Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-225551
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UBS AG
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$2,688,000
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Capped Leveraged Buffered S&P 500® Index-Linked Medium-Term Notes due June 30, 2021
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The notes do not bear interest. The amount that you will
be paid on your notes on the stated maturity date (June 30, 2021) is based on the performance of the S&P 500®
Index as measured from the trade date (May 26, 2020) to and including the determination date (June 28, 2021). If the final underlier
level on the determination date is greater than the initial underlier level of 2,991.77, the return on your notes will be positive,
subject to the maximum settlement amount of $1,144.48 for each $1,000 face amount of your notes. If the final underlier level declines
by up to 10.00% from the initial underlier level, you will receive the face amount of your notes. If the final underlier level
declines by more than 10.00% from the initial underlier level, the return on your notes will be negative. Specifically, you will
lose approximately 1.1111% for every 1% negative underlier return below the buffer level of 90.00% of the initial underlier level.
You could lose your entire investment in the notes.
To determine your cash settlement amount, we will calculate
the underlier return, which is the percentage increase or decrease in the final underlier level from the initial underlier level.
On the stated maturity date, for each $1,000 face amount of your notes, you will receive an amount in cash equal to:
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if the underlier return is positive (the final underlier level is greater than the initial underlier level),
the sum of (i) $1,000 plus (ii) the product of (a) $1,000 times (b) the upside
participation rate of 140.00% times (c) the underlier return, subject to the maximum settlement amount;
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if the underlier return is zero or negative but not below -10.00% (the final underlier level is equal
to or less than the initial underlier level but not by more than 10.00%), $1,000; or
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if the underlier return is negative and is below -10.00% (the final underlier level is less than the initial
underlier level by more than 10.00%), the sum of (i) $1,000 plus (ii) the product of (a) approximately 111.11%
times (b) the sum of the underlier return plus 10.00% times (c) $1,000.
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Your investment in the notes involves certain risks, including,
among other things, our credit risk. See “Additional Risk Factors Specific To Your Notes” beginning on page 10 of this
pricing supplement. You should read the additional disclosure herein so that you may better understand the terms and risks
of your investment.
The estimated initial value of the notes as of the trade
date is $992.80 per $1,000 face amount. The estimated initial value of the notes was determined as of the close of the relevant
markets 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 notes, see “Additional Risk Factors Specific
To Your Notes — Fair Value Considerations” and “Additional Risk Factors Specific To Your Notes — Limited
or No Secondary Market and Secondary Market Price Considerations” beginning on page 11 of this pricing supplement.
Original issue date:
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June 2, 2020
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Original issue price:
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100.00% of the face amount
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Underwriting discount1:
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0.00% of the face amount
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Net proceeds to the issuer1:
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100.00% of the face amount
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1 See “Supplemental plan of distribution
(conflicts of interest); secondary markets (if any)” herein for additional information.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these notes or passed upon the accuracy or adequacy of this pricing supplement,
the accompanying product supplement, the accompanying index supplement or the accompanying prospectus. Any representation to the
contrary is a criminal offense. The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation
or any other governmental agency.
UBS Securities LLC
Pricing Supplement dated May 26, 2020
The issue price, underwriting discount and net proceeds listed
above relate to the notes we sell initially. We may decide to sell additional notes after the date of this pricing supplement,
at issue prices and with underwriting discounts and net proceeds that differ from the amounts set forth above. The return (whether
positive or negative) on your investment in the notes will depend in part on the issue price you pay for such notes.
UBS Securities LLC, our affiliate, will purchase the notes from
UBS for distribution to one or more registered broker dealers (“dealers”). UBS Securities LLC, the dealers or any of
their respective affiliates may use this pricing supplement in market-making transactions in notes after their initial sale. Unless
UBS, UBS Securities LLC, the dealers or any of their respective affiliates selling such notes to you informs you otherwise in the
confirmation of sale, this pricing supplement is being used in a market-making transaction. See “Supplemental plan of
distribution (conflicts of interest); secondary markets (if any)” in this pricing supplement and “Supplemental Plan
of Distribution (Conflicts of Interest)” in the accompanying product supplement.
SUMMARY INFORMATION
UBS has filed a registration statement (including a prospectus, as supplemented by a product supplement for the notes and an index supplement for various securities we may offer, including the notes), with the Securities and Exchange Commission, or SEC, for the offering to which this pricing supplement 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 without cost by visiting EDGAR on the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website is 0001114446.
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You may access these documents on the SEC website at www.sec.gov as follows:
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Underlier-Linked Notes product supplement dated November
1, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000091412118002089/ub46174527-424b2.htm
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Index Supplement dated October 31, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000091412118002083/ub46174419-424b2.htm
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Prospectus dated October 31, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000119312518314003/d612032d424b3.htm
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References to “UBS,” “we,” “our” and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this pricing supplement, “notes” refer to the Capped Leveraged Buffered S&P 500® Index-Linked Medium-Term Notes that are offered hereby, unless the context otherwise requires. Also, references to the “accompanying product supplement” mean the UBS Underlier-Linked Notes product supplement, dated November 1, 2018, references to the “accompanying index supplement” mean the UBS index supplement dated October 31, 2018 and references to the “accompanying prospectus” mean the UBS prospectus titled “Debt Securities and Warrants,” dated October 31, 2018.
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This pricing supplement, together with the documents listed above, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Additional Risk Factors Specific To Your Notes” beginning on page 10 and in “Risk Factors” on page PS-31 in the accompanying product supplement, as the notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax and other advisors before deciding to invest in the notes.
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UBS reserves the right to change the terms of, or reject
any offer to purchase, the notes prior to their issuance. In the event of any changes to the terms of the notes, 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.
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INVESTOR SUITABILITY
The notes may be suitable for you if:
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You fully understand the risks inherent in an investment in the notes, including the risk of loss of your entire initial investment.
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You can tolerate a loss of all or a substantial portion of your investment and are willing to make an investment that may have
the full downside market risk of an investment in the stocks comprising the underlier (the “underlier stocks”), subject
to the buffer level.
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You believe that the level of the underlier will appreciate over the term of the notes and that the final underlier level is
unlikely to exceed the cap level, which is 110.32% of the initial underlier level.
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You understand and accept that your return on the notes is limited by the maximum settlement amount and you are willing to
invest in the notes based on the maximum settlement amount of $1,144.48 for each $1,000.00 face amount of your notes.
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You can tolerate fluctuations in the price of the notes throughout their term that may be similar to or exceed the downside
fluctuations in the level of the underlier or the price of the underlier stocks.
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You do not seek guaranteed current income from your investment and are willing to forgo any dividends paid on the underlier
stocks.
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You are willing to hold the notes to maturity, a term of approximately 13 months, and accept that there may be little or no
secondary market for the notes.
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You are willing to assume the credit risk of UBS for all payments under the notes, and understand that if UBS defaults on its
obligations you may not receive any amounts due to you including any repayment of principal.
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You understand that the estimated initial value of the notes 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 notes, the price (not including their
customary bid-ask spreads) will temporarily exceed the internal pricing model price.
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The notes may not be suitable for you if:
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You do not fully understand the risks inherent in an investment in the notes, including the risk of loss of your entire initial
investment.
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You require an investment designed to guarantee a full return of principal at maturity.
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You cannot tolerate a loss of all or a substantial portion of your investment or are not willing to make an investment that
may have the full downside market risk of an investment in the underlier or the underlier stocks, subject to the buffer level.
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You believe that the level of the underlier will decline during the term of the notes and the final underlier level will likely
be less than the initial underlier level by more than 10.00%, or you believe that the level of the underlier will appreciate over
the term of the notes and that the final underlier level is likely to exceed the cap level, which is 110.32% of the initial underlier
level.
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You seek an investment that has unlimited return potential without a cap on appreciation or you are unwilling to invest in
the notes based on the maximum settlement amount of $1,144.48 for each $1,000.00 face amount of your notes.
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You cannot tolerate fluctuations in the price of the notes throughout their term that may be similar to or exceed the downside
fluctuations in the level of the underlier or the price of the underlier stocks.
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You seek guaranteed current income from this investment or prefer to receive the dividends paid on the underlier stocks.
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You are unable or unwilling to hold the notes to maturity, a term of approximately 13 months, or you seek an investment for
which there will be an active secondary market.
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You are not willing to assume the credit risk of UBS for all payments under the notes.
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The investor suitability considerations identified above
are not exhaustive. Whether or not the notes are a suitable investment for you will depend on your individual circumstances and
you should reach an investment decision only after you and your investment, legal, tax, accounting and other advisors have carefully
considered the suitability of an investment in the notes in light of your particular circumstances. You should also review “Additional
Risk Factors Specific To Your Notes” in this pricing supplement and the more detailed “Risk Factors” in the accompanying
product supplement for risks related to an investment in the notes.
KEY
TERMS
Issuer: UBS AG London Branch
Underlier: S&P 500® Index (Bloomberg
symbol, “SPX” <Index>), as maintained by S&P Dow Jones Indices LLC (“S&P” or the “underlier
sponsor”)
Specified currency: U.S. dollars (“$”)
Terms to be specified in accordance with the accompanying
product supplement:
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type of notes: notes linked to a single underlier
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averaging dates: not applicable
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cap level: yes, as described below
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buffer level: yes, as described below
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interest: not applicable
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Face amount: Each note will have a face amount of
$1,000; $2,688,000.00 in the aggregate for all the offered notes; the aggregate face amount of the offered notes may be increased
if the issuer, at its sole option, decides to sell an additional aggregate face amount of the notes subsequent to the date of this
pricing supplement. The issue price, underwriting discount, and net proceeds of the notes in the subsequent sale may differ substantially
(higher or lower) from the original issue price you paid as provided on the cover of this pricing supplement. The return (whether
positive or negative) on your investment in the notes will depend in part on the issue price you pay for such notes.
Purchase at amount other than face amount: The amount
we will pay you at the stated maturity date for your notes will not be adjusted based on the issue price you pay for your notes,
so if you acquire notes at a premium (or discount) to face amount and hold them to the stated maturity date, it could affect your
investment in a number of ways. The return on your investment in such notes will be lower (or higher) than it would have been had
you purchased the notes at face amount. Also, the stated buffer level would not offer the same measure of protection to your investment
as would be the case if you had purchased the notes at face amount. Additionally, the cap level would be triggered at a lower (or
higher) percentage return than indicated below, relative to your initial investment. See “Additional Risk Factors Specific
To Your Notes — If You Purchase Your Notes at a Premium to Face Amount, the Return on Your Investment Will Be Lower Than
the Return on Notes Purchased at Face Amount and the Impact of Certain Key Terms of the Notes Will be Negatively Affected”
in this pricing supplement.
Supplemental discussion of U.S. federal income tax consequences:
You will be obligated pursuant to the terms of the notes — in the absence of a statutory or regulatory change or an administrative
determination or a judicial ruling to the contrary — to characterize each note for all tax purposes as a prepaid derivative
contract in respect of the underlier, as described under “Material U.S. Federal Income Tax Consequences” in the accompanying
product supplement. Pursuant to this approach, based on certain factual representations received from us, our counsel, Cadwalader,
Wickersham & Taft LLP, is of the opinion that upon the taxable disposition of your notes, it would be reasonable for you to
recognize capital gain or loss equal to the difference, if any, between the amount of cash you receive at such time and your tax
basis in your notes. The U.S. Internal Revenue Service (the “IRS”) might not agree with this treatment, however, in
which case, the timing and character of income or loss on your note could be materially and adversely affected.
A 30% withholding tax (which may be reduced by an applicable
income tax treaty) is imposed under Section 871(m) of the Internal Revenue Code of 1986, as amended (the “Code”) on
certain “dividend equivalents” paid or deemed paid to a non-U.S. holder with respect to a “specified equity-linked
instrument” that references one or more dividend-paying U.S. equity securities or indices containing U.S. equity securities.
The withholding tax can apply even if the instrument does not provide for payments that reference dividends. U.S. Treasury Department
(the “Treasury”) regulations provide that the withholding tax applies to all dividend equivalents paid or deemed paid
on specified equity-linked instruments that have a delta of one (“delta-one specified equity-linked instruments”) issued
after 2016 and to all dividend equivalents paid or deemed paid on all other specified equity-linked instruments issued after 2018.
However, the IRS has issued guidance that states that the Treasury and the IRS intend to amend the effective dates of the Treasury
regulations to provide that withholding on dividend equivalents paid or deemed paid will not apply to specified equity-linked instruments
that are not delta-one specified equity-linked instruments and are issued before January 1, 2023.
Based on our determination that the notes are not “delta-one”
with respect to the underlier or any U.S. underlier stocks, our counsel is of the opinion that the notes should not be delta-one
specified equity-linked instruments and thus should not be subject to withholding on dividend equivalents. Our determination is
not binding on the IRS, and the IRS may disagree with this determination. Furthermore, the application of Section 871(m) of the
Code will depend on our determinations made upon issuance of the notes. If withholding is required, we will not make payments of
any additional amounts.
Nevertheless, after issuance, it is possible that your notes
could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the underlier, underlier stocks
or your notes, and following such occurrence your notes could be treated as delta-one specified equity-linked instruments that
are subject to withholding on dividend equivalents. It is also possible that withholding tax or other tax under Section 871(m)
of the Code could apply to the notes under these rules if you enter, or have entered, into certain other transactions in respect
of the underlier, underlier stocks or the notes. If you enter, or have entered, into other transactions in respect of the underlier,
underlier stocks or the notes, you should consult your tax advisor regarding the application of Section 871(m) of the Code to your
notes in the context of your other transactions.
Because of the uncertainty regarding the application of the
30% withholding tax on dividend equivalents to the notes, you are urged to consult your tax advisor regarding the potential application
of Section 871(m) of the Code and the 30% withholding tax to an investment in the notes.
Pursuant to final and temporary Treasury regulations and
other IRS guidance, the withholding and reporting requirements under the Foreign Account Tax Compliance Act (“FATCA”)
generally apply to certain “withholdable payments” and will generally not apply to gross proceeds on a sale or disposition
and will generally apply to certain foreign passthru payments only to the extent that such payments are made after the date that
is two years after final regulations defining the term “foreign passthru payment” are published. We will not pay additional
amounts with respect to such withholding taxes discussed above. Foreign financial institutions and non-financial foreign entities
located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.
Subject to the paragraph above, you should read the discussion
under “Material U.S. Federal Income Tax Consequences — Foreign Account Tax Compliance Act” in the accompanying
product supplement and consult your tax advisor concerning the potential application of FATCA.
For more information about the tax consequences of an investment
in the notes, you should review carefully the section of the accompanying product supplement entitled “Material U.S. Federal
Income Tax Consequences”.
Cash settlement amount (on the stated maturity date):
For each $1,000 face amount of your notes, we will pay you on the stated maturity date an amount in cash equal to:
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if the final underlier level is greater than or equal to the cap level, the maximum settlement amount;
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if the final underlier level is greater than the initial underlier level but less than the cap level, the sum
of (1) $1,000 plus (2) the product of (i) $1,000 times (ii) the upside participation rate
times (iii) the underlier return;
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if the final underlier level is equal to or less than the initial underlier level but greater than or
equal to the buffer level, $1,000; or
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if the final underlier level is less than the buffer level, the sum of (1) $1,000 plus (2) the
product of (i) $1,000 times (ii) the buffer rate times (iii) the sum of the underlier
return plus the buffer amount.
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Initial underlier level: 2,991.77
Final underlier level: the closing level of the underlier
on the determination date, except in the limited circumstances described under “General Terms of the Notes — Market
Disruption Event — Consequences of a Market Disruption Event or a Non-Trading Day” and “General Terms of the
Notes — Discontinuance of or Adjustments to the Index Underlier or an Index Basket Underlier; Alteration of Method of Calculation”
in the accompanying product supplement
Underlier return: the quotient of (1) the
final underlier level minus the initial underlier level divided by (2) the initial underlier level, expressed
as a percentage
Upside participation rate: 140.00%
Cap level: 110.32% of the initial underlier level
Maximum settlement amount: $1,144.48
Buffer level: 2,692.593, which is 90.00% of the initial
underlier level
Buffer amount: 10.00%
Buffer rate: the quotient of the initial underlier
level divided by the buffer level, which equals approximately 111.11%
Trade date: May 26, 2020
Original issue date (settlement date): June 2, 2020
Determination date: June 28, 2021, subject to adjustment
as described under “General Terms of the Notes — Determination Date” in the accompanying product supplement.
Stated maturity date: June 30, 2021, subject to adjustment
as described under “General Terms of the Notes — Stated Maturity Date” in the accompanying product supplement,
provided, however, that if the determination date is postponed as provided under “Determination date” above, the stated
maturity date will be postponed by the same number of business day(s) from but excluding the originally scheduled determination
date to and including the actual determination date.
No interest: The offered notes do not bear interest.
No redemption: The offered notes will not be subject
to a redemption right or price dependent redemption right.
No listing: The offered notes will not be listed on
any securities exchange or interdealer quotation system.
Closing level: as described under “General Terms
of the Notes — Closing Level” in the accompanying product supplement
Business day: as described under “General Terms
of the Notes — Business Day” in the accompanying product supplement
Trading day: as described under “General Terms
of the Notes — Trading Day” in the accompanying product supplement
Use of proceeds and hedging: as described under “Use
of Proceeds and Hedging” in the accompanying product supplement
ERISA: as described under “ERISA Considerations”
in the accompanying product supplement
Supplemental plan of distribution (conflicts of interest);
secondary markets (if any): UBS has agreed to sell to UBS Securities LLC, and UBS Securities LLC has agreed to purchase from
UBS, the aggregate face amount of the notes specified on the front cover of this pricing supplement. UBS Securities LLC initially
offered the notes to certain unaffiliated securities dealers at the original issue price set forth on the cover page of this pricing
supplement. We or one of our affiliates will pay a fee to SIMON Markets LLC, a broker-dealer affiliated with Goldman Sachs &
Co. LLC, who is acting as a dealer in connection with the distribution of the notes.
We expect to deliver the notes against payment therefor in
New York, New York on June 2, 2020, which is the fifth business day following the date of this pricing supplement and of the pricing
of the notes. 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 any such trade expressly agree otherwise. Accordingly, purchasers
who wish to trade notes on any date prior to two business days before delivery will be required, by virtue of the fact that the
notes are initially expected to settle in five business days (T + 5), to specify alternative settlement arrangements to prevent
a failed settlement.
Conflicts of interest: UBS Securities
LLC is an affiliate of UBS and, as such, has a “conflict of interest” in the offering within the meaning of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds from the initial
public offering of the notes, thus creating an additional conflict of interest within the meaning of FINRA Rule 5121. Consequently,
the offering is being conducted in compliance with the provisions of FINRA Rule 5121.
UBS Securities LLC and its affiliates
may offer to buy or sell the notes in the secondary market (if any) at prices greater than UBS’ internal valuation:
The value of the notes at any time will vary based on many factors that cannot be predicted. However, the price (not including
UBS Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any affiliate would
offer to buy or sell the notes immediately after the trade date in the secondary market is expected to exceed the estimated initial
value of the notes as determined by reference to our internal pricing models. The amount of the excess will decline to zero on
a straight line basis over a period ending no later than 3 months after the trade date, provided that UBS Securities LLC may shorten
the period based on various factors, including the magnitude of purchases and other requests from and negotiated arrangements with
selling agents. Notwithstanding the foregoing, UBS Securities LLC and its affiliates are not required to make a market for the
notes and may stop making a market at any time. For more information about secondary market offers and the estimated initial value
of the notes, see “Additional Risk Factors Specific To Your Notes — Fair value considerations” and “Additional
Risk Factors Specific To Your Notes — Limited or No Secondary Market and Secondary Market Price Considerations” in
this pricing supplement.
Prohibition of Sales to EEA Retail
Investors: The notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail
investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU,
as amended (“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where that customer
would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor
as defined in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation (EU) No 1286/2014,
as amended (the “PRIIPs Regulation”), for offering or selling the notes or otherwise making them available to retail
investors in the EEA has been prepared and therefore offering or selling the notes or otherwise making them available to any retail
investor in the EEA may be unlawful under the PRIIPs Regulation.
Calculation agent: UBS Securities LLC
CUSIP no.: 90276BCT8
ISIN no.: US90276BCT89
FDIC: The notes are not bank deposits and are not
insured by the Federal Deposit Insurance Corporation or any other governmental agency.
HYPOTHETICAL EXAMPLES
The following table and chart are provided for purposes of
illustration only. They should not be taken as an indication or prediction of future investment results and are intended merely
to illustrate the impact that the various hypothetical final underlier levels on the determination date could have on the cash
settlement amount at maturity assuming all other variables remain constant.
The examples below are based on a range of final underlier
levels that are entirely hypothetical; no one can predict what the underlier level will be on any day throughout the life of your
notes, and no one can predict what the final underlier level will be on the determination date. The underlier has been volatile
in the past — meaning that the underlier level has changed considerably in relatively short periods — and its performance
cannot be predicted for any future period.
The information in the following examples reflects hypothetical
rates of return on the offered notes assuming that they are purchased on the original issue date at the face amount and held to
the stated maturity date. If you sell your notes in a secondary market prior to the stated maturity date, your return will depend
upon the market value of your notes at the time of sale, which may be affected by a number of factors that are not reflected in
the table below such as interest rates, the volatility of the underlier and our creditworthiness. In addition, the estimated value
of your notes at the time the terms of your notes were set on the trade date (as determined by reference to our pricing models)
is less than the original issue price of your notes. For more information on the estimated value of your notes, see “Additional
Risk Factors Specific To Your Notes — Fair Value Considerations — The Issue Price You Pay for the Notes Exceeds Their
Estimated Initial Value” in this pricing supplement. The information in the table also reflects the key terms and assumptions
in the box below.
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Key Terms and Assumptions
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Face amount
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$1,000.00
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Upside participation rate
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140.00%
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Cap level
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110.320% of the initial underlier level
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Maximum settlement amount
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$1,144.48
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Buffer level
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90.00% of the initial underlier level
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Buffer rate
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Approximately 111.11%
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Buffer amount
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10.00%
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Neither a market disruption event nor a non-trading day occurs on the originally scheduled determination date.
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No change in or affecting any of the underlier stocks or the method by which the underlier sponsor calculates the underlier.
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Notes are purchased on original issue date at the face amount and held to the stated maturity date.
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The actual performance of the underlier over the life of
your notes, as well as the amount payable at maturity, if any, may bear little relation to the hypothetical examples shown below
or to the historical underlier levels shown elsewhere in this pricing supplement. For information about the historical levels of
the underlier during recent periods, see “The Underlier — Historical Closing Levels of the Underlier” in this
pricing supplement.
Also, the hypothetical examples shown below do not take into
account the effects of applicable taxes. Because of the U.S. tax treatment applicable to your notes, tax liabilities could affect
the after-tax rate of return on your notes to a comparatively greater extent than the after-tax return on the underlier stocks.
The levels in the left column of the table below represent
hypothetical final underlier levels and are expressed as percentages of the initial underlier level. The amounts in the right column
represent the hypothetical cash settlement amounts, based on the corresponding hypothetical final underlier level (expressed as
a percentage of the initial underlier level), and are expressed as percentages of the face amount of a note (rounded to the nearest
one-thousandth of a percent). Thus, a hypothetical cash settlement amount of 100.000% means that the value of the cash payment
that we would pay for each $1,000.00 of the outstanding face amount of the offered notes on the stated maturity date would equal
100.000% of the face amount of a note, based on the corresponding hypothetical final underlier level (expressed as a percentage
of the initial underlier level) and the assumptions noted above.
Hypothetical
Final Underlier Level
(as Percentage of Initial Underlier Level)
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Hypothetical
Cash Settlement Amount
(as Percentage of Face Amount)
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150.000%
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114.448%
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140.000%
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|
114.448%
|
130.000%
|
|
114.448%
|
120.000%
|
|
114.448%
|
110.320%
|
|
114.448%
|
110.000%
|
|
114.000%
|
105.000%
|
|
107.000%
|
100.000%
|
|
100.000%
|
95.000%
|
|
100.000%
|
90.000%
|
|
100.000%
|
85.000%
|
|
94.444%
|
80.000%
|
|
88.889%
|
70.000%
|
|
77.778%
|
60.000%
|
|
66.667%
|
50.000%
|
|
55.556%
|
25.000%
|
|
27.778%
|
0.000%
|
|
0.000%
|
If, for example, the final underlier level were determined
to be 25.000% of the initial underlier level, the cash settlement amount that we would pay on your notes at maturity would be approximately
27.778% of the face amount of your notes, as shown in the table above. As a result, if you purchased your notes on the original
issue date at the face amount and held them to the stated maturity date, you would lose approximately 72.222% of your investment
(if you purchased your notes at a premium to face amount you would lose a correspondingly higher percentage of your investment).
In addition, if the final underlier level were determined to be 140.000% of the initial underlier level, the cash settlement amount
that we would pay on your notes at maturity would be capped at the maximum settlement amount (expressed as a percentage of the
face amount), or 114.448% of each $1,000.00 face amount of your notes, as shown in the table above. As a result, if you held your
notes to the stated maturity date, you would not benefit from any increase in the final underlier level over 110.320% of the initial
underlier level.
The following chart also shows a graphical illustration of
the hypothetical cash settlement amounts (expressed as a percentage of the face amount of your notes) that we would pay on your
notes on the stated maturity date, if the final underlier level (expressed as a percentage of the initial underlier level) were
any of the hypothetical levels shown on the horizontal axis. The chart shows that any hypothetical final underlier level (expressed
as a percentage of the initial underlier level) of less than 90.000% (the section left of the 90.000% marker on the horizontal
axis) would result in a hypothetical cash settlement amount of less than 100.000% of the face amount of your notes (the section
below the 100.000% marker on the vertical axis) and, accordingly, in a loss of principal to the holder of the notes. The chart
also shows that any hypothetical final underlier level (expressed as a percentage of the initial underlier level) of greater than
or equal to 110.320% (the section right of the 110.320% marker on the horizontal axis) would result in a capped return on your
investment.
The cash settlement amounts shown above are entirely hypothetical;
they are based on market prices for the underlier stocks that may not be achieved on the determination date and on assumptions
that may prove to be erroneous. The actual market value of your notes on the stated maturity date or at any other time, including
any time you may wish to sell your notes, may bear little relation to the hypothetical cash settlement amounts shown above, and
these amounts should not be viewed as an indication of the financial return on an investment in the offered notes. The hypothetical
cash settlement amounts on notes held to the stated maturity date in the examples above assume you purchased your notes at their
face amount and have not been adjusted to reflect the actual issue price you pay for your notes. The return on your investment
(whether positive or negative) in your notes will be affected by the amount you pay for your notes. If you purchase your notes
for a price other than the face amount, the return on your investment will differ from, and may be significantly lower than, the
hypothetical returns suggested by the above examples. Please read “Additional Risk Factors Specific To Your Notes –
Market Risk” and “Additional Risk Factors Specific To Your Notes – If You Purchase Your Notes at a Premium to
Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain
Key Terms of the Notes Will be Negatively Affected” in this pricing supplement.
We cannot predict the actual final underlier level or what the market value of your notes will be on any particular trading day, nor can we predict the relationship between the underlier level and the market value of your notes at any time prior to the stated maturity date. The actual amount that you will receive, if any, at maturity and the rate of return on the offered notes will depend on the actual final underlier level, which will be determined by the calculation agent as described above. Moreover, the assumptions on which the hypothetical returns are based may turn out to be inaccurate. Consequently, the amount of cash to be paid in respect of your notes, if any, on the stated maturity date may be very different from the information reflected in the table and chart above.
|
ADDITIONAL
RISK FACTORS SPECIFIC TO YOUR NOTES
An investment in your notes is subject to the risks described below, as well as the risks described under “Considerations Relating to Indexed Securities” in the accompanying prospectus, dated October 31, 2018, and “Risk Factors” in the accompanying product supplement, dated November 1, 2018. You should carefully review these risks as well as the terms of the notes described herein and in the accompanying prospectus, dated October 31, 2018, as supplemented by the accompanying index supplement, dated October 31, 2018 and the accompanying product supplement, dated November 1, 2018, of UBS. Your notes are a riskier investment than ordinary debt securities. Also, your notes are not equivalent to investing directly in the underlier stocks, i.e., the stocks comprising the underlier to which your notes are linked. You should carefully consider whether the offered notes are suited to your particular circumstances.
|
You May Lose Your Entire Investment
In The Notes
You can lose your entire investment in the notes. The cash
payment on your notes, if any, on the stated maturity date will be based on the performance of the underlier as measured from the
initial underlier level set on the trade date to the closing level on the determination date. If the final underlier level is less
than the buffer level, you will have a loss for each $1,000 of the face amount of your notes equal to the product of
(a) the buffer rate times (b) the sum of the underlier return plus the buffer amount times (c) $1,000.
Thus, you may lose your entire investment in the notes, which would include any premium to face amount you paid when you purchased
the notes. Specifically, you will lose approximately 1.1111% for every 1% negative underlier return below the buffer level.
Also, the market price of your notes prior to the stated
maturity date may be significantly lower than the purchase price you pay for your notes. Consequently, if you sell your notes before
the stated maturity date, you may receive far less than the amount of your investment in the notes.
The Upside Participation Rate Applies
Only At Maturity
You should be willing to hold your notes to maturity. If
you are able to sell your notes prior to maturity in the secondary market, the price you receive will likely not reflect the full
economic value of the upside participation rate of the notes and the return you realize may be less than the then-current underlier
return multiplied by the upside participation rate, even if such return is positive and is less than the return implied by the
maximum settlement amount. You can receive the full benefit of any positive underlier return multiplied by the upside participation
rate subject to the maximum settlement amount, only if you hold your notes to maturity.
The Potential for the Value of Your
Notes to Increase Will Be Limited
Your ability to participate in any change in the value of
the underlier over the life of your notes and the positive effects of the upside participation rate on any positive underlier return
will be limited because of the cap level. The maximum settlement amount will limit the cash settlement amount you may receive for
each of your notes at maturity, no matter how much the level of the underlier may rise beyond the cap level over the life of your
notes. Accordingly, the amount payable for each of your notes may be significantly less than it would have been had you invested
directly in the underlier.
Your Notes Do Not Bear Interest
You will not receive any interest payments on your notes.
As a result, even if the cash settlement amount payable for your notes on the stated maturity date exceeds the face amount of your
notes, the overall return you earn on your notes may be less than you would have earned by investing in a conventional debt security
of comparable maturity that bears interest at a prevailing market rate.
The Notes Are Subject to the Credit
Risk of the Issuer
The notes are unsubordinated, unsecured debt obligations
of the issuer, UBS, and are not, either directly or indirectly, an obligation of any third party. Any payment to be made on the
notes, including any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come due. As a result,
the actual and perceived creditworthiness of UBS may affect the market value of the notes and, in the event UBS were to default
on its obligations, you may not receive any amounts owed to you under the terms of the notes and you could lose your entire initial
investment.
Market Risk
The return on the notes is directly linked to the performance
of the underlier and indirectly linked to the value of the underlier stocks, and the extent to which the underlier return is positive
or negative. The level of the underlier can rise or fall sharply due to factors specific to the underlier stocks, as well as general
market factors, such as general 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 issuers of the underlier stocks and, therefore, the underlier.
You may lose some or all of your initial investment.
Fair Value Considerations
The Issue Price You Pay for the Notes
Exceeds Their Estimated Initial Value
The issue price you pay for the notes exceeds their estimated
initial value as of the trade date due to the inclusion in the issue price of hedging costs, issuance and other costs and projected
profits. As of the close of the relevant markets on the trade date, we have determined the estimated initial value of the notes
by reference to our internal pricing models and it is set forth in this pricing supplement. The pricing models used to determine
the estimated initial value of the notes incorporate certain variables, including the level of the underlier, the volatility of
the underlier, any expected dividends on the underlier stocks, prevailing interest rates, the term of the notes 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. Hedging costs, issuance and other costs, projected profits and the difference in rates will
reduce the economic value of the notes to you. Due to these factors, the estimated initial value of the notes as of the trade date
is less than the issue price you pay for the notes.
The Estimated Initial Value Is a Theoretical
Price; the Actual Price that You May Be Able to Sell Your Notes in Any Secondary Market (if Any) at Any Time After the Trade Date
May Differ From the Estimated Initial Value
The value of your notes at any time will vary based on many
factors, including the factors described above and in “—Market 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 trade date, if you attempt to sell the notes in the secondary market, the actual value you
would receive may differ, perhaps materially, from the estimated initial value of the notes determined by reference to our internal
pricing models. The estimated initial value of the notes does not represent a minimum or maximum price at which we or any of our
affiliates would be willing to purchase your notes in any secondary market at any time.
Our Actual Profits May Be Greater
or Less than the Differential Between the Estimated Initial Value and the Issue Price of the Notes as of the Trade Date
We may determine the economic terms of the notes, as well
as hedge our obligations, at least in part, prior to the trade 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 notes cannot be determined as of the trade date and any such differential between the estimated initial value and the issue
price of the notes as of the trade date does not reflect our actual profits. Ultimately, our actual profits will be known only
at the maturity of the notes.
Limited or No Secondary Market and
Secondary Market Price Considerations
There May Be Little or No Secondary
Market for the Notes
The notes will not be listed or displayed on any securities
exchange or any electronic communications network. There can be no assurance that a secondary market for the notes will develop.
UBS Securities LLC and its affiliates may make a market in the notes, although they are not required to do so and may stop making
a market at any time. If you are able to sell your notes prior to maturity, you may have to sell them at a substantial loss. The
estimated initial value of the notes does not represent a minimum or maximum price at which we or any of our affiliates would be
willing to purchase your notes in any secondary market at any time.
The Price at which UBS Securities
LLC and Its Affiliates May Offer to Buy the Notes in the Secondary Market (if Any) May Be Greater than UBS’ Valuation of
the Notes 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
notes, UBS Securities LLC or its affiliates may offer to buy or sell such notes at a price that exceeds (i) our valuation of the
notes 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 notes 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 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 “Summary Information – Key Terms – “Supplemental plan of distribution
(conflicts of interest); secondary markets (if any)” herein. Thereafter, if UBS Securities LLC or an affiliate makes secondary
markets in the notes, 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 models arises from requests from and
arrangements made by UBS Securities LLC with the selling agents of structured debt securities such as the notes. As described above,
UBS Securities LLC and its affiliates are not required to make a market for the notes 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.
Price of Notes Prior to Maturity
The market price of the notes will be influenced by many
unpredictable and interrelated factors, including the level of the underlier; the volatility of the underlier; the dividend rate
paid on the underlier stocks; the time remaining to the maturity of the notes; 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 notes.
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 original issue price
of hedging costs, issuance and other 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
notes in any secondary market.
The Amount Payable on Your Notes Is
Not Linked to the Level of the Underlier at Any Time Other than the Determination Date
The final underlier level will be based on the closing level
of the underlier on the determination date, except in the limited circumstances described under “General Terms of the Notes
– Market Disruption Event – Consequences of a Market Disruption Event or a Non-Trading Day” and “—Discontinuance
of or Adjustments to the Index Underlier or an Index Basket Underlier; Alteration of Method of Calculation” in the accompanying
product supplement. Therefore, if the closing level of the underlier dropped precipitously to a level that is less than the buffer
level on the determination date, the cash settlement amount for your notes may be significantly less than it would have been had
the cash settlement amount been linked to the closing level of the underlier prior to such drop in the level of the underlier.
Although the actual level of the underlier on the stated maturity date or at other times during the life of your notes may be higher
than the final underlier level, you will not benefit from the closing level of the underlier at any time other than on the determination
date.
You Have No Shareholder Rights or
Rights to Receive Any Underlier Stock
Investing in your notes will not make you a holder of any
of the underlier stocks. Neither you nor any other holder or owner of your notes will have any voting rights, any right to receive
dividends or other distributions, any rights to make a claim against the underlier stocks or any other rights with respect to the
underlier stocks. Your notes will be paid in cash and you will have no right to receive delivery of any underlier stocks.
We May Sell an Additional Aggregate
Face Amount of the Notes at a Different Issue Price
At our sole option, we may decide to sell an additional aggregate
face amount of the notes subsequent to the date of this pricing supplement. The issue price, underwriting discount and net proceeds
of the notes in the subsequent sale may differ substantially (higher or lower) from the original issue price you paid as provided
on the cover of this pricing supplement. The return (whether positive or negative) on your investment in the notes will depend
in part on the issue price you pay for such notes.
If You Purchase Your Notes at a Premium
to Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of
Certain Key Terms of the Notes Will be Negatively Affected
The cash settlement amount will not be adjusted based on
the original issue price you pay for the notes. If you purchase notes at a price that differs from the face amount of the notes,
then the return on your investment in such notes held to the stated maturity date will differ from, and may be substantially less
than, the return on notes purchased at face amount. If you purchase your notes at a premium to face amount and hold them to the
stated maturity date, the return on your investment in the notes will be lower than it would have been had you purchased the notes
at face amount or a discount to face amount.
In addition, the impact of the buffer level on the return
on your investment, and the extent to which the buffer level will diminish your exposure to any negative underlier return will
depend upon the price you pay for your notes relative to face amount. For example, if you purchase your notes at a premium to face
amount, the buffer level, while still providing some protection against exposure to any negative underlier return, will allow a
greater percentage decrease in your investment in the notes than would have been the case for notes purchased at face amount or
a discount to face amount.
Lastly, the impact of the cap level on the return on your
investment, and the extent to which the cap level will diminish your exposure to any positive underlier return (as leveraged by
the upside participation rate), will also depend on the price you pay for your notes relative to face amount. For example, if you
purchase your notes at a premium to face amount, the cap level will only permit a lower percentage increase in your investment
in the notes than would have been the case for notes purchased at face amount or a discount to face amount.
If the Level of the Underlier Changes,
the Market Value of Your Notes May Not Change in the Same Manner
Your notes may trade quite differently from the performance
of the underlier. Changes in the level of the underlier may not result in a comparable change in the market value of your notes.
This is because your cash settlement amount at maturity will be based on the final underlier level and subject to the maximum settlement
amount. If the underlier return is negative and the final underlier level is less than the buffer level, you could lose all or
a substantial portion of your investment in the notes. We discuss some of the reasons for this disparity under “Risk Factors
— Risks Related to Liquidity and Secondary Market Issues — The market value of the notes may be influenced by unpredictable
factors” in the accompanying product supplement.
The Underlier Reflects Price Return,
Not Total Return
The return on your notes is based on the performance of the
underlier, which reflects the changes in the market prices of the underlier stocks. It is not, however, linked to a “total
return” index or strategy, which, in addition to reflecting those price returns, would also reflect dividends paid on the
underlier stocks. The return on your notes will not include such a total return feature or dividend component.
The Notes are Considered “Hold
To Maturity” Products
Generally, there is no liquid market for the notes.
Changes Affecting the Underlier Could Have
An Adverse Effect On the Value of the Notes and the Amount You Will Receive at Maturity of Your Notes
The policies of the underlier sponsor concerning the underlier,
additions, deletions or substitutions of the underlier stocks and the manner in which changes affecting the underlier stocks or
the issuers of any underlier stocks (such as stock dividends, reorganizations or mergers) are reflected in the underlier, could
affect the level of the underlier, and, therefore, could affect the amount payable on your notes at maturity, if any, and the market
value of your notes prior to maturity. The amount payable on the notes and their market value could also be affected if the underlier
sponsor changes these policies, for example by changing the manner in which it calculates the underlier, or if the underlier sponsor
discontinues or suspends calculation or publication of the underlier, in which case it may become difficult to determine the market
value of the notes. If events such as these occur, or if the final underlier level is not available because of a market disruption
event, non-trading day or for any other reason, and no successor underlier is selected, the calculation agent—which initially
will be UBS Securities LLC, an affiliate of UBS—may determine the final underlier level — and thus the amount payable
at maturity—in a manner it considers appropriate.
UBS Cannot Control Actions By the
Underlier Sponsor and the Underlier Sponsor Has No Obligation To Consider Your Interests
UBS and its affiliates are not affiliated with the underlier
sponsor and have no ability to control or predict its actions, including any errors in or discontinuation of public disclosure
regarding methods or policies relating to the calculation of the underlier. The underlier sponsor is not involved in the notes
offering in any way and has no obligation to consider your interest as an owner of the notes in taking any actions that might affect
the market value of, and any amount payable at maturity on, your notes.
Potential Conflict of Interest
UBS and its affiliates may engage in business related to
the underlier or underlier stocks, which may present a conflict between the obligations of UBS and you, as a holder of the notes.
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 underlier return and the cash settlement amount, if any, based on the closing level of the underlier on
the determination date. The calculation agent can postpone the determination of the final underlier level if a market disruption
event occurs and is continuing on the determination date. As UBS determines the economic terms of the notes, including the upside
participation rate, the cap level and the buffer level, and such terms include hedging costs, issuance and other costs and projected
profits, the notes 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 the sale of your notes in the secondary market. UBS or its affiliates may earn additional profits (or potentially
incur losses) as a result of payments pursuant to such hedging activities. In performing these duties, the economic interests of
UBS, UBS Securities LLC, the dealers or their respective affiliates are potentially adverse to your interests as an investor in
the notes. Additionally, hedging activities may adversely affect the market value of your notes and the amount we will pay on your
notes.
Potentially Inconsistent Research,
Opinions or Recommendations By UBS
UBS and its affiliates publish research from time to time
on financial markets and other matters that may influence the value of the notes, or express opinions or provide recommendations
that are inconsistent with purchasing or holding the notes. Any research, opinions or recommendations expressed by UBS or its affiliates
may not be consistent with each other and may be modified from time to time without notice. Investors should make their own independent
investigation of the merits of investing in the notes and the underlier to which the notes are linked.
The Notes Are Not Bank Deposits
An investment in the notes carries risks which are very different
from the risk profile of a bank deposit placed with UBS or its affiliates. The notes 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 Notes 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
notes) 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 notes, 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 notes. The
BIO-FINMA provides that a debt-to-equity swap and/or a write-off of debt and other obligations (including the notes) 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 notes 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 notes. Consequently, holders of notes may lose all or some
of their investment in the notes. 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 notes 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.
Uncertain Tax Treatment
Significant aspects of the tax treatment of the notes are
uncertain. There are no statutory provisions, regulations, published rulings, judicial decisions or administrative determinations
addressing the characterization for U.S. federal income tax purposes of securities with terms that are substantially the same as
the notes, and we do not plan to request a ruling from the IRS. Consequently, significant aspects of the tax treatment of the notes
are uncertain, and the IRS or a court might not agree with the treatment of the notes as prepaid derivative contracts that are
not debt. Accordingly, it is possible that your notes could alternatively be treated for tax purposes, and that the timing and
character of the income or loss on your notes could be materially and adversely affected.
In 2007, the IRS released a notice that may affect the taxation
of holders of the notes. According to Notice 2008-2, the IRS and the Treasury are actively considering whether the holder of an
instrument similar to the notes should be required to accrue ordinary income on a current basis, and they are seeking taxpayer
comments on the subject. It is not possible to determine what guidance they will ultimately issue, if any. It is possible, however,
that under such guidance, holders of the notes will ultimately be required to accrue income currently and this could be applied
on a retroactive basis. The IRS and the Treasury are also considering other relevant issues, including whether additional gain
or loss from such instruments should be treated as ordinary or capital, whether non-U.S. holders of such instruments should be
subject to withholding tax on any deemed income accruals, and whether the special “constructive ownership rules” of
Section 1260 of the Code should be applied to such instruments. Holders are urged to consult their tax advisors concerning the
significance, and the potential impact, of the above considerations. Except to the extent otherwise required by law, UBS intends
to treat your notes for U.S. federal income tax purposes in accordance with the treatment described above under “Supplemental
discussion of U.S. federal income tax consequences” and under “Material U.S. Federal Income Tax Consequences”
in the accompanying product supplement, unless and until such time as the Treasury and the IRS determine that some other treatment
is more appropriate.
Purchasers of notes should consult their tax advisors as
to the U.S. federal, state, local, non-U.S. and other tax consequences to them of the purchase, ownership and disposition of the
notes. For more information, see “Material U.S. Federal Income Tax Consequences” in the accompanying product supplement.
VALIDITY OF THE
NOTES
In
the opinion of Cadwalader, Wickersham & Taft LLP, as special counsel to the issuer, when the notes offered by this pricing
supplement have been executed and issued by the issuer and authenticated by the trustee pursuant to the indenture and delivered,
paid for and sold as contemplated herein, the notes will be valid and binding obligations of the issuer, enforceable against the
issuer in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
receivership or other laws relating to or affecting creditors’ rights generally, and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). This opinion is given as of the date hereof and is limited
to the laws of the State of New York. Insofar as this opinion involves matters governed by Swiss law, Cadwalader, Wickersham &
Taft LLP has assumed, without independent inquiry or investigation, the validity of the matters opined on by Homburger AG, Swiss
legal counsel for the issuer, in its opinion dated October 28, 2019 filed on that date with the Securities and Exchange Commission
as an exhibit to a Current Report on Form 6-K and incorporated by reference into the issuer’s registration statement on Form
F-3 (the “Registration Statement”). In addition, this opinion is subject to customary assumptions about the trustee’s
authorization, execution and delivery of the indenture and, with respect to the notes, authentication of the notes and the genuineness
of signatures and certain factual matters, all as stated in the opinion of Cadwalader, Wickersham & Taft LLP dated October
29, 2018 filed on that date with the Securities and Exchange Commission as Exhibit 5.4 to the Registration Statement.
THE UNDERLIER
We have derived all information contained in this pricing
supplement regarding the S&P 500® Index, including without limitation, its make-up, method of calculation and
changes in its components from publicly available information. Such information reflects the policies of, and is subject to change
by S&P Dow Jones Indices LLC (“S&P”), and/or its affiliates.
S&P has no obligation to continue to publish the S&P
500® Index, and may discontinue publication of the S&P 500® Index at any time. The S&P 500®
Index is determined, comprised and calculated by S&P without regard to the notes.
As discussed more fully in the index supplement under the
heading “Underlying Indices and Underlying Index Publishers — S&P 500® Index”, the S&P
500® Index is intended to provide an indication of the pattern of common stock price movement. The calculation of
the value of the S&P 500® Index is based on the relative value of the aggregate market value of the common stock
of 500 companies as of a particular time compared to the aggregate average market value of the common stocks of 500 similar companies
during the base period of the years 1941 through 1943. Eleven main groups of companies comprise the S&P 500®
Index, with the percentage weight of each group in the index as a whole as of April 30, 2020 as follows: Information Technology
(25.7%), Health Care (15.4%), Communication Services (10.8%), Financials (10.6%), Consumer Discretionary (10.5%), Industrials (7.9%),
Consumer Staples (7.4%), Utilities (3.3%), Energy (3.0%), Real Estate (2.9%) and Materials (2.5%). The weightings for each sector
are rounded to the nearest tenth of a percent and, therefore, may not equal 100%.
As of July 31, 2017, companies with multiple share class
lines are no longer eligible for inclusion in the S&P 500® Index. Constituents of the S&P 500®
Index prior to July 31, 2017 with multiple share class lines will be grandfathered in and continue to be included in the S&P
500® Index. If a constituent company of the S&P 500® Index reorganizes into a multiple share
class line structure, that company will be reviewed for continued inclusion in the S&P 500® Index at the discretion
of the S&P Index Committee.
In addition to the criteria for addition to the S&P 500®
Index set forth in the accompanying index supplement, a company must have a primary listing of its common stock on the NYSE, NYSE
Arca, NYSE American (formerly NYSE MKT), NASDAQ Global Select Market, NASDAQ Select Market, NASDAQ Capital Market, Cboe BZX (formerly
Bats BZX), Cboe BYX (formerly Bats BYX), Cboe EDGA (formerly Bats EDGA), or Cboe EDGX (formerly Bats EDGX) and, effective July
31, 2017, the criteria employed by S&P for purposes of making additions to the S&P 500® Index were changed
as follows: (a) the former “corporate governance structure consistent with U.S. practice” requirement was removed;
and (b) with respect to constituents of the S&P MidCap 400® Index and the S&P SmallCap 600®
Index that are being considered for addition to the S&P 500® Index, the financial viability, public float and/or
liquidity eligibility criteria no longer need to be met if the S&P Index Committee decides that such an addition will enhance
the representativeness of the S&P 500® Index as a market benchmark. Effective February 20, 2019, company additions
to the underlier should have an unadjusted company market capitalization of $8.2 billion or more (an increase from the previous
requirement of an unadjusted company market capitalization of $6.1 billion or more). A company meeting the unadjusted company market
capitalization criteria is also required to have a security level float-adjusted market capitalization of at least $4.1 billion.
S&P has announced that, given extreme global market volatility, the March 2020 rebalancing for the S&P 500®
Index was postponed. Please see S&P’s website for additional information.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this pricing supplement, the accompanying product supplement, the accompanying index
supplement or the accompanying prospectus. Information about the S&P 500® Index, including the methodology used
to calculate the S&P 500® Index, is available at us.spindices.com/indices/equity/sp-500. We are not incorporating
by reference the website or any material it includes in this pricing supplement or any document incorporated herein by reference.
Historical Closing Levels of the Underlier
The closing level of the underlier has fluctuated in the
past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the closing level
of the underlier shown below is not an indication that the underlier is more or less likely to increase or decrease at any time
during the life of your notes.
The following graph illustrates the performance of the underlier
from January 1, 2010 through May 26, 2020, based on information reported by Bloomberg Professional® service (“Bloomberg”),
without independent verification. UBS has not conducted any independent review or due diligence of publicly available information
obtained from Bloomberg. The dotted line represents the buffer level, which is equal to 90.00% of 2,991.77, which was the closing
level of the underlier on May 26, 2020. Past performance of the underlier is not indicative of the future performance of
the underlier.
We have not authorized anyone to provide any information
or to make any representations other than those contained or incorporated by reference in this pricing supplement, the accompanying
product supplement, the accompanying index supplement, or the accompanying prospectus. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. This pricing supplement, the accompanying
product supplement, the accompanying index supplement and the accompanying prospectus is an offer to sell only the notes offered
hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this pricing
supplement, the accompanying product supplement, the accompanying index supplement, and the accompanying prospectus is current
only as of the respective dates of such documents.
TABLE OF CONTENTS
Pricing Supplement
|
|
Page
|
Summary Information
|
ii
|
Investor Suitability
|
1
|
Key Terms
|
3
|
Hypothetical Examples
|
7
|
Additional Risk Factors Specific to Your Notes
|
11
|
Validity of the Notes
|
18
|
The Underlier
|
19
|
Product Supplement dated November 1, 2018
|
Product Supplement Summary
|
PS-1
|
Hypothetical Returns on the Underlier-Linked Notes
|
PS-16
|
Risk Factors
|
PS-31
|
General Terms of the Notes
|
PS-45
|
Use of Proceeds and Hedging
|
PS-61
|
Material U.S. Federal Income Tax Consequences
|
PS-62
|
ERISA Considerations
|
PS-69
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-70
|
Index Supplement dated October 31, 2018
|
Index Supplement Summary
|
IS-1
|
Underlying Indices And Underlying Index Publishers
|
IS-2
|
Dow Jones Industrial AverageTM
|
IS-2
|
NASDAQ-100 Index®
|
IS-4
|
Russell 2000® Index
|
IS-10
|
S&P 500® Index
|
IS-15
|
Commodity Indices
|
IS-20
|
Bloomberg Commodity IndexSM
|
IS-20
|
UBS Bloomberg Constant Maturity Commodity Index Excess Return
|
IS-27
|
Non-U.S. Indices
|
IS-32
|
EURO STOXX 50® Index
|
IS-32
|
FTSETM 100 Index
|
IS-38
|
Hang Seng China Enterprises Index
|
IS-41
|
MSCI Indexes
|
IS-45
|
MSCI-EAFE® Index
|
IS-45
|
MSCI® Emerging Markets IndexSM
|
IS-45
|
MSCI® Europe Index
|
IS-45
|
Prospectus dated October 31, 2018
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
4
|
Where You Can Find More Information
|
5
|
Presentation of Financial Information
|
6
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
|
UBS
|
7
|
Swiss Regulatory Powers
|
10
|
Use of Proceeds
|
11
|
Description of Debt Securities We May Offer
|
12
|
Description of Warrants We May Offer
|
32
|
Legal Ownership and Book-Entry Issuance
|
47
|
Considerations Relating to Indexed Securities
|
52
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
55
|
U.S. Tax Considerations
|
58
|
Tax Considerations Under the Laws of Switzerland
|
69
|
Benefit Plan Investor Considerations
|
71
|
Plan of Distribution
|
73
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$2,688,000
UBS AG
Capped Leveraged Buffered S&P 500®
Index-Linked Medium-Term Notes due June 30, 2021
UBS Securities LLC
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