary pricing supplement is accurate as of any date other than the date on the front of the document.
TABLE OF CONTENTS
Preliminary Pricing Supplement
Investment Description
|
i
|
Features
|
i
|
Key Dates
|
i
|
Note Offering
|
i
|
Additional Information about UBS and the Notes
|
ii
|
Investor Suitability
|
1
|
Preliminary Terms
|
2
|
Investment Timeline
|
3
|
Coupon Observation Dates and Coupon Payment Dates
|
4
|
Key Risks
|
5
|
Hypothetical Examples of How the Notes Might Perform
|
10
|
Information About the Underlying Indices
|
12
|
Correlation of the Underlying Indices
|
14
|
What Are the Tax Consequences of the Notes?
|
15
|
Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
17
|
|
|
Product Supplement
|
|
Product Supplement Summary
|
PS-1
|
Specific Terms of Each Security Will Be Described in the Applicable Supplements
|
PS-1
|
The Securities are Part of a Series
|
PS-1
|
Denomination
|
PS-2
|
Coupons
|
PS-2
|
Early Redemption
|
PS-3
|
Payment at Maturity for the Securities
|
PS-3
|
Defined Terms Relating to Payment on the Securities
|
PS-4
|
Valuation Dates
|
PS-5
|
Valuation Periods
|
PS-6
|
Payment Dates
|
PS-6
|
Closing Level
|
PS-7
|
Intraday Level
|
PS-7
|
What are the Tax Consequences of the Securities?
|
PS-8
|
Risk Factors
|
PS-9
|
General Terms of the Securities
|
PS-29
|
Use of Proceeds and Hedging
|
PS-52
|
Material U.S. Federal Income Tax Consequences
|
PS-53
|
Certain ERISA Considerations
|
PS-75
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-76
|
|
|
Index Supplement
|
|
Index Supplement Summary
|
IS-1
|
Underlying Indices And Underlying Index Publishers
|
IS-2
|
Dow Jones Industrial AverageTM
|
IS-2
|
NASDAQ-100 Index®
|
IS-4
|
Russell 2000® Index
|
IS-10
|
S&P 500® Index
|
IS-15
|
Commodity Indices
|
IS-20
|
Bloomberg Commodity IndexSM
|
IS-20
|
UBS Bloomberg Constant Maturity Commodity Index
|
|
Excess Return
|
IS-27
|
Non-U.S. Indices
|
IS-32
|
EURO STOXX 50® Index
|
IS-32
|
FTSETM 100 Index
|
IS-38
|
Hang Seng China Enterprises Index
|
IS-41
|
MSCI Indexes
|
IS-45
|
MSCI EAFE® Index
|
IS-45
|
MSCI® Emerging Markets IndexSM
|
IS-45
|
MSCI® Europe Index
|
IS-45
|
Prospectus
|
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
5
|
Where You Can Find More Information
|
6
|
Presentation of Financial Information
|
7
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
7
|
UBS
|
8
|
Swiss Regulatory Powers
|
11
|
Use of Proceeds
|
12
|
Description of Debt Securities We May Offer
|
13
|
Description of Warrants We May Offer
|
33
|
Legal Ownership and Book-Entry Issuance
|
48
|
Considerations Relating to Indexed Securities
|
53
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
56
|
U.S. Tax Considerations
|
59
|
Tax Considerations Under the Laws of Switzerland
|
70
|
Benefit Plan Investor Considerations
|
72
|
Plan of Distribution
|
74
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$•
UBS AG
Trigger Callable Contingent Yield Notes
due on or about June 22, 2023
Preliminary Pricing Supplement dated June 1, 2020
(To Product Supplement dated October 31, 2018,
Index Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Securities LLC