Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-225551
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UBS AG
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$3,012,000
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Capped Leveraged S&P 500® Index-Linked Medium-Term Notes due October 27, 2021
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The notes do not bear interest. The
amount that you will be paid on your notes on the stated maturity date (October 27, 2021) is based on the performance of the S&P
500® Index as measured from the trade date (May 29, 2020) to and including the determination date (October 25,
2021). If the final underlier level on the determination date is greater than the initial underlier level of 3,044.31, the return
on your notes will be positive, subject to the maximum settlement amount of $1,215.40 for each $1,000 face amount of your notes.
If the final underlier level on the determination date is equal to the initial underlier level, you will receive the face amount
of your notes. If the final underlier level on the determination date is less than the initial underlier level, the return
on your notes will be negative. Specifically, you will lose 1% for every 1% negative underlier return. You could lose your entire
investment in the notes.
To determine your cash settlement amount, we
will calculate the underlier return, which is the percentage increase or decrease in the final underlier level from the initial
underlier level. On the stated maturity date, for each $1,000 face amount of your notes, you will receive an amount in cash equal
to:
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if the underlier return is
positive (the final underlier level is greater than the initial underlier level), the sum of (i) $1,000
plus (ii) the product of (a) $1,000 times (b) the upside participation rate of 300% times
(c) the underlier return, subject to the maximum settlement amount;
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if the underlier return is
zero (the final underlier level is equal to the initial underlier level), $1,000; or
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if the underlier return is
negative (the final underlier level is less than the initial underlier level), the sum of (i) $1,000
plus (ii) the product of (a) the underlier 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 8 of this pricing supplement. You should read the additional disclosure herein so that you may better
understand the terms and risks of your investment.
The estimated initial value of the notes
as of the trade date is $990.60 per $1,000 face amount. The estimated initial value of the notes was determined as of the close of
the relevant markets on the date hereof by reference to UBS’ internal pricing models, inclusive of the internal funding rate.
For more information about secondary market offers and the estimated initial value of the notes, see “Additional Risk Factors
Specific To Your Notes — Fair Value Considerations” and “Additional Risk Factors Specific To Your Notes —
Limited or No Secondary Market and Secondary Market Price Considerations” beginning on page 9 of this pricing
supplement.
Original issue date:
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June 5, 2020
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Original issue price:
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100.00% of the face amount
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Underwriting discount1:
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0.00% of the face amount
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Net proceeds to the issuer1:
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100.00% of the face amount
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1 See “Supplemental plan of
distribution (conflicts of interest); secondary markets (if any)” herein for additional information.
Neither the Securities and Exchange
Commission nor any other regulatory body has approved or disapproved of these notes or passed upon the accuracy or adequacy of this
pricing supplement, the accompanying product supplement, the accompanying index supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense. The notes are not bank deposits and are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
UBS Securities LLC
Pricing Supplement dated May 29,
2020.
The issue price, underwriting discount and
net proceeds listed above relate to the notes we sell initially. We may decide to sell additional notes after the date of this
pricing supplement, at issue prices and with underwriting discounts and net proceeds that differ from the amounts set forth above.
The return (whether positive or negative) on your investment in the notes will depend in part on the issue price you pay for such
notes.
UBS Securities LLC, our affiliate, will purchase the notes
from UBS for distribution to one or more registered broker dealers (“dealers”). UBS Securities LLC, the dealers or any
of their respective affiliates may use this pricing supplement in market-making transactions in notes after their initial sale.
Unless UBS, UBS Securities LLC, the dealers or any of their respective affiliates selling such notes to you informs you otherwise
in the confirmation of sale, this pricing supplement is being used in a market-making transaction. See “Supplemental plan
of distribution (conflicts of interest); secondary markets (if any)” in this pricing supplement and “Supplemental Plan
of Distribution (Conflicts of Interest)” in the accompanying product supplement.
SUMMARY INFORMATION
UBS has filed a registration statement
(including a prospectus, as supplemented by a product supplement for the notes and an index supplement for various securities we
may offer, including the notes), with the Securities and Exchange Commission, or SEC, for the offering to which this pricing
supplement relates. Before you invest, you should read these documents and any other documents relating to this offering that
UBS has filed with the SEC for more complete information about UBS and this offering. You may obtain these documents without
cost by visiting EDGAR on the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website is 0001114446.
You may access these documents on the
SEC website at www.sec.gov as follows:
¨
Underlier-Linked Notes product supplement dated November 1, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000091412118002089/ub46174527-424b2.htm
¨ Index Supplement dated October 31, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000091412118002083/ub46174419-424b2.htm
¨
Prospectus dated October 31, 2018:
http://www.sec.gov/Archives/edgar/data/1114446/000119312518314003/d612032d424b3.htm
References to
‘‘UBS,’’ ‘‘we,’’ ‘‘our’’ and ‘‘us’’
refer only to UBS AG and not to its consolidated subsidiaries. In this pricing supplement, ‘‘notes’’ refer
to the Capped Leveraged S&P 500® Index-Linked Medium-Term Notes, that are offered hereby, unless the context
otherwise requires. Also, references to the “accompanying product supplement’’ mean the UBS Underlier-Linked Notes
product supplement, dated November 1, 2018, references to the “accompanying index supplement” mean the UBS index
supplement dated October 31, 2018 and references to the ‘‘accompanying prospectus’’ mean the UBS prospectus
titled ‘‘Debt Securities and Warrants,’’ dated October 31, 2018.
This pricing supplement, together with the
documents listed above, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements as well as
any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for
implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other
things, the matters set forth in “Additional Risk Factors Specific To Your Notes” herein and in “Risk
Factors” 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.
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INVESTOR SUITABILITY
The notes may be suitable for you if:
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You fully understand the risks inherent in an investment in the notes, including the risk of loss of
your entire initial investment.
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You can tolerate a loss of all or a substantial portion of your investment and are willing to make
an investment that has the same downside market risk as that of an investment in the stocks comprising the underlier (the
“underlier stocks”).
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You believe that the level of the underlier will appreciate over the term of the notes and that the
final underlier level is unlikely to exceed the cap level, which is 107.18% of the initial underlier level.
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You understand and accept that your return on the notes is limited by the maximum settlement amount
and you are willing to invest in the notes based on the maximum settlement amount of $1,215.40 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 underlier or the price of the underlier stocks.
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You do not seek guaranteed current income from your investment and are willing to forgo any
dividends paid on the underlier stocks.
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You are willing to hold the notes to maturity, a term of approximately 17 months, and accept that
there may be little or no secondary market for the notes.
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You are willing to assume the credit risk of UBS for all payments under the notes, and understand
that if UBS defaults on its obligations you may not receive any amounts due to you including any repayment of
principal.
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You understand that the estimated initial value of the notes determined by our internal pricing
models is lower than the issue price and that should UBS Securities LLC or any affiliate make secondary markets for the notes, the
price (not including their customary bid-ask spreads) will temporarily exceed the internal pricing model
price.
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The notes may not be suitable for you if:
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You do not fully understand the risks inherent in an investment in the notes, including the risk of
loss of your entire initial investment.
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You require an investment designed to guarantee a full return of principal at
maturity.
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You cannot tolerate a loss of all or a substantial portion of your investment or are not willing to
make an investment that has the same downside market risk as that of an investment in the underlier stocks.
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You believe that the level of the underlier will decline during the term of the notes, or you
believe that the level of the underlier will appreciate over the term of the notes and that the final underlier level is likely to
exceed the cap level, which is 107.18% of the initial underlier level.
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You seek an investment that has unlimited return potential without a cap on appreciation or you are
unwilling to invest in the notes based on the maximum settlement amount of $1,215.40 for each $1,000.00 face amount of your
notes.
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You cannot tolerate fluctuations in the price of the notes throughout their term that may be similar
to or exceed the downside fluctuations in the level of the underlier or the price of the underlier stocks.
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You seek guaranteed current income from this investment or prefer to receive the dividends paid on
the underlier stocks.
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You are unable or unwilling to hold the notes to maturity, a term of approximately 17 months, or you
seek an investment for which there will be an active secondary market.
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You are not willing to assume the credit risk of UBS for all payments under the notes.
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The investor suitability considerations
identified above are not exhaustive. Whether or not the notes are a suitable investment for you will depend on your individual
circumstances and you should reach an investment decision only after you and your investment, legal, tax, accounting and other
advisors have carefully considered the suitability of an investment in the notes in light of your particular circumstances. You
should also review “Additional Risk Factors Specific To Your Notes” in this pricing supplement and the more detailed
“Risk Factors” in the accompanying product supplement for risks related to an investment in the notes.
KEY TERMS
Issuer: UBS AG London Branch
Underlier: S&P
500® Index (Bloomberg symbol, “SPX” <Index>), as maintained by S&P Dow Jones Indices LLC
(“S&P” or the “underlier sponsor”)
Specified currency: U.S. dollars (“$”)
Terms to be specified in accordance with the accompanying
product supplement:
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type of notes: notes linked to a single underlier
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averaging dates: not applicable
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cap level: yes, as described below
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buffer level: 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; $3,012,000 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 this pricing supplement. The issue price, underwriting discount, and net proceeds of the notes in the subsequent sale may differ
substantially (higher or lower) from the original issue price you paid as provided on the cover of this pricing supplement. The
return (whether positive or negative) on your investment in the notes will depend in part on the issue price you pay for such
notes.
Purchase at amount other than face
amount: The amount we will pay you at the stated maturity date for your notes will not be adjusted based on the issue price you
pay for your notes, so if you acquire notes at a premium (or discount) to face amount and hold them to the stated maturity date, it
could affect your investment in a number of ways. The return on your investment in such notes will be lower (or higher) than it
would have been had you purchased the notes at face amount. Also, the cap level would be triggered at a lower (or higher) percentage
return than indicated below, relative to your initial investment. See “Additional Risk Factors Specific To Your Notes —
If You Purchase Your Notes at a Premium to Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes
Purchased at Face Amount and the Impact of Certain Key Terms of the Notes Will be Negatively Affected” in this pricing
supplement.
Supplemental discussion of U.S. federal
income tax consequences: You will be obligated pursuant to the terms of the notes — in the absence of a statutory or
regulatory change or an administrative determination or a judicial ruling to the contrary — to characterize each note for all
tax purposes as a prepaid derivative contract in respect of the underlier, as described under “Material U.S. Federal Income
Tax Consequences” in the accompanying product supplement. Pursuant to this approach, based on certain factual representations
received from us, our counsel, Cadwalader, Wickersham & Taft LLP, is of the opinion that upon the taxable disposition of your
notes, it would be reasonable for you to recognize capital gain or loss equal to the difference, if any, between the amount of cash
you receive at such time and your tax basis in your notes. The U.S. Internal Revenue Service (the “IRS”) might not agree
with this treatment, however, in which case, the timing and character of income or loss on your note could be materially and
adversely affected.
A 30% withholding tax (which may be reduced
by an applicable income tax treaty) is imposed under Section 871(m) of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”) on certain “dividend equivalents” paid or deemed paid to a non-U.S. holder with respect to a
“specified equity-linked instrument” that references one or more dividend-paying U.S. equity securities or indices
containing U.S. equity securities. The withholding tax can apply even if the instrument does not provide for payments that reference
dividends. U.S. Treasury Department (the “Treasury”) regulations provide that the withholding tax applies to all
dividend equivalents paid or deemed paid on specified equity-linked instruments that have a delta of one (“delta-one specified
equity-linked instruments”) issued after 2016 and to all dividend equivalents paid or deemed paid on all other specified
equity-linked instruments issued after 2018. However, the IRS has issued guidance that states that the Treasury and the IRS intend
to amend the effective dates of the Treasury regulations to provide that withholding on dividend equivalents paid or deemed paid
will not apply to specified equity-linked instruments that are not delta-one specified equity-linked instruments and are issued
before January 1, 2023.
Based on our determination that the notes
are not “delta-one” with respect to the underlier or any U.S. underlier stocks, our counsel is of the opinion that the
notes should not be delta-one specified equity-linked instruments and thus should not be subject to withholding on dividend
equivalents. Our determination is not binding on the IRS, and the IRS may disagree with this determination. Furthermore, the
application of Section 871(m) of the Code will depend on our determinations made upon issuance of the notes. If withholding is
required, we will not make payments of any additional amounts.
Nevertheless, after issuance, it is possible
that your notes could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the underlier,
underlier stocks or your notes, and following such occurrence your notes could be treated as delta-one specified equity-linked
instruments that are subject to withholding on dividend equivalents. It is also possible that withholding tax or other tax under
Section 871(m) of the Code could apply to the notes under these rules if you enter, or have entered, into certain
other transactions in respect of the
underlier, underlier stocks or the notes. If you enter, or have entered, into other transactions in respect of the underlier,
underlier stocks or the notes, you should consult your tax advisor regarding the application of Section 871(m) of the Code to your
notes in the context of your other transactions.
Because of the uncertainty regarding the
application of the 30% withholding tax on dividend equivalents to the notes, you are urged to consult your tax advisor regarding the
potential application of Section 871(m) of the Code and the 30% withholding tax to an investment in the notes.
Pursuant to final and temporary Treasury
regulations and other IRS guidance, the withholding and reporting requirements under the Foreign Account Tax Compliance Act
(“FATCA”) generally apply to certain “withholdable payments” and will generally not apply to gross proceeds
on a sale or disposition and will generally apply to certain foreign passthru payments only to the extent that such payments are
made after the date that is two years after final regulations defining the term “foreign passthru payment” are
published. We will not pay additional amounts with respect to such withholding taxes discussed above. Foreign financial institutions
and non-financial foreign entities located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA
may be subject to different rules.
Subject to the paragraph above, you should
read the discussion under “Material U.S. Federal Income Tax Consequences— Foreign Account Tax Compliance Act” in
the accompanying product supplement and consult your tax advisor concerning the potential application of FATCA.
For more information about the tax
consequences of an investment in the notes, you should review carefully the section of the accompanying product supplement entitled
“Material U.S. Federal Income Tax Consequences”.
Cash settlement amount (on the stated
maturity date): For each $1,000 face amount of your notes, we will pay you on the stated maturity date an amount in cash equal
to:
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if the final underlier level is greater than or equal to the cap level, the maximum
settlement amount;
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if the final underlier level is greater than the initial underlier level but less than
the cap level, the sum of (1) $1,000 plus (2) the product of (i) $1,000 times
(ii) the upside participation rate times (iii) the underlier return;
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if the final underlier level is equal to the initial underlier level, $1,000;
or
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if the final underlier level is less than the initial underlier level, the sum of
(1) $1,000 plus (2) the product of (i) $1,000 times (ii) the underlier
return.
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Initial underlier level: 3,044.31
Final underlier level: the closing
level of the underlier on the determination date, except in the limited circumstances described under “General Terms of the
Notes — Market Disruption Event — Consequences of a Market Disruption Event or a Non-Trading Day” and
“General Terms of the Notes — Discontinuance of or Adjustments to the Index Underlier or an Index Basket Underlier;
Alteration of Method of Calculation” in the accompanying product supplement
Underlier return: the quotient
of (1) the final underlier level minus the initial underlier level divided by (2) the initial underlier
level, expressed as a percentage
Upside participation rate:
300.00%
Cap level: 107.18% of the initial
underlier level
Maximum settlement amount: $1,215.40
Trade date: May 29, 2020
Original issue date (settlement
date): June 5, 2020
Determination date: October 25, 2021,
subject to adjustment as described under “General Terms of the Notes — Determination Date” in the accompanying
product supplement.
Stated maturity date: October 27,
2021, subject to adjustment as described under “General Terms of the Notes — Stated Maturity Date” in the
accompanying product supplement, provided, however, that if the determination date is postponed as provided under
“Determination date” above, the stated maturity date will be postponed by the same number of business day(s) from but
excluding the originally scheduled determination date to and including the actual determination date.
No interest: The offered notes do not
bear interest.
No redemption: The offered notes will
not be subject to a redemption right or price dependent redemption right.
No listing: The offered notes will
not be listed on any securities exchange or interdealer quotation system.
Closing level: as described under
“General Terms of the Notes — Closing Level” in the accompanying product supplement
Business day: as described under
“General Terms of the Notes — Business Day” in the accompanying product supplement
Trading day: as described under
“General Terms of the Notes — Trading Day” in the accompanying product supplement
Use of proceeds and hedging: as
described under “Use of Proceeds and Hedging” in the accompanying product supplement
ERISA: as described under
“ERISA Considerations” in the accompanying product supplement
Supplemental plan of distribution
(conflicts of interest); secondary markets (if any): UBS has agreed to sell to UBS Securities LLC, and UBS Securities LLC has
agreed to purchase from UBS, the aggregate face amount of the notes specified on the front cover of this pricing supplement. UBS
Securities LLC initially offered the notes to certain unaffiliated securities dealers at the original issue price set forth on the
cover page of this pricing supplement. We or one of our affiliates will pay a fee to SIMON Markets LLC, a broker-dealer affiliated
with Goldman Sachs & Co. LLC, who is acting as a dealer in connection with the distribution of the notes.
We expect to deliver the notes against
payment therefor in New York, New York on June 5, 2020, which is the fifth business day following the date of this pricing
supplement and of the pricing of the notes. Under Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the
secondary market generally are required to settle in two business days (T + 2), unless the parties to any such trade expressly agree
otherwise. Accordingly, purchasers who wish to trade notes on any date prior to two business days before delivery will be required,
by virtue of the fact that the notes are initially expected to settle in five business days (T + 5), to specify alternative
settlement arrangements to prevent a failed settlement.
Conflicts of
interest: UBS Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in the offering
within the meaning of the Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will
receive the net proceeds from the initial public offering of the notes, thus creating an additional conflict of interest within the
meaning of FINRA Rule 5121. Consequently, the offering is being conducted in compliance with the provisions of FINRA Rule 5121.
UBS Securities LLC
and its affiliates may offer to buy or sell the notes in the secondary market (if any) at prices greater than UBS’ internal
valuation: The value of the notes at any time will vary based on many factors that cannot be predicted. However, the
price (not including UBS Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or
any affiliate would offer to buy or sell the notes immediately after the trade date in the secondary market is expected to exceed
the estimated initial value of the notes as determined by reference to our internal pricing models. The amount of the excess will
decline to zero on a straight line basis over a period ending no later than 3 months after the trade date, provided that UBS
Securities LLC may shorten the period based on various factors, including the magnitude of purchases and other requests from and
negotiated arrangements with selling agents. Notwithstanding the foregoing, UBS Securities LLC and its affiliates are not required
to make a market for the notes and may stop making a market at any time. For more information about secondary market offers and the
estimated initial value of the notes, see “Additional Risk Factors Specific To Your Notes — Fair value
considerations” and “Additional Risk Factors Specific To Your Notes — Limited or No Secondary Market and Secondary
Market Price Considerations” in this pricing supplement.
Prohibition of Sales
to EEA Retail Investors: The notes are not intended to be offered, sold or otherwise made available to and should not be
offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these
purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of
Directive 2014/65/EU, as amended (“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended,
where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a
qualified investor as defined in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation
(EU) No 1286/2014, as amended (the “PRIIPs Regulation”), for offering or selling the notes or otherwise making them
available to retail investors in the EEA has been prepared and therefore offering or selling the notes or otherwise making them
available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
Calculation agent: UBS Securities
LLC
CUSIP no.: 90276BCU5
ISIN no.: US90276BCU52
FDIC: The notes are not bank deposits
and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
HYPOTHETICAL EXAMPLES
The following table and chart are provided
for purposes of illustration only. They should not be taken as an indication or prediction of future investment results and are
intended merely to illustrate the impact that the various hypothetical final underlier levels on the determination date could have
on the cash settlement amount at maturity assuming all other variables remain constant.
The examples below are based on a range of
final underlier levels that are entirely hypothetical; no one can predict what the underlier level will be on any day throughout the
life of your notes, and no one can predict what the final underlier level will be on the determination date. The underlier has been
volatile in the past — meaning that the underlier level has changed considerably in relatively short periods — and its
performance cannot be predicted for any future period.
The information in the following examples
reflects hypothetical rates of return on the offered notes assuming that they are purchased on the original issue date at the face
amount and held to the stated maturity date. If you sell your notes in a secondary market prior to the stated maturity date, your
return will depend upon the market value of your notes at the time of sale, which may be affected by a number of factors that are
not reflected in the table below such as interest rates, the volatility of the underlier and our creditworthiness. In addition, the
estimated value of your notes at the time the terms of your notes were set on the trade date (as determined by reference to our
pricing models) is less than the original issue price of your notes. For more information on the estimated value of your notes, see
“Additional Risk Factors Specific To Your Notes — Fair Value Considerations — The Issue Price You Pay for the
Notes Exceeds Their Estimated Initial Value” in this pricing supplement. The information in the table also reflects the key
terms and assumptions in the box below.
Key Terms and Assumptions
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Face amount
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$1,000.00
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Upside participation rate
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300.00%
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Cap level
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107.180% of the initial underlier level
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Maximum settlement amount
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$1,215.40
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Neither a market disruption event nor a non-trading day occurs on the originally scheduled determination date
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No change in or affecting any of the underlier stocks or the method by which the underlier sponsor calculates the underlier
Notes are purchased on original issue date at the face amount and held to the stated maturity date
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The actual performance of the underlier over
the life of your notes, as well as the amount payable at maturity, if any, may bear little relation to the hypothetical examples
shown below or to the historical underlier levels shown elsewhere in this pricing supplement. For information about the historical
levels of the underlier during recent periods, see “The Underlier — Historical Closing Levels of the Underlier” in
this pricing supplement.
Also, the hypothetical examples shown below
do not take into account the effects of applicable taxes. Because of the U.S. tax treatment applicable to your notes, tax
liabilities could affect the after-tax rate of return on your notes to a comparatively greater extent than the after-tax return on
the underlier stocks.
The levels in the left column of the table
below represent hypothetical final underlier levels and are expressed as percentages of the initial underlier level. The amounts in
the right column represent the hypothetical cash settlement amounts, based on the corresponding hypothetical final underlier level
(expressed as a percentage of the initial underlier level), and are expressed as percentages of the face amount of a note (rounded
to the nearest one-thousandth of a percent). Thus, a hypothetical cash settlement amount of 100.000% means that the value of the
cash payment that we would pay for each $1,000.00 of the outstanding face amount of the offered notes on the stated maturity date
would equal 100.000% of the face amount of a note, based on the corresponding hypothetical final underlier level (expressed as a
percentage of the initial underlier level) and the assumptions noted above.
Hypothetical Final Underlier Level
(as Percentage of Initial Underlier Level)
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Hypothetical Cash Settlement Amount
(as Percentage of Face Amount)
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140.000%
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121.540%
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130.000%
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121.540%
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120.000%
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121.540%
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115.000%
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121.540%
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110.000%
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121.540%
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107.180%
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121.540%
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106.000%
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118.000%
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104.000%
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112.000%
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102.000%
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106.000%
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100.000%
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100.000%
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95.000%
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95.000%
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90.000%
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90.000%
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80.000%
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80.000%
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70.000%
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70.000%
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60.000%
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60.000%
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50.000%
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50.000%
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25.000%
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25.000%
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0.000%
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0.000%
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If, for example, the final underlier level
were determined to be 25.000% of the initial underlier level, the cash settlement amount that we would pay on your notes at maturity
would be 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 underlier level were determined to be 140.000% of the initial underlier level, the cash settlement amount
that we would pay on your notes at maturity would be capped at the maximum settlement amount (expressed as a percentage of the face
amount), or 121.540% of each $1,000.00 face amount of your notes, as shown in the table above. As a result, if you held your notes
to the stated maturity date, you would not benefit from any increase in the final underlier level over 107.180% of the initial
underlier level.
The following chart also shows a graphical
illustration of the hypothetical cash settlement amounts (expressed as a percentage of the face amount of your notes) that we would
pay on your notes on the stated maturity date, if the final underlier level (expressed as a percentage of the initial underlier
level) were any of the hypothetical levels shown on the horizontal axis. The chart shows that any hypothetical final underlier level
(expressed as a percentage of the initial underlier level) of less than 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 underlier level (expressed as a percentage of the initial underlier level) of greater
than or equal to 107.180% (the section right of the 107.180% marker on the horizontal axis) would result in a capped return on your
investment.
The cash settlement amounts shown above are
entirely hypothetical; they are based on market prices for the underlier stocks that may not be achieved on the determination date
and on assumptions that may prove to be erroneous. The actual market value of your notes on the stated maturity date or at any other
time, including any time you may wish to sell your notes, may bear little relation to the hypothetical cash settlement amounts shown
above, and these amounts should not be viewed as an indication of the financial return on an investment in the offered notes. The
hypothetical cash settlement amounts on notes held to the stated maturity date in the examples above assume you purchased your notes
at their face amount and have not been adjusted to reflect the actual issue price you pay for your notes. The return on your
investment (whether positive or negative) in your notes will be affected by the amount you pay for your notes. If you purchase your
notes for a price other than the face amount, the return on your investment will differ from, and may be significantly lower than,
the hypothetical returns suggested by the above examples. Please read “Additional Risk Factors Specific To Your Notes –
Market Risk” and “Additional Risk Factors Specific To Your Notes – If You Purchase Your Notes at a Premium to Face
Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain Key
Terms of the Notes Will be Negatively Affected” in this pricing supplement.
We cannot predict the actual final underlier level or what the market value of your notes
will be on any particular trading day, nor can we predict the relationship between the underlier level and the market value of your
notes at any time prior to the stated maturity date. The actual amount that you will receive, if any, at maturity and the rate of
return on the offered notes will depend on the actual final underlier level, which will be determined by the calculation agent as
described above. Moreover, the assumptions on which the hypothetical returns are based may turn out to be inaccurate. Consequently,
the amount of cash to be paid in respect of your notes, if any, on the stated maturity date may be very different from the
information reflected in the table and chart above.
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ADDITIONAL RISK FACTORS SPECIFIC TO YOUR NOTES
An investment in your notes is subject to the risks
described below, as well as the risks described under “Considerations Relating to Indexed Securities” in the
accompanying prospectus, dated October 31, 2018, and “Risk Factors” in the accompanying product supplement, dated
November 1, 2018. You should carefully review these risks as well as the terms of the notes described herein and in the accompanying
prospectus, dated October 31, 2018, as supplemented by the accompanying index supplement, dated October 31, 2018 and the
accompanying product supplement, dated November 1, 2018, of UBS. Your notes are a riskier investment than ordinary debt securities.
Also, your notes are not equivalent to investing directly in the underlier stocks, i.e., the stocks comprising the underlier to
which your notes are linked. You should carefully consider whether the offered notes are suited to your particular
circumstances.
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You May Lose Your Entire Investment In The
Notes
You can lose your entire investment in the
notes. The cash payment on your notes, if any, on the stated maturity date will be based on the performance of the underlier as
measured from the initial underlier level set on the trade date to the closing level on the determination date. If the final
underlier level is less than the initial underlier level, you will have a loss for each $1,000 of the face amount of your
notes equal to the product of (a) the underlier 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% for
every 1% negative underlier 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
then-current underlier return multiplied by the upside participation rate, even if such return is positive and is less than the
return implied by the maximum settlement amount. You can receive the full benefit of any positive underlier return multiplied by the
upside participation rate subject to the maximum settlement amount, only if you hold your notes to maturity.
The Potential for the Value of Your Notes
to Increase Will Be Limited
Your ability to participate in any change in
the value of the underlier over the life of your notes and the positive effects of the upside participation rate on any positive
underlier return will be limited because of the cap level. The maximum settlement amount will limit the cash settlement amount you
may receive for each of your notes at maturity, no matter how much the level of the underlier may rise beyond the cap level over the
life of your notes. Accordingly, the amount payable for each of your notes may be significantly less than it would have been had you
invested directly in the underlier.
Your Notes Do Not Bear Interest
You will not receive any interest payments
on your notes. As a result, even if the cash settlement amount payable for your notes on the stated maturity date exceeds the face
amount of your notes, the overall return you earn on your notes may be less than you would have earned by investing in a
conventional debt security of comparable maturity that bears interest at a prevailing market rate.
The Notes Are Subject to the Credit Risk
of the Issuer
The notes are unsubordinated, unsecured debt
obligations of the issuer, UBS, and are not, either directly or indirectly, an obligation of any third party. Any payment to be made
on the notes, including any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come due. As a
result, the actual and perceived creditworthiness of UBS may affect the market value of the notes and, in the event UBS were to
default on its obligations, you may not receive any amounts owed to you under the terms of the notes and you could lose your entire
initial investment.
Market Risk
The return on the notes is directly linked
to the performance of the underlier and indirectly linked to the value of the underlier stocks, and the extent to which the
underlier return is positive or negative. The level of the underlier can rise or fall sharply due to factors specific to the
underlier stocks, as well as general market factors, such as general market volatility and levels, interest rates and economic and
political conditions. Recently, the coronavirus infection has caused volatility in the global financial markets and a slowdown in
the global economy. Coronavirus or any other communicable disease or infection may adversely affect the issuers of the underlier
stocks and, therefore, the underlier. You may lose some or all of your initial investment.
Fair Value Considerations
The Issue Price You Pay for the Notes
Exceeds Their Estimated Initial Value
The issue price you pay for the notes
exceeds their estimated initial value as of the trade date due to the inclusion in the issue price of hedging costs, issuance and
other costs and projected profits. As of the close of the relevant markets on the trade date, we have determined the estimated
initial value of the notes by reference to our internal pricing models and it is set forth in this pricing supplement. The pricing
models used to determine the estimated initial value of the notes incorporate certain variables, including the level of the
underlier, the volatility of the underlier, any expected dividends on the underlier stocks, prevailing interest rates, the term of
the notes and our internal funding rate. Our internal funding rate is typically lower than the rate we would pay to issue
conventional fixed or floating rate debt securities of a similar term. Hedging costs, issuance and other costs, projected profits
and the difference in rates will reduce the economic value of the notes to you. Due to these factors, the estimated initial value of
the notes as of the trade date is less than the issue price you pay for the notes.
The Estimated Initial Value Is a Theoretical
Price; the Actual Price that You May Be Able to Sell Your Notes in Any Secondary Market (if Any) at Any Time After the Trade Date
May Differ From the Estimated Initial Value
The value of your notes at any time will
vary based on many factors, including the factors described above and in “—Market Risk” above and is impossible to
predict. Furthermore, the pricing models that we use are proprietary and rely in part on certain assumptions about future events,
which may prove to be incorrect. As a result, after the trade date, if you attempt to sell the notes in the secondary market, the
actual value you would receive may differ, perhaps materially, from the estimated initial value of the notes determined by reference
to our internal pricing models. The estimated initial value of the notes does not represent a minimum or maximum price at which we
or any of our affiliates would be willing to purchase your notes in any secondary market at any time.
Our Actual Profits May Be Greater or Less
than the Differential Between the Estimated Initial Value and the Issue Price of the Notes as of the Trade Date
We may determine the economic terms of the
notes, as well as hedge our obligations, at least in part, prior to the trade date. In addition, there may be ongoing costs to us to
maintain and/or adjust any hedges and such hedges are often imperfect. Therefore, our actual profits (or potentially, losses) in
issuing the notes cannot be determined as of the trade date and any such differential between the estimated initial value and the
issue price of the notes as of the trade date does not reflect our actual profits. Ultimately, our actual profits will be known only
at the maturity of the notes.
Limited or No Secondary Market and
Secondary Market Price Considerations
There May Be Little or No Secondary Market
for the Notes
The notes will not be listed or displayed on
any securities exchange or any electronic communications network. There can be no assurance that a secondary market for the notes
will develop. UBS Securities LLC and its affiliates may make a market in the notes, although they are not required to do so and may
stop making a market at any time. If you are able to sell your notes prior to maturity, you may have to sell them at a substantial
loss. The estimated initial value of the notes does not represent a minimum or maximum price at which we or any of our affiliates
would be willing to purchase your notes in any secondary market at any time.
The Price at which UBS Securities LLC
and Its Affiliates May Offer to Buy the Notes in the Secondary Market (if Any) May Be Greater than UBS’ Valuation of the
Notes at that Time, Greater than Any Other Secondary Market Prices Provided by Unaffiliated Dealers (if Any) and, Depending on
Your Broker, Greater than the Valuation Provided on Your Customer Account Statements
For a limited period of time following the
issuance of the notes, UBS Securities LLC or its affiliates may offer to buy or sell such notes at a price that exceeds (i) our
valuation of the notes at that time based on our internal pricing models, (ii) any secondary market prices provided by unaffiliated
dealers (if any) and (iii) depending on your broker, the valuation provided on customer account statements. The price that UBS
Securities LLC may initially offer to buy such notes following issuance will exceed the valuations indicated by our internal pricing
models due to the inclusion for a limited period of time of the aggregate value of 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 “Summary Information – Key Terms – Supplemental plan of
distribution (conflicts of interest); secondary markets (if any)” herein. Thereafter, if UBS Securities LLC or an affiliate
makes secondary markets in the notes, it will do so at prices that reflect our estimated value determined by reference to our
internal pricing models at that time. The temporary positive differential relative to our internal pricing models arises from
requests from and arrangements made by UBS Securities LLC with the selling agents of structured debt securities such as the notes.
As described above, UBS Securities LLC and its affiliates are not required to make a market for the notes and may stop making a
market at any time. The price at which UBS Securities LLC or an affiliate may make secondary markets at any time (if at all) will
also reflect its then current bid-ask spread for similar sized trades of structured debt securities. UBS Securities LLC reflects
this temporary positive differential on its customer statements. Investors should inquire as to the valuation provided on customer
account statements provided by unaffiliated dealers.
Price of Notes Prior to Maturity
The market price of the notes will be
influenced by many unpredictable and interrelated factors, including the level of the underlier; the volatility of the underlier;
the dividend rate paid on the underlier stocks; the time remaining to the maturity of the notes; interest rates in the markets;
geopolitical conditions and economic, financial, political, force majeure and regulatory or judicial events; the creditworthiness of
UBS and the then current bid-ask spread for the notes.
Impact of Fees and the Use of Internal
Funding Rates Rather than Secondary Market Credit Spreads on Secondary Market Prices
All other things being equal, the use of the
internal funding rates described above under “—Fair Value Considerations” as well as the inclusion in the original
issue price of hedging costs, issuance and other costs and any projected profits are, subject to the temporary mitigating effect of
UBS Securities LLC’s and its affiliates’ market making premium, expected to reduce the price at which you may be able to
sell the notes in any secondary market.
The Amount Payable on Your Notes Is Not
Linked to the Level of the Underlier at Any Time Other than the Determination Date
The final underlier level will be based on
the closing level of the underlier on the determination date, except in the limited circumstances described under “General
Terms of the Notes — Market Disruption Event — Consequences of a Market Disruption Event or a Non-Trading Day” and
“— Discontinuance of or Adjustments to the Index Underlier or an Index Basket Underlier; Alteration of Method of
Calculation” in the accompanying product supplement. Therefore, if the closing level of the underlier dropped precipitously on
the determination date, the cash settlement amount for your notes may be significantly less than it would have been had the cash
settlement amount been linked to the closing level of the underlier prior to such drop in the level of the underlier. Although the
actual level of the underlier on the stated maturity date or at other times during the life of your notes may be higher than the
final underlier level, you will not benefit from the closing level of the underlier at any time other than on the determination
date.
You Have No Shareholder Rights or Rights
to Receive Any Underlier Stock
Investing in your notes will not make you a
holder of any of the underlier stocks. Neither you nor any other holder or owner of your notes will have any voting rights, any
right to receive dividends or other distributions, any rights to make a claim against the underlier stocks or any other rights with
respect to the underlier stocks. Your notes will be paid in cash and you will have no right to receive delivery of any underlier
stocks.
We May Sell an Additional Aggregate Face
Amount of the Notes at a Different Issue Price
At our sole option, we may decide to sell an
additional aggregate face amount of the notes subsequent to the date of this pricing supplement. The issue price, underwriting
discount and net proceeds of the notes in the subsequent sale may differ substantially (higher or lower) from the original issue
price you paid as provided on the cover of this pricing supplement. The return (whether positive or negative) on your investment in
the notes will depend in part on the issue price you pay for such notes.
If You Purchase Your Notes at a Premium to
Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain
Key Terms of the Notes Will be Negatively Affected
The cash settlement amount will not be
adjusted based on the original issue price you pay for the notes. If you purchase notes at a price that differs from the face amount
of the notes, then the return on your investment in such notes held to the stated maturity date will differ from, and may be
substantially less than, the return on notes purchased at face amount. If you purchase your notes at a premium to face amount and
hold them to the stated maturity date, the return on your investment in the notes will be lower than it would have been had you
purchased the notes at face amount or a discount to face amount.
In addition, the extent to which you are
exposed to any negative underlier return will depend upon the price you pay for your notes relative to face amount. For example, if
you purchase your notes at a premium to face amount, the notes may have a negative return even if the final underlier level is
greater than or equal to the initial underlier level.
Lastly, the impact of the cap level on the
return on your investment, and the extent to which the cap level will diminish your exposure to any positive underlier return (as
leveraged by the upside participation rate), will also depend on the price you pay for your notes relative to face amount. For
example, if you purchase your notes at a premium to face amount, the cap level will only permit a lower percentage increase in your
investment in the notes than would have been the case for notes purchased at face amount or a discount to face amount.
If the Level of the Underlier Changes, the
Market Value of Your Notes May Not Change in the Same Manner
Your notes may trade quite differently from
the performance of the underlier. Changes in the level of the underlier may not result in a comparable change in the market value of
your notes. This is because your cash settlement amount at maturity, if any, will be based on the final underlier level and subject
to the maximum settlement amount. If the underlier return is negative, you could lose all or a substantial portion of your
investment in the notes. We discuss some of the reasons for this disparity under “Risk Factors — Risks
Related to Liquidity and Secondary Market
Issues — The market value of the notes may be influenced by unpredictable factors” in the accompanying product
supplement.
The Underlier Reflects Price Return, Not
Total Return
The return on your notes is based on the
performance of the underlier, which reflects the changes in the market prices of the underlier stocks. It is not, however, linked to
a “total return” index or strategy, which, in addition to reflecting those price returns, would also reflect dividends
paid on the underlier stocks. The return on your notes will not include such a total return feature or dividend component.
The Notes are Considered “Hold To
Maturity” Products
Generally, there is no liquid market for the notes.
Changes Affecting the Underlier Could Have
An Adverse Effect On the Value of the Notes and the Amount You Will Receive at Maturity of Your Notes
The policies of the underlier sponsor
concerning the underlier, additions, deletions or substitutions of the underlier stocks and the manner in which changes affecting
the underlier stocks or the issuers of any underlier stocks (such as stock dividends, reorganizations or mergers) are reflected in
the underlier, could affect the level of the underlier, and, therefore, could affect the amount payable on your notes at maturity,
if any, and the market value of your notes prior to maturity. The amount payable on the notes at maturity, if any, and their market
value could also be affected if the underlier sponsor changes these policies, for example by changing the manner in which it
calculates the underlier, or if the underlier sponsor discontinues or suspends calculation or publication of the underlier, in which
case it may become difficult to make any such determination. If events such as these occur, or if the final underlier level is not
available because of a market disruption event, non-trading day or for any other reason, and no successor underlier is selected, the
calculation agent—which initially will be UBS Securities LLC, an affiliate of UBS—may determine the final underlier
level — and thus the amount payable at maturity, if any—in a manner it considers appropriate.
UBS Cannot Control Actions By the
Underlier Sponsor and the Underlier Sponsor Has No Obligation To Consider Your Interests
UBS and its affiliates are not affiliated
with the underlier sponsor and have no ability to control or predict its actions, including any errors in or discontinuation of
public disclosure regarding methods or policies relating to the calculation of the underlier. The underlier sponsor is not involved
in the notes offering in any way and has no obligation to consider your interest as an owner of the notes in taking any actions that
might affect the market value of, and any amount payable at maturity on, your notes.
Potential Conflict of Interest
UBS and its affiliates may engage in
business related to the underlier or underlier stocks, which may present a conflict between the obligations of UBS and you, as a
holder of the notes. There are also potential conflicts of interest between you and the calculation agent, which will be an
affiliate of UBS. The calculation agent will determine the underlier return and the cash settlement amount, if any, based on the
closing level of the underlier on the determination date. The calculation agent can postpone the determination of the final
underlier level if a market disruption event occurs and is continuing on the determination date. As UBS determines the economic
terms of the notes, including the upside participation rate and the cap level, and such terms include the hedging costs, issuance
and other costs and projected profits, the notes represent a package of economic terms. There are other potential conflicts of
interest insofar as an investor could potentially get better economic terms if that investor entered into exchange-traded and/or OTC
derivatives or other instruments with third parties, assuming that such instruments were available and the investor had the ability
to assemble and enter into such instruments.
Furthermore, given that UBS Securities LLC
and its affiliates temporarily maintain a market making premium, it may have the effect of discouraging UBS Securities LLC and its
affiliates from recommending the sale of your notes in the secondary market. UBS or its affiliates may earn additional profits (or
potentially incur losses) as a result of payments pursuant to such hedging activities. In performing these duties, the economic
interests of UBS, UBS Securities LLC, the dealers or their respective affiliates are potentially adverse to your interests as an
investor in the notes. Additionally, hedging activities may adversely affect the market value of your notes and the amount we will
pay on your notes.
Potentially Inconsistent Research,
Opinions or Recommendations By UBS
UBS and its affiliates publish research from
time to time on financial markets and other matters that may influence the value of the notes, or express opinions or provide
recommendations that are inconsistent with purchasing or holding the notes. Any research, opinions or recommendations expressed by
UBS or its affiliates may not be consistent with each other and may be modified from time to time without notice. Investors should
make their own independent investigation of the merits of investing in the notes and the underlier to which the notes are
linked.
The Notes Are Not Bank Deposits
An investment in the notes carries risks
which are very different from the risk profile of a bank deposit placed with UBS or its affiliates. The notes have different yield
and/or return, liquidity and risk profiles and would not benefit from any protection provided to deposits.
If UBS Experiences Financial Difficulties,
FINMA Has the Power to Open Restructuring or Liquidation Proceedings in Respect of, and/or Impose Protective Measures in Relation
to, UBS, Which Proceedings or Measures May Have a Material Adverse Effect on the Terms and Market Value of the Notes and/or the
Ability of UBS to Make Payments Thereunder
The Swiss Financial Market Supervisory
Authority ("FINMA") has broad statutory powers to take measures and actions in relation to UBS if (i) it concludes that there is
justified concern that UBS is over-indebted or has serious liquidity problems or (ii) UBS fails to fulfill the applicable capital
adequacy requirements (whether on a standalone or consolidated basis) after expiry of a deadline set by FINMA. If one of these
pre-requisites is met, FINMA is authorized to open restructuring proceedings or liquidation (bankruptcy) proceedings in respect of,
and/or impose protective measures in relation to, UBS. The Swiss Banking Act grants significant discretion to FINMA in connection
with the aforementioned proceedings and measures. In particular, a broad variety of protective measures may be imposed by FINMA,
including a bank moratorium or a maturity postponement, which measures may be ordered by FINMA either on a stand-alone basis or in
connection with restructuring or liquidation proceedings. The resolution regime of the Swiss Banking Act is further detailed in the
FINMA Banking Insolvency Ordinance ("BIO-FINMA"). In a restructuring proceeding, FINMA, as resolution authority, is competent to
approve the resolution plan. The resolution plan may, among other things, provide for (a) the transfer of all or a portion of UBS'
assets, debts, other liabilities and contracts (which may or may not include the contractual relationship between UBS and the
holders of notes) to another entity, (b) a stay (for a maximum of two business days) on the termination of contracts to which UBS is
a party, and/or the exercise of (w) rights to terminate, (x) netting rights, (y) rights to enforce or dispose of collateral or (z)
rights to transfer claims, liabilities or collateral under contracts to which UBS is a party, (c) the conversion of UBS' debt and/or
other obligations, including its obligations under the notes, into equity (a "debt-to-equity" swap), and/or (d) the partial or full
write-off of obligations owed by UBS (a "write-off"), including its obligations under the notes. The BIO-FINMA provides that a
debt-to-equity swap and/or a write-off of debt and other obligations (including the notes) may only take place after (i) all debt
instruments issued by UBS qualifying as additional tier 1 capital or tier 2 capital have been converted into equity or written-off,
as applicable, and (ii) the existing equity of UBS has been fully cancelled. While the BIO-FINMA does not expressly address the
order in which a write-off of debt instruments other than debt instruments qualifying as additional tier 1 capital or tier 2 capital
should occur, it states that debt-to-equity swaps should occur in the following order: first, all subordinated claims not qualifying
as regulatory capital; second, all other claims not excluded by law from a debt-to-equity swap (other than deposits); and third,
deposits (in excess of the amount privileged by law). However, given the broad discretion granted to FINMA as the resolution
authority, any restructuring plan in respect of UBS could provide that the claims under or in connection with the notes will be
partially or fully converted into equity or written-off, while preserving other obligations of UBS that rank pari passu with,
or even junior to, UBS' obligations under the notes. Consequently, holders of notes may lose all or some of their investment in the
notes. In the case of restructuring proceedings with respect to a systemically important Swiss bank (such as UBS), the creditors
whose claims are affected by the restructuring plan will not have a right to vote on, reject, or seek the suspension of the
restructuring plan. In addition, if a
restructuring plan has been approved by FINMA, the rights of a creditor to seek judicial review of the restructuring plan (e.g., on
the grounds that the plan would unduly prejudice the rights of holders of notes or otherwise be in violation of the Swiss Banking
Act) are very limited. In particular, a court may not suspend the implementation of the restructuring plan. Furthermore, even if a
creditor successfully challenges the restructuring plan, the court can only require the relevant creditor to be compensated ex
post and there is currently no guidance as to on what basis such compensation would be calculated or how it would be funded.
Uncertain Tax Treatment
Significant aspects of the tax treatment of
the notes are uncertain. There are no statutory provisions, regulations, published rulings, judicial decisions or administrative
determinations addressing the characterization for U.S. federal income tax purposes of securities with terms that are substantially
the same as the notes, and we do not plan to request a ruling from the IRS. Consequently, significant aspects of the tax treatment
of the notes are uncertain, and the IRS or a court might not agree with the treatment of the notes as prepaid derivative contracts
that are not debt. Accordingly, it is possible that your notes could alternatively be treated for tax purposes, and that the timing
and character of the income or loss on your notes could be materially and adversely affected.
In 2007, the IRS released a notice that may
affect the taxation of holders of the notes. According to Notice 2008-2, the IRS and the Treasury are actively considering whether
the holder of an instrument similar to the notes should be required to accrue ordinary income on a current basis, and they are
seeking taxpayer comments on the subject. It is not possible to determine what guidance they will ultimately issue, if any. It is
possible, however, that under such guidance, holders of the notes will ultimately be required to accrue income currently and this
could be applied on a retroactive basis. The IRS and the Treasury are also considering other relevant issues, including whether
additional gain or loss from such instruments should be treated as ordinary or capital, whether non-U.S. holders of such instruments
should be subject to withholding tax on any deemed income accruals, and whether the special “constructive ownership
rules” of Section 1260 of the Code should be applied to such instruments. Holders are urged to consult their tax advisors
concerning the significance, and the potential impact, of the above considerations. Except to the extent otherwise required by law,
UBS intends to treat your notes for U.S. federal income tax purposes in accordance with the treatment described above under
“Supplemental discussion of U.S. federal income tax consequences” and under “Material U.S. Federal Income Tax
Consequences” in the
accompanying product supplement, unless and
until such time as the Treasury and the IRS determine that some other treatment is more appropriate.
Purchasers of notes should consult their tax
advisors as to the U.S. federal, state, local, non-U.S. and other tax consequences to them of the purchase, ownership and
disposition of the notes. For more information, see “Material U.S. Federal Income Tax Consequences” in the accompanying
product supplement.
VALIDITY OF THE NOTES
In the opinion of Cadwalader, Wickersham
& Taft LLP, as special counsel to the issuer, when the notes offered by this pricing supplement have been executed and issued by
the issuer and authenticated by the trustee pursuant to the indenture and delivered, paid for and sold as contemplated herein, the
notes will be valid and binding obligations of the issuer, enforceable against the issuer in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership or other laws relating to or
affecting creditors’ rights generally, and to general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). This opinion is given as of the date hereof and is limited to the laws of the State of New York.
Insofar as this opinion involves matters governed by Swiss law, Cadwalader, Wickersham & Taft LLP has assumed, without
independent inquiry or investigation, the validity of the matters opined on by Homburger AG, Swiss legal counsel for the issuer, in
its opinion dated October 28, 2019 filed on that date with the Securities and Exchange Commission as an exhibit to a Current Report
on Form 6-K and incorporated by reference into the issuer’s registration statement on Form F-3 (the “Registration
Statement”). In addition, this opinion is subject to customary assumptions about the trustee’s authorization, execution
and delivery of the indenture and, with respect to the notes, authentication of the notes and the genuineness of signatures and
certain factual matters, all as stated in the opinion of Cadwalader, Wickersham & Taft LLP dated October 29, 2018 filed on that
date with the Securities and Exchange Commission as Exhibit 5.4 to the Registration Statement.
THE UNDERLIER
We have derived all information contained
herein regarding the S&P 500® Index, including without limitation, its make-up, method of calculation and changes
in its components from publicly available information. Such information reflects the policies of, and is subject to change by
S&P Dow Jones Indices LLC (“S&P”), and/or its affiliates.
S&P has no obligation to continue to
publish the S&P 500® Index, and may discontinue publication of the S&P 500® Index at any time.
The S&P 500® Index is determined, comprised and calculated by S&P without regard to the notes.
As discussed more fully in the index
supplement under the heading “Underlying Indices and Underlying Index Publishers — S&P 500®
Index”, the S&P 500® Index is intended to provide an indication of the pattern of common stock price
movement. The calculation of the value of the S&P 500® Index is based on the relative value of the aggregate
market value of the common stock of 500 companies as of a particular time compared to the aggregate average market value of the
common stocks of 500 similar companies during the base period of the years 1941 through 1943. Eleven main groups of companies
comprise the S&P 500® Index, with the percentage weight of each group in the index as a whole as of April 30,
2020 as follows: Information Technology (25.7%), Health Care (15.4%), Communication Services (10.8%), Financials (10.6%), Consumer
Discretionary (10.5%), Industrials (7.9%), Consumer Staples (7.4%), Utilities (3.3%), Energy (3.0%), Real Estate (2.9%) and
Materials (2.5%). The weightings for each sector are rounded to the nearest tenth of a percent and, therefore, may not equal
100%.
As of July 31, 2017, companies with multiple
share class lines are no longer eligible for inclusion in the S&P 500® Index. Constituents of the S&P
500® Index prior to July 31, 2017 with multiple share class lines will be grandfathered in and continue to be
included in the S&P 500® Index. If a constituent company of the S&P 500® Index reorganizes
into a multiple share class line structure, that company will be reviewed for continued inclusion in the S&P 500®
Index at the discretion of the S&P Index Committee.
In addition to the criteria for addition to
the S&P 500® Index set forth in the accompanying index supplement, a company must have a primary listing of its
common stock on the NYSE, NYSE Arca, NYSE American (formerly NYSE MKT), NASDAQ Global Select Market, NASDAQ Select Market, NASDAQ
Capital Market, Cboe BZX (formerly Bats BZX), Cboe BYX (formerly Bats BYX), Cboe EDGA (formerly Bats EDGA), or Cboe EDGX (formerly
Bats EDGX) and, effective July 31, 2017, the criteria employed by S&P for purposes of making additions to the S&P
500® Index were changed as follows: (a) the former “corporate governance structure consistent with U.S.
practice” requirement was removed; and (b) with respect to constituents of the S&P MidCap 400® Index and
the S&P SmallCap 600® Index that are being considered for addition to the S&P 500® Index, the
financial viability, public float and/or liquidity eligibility criteria no longer need to be met if the S&P Index Committee
decides that such an addition will enhance the representativeness of the S&P 500® Index as a market benchmark.
Effective February 20, 2019, company additions to the underlier should have an unadjusted company market capitalization of $8.2
billion or more (an increase from the previous requirement of an unadjusted company market capitalization of $6.1 billion or more).
A company meeting the unadjusted company market capitalization criteria is also required to have a security level float-adjusted
market capitalization of at least $4.1 billion. S&P has announced that, given extreme global market volatility, the March 2020
rebalancing for the S&P 500® Index was postponed. Please see S&P’s website for additional
information.
Information from outside sources is not
incorporated by reference in, and should not be considered part of, this document or any document incorporated herein by reference.
Information about the S&P 500® Index, including the methodology used to calculate the S&P 500®
Index, is available at us.spindices.com/indices/equity/sp-500. We are not incorporating by reference the website or any material it
includes in this document or any document incorporated herein by reference.
Historical Closing Levels
of the Underlier
The closing level of the underlier has
fluctuated in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the
closing level of the underlier shown below is not an indication that the underlier is more or less likely to increase or decrease at
any time during the life of your notes.
The following graph illustrates the
performance of the underlier from January 1, 2010 through May 29, 2020 based on information reported by Bloomberg, without
independent verification. UBS has not conducted any independent review or due diligence of publicly available information obtained
from Bloomberg. Past performance of the underlier is not indicative of the future performance of the underlier.
We have not authorized anyone to provide any
information or to make any representations other than those contained or incorporated by reference in this pricing supplement, the
accompanying product supplement, the accompanying index supplement, or the accompanying prospectus. We take no responsibility for,
and can provide no assurance as to the reliability of, any other information that others may give you. This pricing supplement, the
accompanying product supplement, the accompanying index supplement and the accompanying prospectus is an offer to sell only the
notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in
this pricing supplement, the accompanying product supplement, the accompanying index supplement, and the accompanying prospectus is
current only as of the respective dates of such documents.
TABLE OF CONTENTS
Pricing Supplement
|
|
Page
|
Summary Information
|
ii
|
Investor Suitability
|
1
|
Key Terms
|
2
|
Hypothetical Examples
|
5
|
Additional Risk Factors Specific to Your Notes
|
8
|
Validity of the Notes
|
14
|
The Underlier
|
15
|
Product Supplement dated November 1, 2018
|
Product Supplement Summary
|
PS-1
|
Hypothetical Returns on the Underlier-Linked Notes
|
PS-16
|
Risk Factors
|
PS-31
|
General Terms of the Notes
|
PS-45
|
Use of Proceeds and Hedging
|
PS-61
|
Material U.S. Federal Income Tax Consequences
|
PS-62
|
ERISA Considerations
|
PS-69
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-70
|
Index Supplement dated October 31, 2018
|
Index Supplement Summary
|
IS-1
|
Underlying Indices And Underlying Index Publishers
|
IS-2
|
Dow Jones Industrial AverageTM
|
IS-2
|
NASDAQ-100 Index®
|
IS-4
|
Russell 2000® Index
|
IS-10
|
S&P 500® Index
|
IS-15
|
Commodity Indices
|
IS-20
|
Bloomberg Commodity IndexSM
|
IS-20
|
UBS Bloomberg Constant Maturity Commodity Index Excess Return
|
IS-27
|
Non-U.S. Indices
|
IS-32
|
EURO STOXX 50® Index
|
IS-32
|
FTSETM 100 Index
|
IS-38
|
Hang Seng China Enterprises Index
|
IS-41
|
MSCI Indexes
|
IS-45
|
MSCI-EAFE® Index
|
IS-45
|
MSCI® Emerging Markets IndexSM
|
IS-45
|
MSCI® Europe Index
|
IS-45
|
Prospectus dated October 31, 2018
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
4
|
Where You Can Find More Information
|
5
|
Presentation of Financial Information
|
6
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
|
UBS
|
7
|
Swiss Regulatory Powers
|
10
|
Use of Proceeds
|
11
|
Description of Debt Securities We May Offer
|
12
|
Description of Warrants We May Offer
|
32
|
Legal Ownership and Book-Entry Issuance
|
47
|
Considerations Relating to Indexed Securities
|
52
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
55
|
U.S. Tax Considerations
|
58
|
Tax Considerations Under the Laws of Switzerland
|
69
|
Benefit Plan Investor Considerations
|
71
|
Plan of Distribution
|
73
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$3,012,000
UBS AG
Capped Leveraged S&P 500®
Index-Linked Medium-Term Notes due October 27, 2021
UBS Securities LLC
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