The information in this preliminary pricing supplement is not complete and may be changed. We may not sell these securities until the pricing supplement, the accompanying product supplement and the accompanying prospectus (collectively, the "Offering Documents") are delivered in final form. The Offering Documents are not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
|
Subject to Completion
|
|
June 2020
Preliminary Pricing Supplement dated June
2, 2020
Registration Statement No. 333-225551
Filed pursuant to Rule 424(b)(2)
(To Prospectus dated October 31, 2018 and
Product Supplement dated October 31, 2018)
|
Structured Investments
Opportunities in U.S. Equities
Buffered Income Auto-Callable Securities with Downside
Leverage due on or about June 8, 2021
$• Based
on the Performance of the Common Stock of Amazon.com, Inc.
Principal at risk securities
Buffered Income Auto-Callable Securities
with Downside Leverage (the “securities”) offer the opportunity for investors to earn an interest payment on each interest
payment date on which the securities are outstanding in exchange for potentially receiving shares of the underlying equity at maturity,
the value of which is expected to be worth less than the stated principal amount of the securities. If the closing price of the
underlying equity is equal to or greater than the call threshold level on any determination date (other than the final determination
date), on the corresponding interest payment date the securities will be redeemed early for an amount per security equal to the
stated principal amount plus the interest payment with respect to such interest payment date. If the closing price of the underlying
equity is less than the call threshold level on any determination date (other than the final determination date), on the corresponding
interest payment date the securities will not be redeemed early and investors will receive the interest payment per security. If
the securities are not redeemed early and the closing price of the underlying equity on the final determination date (the “final
price”) is equal to or greater than the downside threshold level, on the maturity date investors will receive an amount per
security equal to the stated principal amount plus the interest payment with respect to the maturity date. If, however, the securities
are not redeemed early and the final price is less than the downside threshold level, in addition to the interest payment with
respect to the maturity date, investors will receive per security a number of shares of the underlying equity equal to the quotient,
observed to 4 decimal places, of the stated principal amount divided by the downside threshold level (the “exchange
ratio”), the value of which is expected to be worth less than the stated principal amount and, in extreme situations, investors
could lose all of their initial investment. Any fractional share included in the exchange ratio will be paid in cash at an amount
equal to the product of the fractional share multiplied by the final price. Accordingly, the securities do not
guarantee any return of principal at maturity. Investors will not participate in any appreciation of the underlying equity and
must be willing to accept the risk of receiving shares of the underlying equity, the value of which is expected to be worth less
than the stated principal amount, and in extreme situations, investors could lose all of their initial investment. The securities
are unsubordinated, unsecured debt obligations issued by UBS AG, and all payments or deliveries on the securities are subject to
the credit risk of UBS AG.
|
SUMMARY TERMS
|
|
|
Issuer:
|
UBS AG London Branch
|
|
Underlying equity:
|
Common stock of Amazon.com, Inc. (Bloomberg Ticker: “AMZN UW”)
|
|
Aggregate principal amount:
|
$•
|
|
Stated principal amount:
|
$10,000.00 per security
|
|
Issue price:
|
$10,000.00 per security (see “Commissions and issue price” below)
|
|
Strike date:
|
Expected to be June 2, 2020
|
|
Pricing date:
|
Expected to be June 3, 2020
|
|
Original issue date:
|
Expected to be June 8, 2020 (3 business days after the pricing date). Under Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required to settle in two business days (T+2), unless the parties to a trade expressly agree otherwise. Accordingly, purchasers who wish to trade the securities in the secondary market on any date prior to two business days before delivery of the securities will be required, by virtue of the fact that each security initially will settle in three business days (T+3), to specify alternative settlement arrangements to prevent a failed settlement of the secondary market trade.
|
|
Maturity date:
|
Expected to be June 8, 2021, subject to postponement for certain market disruption events and as described under “General Terms of the Securities — Market Disruption Events” and “— Payment Dates — Maturity Date” in the accompanying product supplement.
|
|
Early redemption:
|
If, on any determination date (other
than the final determination date), the closing price of the underlying equity is equal to or greater than the call
threshold level, the securities will be redeemed early and we will pay the early redemption amount on the first interest payment
date immediately following the related determination date. No further payments will be made on the securities once they
have been redeemed.
|
|
Early redemption amount:
|
The early redemption amount will be an amount equal to (i) the stated principal amount plus (ii) the interest payment with respect to the related interest payment date.
|
|
Interest payment:
|
On each interest payment date, we will pay an interest payment of $67.50 (equivalent to 8.10% per annum of the stated principal amount) per security on the related interest payment date, unless the securities were previously redeemed early.
|
|
Determination dates:
|
Expected to be July 6, 2020, August 3, 2020, September 3, 2020, October 5, 2020, November 3, 2020, December 3, 2020, January 4, 2021, February 3, 2021, March 3, 2021, April 5, 2021, May 3, 2021 and June 3, 2021, subject to postponement for non-trading days and certain market disruption events (as described under “General Terms of the Securities — Valuation Dates”, “— Final Valuation Date” and “— Market Disruption Events” in the accompanying product supplement). We also refer to June 3, 2021 as the final determination date. In the event that we make any change to the expected strike date, pricing date and original issue date, the calculation agent may adjust the determination dates, as well as the final determination date and maturity date, to ensure that the stated term of the securities remains the same. References in the accompanying product supplement to one or more “valuation dates” shall mean the determination dates for purposes of the market disruption event provisions in the accompanying product supplement.
|
|
Interest payment dates:
|
With respect to each determination date other than the final determination date, the third business day after the related determination date. With respect to the final determination date, the maturity date.
|
|
Payment at maturity:
|
§
|
If the final price is equal to or greater than the downside threshold level:
|
(i) the stated principal amount plus (ii) the interest payment with respect to the maturity date
|
|
|
§
|
If the final price is less than the downside threshold level:
|
(i) a number of shares of the underlying equity equal to the exchange ratio, and the cash value in lieu of any fractional shares included in the exchange ratio plus (ii) the interest payment with respect to the maturity date
|
|
|
If the securities are not redeemed early and the final price is less than the downside threshold level, you will receive per security a number of shares of the underlying equity equal to the exchange ratio (and cash in lieu of any fractional shares), the value of which is expected to be worth less than the stated principal amount and, in extreme situations, you could lose all of your initial investment. If the exchange ratio is less than 1, your payment at maturity for each security will be the cash value of the fractional share.
|
|
Exchange ratio:
|
A number of shares of the underlying equity per security equal to the quotient of the stated principal amount divided by the downside threshold level, observed to 4 decimal places (as may be adjusted in the case of certain adjustment events as described with respect to the “share delivery amount” under “General Terms of the Securities — Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement). We will pay cash in lieu of delivering any fractional shares in an amount equal to the product of that fraction multiplied by the final price, each as determined by the calculation agent.
|
|
Cash value:
|
An amount in cash per security equal to the product of the exchange ratio multiplied by the final price. For the avoidance of doubt, we will pay the cash value if the exchange ratio is less than 1.0000 and may pay the cash value following certain adjustment events as described with respect to the “share delivery amount” under “General Terms of the Securities — Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
|
|
Call threshold level:
|
$[•], which is equal to 100.00% of the initial price (as may be adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement).
|
|
Downside threshold level:
|
$[•], which is equal to 80.00% of the initial price (as may be adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement).
|
|
Initial price:
|
$[•], which is equal to the closing price of the underlying equity on the strike date and not the closing price on the pricing date (as may be adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement).
|
|
Final price:
|
The closing price of the underlying equity on the final determination date.
|
|
CUSIP / ISIN:
|
90276BDH3 / US90276BDH33
|
|
Listing:
|
The securities will not be listed or displayed on any securities exchange or any electronic communications network.
|
|
Calculation Agent:
|
UBS Securities LLC
|
|
Commissions and issue price:
|
|
Price to Public(1)
|
Fees and Commissions(1)
|
Proceeds to Issuer
|
|
Per security
|
|
100.00%
|
0.10%(a)
|
99.80%
|
|
|
|
|
+ 0.10%(b)
|
|
|
|
|
|
0.20%
|
|
|
Total
|
|
$•
|
$•
|
$•
|
|
|
|
|
|
|
|
|
|
(1)
|
UBS Securities LLC will purchase from UBS AG the securities at the price to public less a fee of $20.00 per $10,000.00 stated principal amount of securities. UBS Securities LLC will agree to resell all of the securities to Morgan Stanley Smith Barney LLC (“Morgan Stanley Smith Wealth Management”) at an underwriting discount which reflects:
|
|
|
(a)
|
a fixed sales commission of $10.00 per $10,000.00 stated principal amount of securities that Morgan Stanley Wealth Management sells and
|
|
|
(b)
|
a fixed structuring fee of $10.00 per $10,000.00 stated principal amount of securities that Morgan Stanley Wealth Management sells,
|
|
|
each payable to Morgan Stanley Wealth Management. See “Supplemental information regarding plan of distribution (conflicts of interest); secondary markets (if any)”.
|
The estimated initial value of the securities
as of the pricing date is expected to be between $9,641.00 and $9,941.00. The range of the estimated initial value of the securities
was determined on the date hereof by reference to UBS’ internal pricing models, inclusive of the internal funding rate. For
more information about secondary market offers and the estimated initial value of the securities, see “Risk Factors —
Fair value considerations” and “— Limited or no secondary market and secondary market price considerations”
beginning on page 11 of this document. The securities involve risks not associated with an investment in ordinary debt securities.
See “Risk Factors” beginning on page 10.
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 document, the accompanying product supplement or the accompanying prospectus. Any representation to the contrary is a criminal
offense.
The securities are not bank deposits
and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. You should read this document
together with the accompanying product supplement and the accompanying prospectus, each of which can be accessed via the hyperlinks
below, before you decide to invest.
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Additional Information about UBS and the Securities
UBS AG (“UBS”) has filed a
registration statement (including a prospectus as supplemented by a product supplement) with the Securities and Exchange Commission
(the “SEC”) for the securities to which this document relates. Before you invest, you should read these documents and
any other documents relating to this offering that UBS has filed with the SEC for more complete information about UBS and this
offering. You may obtain these documents for free from the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC
web site is 0001114446.
You may access these documents on the SEC website at www.sec.gov
as follows:
References to “UBS,” “we,”
“our” and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this document, the “securities”
refers to the Buffered Income Auto-Callable Securities with Downside Leverage that are offered hereby. Also, references to the
“accompanying prospectus” mean the UBS prospectus titled “Debt Securities and Warrants,” dated October
31, 2018, and references to the “accompanying product supplement” mean the UBS product supplement titled “Market-Linked
Securities Product Supplement”, dated October 31, 2018.
You should rely only on the information
incorporated by reference or provided in this document, the accompanying product 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 document, the accompanying product supplement
or the accompanying prospectus is accurate as of any date other than the date on the front of the document.
UBS reserves the right to change the terms
of, or reject any offer to purchase, the securities prior to their issuance. In the event of any changes to the terms of the securities,
UBS will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject
such changes in which case UBS may reject your offer to purchase.
In the event of any discrepancies between
this document, the accompanying product supplement and the accompanying prospectus, the following hierarchy will govern: first,
this document; second, the accompanying product supplement; and finally, the accompanying prospectus.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Investment Summary
The Buffered Income Auto-Callable Securities
with Downside Leverage due on or about June 8, 2021 based on the performance of the common stock of Amazon.com, Inc., which we
refer to as the securities, provide an opportunity for investors to earn an interest payment, which is an amount equal to $67.50
(equivalent to 8.10% per annum of the stated principal amount) per security, on each interest payment date on which the securities
are outstanding. If the securities have not been previously redeemed, the interest payment will be payable on the relevant interest
payment date, which is the third business day after the related determination date, except that the interest payment date for the
final determination date will be the maturity date.
If the closing price of the underlying
equity is equal to or greater than the call threshold level on any of the determination dates other than the final determination
date, the securities will be automatically redeemed for an early redemption amount equal to (i) the stated principal amount plus
(ii) the interest payment with respect to the related interest payment date. If the securities have not previously been redeemed
early and the final price is equal to or greater than 80.00% of the initial price, which we refer to as the downside threshold
level, the payment at maturity will be the sum of (i) the stated principal amount and (ii) the interest payment with respect to
the maturity date. If, however, the securities are not redeemed early and the final price is less than the downside threshold
level, investors will receive per security (i) a number of shares of the underlying equity equal to the exchange ratio, which
will be equal to the quotient, observed to 4 decimal places, of (a) the stated principal amount divided by (b) downside threshold
level, the value of which is expected to be worth less than the stated principal amount and could be zero and (ii) the interest
payment with respect to the maturity date. Any fractional share included in the exchange ratio will be paid in cash at an amount
equal to the product of the fractional share and the final price. Investors in the securities must be willing to accept the
risk of receiving shares of the underlying equity that are expected to be worth less than the principal amount, and in extreme
situations, investors could lose all of their initial investment. In addition, investors will not participate in any appreciation
of the underlying equity.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Key Investment Rationale
The securities offer the opportunity for
investors to earn an interest payment equal to $67.50 (equivalent to 8.10% per annum of the stated principal amount) per security
on each interest payment date on which the securities are outstanding. Payments or deliveries on the securities will vary depending
on the closing price or final price of the underlying equity on each determination date and/or the final determination date, respectively,
relative to the initial price and the downside threshold level, as follows:
|
Scenario 1
|
|
On any determination date other than the final determination date, the closing price is equal to or greater than the call threshold level.
|
|
|
|
§
|
The securities will be automatically redeemed early for an early redemption amount equal to (i) the stated principal amount plus (ii) the interest payment with respect to the related interest payment date.
|
|
§
|
Investors will not participate in any appreciation of the underlying equity from the initial price.
|
|
|
|
|
|
Scenario 2
|
|
The securities are not automatically redeemed early and the final price is equal to or greater than the downside threshold level.
|
|
|
|
§
|
The payment due at maturity will be (i) the stated principal amount plus (ii) the interest payment with respect to the maturity date.
|
|
§
|
Investors will not participate in any appreciation of the underlying equity from the initial price.
|
|
|
|
|
|
Scenario 3
|
|
The securities are not automatically redeemed early and the final price is less than the downside threshold level.
|
|
|
|
§
|
At maturity, investors will receive per security (i) a number of shares of the underlying equity equal to the exchange ratio, which will be equal to the quotient of (a) the stated principal amount divided by (b) the downside threshold level and (ii) the interest payment with respect to the maturity date. Any fractional share included in the exchange ratio will be paid in cash at an amount equal to the product of the fractional share multiplied by the final price.
|
|
§
|
Investors will receive shares of the underlying equity that are expected to be worth less than the stated principal amount and may lose all of their initial investment in this scenario.
|
Investing in the securities involves
significant risks. The securities differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full
amount of your initial investment. In exchange for receiving an interest payment on each interest payment date on which the securities
are outstanding, you are accepting the risk of receiving at maturity a number of shares of the underlying equity. If the securities
are not automatically redeemed early and the final price is less than the downside threshold level, you will receive per security
a number of shares of the underlying equity, the value of which is expected to be worth less than the stated principal amount and,
in extreme situations, you could lose all of your initial investment.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Investor Suitability
The securities may be suitable for you if:
|
|
§
|
You fully understand the risks of an investment in the securities, including the risk of loss of
all of your initial investment.
|
|
|
§
|
You can tolerate a loss of some or all of your initial investment and are willing to make an investment
that may have the full downside market risk of an investment in the underlying equity.
|
|
|
§
|
You believe that the final price of the underlying equity will be equal to or greater than the
downside threshold level.
|
|
|
§
|
You can tolerate receiving a number of shares of the underlying equity equal to the exchange ratio at maturity, the value of
which is expected to be worth less than your stated principal amount and, in extreme situations, losing all of your initial investment.
|
|
|
§
|
You understand and accept that you will not participate in any appreciation in the price of the
underlying equity and that any positive return is limited to the interest payments received, which will depend on the number of
interest payment dates on which the securities remain outstanding.
|
|
|
§
|
You can tolerate fluctuations in the price of the securities prior to maturity that may be similar
to or exceed the downside price fluctuations of the underlying equity.
|
|
|
§
|
You are willing to invest in the securities based on the interest payment, the downside threshold
level and the call threshold level indicated on the cover hereof.
|
|
|
§
|
You are willing to forgo any dividends paid on the underlying equity.
|
|
|
§
|
You are willing to invest in securities that may be redeemed prior to the maturity date and you
are otherwise willing to hold such securities to maturity, a term of approximately 12 months, and accept that there may be little
or no secondary market.
|
|
|
§
|
You are willing to assume the credit risk of UBS for all payments or deliveries under the securities,
and understand that if UBS defaults on its obligations you may not receive any amounts due to you including any repayment of principal.
|
|
|
§
|
You understand that the estimated initial value of the securities determined by our internal pricing
models is lower than the issue price and that should UBS Securities LLC or any affiliate make secondary markets for the securities,
the price (not including their customary bid-ask spreads) will temporarily exceed the internal pricing model price.
|
The securities may not be suitable
for you if:
|
|
§
|
You do not fully understand the risks of an investment in the securities, including the risk of
loss of all of your initial investment.
|
|
|
§
|
You require an investment designed to provide a full return of principal at maturity.
|
|
|
§
|
You cannot tolerate a loss of some or all of your initial investment, or you are not willing to
make an investment that may have the full downside market risk of an investment in the underlying equity.
|
|
|
§
|
You believe that the final price of the underlying equity is likely to be less than the downside
threshold level.
|
|
|
§
|
You cannot tolerate receiving a number of shares of the underlying equity equal to the exchange ratio at maturity, the value
of which is expected to be worth less than your stated principal amount and could be zero.
|
|
|
§
|
You seek an investment that participates in the appreciation in the price of the underlying equity
or that has unlimited return potential.
|
|
|
§
|
You cannot tolerate fluctuations in the price of the securities prior to maturity that may be similar
to or exceed the downside price fluctuations of the underlying equity.
|
|
|
§
|
You are unwilling to invest in the securities based on the interest payment, the downside threshold
level or the call threshold level indicated on the cover hereof.
|
|
|
§
|
You prefer to receive any dividends paid on the underlying equity.
|
|
|
§
|
You are unable or unwilling to hold securities that may be redeemed prior to the maturity date,
or you are otherwise unable or unwilling to hold such securities to maturity, a term of approximately 12 months, or you seek an
investment for which there will be an active secondary market.
|
|
|
§
|
You are not willing to assume the credit risk of UBS for all payments or deliveries under the securities,
including any repayment of principal.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
How the Securities Work
The following diagrams illustrate the potential outcomes for
the securities depending on (1) the closing price and (2) the final price, relative to the initial price and the downside threshold
level.
Diagram #1: Determination
Dates Other Than the Final Determination Date
Diagram #2: Payment at Maturity if No Early
Redemption Occurs
For more information about the payout
upon an early redemption or at maturity in different hypothetical scenarios, see “Hypothetical Examples” beginning
on the following page.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Hypothetical Examples
The below examples are based on the following
terms and are purely hypothetical (the actual terms of your security will be determined on the strike date and will be specified
in the final pricing supplement; amounts may have been rounded for ease of analysis):
|
Hypothetical Initial Price:
|
$2,300.00
|
|
Hypothetical Call Threshold Level:
|
$2,300.00, which is equal to 100.00% of the hypothetical initial price
|
|
Hypothetical Downside Threshold Level:
|
$1,840.00, which is 80.00% of the hypothetical initial price
|
|
Hypothetical Exchange Ratio*:
|
5.4348 shares per security*
|
|
Hypothetical Interest Payment:
|
$67.50 (equivalent to approximately 8.10% per annum of the stated principal amount) per security
|
|
Stated Principal Amount:
|
$10,000.00 per security
|
|
*
|
Equal to the quotient, observed to 4 decimal places, of (i) the stated principal amount
divided by (ii) the hypothetical downside threshold level. If you receive the exchange ratio at maturity, any fractional
share included in the exchange ratio will be paid in cash at an amount equal to the product of the fractional share and the final
price.
|
In Examples 1 and 2 the closing price of
the underlying equity fluctuates over the term of the securities and the closing price of the underlying equity is equal to or
greater than the hypothetical call threshold level on one of the determination dates (other than the final determination date).
Because the closing price is equal to or greater than the call threshold level on one of the determination dates (other than the
final determination date), the securities are redeemed early on the interest payment date corresponding to the relevant determination
date. In Examples 3 and 4, the closing price on each of the determination dates (other than the final determination date) is less
than the call threshold level, and, consequently, the securities are not redeemed early and remain outstanding until maturity.
|
|
Example 1
|
Example 2
|
Determination
Dates
|
Hypothetical
Closing Price
|
Interest
Payment
|
Early
Redemption Amount*
|
Hypothetical
Closing Price
|
Interest
Payment
|
Early
Redemption
Amount
|
|
#1
|
$2,310.00
|
—*
|
$10,067.50
|
$2,090.00
|
$67.50
|
N/A
|
|
#2
|
N/A
|
N/A
|
N/A
|
$2,175.80
|
$67.50
|
N/A
|
|
#3
|
N/A
|
N/A
|
N/A
|
$2,760.00
|
—*
|
$10,067.50
|
|
#4
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#5
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#6
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#7
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#8
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#9
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#10
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
#11
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Final
Determination
Date
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Payment at
Maturity
|
N/A
|
N/A
|
|
|
*
|
The early redemption amount includes the unpaid interest payment with respect to the interest payment
date corresponding to the determination date on which the closing price is equal to or greater than the call threshold level and
the securities are redeemed early as a result.
|
|
▪
|
In Example 1, the securities are redeemed early on the interest payment date corresponding to the first determination
date because the closing price on such determination date is equal to or greater than the call threshold level. You receive the
early redemption amount on such interest payment date, calculated as follows:
|
Stated Principal Amount + Interest Payment
= $10,000.00 + $67.50 = $10,067.50
In this example, the early redemption
feature limits the term of your investment to approximately 1 month and you may not be able to reinvest at comparable terms or
returns. If the securities are redeemed early, you will stop receiving interest payments. Your total return per security in this
example is $10,067.50 (a 0.675% total return on the securities).
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
▪
|
In Example 2, the securities are redeemed early on the interest payment date corresponding to the third determination
date as the closing price on such determination date is equal to or greater than the call threshold level. You receive the early
redemption amount on such interest payment date, calculated as follows:
|
Stated Principal Amount + Interest Payment
= $10,000.00 + $67.50 = $10,067.50
In this example, the early redemption
feature limits the term of your investment to approximately 3 months and you may not be able to reinvest at comparable terms or
returns. If the securities are redeemed early, you will stop receiving interest payments. Further, although the underlying equity
has appreciated by 20% from its initial price on the third determination date, you will receive only $10,067.50 per security and
do not benefit from such appreciation. When added to the interest payments of $135.00 received in respect of the prior interest
payment dates, UBS will have paid you a total of $10,202.50 per security for a 2.025% total return on the securities.
|
|
Example 3
|
Example 4
|
Determination
Dates
|
Hypothetical
Closing Price
|
Interest
Payment
|
Early
Redemption
Amount
|
Hypothetical
Closing Price
|
Interest
Payment
|
Early
Redemption
Amount
|
|
#1
|
$2,200.00
|
$67.50
|
N/A
|
$2,190.00
|
$67.50
|
N/A
|
|
#2
|
$2,150.00
|
$67.50
|
N/A
|
$2,160.00
|
$67.50
|
N/A
|
|
#3
|
$2,250.00
|
$67.50
|
N/A
|
$2,240.00
|
$67.50
|
N/A
|
|
#4
|
$2,050.00
|
$67.50
|
N/A
|
$2,060.00
|
$67.50
|
N/A
|
|
#5
|
$2,275.00
|
$67.50
|
N/A
|
$2,265.00
|
$67.50
|
N/A
|
|
#6
|
$2,175.00
|
$67.50
|
N/A
|
$2,185.00
|
$67.50
|
N/A
|
|
#7
|
$2,140.00
|
$67.50
|
N/A
|
$2,130.00
|
$67.50
|
N/A
|
|
#8
|
$2,210.00
|
$67.50
|
N/A
|
$2,220.00
|
$67.50
|
N/A
|
|
#9
|
$1,980.00
|
$67.50
|
N/A
|
$1,970.00
|
$67.50
|
N/A
|
|
#10
|
$1,945.00
|
$67.50
|
N/A
|
$1,955.00
|
$67.50
|
N/A
|
|
#11
|
$1,900.00
|
$67.50
|
N/A
|
$1,890.00
|
$67.50
|
N/A
|
Final
Determination
Date
|
$1,472.00
|
—*
|
N/A
|
$2,070.00
|
—*
|
N/A
|
Payment at
Maturity
|
$8,067.53**
|
$10,067.50
|
|
|
*
|
The final interest payment will be paid at maturity.
|
|
|
**
|
Represents (i) the approximate cash value of the exchange ratio as of the final determination date, plus (ii) the interest payment with
respect to the maturity date. Because the securities are physically settled, the actual value of the shares received and the total
return on the securities at maturity depends on the price of the underlying equity on the maturity date.
|
Examples 3 and 4 illustrate the payment
at maturity per security based on the final price.
|
▪
|
In Example 3, the closing price of the underlying equity remains less than the call threshold level on each determination
date, including the final determination date. As a result, the securities remain outstanding until maturity and, because the final
price is less than the downside threshold level, at maturity, in addition to the interest payment with respect to the maturity
date, investors will receive shares of the underlying equity, and an amount in cash equal to the product of the fractional share
and the final price, calculated as follows:
|
Exchange Ratio = $8,000.03* = $1,472.00
x 5.4348 shares
Payment at Maturity = Exchange Ratio + Interest
Payment
Payment at Maturity = $8,000.03* + $67.50
= $8,067.53
|
|
*
|
Represents the approximate cash value of
the exchange ratio as of the final determination date. Because the securities are physically settled, the actual value of the shares
received and the total return on the securities at maturity depends on the price of the underlying equity on the maturity date.
|
If the exchange ratio is less than 1, your
payment at maturity for each security will be the cash value of the fractional share.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
In this example, your payment at maturity
is significantly less than the stated principal amount. As represented by the exchange ratio, on the maturity date you will receive
shares of the underlying equity and an amount in cash equal to the product of the fractional share and the final price. The value
of the shares as of the final determination date plus the interest payment with respect to the maturity date equals $8,067.53 per
security. When added to the interest payments per security of $742.50 received in respect to the prior interest payment dates,
UBS will have paid you a total of $8,810.03 (an 11.8997% loss on the securities). The value of the shares received as of the maturity
date and the total return on the securities at that time will depend on the closing price of the underlying equity on the maturity
date.
|
▪
|
In Example 4, the closing price of the underlying equity is less than the call threshold level on each determination
date prior to the final determination date and, as a result, the securities remain outstanding until maturity. On the final determination
date, although the final price is less than the initial price, the final price is equal to or greater than the downside threshold
level and therefore you receive the stated principal amount plus the interest payment with respect to the maturity date. Your payment
at maturity is calculated as follows:
|
$10,000.00 + $67.50 = $10,067.50
In this example, although the final
price represents a 10.00% decline from the initial price, the final price is equal to or greater than the downside threshold level
and therefore you receive at maturity the stated principal amount per security plus the interest payment with respect to the maturity
date, equal to $10,067.50 per security. When added to the interest payments of $742.50 received in respect to the prior interest
payment dates, UBS will have paid you a total of $10,810.00 (an 8.10% total return on the securities).
Investing in the securities involves
significant risks. The securities differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full
amount of your initial investment. In exchange for receiving an interest payment on each interest payment date on which the securities
are outstanding, you are accepting the risk that the securities may have downside market risk similar to the underlying equity.
If the securities are not automatically redeemed early and the final price is less than the downside threshold level, you will
receive per security a number of shares of the underlying equity, the value of which is expected to be worth less than the stated
principal amount and, in extreme situations, you could lose all of your initial investment.
Any payment or delivery to be made
on the securities, including any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come
due. If UBS were to default on its obligations under the securities, you could lose all of your initial investment.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Risk Factors
The following is a non-exhaustive list
of certain key risk factors for investors in the securities. For further discussion of these and other risks, you should read the
section entitled “Risk Factors” in the accompanying product supplement. We urge to consult your investment, legal,
tax, accounting and other advisors before you invest in the securities.
|
|
§
|
The securities do not guarantee the return of any principal and your investment in the securities
may result in a loss. The terms of the securities differ from those of ordinary debt securities in that the securities do not
guarantee the return of any of the stated principal amount at maturity. Instead, if the securities have not been redeemed early
and if the final price is less than the downside threshold level, you will receive a number of shares of the underlying equity
for each security that you own equal to the exchange ratio, the value of which is expected to be worth less than the stated principal
amount and could be worthless. If you receive the exchange ratio, as of the final determination date the percentage decline in
the value of the exchange ratio will be at a proportionately higher percentage relative to any percentage decline in the price
of the underlying equity below the downside threshold level from the initial price to the final price. Therefore, the further the
final price has declined from the downside threshold level, the closer your loss of principal will be to the decline of the underlying
equity from the initial price and, in extreme situations, you could lose all of your initial investment. For example, if the downside
threshold level is 80.00% of the initial price and the final price is 70.00% of the initial price, you will lose 12.50% of your
initial investment (based on the value of the exchange ratio on the final determination date), which is greater than the 10.00%
additional decline of the underlying equity from the downside threshold level, but less than the 30.00% decline from the initial
price.
|
|
|
|
Additionally,
in the event that the securities are not redeemed early and the final price is less than the downside threshold level, any decline
in the price of the underlying equity during the period between the final determination date and the maturity date will result
in a return on the securities at maturity that is less than the return you would have received had UBS instead paid you an amount
in cash at maturity equal to the exchange ratio.
|
|
§
|
The contingent repayment of principal applies only if you hold the securities to maturity.
You should be willing to hold your securities to maturity. If you are able to sell your securities prior to an early redemption
or maturity in the secondary market, you may have to sell them at a loss relative to your initial investment even if the price
of the underlying equity at such time is equal to or greater than the downside threshold level.
|
|
|
§
|
Higher interest payments are generally associated with a greater risk of loss. Greater expected
volatility with respect to the underlying equity reflects a higher expectation as of the strike date that the closing price of
such stock may be less than the downside threshold level on the final determination date of the securities. This greater expected
risk will generally be reflected in a higher interest payment rate for that security. “Volatility” refers to the frequency
and magnitude of changes in the price of the underlying equity. However, while the amount of each applicable interest payment is
set on the strike date, a stock’s volatility can change significantly over the term of the securities. The closing price
of the underlying equity for your securities could fall sharply, which could result in the receipt of shares of the underlying
equity at maturity and, in extreme situations, the loss of all of your initial investment.
|
|
|
§
|
Investors will not participate in any appreciation in the price of the underlying equity and
will not have the same rights during the term of the securities as holders of the underlying equity. Investors will not participate
in any appreciation in the price of the underlying equity from the initial price and the return on the securities will be limited
to the interest payments received, which will depend on the number of interest payment dates on which the securities remain outstanding.
It is possible that the securities could be subject to an early redemption so that you will receive few interest payments. If you
do not earn sufficient interest payments on the securities, the overall return on the securities may be less than the amount that
would be paid on a conventional debt security of the issuer of comparable maturity. Further, investors in the securities will not
have voting rights or rights to receive dividends or other distributions or any other rights during the term of the securities
with respect to the underlying equity, and any such dividends or distributions will not be factored into the calculation of the
payment at maturity.
|
|
|
§
|
Early redemption risk. The term of your investment in the securities may be limited to the
first interest payment date on which the securities may be redeemed early. If the securities are redeemed early, you will receive
no more interest payments and may be forced to invest in a lower interest rate environment and may not be able to reinvest the
proceeds from an investment in the securities at a comparable return for a similar level of risk.
|
|
|
§
|
The securities are subject to the credit risk of UBS AG, and any actual or anticipated changes
to our credit ratings or credit spreads may adversely affect the market value of the securities. Investors are dependent on
UBS AG’s ability to pay all amounts due on the securities, and therefore investors are subject to our credit risk and to
changes in the market’s view of our creditworthiness. Any actual or anticipated decline in our credit ratings or increase
in the credit spreads charged by the market for taking our credit risk is likely to affect adversely the market value of the securities.
If we were to default on our obligations under the securities, you could lose a significant portion or all of your initial investment.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
§
|
Single equity risk. The closing price of the underlying equity can rise or fall sharply
due to factors specific to that underlying equity and the issuer of such underlying equity (the “underlying equity issuer”),
such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes
and decisions and other events, as well as general market factors, such as general stock market volatility and levels, interest
rates and economic and political conditions. Recently, the coronavirus infection has caused volatility in the global financial
markets and a slowdown in the global economy. Coronavirus or any other communicable disease or infection may adversely affect the
underlying equity issuer. You, as an investor in the securities, should make your own investigation into the underlying equity
issuer and the underlying equity for your securities. For additional information regarding the underlying equity, please see “Information
about the Underlying Equity” below and the underlying equity issuer’s SEC filings referred to in this section. We
urge you to review financial and other information filed periodically by the underlying equity issuer with the SEC.
|
|
|
§
|
Fair value considerations.
|
|
|
o
|
The issue price you pay for the securities will exceed their estimated initial value. The
issue price you pay for the securities will exceed their estimated initial value as of the pricing date due to the inclusion in
the issue price of the underwriting discount, hedging costs, issuance costs and projected profits. As of the close of the relevant
markets on the pricing date, we will determine the estimated initial value of the securities by reference to our internal pricing
models and the estimated initial value of the securities will be set forth in the final pricing supplement. The pricing models
used to determine the estimated initial value of the securities incorporate certain variables, including the price, volatility
and any dividends paid on the underlying equity, prevailing interest rates, the term of the securities and our internal funding
rate. Our internal funding rate is typically lower than the rate we would pay to issue conventional fixed or floating rate debt
securities of a similar term. The underwriting discount, hedging costs, issuance and other costs, projected profits and the difference
in rates will reduce the economic value of the securities to you. Due to these factors, the estimated initial value of the securities
as of the pricing date will be less than the issue price you pay for the securities.
|
|
|
o
|
The estimated initial value is a theoretical price and the actual price that you may be able
to sell your securities in any secondary market (if any) at any time after the pricing date may differ from the estimated initial
value. The value of your securities at any time will vary based on many factors, including the factors described above and
in “—Single equity risk” above and is impossible to predict. Furthermore, the pricing models that we use are
proprietary and rely in part on certain assumptions about future events, which may prove to be incorrect. As a result, after the
pricing date, if you attempt to sell the securities in the secondary market, the actual value you would receive may differ, perhaps
materially, from the estimated initial value of the securities determined by reference to our internal pricing models. The estimated
initial value of the securities does not represent a minimum or maximum price at which we or any of our affiliates would be willing
to purchase your securities in any secondary market at any time.
|
|
|
o
|
Our actual profits may be greater or less than the differential between the estimated initial
value and the issue price of the securities as of the pricing date. We may determine the economic terms of the securities,
as well as hedge our obligations, at least in part, prior to the pricing date. In addition, there may be ongoing costs to us to
maintain and/or adjust any hedges and such hedges are often imperfect. Therefore, our actual profits (or potentially, losses) in
issuing the securities cannot be determined as of the pricing date and any such differential between the estimated initial value
and the issue price of the securities as of the pricing date does not reflect our actual profits. Ultimately, our actual profits
will be known only at the maturity of the securities.
|
|
|
§
|
Limited or no secondary market and secondary market price considerations.
|
|
|
o
|
There may be little or no secondary market for the securities. The securities will not be
listed or displayed on any securities exchange or any electronic communications network. UBS Securities LLC and its affiliates
intend, but are not required to make a market for the securities and may stop making a market at any time. If you are able to sell
your securities prior to maturity, you may have to sell them at a substantial loss. Furthermore, there can be no assurance that
a secondary market for the securities will develop. The estimated initial value of the securities does not represent a minimum
or maximum price at which we or any of our affiliates would be willing to purchase your securities in any secondary market at any
time.
|
|
|
o
|
The price at which UBS Securities LLC and its affiliates may offer to buy the securities in
the secondary market (if any) may be greater than UBS’ valuation of the securities at that time, greater than any other secondary
market prices provided by unaffiliated dealers (if any) and, depending on your broker, greater than the valuation provided on your
customer account statements. For a limited period of time following the issuance of the securities, UBS Securities LLC or its
affiliates may offer to buy or sell such securities at a price that exceeds (i) our valuation of the securities at that time based
on our internal pricing models, (ii) any secondary market prices provided by unaffiliated dealers (if any) and (iii) depending
on your broker, the valuation provided on customer account statements. The price that UBS Securities LLC may initially offer to
buy such securities following issuance will exceed the valuations indicated by our internal pricing models due to the inclusion
for a limited period of time of the aggregate value of the underwriting discount, hedging costs, issuance costs and theoretical
projected trading profit. The portion of such amounts included in our price will decline to zero on a straight line basis over
a period ending no later than the date specified under “Supplemental information regarding plan of distribution (conflicts
of interest); secondary markets (if any).” Thereafter, if UBS Securities LLC or an affiliate makes secondary markets in the
securities, it will do so at prices that reflect our estimated value determined by reference to our internal pricing models at
that time. The temporary positive differential relative to our internal pricing
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
|
models arises from requests from and arrangements
made by UBS Securities LLC with the selling agents of structured debt securities such as the securities. As described above, UBS
Securities LLC and its affiliates are not required to make a market for the securities and may stop making a market at any time.
The price at which UBS Securities LLC or an affiliate may make secondary markets at any time (if at all) will also reflect its
then current bid-ask spread for similar sized trades of structured debt securities. UBS Securities LLC reflects this temporary
positive differential on its customer statements. Investors should inquire as to the valuation provided on customer account statements
provided by unaffiliated dealers.
|
|
|
o
|
Price of securities prior to maturity. The market price of the securities will be influenced
by many unpredictable and interrelated factors, including the price of the underlying equity; the volatility of the underlying
equity; the dividend rate paid on the underlying equity; the time remaining to the maturity of the securities; interest rates in
the markets; geopolitical conditions and economic, financial, political, force majeure and regulatory or judicial events; the creditworthiness
of UBS and the then current bid-ask spread for the securities.
|
|
|
o
|
Impact of fees and the use of internal funding rates rather than secondary market credit spreads
on secondary market prices. All other things being equal, the use of the internal funding rates described above under “—Fair
value considerations” as well as the inclusion in the issue price of the underwriting discount, hedging costs, issuance costs
and any projected profits are, subject to the temporary mitigating effect of UBS Securities LLC’s and its affiliates’
market making premium, expected to reduce the price at which you may be able to sell the securities in any secondary market.
|
|
|
§
|
There can be no assurance that the investment view implicit in the securities will be successful.
It is impossible to predict whether the price of the underlying equity will rise or fall. The price of the underlying equity will
be influenced by complex and interrelated political, economic, financial and other factors that affect the underlying equity. You
should be willing to accept the downside risks of owning equities in general and the underlying equity in particular, and to assume
the risk that, if the securities are not redeemed early, you may lose some or all of your initial investment.
|
|
|
§
|
Potential conflicts of interest. We and our affiliates may engage in business related to
the underlying equity, which may present a conflict between our obligations as issuer and you, as a holder of the securities. There
are also potential conflicts of interest between you and the calculation agent, which will be an affiliate of UBS. The calculation
agent will determine the initial price, the final price and whether the closing price of the underlying equity on any determination
date is equal to or greater than the call threshold level (other than on the final determination date) or is less than the downside
threshold level on the final determination date. Determinations made by the calculation agent, including with respect to the occurrence
or non-occurrence of market disruption events, may affect the payout to you at maturity or whether the securities are redeemed
early. As UBS determines the economic terms of the securities, including the interest payment, call threshold level and downside
threshold level, and such terms include the underwriting discount, hedging costs, issuance and other costs and projected profits,
the securities represent a package of economic terms. There are other potential conflicts of interest insofar as an investor could
potentially get better economic terms if that investor entered into exchange-traded and/or OTC derivatives or other instruments
with third parties, assuming that such instruments were available and the investor had the ability to assemble and enter into such
instruments. Furthermore, given that UBS Securities LLC and its affiliates temporarily maintain a market making premium, it may
have the effect of discouraging UBS Securities LLC and its affiliates from recommending sale of your securities in the secondary
market.
|
|
|
|
In addition, we
or one of our affiliates may enter into swap agreements or related hedging activities with the dealer or its affiliates in connection
with the securities, which could cause the economic interests of UBS, the dealer or our or their respective affiliates to be adverse
to your interests as an investor in the securities. If the dealer or any of its affiliates conduct hedging activities for us or
our affiliate in connection with the securities and earns profits in connection with such hedging activities, such profit will
be in addition to the underwriting compensation it receives for the sale of the securities to you. You should be aware that the
potential to receive compensation both for hedging activities and sales may create a further incentive for the dealer to sell the
securities to you.
|
|
|
§
|
No affiliation with the underlying equity issuer. The underlying equity issuer is not an
affiliate of ours, is not involved with the offering in any way, and has no obligation to consider your interests in taking any
corporate actions that might affect the value of the securities. We have not made any due diligence inquiry with respect to the
underlying equity in connection with the offering.
|
|
|
§
|
We may engage in business with or involving the underlying equity issuer without regard to your
interests. We or our affiliates may presently or from time to time engage in business with the underlying equity issuer without
regard to your interests and thus may acquire non-public information about the underlying equity. Neither we nor any of our affiliates
undertakes to disclose any such information to you. In addition, we or our affiliates from time to time have published and in the
future may publish research reports with respect to the underlying equity, which may or may not recommend that investors buy or
hold the underlying equity.
|
|
|
§
|
Potential UBS impact on an underlying equity. Trading or transactions by UBS or its affiliates
in the underlying equity, listed and/or over the counter options, futures, exchange-traded funds or other instruments with return
linked to the performance of the underlying equity, may adversely affect the market price(s) or level(s) of the underlying equity
on the pricing date, any determination date or on the final determination date and, therefore, the market value of the securities
and any payout to you on the securities.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
§
|
The antidilution protection of the underlying equity is limited and may be discretionary.
The calculation agent may make adjustments to the initial price, exchange ratio, downside threshold level, call threshold level,
the final price and/or any other term of the securities, for certain corporate events affecting the underlying equity. However,
the calculation agent will not make an adjustment in response to all events that could affect the underlying equity. If an event
occurs that does not require the calculation agent to make an adjustment, the value of, and the amount payable on, the securities
may be materially and adversely affected. You should also be aware that the calculation agent may make adjustments in response
to events that are not described in the accompanying product supplement to account for any diluting or concentrative effect, but
the calculation agent is under no obligation to do so or to consider your interests as a holder of the securities in making these
determinations.
|
|
|
§
|
Hedging and trading activities by the calculation agent and its affiliates could potentially
affect the value of, and the amount payable on, the securities. The hedging or trading activities of the issuer’s affiliates
and of any other hedging counterparty with respect to the securities on or prior to the strike date and prior to maturity could
adversely affect the value of, and the amount payable on, the securities. These hedging or trading activities on or prior to the
strike date could potentially affect the initial price and, as a result, could adversely affect the downside threshold level and
exchange ratio. Additionally, these hedging or trading activities during the term of the securities could potentially affect the
price of the underlying equity on the determination dates and, accordingly, whether the securities are redeemed early and, if the
securities are not called prior to maturity, the payout to you at maturity. It is possible that these hedging or trading activities
could result in substantial returns for us or our affiliates while the value of the securities declines.
|
|
|
§
|
The securities are not bank deposits. An investment in the securities carries risks which
are very different from the risk profile of a bank deposit placed with UBS or its affiliates. The securities have different yield
and/or return, liquidity and risk profiles and would not benefit from any protection provided to deposits.
|
|
|
§
|
If UBS experiences financial difficulties, FINMA has the power to open restructuring or liquidation
proceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings or measures may have a material
adverse effect on the terms and market value of the securities and/or the ability of UBS to make payments thereunder. The Swiss
Financial Market Supervisory Authority (“FINMA”) has broad statutory powers to take measures and actions in relation
to UBS if (i) it concludes that there is justified concern that UBS is over-indebted or has serious liquidity problems or (ii)
UBS fails to fulfill the applicable capital adequacy requirements (whether on a standalone or consolidated basis) after expiry
of a deadline set by FINMA. If one of these pre-requisites is met, FINMA is authorized to open restructuring proceedings or liquidation
(bankruptcy) proceedings in respect of, and/or impose protective measures in relation to, UBS. The Swiss Banking Act grants significant
discretion to FINMA in connection with the aforementioned proceedings and measures. In particular, a broad variety of protective
measures may be imposed by FINMA, including a bank moratorium or a maturity postponement, which measures may be ordered by FINMA
either on a stand-alone basis or in connection with restructuring or liquidation proceedings. The resolution regime of the Swiss
Banking Act is further detailed in the FINMA Banking Insolvency Ordinance (“BIO-FINMA”). In a restructuring proceeding,
FINMA, as resolution authority, is competent to approve the resolution plan. The resolution plan may, among other things, provide
for (a) the transfer of all or a portion of UBS’ assets, debts, other liabilities and contracts (which may or may not include
the contractual relationship between UBS and the holders of securities) to another entity, (b) a stay (for a maximum of two business
days) on the termination of contracts to which UBS is a party, and/or the exercise of (w) rights to terminate, (x) netting rights,
(y) rights to enforce or dispose of collateral or (z) rights to transfer claims, liabilities or collateral under contracts to which
UBS is a party, (c) the conversion of UBS’ debt and/or other obligations, including its obligations under the securities,
into equity (a “debt-to-equity” swap), and/or (d) the partial or full write-off of obligations owed by UBS (a “write-off”),
including its obligations under the securities. The BIO-FINMA provides that a debt-to-equity swap and/or a write-off of debt and
other obligations (including the securities) may only take place after (i) all debt instruments issued by UBS qualifying as additional
tier 1 capital or tier 2 capital have been converted into equity or written-off, as applicable, and (ii) the existing equity of
UBS has been fully cancelled. While the BIO-FINMA does not expressly address the order in which a write-off of debt instruments
other than debt instruments qualifying as additional tier 1 capital or tier 2 capital should occur, it states that debt-to-equity
swaps should occur in the following order: first, all subordinated claims not qualifying as regulatory capital; second, all other
claims not excluded by law from a debt-to-equity swap (other than deposits); and third, deposits (in excess of the amount privileged
by law). However, given the broad discretion granted to FINMA as the resolution authority, any restructuring plan in respect of
UBS could provide that the claims under or in connection with the securities will be partially or fully converted into equity or
written-off, while preserving other obligations of UBS that rank pari passu with, or even junior to, UBS’ obligations under
the securities. Consequently, holders of securities may lose all or some of their investment in the securities. In the case of
restructuring proceedings with respect to a systemically important Swiss bank (such as UBS), the creditors whose claims are affected
by the restructuring plan will not have a right to vote on, reject, or seek the suspension of the restructuring plan. In addition,
if a restructuring plan has been approved by FINMA, the rights of a creditor to seek judicial review of the restructuring plan
(e.g., on the grounds that the plan would unduly prejudice the rights of holders of securities or otherwise be in violation of
the Swiss Banking Act) are very limited. In particular, a court may not suspend the implementation of the restructuring plan. Furthermore,
even if a creditor successfully challenges the restructuring plan, the court can only require the relevant creditor to be compensated
ex post and there is currently no guidance as to on what basis such compensation would be calculated or how it would be funded.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
§
|
Uncertain tax treatment. Significant aspects of the tax treatment of the securities are
uncertain. You should consult your tax advisor about your tax situation. See “Tax Considerations” herein and “Material
U.S. Federal Income Tax Consequences”, including the section “— Securities Treated as Investment Units Containing
a Debt Instrument and a Put Option Contract”, in the accompanying product supplement.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Information about the Underlying Equity
Amazon.com, Inc.
According to publicly available information,
Amazon.com, Inc. (“Amazon”) is an online retail company offering a variety of products sold by Amazon and third parties.
Amazon also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs and Echo. Information
filed by Amazon with the SEC can be located by reference to its SEC file number: 000-22513, or its CIK Code: 0001018724. Amazon’s
common stock is listed on the Nasdaq Global Select Market under the ticker symbol “AMZN.”
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 any underlying
equity.
Information as of market close on June 1, 2020:
|
Bloomberg Ticker Symbol:
|
AMZN UW <Equity>
|
52 Week High (on May 20, 2020):
|
$2,497.94
|
|
Current Stock Price:
|
$2,471.04
|
52 Week Low (on March 12, 2020):
|
$1,676.61
|
|
52 Weeks Ago (on May 31, 2019):
|
$1,775.07
|
|
|
All disclosures contained in this document
regarding the underlying equity are derived from publicly available information. UBS has not conducted any independent review or
due diligence of any publicly available information with respect to the underlying equity. You should make your own investigation
into the underlying equity.
The underlying equity is registered under
the Exchange Act. Companies with securities registered under the Exchange Act are required to file financial and other information
specified by the SEC periodically. Information filed by the underlying equity issuer with the SEC can be reviewed electronically
through a website maintained by the SEC. The address of the SEC’s website is http://www.sec.gov. Information filed with the
SEC by the underlying equity issuer under the Exchange Act can be located by reference to its SEC file number provided below. In
addition, information filed with the SEC can be inspected and copied at the Public Reference Section of the SEC, 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. Copies of this material can also be obtained from the Public Reference Section, at prescribed
rates.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Historical Information
The table below sets forth the published
high and low closing prices, as well as end-of-quarter closing price, of the underlying equity for the specified period. The closing
price of the underlying equity on June 1, 2020 was $2,471.04 (the “hypothetical initial price”). The associated graph
shows the closing prices of the underlying equity for each day from January 1, 2010 to June 1, 2020. The dotted lines represent
a hypothetical downside threshold level of $1,976.83 and a hypothetical call threshold level of $2,471.04, which are equal to 80.00%
and 100.00%, respectively, of the hypothetical initial price. The actual downside threshold level and call threshold level will
be set on the strike date. We obtained the information in the table below from Bloomberg Professional® service (“Bloomberg”),
without independent verification. The closing prices may be adjusted by Bloomberg for corporate actions such as stock splits, public
offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy. UBS has not undertaken an independent review or due
diligence of any publicly available information obtained from Bloomberg. The historical performance of the underlying equity
should not be taken as an indication of its future performance, and no assurance can be given as to the price of the underlying
equity at any time, including the determination dates.
|
Amazon.com, Inc.
|
High
|
Low
|
Period End
|
|
2016
|
|
|
|
|
First Quarter
|
$636.99
|
$482.07
|
$593.64
|
|
Second Quarter
|
$728.24
|
$586.14
|
$715.62
|
|
Third Quarter
|
$837.31
|
$725.68
|
$837.31
|
|
Fourth Quarter
|
$844.36
|
$719.07
|
$749.87
|
|
2017
|
|
|
|
|
First Quarter
|
$886.54
|
$753.67
|
$886.54
|
|
Second Quarter
|
$1,011.34
|
$884.67
|
$968.00
|
|
Third Quarter
|
$1,052.80
|
$938.60
|
$961.35
|
|
Fourth Quarter
|
$1,195.83
|
$957.10
|
$1,169.47
|
|
2018
|
|
|
|
|
First Quarter
|
$1,598.39
|
$1,189.01
|
$1,447.34
|
|
Second Quarter
|
$1,750.08
|
$1,371.99
|
$1,699.80
|
|
Third Quarter
|
$2,039.51
|
$1,693.96
|
$2,003.00
|
|
Fourth Quarter
|
$2,004.36
|
$1,343.96
|
$1,501.97
|
|
2019
|
|
|
|
|
First Quarter
|
$1,819.26
|
$1,500.28
|
$1,780.75
|
|
Second Quarter
|
$1,962.46
|
$1,692.69
|
$1,893.63
|
|
Third Quarter
|
$2,020.99
|
$1,725.45
|
$1,735.91
|
|
Fourth Quarter
|
$1,869.80
|
$1,705.51
|
$1,847.84
|
|
2020
|
|
|
|
|
First Quarter
|
$2,170.22
|
$1,676.61
|
$1,949.72
|
|
Second Quarter (through June 1, 2020)
|
$2,497.94
|
$1,906.59
|
$2,471.04
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
This document relates only to the
securities offered hereby and does not relate to the underlying equity or other securities linked to the underlying equity. We
have derived all disclosures contained in this document regarding the underlying equity from the publicly available documents described
in the preceding paragraphs. In connection with the offering of the securities, neither we nor the agent has participated in the
preparation of such documents or made any due diligence inquiry with respect to the underlying equity.
Neither the issuer nor any of its affiliates makes any
representation to you as to the performance of the underlying equity.
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
Additional Information about the Securities
Please read this information in conjunction with the summary
terms on the front cover of this document.
|
Additional Provisions:
|
|
|
Record date:
|
The record date for each interest payment date shall be the date one business day prior to such scheduled interest payment date.
|
|
Trustee:
|
U.S. Bank Trust National Association
|
|
Calculation agent:
|
UBS Securities LLC
|
|
Tax considerations:
|
The U.S. federal income tax consequences of your investment in the securities 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 securities. 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 Investment Units Containing a Debt Instrument and a Put Option Contract”, in the accompanying product supplement and to discuss the tax consequences of your particular situation with your tax advisor. This discussion is based upon the 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 Securities, and the following discussion is not binding on the IRS.
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|
|
U.S. Tax Treatment. Pursuant to
the terms of the securities, 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 each security as an investment unit consisting of a non-contingent debt instrument
and a put option contract in respect of the underlying equity. The terms of the securities require (in the absence of an absence
of a statutory or regulatory change or an administrative determination or judicial ruling to the contrary) that you treat your
securities for U.S. federal income tax purposes as consisting of two components:
Debt component — We intend
to treat the debt component as having a term of one year or less, so that the amounts treated as interest on the debt component
would be subject to the general rules governing interest payments on short-term notes and would be required to be accrued by accrual-basis
taxpayers (and cash-basis taxpayers who elect to accrue interest currently) on either the straight-line method, or, if elected,
the constant yield method, compounded daily. Cash-basis taxpayers who do not elect to accrue interest currently would include interest
in income upon receipt of such interest.
Put option component — The
put option component would generally not be taxed until the taxable disposition of the securities. At such time, the put option
component either would be taxed as a short-term capital gain if the stated principal amount is repaid in cash or would reduce the
basis of any shares of the underlying equity if you receive the exchange ratio (unless such receipt of shares is treated as a taxable
settlement of the securities, in which case the put option component will be included in the amount realized when determining gain
or loss on such taxable settlement, as described below).
With respect to interest payments
you receive, you agree to treat such payments as consisting of interest on the debt component and a payment with respect to the
put option as follows:
|
|
|
Interest Rate
|
Interest on Debt Component
|
Put Option Component
|
|
|
8.10% per annum
|
[n]% per annum
|
[n]% per annum
|
|
|
This discussion does not address the U.S. federal income tax consequences to you of holding or disposing of any shares of the underlying equity that you may receive in connection with your investment in the securities. If you receive a number of shares of the underlying equity equal to the exchange ratio, certain adverse U.S. federal income (and other) tax consequences might apply to you. In general, your holding period in shares of the underlying equity received in connection with your investment in the securities will begin the day after you beneficially receive such shares. The IRS may treat the receipt of shares at maturity as a taxable settlement of the security followed by a purchase of the shares of the underlying equity pursuant to the original terms of the securities. If the receipt of shares of the underlying equity is so treated, (i) you should recognize capital gain or loss equal to the fair market value of the shares received at such time plus the cash you receive in lieu of a fractional share and the cash previously received (and not included in income) in respect of the put option component), if any, and the amount you paid for your security, and (ii) you should take a basis in
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
such shares in an amount equal to their fair market value at such time. You should refer to information filed with the SEC or another governmental authority by the underlying equity issuer and consult your tax advisor regarding possible tax consequences to you of acquiring, holding or otherwise disposing of the underlying equity.
|
|
|
Based on certain factual representations received from us, our counsel, Cadwalader, Wickersham & Taft LLP, is of the opinion that it would be reasonable to treat your securities in the manner described above. However, because there is no authority that specifically addresses the tax treatment of the securities, it is possible that your securities 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 securities could differ materially and adversely from the treatment described above, as described further under “Material U.S. Federal Income Tax Consequences”, including the section “—Securities Treated as Investment Units Containing a Debt Instrument and a Put Option Contract”, in the accompanying product supplement.
|
|
|
Except to the extent otherwise required by law, UBS intends to treat your securities for U.S. federal income tax purposes in accordance with the treatment described above and under “Material U.S. Federal Income Tax Consequences”, including the section “—Securities Treated as Investment Units Containing a Debt Instrument and a Put Option Contract”, in the accompanying product supplement unless and until such time as the IRS and the Treasury determine that some other treatment is more appropriate.
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|
|
Notice 2008-2. In 2007, the IRS released a notice that may affect the taxation of holders of the securities. According to Notice 2008-2, the IRS and the Treasury are actively considering the appropriate tax treatment of holders of certain types of structured notes. Legislation has also been proposed in Congress that would require the holders of certain prepaid forward contracts to accrue income during the term of the transaction. It is not clear whether the Notice applies to instruments such as the securities. Furthermore, it is not possible to determine what guidance or legislation will ultimately result, if any, and whether such guidance or legislation will affect the tax treatment of the securities.
|
|
|
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 securities, 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), $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 securities.
|
|
|
Non-U.S. Holders. If you are a non U.S. holder, subject to Section 871(m) of the Code and “FATCA,” discussed below, you should generally not be subject to U.S. withholding tax with respect to payments on your securities or to generally applicable information reporting and backup withholding requirements with respect to payments on your securities if you comply with certain certification and identification requirements as to your non U.S. status (by providing us (and/or the applicable withholding agent) with a fully completed and validly executed applicable IRS Form W-8). Subject to Section 897 of the Code and Section 871(m) of the Code, discussed below, gain realized from the taxable disposition of a security 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.
|
|
|
If the securities are physically settled by delivery to you of a number of shares of the underlying equity equal to the exchange ratio, you may suffer adverse U.S. federal income tax consequences if you hold such shares of the underlying equity. You may be subject to U.S. withholding tax on U.S.-source dividends in respect of such underlying equity that you hold. Other adverse tax consequences are possible. You should carefully review the potential tax consequences to “non-U.S. holders” that are set forth in the prospectus for the underlying equity.
|
|
|
Section 897. We will not attempt to ascertain whether the underlying equity issuer would be treated as a
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
“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 securities should be treated as “United States real property interests”
(“USRPI”) as defined in Section 897 of the Code. If the underlying equity issuer and the securities 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 security upon a taxable disposition of the security 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 the underlying equity issuer as a USRPHC and the securities 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. 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 securities are not “delta-one” with respect to the underlying equity, our counsel is of the opinion that the securities 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 securities. If withholding is required, we will not make payments of any additional amounts.
|
|
|
Nevertheless, after issuance, it is possible that your securities could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the underlying equity or your securities, and following such occurrence your securities 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 securities under these rules if you enter, or have entered, into certain other transactions in respect of the underlying equity or the securities. If you enter, or have entered, into other transactions in respect of the underlying equity or the securities, you should consult your tax advisor regarding the application of Section 871(m) of the Code to your securities in the context of your other transactions.
|
|
|
Because of the uncertainty regarding the application of the 30% withholding tax on dividend equivalents to the securities, 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 securities.
|
|
|
Foreign Account Tax Compliance Act. Legislation commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”) generally imposes a withholding tax of 30% on payments to certain non-U.S. entities (including financial intermediaries) with respect to certain financial instruments, unless various U.S. information reporting and due diligence requirements have been satisfied. An intergovernmental agreement between the U.S. and the non-U.S. entity’s jurisdiction may modify these requirements. This legislation generally applies to certain financial instruments that are treated as paying U.S.-source interest or other U.S.-source “fixed or determinable annual or periodical” income (“FDAP income”). Withholding (if applicable) applies to payments of U.S.-source FDAP income but, pursuant to certain Treasury regulations and IRS guidance, does not apply to payments of gross proceeds on the disposition (including upon retirement) of financial instruments. As the treatment of the securities is unclear, it is possible that any interest payment with respect to the securities could be subject to the FATCA rules. If withholding applies to the securities, we will not be required to pay any additional amounts with respect to amounts withheld. Both U.S. and non-U.S. holders should consult their tax advisors regarding the potential application of FATCA to the securities.
|
|
|
Proposed Legislation. In 2007, legislation was proposed in Congress that, if it had been enacted, would have required accrual of income on certain prepaid forward contracts prior to maturity.
|
|
|
|
Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
|
|
$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
|
|
|
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 put option component of the securities 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 securities. You are urged to consult your tax advisor regarding the possible changes in law and their possible impact on the tax treatment of your securities.
|
|
|
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 securities arising under the laws of any state, local, non-U.S. or other taxing jurisdiction.
|
|
Use of proceeds and hedging:
|
We will use the net proceeds we receive from the sale of the securities for the purposes we describe in the accompanying prospectus under “Use of Proceeds and Hedging.” We and/or our affiliates may also use those proceeds in transactions intended to hedge our obligations under the securities as described below.
|
|
|
In connection with the sale of the securities, we and/or our affiliates may enter into hedging transactions involving the execution of long-term or short-term interest rate swaps, futures and option transactions or purchases and sales of securities before, on and after the strike date of the securities. From time to time, we and/or our affiliates may enter into additional hedging transactions or unwind those we have entered into. In addition, we or one of our affiliates may enter into swap agreements or related hedging activities with the dealer or its affiliates.
|
|
|
We and/or our affiliates may acquire a long or short position in securities similar to the securities from time to time and may, in our or their sole discretion, hold or resell those securities.
|
|
|
The hedging activity discussed above may adversely affect the market value of the securities from time to time and payment on the securities, including any payment at maturity. See “Risk Factors” beginning on page 10 of this document for a discussion of these adverse effects.
|
|
Supplemental information regarding plan of
distribution (conflicts of interest); secondary markets (if any):
|
Pursuant to the terms of a distribution agreement, UBS will agree to sell to UBS Securities LLC, and UBS Securities LLC will agree to purchase from UBS, the stated principal amount of the securities specified on the front cover of this document at the price to public less a fee of $20.00 per $10,000.00 stated principal amount of securities. UBS Securities LLC will agree to resell all of the securities to Morgan Stanley Wealth Management with an underwriting discount of $20.00 reflecting a fixed structuring fee of $10.00 and a fixed sales commission of $10.00 per $10,000.00 stated principal amount of securities that Morgan Stanley Wealth Management sells.
|
|
|
UBS, UBS Securities LLC or any other affiliate of UBS may use this document, the accompanying product supplement and the accompanying prospectus in a market-making transaction for any securities after their initial sale. In connection with the offering, UBS, UBS Securities LLC, any other affiliate of UBS or any other securities dealers may distribute this document, the accompanying product supplement and the accompanying prospectus electronically. Unless UBS or its agent informs the purchaser otherwise in the confirmation of sale, this document, the accompanying product supplement and the accompanying prospectus are being used in a market-making transaction.
|
|
|
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 underwriting discount) from the initial public offering of the securities and, thus creates an additional conflict of interest within the meaning of FINRA Rule 5121. UBS Securities LLC is not permitted to sell securities in this offering to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
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UBS Securities LLC and its affiliates may offer to buy or sell the securities in the secondary market (if any) at prices greater than UBS’ internal valuation — The value of the securities 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 securities immediately after the pricing date in the secondary market is expected to exceed the estimated initial value of the securities 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 weeks after the pricing 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 are not required to make a market for the securities and may stop making a market at any time. For more information about secondary market offers and the estimated
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Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
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$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
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estimated initial value of
the securities, see “Risk Factors — Fair value considerations” and “— Limited or no secondary market
and secondary market price considerations” beginning on page 11 of this document.
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Prohibition of sales to EEA retail investors:
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The securities 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 securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
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Buffered Income Auto-Callable Securities with Downside Leverage due on or about June 8, 2021
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$n Based on the Performance of the Common Stock of Amazon.com, Inc.
Principal at Risk Securities
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You should rely only on the information
incorporated by reference or provided in this preliminary pricing supplement, the accompanying product 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 preliminary pricing supplement
is accurate as of any date other than the date on the front of the document.
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TABLE OF CONTENTS
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Preliminary Pricing Supplement
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Summary Terms
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1
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Additional Information about UBS and the Securities
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2
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Investment Summary
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3
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Key Investment Rationale
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4
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Investor Suitability
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5
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How the Securities Work
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6
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Hypothetical Examples
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7
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Risk Factors
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10
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Information about the Underlying Equity
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15
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Historical Information
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16
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Additional Information about the Securities
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18
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Product Supplement
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Product Supplement Summary
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PS-1
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Specific Terms of Each Security Will Be Described in the Applicable Supplements
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PS-1
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The Securities are Part of a Series
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PS-1
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Denomination
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PS-2
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Coupons
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PS-2
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Early Redemption
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PS-3
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Payment at Maturity for the Securities
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PS-3
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Defined Terms Relating to Payment on the Securities
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PS-4
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Valuation Dates
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PS-5
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Valuation Periods
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PS-6
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Payment Dates
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PS-6
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Closing Level
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PS-7
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Intraday Level
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PS-7
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What are the Tax Consequences of the Securities?
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PS-8
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Risk Factors
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PS-9
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General Terms of the Securities
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PS-29
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Use of Proceeds and Hedging
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PS-52
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Material U.S. Federal Income Tax Consequences
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PS-53
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Certain ERISA Considerations
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PS-75
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Supplemental Plan of Distribution (Conflicts of Interest)
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PS-76
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Prospectus
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Introduction
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1
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Cautionary Note Regarding Forward-Looking Statements
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3
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Incorporation of Information About UBS AG
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5
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Where You Can Find More Information
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6
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Presentation of Financial Information
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7
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Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
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7
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UBS
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8
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Swiss Regulatory Powers
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11
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Use of Proceeds
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12
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Description of Debt Securities We May Offer
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13
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Description of Warrants We May Offer
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33
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Legal Ownership and Book-Entry Issuance
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48
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Considerations Relating to Indexed Securities
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53
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Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
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56
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U.S. Tax Considerations
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59
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Tax Considerations Under the Laws of Switzerland
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70
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Benefit Plan Investor Considerations
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72
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Plan of Distribution
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74
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Conflicts of Interest
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75
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Validity of the Securities
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76
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Experts
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76
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$•
UBS AG
Buffered Income Auto-Callable Securities
with Downside Leverage
due on or about June 8, 2021
Preliminary Pricing Supplement dated June 2, 2020
(To Product Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Securities LLC
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