Filed Pursuant to
Rule 424(b)(2)
Registration Statement No. 333-204908
The information in this preliminary pricing supplement is not complete and may be changed. This preliminary pricing supplement
is not an offer to sell nor does it seek an offer to buy these notes in any jurisdiction where the offer or sale is not permitted.
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Subject to Completion. Dated October 19, 2017.
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UBS AG
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$
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Capped Leveraged Basket-Linked Medium-Term Notes
due
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The
notes will not bear interest.
The amount that you will be paid on your notes on the stated maturity date (expected to be the
third business day after the determination date) is based on the performance of an unequally-weighted basket of five indices: the
EURO STOXX 50
®
Index (37.00% weighting), FTSE
®
100 Index (23.00% weighting), TOPIX
®
Index (23.00% weighting), Swiss Market Index (SMI)
®
(9.00% weighting) and S&P/ASX 200 Index (8.00% weighting)
(each a “basket underlier” and together, the “basket underliers”) as measured from the trade date to and
including the determination date (expected to be between 18 and 21 months after the trade date). The initial basket level will
be set to 100 on the trade date and the final basket level (the basket closing level on the determination date) will equal the
sum
of the products, as calculated for each basket underlier, of: (i) the final underlier level of such basket underlier
times
(ii) the weighting multiplier for such basket underlier. The weighting multiplier will equal, for each basket underlier,
a positive amount equal to the
quotient
of (i) the
product
of the initial basket level
times
the weighting percentage for such basket underlier
divided by
(ii) the initial
underlier level for such basket underlier. If the final basket level on the determination date is greater than the initial basket
level, the return on your notes will be positive, subject to the maximum settlement amount (expected to be between $1,382.20 and $1,449.40 for each $1,000 face amount of your notes). If the final basket
level is equal to the initial basket level, you will receive the face amount of your notes.
If the final basket level on the
determination date is less than the initial basket level, the return on your notes will be negative.
Specifically,
you will lose 1% of the face amount of each of your notes for every 1% negative basket return. You could lose your entire investment
in the notes.
To determine your cash settlement amount, we will calculate the
basket return, which is the percentage increase or decrease in the final basket level from the initial basket 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 basket return is
positive
(the final basket level is
greater than
the initial basket level), the
sum
of (i) $1,000
plus
(ii) the
product
of (a) $1,000
times
(b) the upside participation rate (expected to be 300%)
times
(c) the basket return, subject to the maximum settlement amount;
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if the basket return is
zero
(the final basket level is
equal to
the initial basket level), $1,000; or
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if the basket return is
negative
(the final basket level is
less than
the initial basket level), the
sum
of (i) $1,000
plus
(ii) the
product
of (a) the basket return
times
(b) $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 14 of this preliminary 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 expected to be between $966.40 and $996.40 per $1,000 face amount. The range of the estimated initial value of the notes 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 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” on pages 15 and 16 of this preliminary pricing supplement.
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Original issue date:
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, 2017
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Original issue price:
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100.00% of the face amount
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Underwriting discount:
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% of the face amount
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Net proceeds to the issuer:
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% of the face amount
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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 preliminary 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 , 2017.
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 the final 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
preliminary 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, the pricing supplement to which this preliminary pricing supplement relates is being used in a market-making
transaction
. See “Supplemental plan of distribution (conflicts of interest); secondary markets (if any)” in this
preliminary 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 preliminary 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. Alternatively, UBS will arrange
to send you the prospectus, the index supplement and the product supplement if you so request by calling toll-free 1-877-387-2275.
You may access these documents on the SEC website at www.sec.gov
as follows:
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·
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Index Supplement dated April 29, 2016:
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http://www.sec.gov/Archives/edgar/data/1114446/000119312516569883/d163530d424b2.htm
References to “UBS,” “we,” “our”
and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this preliminary pricing supplement, “notes”
refer to the Capped Leveraged Basket-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
May 2, 2016, references to the “accompanying index supplement” mean the UBS index supplement dated April 29, 2016 and
references to the “accompanying prospectus” mean the UBS prospectus titled “Debt Securities and Warrants,”
dated April 29, 2016.
This preliminary 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 14 and in “Risk Factors”
on page PS-35 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.
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.
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 has the same downside market risk as an investment in the basket
underliers or in the stocks comprising the basket underliers (the “underlier stocks”).
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You believe the level of the basket will appreciate over the term of the notes and the final basket level
is unlikely to exceed the cap level (to be set on the trade date and expected to be between 112.74% and 114.98% of the initial
basket 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
((to be set on the trade date and expected to be between $1,382.20 and $1,449.40 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 basket underliers 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 forego any dividends paid on the underlier stocks.
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You are willing to hold the notes to maturity, a
term expected to be between 18 and 21 months, and accept that there may be little or no secondary market for the
notes.
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You seek an investment with exposure to companies
in the Eurozone, United Kingdom, Japan, Switzerland and Australia.
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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 and are not willing to make an investment that has the same downside market risk as an investment in
the basket underliers or in the underlier stocks.
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You believe that the level of the basket will decline
during the term of the notes or you believe the level of the basket will appreciate over the term of the notes and that the final
basket level is likely to exceed the cap level (to be set on the trade date and expected to be between 112.74% and 114.98% of the initial basket level).
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You seek an investment that has unlimited return potential
without a cap on appreciation and you are unwilling to invest in the notes based on the maximum settlement amount (to be set on the trade date and expected to be between $1,382.20 and $1,449.40 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 basket underliers 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 expected to be between 18 and 21 months, or you seek an investment for which there will be an active
secondary market.
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You do not seek an investment with exposure to companies
in the Eurozone, United Kingdom, Japan, Switzerland and Australia.
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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 preliminary 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:
An unequally-weighted basket of five indices.
For more information about the indices see “The Basket and the Basket Underliers” on page 22 in this preliminary pricing
supplement.
About the Basket:
The following table lists the basket
underliers and their corresponding Bloomberg tickers, percentage weights in the basket, weighting multipliers and initial underlier
levels. The weighting multipliers and the initial underlier levels will not be determined until the trade date.
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Bloomberg Ticker
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Basket Underlier
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Percentage Weight in the Basket
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Weighting Multiplier
(to be set on the trade date)
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Initial Underlier Level
(to be set on the trade date)
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SX5E
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EURO STOXX 50
®
Index
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37.00%
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n
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n
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UKX
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FTSE
®
100 Index
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23.00%
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n
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TPX
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TOPIX
®
Index
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23.00%
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n
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n
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SMI
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Swiss Market Index (SMI)
®
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9.00%
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n
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n
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AS51
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S&P/ASX 200 Index
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8.00%
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n
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n
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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 an unequally-weighted basket of five indices
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averaging dates: not applicable
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cap level: yes, as described below
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buffer level: not applicable
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interest: not applicable
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Face amount:
Each note will have a face amount of
$1,000; $ 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 the final 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 the final 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 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” on page 17 in this preliminary 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 change in law,
an administrative determination or a judicial ruling to the contrary — to characterize each note for all tax purposes
as a pre-paid derivative contract in respect of the underlier, as described under “Supplemental U.S.
Tax Considerations” in the accompanying product supplement. Pursuant to this approach, it is the opinion of
Cadwalader, Wickersham & Taft LLP that upon the sale, exchange or maturity 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 Internal Revenue Service (“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.
Additionally, we will not attempt to ascertain whether any
issuers of the underlier stocks would be treated as a “passive foreign investment company” (a “PFIC”) within
the meaning of Section 1297 of the Internal Revenue Code of 1986, as amended (the “Code”). If any such entity were
so treated, certain adverse U.S. federal income tax consequences might apply to U.S. holders upon the taxable disposition (including
cash settlement) of the notes. You should refer to information filed with the Securities and Exchange Commission or an equivalent
governmental authority by such entities and consult your tax advisor regarding the possible consequences to you if any such entity
is or becomes a PFIC.
Subject to the paragraphs below, investors should read the
discussion under “Supplemental U.S. Tax Considerations — Non-United States Holders — Foreign Account Tax Compliance
Act” beginning on page PS-77 in the accompanying product supplement and consult their tax advisors concerning the potential
application of The Foreign Account Tax Compliance Act.
A 30% withholding tax (which may be reduced by an applicable
income tax treaty) is imposed under Section 871(m) of the Code on certain “dividend equivalents” paid or deemed paid
to a non-U.S. holder with respect to a “specified equity-linked instrument” that references one or more dividend-paying
U.S. equity securities or indices containing U.S. equity securities. The withholding tax can apply even if the instrument
does not provide for payments that reference dividends. Treasury regulations provide that the withholding tax applies to
all dividend equivalents paid or deemed paid on specified equity-linked instruments that have a delta of one (“delta one
specified equity-linked instruments”) issued after 2016 and to all dividend equivalents paid or deemed paid on all
other specified equity-linked instruments issued after 2018.
Based on our determination that the notes are not “delta-one”
with respect to any basket underliers or 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 basket underliers or 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 a non-U.S. holder enters, or has entered, into certain
other transactions in respect of the basket underliers or underlier stocks or the notes. A non-U.S. holder that
enters, or has entered, into other transactions in respect of the basket underliers or underlier stocks or the notes
should consult its tax advisor regarding the application of Section 871(m) of the Code to its notes in the context of its other
transactions.
Because of the uncertainty regarding the application of
the 30% withholding tax on dividend equivalents to the notes, you are urged to consult your tax advisor regarding the potential
application of Section 871(m) of the Code and the 30% withholding tax to an investment in the notes.
Pursuant to final and temporary Treasury regulations and
Notice 2015-66, the withholding and reporting requirements under FATCA generally apply to certain “withholdable payments”
and, if made after December 31, 2018, payments of certain gross proceeds on a sale or disposition and certain foreign
passthru payments made after December 31, 2018 (or, if
later, the date that final regulations defining the term “foreign pass-thru payment” are published). We will not
pay additional amounts with respect to such withholding taxes discussed above.
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 “Supplemental U.S.
Tax Considerations”.
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 basket level is
greater than or equal to
the cap level, the maximum settlement amount;
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if the final basket level is
greater than
the initial basket level but
less than
the cap level, the sum of (i) $1,000
plus
(ii) the product of (a) $1,000
times
(b) the upside participation rate
times
(c) the basket return;
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if the basket return is zero (the final basket level is
equal
to the initial basket level), $1,000; or
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if the basket return is
negative
(the final basket level is
less than
the initial basket level), the sum of (i) $1,000 plus (ii) the product of (a) $1,000
times
(b) the basket return.
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Initial basket level:
a positive amount set equal to
100 on the trade date
Basket closing level:
for any given trading day, the
sum
of the products, as calculated for each basket underlier, of the closing level for each basket underlier on such trading
day
multiplied
by
the weighting multiplier for each such basket underlier
Closing level:
as described under “General Terms
of the Notes — Closing Level” in the accompanying product supplement
Initial underlier level:
for each of the basket underliers,
the closing level of such basket underlier on the trade date, as determined by the calculation agent
Final underlier level:
for each of the basket underliers,
the closing level of such basket underlier on the determination date, as determined by the calculation agent
Final basket level:
the basket closing level 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
Basket return:
the
quotient
of (1) the
final basket level
minus
the initial basket level
divided
by (2) the initial basket level, expressed as a percentage
Weighting percentage:
for each basket underlier, the
applicable percentage weight of such basket underlier within the basket of underliers as set forth under “About the Basket”
on page 3; the sum of the weighting percentages of all basket underliers will equal 100%
Weighting multiplier:
for each basket underlier, a
positive amount equal to the
quotient
of (i) the
product
of the initial basket level
times
the weighting percentage
for such basket underlier
divided
by (ii) the initial underlier level for such basket underlier; the weighting multipliers
will remain constant for the life of the notes
Upside participation rate (to be set on the trade date):
expected to be 300.00%
Cap level (to be set on the trade date):
a level of the basket expected to be between 112.74% and 114.98% of the initial basket level
Maximum settlement amount (to be set on the trade date):
expected to be between $1,382.20 and $1,449.40.
Trade date:
[ ]
Original issue date (settlement date) (to be set on the
trade date):
expected to be the fifth business day following the trade date
Determination date (to be set on the trade date):
a
specified date that is expected to be between 18 and 21 months after the trade date, subject to adjustment as described
under “General Terms of the Notes — Determination Date” in the accompanying product supplement
Stated maturity date (to be set on the trade date):
a specified date that is expected to be the third business day after the determination date, subject to adjustment as described
under “General Terms of the Notes — Stated Maturity Date” in the accompanying product supplement
Additional Market Disruption Event:
Notwithstanding
any provision to the contrary in the accompanying product supplement, if the EURO STOXX 50
®
Index is calculated
and published by its sponsor (the “underlier sponsor”), a market disruption event may occur if (a) underlier stocks
constituting 20% or more, by weight, of such basket underlier or any constituent index of such basket underlier, or (b) any option
or futures contracts, if available, relating to (i) such basket underlier, (ii) any constituent index of such basket underlier,
or (iii) underlier stocks constituting 20% or more, by weight, of such basket underlier or any constituent index of such basket
underlier do not trade on what were the respective primary markets for those underlier stocks or contracts, as determined by the
calculation agent, including when one or more applicable markets are closed for trading under ordinary circumstances.
No interest:
The offered notes will 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.
Business day:
as described under “General Terms
of the Notes — Business Day” in the accompanying product supplement
Trading day:
When we refer to a trading day with respect
to a basket underlier, we mean (i) for the FTSE
®
100 Index, the TOPIX
®
Index, the Swiss Market Index
(SMI)
®
and the S&P/ASX 200 Index, a day as described under “General Terms of the Notes—Trading Day”
in the accompanying product supplement and (ii) for the EURO STOXX 50
®
Index, a day on which such basket underlier
is calculated and published by its underlier sponsor.
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 will agree to sell to UBS Securities LLC, and UBS Securities LLC will agree to purchase from UBS, the
aggregate face amount of the notes specified on the front cover of the final pricing supplement. UBS Securities LLC proposes initially
to offer the notes to certain unaffiliated securities dealers at an original issue price set forth on the cover page of this preliminary
pricing supplement.
We expect to deliver the notes against payment therefor in New York, New York on ,
2017, which is expected to be the fifth business day following the date of the final 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, 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 preliminary pricing supplement.
Calculation agent:
UBS Securities LLC
CUSIP
no.:
90270KNT2
ISIN no.:
US90270KNT24
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 basket 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 basket levels
that are entirely hypothetical; no one can predict what the basket level will be on any day throughout the life of your notes,
and no one can predict what the final basket level will be on the determination date. The levels of the basket underliers have
been volatile in the past — meaning that the levels of the basket underliers have changed considerably in relatively short
periods — and their performance (and therefore the performance of the basket) 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 basket underliers and the underlier stocks and our creditworthiness.
In addition, the estimated value of your notes at the time the terms of your notes are set on the trade date (as determined by
reference to our pricing models) will be 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 Will Exceed Their Estimated Initial Value” in this preliminary pricing supplement. The information
in the table also reflects the key terms and assumptions in the box below.
|
Key Terms and Assumptions
|
|
Face amount
|
|
$1,000.00
|
|
Initial basket level
|
|
100
|
|
Upside participation rate
|
|
300.00%
|
|
Cap level
|
|
113.860% of the initial basket level (the midpoint of the range set forth herein)
|
|
Maximum settlement amount
|
|
$1,415.80 (the midpoint of the range set forth on the cover page of this preliminary pricing supplement)
|
|
Neither a market disruption event nor a non-trading day
occurs on the originally scheduled determination date.
No change in or affecting any of the underlier stocks
or the method by which any of the underlier sponsors calculate the respective basket underliers.
Notes are purchased on original issue date at the face
amount and held to the stated maturity date.
|
Moreover, we have not yet set the initial underlier level
or the weighting multiplier for each basket underlier that will serve as the baseline for determining the basket return, the cap
level or the maximum settlement amount, each of which will affect the amount that we will pay on your notes, if any, at maturity.
We will not do so until the trade date. As a result, the actual initial underlier levels for the basket underliers may differ substantially
from their respective underlier levels prior to the trade date.
For these reasons, the actual performance of the basket underliers
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 hypothetical historical basket closing levels and historical levels of the basket underliers shown below
under “The Basket and Basket Underliers — Hypothetical Historical Basket Level” and “The Basket and Basket
Underliers — Historical High, Low and Closing Levels of the Basket Underlier” in this preliminary pricing supplement.
Before investing in the offered notes, you should consult publicly available information to determine the levels of the underlier
between the date of this preliminary pricing supplement and the date of your purchase of the offered notes.
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.
Any rate of return you may earn on an investment
in the notes may be lower than that which you could earn on a comparable investment in the underlier stocks. Among other things,
the return on the notes will not reflect any dividends that may be paid on the underlier stocks.
The levels in the left column of the table below represent
hypothetical final basket levels and are expressed as percentages of the initial basket level. The amounts in the right column
represent the hypothetical cash settlement amounts, based on the corresponding hypothetical final basket level (expressed as a
percentage of the initial basket 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 deliver 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 basket level (expressed as a percentage
of the initial basket level) and the assumptions noted above.
Hypothetical Final Basket Level
(as Percentage of Initial Basket Level)
|
Hypothetical Cash Settlement Amount
(as Percentage of Face Amount)
|
|
150.000%
|
141.580%
|
|
140.000%
|
141.580%
|
|
130.000%
|
141.580%
|
|
120.000%
|
141.580%
|
|
113.860%
|
141.580%
|
|
108.000%
|
124.000%
|
|
105.000%
|
115.000%
|
|
100.000%
|
100.000%
|
|
95.000%
|
95.000%
|
|
90.000%
|
90.000%
|
|
80.000%
|
80.000%
|
|
70.000%
|
70.000%
|
|
60.000%
|
60.000%
|
|
50.000%
|
50.000%
|
|
25.000%
|
25.000%
|
|
0.000%
|
0.000%
|
If, for example, the final basket level were determined to be 25.000% of the initial basket level, the cash
settlement amount that we would deliver on your notes at maturity would be 25.000% 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 75.000% 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 basket level were determined to be 150.000%
of the initial basket level, the cash settlement amount that we would deliver on your notes at maturity would be capped at the
maximum settlement amount (expressed as a percentage of the face amount), or 141.580% 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 basket level over 113.860% of the initial basket 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 basket level (expressed as a percentage of the initial basket level)
were any of the hypothetical levels shown on the horizontal axis. The chart shows that any hypothetical final basket level (expressed as a percentage of
the initial basket level) of less than 100.000% (the section left
of the 100.000% 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 basket level (expressed as a percentage of the initial basket level) of greater than or equal to 113.860% (the section right of the 113.860% 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 levels of the basket 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” on pages 15 and 17 in this preliminary pricing supplement.
The following examples illustrate the hypothetical cash settlement
amount on each $1,000 principal amount note based on hypothetical initial underlier levels of the basket underliers and hypothetical
final underlier levels of the basket underliers calculated based on the key terms and assumptions above. The levels in Column A
represent the hypothetical initial underlier levels for each basket underlier, and the levels in Column B represent hypothetical
final underlier levels for each basket underlier. The percentages in Column C represent the appreciation or depreciation of the
hypothetical final underlier levels as compared to the respective hypothetical initial underlier
levels. The amounts in Column D represent the hypothetical weighting multiplier for each basket underlier, and the amounts in Column
E represent the products of Column B times the corresponding amounts in Column D. The final basket level
for each example is shown
beneath each example, and will equal the sum of the five products shown in Column E. The basket return for each example is shown
beneath the final basket level for such example, and will equal the quotient of (i) the final basket level for such example minus
the initial basket level divided by (ii) the initial basket level, expressed as a percentage. The values below have been rounded
for ease of analysis.
The hypothetical initial underlier level for each basket underlier
of 100.00 has been chosen for illustrative purposes only and does not represent a likely initial underlier level for that basket
underlier. Because each hypothetical initial underlier level has been set to 100.00, these examples do not accurately reflect the
differences in the levels of the basket underliers. For historical data regarding the actual historical levels of the basket underliers,
please see the historical information set forth below under “The Basket and the Basket Underliers”.
Example 1: The final basket level is greater than
the initial basket level and less than the cap level. The cash settlement amount exceeds the $1,000 principal amount.
|
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
|
Basket
Underlier
|
Hypothetical
Initial Underlier Level
|
Hypothetical
Final Underlier Level
|
Appreciation/
Depreciation
|
Hypothetical
Weighting Multiplier
|
Column
B ×
Column D
|
|
EURO STOXX 50
®
Index
|
100.00
|
105.00
|
5%
|
0.370000000
|
38.85
|
|
FTSE
®
100 Index
|
100.00
|
105.00
|
5%
|
0.230000000
|
24.15
|
|
TOPIX
®
Index
|
100.00
|
105.00
|
5%
|
0.230000000
|
24.15
|
|
Swiss Market Index (SMI)
®
|
100.00
|
105.00
|
5%
|
0.090000000
|
9.45
|
|
S&P/ASX 200 Index
|
100.00
|
105.00
|
5%
|
0.080000000
|
8.40
|
|
|
|
|
|
Final Basket Level:
|
105.00
|
|
|
|
|
|
Basket Return:
|
5.00%
|
In this example, all of the hypothetical final underlier
levels for the basket underliers are greater than the applicable hypothetical initial underlier levels, which results in the hypothetical
final basket level being greater than the initial basket level of 100.00. Because the hypothetical final basket level of 105.00
exceeds the initial basket level and is less than the cap level, the hypothetical cash settlement amount will equal:
Cash settlement amount = $1,000 + ($1,000 × 300.00% × 5.00%) = $1,150.00
Example 2: The final basket level is greater than
the initial basket level and greater than or equal to the cap level. The cash settlement amount equals the maximum settlement amount.
|
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
|
Basket
Underlier
|
Hypothetical
Initial Underlier Level
|
Hypothetical
Final Underlier Level
|
Appreciation/
Depreciation
|
Hypothetical
Weighting Multiplier
|
Column
B ×
Column D
|
|
EURO STOXX 50
®
Index
|
100.00
|
150.00
|
50%
|
0.370000000
|
55.50
|
|
FTSE
®
100 Index
|
100.00
|
150.00
|
50%
|
0.230000000
|
34.50
|
|
TOPIX
®
Index
|
100.00
|
150.00
|
50%
|
0.230000000
|
34.50
|
|
Swiss Market Index (SMI)
®
|
100.00
|
150.00
|
50%
|
0.090000000
|
13.50
|
|
S&P/ASX 200 Index
|
100.00
|
150.00
|
50%
|
0.080000000
|
12.00
|
|
|
|
|
|
Final Basket Level:
|
150.00
|
|
|
|
|
|
Basket Return:
|
50.00%
|
In this example, all of the hypothetical final underlier
levels for the basket underliers are greater than the applicable hypothetical initial underlier levels, which results in the hypothetical
final basket level being greater than the initial basket level of 100.00. Because the hypothetical final basket level of 150.00
exceeds the initial basket level and is greater than the cap level, the hypothetical cash settlement amount will be capped at the
maximum settlement amount of $1,415.80 for each $1,000 face amount of your notes.
Example 3: The final basket level is less than the
initial basket level. The cash settlement amount is less than the $1,000 principal amount.
|
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
|
Basket
Underlier
|
Hypothetical
Initial Underlier Level
|
Hypothetical
Final Underlier Level
|
Appreciation/
Depreciation
|
Hypothetical
Weighting Multiplier
|
Column
B ×
Column D
|
|
EURO STOXX 50
®
Index
|
100.00
|
40.00
|
-60%
|
0.370000000
|
14.80
|
|
FTSE
®
100 Index
|
100.00
|
100.00
|
0%
|
0.230000000
|
23.00
|
|
TOPIX
®
Index
|
100.00
|
100.00
|
0%
|
0.230000000
|
23.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
130.00
|
30%
|
0.090000000
|
11.70
|
|
S&P/ASX 200 Index
|
100.00
|
130.00
|
30%
|
0.080000000
|
10.40
|
|
|
|
|
|
Final Basket Level:
|
82.90
|
|
|
|
|
|
Basket Return:
|
-17.10%
|
In this example, the hypothetical final underlier level
of the EURO STOXX 50
®
Index is less than its hypothetical initial underlier level, while the hypothetical final
underlier levels of the FTSE
®
100 Index and TOPIX
®
Index are equal to their applicable hypothetical
initial underlier levels and the hypothetical final underlier levels of the Swiss Market Index (SMI)
®
and S&P/ASX
200 Index are greater than their applicable hypothetical initial underlier levels.
Because the basket is unequally weighted, increases in
the lower weighted basket underliers will be offset by decreases in the more heavily weighted basket underliers. In this example,
the large decline in the EURO STOXX 50
®
Index results in the hypothetical final basket level being less than the
initial basket level, even though the FTSE
®
100 Index and TOPIX
®
Index remained flat and the Swiss
Market Index (SMI)
®
and the S&P/ASX 200 Index increased.
Because the hypothetical final basket level of 82.90
is less than the initial basket level, the cash settlement amount will equal:
Cash settlement amount = $1,000 +
[$1,000 × -17.10%] = $829.00
Example 4: The final basket level is less than the initial
basket level. The cash settlement amount is less than the $1,000 principal amount.
|
|
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
|
Basket
Underlier
|
Hypothetical
Initial Underlier Level
|
Hypothetical
Final Underlier Level
|
Appreciation/
Depreciation
|
Hypothetical
Weighting Multiplier
|
Column
B ×
Column D
|
|
EURO STOXX 50
®
Index
|
100.00
|
60.00
|
-40%
|
0.370000000
|
22.20
|
|
FTSE
®
100 Index
|
100.00
|
65.00
|
-35%
|
0.230000000
|
14.95
|
|
TOPIX
®
Index
|
100.00
|
60.00
|
-40%
|
0.230000000
|
13.80
|
|
Swiss Market Index (SMI)
®
|
100.00
|
55.00
|
-45%
|
0.090000000
|
4.95
|
|
S&P/ASX 200 Index
|
100.00
|
70.00
|
-30%
|
0.080000000
|
5.60
|
|
|
|
|
|
Final Basket Level:
|
61.50
|
|
|
|
|
|
Basket Return:
|
-38.50%
|
In this example, the hypothetical final underlier levels
for all of the basket underliers are less than the applicable hypothetical initial underlier levels, which results in the hypothetical
final basket level being less than the initial basket level of 100.00. Since the hypothetical final basket level of 61.50 is less
than the initial basket level, the hypothetical cash settlement amount for each $1,000 face amount of your notes will equal:
Cash settlement amount = $1,000 +
[$1,000 × -38.50%] = $615.00
|
We cannot predict the actual final basket level, the level of any particular basket underlier or what the market value of your notes will be on any particular trading day, nor can we predict the relationship between the basket 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 initial underlier level and weighting multiplier for each basket underlier, the cap level and the maximum settlement amount, which we will set on the trade date, the actual final basket level determined by the calculation agent as described above and the price you pay for your notes. 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 April 29, 2016, and “Risk Factors” in the accompanying product supplement, dated May 2, 2016. You should carefully review these risks as well as the terms of the notes described herein and in the accompanying prospectus, dated April 29, 2016, as supplemented by the accompanying index supplement, dated April 29, 2016 and the accompanying product supplement, dated May 2, 2016, 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 basket underliers 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 basket as measured from the
initial basket level set on the trade date to the final basket level on the determination date. If the final basket level is
less
than
the initial basket level, you will have a loss for each $1,000 of the face amount of your notes equal to the
product
of (a) the basket return
times
(b) $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 1% of the face amount of each
of your notes for every 1% negative basket return.
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 basket return multiplied
by the upside participation rate, even if such return is positive. You can receive the full benefit of any positive basket 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 basket over the life of your notes and the positive effects of the upside participation rate on any positive basket return
will be limited because of the cap level, which will be set on the trade date. 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 basket 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 basket underliers.
Your Notes Will 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.
A Decrease in the Level of
One Basket Underlier May Offset Increases in the Other Basket Underliers on the Determination Date
The cash settlement amount is based on the returns of the
basket underliers; thus, declines in the level of one basket underlier may offset changes in the levels of the other basket underliers
that are positive. As a result, the basket return could be negative even if relatively few of the basket underliers experience
a decrease in their closing levels. As a result, you could lose a portion of your investment in the notes and may lose your entire
investment depending on the performance of the basket
.
In addition, because the basket underliers are not equally weighted,
increases in lower weighted basket underliers may be offset by even small decreases in more heavily weighted basket underliers.
Market Risk
The return on the notes is directly linked to the performance
of the basket and indirectly linked to the value of the basket underliers (and the underlier stocks), and the extent to which the
basket return is positive or negative. The level of the basket can rise or fall sharply due to factors specific to the basket underliers
(and the underlier stocks), as well as general market factors, such as general market volatility and levels, interest rates and
economic and political conditions. You may lose some or all of your initial investment.
Fair Value Considerations
The Issue Price You Pay for the Notes
Will Exceed Their Estimated Initial Value
The issue price you pay for the notes will exceed their estimated
initial value as of the trade date due to the inclusion in the issue price of the hedging costs, issuance
costs and projected profits. As of the close of the relevant markets on the trade date, we will determine the estimated initial
value of the notes by reference to our internal pricing models and it will be set forth in the final pricing supplement. The pricing
models used to determine the estimated initial value of the notes incorporate certain variables, including the level of the basket
and basket underliers, the volatility of the basket and basket underliers, the correlation among the basket underliers, the 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. The hedging costs, issuance 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 will be 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 the 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 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 basket and basket underliers; the volatility of the basket and
basket underliers; the correlation among the basket underliers; 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 the 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 notes in any secondary market.
The Amount Payable on Your Notes Is
Not Linked to the Level of Any Basket Underlier at Any Time Other than the Determination Date
The final basket level will be based on the basket
closing level on the determination date (and therefore will be based on the closing levels of the basket underliers on the determination
date), except in the limited circumstances described under “General Terms of the Notes – Consequences of a Market Disruption
Event or a Non-Trading Day” and “General Terms of the Notes – Discontinuance of or Adjustments to the Index or
an Index Basket Underlier; Alteration of Method of Calculation” in the accompanying product supplement. Therefore, if the
closing level of one or more of the basket underliers dropped precipitously 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 levels
of the basket underliers prior to such drop in the levels of the basket underliers. Although the actual levels of the basket underliers
on the stated maturity date or at other times during the life of your notes may be higher than the final underlier levels, you
will not benefit from the closing levels of the basket underliers 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 the final pricing supplement. The issue price 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 the final 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 cap level on the return on
your investment, and the extent to which the cap level will diminish your exposure to any positive basket return (as leveraged
by the upside participation rate), will 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.
The Market Value of Your Notes May
Be Influenced by Many Unpredictable Factors
When we refer to the market value of your notes, we mean the
value that you could receive for your notes if you chose to sell them in the open market before the stated maturity date. A number
of factors, many of which are beyond our control, will influence the market value of your notes, including:
|
|
·
|
the volatility – i.e., the frequency and magnitude
of changes – in the level of the basket and the basket underliers;
|
|
|
·
|
the dividend rates of the underlier stocks;
|
|
|
·
|
economic, financial, legislative, regulatory and political,
military or other events that may affect the prices of any of the underlier stocks and thus the level of the basket;
|
|
|
·
|
other interest rate and yield rates in the market;
|
|
|
·
|
fluctuations in the exchange rate between currencies
in which the relevant ordinary shares are quoted and traded and the U.S. dollar; and
|
|
|
·
|
our creditworthiness, whether actual or perceived,
and including actual or anticipated upgrades or downgrades in our credit ratings or changes in other credit measures.
|
These factors will influence the price you will receive if
you sell your notes before maturity, including the price you may receive for your notes in any market-making transaction. If you
sell your notes prior to maturity, you may receive less than the face amount of your notes.
You cannot predict the future levels of the basket based on
its hypothetical historical performance. The actual change in the value in the basket over the life of the notes, as well as the
amount payable on the stated maturity date, may bear little or no relation to the hypothetical historical basket closing levels
or to the hypothetical examples shown elsewhere in this preliminary pricing supplement.
If the Level of the Basket
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 basket. Changes in the level of the basket 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 basket level and subject to the maximum settlement
amount. If the basket return is negative and the final basket level is less than the initial basket 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 “— The
Market Value of Your Notes May Be Influenced by Many Unpredictable Factors” above.
The Basket Underliers Reflect Price Return,
Not Total Return
The return on your notes is based on the performance of the
basket, which reflects the changes in the market levels of the basket underliers, and the prices of their 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 That Affect
Any Basket 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 an underlier sponsor, each
as defined under “The Basket and the Basket Underliers” below, concerning a basket 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 any basket underlier, could affect the level of that
basket underlier, and, therefore, could affect the amount payable on your notes at maturity 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 an underlier sponsor changes
these policies, for example by changing the manner in which it calculates a basket underlier, or if an underlier sponsor discontinues
or suspends calculation or publication of a basket underlier, in which case it may become difficult to determine the market value
of the notes. If events such as these occur, or if any final underlier level (and therefore the final basket level) is not available
because of a market disruption event, non-trading day or for any other reason, and no successor basket underlier is selected, the
calculation agent—which initially will be UBS Securities LLC, an affiliate of UBS—may determine the final underlier
level (and therefore the final basket level)—and thus the amount payable at maturity—in a manner it considers appropriate.
Your
Notes Are Subject to Non-U.S. Securities Market Risk
Each of the basket underliers is subject to
risks associated with non-U.S. securities markets, specifically the regions of the Eurozone, United Kingdom, Japan, Switzerland
and Australia. An investment in notes linked directly or indirectly to the value of securities issued by non-U.S. companies involves
particular risks.
Generally, non-U.S. securities and futures markets may be more volatile than U.S. securities and futures markets,
and market developments may affect non-U.S. markets differently from U.S. securities and futures markets. Direct or indirect government
intervention to stabilize these non-U.S. markets, as well as cross shareholdings in non-U.S. companies, may affect trading prices
and volumes in those markets. There is generally less publicly available information about non-U.S. companies than about those
U.S. companies that are subject to the reporting requirements of the SEC, and non-U.S. companies are subject to accounting, auditing
and financial reporting standards and requirements that differ from those applicable to U.S. reporting companies. Similarly, regulations
of the Commodity Futures Trading Commission generally do not apply to trading on non-U.S. exchanges, and trading on non-U.S. exchanges
may involve different and greater risks than trading on U.S. exchanges.
Securities and futures prices in non-U.S. countries are subject to political, economic, financial and
social factors that may be unique to the particular country. These factors, which could negatively affect the non-U.S. securities
and futures markets, include the possibility of recent or future changes in the non-U.S. government’s economic and fiscal
policies, the possible imposition of, or changes in, currency exchange laws or other non-U.S. laws or restrictions applicable
to non-U.S. companies or investments in non-U.S. securities or futures contracts and the possibility of fluctuations in the rate
of exchange between currencies. Moreover, certain aspects of a particular non-U.S. economy may differ favorably or unfavorably
from the U.S. economy in important respects, such as growth of gross national product, rate of inflation, capital reinvestment,
resources and self-sufficiency.
The Basket Return For
the Notes Will Not Be Adjusted for Changes in Exchange Rates Related to the U.S. Dollar, Which Might Affect a Basket Underlier
Whose Underlier Stocks Are Traded in Currencies Other Than the U.S. Dollar.
Although the underlier stocks for the basket
underliers are traded in currencies other than the U.S. dollar, the notes are denominated in U.S. dollars, and the calculation
of the amount payable on the notes at maturity will not be adjusted for changes in the exchange rates between the U.S. dollar and
any of the currencies in which such underlier stocks are
denominated. Changes in exchange rates, however, may
reflect changes in various non-U.S.
economies that in turn may affect the levels of the basket underliers (and therefore the basket closing level) or basket return,
as applicable, and therefore, the amount payable on your notes. The amount we pay in respect of the notes on the stated maturity
date will be determined solely in accordance with the procedures described in “General Terms of the Notes” beginning
on page PS-51 in the accompanying product supplement.
UBS Cannot Control Actions
By the Underlier Sponsors and the Underlier Sponsors Have No Obligation To Consider Your Interests
UBS and its affiliates are not affiliated with
any underlier sponsors and have no ability to control or predict their actions, including any errors in or discontinuation of public
disclosure regarding methods or policies relating to the calculation of the basket underliers. The underlier sponsors are not involved
in the notes offering in any way and have no obligation to consider your interest as an owner of the notes in taking any actions
that might affect the market value of your notes.
Potential Conflict of Interest
UBS and its affiliates may engage in business related to
the basket underliers 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 basket return and the cash settlement amount based on the final underlier levels
and final basket level. The calculation agent can postpone the determination of any final underlier level (and therefore the final
basket level) if a market disruption event occurs and is continuing on the determination date. The calculation agent also has discretion
in making certain adjustments relating to a modification of the basket. As UBS determines the economic terms of the notes, including
the upside participation rate and cap level, and such terms include hedging costs, issuance 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.
Under Certain Circumstances, the Swiss
Financial Market Supervisory Authority (“FINMA”) has the Power to Take Actions That May Adversely Affect the Notes
Pursuant to article 25 et seq. of the Swiss Banking Act,
FINMA has broad statutory powers to take measures and actions in relation to UBS if it (i) is overindebted, (ii) has serious liquidity
problems or (iii) fails to fulfill the applicable capital adequacy provisions after expiration of a deadline set by FINMA. If one
of these prerequisites is met, the Swiss Banking Act grants significant discretion to FINMA to open restructuring proceedings or
liquidation (bankruptcy) proceedings in respect of, and/or impose protective measures in relation to, UBS. 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. In a restructuring proceeding,
the resolution plan may, among other things, (a) provide for the transfer of UBS’s assets or a portion thereof, together
with debts and other liabilities, and contracts of UBS, to another entity, (b) provide for the conversion of UBS’s debt and/or
other obligations, including its obligations under the notes, into equity, and/or (c) potentially provide for haircuts on obligations
of UBS, including its obligations under the notes. Although no precedent exists, if one or more measures under the revised regime
were imposed, such 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.
Uncertain Tax Treatment
Significant aspects of the tax treatment of the Notes are
uncertain. There are no statutory provisions, regulations, published rulings or judicial decisions addressing the characterization
for U.S. federal income tax purposes of securities with terms that are substantially the same as the notes, 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 pre-paid financial 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.
The IRS has released a notice that may affect the taxation of holders of the notes. According to Notice 2008-2,
the IRS and the Treasury Department 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 Department are also considering other relevant issues, including whether additional gain or loss from such instruments
should be treated as ordinary or capital, whether foreign 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 United States
federal income tax purposes in accordance with the treatment described above under “Supplemental discussion of U.S. federal
income tax consequences” and under “Supplemental U.S. Tax Considerations” in the accompanying product supplement,
unless and until such time as the Treasury Department and the IRS determine that some other treatment is more appropriate.
Prospective 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 “Supplemental U.S. Tax Considerations” in the accompanying product supplement.
THE BASKET AND THE BASKET UNDERLIERS
The basket consists of five basket underliers with the following
weights: the EURO STOXX 50
®
Index (37.00% weighting), FTSE
®
100 Index (23.00% weighting), TOPIX
®
Index
(23.00% weighting), Swiss Market Index (SMI)
®
(9.00% weighting) and S&P/ASX 200 Index (8.00%
weighting).
HYPOTHETICAL HISTORICAL BASKET LEVELS
Because the basket is a newly created basket and its level
will begin to be calculated only on the trade date, there is no actual historical information about the basket closing levels as
of the date of this preliminary pricing supplement. Therefore, the hypothetical basket closing levels of the basket below are calculated
based on publicly available information for each basket underlier as 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 hypothetical basket closing levels have fluctuated in the past and may, in the
future, experience significant fluctuations. Any hypothetical historical upward or downward trend in the basket closing level during
any period shown below is not an indication that the basket is more or less likely to increase or decrease at any time during the
life of your notes.
The following table sets forth the hypothetical quarterly
basket closing levels for the basket.
Past hypothetical performance of the basket is not indicative of the future performance
of the basket, assuming the basket closing level was 100 on January 4, 2013.
|
Quarter
Begin
|
Quarter
End
|
Hypothetical
Quarterly Basket Closing Level
|
|
1/4/2013
|
3/28/2013
|
105.26
|
|
4/2/2013
|
6/28/2013
|
106.30
|
|
7/1/2013
|
9/30/2013
|
113.89
|
|
10/1/2013
|
12/30/2013
|
121.01
|
|
1/6/2014
|
3/31/2014
|
119.15
|
|
4/1/2014
|
6/30/2014
|
122.28
|
|
7/1/2014
|
9/30/2014
|
123.63
|
|
10/1/2014
|
12/30/2014
|
124.61
|
|
1/5/2015
|
3/31/2015
|
137.64
|
|
4/1/2015
|
6/30/2015
|
134.04
|
|
7/1/2015
|
9/30/2015
|
121.13
|
|
10/1/2015
|
12/31/2015
|
128.46
|
|
1/4/2016
|
3/31/2016
|
117.79
|
|
4/1/2016
|
6/30/2016
|
115.03
|
|
7/1/2016
|
9/30/2016
|
120.88
|
|
10/3/2016
|
12/30/2016
|
131.30
|
|
1/4/2017
|
3/31/2017
|
135.59
|
|
4/3/2017
|
6/30/2017
|
137.39
|
|
7/3/2017
|
9/29/2017
|
141.59
|
|
10/2/2019*
|
10/18/2019*
|
144.41
|
*As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through October 18, 2017. Accordingly, the “Hypothetical Quarterly
Basket Closing Level” data indicated is for this shortened period only and does not reflect complete data for the fourth
calendar quarter of 2017.
The graph below illustrates the hypothetical performance of the basket from January 4, 2013 through October
18, 2017, based on the daily closing levels of the basket underliers.
Past
hypothetical performance of the basket is not indicative of the future performance of the basket.
EURO STOXX 50
®
Index
We have derived all information contained in this preliminary pricing supplement regarding the EURO STOXX
50
®
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 STOXX Limited. The information included
below supplements the description of the EURO STOXX 50
®
Index found in the accompanying index supplement. Additional
information regarding the EURO STOXX 50
®
Index may be obtained from the STOXX Limited website: stoxx.com. We are
not incorporating by reference the website or any material it includes in this preliminary pricing supplement or any document incorporated
herein by reference.
STOXX Limited has no obligation to continue
to publish the EURO STOXX 50
®
Index, and may discontinue publication of the EURO STOXX 50
®
Index
at any time. The EURO STOXX 50
®
Index is determined, comprised and calculated by STOXX Limited without regard to
the notes.
The EURO STOXX 50
®
Index covers
50 stocks of market sector leaders mainly from 11 Eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. The EURO STOXX 50
®
Index captures a selection of the largest stocks
among the 19 EURO STOXX regional Supersector indices. The largest stocks within those indices are added to the selection list
until coverage is approximately 60% of the free float market capitalization of the corresponding EURO STOXX Total Market Index
(the “EURO STOXX TMI”) Supersector Index and from that selection list the 50 stocks are selected. The EURO STOXX 50
®
Index universe is defined as all components of the 19 EURO STOXX Regional Supersector indices. The EURO STOXX Supersector
indices represent the Eurozone portion of the STOXX 600 Supersector indices, which contain the 600 largest stocks traded on the
major exchanges of 18 European countries. Each component’s weight is capped at 10% of the EURO STOXX 50
®
Index’s total free-float market capitalization.
The top ten underlier stocks of the EURO STOXX 50
®
Index as of September 29, 2017, by weight,
are: Total S.A. (4.64%), Siemens AG (4.14%), Sanofi (3.94%), Bayer AG (3.90%), Banco Santander S.A. (3.87%), SAP SE (3.78%), Allianz
SE (3.49%), BASF SE (3.38%), Unilever N.V. (3.22%) and BNP Paribas (3.21%); underlier stock weights may be found
at stoxx.com/download/indices/factsheets/SX5GT.pdf and are updated periodically.
As of September 29, 2017, the top ten industry sectors which comprise the EURO STOXX 50
®
Index
represent the following weights in the index: Banks (16.1%), Chemicals (9.1%), Health Care (7.4%), Industrial Goods & Services
(10.5%), Insurance (6.8%), Oil & Gas (6.1%), Personal & Household Goods (9.0%), Technology (7.3%) , Telecommunications
(4.9%) and Utilities (5.1%); industry weightings may be found at stoxx.com/download/indices/factsheets/SX5GT.pdf and are updated
periodically. Percentages may not sum to 100% due to rounding. Sector designations are determined by the underlier sponsor using
criteria it has selected or developed. Index sponsors may use very different standards for determining sector designations. In
addition, many companies operate in a number of sectors, but are listed in only one sector and the basis on which that sector is
selected may also differ. As a result, sector comparisons between indices with different index sponsors may reflect differences
in methodology as well as actual differences in the sector composition of the indices.
As of September 29, 2017, the eight countries which comprise the EURO STOXX 50
®
Index represent
the following weights in the index: Belgium (3.1%), Finland (1.2%), France (36.2%), Germany (32.9%), Ireland (1.1%), Italy (4.8%),
Netherlands (10.1%) and Spain (10.6%); country weightings may be found at stoxx.com/download/indices/factsheets/SX5GT.pdf and are
updated periodically.
Information from outside sources is not incorporated by reference in, and should not be considered part of,
this preliminary pricing supplement, the accompanying product supplement, accompanying index supplement or any accompanying prospectus.
UBS has not conducted any independent review or due diligence of any publicly available information with respect to the EURO STOXX
50
®
Index.
Historical High, Low and Closing Levels
of the Basket Underlier
The level of the basket underlier has fluctuated in the past
and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level of the basket
underlier during any period shown below is not an indication that the basket underlier is more or less likely to increase or decrease
at any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as 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 level of the basket underlier on October 18, 2017 was 3,619.65.
Past
performance of the basket underlier is not indicative of the future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
|
Quarter
Begin
|
Quarter
End
|
Quarterly
Closing High
|
Quarterly
Closing Low
|
Quarterly
Close
|
|
1/2/2013
|
3/28/2013
|
2,749.27
|
2,570.52
|
2,624.02
|
|
4/1/2013
|
6/28/2013
|
2,835.87
|
2,511.83
|
2,602.59
|
|
7/1/2013
|
9/30/2013
|
2,936.20
|
2,570.76
|
2,893.15
|
|
10/1/2013
|
12/31/2013
|
3,111.37
|
2,902.12
|
3,109.00
|
|
1/2/2014
|
3/31/2014
|
3,172.43
|
2,962.49
|
3,161.60
|
|
4/1/2014
|
6/30/2014
|
3,314.80
|
3,091.52
|
3,228.24
|
|
7/1/2014
|
9/30/2014
|
3,289.75
|
3,006.83
|
3,225.93
|
|
10/1/2014
|
12/31/2014
|
3,277.38
|
2,874.65
|
3,146.43
|
|
1/2/2015
|
3/31/2015
|
3,731.35
|
3,007.91
|
3,697.38
|
|
4/1/2015
|
6/30/2015
|
3,828.78
|
3,424.30
|
3,424.30
|
|
7/1/2015
|
9/30/2015
|
3,686.58
|
3,019.34
|
3,100.67
|
|
10/1/2015
|
12/31/2015
|
3,506.45
|
3,069.05
|
3,267.52
|
|
1/4/2016
|
3/31/2016
|
3,178.01
|
2,680.35
|
3,004.93
|
|
4/1/2016
|
6/30/2016
|
3,151.69
|
2,697.44
|
2,864.74
|
|
7/1/2016
|
9/30/2016
|
3,091.66
|
2,761.37
|
3,002.24
|
|
10/3/2016
|
12/30/2016
|
3,290.52
|
2,954.53
|
3,290.52
|
|
1/2/2017
|
3/31/2017
|
3,500.93
|
3,230.68
|
3,500.93
|
|
4/3/2017
|
6/30/2017
|
3,658.79
|
3,409.78
|
3,471.33
|
|
7/3/2017
|
9/29/2017
|
3,594.85
|
3,388.22
|
3,594.85
|
|
10/2/2017*
|
10/18/2017*
|
3,619.65
|
3,594.91
|
3,619.65
|
*As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through
October
18, 2017. Accordingly, the “Quarterly Closing High,” “Quarterly Closing Low” and “Quarterly Close”
data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2017
.
The graph below illustrates the performance of the basket underlier from January 3, 2007 through October 18,
2017, based on information from Bloomberg.
Past performance of the basket underlier is not indicative of the future performance of the basket underlier.
FTSE
®
100 Index
We have derived all information contained in
this preliminary pricing supplement regarding the FTSE
®
100 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 the FTSE
®
100 Index Sponsor, FTSE Group. UBS has not conducted any independent review or
due diligence of any publicly available information with respect to the FTSE
®
100 Index. The information included
below supplements the description of the FTSE
®
100 Index found in the accompanying index supplement.
The FTSE Index Sponsor has no obligation to
continue to publish, and may discontinue publication of, the FTSE
®
100 Index. The FTSE Index Sponsor has no obligation
to take into account your interest, or that of anyone else having an interest, in the notes in determining, composing or calculating
the FTSE
®
100 Index.
The FTSE
®
100 Index is a market
capitalization-weighted index and consists of the 100 most highly capitalized UK-domiciled companies traded on the SETS trading
system of the London Stock Exchange (the “Exchange”). To qualify, companies must have a full listing on the Exchange
with a Sterling or Euro denominated price on the Exchange’s SETS trading system, subject to eligibility screens. The FTSE
Europe/Middle East/Africa Regional (“EMEA”) Committee meets quarterly, on the Wednesday before the first Friday in
March, June, September and December, to review the constituents of the FTSE 100 Index. A constant number of constituents are maintained
for the FTSE 100 Index. Where a greater number of companies qualify to be inserted in the FTSE 100 Index than those qualifying
to be deleted, the lowest ranking constituents presently included in the FTSE 100 Index will be deleted to ensure that an equal
number of companies are inserted and deleted at the periodic review. Likewise, where a greater number of companies qualify to be
deleted than those qualifying to be inserted, the securities of the highest ranking companies which are presently not included
in the FTSE 100 Index will be inserted to match the number of companies being deleted at the periodic review.
In addition to the eligibility criteria discussed
under “Underlying” Indices and Underlying Index Publishers— Non-U.S. Indices— FTSE
®
100 Index” on page IS-31 of
the accompanying index supplement, in order to be included in the FTSE
®
100 Index, a company is required to have greater than
5% of its voting rights (aggregated across all of its equity securities, including, where identifiable, those that are not listed
or trading) in the hands of unrestricted shareholders. Current constituents of the FTSE
®
100 Index who do not meet this requirement
will have until the September 2022 review to meet the requirement or they will be removed from the FTSE
®
100 Index.
Additional information on the FTSE
®
100 Index is available on the following website:
ftse.com/products/indices/uk. We are not incorporating by reference the website
or any material it includes in this preliminary pricing supplement.
Index Stock Weighting by Sector as
of September 29, 2017
|
Sector:*
|
|
Percentage (%)**
|
|
Oil & Gas
|
|
12.20%
|
|
|
Personal & Household Goods
|
|
11.71%
|
|
|
Banks
|
|
11.27%
|
|
|
Industrial Goods & Services
|
|
9.74%
|
|
|
Health Care
|
|
8.54%
|
|
|
Financial Services
|
|
7.31%
|
|
|
Basic Resources
|
|
6.47%
|
|
|
Insurance
|
|
5.38%
|
|
|
Travel & Leisure
|
|
4.46%
|
|
|
Food & Beverages
|
|
3.71%
|
|
|
Telecommunications
|
|
3.55%
|
|
|
Media
|
|
3.31%
|
|
|
Retail
|
|
3.21%
|
|
|
Utilities
|
|
3.01%
|
|
|
Real Estate
|
|
2.49%
|
|
|
Construction & Materials
|
|
1.54%
|
|
|
Technology
|
|
1.14%
|
|
|
Chemicals
|
|
0.73%
|
|
|
Automobiles & Parts
|
|
0.25%
|
|
*
Sector designations are determined by the underlier
sponsor using criteria it has selected or developed. Index sponsors may use very different standards for determining sector designations.
In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis on which that sector
is selected may also differ. As a result, sector comparisons between indices may reflect differences in sector designation
methodology as well as actual differences in the sector composition of the indices.
**
Information
provided by the underlier sponsor. Percentages may not sum to 100% due to rounding.
The top five constituent stocks of the FTSE
®
100 Index as of September 29, 2017, by weight,
are: HSBC Holdings PLC (7.78%); British American Tobacco PLC (5.62%); Royal Dutch Shell PLC Class A (5.30%); BP PLC (4.84%) and
Royal Dutch Shell PLC Class B (4.53%).
Information from outside sources is not incorporated by reference in, and should not be considered part of
this preliminary pricing supplement, the accompanying product supplement, accompanying index supplement or any accompanying prospectus.
UBS has not conducted any independent review or due diligence of any publicly available information with respect to the FTSE
®
100 Index. UBS has entered into a non-exclusive license agreement with the FTSE
®
100 Index Sponsor, which grants
UBS a license in exchange for a fee to use the FTSE
®
100 Index in connection with the issuance of certain securities,
including the notes
.
“FTSE
®
100” is a
trademark of the FTSE Index Sponsor and has been licensed for use by UBS. The FTSE
®
100 Index Sponsor has no relation
to UBS, other than the licensing of the FTSE
®
100 Index and its service marks for use in connection with the notes.
The FTSE 100 Index Sponsor disclaims all responsibility
for any errors or omissions in the calculation and dissemination of the FTSE Index or the manner in which the FTSE Index is applied
in determining any initial FTSE 100 Index Initial Underlying Value or FTSE 100 Index Final Underlying Value or any amount payable
upon maturity of the notes.
THE FTSE 100 INDEX SPONSOR DOES NOT GUARANTEE THE ACCURACY
OR THE COMPLETENESS OF THE FTSE 100 INDEX OR ANY DATA INCLUDED IN THE FTSE 100 INDEX. THE FTSE 100 INDEX SPONSOR ASSUMES NO LIABILITY
FOR ANY ERRORS OR OMISSIONS.
Historical High, Low and Closing Levels
of the Basket Underlier
The level of the basket underlier has fluctuated in the past
and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level of the basket
underlier during any period shown below is not an indication that the basket underlier is more or less likely to increase or decrease
at any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The level of the basket underlier on October 18, 2017 was 7,542.87.
Past performance of the basket underlier is not indicative of the
future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
|
Quarter
Begin
|
Quarter
End
|
Quarterly
Closing High
|
Quarterly
Closing Low
|
Quarterly
Close
|
|
1/2/2013
|
3/28/2013
|
6,529.41
|
6,027.37
|
6,411.74
|
|
4/1/2013
|
6/28/2013
|
6,840.27
|
6,029.10
|
6,215.47
|
|
7/1/2013
|
9/30/2013
|
6,681.98
|
6,229.87
|
6,462.22
|
|
10/1/2013
|
12/31/2013
|
6,777.70
|
6,337.91
|
6,749.09
|
|
1/2/2014
|
3/31/2014
|
6,865.86
|
6,449.27
|
6,598.37
|
|
4/1/2014
|
6/30/2014
|
6,878.49
|
6,541.61
|
6,743.94
|
|
7/1/2014
|
9/30/2014
|
6,877.97
|
6,567.36
|
6,622.72
|
|
10/1/2014
|
12/31/2014
|
6,750.76
|
6,182.72
|
6,566.09
|
|
1/2/2015
|
3/31/2015
|
7,037.67
|
6,366.51
|
6,773.04
|
|
4/1/2015
|
6/30/2015
|
7,103.98
|
6,520.98
|
6,520.98
|
|
7/1/2015
|
9/30/2015
|
6,796.45
|
5,898.87
|
6,061.61
|
|
10/1/2015
|
12/31/2015
|
6,444.08
|
5,874.06
|
6,242.32
|
|
1/4/2016
|
3/31/2016
|
6,203.17
|
5,536.97
|
6,174.90
|
|
4/1/2016
|
6/30/2016
|
6,504.33
|
5,923.53
|
6,504.33
|
|
7/1/2016
|
9/30/2016
|
6,941.19
|
6,463.59
|
6,899.33
|
|
10/3/2016
|
12/2/2016
|
7,142.83
|
6,693.26
|
7,142.83
|
|
1/3/2017
|
3/31/2017
|
7,429.81
|
7,099.15
|
7,322.92
|
|
4/3/2017
|
6/30/2017
|
7,547.63
|
7,114.36
|
7,312.72
|
|
7/3/2017
|
9/29/2017
|
7,542.73
|
7,215.47
|
7,372.76
|
|
10/2/2017*
|
10/18/2017*
|
7,556.24
|
7,438.84
|
7,542.87
|
* As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through October 18, 2017. Accordingly, the “Quarterly Closing High,”
“Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened period only and do
not reflect complete data for the fourth calendar quarter of 2017.
The graph below illustrates the performance of the basket underlier from January 2, 2007 through October 18,
2017, based on information from Bloomberg.
Past performance of the basket
underlier is not indicative of the future performance of the basket underlier.
TOPIX
®
Index
We have derived all information contained in this
preliminary pricing supplement regarding the TOPIX
®
Index
contained herein, including, its make-up,
method of calculation and changes in its components, from publicly available information. The TOPIX
®
Index,
also known as the Tokyo Stock Price Index, is a free-float adjusted capitalization-weighted index of all the domestic common
stocks listed on the First Section of the Tokyo Stock Exchange (“TSE”). Domestic stocks admitted to the TSE are
assigned either to the TSE First Section Index, the TSE Second Section Index or the TSE Mothers Index. Stocks listed in the
First Section, which number approximately 1,500, are among the most actively traded stocks on the TSE. The
TOPIX
®
Index is supplemented by the sub-basket components of the 33 industry sectors and was developed with a
base index value of 100 as of January 4, 1968. The TOPIX
®
Index is calculated and published by the TSE.
Additional information about the TOPIX
®
Index is available on the following website:
www.jpx.co.jp/english/markets/indices/topix/. We are not incorporating by reference the website or any material it includes
in this preliminary pricing supplement.
Composition and Maintenance. The TOPIX
®
Index is composed of all domestic common stocks listed on the TSE First Section, excluding temporary issues and preferred
stocks. Companies scheduled to be delisted or newly listed companies that are still in the waiting period are excluded from the
TOPIX
®
Index. The TOPIX
®
Index has no constituent review. The number of constituents will change
according to new listings and delistings.
|
Index Stock Weighting by Sector as of September 29, 2017
|
|
Percentage (%)*
|
|
|
Air Transportation
|
0.60%
|
|
Banks
|
7.61%
|
|
Chemicals
|
7.09%
|
|
Construction
|
3.27%
|
|
Electric Appliances
|
13.40%
|
|
Electric Power and Gas
|
1.66%
|
|
Fishery, Agriculture and Forestry
|
0.11%
|
|
Foods
|
4.42%
|
|
Glass and Ceramics Products
|
0.98%
|
|
Information & Communication
|
7.79%
|
|
Insurance
|
2.34%
|
|
Iron and Steel
|
1.22%
|
|
Land Transportation
|
4.03%
|
|
Machinery
|
5.38%
|
|
Marine Transportation
|
0.22%
|
|
Metal Products
|
0.70%
|
|
Mining
|
0.33%
|
|
Nonferrous Metals
|
1.00%
|
|
Oil and Coal Products
|
0.57%
|
|
Other Financing Business
|
1.27%
|
|
Other Products
|
2.18%
|
|
Pharmaceutical
|
4.50%
|
|
Precision Instruments
|
1.57%
|
|
Pulp and Paper
|
0.25%
|
|
Real Estate
|
2.30%
|
|
Retail Trade
|
4.59%
|
|
Rubber Products
|
1.01%
|
|
Securities and Commodities Futures
|
1.04%
|
|
Services
|
4.11%
|
|
Textiles and Apparels
|
0.73%
|
|
Transportation Equipment
|
8.94%
|
|
Warehousing and Harbor Transportation Service
|
0.20%
|
|
Wholesale Trade
|
4.58%
|
* Sector designations are determined by the
TSE using criteria it has selected or developed. The TSE may use very different standards for determining sector designations.
In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis on which that sector
is selected may also differ. As a result, sector comparisons between indices with different index sponsors may reflect differences
in methodology as well as actual differences in the sector composition of the indices.
** Information provided by the TSE. Percentages
may not sum to 100% due to rounding.
Index Calculation. The TOPIX
®
Index is a free-float adjusted market capitalization-weighted index, which reflects movements in the market capitalization from
a base market value of 100 set on the base date of January 4, 1968. The TSE calculates the TOPIX
®
Index multiplying
the base point of 100 by the figure obtained from dividing the current free float adjusted market value by the base market value.
The resulting value is not expressed in Japanese yen but presented in terms of points rounded to the nearest one hundredth. The
formula for calculating the TOPIX
®
Index value can be expressed:
|
|
|
|
|
|
Index value = Base point of 100 x Current free float adjusted
market value
|
|
|
|
Base Market Value
|
|
|
|
|
|
The current free float adjusted market value
is the sum of the products of the price and the number of free float adjusted shares for index calculation of each component stock.
The number of free float adjusted shares for
index calculation is the number of listed shares multiplied by free-float weight. The number of listed shares for index calculation
is determined by the TSE. The number of listed shares for index calculation normally coincides with that of listed shares. However,
in the case of a stock split, the number of listed shares increases at the additional listing date which comes after such stock
split becomes effective; on the other hand, the number of listed shares for index calculation increases at the ex-rights date.
Free-float weight is a weight of listed shares
deemed to be available for trading in the market and is determined and calculated by the TSE for each listed company for index
calculation. The free-float weight of one company may be different from that of any other company. Free-float weight is reviewed
once a year in order to reflect the latest distribution of share ownership. The timing of the yearly free-float weight review is
different according to the settlement terms of listed companies. In addition to the yearly review, extraordinary reviews are conducted
in the following cases: allocation of new shares to a third party, strategic exercise of preferred shares or equity warrants, company
spin-off, merger, stock-swap, take-over bid and other events that the TSE judges as appropriate reasons to review.
In the event of any increase or decrease in the current free-float
adjusted market value due to reasons other than fluctuations in the TSE, such as public offerings or changes in the number of constituents
in the TSE First Section, necessary adjustments are made by the TSE to the base market value in order to maintain the continuity
of the TOPIX
®
Index. The TSE makes adjustments as follows:
|
Event
|
Implementation
of Adjustment (After Close of Trading)
|
Price
Used for Adjustments
|
|
Addition
|
Company to be listed on the TSE First Section by initial public offering or via another stock exchange
|
One business day before the last business day of the next month of listing
|
Price on the adjustment date
|
|
Addition
|
Company included in the TOPIX
®
Index is to be delisted and a new company established through stockswap or similar transaction (including merger through establishing new company and company spin-off)
|
One business day before the listing date
|
Base price (used to decide the daily price limit)
|
|
Addition
|
Transfer to the TSE First Section from the Second Section
|
One business day before the last business day after such assignment (a free float weight of 0.00 is used from the transfer date to the adjustment date and thus the number of shares to be used for calculation will be 0.00 during such period)
|
Price on the adjustment date
|
|
Addition
|
Transfer to the TSE First Section from TSE Mothers Index
|
One business day before the last business day of the next month of transfer (a free float weight of 0.00 is used from the transfer date to the adjustment date and thus the number of shares to be used for calculation will be 0.00 during such period)
|
Price on the adjustment date
|
|
Deletion
|
Company to be de-listed due to a stock-swap or similar transaction while the newly established company is promptly listed on the TSE First Section
|
Initial listing date of newly established company (normally two business days after delisting date)
|
Price one business day before the de-listing date (during the period from the delisting date to the business day before the date of removal from the TOPIX
®
Index, the price on the business day before the delisting date is used for index calculation)
|
|
|
Event
|
Implementation
of Adjustment (After Close of Trading)
|
Price
Used for Adjustments
|
|
Deletion
|
Company to be de-listed due to other reason than described above (merger and stockswap with non-surviving company included in the TOPIX
®
Index)
|
One business day before delisting date
|
Price on the business day before the adjustment date
|
|
Deletion
|
Designation of securities to be delisted
|
Three business days after the designation of securities to be delisted (one business day after designation if the day of designation is a holiday)
|
Price on the business day before the adjustment date
|
|
Deletion
|
Transfer to the TSE Second Section from the TSE First Section
|
One business day before the date of the reassignment date
|
Price on the business day before the adjustment date
|
No adjustments will be made to the base market
value in the case of a stock split or reverse stock split.
Retroactive adjustments will not be made to
revise the figures of the TOPIX
®
Index that have already been calculated and disseminated even if issuing companies
file amendments on previously released information.
If trading in a certain constituent is suspended,
the TSE regards it as having no change in its share price for purposes of calculating the TOPIX
®
Index. In the event
of unforeseen circumstances, or if the TSE decides it is impossible to use its existing methods to calculate the TOPIX
®
Index, the TSE may use an alternate method of index calculation as it deems valid.
License Agreement
We expect to enter into a non-exclusive license
agreement with the Tokyo Stock Exchange, Inc. (“TSE”) providing for the license to us, in exchange for a fee, of the
right to use the Tokyo Stock Price Index (“TOPIX Index”), the proprietary data therein contained (“TOPIX Index
Value”) and the trademarks “TOPIX”, Tokyo Stock Exchange” and “Tokyo Stock Price Index/TOPIX”
(collectively, the “TOPIX Marks”) in connection with certain securities, including the notes.
The TOPIX Index Value and the TOPIX Marks are
subject to the proprietary rights owned by the Tokyo Stock Exchange, Inc. and the Tokyo Stock Exchange, Inc. owns all rights and
know-how relating to the TOPIX such as calculation, publication and use of the TOPIX Index Value and relating to the TOPIX Marks.
The Tokyo Stock Exchange, Inc. shall reserve the rights to change the methods of calculation or publication, to cease the calculation
or publication of the TOPIX Index Value or to change the TOPIX Marks or cease the use thereof. The Tokyo Stock Exchange, Inc. makes
no warranty or representation whatsoever, either as to the results stemmed from the use of the TOPIX Index Value and the TOPIX
Marks or as to the figure at which TOPIX Index Value stands on any particular day. The Tokyo Stock Exchange, Inc. gives no assurance
regarding accuracy or completeness of the TOPIX Index Value and data contained therein. Further, the Tokyo Stock Exchange, Inc.
shall not be liable for the miscalculation, incorrect publication, delayed or interrupted publication of the TOPIX Index Value.
No securities are in no way sponsored, endorsed or promoted by the Tokyo Stock Exchange, Inc. The Tokyo Stock Exchange,
Inc. shall not bear any obligation to give
an explanation of the securities or any advice on investments to any purchaser of the notes or to the public. The Tokyo Stock Exchange,
Inc. neither selects specific stocks or groups thereof nor takes into account any needs of the issuing company or any purchaser
of the notes, for calculation of the TOPIX Index Value. Including but not limited to the foregoing, the Tokyo Stock Exchange, Inc.
shall not be responsible for any damage resulting from the issue and sale of the notes.
Information from outside sources is not incorporated
by reference in, and should not be considered part of, this preliminary pricing supplement or any accompanying prospectus.
Historical High, Low
and Closing Levels of the Basket Underlier
The level of the basket underlier has fluctuated in the past
and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level of the basket
underlier during any period shown below is not an indication that the basket underlier is more or less likely to increase or decrease
at any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The level of the basket underlier as of October 18, 2017 was 1,724.64.
Past performance of the basket underlier is not indicative of the
future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
|
Quarter
Begin
|
Quarter
End
|
Quarterly
Closing High
|
Quarterly
Closing Low
|
Quarterly
Close
|
|
1/2/2013
|
3/28/2013
|
1,058.10
|
871.88
|
1,034.71
|
|
4/1/2013
|
6/28/2013
|
1,276.03
|
991.34
|
1,133.84
|
|
7/1/2013
|
9/30/2013
|
1,222.72
|
1,106.05
|
1,194.10
|
|
10/1/2013
|
12/31/2013
|
1,302.29
|
1,147.58
|
1,302.29
|
|
1/2/2014
|
3/31/2014
|
1,306.23
|
1,139.27
|
1,202.89
|
|
4/1/2014
|
6/30/2014
|
1,269.04
|
1,132.76
|
1,262.56
|
|
7/1/2014
|
9/30/2014
|
1,346.43
|
1,228.26
|
1,326.29
|
|
10/1/2014
|
12/31/2014
|
1,447.58
|
1,177.22
|
1,407.51
|
|
1/2/2015
|
3/31/2015
|
1,592.25
|
1,357.98
|
1,543.11
|
|
4/1/2015
|
6/30/2015
|
1,679.89
|
1,528.99
|
1,630.40
|
|
7/1/2015
|
9/30/2015
|
1,691.29
|
1,375.52
|
1,411.16
|
|
10/1/2015
|
12/31/2015
|
1,605.94
|
1,442.74
|
1,547.30
|
|
1/4/2016
|
3/31/2016
|
1,509.67
|
1,196.28
|
1,347.20
|
|
4/1/2016
|
6/30/2016
|
1,407.50
|
1,204.48
|
1,245.82
|
|
7/1/2016
|
9/30/2016
|
1,352.67
|
1,209.88
|
1,322.78
|
|
10/3/2016
|
12/30/2016
|
1,552.36
|
1,301.16
|
1,518.61
|
|
1/4/2017
|
3/31/2017
|
1,577.40
|
1,506.33
|
1,512.60
|
|
4/3/2017
|
6/30/2017
|
1,624.07
|
1,459.07
|
1,611.90
|
|
7/3/2017
|
9/29/2017
|
1,676.17
|
1,590.71
|
1,674.75
|
|
10/2/2017*
|
10/18/2017*
|
1,724.64
|
1,673.62
|
1,724.64
|
* As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through October 18, 2017. Accordingly, the “Quarterly Closing High,”
“Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened period only and do
not reflect complete data for the fourth calendar quarter of 2017.
The graph below illustrates the performance of the basket underlier from January 4, 2007 through October 18,
2017, based on information from Bloomberg.
Past performance of the basket
underlier is not indicative of the future performance of the basket underlier.
Swiss Market Index (SMI)
®
The SMI Index contains approximately 85% of
the entire free float market capitalization of the Swiss equity market and is made up of 20 of the largest and most liquid stocks
from the Swiss Performance Index (“SPI”). Its composition is examined twice a year by the Management Committee and
the Index Commission, and any changes to the index composition of the SMI Index are made once a year. The Swiss Market Index (SMI)
®
(the “SMI Index”) was standardized on June 30, 1988 at a baseline value of 1500 points and is maintained by the SIX
Swiss Exchange Ltd (the “SMI Index Sponsor”). Additional information on the SMI Index is available from the following
website: six-swiss-exchange.com/indices/overview_en.html. We are not incorporating by reference the website or any material it
includes in this preliminary pricing supplement.
The position of each security is determined
by a combination of average free-float market capitalization (compared to the capitalization of the entire SPI) and cumulated on
order book turnover (compared to the total turnover of the SPI). A security is admitted to the SMI Index if it ranks 18 or better
in the selection list. A security ranked 19 or 20 is admitted only if a security that was already included in the SMI Index meets
the exclusion criteria directly (i.e., ranks in position 23 or lower) and no security that either meets the admission criteria
directly (i.e., ranks in position 18 or higher) or is rated higher has moved up in its place. A security is excluded from the SMI
Index if it ranked 23 or lower in the selection list. A security that ranks 21 or 22 is excluded only if it meets the admission
criteria directly (i.e., ranks in position 18 or higher) and no security that either meets the exclusion criteria directly (position
23 or lower) or is rated lower has been excluded in its place.
The SMI Index is a non-dividend-adjusted price
index. The SMI Index is calculated using the Laspeyres method with the weighted arithmetic mean of a defined number of securities
issues. The index level is calculated by dividing the market capitalization of all securities included in the index by a divisor.
The divisor is a technical number used to calculate
the index. If the market capitalization changes due to a corporate event, the divisor changes while the index value remains the
same. The new divisor is calculated on the evening of the day before the corporate event takes effect. Regular cash dividend payments
do not result in adjustments to the divisor. Repayments of capital through the reduction of a share's par value, which can take
the place of a regular cash dividend or constitute a component of the regular distribution, are treated in the same way as a normal
dividend payment and no adjustments are made to the divisor. Distributions such as special dividends and anniversary bonuses that,
contrary to a company's usual dividend policy, are paid out or declared extraordinary dividends, are not deemed dividends in the
above sense. These distributions are considered corporate events and also result in adjustments to the divisor.
As of December 30, 2016, the top ten constituents
of the index (and their respective weightings in the index) were: Nestle SA (22.72%); Novartis AG (19.45%); Roche Holding AG (16.33%);
UBS Group AG (5.75%); Zurich Insurance Group AG (4.22%); ABB Ltd (4.00%); Syngenta AG (3.72%); Compagnie Financiere Richemont SA
(3.52%); Swiss Re AG (3.11%) and Credit Suisse Group AG (2.89%).
As of December 30, 2016, the ICB industry sectors
in the index (and their respective weights) were: Basic Materials (5.2%), Consumer Goods (27.2%), Financials (17.9%), Health Care
(38.2%), Industrials (10.4%) and Telecommunications (1.2%) (may not sum to 100% due to rounding). Sector designations are determined
by the index sponsor using criteria it has selected or developed. Index sponsors may use very different standards for determining
sector designations. In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis
on which that sector is selected may also differ. As a result, sector comparisons between indices with different index sponsors
may reflect differences in methodology as well as actual differences in the sector composition of the indices.
We have derived all information regarding the SMI Index contained
in this preliminary pricing supplement from publicly available information without independent verification. Such information reflects
the policies
of, and is subject to change by the SMI Index Sponsor. The SMI
Index Sponsor owns the copyright and all other rights to the SMI Index. The SMI Index Sponsor has no obligation to continue to
publish, and may discontinue publication of, the SMI Index.
License Agreement
SIX Swiss Exchange AG (“SIX Swiss Exchange”) and
its licensors (“Licensors”) have no relationship to UBS, other than the licensing of the SMI Index and the related
trademarks for use in connection with the notes.
SIX Swiss Exchange and its Licensors do
not
:
|
|
¨
|
sponsor, endorse, sell or promote the notes.
|
|
|
¨
|
recommend that any person invest in the notes or any
other securities.
|
|
|
¨
|
have any responsibility or liability for or make any
decisions about the timing, amount or pricing of the notes.
|
|
|
¨
|
have any responsibility or liability for the administration,
management or marketing of the notes.
|
|
|
¨
|
consider the needs of the notes or the owners of the
notes in determining, composing or calculating the SMI Index or have any obligation to do so.
|
SIX Swiss Exchange and its Licensors give no warranty, and
exclude any liability (whether in negligence or otherwise), in connection with the notes or their performance.
SIX Swiss Exchange does not assume any contractual relationship
with the purchasers of the notes or any other third parties.
Specifically,
|
|
¨
|
SIX Swiss Exchange and its Licensors do not give any
warranty, express or implied, and exclude any liability for:
|
|
|
·
|
The results to be obtained by the notes, the owner
of the notes or any other person in connection with the use of the SMI Index and the data included in the SMI Index;
|
|
|
·
|
The accuracy, timeliness, and completeness of the
SMI Index and its data;
|
|
|
·
|
The merchantability and the fitness for a particular
purpose or use of the SMI Index and its data; or
|
|
|
·
|
The performance of the notes generally.
|
|
|
¨
|
SIX Swiss Exchange and its Licensors give no warranty
and exclude any liability, for any errors, omissions or interruptions in the SMI Index or its data.
|
|
|
¨
|
Under no circumstances will SIX Swiss Exchange or
its Licensors be liable (whether in negligence or otherwise) for any lost profits or indirect, punitive, special or consequential
damages or losses, arising as a result of such errors, omissions or interruptions in the SMI Index or its data or generally in
relation to the notes, even in circumstances where SIX Swiss Exchange or its Licensors are aware that such loss or damage may occur.
|
The licensing Agreement between UBS and SIX Swiss Exchange
is solely for their benefit and not for the benefit of the owners of the notes or any other third parties.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this preliminary pricing supplement or any accompanying prospectus.
Historical High, Low and Closing Levels
of the Basket Underlier
The level of the basket underlier has fluctuated in the past
and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level of the basket
underlier during any period shown below is not an indication that the basket underlier is more or less likely to increase or decrease
at any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The level of the basket underlier on October 18, 2017 was 9,309.61.
Past performance of the basket underlier is not indicative of the future
performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
|
Quarter
Begin
|
Quarter
End
|
Quarterly
Closing High
|
Quarterly
Closing Low
|
Quarterly
Close
|
|
1/2/2013
|
3/28/2013
|
7,864.39
|
7,020.46
|
7,813.67
|
|
4/1/2013
|
6/28/2013
|
8,407.61
|
7,249.47
|
7,683.04
|
|
7/1/2013
|
9/30/2013
|
8,105.39
|
7,675.29
|
8,022.60
|
|
10/1/2013
|
12/31/2013
|
8,351.38
|
7,755.26
|
8,202.98
|
|
1/2/2014
|
3/31/2014
|
8,532.99
|
8,092.53
|
8,453.82
|
|
4/1/2014
|
6/30/2014
|
8,752.86
|
8,280.53
|
8,554.52
|
|
7/1/2014
|
9/30/2014
|
8,840.17
|
8,274.65
|
8,835.14
|
|
10/1/2014
|
12/31/2014
|
9,212.85
|
8,057.54
|
8,983.37
|
|
1/2/2015
|
3/31/2015
|
9,396.29
|
7,899.59
|
9,128.98
|
|
4/1/2015
|
6/30/2015
|
9,471.46
|
8,780.91
|
8,780.91
|
|
7/1/2015
|
9/30/2015
|
9,526.79
|
8,278.07
|
8,513.41
|
|
10/1/2015
|
12/31/2015
|
9,016.56
|
8,375.31
|
8,818.09
|
|
1/4/2016
|
3/31/2016
|
8,701.46
|
7,496.62
|
7,807.89
|
|
4/1/2016
|
6/30/2016
|
8,292.45
|
7,594.49
|
8,020.15
|
|
7/1/2016
|
9/30/2016
|
8,320.99
|
7,898.21
|
8,139.01
|
|
10/3/2016
|
12/30/2016
|
8,259.45
|
7,593.20
|
8,219.87
|
|
1/3/2017
|
3/31/2017
|
8,704.39
|
8,229.01
|
8,658.89
|
|
4/3/2017
|
6/30/2017
|
9,127.61
|
8,529.28
|
8,906.89
|
|
7/3/2017
|
9/29/2017
|
9,176.99
|
8,814.54
|
9,157.46
|
|
10/2/2017*
|
10/18/2017*
|
9,311.69
|
9,242.15
|
9,309.61
|
* As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through October 18, 2017. Accordingly, the “Quarterly Closing High,”
“Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened period only and do
not reflect complete data for the fourth calendar quarter of 2017.
The graph below illustrates the performance of the basket underlier from January 3, 2007 through October 18,
2017, based on information from Bloomberg.
Past performance of the basket
underlier is not indicative of the future performance of the basket underlier.
S&P/ASX 200 Index
The S&P/ASX 200 Index (the “S&P/ASX 200 Index”)
was introduced in April 2000 and is maintained by the S&P/ASX Index Committee (the “ASX Committee”), a team of
five representatives from both S&P Dow Jones Indices LLC (“S&P”) and the Australian Securities Exchange (“ASX”).
As of September 29, 2017, the top 10 underlier stocks by weight were the following: Commonwealth Bank of Australia,
Westpac Banking Corp., ANZ Banking Group, National Australia Bank Ltd., BHP Billiton Ltd., CSL Ltd., Wesfarmers Ltd., Telstra Corp
Ltd., Woolworths Ltd. and Macquarie Group Ltd.
As of September 29, 2017, the 11 GICS industry sectors represented by stocks in the index include: Financials
(37.4%), Materials (16.9%), Real Estate (8.2%), Industrials (7.3%), Consumer Staples (7.2%), Health Care (7.1%), Consumer Discretionary
(4.8%), Energy (4.4%), Telecommunication Services (3.1%), Utilities (2.2%) and Information Technology (1.4%). Sector designations
are determined by the index sponsor using criteria it has selected or developed. Index sponsors may use very different standards
for determining sector designations. In addition, many companies operate in a number of sectors, but are listed in only one sector
and the basis on which that sector is selected may also differ. As a result, sector comparisons between indices with different
index sponsors may reflect differences in methodology as well as actual differences in the sector composition of the indices.
As of September 29, 2017, the countries of domicile included in the index and their relative weights were:
Australia (98.3%), United States (0.7%), New Zealand (0.7%) and United Kingdom (0.2%).
The S&P/ASX 200 Index is composed of the 200 largest
index-eligible stocks listed on the ASX by float-adjusted market capitalization. The index is float-adjusted, covering approximately
80% of Australian equity market capitalization.
The S&P/ASX 200 Index classifies stocks according to
the Global Industry Classification Standard (“GICS”). These sectors, consistent throughout all the S&P-branded
indices, are Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials,
Telecommunication Services and Utilities. GICS classifies a stock according to a number of measures, including revenues, earnings
and the market’s perception of a company.
Only stocks listed on the Australian Stock Exchange (the
“ASX”) are considered for inclusion in the S&P/ASX 200 Index. Stocks are assessed based on the average of their
previous six-month day-end free float adjusted market capitalization. Only stocks that are regularly traded are considered for
inclusion in the S&P/ASX 200 Index. A stock’s liquidity is measured relative to its size peers.
The ASX Committee rebalances constituents quarterly to ensure
adequate market capitalization and liquidity. Both market capitalization and liquidity are assessed using the previous six months’
worth of data to determine index eligibility. Quarterly rebalancing changes take effect on the third Friday of March, June, September
and December. The weighting of constituents in the S&P/ASX 200 Index is determined by a float factor, called an Investable
Weight Factor (“IWF”) assigned to each stock by the ASX Committee. The IWF is a variable that is primarily used to
determine the available float of a security for ASX listed securities. IWFs are reviewed annually as part of the September quarterly
review. However, any event that alters the float of a security in excess of 5% will be implemented as soon as practicable by an
adjustment to the IWF.
The S&P/ASX 200 Index is calculated using a base-weighted
aggregate methodology where the level of an index reflects the total market value of all the component stocks relative to a particular
base period. On any given day, the index value is the quotient of the total available market capitalization of the index’s
constituents and its divisor. Continuity in index values is maintained by adjusting the divisor for all changes in the constituents’
share capital after the base date.
You may find information about the S&P/ASX 200 Index
on the S&P website at http://us.spindices.com/indices/equity/sp-asx-200. We are not incorporating by reference the website or any material it includes
in this preliminary pricing supplement.
We have derived all information regarding the S&P/ASX
200 Index contained herein from publicly available information without independent verification. Such information reflects the
policies of, and is subject to change by, the ASX Committee. Historical performance
of the S&P/ASX Index is not an indication of future performance. Future performance of the S&P/ASX Index may differ significantly
from historical performance, either positively or negatively.
License Agreement
The S&P/ASX Index is a product of S&P or its affiliates
(“SPDJI”) and Australian Securities Exchange, and has been licensed for use by UBS. Standard & Poor’s
®
and S&P
®
are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P Financial”)
and Dow Jones
®
is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). ASX
®
is a registered trademark of Australian Securities Exchange. The trademarks have been licensed to SPDJI and have been sublicensed
for use for certain purposes by UBS. The notes are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P Financial,
any of their respective affiliates (collectively, “S&P Dow Jones Indices”) or Australian Securities Exchange. Neither
S&P Dow Jones Indices nor Australian Securities Exchange make any representation or warranty, express or implied, to the owners
of the notes or any member of the public regarding the advisability of investing in securities generally or in the notes particularly
or the ability of the S&P/ASX Index to track general market performance. S&P Dow Jones Indices and Australian Securities
Exchange only relationship to UBS with respect to the S&P/ASX Index is the licensing of the Index and certain trademarks, service
marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P/ASX Index is determined, composed and calculated
by S&P Dow Jones Indices or Australian Securities Exchange without regard to UBS or the notes. S&P Dow Jones Indices and
Australian Securities Exchange have no obligation to take the needs of UBS or the owners of the notes into consideration in determining,
composing or calculating the S&P/ASX Index. Neither S&P Dow Jones Indices nor Australian Securities Exchange are responsible
for and have not participated in the determination of the prices, and amount of the notes or the timing of the issuance or sale
of the notes or in the determination or calculation of the equation by which notes are to be converted into cash, surrendered or
redeemed, as the case may be. S&P Dow Jones Indices and Australian Securities Exchange have no obligation or liability in connection
with the administration, marketing or trading of the notes. There is no assurance that investment products based on the S&P/ASX
Index will accurately track index performance or provide positive investment returns. S&P is not an investment advisor. Inclusion
of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is
it considered to be investment advice.
NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR
GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P/ASX INDEX OR ANY DATA RELATED THERETO OR ANY
COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO.
S&P DOW JONES INDICES AND AUSTRALIAN STOCK EXCHANGE SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS,
OR DELAYS THEREIN. S&P DOW JONES INDICES AND AUSTRALIAN STOCK EXCHANGE MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY UBS,
OWNERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P/ASX INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES OR AUSTRALIAN STOCK EXCHANGE BE LIABLE
FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING
LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT
LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES
AND UBS, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
Information from outside sources is not incorporated by reference in, and should not be considered part of, this preliminary
pricing supplement or any accompanying prospectus.
Historical High, Low and Closing Levels
of the Basket Underlier
The level of the basket underlier has fluctuated in the past
and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the initial underlier level
during any period shown below is not an indication that the basket underlier is more or less likely to increase or decrease at
any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The level of the basket underlier on October 18, 2017 was 5,890.477.
Past performance of the basket underlier is not indicative of the
future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
|
Quarter
Begin
|
Quarter
End
|
Quarterly
Closing High
|
Quarterly
Closing Low
|
Quarterly
Close
|
|
1/2/2013
|
3/28/2013
|
5,146.905
|
4,690.250
|
4,966.499
|
|
4/1/2013
|
6/28/2013
|
5,220.987
|
4,655.960
|
4,802.591
|
|
7/1/2013
|
9/30/2013
|
5,307.061
|
4,710.289
|
5,218.877
|
|
10/1/2013
|
12/31/2013
|
5,441.411
|
5,062.516
|
5,352.210
|
|
1/2/2014
|
3/31/2014
|
5,462.309
|
5,070.311
|
5,394.831
|
|
4/1/2014
|
6/30/2014
|
5,536.073
|
5,358.948
|
5,395.747
|
|
7/1/2014
|
9/30/2014
|
5,658.511
|
5,264.217
|
5,292.812
|
|
10/1/2014
|
12/31/2014
|
5,549.130
|
5,152.343
|
5,411.018
|
|
1/2/2015
|
3/31/2015
|
5,975.491
|
5,299.237
|
5,891.505
|
|
4/1/2015
|
6/30/2015
|
5,982.694
|
5,422.487
|
5,459.010
|
|
7/1/2015
|
9/30/2015
|
5,706.715
|
4,918.429
|
5,021.629
|
|
10/1/2015
|
12/31/2015
|
5,351.565
|
4,909.555
|
5,295.900
|
|
1/4/2016
|
3/31/2016
|
5,270.475
|
4,765.346
|
5,082.785
|
|
4/1/2016
|
6/30/2016
|
5,408.017
|
4,924.385
|
5,233.375
|
|
7/1/2016
|
9/30/2016
|
5,587.392
|
5,197.500
|
5,435.921
|
|
10/3/2016
|
12/30/2016
|
5,699.068
|
5,156.556
|
5,665.800
|
|
1/3/2017
|
3/31/2017
|
5,896.229
|
5,610.972
|
5,864.905
|
|
4/3/2017
|
6/30/2017
|
5,956.523
|
5,665.721
|
5,721.494
|
|
7/3/2017
|
9/29/2017
|
5,785.102
|
5,655.420
|
5,681.610
|
|
10/2/2017*
|
10/18/2017*
|
5,890.477
|
5,651.766
|
5,890.477
|
* As of the date of this preliminary pricing supplement, available information for the fourth calendar quarter
of 2017 includes data for the period from October 2, 2017 through October 18, 2017. Accordingly, the “Quarterly Closing High,”
“Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened period only and do
not reflect complete data for the fourth calendar quarter of 2017.
The graph below illustrates the performance of the basket underlier from January 2, 2007 through October 18,
2017, based on information from Bloomberg.
Past performance of the basket
underlier is not indicative of the future performance of the basket 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 preliminary 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 preliminary 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 preliminary 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
Preliminary Pricing Supplement
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Page
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Summary Information
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ii
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Investor Suitability
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1
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Key Terms
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3
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Hypothetical Examples
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8
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Additional Risk Factors Specific to Your Notes
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14
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The Basket and the Basket Underliers
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22
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Product Supplement dated May 2, 2016
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Product Supplement Summary
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PS-1
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Hypothetical Returns on Underlier-Linked Notes
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PS-17
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Hypothetical Payment Amounts on Your Notes
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PS-34
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Risk Factors
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PS-35
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General Terms of the Notes
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PS-51
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Use of Proceeds and Hedging
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PS-70
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Supplemental U.S. Tax Considerations
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PS-71
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ERISA Considerations
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PS-79
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Supplemental Plan of Distribution (Conflicts of Interest)
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PS-80
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Index Supplement dated April 29, 2016
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Index Supplement Summary
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IS-1
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Underlying Indices And Underlying Index Publishers
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IS-2
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Dow Jones Industrial Average
TM
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IS-2
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NASDAQ-100 Index
®
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IS-4
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Russell 2000
®
Index
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IS-7
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S&P 500
®
Index
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IS-12
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Commodity Indices
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IS-17
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Bloomberg Commodity Index
SM
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IS-17
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UBS Bloomberg Constant Maturity Commodity Index Excess Return
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IS-24
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Non-U.S. Indices
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IS-29
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EURO STOXX 50
®
Index
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IS-29
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FTSE
TM
100 Index
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IS-31
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Hang Seng China Enterprises Index
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IS-35
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MSCI Indexes
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IS-38
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MSCI-EAFE
®
Index
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IS-38
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MSCI
®
Emerging Markets Index
SM
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IS-38
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MSCI
®
Europe Index
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IS-38
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Prospectus dated April 29, 2016
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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
Capped Leveraged Basket-Linked Medium-Term
Notes, due
UBS Securities LLC