At first no-one, including himself, knows he's a cygnet, and he is mercilessly teased for being the oddest-looking duckling anyone has ever seen, as he is too big and a boring grey colour. This makes him very sad.

Eventually he grows up, and turns out (surprise!) to be a swan. All of a sudden he's better-looking than any of the ducks. This makes him very happy.

The story is used to make bullied children think that when they're older, they will become the most popular kid in school and the tables will be turned on their bullies. Whether this is good or bad for their development, I'm not sure.

Given the story, "The Ugly Cygnet" would be a bad title, because he was only considered ugly under the hypothesis that he was a duckling. Had he been known to be a cygnet, he wouldn't have been considered ugly. "The Ugly Putative Duckling" is maybe a little beyond the vocabulary range of your average five-year-old, as well as giving away the ending in advance.

(Would it have been that hard to look up the story before nitpicking at the title? )