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May 2020
Pricing Supplement
Dated May 29, 2020
Registration Statement No. 333-225551
Filed pursuant to Rule 424(b)(2)
(To Prospectus dated October 31, 2018
and Product Supplement dated October 31, 2018)
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Structured Investments
Opportunities in U.S. Equities
Contingent Income Auto-Callable Securities due June 2, 2023
$6,149,300 Based
on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
Contingent Income Auto-Callable Securities (the “securities”)
offer the opportunity for investors to earn a contingent payment with respect to each determination date on which the closing price
of each underlying equity is equal to or greater than 60% of its initial price, which we refer to as its coupon barrier level.
If the closing price of any underlying equity is less than its coupon barrier level on a determination date, you will not receive
any contingent payment for that determination date. As a result, investors must be willing to accept the risk of not receiving
any contingent payments during the term of the securities. In addition, if the closing prices of all of the underlying equities
are equal to or greater than their respective call threshold levels on any determination date other than the final determination
date, the securities will be automatically redeemed for an amount per security equal to (i) the stated principal amount plus (ii)
the contingent payment otherwise payable with respect to the related determination date. If, however, on any determination date
the closing price of any underlying equity is less than its call threshold level, the securities will not be redeemed. Furthermore,
if the final price of any underlying equity is less than 60% of its initial price, which we refer to as its downside threshold
level on the final determination date, UBS will pay you a cash payment per security that will be less than the stated principal
amount, if anything, resulting in a percentage loss that is equal to the underlying return of the underlying equity with the lowest
underlying return as compared to any other underlying equities (the “worst performing underlying equity”) over the
term of the securities and, in extreme situations, you could lose all of your initial investment. Accordingly, the securities do
not guarantee any return of principal at maturity. Investors will not participate in any appreciation of the underlying equities.
Because all payments on the securities are based on the worst performing underlying equity, a decline beyond the respective coupon
barrier level and/or downside threshold level, as applicable, of any underlying equity will result in few or no contingent payments
and/or a loss of a significant portion and, in extreme situations, all of your initial investment even if the other underlying
equity appreciates or has not declined as much. These securities are for investors who are willing to risk their initial investment
and seek an opportunity to earn interest at a potentially above-market rate in exchange for the risk of receiving no interest over
the entire term of the securities. The securities are unsubordinated, unsecured debt obligations issued by UBS AG, and all payments
on the securities are subject to the credit risk of UBS AG.
SUMMARY TERMS
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Issuer:
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UBS AG London Branch
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Underlying equities:
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Common stock of NIKE, Inc. (Bloomberg Ticker: “NKE UN”)
Common stock of Walmart Inc. (Bloomberg Ticker: “WMT UN”)
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Aggregate principal amount:
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$6,149,300
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Stated principal amount:
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$10.00 per security
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Issue price:
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$10.00 per security (see “Commissions and issue price” below)
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Pricing date:
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May 29, 2020
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Original issue date:
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June 3, 2020 (3 business days after the pricing
date). Under Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required
to settle in two business days (T+2), unless the parties to a trade expressly agree otherwise. Accordingly, purchasers who wish
to trade the securities in the secondary market on any date prior to two business days before delivery of the securities will be
required, by virtue of the fact that each security initially will settle in three business days (T+3), to specify alternative settlement
arrangements to prevent a failed settlement of the secondary market trade.
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Maturity date:
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June 2, 2023, subject to postponement for
certain market disruption events and as described under “General Terms of the Securities — Market Disruption
Events” and “— Payment Dates — Maturity Date” in the accompanying product supplement.
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Early redemption:
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If, on any determination date other than the final determination date, the closing prices
of all of the underlying equities are equal to or greater than their respective call threshold levels, the securities will be
automatically redeemed for an early redemption amount on the first contingent payment date immediately following the related
determination date.
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Early redemption amount:
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The early redemption amount will be an amount equal to (i) the stated principal amount
plus (ii) any contingent payment otherwise payable with respect to the related determination date.
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Contingent payment:
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§
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If the closing prices of all of the underlying equities
are equal to or greater than their respective coupon barrier levels on any determination date, we will pay a contingent
payment of $0.2588 (equivalent to approximately 10.35% per annum of the stated principal amount) per security on the related
contingent payment date.
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§
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If the closing price of any underlying
equity is less than its respective coupon barrier level on any determination date, we will not pay a contingent payment with respect
to that determination date.
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Determination dates:
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August 31, 2020, November 30, 2020, March 1, 2021,
June 1, 2021, August 30, 2021, November 29, 2021, February 28, 2022, May 31, 2022, August 29, 2022, November 29, 2022, February
28, 2023 and May 30, 2023, subject to postponement for non-trading days and certain market disruption events (as described under
“General Terms of the Securities — Valuation Dates”, “ — Final Valuation Date” and “—
Market Disruption Events” in the accompanying product supplement). We also refer to May 30, 2023 as the final determination
date.
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Contingent payment dates:
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Three business days following the applicable determination date, except that the contingent
payment date for the final determination date will be the maturity date.
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Payment at maturity:
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§
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If the final prices of all of the underlying equities are equal to
or greater
than their respective downside threshold levels:
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(i) the stated principal amount plus
(ii) any contingent payment otherwise payable on the maturity date.
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§
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If the final price of any underlying equity is less than its
downside
threshold level:
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a cash payment that is less than the stated
principal amount, if anything, resulting in a percentage loss that is equal to the underlying return of the worst performing underlying
equity, for an amount equal to (i) the stated principal amount plus (ii) the stated principal amount times the underlying
return of the worst performing underlying equity.
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If the final price of any underlying equity is less than its
downside threshold level, investors will lose a significant portion and, in extreme situations, all of their initial investment
regardless of the performance of any other underlying equity.
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Underlying return:
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The quotient, expressed as a percentage of the following formula: (final price −
initial price) / initial price
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Initial price:
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$98.58, which is the
closing price of the common stock of NIKE, Inc. on the pricing date
$124.06, which is the closing price of the common stock of Walmart Inc. on the pricing date
The initial price of each underlying equity may be adjusted
in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution Adjustments
for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities
Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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Worst performing underlying equity:
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The underlying equity with the lowest underlying return as compared to any other underlying
equity
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Call threshold level:
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$98.58, which is
equal to 100% of the initial price of the common stock of NIKE, Inc.
$124.06, which is
equal to 100% of the initial price of the common stock of Walmart Inc.
The call threshold level of each underlying equity may be
adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution
Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for
Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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Coupon barrier level:
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$59.15, which is
equal to 60% of the initial price of the common stock of NIKE, Inc.
$74.44, which is
equal to 60% of the initial price of the common stock of Walmart Inc.
The coupon barrier level of each underlying equity may be
adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution
Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for
Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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Downside threshold level:
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$59.15, which is
equal to 60% of the initial price of the common stock of NIKE, Inc.
$74.44, which is
equal to 60% of the initial price of the common stock of Walmart Inc.
The downside threshold level of each underlying equity may be
adjusted in the case of certain adjustment events as described under “General Terms of the Securities — Antidilution
Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for
Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
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Final Price:
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The closing price of each underlying equity on the final determination date
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CUSIP / ISIN:
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90281J851 / US90281J8514
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Listing:
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The securities will not be listed or displayed on any securities exchange or any electronic
communications network.
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Calculation Agent:
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UBS Securities LLC
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Commissions and issue level:
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Price to
Public(1)
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Fees and
Commissions(1)
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Proceeds to
Issuer
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Per security
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100.00%
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2.00%(a)
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97.50%
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+ 0.50%(b)
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2.50%
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Total
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$6,149,300.00
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$153,732.50
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$5,995,567.50
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(1)
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UBS Securities LLC
has agreed to purchase from UBS AG the securities at the price to public less a fee of $0.25 per $10.00 stated principal
amount of securities. UBS Securities LLC has agreed to resell all of the securities to Morgan Stanley Smith Barney LLC
(“Morgan Stanley Wealth Management”) at an underwriting discount which reflects:
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(a)
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a fixed sales commission of $0.20 per $10.00
stated principal amount of securities that Morgan Stanley Wealth Management sells and
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(b)
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a fixed structuring fee of $0.05 per $10.00 stated principal
amount of securities that Morgan Stanley Wealth Management sells,
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each payable to Morgan Stanley Wealth
Management. See “Supplemental information regarding plan of distribution (conflicts of interest) ; secondary markets (if
any)”.
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The estimated initial value of the
securities as of the pricing date is $9.488. The estimated initial value of the securities 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 securities, see “Risk
Factors — Fair value considerations” and “— Limited or no secondary market and secondary market price
considerations” on pages 11 and 12 of this document.
The securities involve risks not associated with an investment in
ordinary debt securities. See “Risk Factors” beginning on page 10.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this document, the accompanying
product supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
The securities are not bank deposits and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
You should read this document together with the accompanying product
supplement and the accompanying prospectus, each of which can be accessed via the hyperlinks below, before you decide to invest.
Contingent Income Auto-Callable Securities due June 2, 2023
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$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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Additional Information about UBS and the Securities
UBS AG (“UBS”) has filed a registration statement (including
a prospectus as supplemented by a product supplement) with the Securities and Exchange Commission (the “SEC”) for the
securities to which this document relates. You should read these documents and any other documents relating
to this offering that UBS has filed with the SEC for more complete information about UBS and this offering. You may obtain these
documents for free from the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC web site is 0001114446.
You may access these documents on the SEC website at www.sec.gov
as follows:
References to “UBS”,
“we”, “our” and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this
document, the “securities” refers to the Contingent Income Auto-Callable Securities that are offered hereby. Also,
references to the “accompanying prospectus” mean the UBS prospectus titled “Debt Securities and Warrants”,
dated October 31, 2018 and references to the “accompanying product supplement” mean the UBS product supplement titled
“Market-Linked Securities Product Supplement”, dated October 31, 2018.
You should rely only on the information
incorporated by reference or provided in this document, the accompanying product supplement or the accompanying prospectus. We have
not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this document, the accompanying product supplement or the
accompanying prospectus is accurate as of any date other than the date on the front of the document.
UBS reserves the right to change the terms
of, or reject any offer to purchase, the securities prior to their issuance. In the event of any changes to the terms of the
securities, UBS will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose
to reject such changes in which case UBS may reject your offer to purchase.
In the event of any discrepancies between this document, the
accompanying product supplement and the accompanying prospectus, the following hierarchy will govern: first, this document; second,
the accompanying product supplement; and finally, the accompanying prospectus.
Contingent Income Auto-Callable Securities due June 2, 2023
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$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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Investment Summary
The Contingent Income Auto-Callable
Securities due June 2, 2023 based on the worst performing of the common stock of NIKE, Inc. and the common stock of
Walmart Inc., which we refer to as the securities, provide an opportunity for investors to earn a contingent payment, which will be
an amount equal to $0.2588 (equivalent to approximately 10.35% per annum of the stated principal amount) per security, with respect
to each determination date on which the closing prices of all of the underlying equities are equal to or greater than 60% of their
respective initial prices, which we refer to as the coupon barrier levels. The contingent payment, if any, will be payable on the
relevant contingent payment date, which is the third business day after the related determination date, except that the contingent
payment date for the final determination date will be the maturity date. It is possible that the closing prices of one or more of
the underlying equities could remain less than their respective coupon barrier levels for extended periods of time or even
throughout the term of the securities so that you may receive few or no contingent payments.
If the closing prices of all of the
underlying equities are equal to or greater than their respective call threshold levels on any of the determination dates other than
the final determination date, the securities will be automatically redeemed for an early redemption amount equal to (i) the stated
principal amount plus (ii) any contingent payment otherwise payable with respect to the related determination date. If the
securities have not previously been redeemed and the final prices of all of the underlying equities are equal to or greater
than their respective downside threshold levels and coupon barrier levels, the payment due at maturity will be (i) the stated
principal amount plus (ii) any contingent payment otherwise payable with respect to the final determination date. If,
however, the securities are not redeemed prior to maturity and the final price of any underlying equity is less than its
respective downside threshold level, the payment due at maturity will be a cash payment that is less than the stated principal
amount, if anything, resulting in a percentage loss that is equal to the underlying return of the worst performing underlying
equity, for an amount equal to (i) the stated principal amount plus (ii) the stated principal amount times the
underlying return of the worst performing underlying equity. The value of such cash payment will be less than 60% of the stated
principal amount of the securities and could be zero. Investors in the securities must be willing to accept the risk of losing a
significant portion and, in extreme situations, all of their initial investment and also the risk of not receiving any contingent
payments. In addition, investors will not participate in any appreciation of the underlying equities.
Contingent Income Auto-Callable Securities due June 2, 2023
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$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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Key Investment Rationale
The securities offer the opportunity
for investors to earn a contingent payment equal to $0.2588 (equivalent to approximately 10.35% per annum of the stated
principal amount) per security, with respect to each determination date on which the closing prices of all of the
underlying equities are equal to or greater than 60% of their respective initial prices, which we refer to as the coupon
barrier levels. The securities may be redeemed prior to maturity for an early redemption amount equal to (i) the stated
principal amount per security plus (ii) any contingent payment otherwise payable with respect to the related
determination date. The payment at maturity will vary depending on the final prices, as follows:
Scenario 1
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On any
determination date other than the final determination date, the closing prices of all of the underlying equities are equal to or
greater than their respective call threshold levels.
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§
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The securities will be
automatically redeemed for an early redemption amount equal to (i) the stated principal amount plus (ii) any contingent
payment otherwise payable with respect to the related determination date.
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§
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Investors will not participate in any
appreciation of the underlying equities from their respective initial prices.
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Scenario 2
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The
securities are not automatically redeemed prior to maturity and the final prices of all of the underlying equities are equal to or
greater than their respective downside threshold levels and coupon barrier levels on the final determination date.
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§
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The payment due at maturity will be (i) the
stated principal amount plus (ii) any contingent payment otherwise payable on the maturity date.
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§
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Investors will not participate in any
appreciation of the underlying equities from their respective initial prices.
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Scenario 3
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The
securities are not automatically redeemed prior to maturity and the final price of any underlying equity is less than its respective
downside threshold level and coupon barrier level.
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§
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The payment due at maturity will be a cash payment that
is less than the stated principal amount, if anything, resulting in a percentage loss that is equal to the underlying return of
the worst performing underlying equity, for an amount equal to (i) the stated principal amount plus (ii) the stated principal
amount times the underlying return of the worst performing underlying equity.
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§
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Investors will lose a significant portion
and, in extreme situations, all of their initial investment in this scenario.
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Investing in the securities involves significant risks.
You may lose a significant portion and, in extreme situations, all of your initial investment. Any payment on the securities,
including payments in respect of an early redemption, contingent payment or any repayment of principal provided at maturity, is
dependent on the ability of UBS to satisfy its obligations when they come due. If UBS is unable to meet its obligations, you may
not receive any amounts due to you under the securities and you could lose all of your initial investment.
The securities will not pay a contingent payment on a contingent
payment date (including the maturity date) if the closing price of any underlying equity is less than its respective coupon barrier
level on the related determination date. The securities will not be subject to an early redemption if the closing price of any
underlying equity is less than its respective call threshold level on a determination date (other than the final determination
date). If the securities are not redeemed prior to the final determination date, you will lose a significant portion and, in extreme
situations, all of your initial investment at maturity if the final price of any underlying equity is less than its respective
downside threshold level.
Contingent Income Auto-Callable Securities due June 2, 2023
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$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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Investor Suitability
The securities may be suitable for you if:
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§
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You fully understand the risks of an investment in the securities, including the risk of loss of all of your initial investment.
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§
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You can tolerate a loss of a significant portion or all of your initial investment and are willing to make an investment that
may have the same downside market risk as an investment in the worst performing of the underlying equities.
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§
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You understand and accept that an investment in the securities is linked to the worst performing underlying equity and not
a basket of the underlying equities and that you will be exposed to the market risk of each underlying equity on each determination
date.
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§
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You believe that the closing price of each underlying equity will be equal to or greater than its coupon barrier level on
each determination date.
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§
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You believe that the final price of each underlying equity will be equal to or greater than its downside threshold level
on the final determination date.
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§
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You accept that the risks of each underlying equity are not mitigated by the performance of any other underlying equity and
the risks of investing in securities with a return based on the worst performing underlying equity.
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§
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You understand and accept that you will not participate in any appreciation in the price of the underlying equities and that
any potential positive return is limited to the contingent payments.
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§
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You can tolerate fluctuations in the price of the securities prior to maturity that may be similar to or exceed the downside
level fluctuations of the underlying equities.
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§
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You are willing to invest in the securities based on the call threshold levels, coupon barrier levels,
downside threshold levels and the contingent payment specified on the cover hereof.
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§
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You are willing to forgo any dividends paid on the underlying equities and you do not seek guaranteed current income from this
investment.
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§
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You are willing to invest in securities that may be redeemed prior to the maturity date and you are otherwise willing to
hold such securities to maturity, a term of approximately 36 months, and accept that there may be little or no secondary
market.
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§
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You understand and are willing to accept the single equity risk associated with the securities and the risks associated with
the underlying equities.
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§
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You are willing to assume the credit risk of UBS for all payments under the securities, and understand that if UBS defaults
on its obligations you may not receive any amounts due to you including any repayment of principal.
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§
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You understand that the estimated initial value of the securities determined by our internal pricing models is lower than the
issue price and that, should UBS Securities LLC or any affiliate make secondary markets for the securities, the price (not including
their customary bid-ask spreads) will temporarily exceed the internal pricing model price.
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The securities may not be suitable for you if:
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§
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You do not fully understand the risks of an investment in the securities, including the risk of loss of all of your initial
investment.
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§
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You require an investment designed to provide a full return of principal at maturity.
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§
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You cannot tolerate a loss of a significant portion or all of your initial investment, or you are not willing to make an investment
that may have the same downside market risk as an investment in the worst performing of the underlying equities.
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§
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You do not understand or cannot accept that an investment in the securities is linked to the worst performing underlying equity
and not a basket of the underlying equities and that you will be exposed to the market risk of each underlying equity on each determination
date.
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§
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You believe that the closing price of any underlying equity will decline during the term of the securities and is likely
to be less than its coupon barrier level on each determination date.
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§
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You believe that the final price of any underlying equity is likely to be less than its downside threshold level on the
final determination date.
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§
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You cannot accept that the risks of each underlying equity are not mitigated by the performance of any other underlying equity
and the risks of investing in securities with a return based on the worst performing underlying equity.
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§
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You seek an investment that participates in the full appreciation in the price of the underlying equities or that has unlimited
return potential.
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§
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You cannot tolerate fluctuations in the price of the securities prior to maturity that may be similar to or exceed the downside
fluctuations of the underlying equities.
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§
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You are unwilling to invest in the securities based on the call threshold levels, coupon barrier levels,
downside threshold levels or the contingent payment specified on the cover hereof.
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§
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You prefer to receive the dividends paid on the underlying equities or you seek guaranteed current income from this investment.
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§
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You are unable or unwilling to hold securities that may be redeemed prior to the maturity date, or you are
otherwise unable or unwilling to hold such securities to maturity, a term of approximately 36 months, or you seek an
investment for which there will be an active secondary market.
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§
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You do not understand and are not willing to accept the single equity risk associated with the securities or the risks associated
with the underlying equities.
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§
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You are not willing to assume the credit risk of UBS for all payments under the securities, including any repayment of principal.
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Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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How the Securities Work
The following diagrams illustrate the potential outcomes for the securities
depending on (1) the closing prices and (2) the final prices.
Diagram #1: Determination Dates Other Than the Final
Determination Date
Diagram #2: Payment at Maturity if No Automatic Early
Redemption Occurs
For more information about the payout upon an early redemption or at
maturity in different hypothetical scenarios, see “Hypothetical Examples” beginning on the following page.
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Hypothetical Examples
The below examples are based on the following terms and are purely hypothetical
(the actual terms of your security are specified on the cover hereof):
Hypothetical Initial Price:
Underlying Equity A:
Underlying Equity B:
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$90.00
$120.00
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Hypothetical Call Threshold Level:
Underlying Equity A:
Underlying Equity B:
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$90.00, which is 100% of the initial price
$120.00, which is 100% of the initial price
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Hypothetical Coupon Barrier Level:
Underlying Equity A:
Underlying Equity B:
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$54.00, which is 60% of the initial price
$72.00, which is 60% of the initial price
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Hypothetical Downside Threshold Level:
Underlying Equity A:
Underlying Equity B:
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$54.00, which is 60% of the initial price
$72.00, which is 60% of the initial price
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Hypothetical Contingent Payment:*
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$0.2588 per security (equivalent to approximately 10.35% per annum of the stated principal
amount)
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Stated Principal Amount:
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$10.00 per security
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In Examples 1 and 2, the closing
prices of the underlying equities fluctuate over the term of the securities and the closing prices of all of the underlying
equities are equal to or greater than their respective hypothetical call threshold levels on one of the determination dates
prior to the final determination date. Because the closing prices of all of the underlying equities are equal to or greater
than their respective call threshold levels on one of the determination dates prior to the final determination date, the
securities are automatically redeemed on the related contingent payment date. In Examples 3 and 4, the closing price of at
least one underlying equity on each of the determination dates prior to the final determination date is less than its
respective call threshold level and, consequently, the securities are not automatically redeemed prior to, and remain
outstanding until, maturity.
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Example 1
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Example 2
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Determination Dates
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Hypothetical Closing Price
Underlying Equity A
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Hypothetical Closing Price
Underlying Equity B
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Contingent Payment
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Early Redemption Amount
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Hypothetical Closing Price
Underlying Equity A
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Hypothetical Closing Price
Underlying Equity B
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Contingent Payment
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Early Redemption Amount
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#1
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$95.00
(at or above coupon barrier level and call threshold
level)
|
$125.00
(at or above coupon barrier level and call threshold
level)
|
—*
|
$10.2588
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$56.00
(at or above coupon barrier level; below call
threshold level)
|
$135.00
(at or above coupon barrier level and call threshold
level)
|
$0.2588
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N/A
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#2 - #9
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N/A
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N/A
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N/A
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N/A
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Various
(all at or above coupon barrier level; below call threshold level)
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Various
(all below coupon barrier level and call threshold level)
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$0
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N/A
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#10
|
N/A
|
N/A
|
N/A
|
N/A
|
$108.00
(at or above coupon barrier level and call threshold
level)
|
$144.00
(at or above coupon barrier level and call threshold
level)
|
—*
|
$10.2588
|
#11
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Final Determination Date
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Payment at Maturity
|
N/A
|
N/A
|
|
*
|
The early redemption amount includes any unpaid contingent payment with respect to the determination date on which the closing
prices for the underlying equities are equal to or greater than their respective call threshold levels and the securities are redeemed
as a result.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
§
|
In Example 1, the securities are automatically redeemed following the first determination date as the closing
prices of all of the underlying equities on the first determination date are equal to or greater than their respective
call threshold levels. As the closing prices of all of the underlying equities on the first determination date are
equal to or greater than their respective coupon barrier levels and call threshold levels, the securities are automatically
redeemed early. Following the first determination date, you receive an early redemption amount, calculated as follows:
|
Stated Principal Amount + Contingent
Payment = $10.00 + $0.2588 = $10.2588
|
|
In this example, the early redemption feature
limits the term of your investment to approximately 3 months and you may not be able to reinvest at comparable terms or returns.
If the securities are redeemed early, you will stop receiving contingent payments. Your total return per security in this example
is $10.2588 (a 2.588% total return on the securities).
|
|
§
|
In Example 2, the securities are automatically redeemed following the tenth determination date as
the closing prices of all of the underlying equities on the tenth determination date are equal to or greater than
their respective call threshold levels. As the closing prices of all of the underlying equities on the first
determination date are equal to or greater than their respective coupon barrier levels, you receive the contingent payment of
$0.2588 with respect to the first determination date. Following the tenth determination date, you receive the early
redemption amount, calculated as follows:
|
Stated Principal Amount + Contingent Payment = $10.00
+ $0.2588 = $10.2588
|
|
In this example, the early redemption
feature limits the term of your investment to approximately 30 months and you may not be able to reinvest at comparable terms or
returns. If the securities are redeemed early, you will stop receiving contingent payments. Further, although all of the underlying
equities have appreciated by 20% from their respective initial prices on the tenth determination date, you receive only $10.2588
per security and do not benefit from such appreciation. When added to the contingent interest payment of $0.2588 received with respect
to the prior determination dates, your total return per security in this example is $10.5176 (a 5.176% total return on the securities).
|
|
Example 3
|
Example 4
|
Determination Dates
|
Hypothetical Closing Price
Underlying Equity A
|
Hypothetical Closing Price
Underlying Equity B
|
Contingent Payment
|
Early Redemption Amount
|
Hypothetical Closing Price
Underlying Equity A
|
Hypothetical Closing Price
Underlying Equity B
|
Contingent Payment
|
Early Redemption Amount
|
#1
|
$53.00
(below coupon barrier level and call threshold level)
|
$70.00
(below coupon barrier level and call threshold
level)
|
$0
|
N/A
|
$50.00
(below coupon barrier level and call threshold level)
|
$70.00
(below coupon barrier level and call threshold
level)
|
$0
|
N/A
|
#2
|
$60.00
(at or above coupon barrier level; below call threshold level)
|
$67.00
(below coupon barrier level and call threshold level)
|
$0
|
N/A
|
$47.00
(below coupon barrier level and call threshold level)
|
$77.00
(at or above coupon barrier level; below call threshold level)
|
$0
|
N/A
|
#3 - #11
|
Various
(all below coupon barrier level and call threshold level)
|
Various
(all below coupon barrier level and call threshold level)
|
$0
|
N/A
|
Various
(all below coupon barrier level and call threshold level)
|
Various
(all below coupon barrier level and call threshold level)
|
$0
|
N/A
|
Final Determination Date
|
$63.00
(at or above downside threshold level and coupon barrier level)
|
$80.00
(at or above downside threshold level and coupon barrier level)
|
—*
|
N/A
|
$36.00
(below downside threshold level and coupon barrier level)
|
$75.00
(at or above downside threshold level and coupon barrier level)
|
$0
|
N/A
|
Payment at Maturity
|
$10.2588
|
$4.00
|
* The final contingent payment,
if any, will be paid at maturity.
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Examples 3 and 4 illustrate the
payment at maturity per security based on the final price.
|
§
|
In Example 3, on each of the determination dates prior to the final determination date, the closing price of at
least one of the underlying equities is less than its respective coupon barrier level. As a result, you do not receive a
contingent payment with respect to any of those determination dates. Because the closing prices of all of the
underlying equities are equal to or greater than their respective downside threshold levels and coupon barrier levels on
the final determination date, at maturity, you receive the stated principal amount plus a contingent payment with
respect to the final determination date, calculated as follows:
|
$10.00 + $0.2588 = $10.2588
In this example, you receive the
stated principal amount per security plus the contingent payment, equal to a total payment of $10.2588 per security at maturity.
Your total return per security in this example is $10.2588 (a 2.588% total return on the securities).
|
§
|
In Example 4, on each determination date throughout the term of the securities, the closing price of at least one
of the underlying equities is less than its respective coupon barrier level. As a result, you do not receive any contingent
payment during the term of the securities. Furthermore, because the final price of at least one of the underlying equities
on the final determination date is less than its applicable downside threshold level, you are fully exposed to the decline in
the worst performing underlying equity. Your payment at maturity is calculated as follows:
|
$10.00 + ($10.00 × Underlying Return of the Worst
Performing Underlying Equity)
= $10.00 + ($10.00 × -60%)
= $4.00
In this example, because the final price of the worst performing underlying
equity represents a 60.00% decline, you will receive a total cash payment per security equal to $4.00 (a 60.00% loss on the securities).
We make no representation or warranty as to which of the
underlying equities will be the worst performing underlying equity for the purposes of calculating your actual payment at maturity.
Investing in the securities involves significant risks.
The securities differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full amount of your
initial investment. If the securities are not redeemed prior to the final determination date, you may lose a significant portion
and, in extreme situations, all of your initial investment. Specifically, if the securities are not redeemed prior to maturity
and the final price of any underlying equity is less than its respective downside threshold level, UBS will pay you a cash payment
per security that will be less than the stated principal amount, if anything, resulting in a percentage loss that is equal to
the underlying return of the worst performing underlying equity over the term of the securities.
The securities will not pay a contingent payment if the
closing price of any underlying equity is less than its respective coupon barrier level on any determination date. The securities
will not be subject to an early redemption if the closing price of any underlying equity is less than its respective call threshold
level on any determination date.
You will be exposed to the market risk of each underlying
equity on each determination date and on the final determination date and any decline in the level of one underlying equity may
negatively affect your return and will not be offset or mitigated by a lesser decline or any potential increase in the level of
any other underlying equity. Any payment to be made on the securities, including any repayment of principal, depends on the ability
of UBS to satisfy its obligations as they come due. If UBS were to default on its payment obligations you may not receive any
amounts owed to you under the securities and you could lose all of your initial investment.
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Risk Factors
The following is a non-exhaustive list of certain key risk factors for
investors in the securities. For further discussion of these and other risks, you should read the section entitled “Risk
Factors” in the accompanying product supplement. We urge you to consult your investment, legal, tax, accounting and other
advisors before you invest in the securities.
|
§
|
Risk of loss at maturity. The securities differ from ordinary debt securities in that UBS will not necessarily repay
the stated principal amount of the securities at maturity. If the securities are not redeemed prior to maturity, UBS will repay
you the stated principal amount of your securities in cash only if the final prices of all of the underlying equities are
equal to or greater than their respective downside threshold levels on the final determination date and will only make such payment
at maturity. If the securities are not redeemed prior to maturity and the final price of any underlying equity is less
than its respective downside threshold level, you will lose a percentage of your principal amount equal to the underlying return
of the worst performing underlying equity.
|
|
§
|
Contingent repayment of stated principal amount only at maturity. If your securities are not redeemed prior to maturity,
you should be willing to hold your securities to maturity. If you are able to sell your securities prior to maturity in the secondary
market, you may have to sell them at a loss relative to your initial investment even if the then-current prices of all of the underlying
equities are equal to or greater than their respective downside threshold levels.
|
|
§
|
You may not receive any contingent payments. UBS will not necessarily make periodic payments on the securities. If
the closing price of any of the underlying equities on any determination date is less than its respective coupon barrier
level, UBS will not pay you the contingent payment applicable to such determination date. If the closing price of any of
the underlying equities is less than its respective coupon barrier level on each of the determination dates, UBS will not pay
you any contingent payments during the term of, and you will not receive a positive return on, your securities. Generally, this
non-payment of the contingent payment coincides with a period of greater risk of principal loss on your securities.
|
|
§
|
Your potential return on the securities is limited and you will not participate in any appreciation of the underlying equities.
The return potential of the securities is limited to the pre-specified contingent payment rate, regardless of the appreciation
of the underlying equities. In addition, your return on the securities will vary based on the number of determination dates on
which the requirements of the contingent payment have been met prior to maturity or an early redemption. Furthermore, if the securities
are redeemed prior to maturity, you will not receive any contingent payments or any other payment in respect of any determination
dates after the applicable contingent payment date, and your return on the securities could be less than if the securities remained
outstanding until maturity. If the securities are not redeemed prior to maturity, you may be subject to the depreciation in the
level of the worst performing underlying equity even though you cannot participate in any appreciation in the prices of the underlying
equities. As a result, the return on an investment in the securities could be less than the return on a direct investment in any
or all of the underlying equities.
|
|
§
|
Higher contingent payment rates are generally associated with a greater risk of loss. Greater expected volatility with
respect to, and lower expected correlation among, the underlying equities reflects a higher expectation as of the pricing date
that the final price of any one of the underlying equities could be less than its respective downside threshold level on the final
determination date of the securities. “Volatility” refers to the frequency and magnitude of changes in the price of
an underlying equity. This greater expected risk will generally be reflected in a higher contingent payment rate for that security.
However, while the contingent payment rate was set on the pricing date, an underlying equity’s volatility, and the correlation
among the underlying equities, can change significantly over the term of the securities. The price of any one of the underlying
equities for your securities could fall sharply, which could result in the loss of a significant portion or all of your initial
investment.
|
|
§
|
Reinvestment risk. The securities will be redeemed prior to maturity if the closing prices of all of the underlying
equities are equal to or greater than their call threshold levels on any determination date other than the final determination
date and you will not receive any more contingent payments after the related contingent payment date. Conversely, the securities
will not be subject to an early redemption when the closing price of any one of the underlying equities is less than its
call threshold level on any determination date, which generally coincides with a period of greater risk of principal loss on your
securities. The securities could be redeemed as early as the first contingent payment date, potentially limiting your investment
to a term of approximately 3 months. In the event that the securities are redeemed prior to maturity, there is no guarantee that
you will be able to reinvest the proceeds from an investment in the securities at a comparable rate of return for a similar level
of risk. In addition, to the extent you are able to reinvest such proceeds in an investment comparable to the securities, you
will incur transaction costs and the original issue price for such an investment is likely to include certain built-in costs such
as dealer discounts and hedging costs.
|
|
§
|
Credit risk of UBS. The securities are unsubordinated, unsecured debt obligations of UBS and are not, either directly
or indirectly, an obligation of any third party. Any payment to be made on the securities, including any repayment of principal
at maturity, depends on the ability of UBS to satisfy its obligations as they come due. As a result, UBS’ actual and perceived
creditworthiness may affect the market value of the securities. If UBS were to default on its obligations, you may not receive
any amounts owed to you under the terms of the securities and you could lose all of your initial investment.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
§
|
Single equity risk. The return on the securities, which may be negative, is linked to the performance of each underlying equity. The price of each
underlying equity can rise or fall sharply due to factors specific to such underlying equity and its issuer (an “underlying equity issuer”) such
as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes
and decisions and other events, as well as general market factors, such as general stock market or commodity market volatility
and levels, interest rates and economic and political conditions. Recently,
the coronavirus infection has caused volatility in the global financial markets and a slowdown in the global economy.
Coronavirus or any other communicable disease or infection may adversely affect the underlying equity issuers and, therefore, the
underlying equities. You, as an investor in the securities, should make your own investigation into the underlying equity issuers
and the underlying equities. For additional information regarding each underlying equity issuer, please see “Information
about the Underlying Equities” in this document and each underlying equity issuer’s SEC filings referred to in that
section. We urge you to review financial and other information filed periodically by the underlying equity issuer with the SEC.
|
|
§
|
You are exposed to the market risk of each underlying equity. Your return on the securities is not linked to a basket
consisting of the underlying equities. Rather, it will be contingent upon the performance of each underlying equity. Unlike an
instrument with a return linked to a basket of American depositary receipts, common stocks or other underlying assets, in which
risk is mitigated and diversified among all of the components of the basket, you will be exposed equally to the risks related to
each underlying equity. Poor performance by any one underlying equity may negatively affect your return and will not be offset
or mitigated by the performance of any other underlying equity. Accordingly, your investment is subject to the market risk of each
underlying equity.
|
|
§
|
Because the securities are linked to the performance of more than one underlying equity, there is an increased probability
that you will not receive a contingent payment on a determination date and that you will lose a significant portion or all of
your initial investment. The risk that you will not receive a contingent payment on a determination date and that you will
lose a significant portion or all of your initial investment in the securities is greater if you invest in the securities as opposed
to securities that are linked to the performance of a single underlying equity if their terms are otherwise substantially similar.
With a greater total number of underlying equities, it is more likely that the closing price or the final price, as applicable,
of any underlying equity will be less than its respective coupon barrier level and/or downside threshold level, as applicable.
Therefore, it is more likely that you will receive an amount in cash which is worth less than your stated principal amount on
the maturity date. In addition, if the performances of the underlying equities are not correlated to each other, the risk that
the closing price or the final price, as applicable, of any underlying equity is less than its coupon barrier level or
downside threshold level, respectively is even greater.
|
|
§
|
Fair value considerations.
|
|
o
|
The issue price you pay for the securities exceeds their estimated initial value. The
issue price you pay for the securities exceeds their estimated initial value as of the pricing date due to the inclusion in
the issue price of the underwriting discount, hedging costs, issuance costs, projected profits and a fee paid to an
unaffiliated broker-dealer providing an electronic platform for this offering. As of the close of the relevant markets on the
pricing date, we have determined the estimated initial value of the securities by reference to our internal pricing models and
the estimated initial value of the securities is set forth in this pricing supplement. The pricing models used
to determine the estimated initial value of the securities incorporate certain variables, including the levels of the
underlying equities, volatility of the underlying equities, any dividends paid on the underlying equities, the correlation
among the underlying equities, prevailing interest rates, the term of the securities and our internal funding rate. Our
internal funding rate is typically lower than the rate we would pay to issue conventional fixed or floating rate debt
securities of a similar term. The underwriting discount, hedging costs, issuance and other costs, projected profits and the
difference in rates will reduce the economic value of the securities to you. Due to these factors, the estimated initial
value of the securities as of the pricing date is less than the issue price you pay for the securities.
|
|
o
|
The estimated initial value is a theoretical price and the actual price that you may be able to sell your securities in
any secondary market (if any) at any time after the pricing date may differ from the estimated initial value. The value of
your securities at any time will vary based on many factors, including the factors described above and in “—Single
equity risk” above and is impossible to predict. Furthermore, the pricing models that we use are proprietary and rely in
part on certain assumptions about future events, which may prove to be incorrect. As a result, after the pricing date, if you attempt
to sell the securities in the secondary market, the actual value you would receive may differ, perhaps materially, from the estimated
initial value of the securities determined by reference to our internal pricing models. The estimated initial value of the securities
does not represent a minimum or maximum price at which we or any of our affiliates would be willing to purchase your securities
in any secondary market at any time.
|
|
o
|
Our actual profits may be greater or less than the differential between the estimated initial value and the issue price
of the securities as of the pricing date. We may determine the economic terms of the securities, as well as hedge our obligations,
at least in part, prior to the pricing date. In addition, there may be ongoing costs to us to maintain and/or adjust any hedges
and such hedges are often imperfect. Therefore, our actual profits (or potentially, losses) in issuing the securities cannot be
determined as of the pricing date and any such differential between the estimated initial value and the issue price of the securities
as of the pricing date does not reflect our actual profits. Ultimately, our actual profits will be known only at the maturity of
the securities.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
§
|
Limited or no secondary market and secondary market price considerations.
|
|
o
|
There may be little or no secondary market for the securities. The securities will not be listed or displayed on any
securities exchange or any electronic communications network. UBS Securities LLC and its affiliates intend, but are not required,
to make a market for the securities and may stop making a market at any time. If you are able to sell your securities prior to
maturity, you may have to sell them at a substantial loss. Furthermore, there can be no assurance that a secondary market for the
securities will develop. The estimated initial value of the securities does not represent a minimum or maximum price at which we
or any of our affiliates would be willing to purchase your securities in any secondary market at any time.
|
|
o
|
The price at which UBS Securities LLC and its affiliates may offer to buy the securities in the secondary market (if any)
may be greater than UBS’ valuation of the securities at that time, greater than any other secondary market prices provided
by unaffiliated dealers (if any) and, depending on your broker, greater than the valuation provided on your customer account statements.
For a limited period of time following the issuance of the securities, UBS Securities LLC or its affiliates may offer to buy or
sell such securities at a price that exceeds (i) our valuation of the securities at that time based on our internal pricing models,
(ii) any secondary market prices provided by unaffiliated dealers (if any) and (iii) depending on your broker, the valuation provided
on customer account statements. The price that UBS Securities LLC may initially offer to buy such securities following issuance
will exceed the valuations indicated by our internal pricing models due to the inclusion for a limited period of time of the aggregate
value of the underwriting discount, hedging costs, issuance costs and theoretical projected trading profit. The portion of such
amounts included in our price will decline to zero on a straight line basis over a period ending no later than the date specified
under “Supplemental information regarding plan of distribution (conflicts of interest); secondary markets (if any)”.
Thereafter, if UBS Securities LLC or an affiliate makes secondary markets in the securities, it will do so at prices that reflect
our estimated value determined by reference to our internal pricing models at that time. The temporary positive differential relative
to our internal pricing models arises from requests from and arrangements made by UBS Securities LLC with the selling agents of
structured debt securities such as the securities. As described above, UBS Securities LLC and its affiliates are not required to
make a market for the securities and may stop making a market at any time. The price at which UBS Securities LLC or an affiliate
may make secondary markets at any time (if at all) will also reflect its then current bid-ask spread for similar sized trades of
structured debt securities. UBS Securities LLC reflects this temporary positive differential on its customer statements. Investors
should inquire as to the valuation provided on customer account statements provided by unaffiliated dealers.
|
|
o
|
Price of securities prior to maturity. The market price of the securities will be influenced by many unpredictable and
interrelated factors, including the prices of the underlying equities; the correlation between the underlying equities; the volatility
of the underlying equities; any dividends paid on the underlying equities; the time remaining to the maturity of the securities;
interest rates in the markets; geopolitical conditions and economic, financial, political, force majeure and regulatory or judicial
events; the creditworthiness of UBS and the then current bid-ask spread for the securities.
|
|
o
|
Impact of fees and the use of internal funding rates rather than secondary market credit spreads on secondary
market prices. All other things being equal, the use of the internal funding rates described above under
“—Fair value considerations” as well as the inclusion in the issue price of the underwriting discount,
hedging costs, issuance 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 securities in any secondary market.
|
|
§
|
Investors will not participate in any appreciation in the closing price of any underlying equity
and will not have the same rights as holders of any underlying equity. Investors will not participate in any appreciation
in the closing price of any underlying equity from its initial price, and the return on the securities will be limited
to any contingent interest payment that is paid with respect to each determination date on which the closing price or the final
price, as applicable, of each underlying equity is equal to or greater than its coupon barrier level. It is possible that
the closing price of at least one of the underlying equities could be less than its coupon barrier level on most or all
of the determination dates so that you will receive few or no contingent payments. If you do not earn sufficient contingent payments
over the term of the securities, the overall return on the securities may be less than the amount that would be paid on a conventional
debt security of the issuer of comparable maturity. Investors in the securities will not have voting rights or rights to receive
dividends or other distributions or any other rights with respect to any underlying equity.
|
|
§
|
There can be no assurance that the investment view implicit in the securities will be successful. It is impossible
to predict whether and the extent to which the prices of the underlying equities will rise or fall and there can be no assurance
that the closing price of each underlying equity will be equal to or greater than its coupon barrier level on any determination
date, or, if the securities are not redeemed prior to maturity, that the final price of each underlying equity will be
equal to or greater than its downside threshold level. The prices of the underlying equities will be influenced by complex and
interrelated political, economic, financial and other factors that affect the underlying equity issuers. You should be willing
to accept the risks of owning equities in general and the underlying equities in particular, and the risk of losing a significant
portion or all of your initial investment.
|
|
§
|
No affiliation with the underlying equity issuers. The underlying equity issuers are not affiliates of ours, are not involved with the offering
in any way, and have no obligation to consider your interests in taking any corporate actions that might affect the value of, and
any amounts payable on, the securities. We have obtained all information regarding the underlying equities from publicly available
information and have not made any due diligence inquiry with respect to the underlying equities in connection with the offering.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
§
|
We may engage in business with or involving the underlying equity issuers without regard to your interests. We or our
affiliates may presently or from time to time engage in business with the underlying equity issuers without regard to your interests
and thus may acquire non-public information about the underlying equities. Neither we nor any of our affiliates undertakes to disclose
any such information to you. In addition, we or our affiliates from time to time have published and in the future may publish research
reports with respect to the underlying equities, which may or may not recommend that investors buy or hold the underlying equities.
|
|
§
|
Potential UBS impact on an underlying equity. Trading or transactions by UBS or its affiliates in an underlying equity,
listed and/or over the counter options, futures, exchange-traded funds or other instruments with return linked to the performance
of that underlying equity, may adversely affect the market price(s) or level(s) of that underlying equity on any determination
date or the final determination date and, therefore, the market value of the securities and any payout to you of any contingent
payments or at maturity.
|
|
§
|
Potential conflicts of interest. We and our affiliates may engage in business related to any underlying
equity, which may present a conflict between our obligations as issuer and you, as a holder of the securities. There are also potential
conflicts of interest between you and the calculation agent, which will be an affiliate of UBS. The calculation agent will determine
whether the contingent payment is payable to you on any contingent payment date, whether the securities are subject to an early
redemption and the payment at maturity of the securities, if any, based on observed closing prices of the underlying equities.
The calculation agent can postpone the determination of the initial price, closing price or final price of any underlying
equity (and therefore the related contingent payment date or maturity date, as applicable) if a market disruption event occurs
and is continuing, on the pricing date, any determination date or the final determination date, respectively. As UBS determines
the economic terms of the securities, including the contingent payment, call threshold levels, coupon barrier levels and downside
threshold levels, and such terms include the underwriting discount, hedging costs, issuance and other costs and projected profits,
the securities represent a package of economic terms. There are other potential conflicts of interest insofar as an investor could
potentially get better economic terms if that investor entered into exchange-traded and/or OTC derivatives or other instruments
with third parties, assuming that such instruments were available and the investor had the ability to assemble and enter into such
instruments. Furthermore, given that UBS Securities LLC and its affiliates temporarily maintain a market making premium, it may
have the effect of discouraging UBS Securities LLC and its affiliates from recommending sale of your securities in the secondary
market.
|
|
|
In addition, we or one of our affiliates may enter into swap agreements
or related hedging activities with the dealer or its affiliates in connection with the securities, which could cause the economic
interests of UBS, the dealer or our or their respective affiliates to be adverse to your interests as an investor in the securities.
If the dealer or any of its affiliates conduct hedging activities for us or our affiliate in connection with the securities and
earns profits in connection with such hedging activities, such profit will be in addition to the underwriting compensation it receives
for the sale of the securities to you. You should be aware that the potential to receive compensation both for hedging activities
and sales may create a further incentive for the dealer to sell the securities to you.
|
|
§
|
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, and any amounts payable on, the securities,
or express opinions or provide recommendations that are inconsistent with purchasing or holding the securities. 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 securities and the
underlying equities to which the securities are linked.
|
|
§
|
The antidilution protection of the underlying equities is limited and may be discretionary. The calculation agent may
make adjustments to the initial price, downside threshold level, call threshold level, and/or final price of an underlying equity
or any other term of the securities, for certain corporate events affecting such underlying equity. However, the calculation agent
will not make an adjustment in response to all events that could affect an underlying equity. If an event occurs that does not
require the calculation agent to make an adjustment, the value of, and any amounts payable on, the securities may be materially
and adversely affected. You should also be aware that the calculation agent may make adjustments
in response to events that are not described in the accompanying product supplement to account for any diluting or concentrative
effect, but the calculation agent is under no obligation to do so or to consider your interests as a holder of the securities in
making these determinations.
|
|
§
|
The securities are not bank deposits. An investment in the securities carries risks which are very different from the
risk profile of a bank deposit placed with UBS or its affiliates. The securities have different yield and/or return, liquidity
and risk profiles and would not benefit from any protection provided to deposits.
|
|
§
|
If UBS experiences financial difficulties, FINMA has the power to open restructuring or
liquidation proceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings or measures
may have a material adverse effect on the terms and market value of the securities and/or the ability of UBS to make payments
thereunder. The Swiss Financial Market Supervisory Authority (“FINMA”) has broad statutory powers to take
measures and actions in relation to UBS if (i) it concludes that there is justified concern that UBS is over-indebted or has
serious liquidity problems or (ii) UBS fails to fulfill the applicable capital adequacy requirements (whether on a standalone
or consolidated basis) after expiry of a deadline set by FINMA. If one of these pre-requisites is met, FINMA is authorized to
open restructuring proceedings or liquidation (bankruptcy) proceedings in
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
|
respect of, and/or impose protective measures in relation to, UBS. The Swiss Banking Act grants significant discretion
to FINMA in connection with the aforementioned proceedings and measures. In particular, a broad variety of protective measures may be imposed by FINMA, including a bank moratorium or a maturity postponement, which measures may
be ordered by FINMA either on a stand-alone basis or in connection with restructuring or liquidation proceedings. The resolution
regime of the Swiss Banking Act is further detailed in the FINMA Banking Insolvency Ordinance (“BIO-FINMA”). In a
restructuring proceeding, FINMA, as resolution authority, is competent to approve the resolution plan. The resolution plan may,
among other things, provide for (a) the transfer of all or a portion of UBS’ assets, debts, other liabilities and contracts
(which may or may not include the contractual relationship between UBS and the holders of securities) to another entity, (b) a
stay (for a maximum of two business days) on the termination of contracts to which UBS is a party, and/or the exercise of (w)
rights to terminate, (x) netting rights, (y) rights to enforce or dispose of collateral or (z) rights to transfer claims, liabilities
or collateral under contracts to which UBS is a party, (c) the conversion of UBS’ debt and/or other obligations, including
its obligations under the securities, into equity (a “debt-to-equity” swap), and/or (d) the partial or full write-off
of obligations owed by UBS (a “write-off”), including its obligations under the securities. The BIO-FINMA provides
that a debt-to-equity swap and/or a write-off of debt and other obligations (including the securities) may only take place after
(i) all debt instruments issued by UBS qualifying as additional tier 1 capital or tier 2 capital have been converted into equity
or written-off, as applicable, and (ii) the existing equity of UBS has been fully cancelled. While the BIO-FINMA does not expressly
address the order in which a write-off of debt instruments other than debt instruments qualifying as additional tier 1 capital
or tier 2 capital should occur, it states that debt-to-equity swaps should occur in the following order: first, all subordinated
claims not qualifying as regulatory capital; second, all other claims not excluded by law from a debt-to-equity swap (other than
deposits); and third, deposits (in excess of the amount privileged by law). However, given the broad discretion granted to FINMA
as the resolution authority, any restructuring plan in respect of UBS could provide that the claims under or in connection with
the securities will be partially or fully converted into equity or written-off, while preserving other obligations of UBS that
rank pari passu with, or even junior to, UBS’ obligations under the securities. Consequently, holders of securities may
lose all or some of their investment in the securities. In the case of restructuring proceedings with respect to a systemically
important Swiss bank (such as UBS), the creditors whose claims are affected by the restructuring plan will not have a right to
vote on, reject, or seek the suspension of the restructuring plan. In addition, if a restructuring plan has been approved by FINMA,
the rights of a creditor to seek judicial review of the restructuring plan (e.g., on the grounds that the plan would unduly prejudice
the rights of holders of securities or otherwise be in violation of the Swiss Banking Act) are very limited. In particular, a
court may not suspend the implementation of the restructuring plan. Furthermore, even if a creditor successfully challenges the
restructuring plan, the court can only require the relevant creditor to be compensated ex post and there is currently no guidance
as to on what basis such compensation would be calculated or how it would be funded.
|
|
§
|
Uncertain tax treatment. Significant aspects of the tax treatment of the securities are uncertain. You should consult
your tax advisor about your tax situation. See “Tax Considerations” herein and “Material U.S. Federal Income
Tax Consequences”, including the section “— Securities Treated as Prepaid Derivatives or Prepaid Forwards with
Associated Contingent Coupons”, in the accompanying product supplement.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Information about the Underlying Equities
All disclosures contained in this document regarding each
underlying equity for the securities are derived from publicly available information. UBS has not conducted any independent review
or due diligence of any publicly available information with respect to any underlying equity. You should make your own investigation
into each underlying equity.
Included on the following pages is a brief description of each
underlying equity. This information has been obtained from publicly available sources. Set forth below is a table that provides
the quarterly closing high and quarterly closing low for each underlying equity. The information given below is for the specified
calendar quarters. We obtained the closing price information set forth below from Bloomberg Professional® service
(“Bloomberg”), without independent verification. You should not take the historical prices of the underlying equities
as an indication of future performance.
NIKE, Inc.
According to publicly available information, NIKE, Inc. (“NIKE”)
is engaged in the design, development and marketing of athletic footwear, apparel, equipment, accessories and services. Information
filed by NIKE with the SEC can be located by reference to its SEC file number: 001-10635, or its CIK Code: 0000320187. NIKE’s
common stock is listed on the New York Stock Exchange under the ticker symbol “NKE”.
Information from outside sources
is not incorporated by reference in, and should not be considered part of, this document or any document incorporated herein by
reference. UBS has not conducted any independent review or due diligence of any publicly available information with respect to
any underlying equity.
Information as of market close
on May 29, 2020:
Bloomberg Ticker Symbol:
|
NKE
UN <Equity>
|
52
Week High (on January 21, 2020):
|
$104.58
|
Current Price:
|
$98.58
|
52
Week Low (on March 23, 2020):
|
$62.80
|
52 Weeks Ago (on May 29, 2019):
|
$78.87
|
|
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Historical Information
The table below sets forth the published
high and low closing prices, as well as end-of-quarter closing price, of the underlying equity for the specified period. The closing
price of the underlying equity on May 29, 2020 was $98.58. The associated graph shows the closing prices of the underlying equity
for each day from January 1, 2010 to May 29, 2020. The dotted lines represent its downside threshold level and its coupon barrier
level of $59.15 and its call threshold level of $98.58, which are equal to 60% and 100%, respectively, of its initial price. We
obtained the information in the table below from Bloomberg without independent verification. UBS has not undertaken an independent
review or due diligence of any publicly available information obtained from Bloomberg. The historical performance of the
underlying equity should not be taken as an indication of its future performance, and no assurance can be given as to the closing
price of the underlying equity at any time, including the determination dates.
NIKE,
Inc.
|
High
|
Low
|
Period
End
|
2016
|
|
|
|
First Quarter
|
$64.90
|
$55.04
|
$61.47
|
Second Quarter
|
$61.59
|
$51.89
|
$55.20
|
Third Quarter
|
$60.22
|
$52.16
|
$52.65
|
Fourth Quarter
|
$52.67
|
$49.62
|
$50.83
|
2017
|
|
|
|
First Quarter
|
$58.75
|
$51.98
|
$55.73
|
Second Quarter
|
$59.00
|
$51.10
|
$59.00
|
Third Quarter
|
$60.14
|
$51.85
|
$51.85
|
Fourth Quarter
|
$64.81
|
$50.83
|
$62.55
|
2018
|
|
|
|
First Quarter
|
$69.65
|
$62.49
|
$66.44
|
Second Quarter
|
$79.68
|
$64.12
|
$79.68
|
Third Quarter
|
$85.55
|
$75.53
|
$84.72
|
Fourth Quarter
|
$84.46
|
$67.53
|
$74.14
|
2019
|
|
|
|
First Quarter
|
$88.01
|
$72.75
|
$84.21
|
Second Quarter
|
$89.20
|
$77.14
|
$83.95
|
Third Quarter
|
$93.92
|
$78.97
|
$93.92
|
Fourth Quarter
|
$101.57
|
$89.18
|
$101.31
|
2020
|
|
|
|
First Quarter
|
$104.58
|
$62.80
|
$82.74
|
Second Quarter (through May 29, 2020)
|
$99.87
|
$78.86
|
$98.58
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Walmart Inc.
According to publicly available information, Walmart Inc. (“Walmart”)
offers grocery items, health and wellness products and general merchandise, including apparel, housewares, small appliances, electronics
and hardware, through various physical retail stores as well as through eCommerce. Information filed by Walmart with the SEC can
be located by reference to its SEC file number: 001-06991, or its CIK Code: 0000104169. Walmart’s common stock is listed
on the New York Stock Exchange under the ticker symbol “WMT”.
Information from outside sources
is not incorporated by reference in, and should not be considered part of, this document or any document incorporated herein by
reference. UBS has not conducted any independent review or due diligence of any publicly available information with respect to
any underlying equity.
Information as of market close on
May 29, 2020:
Bloomberg Ticker Symbol:
|
WMT UN <Equity>
|
52 Week High (on April 16, 2020):
|
$132.33
|
Current Price:
|
$124.06
|
52
Week Low (on May 31, 2019):
|
$101.44
|
52 Weeks Ago (on May 29, 2019):
|
$102.12
|
|
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Historical Information
The table below sets forth the published high
and low closing prices, as well as end-of-quarter closing price, of the underlying equity for the specified period. The closing
price of the underlying equity on May 29, 2020 was $124.06. The associated graph shows the closing prices of the underlying equity
for each day from January 1, 2010 to May 29, 2020. The dotted lines represent its downside threshold level and its coupon barrier
level of $74.44 and its call threshold level of $124.06, which are equal to 60% and 100%, respectively, of its initial price. We
obtained the information in the table below from Bloomberg without independent verification. UBS has not undertaken an independent
review or due diligence of any publicly available information obtained from Bloomberg. The historical performance of the
underlying equity should not be taken as an indication of its future performance, and no assurance can be given as to the closing
price of the underlying equity at any time, including the determination dates.
Walmart
Inc.
|
High
|
Low
|
Period
End
|
2016
|
|
|
|
First Quarter
|
$68.80
|
$60.84
|
$68.49
|
Second Quarter
|
$73.02
|
$63.15
|
$73.02
|
Third Quarter
|
$74.30
|
$70.30
|
$72.12
|
Fourth Quarter
|
$72.01
|
$67.39
|
$69.12
|
2017
|
|
|
|
First Quarter
|
$72.39
|
$65.66
|
$72.08
|
Second Quarter
|
$80.26
|
$71.43
|
$75.68
|
Third Quarter
|
$81.61
|
$73.23
|
$78.14
|
Fourth Quarter
|
$99.62
|
$78.45
|
$98.75
|
2018
|
|
|
|
First Quarter
|
$109.55
|
$85.42
|
$88.97
|
Second Quarter
|
$88.46
|
$82.40
|
$85.65
|
Third Quarter
|
$98.64
|
$84.00
|
$93.91
|
Fourth Quarter
|
$105.56
|
$85.82
|
$93.15
|
2019
|
|
|
|
First Quarter
|
$102.20
|
$92.86
|
$97.53
|
Second Quarter
|
$111.24
|
$96.94
|
$110.49
|
Third Quarter
|
$118.68
|
$105.22
|
$118.68
|
Fourth Quarter
|
$121.28
|
$116.12
|
$118.84
|
2020
|
|
|
|
First Quarter
|
$122.58
|
$104.05
|
$113.62
|
Second Quarter (through May 29, 2020)
|
$132.33
|
$114.14
|
$124.06
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
This document relates only to the
securities offered hereby and does not relate to the underlying equities or other securities linked to the underlying equities. We
have derived all disclosures contained in this document regarding the underlying equities from the publicly available documents
described in the preceding paragraphs. In connection with the offering of the securities, neither we nor the agent has participated
in the preparation of such documents or made any due diligence inquiry with respect to the underlying equities.
Neither the issuer nor any of its
affiliates makes any representation to you as to the performance of the underlying equities.
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
Additional Information about the Securities
Please read this information in conjunction
with the summary terms on the front cover of this document.
Additional Provisions:
|
Record date:
|
The record date for each
contingent payment date shall be the date one business day prior to such scheduled contingent payment date; provided,
however, that any contingent payment payable at maturity or upon early redemption shall be payable to the person to whom the
payment at maturity or early redemption amount, as the case may be, shall be payable.
|
Trustee:
|
U.S. Bank Trust National Association
|
Calculation agent:
|
UBS Securities LLC
|
Tax
considerations:
|
The U.S. federal income tax
consequences of your investment in the securities are uncertain. There are no statutory provisions, regulations, published rulings
or judicial decisions addressing the characterization for U.S. federal income tax purposes of securities with terms that are
substantially the same as the securities. Some of these tax consequences are summarized below, but we urge you to read the more
detailed discussion in “Material U.S. Federal Income Tax Consequences”, including the section “— Securities
Treated as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement
and to discuss the tax consequences of your particular situation with your tax advisor. This discussion is based upon the Internal
Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed U.S. Treasury Department (the
“Treasury”) regulations, rulings and decisions, in each case, as available and in effect as of the date hereof, all of
which are subject to change, possibly with retroactive effect. Tax consequences under state, local and non-U.S. laws are not
addressed herein. No ruling from the U.S. Internal Revenue Service (the “IRS”) has been sought as to the U.S. federal
income tax consequences of your investment in the securities, and the following discussion is not binding on the IRS.
|
|
U.S. Tax Treatment. Pursuant
to the terms of the securities, UBS and you agree, in the absence of a statutory or regulatory change or an administrative
determination or judicial ruling to the contrary, to characterize the securities as prepaid derivative contracts with respect to the
underlying equities. If your securities are so treated, any contingent payment that is paid by UBS (including on the maturity date
or upon early redemption) should be included in your income as ordinary income in accordance with your regular method of accounting
for U.S. federal income tax purposes.
|
|
In addition, excluding amounts
attributable to any contingent payment, you should generally recognize capital gain or loss upon the taxable disposition of your
securities in an amount equal to the difference between the amount you receive at such time (other than amounts or proceeds
attributable to a contingent payment or any amount attributable to any accrued but unpaid contingent payment) and the amount you
paid for your securities. Such gain or loss should generally be long-term capital gain or loss if you have held your securities for
more than one year (otherwise such gain or loss should be short-term capital gain or loss if held for one year or less). The
deductibility of capital losses is subject to limitations. Although uncertain, it is possible that proceeds received from the sale
or exchange of your securities prior to a contingent payment date, but that could be attributed to an expected contingent payment,
could be treated as ordinary income. You should consult your tax advisor regarding this risk.
|
|
Based on certain factual
representations received from us, our counsel, Cadwalader, Wickersham & Taft LLP, is of the opinion that it would be reasonable
to treat your securities in the manner described above. However, because there is no authority that specifically addresses the tax
treatment of the securities, it is possible that your securities could alternatively be treated for tax purposes as a single
contingent payment debt instrument, or pursuant to some other characterization, such that the timing and character of your income
from the securities could differ materially and adversely from the treatment described above, as described further under
“Material U.S. Federal Income Tax Consequences”, including the section “— Securities Treated as Prepaid
Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement.
|
|
Except to the extent otherwise
required by law, UBS intends to treat your securities for U.S. federal income tax purposes in accordance with the treatment
described above and under “Material U.S. Federal Income Tax Consequences”, including the section “—
Securities Treated as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product
supplement unless and until such time as the IRS and the Treasury determine that some other treatment is more appropriate.
|
|
Notice 2008-2. In 2007, the
IRS released a notice that may affect the taxation of holders of the securities. According to Notice 2008-2, the IRS and the
Treasury are actively considering whether the holder of an instrument such as the securities should be required to accrue ordinary
income on a current basis. 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 securities will ultimately be required to accrue income currently in excess of any
receipt of contingent payments 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 and
whether non-U.S. holders of such instruments should be subject to withholding tax on any deemed income accruals. Both U.S. and
non-U.S. holders are urged to consult their tax advisors concerning the significance and the potential impact of the above
considerations.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
Medicare Tax on Net
Investment Income. U.S. holders that are individuals, estates or certain trusts are subject to an additional 3.8% tax on all or
a portion of their “net investment income,” which may include any income or gain realized with respect to the
securities, to the extent of their net investment income that when added to their other modified adjusted gross income, exceeds
$200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), $125,000 for a
married individual filing a separate return or the dollar amount at which the highest tax bracket begins for an estate or trust. The
3.8% Medicare tax is determined in a different manner than the income tax. U.S. holders should consult their tax advisors as to the
consequences of the 3.8% Medicare tax.
|
|
Specified Foreign Financial
Assets. Certain U.S. holders that own “specified foreign financial assets” in excess of an applicable threshold may
be subject to reporting obligations with respect to such assets with their tax returns, especially if such assets are held outside
the custody of a U.S. financial institution. U.S. holders are urged to consult their tax advisors as to the application of this
legislation to their ownership of the securities.
|
|
Non-U.S. Holders. The U.S.
federal income tax treatment of the contingent payments is unclear. Subject to Section 871(m) of the Code and FATCA, as discussed
below, our counsel is of the opinion that contingent payments paid to a non-U.S. holder that provides us (and/or the applicable
withholding agent) with a fully completed and validly executed applicable IRS Form W-8 should not be subject to U.S. withholding tax
and we do not intend to withhold any tax on contingent payments. However, it is possible that the IRS could assert that such
payments are subject to U.S. withholding tax, or that another withholding agent may otherwise determine that withholding is
required, in which case we or the other withholding agent may withhold up to 30% on such payments (subject to reduction or
elimination of such withholding tax pursuant to an applicable income tax treaty). We will not pay any additional amounts in respect
of such withholding. Subject to Section 897 of the Code and Section 871(m) of the Code, discussed below, gain realized from the
taxable disposition of a security generally should not be subject to U.S. tax unless (i) such gain is effectively connected with a
trade or business conducted by the non-U.S. holder in the U.S., (ii) the non-U.S. holder is a non-resident alien individual and is
present in the U.S. for 183 days or more during the taxable year of such taxable disposition and certain other conditions are
satisfied, or (iii) the non-U.S. holder has certain other present or former connections with the U.S.
|
|
Section 897. We will not
attempt to ascertain whether any underlying equity issuer would be treated as a “United States real property holding
corporation” (“USRPHC”) within the meaning of Section 897 of the Code. We also have not attempted to determine
whether the securities should be treated as “United States real property interests” (“USRPI”) as defined in
Section 897 of the Code. If any such entity and the securities were so treated, certain adverse U.S. federal income tax consequences
could possibly apply, including subjecting any gain to a non-U.S. holder in respect of a security upon a taxable disposition of the
securities to the U.S. federal income tax on a net basis, and the proceeds from such a taxable disposition to a 15% withholding tax.
Non-U.S. holders should consult their tax advisors regarding the potential treatment of any such entity as a USRPHC and the
securities as USRPI.
|
|
Section 871(m). A 30%
withholding tax (which may be reduced by an applicable income tax treaty) is imposed under Section 871(m) of the Code on certain
“dividend equivalents” paid or deemed paid to a non-U.S. holder with respect to a “specified equity-linked
instrument” that references one or more dividend-paying U.S. equity securities. The withholding tax can apply even if the
instrument does not provide for payments that reference dividends. Treasury regulations provide that the withholding tax applies to
all dividend equivalents paid or deemed paid on specified equity-linked instruments that have a delta of one (“delta-one
specified equity-linked instruments”) issued after 2016 and to all dividend equivalents paid or deemed paid on all other
specified equity-linked instruments issued after 2018. However, the IRS has issued guidance that states that the Treasury and the
IRS intend to amend the effective dates of the Treasury regulations to provide that withholding on dividend equivalents paid or
deemed paid will not apply to specified equity-linked instruments that are not delta-one specified equity-linked instruments and are
issued before January 1, 2023.
|
|
Based on our determination that the
securities are not “delta-one” with respect to any underlying equity, our counsel is of the opinion that the securities
should not be delta-one specified equity-linked instruments and thus should not be subject to withholding on dividend equivalents.
Our determination is not binding on the IRS, and the IRS may disagree with this determination. Furthermore, the application of
Section 871(m) of the Code will depend on our determinations made upon issuance of the securities. If withholding is required, we
will not make payments of any additional amounts.
|
|
Nevertheless, after issuance, it is
possible that your securities could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the
underlying equities or your securities, and following such occurrence your securities could be treated as delta-one specified
equity-linked instruments that are subject to withholding on dividend equivalents. It is also possible that withholding tax or other
tax under Section 871(m) of the Code could apply to the securities under these rules if you enter, or have entered, into certain
other transactions in respect of the underlying equities or the securities. If you enter, or have entered, into other transactions
in respect of the underlying equities or the securities, you should consult your tax advisor regarding the application of Section
871(m) of the Code to your securities in the context of your other transactions.
|
|
Because of the uncertainty
regarding the application of the 30% withholding tax on dividend equivalents to the securities, you are urged to consult your tax
advisor regarding the potential application of Section 871(m) of the Code and the 30% withholding tax to an investment in the
securities.
|
Contingent Income Auto-Callable Securities due June 2, 2023
|
$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
|
|
Foreign Account Tax
Compliance Act. Legislation commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”) generally
imposes a withholding tax of 30% on payments to certain non-U.S. entities (including financial intermediaries) with respect to
certain financial instruments, unless various U.S. information reporting and due diligence requirements have been satisfied. An
intergovernmental agreement between the U.S. and the non-U.S. entity’s jurisdiction may modify these requirements. This
legislation generally applies to certain financial instruments that are treated as paying U.S.-source interest or other U.S.-source
“fixed or determinable annual or periodical” income (“FDAP income”). Withholding (if applicable) applies to
payments of U.S.-source FDAP income but, pursuant to certain Treasury regulations and IRS guidance, does not apply to payments of
gross proceeds on the disposition (including upon retirement) of financial instruments. As the treatment of the securities is
unclear, it is possible that any contingent payment with respect to the securities could be subject to the FATCA rules. If
withholding applies to the securities, we will not be required to pay any additional amounts with respect to amounts withheld. Both
U.S. and non-U.S. holders should consult their tax advisors regarding the potential application of FATCA to the
securities.
|
|
Proposed Legislation. In 2007,
legislation was introduced in Congress that, if it had been enacted, would have required holders of securities similar to the
securities purchased after the bill was enacted to accrue interest income over the term of such securities despite the fact that
there may be no interest payments over the term of such securities.
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Furthermore, in 2013, the House Ways
and Means Committee released in draft form certain proposed legislation relating to financial instruments. If it had been enacted,
the effect of this legislation generally would have been to require instruments such as the securities to be marked to market on an
annual basis with all gains and losses to be treated as ordinary, subject to certain exceptions.
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It is not possible to predict whether
any similar or identical bills will be enacted in the future, or whether any such bill would affect the tax treatment of your
securities. You are urged to consult your tax advisor regarding the possible changes in law and their possible impact on the tax
treatment of your securities.
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Both U.S. and non-U.S. holders are
urged to consult their tax advisors concerning the application of U.S. federal income tax laws to their particular situations, as
well as any tax consequences of the purchase, beneficial ownership and disposition of the securities arising under the laws of any
state, local, non-U.S. or other taxing jurisdiction.
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Use of proceeds and
hedging:
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We will use the net proceeds we receive
from the sale of the securities for the purposes we describe in the accompanying product supplement under “Use of Proceeds and
Hedging.” We and/or our affiliates may also use those proceeds in transactions intended to hedge our obligations under the
securities as described below.
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In connection with the sale of the
securities, we and/or our affiliates may enter into hedging transactions involving the execution of long-term or short-term interest
rate swaps, futures and option transactions or purchases and sales of securities before, on and after the pricing date of the
securities. From time to time, we and/or our affiliates may enter into additional hedging transactions or unwind those we have
entered into. In addition, we or one of our affiliates may enter into swap agreements or related hedging activities with the dealer
or its affiliates.
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We and/or our affiliates may acquire a
long or short position in securities similar to the securities from time to time and may, in our or their sole discretion, hold or
resell those securities.
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The hedging activity discussed above
may adversely affect the market value of the securities from time to time and payment on the securities, including any payment at
maturity. See “Risk Factors” beginning on page 10 of this document for a discussion of these adverse effects.
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Supplemental
information regarding plan of distribution (conflicts of interest); secondary markets (if any):
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Pursuant to the terms of a
distribution agreement, UBS has agreed to sell to UBS Securities LLC, and UBS Securities LLC has agreed to purchase from UBS,
the stated principal amount of the securities specified on the front cover of this document at the price to public less a fee
of $0.25 per $10.00 stated principal amount of securities. UBS Securities LLC has agreed to resell all of the securities to
Morgan Stanley Wealth Management with an underwriting discount of $0.25 reflecting a fixed structuring fee of $0.05 and a
fixed sales commission of $0.20 per $10.00 stated principal amount of securities that Morgan Stanley Wealth Management
sells.
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UBS, UBS Securities LLC or any other
affiliate of UBS may use this document, the accompanying product supplement and the accompanying prospectus in a market-making
transaction for any securities after their initial sale. In connection with the offering, UBS, UBS Securities LLC, any other
affiliate of UBS or any other securities dealers may distribute this document, the accompanying product supplement and the
accompanying prospectus electronically. Unless UBS or its agent informs the purchaser otherwise in the confirmation of sale, this
document, the accompanying product supplement and the accompanying prospectus are being used in a market-making
transaction.
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Conflicts of Interest. UBS
Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in this offering within the meaning of
Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds
(excluding the underwriting discount) from the initial public offering of the securities and, thus creates an additional conflict of
interest within the meaning of FINRA Rule 5121. UBS Securities LLC is not permitted to sell securities in this offering to an
account over which it exercises discretionary authority without the prior specific written approval of the account holder.
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Contingent Income Auto-Callable Securities due June 2, 2023
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$6,149,300 Based on the worst performing of the common stock of NIKE, Inc. and the common stock of Walmart Inc.
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UBS Securities LLC and
its affiliates may offer to buy or sell the securities in the secondary market (if any) at prices greater than UBS’ internal
valuation. The value of the securities at any time will vary based on many factors that cannot be predicted. However, the price
(not including UBS Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any
affiliate would offer to buy or sell the securities immediately after the pricing date in the secondary market is expected to exceed
the estimated initial value of the securities as determined by reference to our internal pricing models. The amount of the excess
will decline to zero on a straight line basis over a period ending no later than 6 weeks after the pricing date, provided that UBS
Securities LLC may shorten the period based on various factors, including the magnitude of purchases and other negotiated provisions
with selling agents. Notwithstanding the foregoing, UBS Securities LLC and its affiliates are not required to make a market for the
securities and may stop making a market at any time. For more information about secondary market offers and the estimated initial
value of the securities, see “Risk Factors — Fair value considerations” and “— Limited or no secondary
market and secondary market price considerations” on pages 11 and 12 of this document.
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Prohibition of sales to
EEA retail investors:
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The securities are not intended to be
offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in
the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a
retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); (ii) a customer
within the meaning of Directive 2002/92/EC, as amended, where that customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC, as amended.
Consequently no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”),
for offering or selling the securities or otherwise making them available to retail investors in the EEA has been prepared and
therefore offering or selling the securities or otherwise making them available to any retail investor in the EEA may be unlawful
under the PRIIPs Regulation.
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Validity of the
securities:
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In the opinion of Cadwalader,
Wickersham & Taft LLP, as special counsel to the issuer, when the securities 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 securities 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 securities,
authentication of the securities 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.
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