Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-204908
|
UBS AG
|
|
$893,000
|
|
Capped
Leveraged Buffered Basket-Linked Medium-Term Notes due March 11, 2020
|
|
The notes do not bear interest.
The amount that
you will be paid on your notes on the stated maturity date (March 11, 2020) is based on the performance of an unequally-weighted
basket of five indices: the EURO STOXX 50
®
Index (36.00% weighting), TOPIX
®
Index (27.00% weighting),
FTSE
®
100 Index (20.00% weighting), Swiss Market Index (SMI)
®
(9.00% weighting) and S&P/ASX 200
Index (8.00% weighting) (each a “basket underlier” and together, the “basket underliers”) as measured from
the trade date (August 8, 2018) to and including the determination date (March 9, 2020). The initial basket level was set to 100
on the trade date and the final basket level (the basket closing level on the determination date) will equal the
sum
of
the products, as calculated for each basket underlier, of: (i) the final underlier level of such basket underlier
times
(ii) the weighting multiplier for such basket underlier. The weighting multiplier will equal, for each basket underlier, a positive
amount equal to the
quotient
of (i) the
product
of the initial basket level
times
the weighting percentage
for such basket underlier
divided by
(ii) the initial underlier level for such basket underlier. If the final basket level
on the determination date is greater than the initial basket level, the return on your notes will be positive, subject to the maximum
settlement amount of $1,330.30 for each $1,000 face amount of your notes. If the final basket level declines by up to 15.00% from
the initial basket level, you will receive the face amount of your notes.
If the final basket level declines by more than 15.00%
from the initial basket level, the return on your notes will be negative. Specifically, you will lose approximately 1.1765% for
every 1% negative basket return below the buffer level of 85.00, which is 85.00% of the initial basket level. You could lose your
entire investment in the notes.
To determine your cash settlement amount, we will calculate the
basket return, which is the percentage increase or decrease in the final basket level from the initial basket level. On the
stated maturity date, for each $1,000 face amount of your notes, you will receive an amount in cash equal to:
·
|
if the basket return is
positive
(the final basket level is
greater than
the initial basket level), the
sum
of (i) $1,000
plus
(ii) the
product
of (a) $1,000
times
(b) the upside participation rate of 180%
times
(c) the basket return, subject to the maximum settlement
amount;
|
·
|
if the basket return is
zero
or
negative
but
not below
-15.00% (the final basket level is
equal to or less than
the initial basket level but not by more than 15.00%), $1,000; or
|
·
|
if the basket return is
negative
and is
below
-15.00% (the final basket level is
less than
the initial basket level by more than 15.00%), the sum of (i) $1,000
plus
(ii) the
product
of (a) approximately 117.65%
times
(b) the
sum of
the basket return plus 15.00%
times
(c) $1,000.
|
Your investment in the notes involves certain risks,
including, among other things, our credit risk. See “Additional Risk Factors Specific To Your Notes” beginning on page
15 of this pricing supplement.
You should read the additional disclosure herein so that you may better understand
the terms and risks of your investment.
The estimated initial value of the notes as of the trade
date is $994.00 per $1,000 face amount. The estimated initial value of the notes was determined as of the close of the relevant
markets on the date hereof by reference to UBS’ internal pricing models, inclusive of the internal funding rate. For more
information about secondary market offers and the estimated initial value of the notes, see “Additional Risk Factors Specific
To Your Notes — Fair Value Considerations” and “Additional Risk Factors Specific To Your Notes — Limited
or No Secondary Market and Secondary Market Price Considerations” on pages 16 and 17 of this pricing supplement.
Original issue date:
|
|
August 15, 2018
|
|
Original issue price:
|
|
100.00% of the face amount
|
Underwriting discount:
|
|
0.00% of the face amount
|
|
Net proceeds to the issuer:
|
|
100.00% of the face amount
|
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these notes or passed upon the accuracy or adequacy of this pricing
supplement, the accompanying product supplement, the accompanying index supplement or the accompanying prospectus. Any representation
to the contrary is a criminal offense. The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation
or any other governmental agency.
UBS Securities LLC
Pricing Supplement dated August 8, 2018.
The issue price, underwriting discount and net proceeds
listed above relate to the notes we sell initially. We may decide to sell additional notes after the date of this pricing
supplement, at issue prices and with underwriting discounts and net proceeds that differ from the amounts set forth above.
The return (whether positive or negative) on your investment in the notes will depend in part on the issue price you pay for
such notes.
UBS Securities LLC, our affiliate, will purchase the notes
from UBS for distribution to one or more registered broker dealers (“dealers”). UBS Securities LLC, the dealers or
any of their respective affiliates may use this pricing supplement in market-making transactions in notes after their initial sale.
Unless UBS, UBS Securities LLC, the dealers or any of their respective affiliates selling such notes to you informs you otherwise
in the confirmation of sale, this pricing supplement is being used in a market-making transaction
. See “Supplemental
plan of distribution (conflicts of interest); secondary markets (if any)” in this pricing supplement and “Supplemental
Plan of Distribution (Conflicts of Interest)” in the accompanying product supplement.
SUMMARY INFORMATION
UBS has filed a registration statement
(including a prospectus, as supplemented by a product supplement for the notes and an index supplement for various securities we
may offer, including the notes), with the Securities and Exchange Commission, or SEC, for the offering to which this pricing supplement relates. Before you invest, you should read these documents and any other documents relating to this offering
that UBS has filed with the SEC for more complete information about UBS and this offering. You may obtain these documents without
cost by visiting EDGAR on the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website is 0001114446.
You may access these documents on the SEC website at www.sec.gov
as follows:
References to “UBS,” “we,” “our”
and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this pricing supplement, “notes”
refer to the Capped Leveraged Buffered Basket-Linked Medium-Term Notes that are offered hereby, unless the context otherwise
requires. Also, references to the “accompanying product supplement” mean the UBS Underlier-Linked Notes product supplement,
dated May 2, 2016, references to the “accompanying index supplement” mean the UBS index supplement dated April 29,
2016 and references to the “accompanying prospectus” mean the UBS prospectus titled “Debt Securities and Warrants,”
dated April 29, 2016.
This pricing supplement, together with
the documents listed above, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements as
well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures
for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other
things, the matters set forth in “Additional Risk Factors Specific To Your Notes” beginning on page 15 and in “Risk
Factors” on page PS-35 in the accompanying product supplement, as the notes involve risks not associated with conventional
debt securities. We urge you to consult your investment, legal, tax and other advisors before deciding to invest in the notes.
UBS reserves the right to change the terms of, or
reject any offer to purchase, the notes prior to their issuance. In the event of any changes to the terms of the notes, UBS
will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject
such changes in which case UBS may reject your offer to purchase.
INVESTOR SUITABILITY
The notes may be suitable for you if:
|
¨
|
You fully understand the risks inherent in an investment in the notes, including the risk of loss of your entire initial investment.
|
|
¨
|
You can tolerate a loss of all or a substantial portion of your investment and are willing to make an investment that may have the
full downside market risk of an investment in the basket underliers or in the stocks comprising the basket underliers (the “underlier stocks”), subject to the buffer level.
|
|
¨
|
You believe the level of the basket will appreciate
over the term of the notes and the final basket level is unlikely to exceed the cap level, which is 118.35% of the initial basket
level.
|
|
¨
|
You understand and accept that your return on the
notes is limited by the maximum settlement amount and you are willing to invest in the notes based on the maximum settlement amount
of $1,330.30 for each $1,000.00 face amount of your notes.
|
|
¨
|
You can tolerate fluctuations in the price of the notes throughout their
term that may be similar to or exceed the downside fluctuations
in the level of the basket underliers or the price of the underlier stocks.
|
|
¨
|
You do not seek guaranteed current income from your investment and are
willing to forego any dividends paid on the underlier stocks.
|
|
¨
|
You are willing to hold the notes to maturity, a term
of approximately 19 months, and accept that there may be little or no secondary market for the notes.
|
|
¨
|
You seek an investment with exposure to companies in the Eurozone, Japan, United Kingdom, Switzerland and
Australia.
|
|
¨
|
You are willing to assume the credit risk of UBS for all payments under
the notes, and understand that if UBS defaults on its obligations you
may not receive any amounts due to you including any repayment of principal.
|
|
¨
|
You understand that the estimated initial value of the notes determined
by our internal pricing models is lower than the issue price and
that should UBS Securities LLC or any affiliate make secondary markets for the notes, the price (not including their customary
bid-ask spreads) will temporarily exceed the
internal pricing model price.
|
The notes may not be suitable for you if:
|
¨
|
You do not fully understand the risks inherent in an investment in the notes,
including the risk of loss of your entire initial investment.
|
|
¨
|
You require an investment designed to guarantee a full return of principal at maturity.
|
|
¨
|
You cannot tolerate a loss of all or a substantial portion of your
investment or are not willing to make an investment that may have the
full downside market risk of an investment in the basket underliers or in the underlier stocks, subject to the buffer level.
|
|
¨
|
You believe that the level of the basket will decline
during the term of the notes and the final basket level will likely be less than the initial basket level by more than 15.00%,
or you believe the level of the basket will appreciate over the term of the notes and that the final basket level is likely to
exceed the cap level, which is 118.35% of the initial basket level.
|
|
¨
|
You seek an investment that has unlimited return potential
without a cap on appreciation or you are unwilling to invest in the notes based on the maximum settlement amount of $1,330.30 for
each $1,000.00 face amount of your notes.
|
|
¨
|
You cannot tolerate fluctuations in the
price of the notes throughout their term that may be similar to or exceed the downside fluctuations
in the level of the basket underliers or the price of the underlier stocks.
|
|
¨
|
You seek guaranteed current income from this investment or prefer
to receive the dividends paid on the underlier stocks.
|
|
¨
|
You are unable or unwilling to hold the notes to maturity,
a term of approximately 19 months, or you seek an investment for which there will be an active secondary market.
|
|
¨
|
You do not seek an investment with exposure to companies in the Eurozone, Japan, United Kingdom, Switzerland
and Australia.
|
|
¨
|
You are not willing to assume the credit risk of UBS for all payments under the notes.
|
The investor suitability considerations identified above are
not exhaustive. Whether or not the notes are a suitable investment for you will depend on your individual circumstances and you
should reach an investment decision only after you and your investment, legal, tax, accounting and other advisors have carefully
considered the suitability of an investment in the notes in light of your particular circumstances. You should also review “Additional
Risk Factors Specific To Your Notes” in this pricing supplement and the more detailed “Risk Factors”
in the accompanying product supplement for risks related to an investment in the notes.
KEY TERMS
Issuer:
UBS AG, London Branch
Underlier:
An unequally-weighted basket of
five indices. For more information about the indices see “The Basket and the Basket Underliers” on page 23 in this pricing supplement.
About the Basket:
The following table lists the
basket underliers and their corresponding Bloomberg tickers, percentage weights in the basket, weighting multipliers and initial
underlier levels. The weighting multipliers below have been rounded for ease of analysis.
Bloomberg Ticker
|
Basket Underlier
|
Percentage Weight in the Basket
|
Weighting Multiplier
|
Initial Underlier Level
|
SX5E
|
EURO STOXX 50
®
Index
|
36.00%
|
0.010304557
|
3,493.60
|
TPX
|
TOPIX
®
Index
|
27.00%
|
0.015475351
|
1,744.71
|
UKX
|
FTSE
®
100 Index
|
20.00%
|
0.002571801
|
7,776.65
|
SMI
|
Swiss Market Index (SMI)
®
|
9.00%
|
0.000980803
|
9,176.15
|
AS51
|
S&P/ASX 200 Index
|
8.00%
|
0.001276217
|
6,268.528
|
Specified currency:
U.S. dollars (“$”)
Terms to be specified in accordance with the accompanying
product supplement:
•
|
type of notes: notes linked to an unequally-weighted basket of five indices
|
•
|
averaging dates: not applicable
|
•
|
cap level: yes, as described below
|
•
|
buffer level: yes, as described below
|
•
|
interest: not applicable
|
Face amount:
Each note will have a face amount
of $1,000; $893,000 in the aggregate for all the offered notes; the aggregate face amount of the offered notes may be increased
if the issuer, at its sole option, decides to sell an additional aggregate face amount of the notes subsequent to the date of this
pricing supplement. The issue price, underwriting discount, and net proceeds of the notes in the subsequent sale may differ substantially
(higher or lower) from the original issue price you paid as provided on the cover of this pricing supplement. The return (whether
positive or negative) on your investment in the notes will depend in part on the issue price you pay for such notes.
Purchase at amount other than face amount:
The
amount we will pay you at the stated maturity date for your notes will not be adjusted based on the issue price you pay for your
notes, so if you acquire notes at a premium (or discount) to face amount and hold them to the stated maturity date, it could affect
your investment in a number of ways. The return on your investment in such notes will be lower (or higher) than it would have been
had you purchased the notes at face amount. Also, the stated buffer level would not offer the same measure of protection to your
investment as would be the case if you had purchased the notes at face amount. Additionally, the cap level would be triggered at
a lower (or higher) percentage return than indicated below, relative to your initial investment. See “Additional Risk Factors
Specific To Your Notes — If You Purchase Your Notes at a Premium to Face Amount, the Return on Your Investment Will Be Lower
Than the Return on Notes Purchased at Face Amount and the Impact of Certain Key Terms of the Notes Will be Negatively Affected”
beginning on page 18 in this pricing supplement.
Supplemental discussion of U.S. federal income tax
consequences:
You will be obligated pursuant to the terms of the notes — in the absence of a change in law, an administrative
determination or a judicial ruling to the contrary — to characterize each note for all tax purposes as a pre-paid derivative
contract in respect of the underlier, as described under “Supplemental U.S. Tax Considerations” in the accompanying
product supplement. Pursuant to this approach, based on certain factual representations received from us, our counsel, Cadwalader,
Wickersham & Taft LLP, is of the opinion that upon the taxable disposition of your notes, it would be reasonable for you to
recognize capital gain or loss equal to the difference, if any, between the amount of cash you receive at such time and your tax
basis in your notes. The Internal Revenue Service (the “IRS”) might not agree with this treatment, however, in which
case, the timing and character of income or loss on your note could be materially and adversely affected.
Additionally, we will not attempt to ascertain whether
any issuers of the underlier stocks would be treated as a “passive foreign investment company” (a “PFIC”)
within the meaning of Section 1297 of the Internal Revenue Code of 1986, as amended (the “Code”). If any such entity
were so treated, certain adverse U.S. federal income tax consequences might apply to U.S. holders upon the taxable disposition
(including cash settlement) of the notes. You should refer to information filed with the SEC or an equivalent governmental authority
by such entities and consult your tax advisor regarding the possible consequences to you if any such entity is or becomes a PFIC.
A 30% withholding tax (which may be reduced by an
applicable income tax treaty) is imposed under Section 871(m) of the Code on certain “dividend equivalents” paid or
deemed paid to a non-U.S. holder with respect to a “specified equity-linked instrument” that references one or more
dividend-paying U.S. equity securities or indices containing U.S. equity securities. The withholding tax can apply even if the
instrument does not provide for payments that reference dividends. U.S. Treasury Department (“Treasury”) regulations
provide that the withholding tax applies to all dividend equivalents paid or deemed paid on specified equity-linked instruments
that have a delta of one (“delta one specified equity-linked instruments”) issued after 2016 and to all dividend equivalents
paid or deemed paid on all other specified equity-linked instruments issued after 2018.
Based on our determination
that the notes are not “delta-one” with respect to any basket underliers or U.S. underlier stocks, our
counsel is of the opinion that the notes should not be delta one specified equity-linked instruments and thus should not be subject
to withholding on dividend equivalents. Our determination is not binding on the IRS, and the IRS may disagree with this determination.
Furthermore, the application of Section 871(m) of the Code will depend on our determinations made upon issuance of the notes.
If withholding is required, we will not make payments of any additional amounts.
Nevertheless, after issuance, it is possible that
your notes could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the basket underliers,
underlier stocks or your notes, and following such occurrence your notes could be treated as delta one specified equity-linked
instruments that are subject to withholding on dividend equivalents. It is also possible that withholding tax or other tax under
Section 871(m) of the Code could apply to the notes under these rules if you enter, or have entered, into certain other transactions
in respect of the basket underliers, underlier stocks or the notes. If you enter, or have entered, into other transactions in respect
of the basket underliers, underlier stocks or the notes you should consult your tax advisor regarding the application of Section
871(m) of the Code to your notes in the context of your other transactions.
Because of the uncertainty
regarding the application of the 30% withholding tax on dividend equivalents to the notes, you are urged to consult your tax advisor
regarding the potential application of Section 871(m) of the Code and the 30% withholding tax to an investment in the notes.
Pursuant to final and temporary Treasury regulations and Notice 2015-66, the withholding and reporting requirements
under the Foreign Account Tax Compliance Act generally apply to certain “withholdable payments” and, if made after
December 31, 2018, payments of certain gross proceeds on a sale or disposition and certain foreign passthru payments made after
December 31, 2018 (or, if later, the date that final regulations defining the term “foreign pass-thru payment” are
published). We will not pay additional amounts with respect to such withholding taxes discussed above.
Subject to the paragraph above, investors should read the discussion under “Supplemental U.S. Tax Considerations
— Non-United States Holders — Foreign Account Tax Compliance Act” beginning on page PS-77 in the accompanying
product supplement and consult their tax advisors concerning the potential application of the Foreign Account Tax Compliance Act.
For more information about the tax consequences of an investment
in the notes, you should review carefully the section of the accompanying product supplement entitled “Supplemental U.S.
Tax Considerations”.
Cash settlement amount (on the stated maturity date):
for each $1,000 face amount of your notes, we will pay you on the stated maturity date an amount in cash equal to:
•
|
|
if the final basket level is
greater than or equal to
the cap level, the maximum settlement amount;
|
•
|
|
if the final basket level is
greater than
the initial basket level but
less than
the cap level, the sum of (i) $1,000
plus
(ii) the product of (a) $1,000
times
(b) the upside participation rate
times
(c) the basket return;
|
•
|
|
if the final basket level is
equal to or
less than
the initial basket level but
greater than
or equal to
the buffer level, $1,000; or
|
•
|
|
if the final basket level is
less than
the buffer level, the sum of (i) $1,000 plus (ii) the product of (a) $1,000
times
(b) the buffer rate
times
(c) the sum of the basket return plus the buffer amount.
|
Initial basket level:
100
Basket closing level:
for any given trading day, the
sum
of the products, as calculated for each basket underlier, of the closing level for each basket underlier on such trading
day
multiplied
by
the weighting multiplier for each such basket underlier
Closing level:
as described under “General Terms
of the Notes — Closing Level” in the accompanying product supplement
Initial underlier level:
for each of the basket
underliers, the closing level of such basket underlier on the trade date, as set forth under “About the Basket” on
page 3
Final underlier level:
for each of the basket underliers,
the closing level of such basket underlier on the determination date, as determined by the calculation agent
Final basket level:
the basket closing level on the
determination date, except in the limited circumstances described under “General Terms of the Notes — Market Disruption
Event — Consequences of a Market Disruption Event or a Non-Trading Day” and “General Terms of the Notes —
Discontinuance of or Adjustments to the Index Underlier or an Index Basket Underlier; Alteration of Method of Calculation”
in the accompanying product supplement
Basket return:
the
quotient
of (1) the
final basket level
minus
the initial basket level
divided
by (2) the initial basket level, expressed as a percentage
Weighting percentage:
for each basket underlier, the
applicable percentage weight of such basket underlier within the basket of underliers as set forth under “About the Basket”
on page 3; the sum of the weighting percentages of all basket underliers is equal to 100%
Weighting multiplier:
for each basket underlier,
a positive amount equal to the
quotient
of (i) the
product
of the initial basket level
times
the weighting
percentage for such basket underlier
divided
by (ii) the initial underlier level for such basket underlier; as set forth
under “About the Basket” on page 3, the weighting multipliers will remain constant for the life of the notes
Upside participation rate:
180.00%
Cap level:
118.35% of the initial basket level
Maximum settlement amount:
$1,330.30
Buffer level:
85.00, which is 85.00% of the
initial basket level
Buffer amount:
15.00%
Buffer rate:
the quotient of the initial basket
level divided by the buffer level, which equals approximately 117.65%
Trade date:
August 8, 2018
Original issue date (settlement date):
August
15, 2018
Determination date:
March 9, 2020, subject
to adjustment as described under “General Terms of the Notes — Determination Date” in the accompanying product
supplement, provided, however, that the determination date may not be postponed to a date later than the originally scheduled stated
maturity date (which is two (2) business days after the determination date) or, if the originally scheduled stated maturity date
is not a business day, the first succeeding business day.
Stated maturity date:
March 11, 2020, subject
to adjustment as described under “General Terms of the Notes — Stated Maturity Date” in the accompanying product
supplement, provided, however, that if the determination date is postponed as provided under “Determination date” above,
the stated maturity date will be postponed by the same number of business day(s) from but excluding the originally scheduled determination
date to and including the actual determination date.
Additional Market Disruption Event:
Notwithstanding
any provision to the contrary in the accompanying product supplement, if the EURO STOXX 50
®
Index is calculated
and published by its sponsor (the “underlier sponsor”), a market disruption event may occur if (a) underlier stocks
constituting 20% or more, by weight, of such basket underlier or any constituent index of such basket underlier, or (b) any option
or futures contracts, if available, relating to (i) such basket underlier, (ii) any constituent index of such basket underlier,
or (iii) underlier stocks constituting 20% or more, by weight, of such basket underlier or any constituent index of such basket
underlier do not trade on what were the respective primary markets for those underlier stocks or contracts, as determined by the
calculation agent, including when one or more applicable markets are closed for trading under ordinary circumstances.
No interest:
The offered notes do not bear interest.
No redemption:
The offered notes will not be subject
to a redemption right or price dependent redemption right.
No listing:
The offered notes will not be listed on
any securities exchange or interdealer quotation system.
Business day:
as described under “General Terms
of the Notes — Business Day” in the accompanying product supplement
Trading day:
When we refer to a trading day
with respect to a basket underlier, we mean (i) for the TOPIX
®
Index, the FTSE
®
100 Index, the
Swiss Market Index (SMI)
®
and the S&P/ASX 200 Index, a day as described under “General Terms of
the Notes—Trading Day” in the accompanying product supplement and (ii) for the EURO STOXX 50
®
Index, a day on which such basket underlier is calculated and published by its underlier sponsor.
Use of proceeds and hedging:
as described under “Use
of Proceeds and Hedging” in the accompanying product supplement
ERISA:
as described under “ERISA Considerations”
in the accompanying product supplement
Supplemental plan of distribution (conflicts of interest);
secondary markets (if any):
UBS has agreed to sell to UBS Securities LLC, and UBS Securities LLC has agreed to purchase from
UBS, the aggregate face amount of the notes specified on the front cover of this pricing supplement. UBS Securities LLC initially
offered the notes to certain unaffiliated securities dealers at an original issue price set forth on the cover page of this pricing
supplement.
We expect to deliver the notes against payment therefor
in New York, New York on August 15, 2018, which is the fifth business day following the date of this pricing supplement and of
the pricing of the notes. Under Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the secondary market
generally are required to settle in two business days (T + 2), unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade notes on any date prior to two business days before delivery will be required, by virtue
of the fact that the notes are initially expected to settle in five business days (T + 5), to specify alternative settlement arrangements
to prevent a failed settlement.
Conflicts of interest
: UBS Securities
LLC is an affiliate of UBS and, as such, has a “conflict of interest” in the offering within the meaning of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds from the initial
public offering of the notes, thus creating an additional conflict of interest within the meaning of FINRA Rule 5121. Consequently,
the offering is being conducted in compliance with the provisions of FINRA Rule 5121.
UBS Securities LLC and its affiliates
may offer to buy or sell the notes in the secondary market (if any) at prices greater than UBS’ internal valuation
:
The value of the notes at any time will vary based on many factors that cannot be predicted. However, the price (not including
UBS Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any affiliate would
offer to buy or sell the notes immediately after the trade date in the secondary market is expected to exceed the estimated initial
value of the notes as determined by reference to our internal pricing models. The amount of the excess will decline to zero on
a straight line basis over a period ending no later than 3 months after the trade date, provided that UBS Securities LLC may shorten
the period based on various factors, including the magnitude of purchases and other requests from and negotiated arrangements
with selling agents. Notwithstanding the foregoing, UBS Securities LLC and its affiliates are not required to make a market for
the notes and may stop making a market at any time. For more information about secondary market offers and the estimated initial
value of the notes, see “Additional Risk Factors Specific To Your Notes — Fair value considerations” and “Additional
Risk Factors Specific To Your Notes — Limited or No Secondary Market and Secondary Market Price Considerations” in
this pricing supplement.
Prohibition of Sales to EEA
Retail Investors:
The notes are not intended to be offered, sold or otherwise made available to and should not be offered,
sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes,
a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive
2014/65/EU, as amended (“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where
that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation (EU) No
1286/2014, as amended (the “PRIIPs Regulation”), for offering or selling the notes or otherwise making them available
to retail investors in the EEA has been prepared and therefore offering or selling the notes or otherwise making them available
to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
Calculation agent:
UBS Securities LLC
CUSIP no.:
90270KTG4
ISIN no.:
US90270KTG49
FDIC:
The notes are not bank deposits and are not insured
by the Federal Deposit Insurance Corporation or any other governmental agency.
HYPOTHETICAL EXAMPLES
The following table and chart are provided for purposes of
illustration only. They should not be taken as an indication or prediction of future investment results and are intended merely
to illustrate the impact that the various hypothetical final basket levels on the determination date could have on the cash settlement
amount at maturity assuming all other variables remain constant.
The examples below are based on a range of final basket levels
that are entirely hypothetical; no one can predict what the basket level will be on any day throughout the life of your notes,
and no one can predict what the final basket level will be on the determination date. The levels of the basket underliers have
been volatile in the past — meaning that the levels of the basket underliers have changed considerably in relatively short
periods — and their performance (and therefore the performance of the basket) cannot be predicted for any future period.
The information in the following examples reflects hypothetical
rates of return on the offered notes assuming that they are purchased on the original issue date at the face amount and held to
the stated maturity date. If you sell your notes in a secondary market prior to the stated maturity date, your return will depend
upon the market value of your notes at the time of sale, which may be affected by a number of factors that are not reflected in
the table below such as interest rates, the volatility of the basket underliers and the underlier stocks and our creditworthiness.
In addition, the estimated value of your notes at the time the terms of your notes were set on the trade date (as determined by
reference to our pricing models) is less than the original issue price of your notes. For more information on the estimated value
of your notes, see “Additional Risk Factors Specific To Your Notes — Fair Value Considerations — The Issue Price
You Pay for the Notes Exceeds Their Estimated Initial Value” in this pricing supplement. The information in the table also
reflects the key terms and assumptions in the box below.
|
Key Terms and Assumptions
|
|
Face amount
|
$1,000.00
|
|
|
Initial basket level
|
100
|
|
|
Upside participation rate
|
180.00%
|
|
|
Cap level
|
118.350% of the initial basket level
|
|
|
Maximum settlement amount
|
$1,330.30
|
|
|
Buffer level
|
85.00% of the initial basket level
|
|
|
Buffer rate
|
Approximately 117.65%
|
|
|
Buffer amount
|
15.00%
|
|
|
Neither a market disruption
event nor a non-trading day occurs on
the originally scheduled determination date.
|
|
|
No change in or affecting any of the
underlier stocks or the method by which
any of the underlier sponsors calculate the respective basket underliers.
|
|
|
Notes are purchased on original issue date at the face amount
and held to the stated maturity date.
|
|
The actual performance of the basket underliers over
the life of your notes, as well as the amount payable at maturity, if any, may bear little relation to the hypothetical examples
shown below or to the hypothetical historical basket closing levels and historical levels of the basket underliers shown below
under “The Basket and Basket Underliers — Hypothetical Historical Basket Level” and “The Basket and Basket
Underliers — Historical High, Low and Closing Levels of the Basket Underlier” in this pricing supplement.
Also, the hypothetical examples shown below do not take into
account the effects of applicable taxes. Because of the U.S. tax treatment applicable to your notes, tax liabilities could affect
the after-tax rate of return on your notes to a comparatively greater extent than the after-tax return on the underlier stocks.
Any rate of return you may earn on an investment
in the notes may be lower than that which you could earn on a comparable investment in the underlier stocks. Among other things,
the return on the notes will not reflect any dividends that may be paid on the underlier stocks.
The levels in the left column of the table below represent hypothetical final basket levels and are expressed
as percentages of the initial basket level. The amounts in the right column represent the hypothetical cash settlement amounts,
based on the corresponding hypothetical final basket level (expressed as a percentage of the initial basket level), and are expressed
as percentages of the face amount of a note (rounded to the nearest one-thousandth of a percent). Thus, a hypothetical cash settlement
amount of 100.000% means that the value of the cash payment that we would deliver for each $1,000.00 of the outstanding face amount
of the offered notes on the stated maturity date would equal 100.000% of the face amount of a note, based on the corresponding
hypothetical final basket level (expressed as a percentage of the initial basket level) and the assumptions noted above.
Hypothetical Final Basket Level
(as
Percentage of Initial Basket Level)
|
|
Hypothetical Cash Settlement Amount
(as
Percentage of Face Amount)
|
160.000%
|
|
133.030%
|
150.000%
|
|
133.030%
|
140.000%
|
|
133.030%
|
130.000%
|
|
133.030%
|
120.000%
|
|
133.030%
|
118.350%
|
|
133.030%
|
115.000%
|
|
127.000%
|
110.000%
|
|
118.000%
|
105.000%
|
|
109.000%
|
100.000%
|
|
100.000%
|
95.000%
|
|
100.000%
|
90.000%
|
|
100.000%
|
85.000%
|
|
100.000%
|
80.000%
|
|
94.118%
|
70.000%
|
|
82.353%
|
60.000%
|
|
70.588%
|
50.000%
|
|
58.824%
|
25.000%
|
|
29.412%
|
0.000%
|
|
0.000%
|
If, for example, the final basket level were determined to be 25.000% of the initial basket level, the cash
settlement amount that we would deliver on your notes at maturity would be
approximately
29.412% of the face amount of your notes, as shown in the table above. As a result, if you purchased your notes on the original
issue date at the face amount and held them to the stated maturity date, you would lose approximately 70.588% of your investment
(if you purchased your notes at a premium to face amount you would lose a correspondingly higher percentage of your investment).
In addition, if the final basket level were determined to be 160.000% of the initial basket level, the cash settlement amount that
we would deliver on your notes at maturity would be capped at the maximum settlement amount (expressed as a percentage of the face
amount), or 133.030% of each $1,000.00 face amount of your notes, as shown in the table above. As a result, if you held your notes
to the stated maturity date, you would not benefit from any increase in the final basket level over 118.350% of the initial basket
level.
The following chart also shows a graphical illustration of the hypothetical cash settlement amounts (expressed
as a percentage of the face amount of your notes) that we would pay on your notes on the stated maturity date, if the final basket
level (expressed as a percentage of the initial basket level) were any of the hypothetical levels shown on the horizontal axis.
The chart shows that any hypothetical final
basket level (expressed as a percentage of the initial basket level) of less than 85.000%
(the section left of the 85.000% marker on the horizontal axis) would result in a hypothetical cash settlement amount of less than
100.000% of the face amount of your notes (the section below the 100.000% marker on the vertical axis) and, accordingly, in a loss
of principal to the holder of the notes. The chart also shows that any hypothetical final basket level (expressed as a percentage
of the initial basket level) of greater than or equal to 118.350% (the section right of the 118.350% marker on the horizontal axis)
would result in a capped return on your investment.
The cash settlement amounts shown above
are entirely hypothetical; they are based on levels of the basket that may not be achieved on the determination date and on
assumptions that may prove to be erroneous. The actual market value of your notes on the stated maturity date or at any other
time, including any time you may wish to sell your notes, may bear little relation to the hypothetical cash settlement amounts shown above, and these
amounts should not be viewed as an indication of the financial return on an investment in the
offered notes. The hypothetical cash settlement amounts on notes held to the stated maturity date in the examples
above assume you purchased your notes at their face amount and have not been adjusted to reflect the actual issue price you
pay for your notes. The return on your investment (whether positive or negative) in your notes will be affected by the amount
you pay for your notes. If you purchase your notes for a price other than the face amount, the return on your investment will
differ from, and may be significantly lower than, the hypothetical returns suggested by the above examples. Please
read “Additional Risk Factors Specific To Your Notes — Market Risk” and “Additional Risk Factors
Specific To Your Notes — If You Purchase Your Notes at a Premium to Face Amount, the Return on Your Investment Will Be
Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain Key Terms of the Notes Will be
Negatively Affected” on pages 16 and 18 of this pricing supplement.
The following examples illustrate the hypothetical
cash settlement amount on each $1,000 face amount note based on hypothetical initial underlier levels of the basket
underliers and hypothetical final underlier levels of the basket underliers calculated based on the key terms and assumptions
above. The levels in Column A represent the hypothetical initial underlier levels for each basket underlier, and the levels
in Column B represent hypothetical final underlier levels for each basket underlier. The percentages in Column C represent
the appreciation or depreciation of the hypothetical final underlier levels as compared to the respective hypothetical
initial underlier levels. The amounts in Column D represent the
hypothetical weighting multiplier for each basket underlier,
and the amounts in Column E represent the
products
of Column B
times
the corresponding amounts in Column D. The
final basket level for each example is shown beneath each example, and will equal the
sum
of the five products shown
in Column E. The basket return for each example is shown beneath the final basket level for such example, and will equal the
quotient
of (i) the final basket level for such example
minus
the initial basket level
divided
by (ii) the initial
basket level, expressed as a percentage. The actual terms of your notes are specified under “Key Terms” on page 3
of this pricing supplement. The values below have been rounded for ease of analysis.
The hypothetical initial underlier level for each basket
underlier of 100.00 has been chosen for illustrative purposes only and does not represent the actual initial underlier level for
that basket underlier. Because each hypothetical initial underlier level has been set to 100.00, these examples do not accurately
reflect the differences in the levels of the basket underliers. For historical data regarding the actual historical levels of the
basket underliers, please see the historical information set forth below under “The Basket and the Basket Underliers”.
Example 1: The final basket level is greater than
the initial basket level and less than the cap level. The cash settlement amount exceeds the $1,000 face amount.
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Basket Underlier
|
Hypothetical Initial Underlier Level
|
Hypothetical Final Underlier Level
|
Appreciation/ Depreciation
|
Hypothetical Weighting Multiplier
|
Column B × Column D
|
EURO STOXX 50
®
Index
|
100.00
|
105.00
|
5%
|
0.360000000
|
|
37.80
|
|
TOPIX
®
Index
|
100.00
|
105.00
|
5%
|
0.270000000
|
|
28.35
|
|
FTSE
®
100 Index
|
100.00
|
105.00
|
5%
|
0.200000000
|
|
21.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
105.00
|
5%
|
0.090000000
|
|
9.45
|
|
S&P/ASX 200 Index
|
100.00
|
105.00
|
5%
|
0.080000000
|
|
8.40
|
|
|
|
|
Final Basket Level:
|
|
105.00
|
|
|
|
|
Basket Return:
|
|
5.00
|
%
|
In
this example, all of the hypothetical final underlier levels for the basket underliers are greater than the applicable hypothetical
initial underlier levels, which results in the hypothetical final basket level being greater than the initial basket level of
100.00. Because the hypothetical final basket level of 105.00 exceeds the initial basket level and is less than the cap level,
the hypothetical cash settlement amount will equal:
Cash settlement amount = $1,000 + ($1,000 × 180.00%
×
5.00%) = $1,090.00
Example 2: The final basket level is greater than
the initial basket level and greater than or equal to the cap level. The cash settlement amount equals the maximum settlement
amount.
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Basket Underlier
|
Hypothetical Initial Underlier Level
|
Hypothetical Final Underlier Level
|
Appreciation/ Depreciation
|
Hypothetical Weighting Multiplier
|
Column B × Column D
|
EURO STOXX 50
®
Index
|
100.00
|
160.00
|
60%
|
0.360000000
|
|
57.60
|
|
TOPIX
®
Index
|
100.00
|
160.00
|
60%
|
0.270000000
|
|
43.20
|
|
FTSE
®
100 Index
|
100.00
|
160.00
|
60%
|
0.200000000
|
|
32.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
160.00
|
60%
|
0.090000000
|
|
14.40
|
|
S&P/ASX 200 Index
|
100.00
|
160.00
|
60%
|
0.080000000
|
|
12.80
|
|
|
|
|
Final Basket Level:
|
|
160.00
|
|
|
|
|
Basket Return:
|
|
60.00
|
%
|
In this example, all of the hypothetical final underlier levels for the basket underliers are greater than
the applicable hypothetical initial underlier levels, which results in the hypothetical final basket level being greater than the
initial basket level of 100.00. Because the hypothetical final basket level of 160.00 exceeds the initial basket level and is greater
than the cap level, the hypothetical cash settlement amount will be capped at the maximum settlement amount of $1,330.30 for each
$1,000 face amount of your notes.
Example 3: The final basket level is less than the
initial basket level, but greater than the buffer level. The cash settlement amount equals the $1,000 face amount.
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Basket Underlier
|
Hypothetical Initial Underlier Level
|
Hypothetical Final Underlier Level
|
Appreciation/ Depreciation
|
Hypothetical Weighting Multiplier
|
Column B × Column D
|
EURO STOXX 50
®
Index
|
100.00
|
95.00
|
-5%
|
0.360000000
|
|
34.20
|
|
TOPIX
®
Index
|
100.00
|
95.00
|
-5%
|
0.270000000
|
|
25.65
|
|
FTSE
®
100
Index
|
100.00
|
95.00
|
-5%
|
0.200000000
|
|
19.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
95.00
|
-5%
|
0.090000000
|
|
8.55
|
|
S&P/ASX 200 Index
|
100.00
|
95.00
|
-5%
|
0.080000000
|
|
7.60
|
|
|
|
|
Final Basket Level:
|
|
95.00
|
|
|
|
|
Basket Return:
|
|
-5.00
|
%
|
In
this example, all of the hypothetical final underlier levels for the basket underliers are less than the applicable hypothetical
initial underlier levels, which results in the hypothetical final basket level being less than the initial basket level of 100.00.
Since the hypothetical final basket level of 95.00 is greater than the buffer level of 85.00% of the initial basket level but
less than the initial basket level of 100, the hypothetical cash settlement amount for each $1,000 face amount of your notes will
equal the face amount of the note, or $1,000.
Example 4: The final basket level is less than the
initial basket level and less than the buffer level. The cash settlement amount is less than the $1,000 face amount.
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Basket Underlier
|
Hypothetical Initial Underlier Level
|
Hypothetical Final Underlier Level
|
Appreciation/ Depreciation
|
Hypothetical Weighting Multiplier
|
Column B × Column D
|
EURO STOXX 50
®
Index
|
100.00
|
40.00
|
-60%
|
0.360000000
|
|
14.40
|
|
TOPIX
®
Index
|
100.00
|
100.00
|
0%
|
0.270000000
|
|
27.00
|
|
FTSE
®
100 Index
|
100.00
|
100.00
|
0%
|
0.200000000
|
|
20.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
103.00
|
3%
|
0.090000000
|
|
9.27
|
|
S&P/ASX 200 Index
|
100.00
|
102.00
|
2%
|
0.080000000
|
|
8.16
|
|
|
|
|
Final Basket Level:
|
|
78.83
|
|
|
|
|
Basket Return:
|
|
-21.17
|
%
|
In this example, the hypothetical final underlier level of
the EURO STOXX 50
®
Index is less than its hypothetical initial underlier level, while the hypothetical final underlier
levels of the TOPIX
®
Index and FTSE
®
100 Index are equal to their applicable hypothetical initial underlier levels and the hypothetical
final underlier levels of the Swiss Market Index (SMI)
®
and S&P/ASX 200 Index are greater than their applicable
hypothetical initial underlier levels.
Because the basket is unequally weighted, increases in
the lower weighted basket underliers will be offset by decreases in the more heavily weighted basket underliers. In this
example, the large decline in
the EURO STOXX 50
®
Index results in the hypothetical final basket level being
less than the initial basket level, even though the TOPIX
®
Index and FTSE
®
100 Index remained flat and the Swiss
Market Index (SMI)
®
and the S&P/ASX 200 Index increased.
Because the hypothetical final basket level of 78.83
is less than the initial basket level and is less than the buffer level, the hypothetical cash settlement amount will equal:
Cash settlement amount = $1,000
+ [$1,000 × 117.65% × (-21.17% + 15.00%)] = $927.41
Example 5: The final basket level is less than the
initial basket level and is less than the buffer level. The cash settlement amount is less than the $1,000 face amount.
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Basket Underlier
|
Hypothetical Initial Underlier Level
|
Hypothetical Final Underlier Level
|
Appreciation/ Depreciation
|
Hypothetical Weighting Multiplier
|
Column B × Column D
|
EURO STOXX 50
®
Index
|
100.00
|
65.00
|
-35%
|
0.360000000
|
|
23.40
|
|
TOPIX
®
Index
|
100.00
|
70.00
|
-30%
|
0.270000000
|
|
18.90
|
|
FTSE
®
100 Index
|
100.00
|
80.00
|
-20%
|
0.200000000
|
|
16.00
|
|
Swiss Market Index (SMI)
®
|
100.00
|
60.00
|
-40%
|
0.090000000
|
|
5.40
|
|
S&P/ASX 200 Index
|
100.00
|
70.00
|
-30%
|
0.080000000
|
|
5.60
|
|
|
|
|
Final Basket Level:
|
|
69.30
|
|
|
|
|
Basket Return:
|
|
-30.70
|
%
|
In this example, the hypothetical final underlier levels
for all of the basket underliers are less than the applicable hypothetical initial underlier levels, which results in the hypothetical
final basket level being less than the initial basket level of 100.00. Since the hypothetical final basket level of 69.30 is less
than the initial basket level and is less than the buffer
level, the hypothetical cash settlement amount for each $1,000 face amount of your notes will equal:
Cash settlement amount = $1,000 + [$1,000 × 117.65% × (-30.70% + 15.00%)] = $815.29
We cannot predict the actual final basket level, the level of any particular basket underlier or what the market value of your notes
will be on any particular trading day, nor can we predict the relationship between the basket level and the market value of your
notes at any time prior to the stated maturity date. The actual amount that you will receive, if any, at maturity and the rate
of return on the offered notes will depend on the actual final basket level determined by the calculation agent as described above and the
price you pay for your notes. Moreover, the assumptions on which the hypothetical returns are based may turn out to be inaccurate.
Consequently, the amount of cash to be paid in respect of your notes, if any, on the stated maturity date may be very different
from the information reflected in the table and chart above.
|
ADDITIONAL RISK FACTORS SPECIFIC
TO YOUR NOTES
An investment in your notes is subject to the
risks described below, as well as the risks described under “Considerations Relating to Indexed Securities” in the
accompanying prospectus, dated April 29, 2016, and “Risk Factors” in the accompanying product supplement, dated May
2, 2016. You should carefully review these risks as well as the terms of the notes described herein and in the accompanying prospectus,
dated April 29, 2016, as supplemented by the accompanying index supplement, dated April 29, 2016 and the accompanying product supplement,
dated May 2, 2016, of UBS. Your notes are a riskier investment than ordinary debt securities. Also, your notes are not equivalent
to investing directly in the underlier stocks, i.e., the stocks comprising the basket underliers to which your notes are linked.
You should carefully consider whether the offered notes are suited to your particular circumstances.
|
You May Lose Your Entire Investment
In The Notes
You can lose your entire investment in the notes.
The cash payment on your notes, if any, on the stated maturity date will be based on the performance of the basket as measured
from the initial basket level set on the trade date to the final basket level on the determination date. If the final basket level
is
less than
the buffer level, you will have a loss for each $1,000 of the face amount of your notes equal to the
product
of (a) the buffer rate
times
(b) the
sum
of the basket return
plus
the buffer amount
times
(c)
$1,000. Thus, you may lose your entire investment in the notes, which would include any premium to face amount you paid when you
purchased the notes. Specifically, you will lose approximately 1.1765% of the face amount of each of your notes for every 1% negative
basket return below the buffer level.
Also, the market price of your notes prior to the stated
maturity date may be significantly lower than the purchase price you pay for your notes. Consequently, if you sell your notes before
the stated maturity date, you may receive far less than the amount of your investment in the notes.
The Upside Participation Rate Applies
Only At Maturity
You should be willing to hold your notes to maturity. If
you are able to sell your notes prior to maturity in the secondary market, the price you receive will likely not reflect the full
economic value of the upside participation rate of the notes and the return you realize may be less than the basket return multiplied
by the upside participation rate, even if such return is positive. You can receive the full benefit of any positive basket return
multiplied by the upside participation rate subject to the maximum settlement amount only if you hold your notes to maturity.
The Potential for the Value of Your
Notes to Increase Will Be Limited
Your ability to participate in any change in the value of
the basket over the life of your notes and the positive effects of the upside participation rate on any positive basket return
will be limited because of the cap level. The maximum settlement amount will limit the cash
settlement amount you may receive for each of your notes at maturity, no matter how much the level of the basket may rise beyond
the cap level over the life of your notes. Accordingly, the amount payable for each of your notes may be significantly less than
it would have been had you invested directly in the basket underliers.
Your Notes Do Not Bear Interest
You will not receive any interest payments on your notes.
As a result, even if the cash settlement amount payable for your notes on the stated maturity date exceeds the face amount of your
notes, the overall return you earn on your notes may be less than you would have earned by investing in a conventional debt security
of comparable maturity that bears interest at a prevailing market rate.
The Notes Are Subject to the Credit
Risk of the Issuer
The notes are unsubordinated, unsecured debt obligations
of the issuer, UBS, and are not, either directly or indirectly, an obligation of any third party. Any payment to be made on the
notes, including any repayment of principal, depends on the ability of UBS to satisfy its obligations as they come due. As a result,
the actual and perceived creditworthiness of UBS may affect the market value of the notes and, in the event UBS were to default on its obligations, you may
not receive any amounts owed to you under the terms of the notes and you could lose your entire initial investment.
A Decrease in the Level of
One Basket Underlier May Offset Increases in the Other Basket Underliers on the Determination Date
The cash settlement amount is based on the returns of the
basket underliers; thus, declines in the level of one basket underlier may offset changes in the levels of the other basket underliers
that are positive. As a result, the basket return could be negative even if relatively few of the basket underliers experience
a decrease in their closing levels. As a result, you could lose a portion of your investment in the notes and may lose your entire
investment depending on the performance of the basket
.
In addition, because the basket underliers are not equally weighted,
increases in lower weighted basket underliers may be offset by even small decreases in more heavily weighted basket underliers.
Market Risk
The return on the notes is directly linked to the performance
of the basket and indirectly linked to the value of the basket underliers (and the underlier stocks), and the extent to which the
basket return is positive or negative. The level of the basket can rise or fall sharply due to factors specific to the basket underliers
(and the underlier stocks), as well as general market factors, such as general market volatility and levels, interest rates and
economic and political conditions. You may lose some or all of your initial investment.
Fair Value Considerations
The Issue Price You Pay for the Notes Exceeds Their Estimated Initial Value
The issue price you pay for the notes exceeds their
estimated initial value as of the trade date due to the inclusion in the issue price of the hedging costs, issuance costs and
projected profits. As of the close of the relevant markets on the trade date, we have determined the estimated initial
value of the notes by reference to our internal pricing models and it is set forth in this pricing supplement. The
pricing models used to determine the estimated initial value of the notes incorporate certain variables, including the level
of the basket and basket underliers, the volatility of the basket and basket underliers, the correlation among the basket
underliers, any expected dividends on the underlier stocks, prevailing interest rates, the term of the notes and our internal
funding rate. Our internal funding rate is typically lower than the rate we would pay to issue conventional fixed or floating
rate debt securities of a similar term. The hedging costs, issuance costs, projected profits and the difference in rates will
reduce the economic value of the notes to you. Due to these factors, the estimated initial value of the notes as of the trade
date is less than the issue price you pay for the notes.
The Estimated Initial Value Is a Theoretical
Price; the Actual Price that You May Be Able to Sell Your Notes in Any Secondary Market (if Any) at Any Time After the Trade Date
May Differ From the Estimated Initial Value
The value of your notes at any time will vary based on many
factors, including the factors described above and in “—Market Risk” above and is impossible to predict. Furthermore,
the pricing models that we use are proprietary and rely in part on certain assumptions about future events, which may prove to
be incorrect. As a result, after the trade date, if you attempt to sell the notes in the secondary market, the actual value you
would receive may differ, perhaps materially, from the estimated initial value of the notes determined by reference to our internal
pricing models. The estimated initial value of the notes does not represent a minimum or maximum price at which we or any of our
affiliates would be willing to purchase your notes in any secondary market at any time.
Our Actual Profits May Be Greater
or Less than the Differential Between the Estimated Initial Value and the Issue Price of the Notes as of the Trade Date
We may determine the economic terms of the notes, as well
as hedge our obligations, at least in part, prior to the trade date. In addition, there may be ongoing costs to us to maintain
and/or adjust any hedges and such hedges are often imperfect. Therefore, our actual profits (or potentially, losses) in issuing
the notes cannot be determined as of the trade date and any such differential between the estimated initial value and the issue price of the notes as of the trade date
does not reflect our actual profits. Ultimately, our actual profits will be known only at the maturity of the notes.
Limited or No Secondary Market and
Secondary Market Price Considerations
There May Be Little or No Secondary
Market for the Notes
The notes will not be listed or displayed on any securities
exchange or any electronic communications network. There can be no assurance that a secondary market for the notes will develop.
UBS Securities LLC and its affiliates may make a market in the notes, although they are not required to do so and may stop making
a market at any time. If you are able to sell your notes prior to maturity, you may have to sell them at a substantial loss. The
estimated initial value of the notes does not represent a minimum or maximum price at which we or any of our affiliates would be
willing to purchase your notes in any secondary market at any time.
The Price at which UBS Securities
LLC and Its Affiliates May Offer to Buy the Notes in the Secondary Market (if Any) May Be Greater than UBS’ Valuation of
the Notes at that Time, Greater than Any Other Secondary Market Prices Provided by Unaffiliated Dealers (if Any) and, Depending
on Your Broker, Greater than the Valuation Provided on Your Customer Account Statements
For a limited period of time following the issuance
of the notes, UBS Securities LLC or its affiliates may offer to buy or sell such notes at a price that exceeds (i) our valuation
of the notes at that time based on our internal pricing models, (ii) any secondary market prices provided by unaffiliated dealers
(if any) and (iii) depending on your broker, the valuation provided on customer account statements. The price that UBS Securities
LLC may initially offer to buy such notes following issuance will exceed the valuations indicated by our internal pricing models
due to the inclusion for a limited period of time of the aggregate value of the hedging costs, issuance costs and theoretical projected
trading profit. The portion of such amounts included in our price will decline to zero on a straight line basis over a period ending
no later than the date specified under “Supplemental plan of distribution (conflicts of interest); secondary markets (if
any)” herein. Thereafter, if UBS Securities LLC or an affiliate makes secondary markets in the notes, it will do so at prices
that reflect our estimated value determined by reference to our internal pricing models at that time. The temporary positive differential
relative to our internal pricing models arises from requests from and arrangements made by UBS Securities LLC with the selling
agents of structured debt securities such as the notes. As described above, UBS Securities LLC and its affiliates are not required
to make a market for the notes and may stop making a market at any time. The price at which UBS Securities LLC or an affiliate
may make secondary markets at any time (if at all) will also reflect its then current bid-ask spread for similar sized trades of
structured debt securities. UBS Securities LLC reflects this temporary positive differential on its customer statements. Investors
should inquire as to the valuation provided on customer account statements provided by unaffiliated dealers.
Price of Notes Prior to Maturity
The market price of the notes will be influenced by many
unpredictable and interrelated factors, including the level of the basket and basket underliers; the volatility of the basket and
basket underliers; the correlation among the basket underliers; the dividend rate paid on the underlier stocks; the time remaining
to the maturity of the notes; interest rates in the markets; geopolitical conditions and economic, financial, political, force
majeure and regulatory or judicial events; the creditworthiness of UBS and the then current bid-ask spread for the notes.
Impact of Fees and the Use of Internal
Funding Rates Rather than Secondary Market Credit Spreads on Secondary Market Prices
All other things being equal, the use of the internal
funding rates described above under “—Fair Value Considerations” as well as the inclusion in the original issue
price of the hedging costs, issuance costs and any projected profits are, subject to the temporary mitigating effect of UBS Securities
LLC’s and its affiliates’ market making premium, expected to reduce the price at which you may be able to sell the
notes in any secondary market.
The Amount Payable on Your Notes Is
Not Linked to the Level of Any Basket Underlier at Any Time Other than the Determination Date
The final basket level will be based on the basket
closing level on the determination date (and therefore will be based on the closing levels of the basket underliers on the determination
date), except in the limited circumstances described under “General
Terms of the Notes – Consequences of a Market Disruption
Event or a Non-Trading Day” and “General Terms of the Notes – Discontinuance of or Adjustments to the Index or
an Index Basket Underlier; Alteration of Method of Calculation” in the accompanying product supplement. Therefore, if the
closing level of one or more of the basket underliers dropped precipitously on the determination date, the cash settlement amount
for your notes may be significantly less than it would have been had the cash settlement amount been linked to the closing levels
of the basket underliers prior to such drop in the levels of the basket underliers. Although the actual levels of the basket underliers
on the stated maturity date or at other times during the life of your notes may be higher than the final underlier levels, you
will not benefit from the closing levels of the basket underliers at any time other than on the determination date.
You Have No Shareholder Rights or
Rights to Receive Any Underlier Stock
Investing in your notes will not make you a holder of any
of the underlier stocks. Neither you nor any other holder or owner of your notes will have any voting rights, any right to receive
dividends or other distributions, any rights to make a claim against the underlier stocks or any other rights with respect to the
underlier stocks. Your notes will be paid in cash and you will have no right to receive delivery of any underlier stocks.
We May Sell an Additional Aggregate
Face Amount of the Notes at a Different Issue Price
At our sole option, we may decide to sell an
additional aggregate face amount of the notes subsequent to the date of this pricing supplement. The issue price and net
proceeds of the notes in the subsequent sale may differ substantially (higher or lower) from the original issue price you
paid as provided on the cover of this pricing supplement. The return (whether positive or negative) on your investment in the
notes will depend in part on the issue price you pay for such notes.
If You Purchase Your Notes at a Premium
to Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of
Certain Key Terms of the Notes Will be Negatively Affected
The cash settlement amount will not be adjusted based on
the original issue price you pay for the notes. If you purchase notes at a price that differs from the face amount of the notes,
then the return on your investment in such notes held to the stated maturity date will differ from, and may be substantially less
than, the return on notes purchased at face amount. If you purchase your notes at a premium to face amount and hold them to the
stated maturity date, the return on your investment in the notes will be lower than it would have been had you purchased the notes
at face amount or a discount to face amount.
In addition, the impact of the buffer level on the return
on your investment, and the extent to which the buffer level will diminish your exposure to any negative basket return will depend
upon the price you pay for your notes relative to face amount. For example, if you purchase your notes at a premium to face amount,
the buffer level, while still providing some protection against exposure to any negative basket return, will allow a greater percentage
decrease in your investment in the notes than would have been the case for notes purchased at face amount or a discount to face
amount.
Lastly, the impact of the cap level on the return on your
investment, and the extent to which the cap level will diminish your exposure to any positive basket return (as leveraged by the
upside participation rate), will also depend on the price you pay for your notes relative to face amount. For example, if you
purchase your notes at a premium to face amount, the cap level will only permit a lower percentage increase in your investment
in the notes than would have been the case for notes purchased at face amount or a discount to face amount.
The Market Value of Your Notes May
Be Influenced by Many Unpredictable Factors
When we refer to the market value of your notes, we mean the
value that you could receive for your notes if you chose to sell them in the open market before the stated maturity date. A number
of factors, many of which are beyond our control, will influence the market value of your notes, including:
|
·
|
the volatility – i.e., the frequency and magnitude of changes – in the level of the basket and the basket underliers;
|
|
·
|
the dividend rates of the underlier stocks;
|
|
·
|
economic, financial, legislative, regulatory and political,
military or other events that may affect the prices of any of the underlier stocks and thus the level of the basket;
|
|
·
|
other interest rate and yield rates in the market;
|
|
·
|
fluctuations in the exchange rate between currencies
in which the relevant ordinary shares are quoted and traded and the U.S. dollar; and
|
|
·
|
our creditworthiness, whether actual or perceived,
and including actual or anticipated upgrades or downgrades in our credit ratings or changes in other credit measures.
|
These factors will influence the price you will receive if
you sell your notes before maturity, including the price you may receive for your notes in any market-making transaction. If you
sell your notes prior to maturity, you may receive less than the face amount of your notes.
You cannot predict the future levels of the basket based on
its hypothetical historical performance. The actual change in the value in the basket over the life of the notes, as well as the
amount payable on the stated maturity date, may bear little or no relation to the hypothetical historical basket closing levels
or to the hypothetical examples shown elsewhere in this pricing supplement.
If the Level of the Basket
Changes, the Market Value of Your Notes May Not Change in the Same Manner
Your notes may trade quite differently from the performance
of the basket. Changes in the level of the basket may not result in a comparable change in the market value of your notes. This
is because your cash settlement amount at maturity will be based on the final basket level and subject to the maximum settlement
amount. If the basket return is negative and the final basket level is less than the buffer level, you could lose all or a substantial
portion of your investment in the notes. We discuss some of the reasons for this disparity under “— The Market Value
of Your Notes May Be Influenced by Many Unpredictable Factors” above.
The Basket Underliers Reflect Price Return,
Not Total Return
The return on your notes is based on the performance of the
basket, which reflects the changes in the market levels of the basket underliers, and the prices of their underlier stocks. It
is not, however, linked to a “total return” index or strategy, which, in addition to reflecting those price returns,
would also reflect dividends paid on the underlier stocks. The return on your notes will not include such a total return feature
or dividend component.
The Notes are Considered “Hold To Maturity” Products
Generally, there is no liquid market for the notes.
Changes That Affect
Any Basket Underlier Could Have An Adverse Effect On the Value of The Notes and the Amount You Will Receive at Maturity of Your
Notes
The policies of an underlier sponsor, each
as defined under “The Basket and the Basket Underliers” below, concerning a basket underlier, additions, deletions
or substitutions of the underlier stocks and the manner in which changes affecting the underlier stocks or the issuers of any underlier
stocks (such as stock dividends, reorganizations or mergers) are reflected in any basket underlier, could affect the level of
that
basket underlier, and, therefore, could affect the amount payable on your notes at maturity and the market value of your notes
prior to maturity. The amount payable on the notes and their market value could also be affected if an underlier sponsor changes
these policies, for example by changing the manner in which it calculates a basket underlier, or if an underlier sponsor discontinues
or suspends calculation or publication of a basket underlier, in which case it may become difficult to determine the market value
of the notes. If events such as these occur, or if any final underlier level (and therefore the final basket level) is not available
because of a market disruption event, non-trading day or for any other reason, and no successor basket underlier is selected, the
calculation agent—which initially will be UBS Securities LLC, an affiliate of UBS—may determine the final underlier
level (and therefore the final basket level)—and thus the amount payable at maturity—in a manner it considers appropriate.
Your
Notes Are Subject to Non-U.S. Securities Market Risk
Each of the basket underliers is subject to
risks associated with non-U.S. securities markets, specifically the regions of the Eurozone, United Kingdom, Japan, Switzerland
and Australia. An investment in notes linked directly or indirectly to the value of securities issued by non-U.S. companies involves
particular risks.
Generally, non-U.S. securities and futures
markets may be more volatile than U.S. securities and futures markets, and market developments may affect non-U.S. markets differently
from U.S. securities and futures markets. Direct or indirect government intervention to stabilize these non-U.S. markets, as well
as cross shareholdings in non-U.S. companies, may affect trading prices and volumes in those markets. There is generally less publicly
available information about non-U.S. companies than about those U.S. companies that are subject to the reporting requirements of
the SEC, and non-U.S. companies are subject to accounting, auditing and financial reporting standards and requirements that differ
from those applicable to U.S. reporting companies. Similarly, regulations of the Commodity Futures Trading Commission generally
do not apply to trading on non-U.S. exchanges, and trading on non-U.S. exchanges may involve different and greater risks than trading
on U.S. exchanges.
Securities and futures prices in non-U.S. countries are subject to political, economic, financial and social
factors that may be unique to the particular country. These factors, which could negatively affect the non-U.S. securities and
futures markets, include the possibility of recent or future changes in the non-U.S. government’s economic and fiscal policies,
the possible imposition of, or changes in, currency exchange laws or other non-U.S. laws or restrictions applicable to non-U.S.
companies or investments in non-U.S. securities or futures contracts and the possibility of fluctuations in the rate of exchange
between currencies. The United Kingdom has voted to leave the European Union (popularly known as “Brexit”). The effect
of Brexit is uncertain, and Brexit has and may continue to contribute to volatility in the prices of securities of companies located
in Europe and currency exchange rates, including the valuation of the euro and British pound in particular. Moreover, certain aspects
of a particular non-U.S. economy may differ favorably or unfavorably from the U.S. economy in important respects, such as growth
of gross national product, rate of inflation, capital reinvestment, resources and self-sufficiency.
The Basket Return For
the Notes Will Not Be Adjusted for Changes in Exchange Rates Related to the U.S. Dollar, Which Might Affect a Basket Underlier
Whose Underlier Stocks Are Traded in Currencies Other Than the U.S. Dollar
Although the underlier stocks for the basket
underliers are traded in currencies other than the U.S. dollar, the notes are denominated in U.S. dollars, and the calculation
of the amount payable on the notes at maturity will not be adjusted for changes in the exchange rates between the U.S. dollar and
any of the currencies in which such underlier stocks
are denominated. Changes in exchange rates, however, may reflect changes in various non-U.S. economies that in turn may
affect the levels of the basket underliers (and therefore the basket closing level) or basket return, as applicable, and
therefore, the amount payable on your notes. The amount we pay in respect of the notes on the stated maturity date will be
determined solely in accordance with the procedures described in “General Terms of the Notes” beginning on page
PS-51 in the accompanying product supplement.
UBS Cannot Control Actions
By the Underlier Sponsors or, Except to the Extent Our Common Stock is Included in a Basket Underlier, Any Issuer of an Underlier
Stock and None of the Underlier Sponsors or Any Other Issuer of an Underlier Stock Have Any Obligation To Consider Your Interests
UBS and its affiliates are not affiliated
with any underlier sponsors and have no ability to control or predict their actions, including any errors in or
discontinuation of public disclosure regarding methods or policies relating to the calculation of the basket underliers. In
addition, except to the extent our common stock is included in the Swiss Market Index, UBS and its
affiliates are not affiliated with any issuer of an underlier stock and have no ability to control or predict their actions
or their public disclosure of information, whether contained in SEC filings or otherwise. None of the underlier sponsors or
any other issuer of an underlier stock are involved in the notes offering in any way and none have any obligation to consider
your interest as an owner of the notes in taking any actions that might affect the market value of your notes.
Potential Conflict of Interest
UBS and its affiliates may engage in business related
to the basket underliers or underlier stocks, which may present a conflict between the obligations of UBS and you, as a holder
of the notes. There are also potential conflicts of interest between you and the calculation agent, which will be an affiliate
of UBS. The calculation agent will determine the basket return and the cash settlement amount based on the final underlier levels
and final basket level. The calculation agent can postpone the determination of any final underlier level (and therefore the final
basket level) if a market disruption event occurs and is continuing on the determination date. The calculation agent also has discretion
in making certain adjustments relating to a modification of the basket. As UBS determines the economic terms of the notes, including
the upside participation rate, cap level and the buffer level, and such terms include hedging costs, issuance costs and projected
profits, the notes represent a package of economic terms. There are other potential conflicts of interest insofar as an investor
could potentially get better economic terms if that investor entered into exchange-traded and/or OTC derivatives or other instruments
with third parties, assuming that such instruments were available and the investor had the ability to assemble and enter into such
instruments.
Furthermore, given that UBS Securities LLC and its affiliates
temporarily maintain a market making premium, it may have the effect of discouraging UBS Securities LLC and its affiliates from
recommending the sale of your notes in the secondary market. UBS or its affiliates may earn additional profits (or potentially
incur losses) as a result of payments pursuant to such hedging activities. In performing these duties, the economic interests of
UBS, UBS Securities LLC, the dealers or their respective affiliates are potentially adverse to your interests as an investor in
the notes. Additionally, hedging activities may adversely affect the market value of your notes and the amount we will pay on your
notes.
Potentially Inconsistent Research,
Opinions or Recommendations By UBS
UBS and its affiliates publish research from time to time
on financial markets and other matters that may influence the value of the notes, or express opinions or provide recommendations
that are inconsistent with purchasing or holding the notes. Any research, opinions or recommendations expressed by UBS or its
affiliates may not be consistent with each other and may be modified from time to time without notice. Investors should make their
own independent investigation of the merits of investing in the notes and the underlier to which the notes are linked.
The Notes Are Not Bank Deposits
An investment in the notes carries risks which are
very different from the risk profile of a bank deposit placed with UBS or its affiliates. The notes have different yield and/or
return, liquidity and risk profiles and would not benefit from any protection provided to deposits.
Under Certain Circumstances, the Swiss
Financial Market Supervisory Authority (“FINMA”) has the Power to Take Actions That May Adversely Affect the Notes
Pursuant to article 25 et seq. of the Swiss Banking
Act, FINMA has broad statutory powers to take measures and actions in relation to UBS if it (i) is over-indebted, (ii) has serious
liquidity problems or (iii) fails to fulfill the applicable capital adequacy provisions after expiration of a deadline set by FINMA.
If one of these prerequisites is met, the Swiss Banking Act grants significant discretion to FINMA to open restructuring proceedings
or liquidation (bankruptcy) proceedings in respect of, and/or impose protective measures in relation to, UBS. In particular, a
broad variety of protective measures may be imposed by FINMA, including a bank moratorium or a maturity postponement, which measures
may be ordered by FINMA either on a stand-alone basis or in connection with restructuring or liquidation proceedings. In a restructuring
proceeding, the resolution plan may, among other things, (a) provide for the transfer of UBS’s assets or a portion thereof,
together with debts and other liabilities, and contracts of UBS, to another entity, (b) provide for the conversion of UBS’s
debt and/or other obligations, including its obligations under the notes, into equity, and/or (c) potentially provide for haircuts
on obligations of UBS, including its obligations under the notes. Although no precedent exists, if one or more measures under the
revised regime were imposed, such measures may have a material adverse effect on the terms and market value of the notes and/or
the ability of UBS to make payments thereunder.
Uncertain Tax Treatment
Significant aspects of the tax treatment of the notes are
uncertain. There are no statutory provisions, regulations, published rulings or judicial decisions addressing the characterization
for U.S. federal income tax purposes of securities with terms that are substantially the same as the notes, and we do not plan
to request a ruling from the IRS. Consequently, significant aspects of the tax treatment
of the notes are uncertain, and the IRS or a court might not agree with the treatment of the notes as pre-paid financial contracts
that are not debt. Accordingly, it is possible that your notes could alternatively be treated for tax purposes, and that the timing
and character of the income or loss on your notes could be materially and adversely affected.
In 2007, the IRS released a notice that may affect
the taxation of holders of the notes. According to Notice 2008-2, the IRS and the Treasury are actively considering whether the
holder of an instrument similar to the notes should be required to accrue ordinary income on a current basis, and they are seeking
taxpayer comments on the subject. It is not possible to determine what guidance they will ultimately issue, if any. It is possible,
however, that under such guidance, holders of the notes will ultimately be required to accrue income currently and this could be
applied on a retroactive basis. The IRS and the Treasury are also considering other relevant issues, including whether additional
gain or loss from such instruments should be treated as ordinary or capital, whether non-U.S. holders of such instruments should
be subject to withholding tax on any deemed income accruals, and whether the special “constructive ownership rules”
of Section 1260 of the Code should be applied to such instruments. Holders are urged to consult their tax advisors concerning the
significance, and the potential impact, of the above considerations. Except to the extent otherwise required by law, UBS intends
to treat your notes for U.S. federal income tax purposes in accordance with the treatment described above under “Supplemental
discussion of U.S. federal income tax consequences” and under “Supplemental U.S. Tax Considerations” in the accompanying
product supplement, unless and until such time as the Treasury and the IRS determine that some other treatment is more appropriate.
Prospective purchasers of notes should consult their tax
advisors as to the U.S. federal, state, local, non-U.S. and other tax consequences to them of the purchase, ownership and disposition
of the notes. For more information, see “Supplemental U.S. Tax Considerations” in the accompanying product supplement.
VALIDITY OF THE NOTES
In the opinion of Cadwalader, Wickersham & Taft
LLP, as special counsel to the issuer, when the notes offered by this pricing supplement have been executed and issued by the issuer
and authenticated by the trustee pursuant to the indenture and delivered, paid for and sold as contemplated herein, the notes will
be valid and binding obligations of the issuer, enforceable against the issuer in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership or other laws relating to or affecting
creditors’ rights generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding
at law or in equity). This opinion is given as of the date hereof and is limited to the laws of the State of New York. Insofar
as this opinion involves matters governed by Swiss law, Cadwalader, Wickersham & Taft LLP has assumed, without independent
inquiry or investigation, the validity of the matters opined on by Homburger AG, Swiss legal counsel for the issuer, in its opinion
dated June 20, 2017 filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 6-K on June 20,
2017. In addition, this opinion is subject to customary assumptions about the trustee’s authorization, execution and delivery
of the indenture and, with respect to the notes, authentication of the notes and the genuineness of signatures and certain factual
matters, all as stated in the opinion of Cadwalader, Wickersham & Taft LLP dated June 15, 2015 filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 6-K on June 15, 2015.
THE BASKET AND THE BASKET UNDERLIERS
The basket consists of five basket underliers with the following
weights: the EURO STOXX 50
®
Index (36.00% weighting), TOPIX
®
Index (27.00% weighting), FTSE
®
100 Index
(20.00% weighting), Swiss Market Index (SMI)
®
(9.00% weighting) and S&P/ASX 200 Index (8.00%
weighting).
HYPOTHETICAL HISTORICAL BASKET LEVELS
Because the basket is a newly created basket and its level
was calculated only on the trade date, there is no actual historical information about the basket closing levels as
of the date of this pricing supplement. Therefore, the hypothetical basket closing levels of the basket below are calculated
based on publicly available information for each basket underlier as reported by Bloomberg Professional
®
service
(“Bloomberg”), without independent verification. UBS has not conducted any independent review or due diligence of publicly
available information obtained from Bloomberg. The hypothetical basket closing levels have fluctuated in the past and may, in the
future, experience significant fluctuations. Any hypothetical historical upward or downward trend in the basket closing level during
any period shown below is not an indication that the basket is more or less likely to increase or decrease at any time during the
life of your notes.
The following table sets forth the hypothetical quarterly basket
closing levels for the basket.
Past hypothetical performance of the basket is not indicative of the future performance of
the basket, assuming the basket closing level was 100 on January 1, 2014.
Quarter Begin
|
Quarter End
|
Hypothetical Quarterly Basket Closing Level
|
1/1/2014
|
3/31/2014
|
98.44
|
4/1/2014
|
6/30/2014
|
100.99
|
7/1/2014
|
9/30/2014
|
102.08
|
10/1/2014
|
12/31/2014
|
103.02
|
1/1/2015
|
3/31/2015
|
113.70
|
4/1/2015
|
6/30/2015
|
110.57
|
7/1/2015
|
9/30/2015
|
99.97
|
10/1/2015
|
12/31/2015
|
106.00
|
1/1/2016
|
3/31/2016
|
97.19
|
4/1/2016
|
6/30/2016
|
94.90
|
7/1/2016
|
9/30/2016
|
99.69
|
10/1/2016
|
12/31/2016
|
108.24
|
1/1/2017
|
3/31/2017
|
111.87
|
4/1/2017
|
6/30/2017
|
113.27
|
7/1/2017
|
9/30/2017
|
116.74
|
10/1/2017
|
12/31/2017
|
120.40
|
1/1/2018
|
3/31/2018
|
113.62
|
4/1/2018
|
6/30/2018
|
116.54
|
7/1/2018*
|
8/8/2018*
|
119.11
|
*As of the date of this pricing
supplement, available information for the third calendar quarter of 2018 includes data for the period from July 1, 2018
through August 8, 2018. Accordingly, the “Hypothetical Quarterly Basket Closing Level” data indicated is for this
shortened period only and does not reflect complete data for the third calendar quarter of 2018.
The graph
below illustrates the hypothetical performance of the basket from January 1, 2014 through August 8, 2018, based on the daily
closing levels of the basket underliers.
Past hypothetical performance of the basket is not indicative of the
future performance of the basket.
EURO STOXX 50
®
Index
We have derived all information contained in
this pricing supplement regarding the EURO STOXX 50
®
Index, including without limitation, its make-up,
method of calculation and changes in its components from publicly available information. Such information reflects the policies
of, and is subject to change by STOXX Limited. The information included below supplements the description of the EURO STOXX 50
®
Index found in the accompanying index supplement.
STOXX Limited has no obligation to continue
to publish the EURO STOXX 50
®
Index, and may discontinue publication of the EURO STOXX 50
®
Index
at any time. The EURO STOXX 50
®
Index is determined, comprised and calculated by STOXX Limited without regard to
the notes.
The EURO STOXX 50
®
Index covers
50 stocks of market sector leaders mainly from 11 Eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. The EURO STOXX 50
®
Index captures a selection of the largest stocks
among the 19 EURO STOXX regional Supersector indices. The largest stocks within those indices are added to the selection list until
coverage is approximately 60% of the free float market capitalization of the corresponding EURO STOXX Total Market Index (the “EURO
STOXX TMI”) Supersector Index and from that selection list the 50 stocks are selected. The EURO STOXX 50
®
Index universe is defined as all components of the 19 EURO STOXX Regional Supersector indices. The EURO STOXX Supersector indices
represent the Eurozone portion of the STOXX 600 Supersector indices, which contain the 600 largest stocks traded on the major exchanges
of 18 European countries. Each component’s weight is capped at 10% of the EURO STOXX 50
®
Index’s total
free-float market capitalization. Additional information regarding the EURO STOXX 50
®
Index may be obtained from
the STOXX Limited website: stoxx.com. We are not incorporating by reference the website or any material it includes in this pricing supplement.
The top ten underlier stocks of the EURO STOXX 50
®
Index as of June 29, 2018, by weight, are:
Total S.A. (5.93%), SAP SE (4.57%), Siemens AG (4.11%), Bayer AG (3.76%), Allianz SE (3.33%), Sanofi (3.32%), LVMH Moët Hennessy
Louis Vuitton SE (3.28%), BASF SE (3.21%), Banco Santander S.A. (3.16%) and ASML Holding NV (3.13%); underlier stock weights may
be found at stoxx.com/download/indices/factsheets/SX5GT.pdf and are updated periodically.
As of June 29, 2018, the top ten industry sectors which comprise the EURO STOXX 50
®
Index represent
the following weights in the index: Banks (13.1%), Industrial Goods & Services (11.0%), Health Care (10.9%), Personal &
Household Goods (10.0%), Technology (8.9%), Oil & Gas (7.6%), Insurance (6.4%), Chemicals (5.2%), Utilities (5.1%) and Telecommunications
(4.5%); industry weightings may be found at stoxx.com/download/indices/factsheets/SX5GT.pdf and are updated periodically. Percentages
may not sum to 100% due to rounding. Sector designations are determined by the underlier sponsor using criteria it has selected
or developed. Index sponsors may use very different standards for determining sector designations. In addition, many companies
operate in a number of sectors, but are listed in only one sector and the basis on which that sector is selected may also differ.
As a result, sector comparisons between indices with different index sponsors may reflect differences in methodology as well as
actual differences in the sector composition of the indices.
As of June 29, 2018, the eight countries which comprise the EURO STOXX 50
®
Index represent
the following weights in the index: France (38.2%), Germany (31.7%), Netherlands (10.8%), Spain (9.4%), Italy (4.9%), Belgium (2.8%),
Finland (1.2%) and Ireland (1.1%); country weightings may be found at stoxx.com/download/indices/factsheets/SX5GT.pdf and are updated
periodically.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this pricing supplement, the accompanying product supplement, accompanying
index supplement or any accompanying prospectus. UBS has not conducted any independent review or due diligence of any publicly
available information with respect to the EURO STOXX 50
®
Index.
Historical High, Low and Closing Levels
of the Basket Underlier
The closing level of the basket underlier has fluctuated
in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level
of the basket underlier during any period shown below is not an indication that the basket underlier is more or less likely
to increase or decrease at any time during the life of your notes.
The following table sets forth the quarterly high
and low closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg.
The closing level of the basket underlier on August 8, 2018 was 3,493.60.
Past performance of the basket underlier is not indicative
of the future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
Quarter Begin
|
Quarter End
|
Quarterly Closing High
|
Quarterly Closing Low
|
Quarterly Close
|
1/1/2014
|
3/31/2014
|
3,172.43
|
2,962.49
|
3,161.60
|
4/1/2014
|
6/30/2014
|
3,314.80
|
3,091.52
|
3,228.24
|
7/1/2014
|
9/30/2014
|
3,289.75
|
3,006.83
|
3,225.93
|
10/1/2014
|
12/31/2014
|
3,277.38
|
2,874.65
|
3,146.43
|
1/1/2015
|
3/31/2015
|
3,731.35
|
3,007.91
|
3,697.38
|
4/1/2015
|
6/30/2015
|
3,828.78
|
3,424.30
|
3,424.30
|
7/1/2015
|
9/30/2015
|
3,686.58
|
3,019.34
|
3,100.67
|
10/1/2015
|
12/31/2015
|
3,506.45
|
3,069.05
|
3,267.52
|
1/1/2016
|
3/31/2016
|
3,178.01
|
2,680.35
|
3,004.93
|
4/1/2016
|
6/30/2016
|
3,151.69
|
2,697.44
|
2,864.74
|
7/1/2016
|
9/30/2016
|
3,091.66
|
2,761.37
|
3,002.24
|
10/1/2016
|
12/31/2016
|
3,290.52
|
2,954.53
|
3,290.52
|
1/1/2017
|
3/31/2017
|
3,500.93
|
3,230.68
|
3,500.93
|
4/1/2017
|
6/30/2017
|
3,658.79
|
3,409.78
|
3,441.88
|
7/1/2017
|
9/30/2017
|
3,594.85
|
3,388.22
|
3,594.85
|
10/1/2017
|
12/31/2017
|
3,697.40
|
3,503.96
|
3,503.96
|
1/1/2018
|
3/31/2018
|
3,672.29
|
3,278.72
|
3,361.50
|
4/1/2018
|
6/30/2018
|
3,592.18
|
3,340.35
|
3,395.60
|
7/1/2018*
|
8/8/2018*
|
3,527.18
|
3,372.21
|
3,493.60
|
* As of the date of this pricing supplement, available information for the third
calendar quarter of 2018 includes data for the period from July 1, 2018 through August 8, 2018. Accordingly, the “Quarterly
Closing High”, “Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened
period only and do not reflect complete data for the third calendar quarter of 2018.
The graph below illustrates the performance of the basket underlier
from January 1, 2008 through August 8, 2018, based on information from Bloomberg.
Past performance of the basket underlier
is not indicative of the future performance of the basket underlier.
TOPIX
®
Index
We have derived all information contained in this
pricing supplement regarding the TOPIX
®
Index
contained herein, including, its make-up, method
of calculation and changes in its components, from publicly available information. The TOPIX
®
Index, also known
as the Tokyo Stock Price Index, is a free-float adjusted capitalization-weighted index of all the domestic common stocks listed
on the First Section of the Tokyo Stock Exchange (“TSE”). Domestic stocks admitted to the TSE are assigned either to
the TSE First Section Index, the TSE Second Section Index or the TSE Mothers Index. Stocks listed in the First Section, which number
approximately 1,500, are among the most actively traded stocks on the TSE. The TOPIX
®
Index is supplemented by the
sub-basket components of the 33 industry sectors and was developed with a base index value of 100 as of January 4, 1968. The TOPIX
®
Index is calculated and published by the TSE. Additional information about the TOPIX
®
Index is available on the
following website: jpx.co.jp/english/markets/indices/topix/. We are not incorporating by reference the website or any material
it includes in this pricing supplement.
Composition and Maintenance. The TOPIX
®
Index is composed of all domestic common stocks listed on the TSE First Section, excluding temporary issues and preferred stocks.
Companies scheduled to be delisted or newly listed companies that are still in the waiting period are excluded from the TOPIX
®
Index. The TOPIX
®
Index does not review underlier stocks. The number of underlier stocks will change according to
new listings and delistings.
Index Stock Weighting by Sector
as of July 31, 2018
Percentage (%)*
|
|
|
Air Transportation
|
|
0.59%
|
Banks
|
|
6.93%
|
Chemicals
|
|
7.49%
|
Construction
|
|
3.19%
|
Electric Appliances
|
|
13.57%
|
Electric Power and Gas
|
|
1.74%
|
Fishery, Agriculture and Forestry
|
|
0.11%
|
Foods
|
|
4.22%
|
Glass and Ceramics Products
|
|
1.02%
|
Information & Communication
|
|
7.77%
|
Insurance
|
|
2.28%
|
Iron and Steel
|
|
1.05%
|
Land Transportation
|
|
4.31%
|
Machinery
|
|
5.17%
|
Marine Transportation
|
|
0.19%
|
Metal Products
|
|
0.65%
|
Mining
|
|
0.30%
|
Nonferrous Metals
|
|
0.85%
|
Oil and Coal Products
|
|
0.83%
|
Other Financing Business
|
|
1.20%
|
Other Products
|
|
2.05%
|
Pharmaceutical
|
|
4.79%
|
Precision Instruments
|
|
1.76%
|
Pulp and Paper
|
|
0.27%
|
Real Estate
|
|
2.40%
|
Retail Trade
|
|
4.82%
|
Rubber Products
|
|
0.77%
|
Securities and Commodities Futures
|
|
0.91%
|
Services
|
|
4.53%
|
Textiles and Apparels
|
|
0.63%
|
Transportation Equipment
|
|
8.68%
|
Warehousing and Harbor Transportation Service
|
|
0.18%
|
Wholesale Trade
|
|
4.75%
|
* Sector designations are determined by the
TSE using criteria it has selected or developed. The TSE may use very different standards for determining sector designations.
In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis on which that sector
is selected may also differ. As a result, sector comparisons between indices with different index sponsors may reflect differences
in methodology as well as actual differences in the sector composition of the indices.
** Information provided by the TSE. Percentages
may not sum to 100% due to rounding.
Index Calculation. The TOPIX
®
Index is a free-float adjusted market capitalization-weighted index, which reflects movements in the market capitalization from
a base market value of 100 set on the base date of January 4, 1968. The TSE calculates the TOPIX
®
Index multiplying
the base point of 100 by the figure obtained from dividing the current free float adjusted market value by the base market value.
The resulting value is not expressed in Japanese yen but presented in terms of points rounded to the nearest one hundredth. The
formula for calculating the TOPIX
®
Index value can be expressed:
Index value =
|
Base point
of 100 x Current free float adjusted market value
|
Base Market Value
|
The current free float adjusted market
value is the sum of the products of the price and the number of free float adjusted shares for index calculation of each
underlier stock.
The number of free float adjusted shares for
index calculation is the number of listed shares multiplied by free-float weight. The number of listed shares for index calculation
is determined by the TSE. The number of listed shares for index calculation normally coincides with that of listed shares. However,
in the case of a stock split, the number of listed shares increases at the additional listing date which comes after such stock
split becomes effective; on the other hand, the number of listed shares for index calculation increases at the ex-rights date.
Free-float weight is a weight of listed shares
deemed to be available for trading in the market and is determined and calculated by the TSE for each listed company for index
calculation. The free-float weight of one company may be different from that of any other company. Free-float weight is reviewed
once a year in order to reflect the latest distribution of share ownership. The timing of the yearly free-float weight review is
different according to the settlement terms of listed companies. In addition to the yearly review, extraordinary reviews are conducted
in the following cases: allocation of new shares to a third party, strategic exercise of preferred shares or equity warrants, company
spin-off, merger, stock-swap, take-over bid and other events that the TSE judges as appropriate reasons to review.
In the event of any increase or decrease in
the current free-float adjusted market value due to reasons other than fluctuations in the TSE, such as public offerings or changes
in the number of underlier stocks in the TSE First Section, necessary adjustments are made by the TSE to the base market value in order
to maintain the continuity of the TOPIX
®
Index. The TSE makes adjustments as follows:
Event
|
Implementation of
Adjustment (After Close
of Trading)
|
Price Used for
Adjustments
|
Addition
|
Company to be listed on the TSE First Section by initial public offering or via another stock exchange
|
One business day before the last business day of the next month of listing
|
Price on the adjustment date
|
|
|
|
|
Addition
|
Company included in the TOPIX
®
Index is to be delisted and a new company established through
stockswap or similar transaction (including merger through establishing new company and company spin-off)
|
One business day before the listing date
|
Base price (used to decide the daily price limit)
|
Event
|
Implementation of
Adjustment (After Close
of Trading)
|
Price Used for
Adjustments
|
Addition
|
Transfer to the TSE First Section from the Second Section
|
One business day before the last business day after such assignment (a free float weight of 0.00 is
used from the transfer date to the adjustment date and thus the number of shares to be used for calculation will be 0.00 during such period)
|
Price on the adjustment date
|
Addition
|
Transfer to the TSE First Section from TSE Mothers Index
|
One business day before the last business day of the next month of transfer (a free float weight of 0.00 is
used from the transfer date to the adjustment date and thus the number of shares to be used for calculation will be 0.00 during such period)
|
Price on the adjustment date
|
Deletion
|
Company to be de-listed due to a stock-swap or similar transaction while the newly established company is promptly
listed on the TSE First Section
|
Initial listing date of newly established company (normally two business days after delisting date)
|
Price one business day before the de-listing date (during the period from the delisting date
to the business day before the date of removal from the TOPIX
®
Index, the price on the business day before the delisting date is used for index calculation)
|
Deletion
|
Company to be de-listed due to other reason than described above (merger and stockswap with
non-surviving company included in the TOPIX
®
Index)
|
One business day before delisting date
|
Price on the business day before the adjustment date
|
Deletion
|
Designation of securities to be delisted
|
Three business days after the designation of securities to be delisted (one business day
after designation if the day of designation is a holiday)
|
Price on the business day before the adjustment date
|
Deletion
|
Transfer to the TSE Second Section from the TSE First Section
|
One business day before the date of the reassignment date
|
Price on the business day before the adjustment date
|
No adjustments will be made to the base market
value in the case of a stock split or reverse stock split.
Retroactive adjustments will not be made to
revise the figures of the TOPIX
®
Index that have already been calculated and disseminated even if issuing companies
file amendments on previously released information.
If trading in a certain underlier stock is suspended,
the TSE regards it as having no change in its share price for purposes of calculating the TOPIX
®
Index. In the event
of unforeseen circumstances, or if the TSE decides it is impossible to use its existing methods to calculate the TOPIX
®
Index, the TSE may use an alternate method of index calculation as it deems valid.
License Agreement
We expect to enter into a non-exclusive license
agreement with the Tokyo Stock Exchange, Inc. (“TSE”) providing for the license to us, in exchange for a fee, of the
right to use the Tokyo Stock Price Index (“TOPIX Index”), the proprietary data therein contained (“TOPIX Index
Value”) and the trademarks “TOPIX”, Tokyo Stock Exchange” and “Tokyo Stock Price Index/TOPIX”
(collectively, the “TOPIX Marks”) in connection with certain securities, including the notes.
The TOPIX Index Value and the TOPIX Marks are subject to
the proprietary rights owned by the Tokyo Stock Exchange, Inc. and the Tokyo Stock Exchange, Inc. owns all rights and know-how
relating to the TOPIX such as calculation, publication and use of the TOPIX Index Value and relating to the TOPIX Marks. The Tokyo
Stock Exchange, Inc. shall reserve the rights to change the methods of calculation or publication, to cease the calculation or
publication of the TOPIX Index Value or to change the TOPIX Marks or cease the use thereof. The Tokyo Stock Exchange, Inc. makes
no warranty or representation whatsoever, either as to the results stemmed from the use of the TOPIX Index Value and the TOPIX
Marks or as to the figure at which TOPIX Index Value stands on any particular day. The Tokyo Stock Exchange, Inc. gives no assurance
regarding accuracy or completeness of the TOPIX Index Value and data contained therein. Further, the Tokyo Stock Exchange, Inc.
shall not be liable for the miscalculation, incorrect publication, delayed or interrupted publication of the TOPIX Index Value.
No securities are in no way sponsored, endorsed or promoted by the Tokyo Stock Exchange, Inc. The Tokyo Stock Exchange, Inc. shall
not bear any obligation to give an explanation of the securities or any advice on investments to any purchaser of the notes or
to the public. The Tokyo Stock Exchange, Inc. neither selects specific stocks or groups thereof nor takes into account any needs
of the issuing company or any purchaser of the notes, for calculation of the TOPIX Index Value. Including but not limited to the
foregoing, the Tokyo Stock Exchange, Inc. shall not be responsible for any damage resulting from the issue and sale of the notes.
Information
from outside sources is not incorporated by reference in, and should not be considered part of, this pricing supplement,
the accompanying product supplement, accompanying index supplement or any accompanying prospectus.
Historical High, Low
and Closing Levels of the Basket Underlier
The closing level of the basket underlier has fluctuated
in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level
of the basket underlier during any period shown below is not an indication that the basket underlier is more or less likely
to increase or decrease at any time during the life of your notes.
The following table sets forth the quarterly high and low
closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent
verification. UBS has not conducted any independent review or due diligence of publicly available information obtained from
Bloomberg. The closing level of the basket underlier as of August 8, 2018 was 1,744.71.
Past performance of the basket
underlier is not indicative of the future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
Quarter Begin
|
Quarter End
|
Quarterly Closing High
|
Quarterly Closing Low
|
Quarterly Close
|
1/1/2014
|
3/31/2014
|
1,306.23
|
1,139.27
|
1,202.89
|
4/1/2014
|
6/30/2014
|
1,269.04
|
1,132.76
|
1,262.56
|
7/1/2014
|
9/30/2014
|
1,346.43
|
1,228.26
|
1,326.29
|
10/1/2014
|
12/31/2014
|
1,447.58
|
1,177.22
|
1,407.51
|
1/1/2015
|
3/31/2015
|
1,592.25
|
1,357.98
|
1,543.11
|
4/1/2015
|
6/30/2015
|
1,679.89
|
1,528.99
|
1,630.40
|
7/1/2015
|
9/30/2015
|
1,691.29
|
1,375.52
|
1,411.16
|
10/1/2015
|
12/31/2015
|
1,605.94
|
1,442.74
|
1,547.30
|
1/1/2016
|
3/31/2016
|
1,509.67
|
1,196.28
|
1,347.20
|
4/1/2016
|
6/30/2016
|
1,407.50
|
1,204.48
|
1,245.82
|
7/1/2016
|
9/30/2016
|
1,352.67
|
1,209.88
|
1,322.78
|
10/1/2016
|
12/31/2016
|
1,552.36
|
1,301.16
|
1,518.61
|
1/1/2017
|
3/31/2017
|
1,577.40
|
1,506.33
|
1,512.60
|
4/1/2017
|
6/30/2017
|
1,624.07
|
1,459.07
|
1,611.90
|
7/1/2017
|
9/30/2017
|
1,676.17
|
1,590.71
|
1,674.75
|
10/1/2017
|
12/31/2017
|
1,831.93
|
1,673.62
|
1,817.56
|
1/1/2018
|
3/31/2018
|
1,911.07
|
1,664.94
|
1,704.00
|
4/1/2018
|
6/30/2018
|
1,815.25
|
1,703.80
|
1,730.89
|
7/1/2018*
|
8/8/2018*
|
1,775.76
|
1,676.20
|
1,744.71
|
*As of the date of this pricing supplement, available information for the third
calendar quarter of 2018 includes data for the period from July 1, 2018 through August 8, 2018. Accordingly, the “Quarterly
Closing High”, “Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened
period only and do not reflect complete data for the third calendar quarter of 2018.
The graph below illustrates the performance of the basket underlier
from January 1, 2008 through August 8, 2018, based on information from Bloomberg.
Past performance of the basket underlier
is not indicative of the future performance of the basket underlier.
FTSE
®
100 Index
We have derived all information contained
in this pricing supplement regarding the FTSE
®
100 Index, including without limitation, its make-up,
method of calculation and changes in its components from publicly available information. Such information reflects the policies
of, and is subject to change by the FTSE
®
100 Index Sponsor, FTSE Group. UBS has not conducted any independent
review or due diligence of any publicly available information with respect to the FTSE
®
100 Index. The information
included below supplements the description of the FTSE
®
100 Index found in the accompanying index supplement.
The FTSE Index Sponsor has no obligation to
continue to publish, and may discontinue publication of, the FTSE
®
100 Index. The FTSE Index Sponsor has no obligation
to take into account your interest, or that of anyone else having an interest, in the notes in determining, composing or calculating
the FTSE
®
100 Index.
The FTSE
®
100 Index is a market
capitalization-weighted index and consists of the 100 most highly capitalized UK-domiciled companies traded on the SETS trading
system of the London Stock Exchange (the “Exchange”). To qualify, companies must have a full listing on the Exchange
with a Sterling or Euro denominated price on the Exchange’s SETS trading system, subject to eligibility screens. The FTSE
Europe/Middle East/Africa Regional (“EMEA”) Committee meets quarterly, on the Wednesday before the first Friday in
March, June, September and December, to review the underlier stocks of the FTSE 100 Index. A constant number of underlier stocks
are maintained for the FTSE 100 Index. Where a greater number of companies qualify to be inserted in the FTSE 100 Index than those
qualifying to be deleted, the lowest ranking underlier stocks presently included in the FTSE 100 Index will be deleted to ensure
that an equal number of companies are inserted and deleted at the periodic review. Likewise, where a greater number of companies
qualify to be deleted than those qualifying to be inserted, the securities of the highest ranking companies which are presently
not included in the FTSE 100 Index will be inserted to match the number of companies being deleted at the periodic review.
In addition to the eligibility criteria discussed under "Underlying Indices and Underlying Index
Publishers- Non-U.S. Indices - FTSE
®
100 Index" on page IS-31 of the accompanying index supplement, in order to be included in the FTSE
®
100 Index,
a company is required to have greater than 5% of its voting rights (aggregated across all of its equity securities, including, where identifiable, those that are not listed or trading)
in the hands of unrestricted shareholders. Current constituents of the FTSE
®
100 Index who do not meet this requirement will have until the September 2022 review to meet
the requirement or they will be removed from the FTSE
®
100 Index.
Additional information on the FTSE
®
100 Index is available on the following website: ftse.com/products/indices/uk. We are not
incorporating by reference the website or any material it includes in this pricing supplement.
Index Stock Weighting by Sector as of July 31, 2018
Sector:*
|
Percentage (%)**
|
Oil & Gas
|
13.91%
|
Banks
|
10.66%
|
Personal & Household Goods
|
10.54%
|
Industrial Goods & Services
|
9.69%
|
Health Care
|
9.11%
|
Financial Services
|
7.73%
|
Basic Resources
|
6.82%
|
Insurance
|
4.88%
|
Travel & Leisure
|
4.65%
|
Food & Beverages
|
3.75%
|
Media
|
3.49%
|
Retail
|
3.47%
|
Telecommunications
|
2.95%
|
Utilities
|
2.52%
|
Real Estate
|
2.47%
|
Construction & Materials
|
1.63%
|
Technology
|
0.88%
|
Chemicals
|
0.84%
|
* Sector designations are determined by the
underlier sponsor using criteria it has selected or developed. Index sponsors may use very different standards for determining
sector designations. In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis
on which that sector is selected may also differ. As a result, sector comparisons between indices may reflect differences in sector
designation methodology as well as actual differences in the sector composition of the indices.
**Information provided by the FTSE
®
100 Index Sponsors. Percentages may not sum to 100% due to rounding.
The top five underlier stocks of the FTSE
®
100 Index as of July 31, 2018, by weight, are: HSBC Holdings PLC (7.32%); Royal Dutch Shell PLC Class A (5.99%); BP PLC
(5.58%); Royal Dutch Shell PLC Class B (4.99%); and British American Tobacco PLC (4.78%).
Information from outside sources is not incorporated
by reference in, and should not be considered part of, this pricing supplement, the accompanying product supplement,
accompanying index supplement or accompanying prospectus. UBS has not conducted any independent review or due diligence of any
publicly available information with respect to the FTSE
®
100 Index. UBS has entered into a non-exclusive license
agreement with the FTSE
®
100 Index Sponsor, which grants UBS a license in exchange for a fee to use the FTSE
®
100 Index in connection with the issuance of certain securities, including the notes.
“FTSE
®
100” is a
trademark of the FTSE Index Sponsor and has been licensed for use by UBS. The FTSE
®
100 Index Sponsor has no relation
to UBS, other than the licensing of the FTSE
®
100 Index and its service marks for use in connection with the notes.
The FTSE 100 Index Sponsor disclaims all responsibility
for any errors or omissions in the calculation and dissemination of the FTSE Index or the manner in which the FTSE Index is applied
in determining any initial FTSE 100 Index Initial Underlying Value or FTSE 100 Index Final Underlying Value or any amount payable
upon maturity of the notes.
THE FTSE 100 INDEX SPONSOR DOES NOT GUARANTEE THE ACCURACY
OR THE COMPLETENESS OF THE FTSE 100 INDEX OR ANY DATA INCLUDED IN THE FTSE 100 INDEX. THE FTSE 100 INDEX SPONSOR ASSUMES NO LIABILITY
FOR ANY ERRORS OR OMISSIONS.
Historical High, Low and Closing Levels
of the Basket Underlier
The closing level of the basket underlier has fluctuated
in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level
of the basket underlier during any period shown below is not an indication that the basket underlier is more or less likely
to increase or decrease at any time during the life of your notes.
The following table sets forth the quarterly high and low closing
levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification. UBS
has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The closing
level of the basket underlier on August 8, 2018 was 7,776.65.
Past performance of the basket underlier is not indicative
of the future performance of the basket underlier.
Quarterly Closing High, Closing Low
and Closing Levels of the Basket Underlier*
Quarter Begin
|
Quarter End
|
Quarterly Closing High
|
Quarterly Closing Low
|
Quarterly Close
|
1/1/2014
|
3/31/2014
|
6,865.86
|
6,449.27
|
6,598.37
|
4/1/2014
|
6/30/2014
|
6,878.49
|
6,541.61
|
6,743.94
|
7/1/2014
|
9/30/2014
|
6,877.97
|
6,567.36
|
6,622.72
|
10/1/2014
|
12/31/2014
|
6,750.76
|
6,182.72
|
6,566.09
|
1/1/2015
|
3/31/2015
|
7,037.67
|
6,366.51
|
6,773.04
|
4/1/2015
|
6/30/2015
|
7,103.98
|
6,520.98
|
6,520.98
|
7/1/2015
|
9/30/2015
|
6,796.45
|
5,898.87
|
6,061.61
|
10/1/2015
|
12/31/2015
|
6,444.08
|
5,874.06
|
6,242.32
|
1/1/2016
|
3/31/2016
|
6,203.17
|
5,536.97
|
6,174.90
|
4/1/2016
|
6/30/2016
|
6,504.33
|
5,923.53
|
6,504.33
|
7/1/2016
|
9/30/2016
|
6,941.19
|
6,463.59
|
6,899.33
|
10/1/2016
|
12/31/2016
|
7,142.83
|
6,693.26
|
7,142.83
|
1/1/2017
|
3/31/2017
|
7,429.81
|
7,099.15
|
7,322.92
|
4/1/2017
|
6/30/2017
|
7,547.63
|
7,114.36
|
7,312.72
|
7/1/2017
|
9/30/2017
|
7,542.73
|
7,215.47
|
7,372.76
|
10/1/2017
|
12/31/2017
|
7,687.77
|
7,300.49
|
7,687.77
|
1/1/2018
|
3/31/2018
|
7,778.64
|
6,888.69
|
7,056.61
|
4/1/2018
|
6/30/2018
|
7,877.45
|
7,030.46
|
7,636.93
|
7/1/2018*
|
8/8/2018*
|
7,776.65
|
7,547.85
|
7,776.65
|
* As of the date of this pricing
supplement, available information for the third calendar quarter of 2018 includes data for the period from July 1, 2018
through August 8, 2018. Accordingly, the “Quarterly Closing High”, “Quarterly Closing Low” and
“Quarterly Close” data indicated are for this shortened period only and do not reflect complete data for the
third calendar quarter of 2018.
The graph below illustrates the performance of the basket underlier
from January 1, 2008 through August 8, 2018, based on information from Bloomberg.
Past performance of the basket underlier
is not indicative of the future performance of the basket underlier.
Swiss Market Index (SMI)
®
The SMI Index contains approximately 85% of
the entire free float market capitalization of the Swiss equity market and is made up of 20 of the largest and most liquid stocks
from the Swiss Performance Index (“SPI”). Its composition is examined twice a year by the Management Committee and
the Index Commission, and any changes to the index composition of the SMI Index are made once a year. The Swiss Market Index (SMI)
®
(the “SMI Index”) was standardized on June 30, 1988 at a baseline value of 1500 points and is maintained by the SIX
Swiss Exchange Ltd (the “SMI Index Sponsor”). Additional information on the SMI Index is available from the following
website: six-swiss-exchange.com/indices/overview_en.html. We are not incorporating by reference the website or any material it
includes in this pricing supplement.
The position of each security is determined
by a combination of average free-float market capitalization (compared to the capitalization of the entire SPI) and cumulated
on order book turnover (compared to the total turnover of the SPI). A security is admitted to the SMI Index if it ranks 18 or
better in the selection list. A security ranked 19 or 20 is admitted only if a security that was already included in the SMI Index
meets the exclusion criteria directly (i.e., ranks in position 23 or lower) and no security that either meets the admission criteria
directly (i.e., ranks in position 18 or higher) or is rated higher has moved up in its place. A security is excluded from the
SMI Index if it ranked 23 or lower in the selection list. A security that ranks 21 or 22 is excluded only if it meets the admission
criteria directly (i.e., ranks in position 18 or higher) and no security that either meets the exclusion criteria directly (position
23 or lower) or is rated lower has been excluded in its place.
Capped Weightings and Intra-Quarter Breaches.
The weight of any underlier stock that exceeds a weight of 18% within the SMI Index is reduced to that value
at each ordinary quarterly adjustment date by applying a capping factor to the calculation of such underlier stock’s free
float market capitalization. An underlier stocks’s number of shares and free float figure are used to determine its capping
factor. The excess weight (the difference of the original weight minus the capped weight) is distributed proportionally across
the other underlier stocks. The underlier stocks are also capped to 18% as soon as two underlier stocks exceed a weight of 20%
(an “intra-quarter breach”). If an intra-quarter breach is observed after the close of the markets, a new calculation
of the capping factors is executed immediately and communicated to the market in order to ensure that the maximum weight per underlier
stock is capped at 18% for the opening on the next day. In order to achieve a capped weighting while attempting to not cause market
distortion, a stepwise reduction is conducted based on the ordinary quarterly index adjustment reviews to ensure that no change
in the weight (as a result of capping) from one review to the next exceeds 3%. The transition period is in effect until no component
has a weight larger than 18%. In the case of an intraquarter breach, the weights are limited to the last defined weights as of
the prior review.
The SMI Index is a non-dividend-adjusted price
index. The SMI Index is calculated using the Laspeyres method with the weighted arithmetic mean of a defined number of securities
issues. The index level is calculated by dividing the market capitalization of all securities included in the index by a divisor.
The divisor is a technical number used to
calculate the index. If the market capitalization changes due to a corporate event, the divisor changes while the index value
remains the same. The new divisor is calculated on the evening of the day before the corporate event takes effect. Regular cash
dividend payments do not result in adjustments to the divisor. Repayments of capital through the reduction of a share's par value,
which can take the place of a regular cash dividend or constitute a component of the regular distribution, are treated in the
same way as a normal dividend payment and no adjustments are made to the divisor. Distributions such as special dividends and
anniversary bonuses that, contrary to a company's usual dividend policy, are paid out or declared extraordinary dividends, are
not deemed dividends in the above sense. These distributions are considered corporate events and also result in adjustments to
the divisor.
As of December 29, 2017, the top ten underlier
stocks of the index (and their respective weightings in the index) were: Nestle SA (18.04%); Roche Holding AG (17.79%); Novartis
AG (17.71%); UBS Group AG (7.10%); ABB Ltd (4.88%); Financiere Richemont SA (4.74%); Zurich Insurance Group AG (4.61%); Credit
Suisse Group AG (4.34%); Compagnie Swiss Re AG (3.01%); and LafargeHolcim LTD (2.71%).
As of December 29, 2017, the ICB industry sectors in the index
(and their respective weights) were: Health Care (37.52%), Consumer Goods (24.03%), Financials (21.62%), Industrials (13.63%),
Basic Materials (1.84%) and Telecommunications (1.35%) (may not sum to 100% due to rounding). Sector designations are determined
by the index sponsor using criteria it has selected or developed. Index sponsors may use very different standards for determining
sector designations. In addition, many companies operate in a number of sectors, but are listed in only one sector and the basis
on which that sector is selected may also differ. As a result, sector comparisons between indices with different index sponsors
may reflect differences in methodology as well as actual differences in the sector composition of the indices.
We have derived all information regarding
the SMI Index contained in this pricing supplement from publicly available information without independent verification.
Such information reflects the policies of, and is subject to change by the SMI Index Sponsor. The SMI Index Sponsor owns the copyright
and all other rights to the SMI Index. The SMI Index Sponsor has no obligation to continue to publish, and may discontinue publication
of, the SMI Index.
License Agreement
SIX Swiss Exchange AG (“SIX Swiss Exchange”)
and its licensors (“Licensors”) have no relationship to UBS, other than the licensing of the SMI Index and the related
trademarks for use in connection with the notes.
SIX Swiss Exchange and its Licensors do
not
:
|
¨
|
sponsor, endorse, sell or promote the notes.
|
|
¨
|
recommend that any person invest in the notes or any
other securities.
|
|
¨
|
have any responsibility or liability for or make any
decisions about the timing, amount or pricing of the notes.
|
|
¨
|
have any responsibility or liability for the administration,
management or marketing of the notes.
|
|
¨
|
consider the needs of the notes or the owners of the
notes in determining, composing or calculating the SMI Index or have any obligation to do so.
|
SIX Swiss Exchange and its Licensors give
no warranty, and exclude any liability (whether in negligence or otherwise), in connection with the notes or their performance.
SIX Swiss Exchange does not assume any contractual
relationship with the purchasers of the notes or any other third parties.
Specifically,
|
¨
|
SIX Swiss Exchange and its Licensors do not give any warranty, express or implied, and exclude any liability for:
|
|
·
|
The results to be obtained by the notes, the owner of the notes or any other person in connection with the use of the SMI Index
and the data included in the SMI Index;
|
|
·
|
The accuracy, timeliness, and completeness of the SMI Index and its data;
|
|
·
|
The merchantability and the fitness for a particular purpose or use of the SMI Index and its data; or
|
|
·
|
The performance of the notes generally.
|
|
¨
|
SIX Swiss Exchange and its Licensors give no warranty and exclude any liability, for any errors, omissions or interruptions in the SMI Index or its data.
|
|
¨
|
Under no circumstances will SIX Swiss Exchange or
its Licensors be liable (whether in negligence or otherwise) for any lost profits or indirect, punitive, special or consequential
damages or losses, arising as a result of such errors, omissions or interruptions in the SMI Index or its data or generally in
relation to the notes, even in circumstances where SIX Swiss Exchange or its Licensors are aware that such loss or damage may occur.
|
The licensing Agreement between UBS and SIX Swiss Exchange
is solely for their benefit and not for the benefit of the owners of the notes or any other third parties.
Information from outside sources is not incorporated by reference
in, and should not be considered part of, this pricing supplement, the accompanying product supplement, accompanying
index supplement or any accompanying prospectus.
Historical High, Low and Closing Levels
of the Basket Underlier
The closing level of the basket underlier has fluctuated
in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the level
of the basket underlier during any period shown below is not an indication that the basket underlier is more or less likely
to increase or decrease at any time during the life of your notes.
The following table sets forth the quarterly high and
low closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The closing
level of the basket underlier on August 8, 2018 was 9,176.15.
Past performance of the basket underlier is not indicative
of the future performance of the basket underlier.
Quarterly Closing High, Closing Low
and Closing Levels of the Basket Underlier*
Quarter Begin
|
Quarter End
|
Quarterly Closing High
|
Quarterly Closing Low
|
Quarterly Close
|
1/1/2014
|
3/31/2014
|
8,532.99
|
8,092.53
|
8,453.82
|
4/1/2014
|
6/30/2014
|
8,752.86
|
8,280.53
|
8,554.52
|
7/1/2014
|
9/30/2014
|
8,840.17
|
8,274.65
|
8,835.14
|
10/1/2014
|
12/31/2014
|
9,212.85
|
8,057.54
|
8,983.37
|
1/1/2015
|
3/31/2015
|
9,396.29
|
7,899.59
|
9,128.98
|
4/1/2015
|
6/30/2015
|
9,471.46
|
8,780.91
|
8,780.91
|
7/1/2015
|
9/30/2015
|
9,526.79
|
8,278.07
|
8,513.41
|
10/1/2015
|
12/31/2015
|
9,016.56
|
8,375.31
|
8,818.09
|
1/1/2016
|
3/31/2016
|
8,701.46
|
7,496.62
|
7,807.89
|
4/1/2016
|
6/30/2016
|
8,292.45
|
7,594.49
|
8,020.15
|
7/1/2016
|
9/30/2016
|
8,320.99
|
7,898.21
|
8,139.01
|
10/1/2016
|
12/31/2016
|
8,259.45
|
7,593.20
|
8,219.87
|
1/1/2017
|
3/31/2017
|
8,704.39
|
8,229.01
|
8,658.89
|
4/1/2017
|
6/30/2017
|
9,127.61
|
8,529.28
|
8,906.89
|
7/1/2017
|
9/30/2017
|
9,176.99
|
8,814.54
|
9,157.46
|
10/1/2017
|
12/31/2017
|
9,452.32
|
9,084.04
|
9,381.87
|
1/1/2018
|
3/31/2018
|
9,611.61
|
8,509.29
|
8,740.97
|
4/1/2018
|
6/30/2018
|
9,000.89
|
8,456.95
|
8,609.30
|
7/1/2018*
|
8/8/2018*
|
9,201.22
|
8,529.59
|
9,176.15
|
*As of the date of this pricing supplement, available information for the third
calendar quarter of 2018 includes data for the period from July 1, 2018 through August 8, 2018. Accordingly, the “Quarterly
Closing High,” “Quarterly Closing Low” and “Quarterly Close” data indicated are for this shortened
period only and do not reflect complete data for the third calendar quarter of 2018.
The graph below illustrates the performance of the basket underlier
from January 1, 2008 through August 8, 2018, based on information from Bloomberg.
Past performance of the basket underlier
is not indicative of the future performance of the basket underlier.
S&P/ASX 200 Index
The S&P/ASX 200 Index (the “S&P/ASX 200 Index”)
was introduced in April 2000 and is maintained by the S&P/ASX Index Committee (the “ASX Committee”), a team of
five representatives from both S&P Dow Jones Indices LLC (“S&P”) and the Australian Securities Exchange (“ASX”).
As of July 31, 2018, the top 10 underlier stocks by weight were the following: Commonwealth Bank of Australia,
BHP Billiton Ltd., Westpac Banking Corp., CSL Ltd., ANZ Banking Group, National Australia Bank Ltd., Wesfarmers Ltd., Woolworths
Ltd., Macquarie Group Ltd. and Woodside Petroleum Ltd.
As of July 31, 2018, the 11 GICS industry sectors represented
by stocks in the index include: Financials (33.4%), Materials (18.3%), Health Care (8.5%), Consumer Staples (7.9%), Real Estate
(7.4%), Industrials (7.2%), Energy (5.7%), Consumer Discretionary (4.8%), Telecommunication Services (2.4%), Information Technology
(2.3%) and Utilities (2.0%). Sector designations are determined by the index sponsor using criteria it has selected or developed.
Index sponsors may use very different standards for determining sector designations. In addition, many companies operate in a number
of sectors, but are listed in only one sector and the basis on which that sector is selected may also differ. As a result, sector
comparisons between indices with different index sponsors may reflect differences in methodology as well as actual differences
in the sector composition of the indices.
S&P and MSCI, Inc. have announced that the
Global Industry Classification Sector structure is expected to be updated after the close of business on September 28, 2018. Among
other things, the update is expected to broaden the current Telecommunications Services sector and rename it the Communication
Services sector. The renamed sector is expected to include the existing Telecommunication Services Industry group, as well as the
Media Industry group, which is expected to move from the Consumer Discretionary sector and be renamed the Media & Entertainment
Industry group. The Media & Entertainment Industry group is expected to contain three industries: Media, Entertainment and
Interactive Media & Services. The Media industry is expected to continue to consist of the Advertising, Broadcasting, Cable
& Satellite and Publishing sub-industries. The Entertainment industry is expected to contain the Movies & Entertainment
sub-industry (which is expected to include online entertainment streaming companies in addition to companies currently classified
in such industry) and the Interactive Home Entertainment sub-industry (which is expected to include companies from the current
Home Entertainment Software sub-industry in the Information Technology sector, as well as producers of mobile gaming applications).
The Interactive Media & Services industry and sub-industry is expected to include companies engaged in content and information
creation or distribution through proprietary platforms, where revenues are derived primarily through pay-per-click advertisements,
and will include search engines, social media and networking platforms, online classifieds and online review companies.
As of July 31, 2018, the countries of domicile included in the index and their relative weights were: Australia
(97.2%), New Zealand (1.1%), United States (0.7%), France (0.6%) and United Kingdom (0.3%).
The S&P/ASX 200 Index is composed of the 200 largest index-eligible stocks
listed on the ASX by float-adjusted market capitalization. The index is float-adjusted, covering approximately 80% of Australian
equity market capitalization.
The S&P/ASX 200 Index classifies stocks according to
the Global Industry Classification Standard (“GICS”). These sectors, consistent throughout all the S&P-branded
indices, are Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials,
Telecommunication Services and Utilities. GICS classifies a stock according to a number of measures, including revenues, earnings
and the market’s perception of a company.
Only stocks listed on the Australian Stock Exchange (the
“ASX”) are considered for inclusion in the S&P/ASX 200 Index. Stocks are assessed based on the average of their
previous six-month day-end free float adjusted market capitalization. Only stocks that are regularly traded are considered for
inclusion in the S&P/ASX 200 Index. A stock’s liquidity is measured relative to its size peers.
The ASX Committee rebalances the underlier stocks
quarterly to ensure adequate market capitalization and liquidity. Both market capitalization and liquidity are assessed using
the previous six months’ worth of data to determine index eligibility. Quarterly rebalancing changes take effect on the
third Friday of March, June, September and December. The weighting of underlier stocks in the S&P/ASX 200 Index is
determined by a float factor, called an Investable Weight Factor (“IWF”) assigned to each stock by the ASX
Committee. The IWF is a variable that is primarily used to determine the available float of a security for ASX listed
securities. IWFs are reviewed annually as part of the September quarterly review. However, any event that alters the float of
a security in excess of 5% will be implemented as soon as practicable by an adjustment to the IWF.
The S&P/ASX 200 Index is calculated using a base-weighted
aggregate methodology where the level of an index reflects the total market value of all the component stocks relative to a particular
base period. On any given day, the index value is the quotient of the total available market capitalization of the index’s
underlier stocks and its divisor. Continuity in index values is maintained by adjusting the divisor for all changes in an underlier
stock’s share capital after the base date.
You may find information about the S&P/ASX 200
Index on the S&P website at us.spindices.com/indices/equity/sp-asx-200. We are not incorporating by reference the website
or any material it includes in this pricing supplement.
We have derived all information regarding the
S&P/ASX 200 Index contained herein from publicly available information without independent verification. Such information
reflects the policies of, and is subject to change by, the ASX Committee. Historical performance of the S&P/ASX Index is
not an indication of future performance. Future performance of the S&P/ASX Index may differ significantly from historical
performance, either positively or negatively.
License Agreement
The S&P/ASX Index is a product of S&P or its
affiliates (“SPDJI”) and Australian Securities Exchange, and has been licensed for use by UBS. Standard &
Poor’s
®
and S&P
®
are registered trademarks of Standard & Poor’s Financial
Services LLC (“S&P Financial”) and Dow Jones
®
is a registered trademark of Dow Jones Trademark
Holdings LLC (“Dow Jones”). ASX
®
is a registered trademark of Australian Securities Exchange. The
trademarks have been licensed to SPDJI and have been sublicensed for use for certain purposes by UBS. The notes are not
sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P Financial, any of their respective affiliates
(collectively, “S&P Dow Jones Indices”) or Australian Securities Exchange. Neither S&P Dow Jones Indices
nor Australian Securities Exchange make any representation or warranty, express or implied, to the owners of the notes or any
member of the public regarding the advisability of investing in securities generally or in the notes particularly or the
ability of the S&P/ASX Index to track general market performance. S&P Dow Jones Indices and Australian Securities
Exchange only relationship to UBS with respect to the S&P/ASX Index is the licensing of the Index and certain trademarks,
service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P/ASX Index is determined,
composed and calculated by S&P Dow Jones Indices or Australian Securities Exchange without regard to UBS or the notes.
S&P Dow Jones Indices and Australian Securities Exchange have no obligation to take the needs of UBS or the owners of the
notes into consideration in determining, composing or calculating the S&P/ASX Index. Neither S&P Dow Jones Indices
nor Australian Securities Exchange are responsible for and have not participated in the determination of the prices, and
amount of the notes or the timing of the issuance or sale of the notes or in the determination or calculation of the
equation by which notes are to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices
and Australian Securities Exchange have no obligation or liability in connection with the administration, marketing or
trading of the notes. There is no assurance that investment products based on the S&P/ASX Index will accurately track
index performance or provide positive investment returns. S&P is not an investment advisor. Inclusion of a security
within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it
considered to be investment advice.
NEITHER S&P DOW JONES INDICES NOR THIRD PARTY LICENSOR
GUARANTEES THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P/ASX INDEX OR ANY DATA RELATED THERETO OR
ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT
THERETO. S&P DOW JONES INDICES AND AUSTRALIAN STOCK EXCHANGE SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS,
OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES AND AUSTRALIAN STOCK EXCHANGE MAKES NO EXPRESS OR IMPLIED WARRANTIES,
AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
USE OR AS TO RESULTS TO BE OBTAINED BY UBS, OWNERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
S&P/ASX INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER
SHALL S&P DOW JONES INDICES OR AUSTRALIAN STOCK EXCHANGE BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO
THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND UBS, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
Information from outside sources is not incorporated
by reference in, and should not be considered part of, this pricing supplement, the accompanying product supplement,
accompanying index supplement or any accompanying prospectus.
Historical High, Low and Closing Levels
of the Basket Underlier
The closing level of the basket underlier has fluctuated
in the past and may, in the future, experience significant fluctuations. Any historical upward or downward trend in the
initial underlier level during any period shown below is not an indication that the basket underlier is more or less likely
to increase or decrease at any time during the life of your notes.
The following table sets forth the quarterly high and
low closing levels for the basket underlier, based on the daily closing level as reported by Bloomberg, without independent verification.
UBS has not conducted any independent review or due diligence of publicly available information obtained from Bloomberg. The closing
level of the basket underlier on August 8, 2018 was 6,268.528.
Past performance of the basket underlier is not indicative
of the future performance of the basket underlier.
Quarterly Closing High, Closing Low and Closing
Levels of the Basket Underlier*
Quarter Begin
|
Quarter End
|
Quarterly Closing High
|
Quarterly Closing Low
|
Quarterly Close
|
1/1/2014
|
3/31/2014
|
5,462.309
|
5,070.311
|
5,394.831
|
4/1/2014
|
6/30/2014
|
5,536.073
|
5,358.948
|
5,395.747
|
7/1/2014
|
9/30/2014
|
5,658.511
|
5,264.217
|
5,292.812
|
10/1/2014
|
12/31/2014
|
5,549.130
|
5,152.343
|
5,411.018
|
1/1/2015
|
3/31/2015
|
5,975.491
|
5,299.237
|
5,891.505
|
4/1/2015
|
6/30/2015
|
5,982.694
|
5,422.487
|
5,459.010
|
7/1/2015
|
9/30/2015
|
5,706.715
|
4,918.429
|
5,021.629
|
10/1/2015
|
12/31/2015
|
5,351.565
|
4,909.555
|
5,295.900
|
1/1/2016
|
3/31/2016
|
5,270.475
|
4,765.346
|
5,082.785
|
4/1/2016
|
6/30/2016
|
5,408.017
|
4,924.385
|
5,233.375
|
7/1/2016
|
9/30/2016
|
5,587.392
|
5,197.547
|
5,435.921
|
10/1/2016
|
12/31/2016
|
5,699.068
|
5,156.556
|
5,665.800
|
1/1/2017
|
3/31/2017
|
5,896.229
|
5,610.972
|
5,864.905
|
4/1/2017
|
6/30/2017
|
5,956.523
|
5,665.721
|
5,721.494
|
7/1/2017
|
9/30/2017
|
5,785.102
|
5,655.420
|
5,681.610
|
10/1/2017
|
12/31/2017
|
6,088.143
|
5,651.766
|
6,065.129
|
1/1/2018
|
3/31/2018
|
6,135.807
|
5,759.365
|
5,759.365
|
4/1/2018
|
6/30/2018
|
6,232.134
|
5,751.924
|
6,194.633
|
7/1/2018*
|
8/8/2018*
|
6,300.227
|
6,177.792
|
6,268.528
|
*As of the date of this pricing supplement,
available information for the third calendar quarter of 2018 includes data for the period from July 1, 2018 through August 8,
2018. Accordingly, the “Quarterly Closing High”, “Quarterly Closing Low” and “Quarterly
Close” data indicated are for this shortened period only and do not reflect complete data for the third calendar
quarter of 2018.
The graph below illustrates the performance of the basket underlier
from January 1, 2008 through August 8, 2018, based on information from Bloomberg.
Past performance of the basket underlier
is not indicative of the future performance of the basket underlier.
We have not authorized anyone to provide any information or
to make any representations other than those contained or incorporated by reference in this pricing supplement, the accompanying
product supplement, the accompanying index supplement or the accompanying prospectus. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. This pricing supplement, the accompanying
product supplement, the accompanying index supplement and the accompanying prospectus is an offer to sell only the notes offered
hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this pricing
supplement, the accompanying product supplement, the accompanying index supplement and the accompanying prospectus is current only
as of the respective dates of such documents.
TABLE OF CONTENTS
Pricing Supplement
|
Page
|
Summary Information
|
ii
|
Investor Suitability
|
1
|
Key Terms
|
3
|
Hypothetical Examples
|
8
|
Additional Risk Factors Specific to Your Notes
|
15
|
Validity of the Notes
|
23
|
The Basket and the Basket Underliers
|
24
|
|
|
Product Supplement dated May 2, 2016
|
Product Supplement Summary
|
PS-1
|
Hypothetical Returns on Underlier-Linked Notes
|
PS-17
|
Hypothetical Payment Amounts on Your Notes
|
PS-34
|
Risk Factors
|
PS-35
|
General Terms of the Notes
|
PS-51
|
Use of Proceeds and Hedging
|
PS-70
|
Supplemental U.S. Tax Considerations
|
PS-71
|
ERISA Considerations
|
PS-79
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-80
|
|
|
Index Supplement dated April 29, 2016
|
Index Supplement Summary
|
IS-1
|
Underlying Indices And Underlying Index Publishers
|
IS-2
|
Dow Jones Industrial Average
TM
|
IS-2
|
NASDAQ-100 Index
®
|
IS-4
|
Russell 2000
®
Index
|
IS-7
|
S&P 500
®
Index
|
IS-12
|
Commodity Indices
|
IS-17
|
Bloomberg Commodity Index
SM
|
IS-17
|
UBS Bloomberg Constant Maturity Commodity Index Excess Return
|
IS-24
|
Non-U.S. Indices
|
IS-29
|
EURO STOXX 50
®
Index
|
IS-29
|
FTSE
TM
100 Index
|
IS-31
|
Hang Seng China Enterprises Index
|
IS-35
|
MSCI Indexes
|
IS-38
|
MSCI-EAFE
®
Index
|
IS-38
|
MSCI
®
Emerging Markets Index
SM
|
IS-38
|
MSCI
®
Europe Index
|
IS-38
|
|
|
Prospectus dated April 29, 2016
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
5
|
Where You Can Find More Information
|
6
|
Presentation of Financial Information
|
7
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
7
|
UBS
|
8
|
Swiss Regulatory Powers
|
11
|
Use of Proceeds
|
12
|
Description of Debt Securities We May Offer
|
13
|
Description of Warrants We May Offer
|
33
|
Legal Ownership and Book-Entry Issuance
|
48
|
Considerations Relating to Indexed Securities
|
53
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
56
|
U.S. Tax Considerations
|
59
|
Tax Considerations Under the Laws of Switzerland
|
70
|
Benefit Plan Investor Considerations
|
72
|
Plan of Distribution
|
74
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$893,000
UBS AG
Capped Leveraged Buffered Basket-Linked
Medium-Term Notes due March 11, 2020
UBS Securities LLC