The 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 review “Information
About the Underlying Asset” herein for more information on the underlying asset. You should also review carefully the “Key
Risks” section herein for risks related to an investment in the Notes.
Preliminary
Terms
Issuer
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UBS AG London Branch
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Principal Amount
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$1,000 per Note
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Term
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Approximately 12 months, unless subject to an automatic call. In the event that we make any change to the expected trade date and settlement date, the calculation agent may adjust the observation dates (including the final valuation date) and coupon payment dates (including the maturity date) to ensure that the stated term of the Notes remains the same.
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Underlying
Asset
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The common stock of Apple Inc.
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Contingent Coupon & Contingent Coupon Rate
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If
the closing level of the underlying asset is equal to or greater than the coupon barrier on any observation date (including the
final valuation date), UBS will pay you the contingent coupon applicable to such observation date.
If the closing level of the
underlying asset is less than the coupon barrier on any observation date (including the final valuation date), the contingent
coupon applicable to such observation date will not accrue or be payable and UBS will not make any payment to you on the relevant
coupon payment date.
The contingent coupon will be a fixed amount based upon equal periodic installments at a per annum rate (the
“contingent coupon rate”) and will be set on the trade date. The table below sets forth the range of the contingent
coupon rate and contingent coupon for the Notes that would be applicable to each observation date on which the closing level of
the underlying asset is equal to or greater than the coupon barrier. The actual contingent coupon rate and contingent coupon will
be set on the trade date.
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Contingent Coupon
Rate
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Contingent Coupon
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8.00% - 9.50%
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$20.00 - $23.75
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Contingent coupons on the Notes are not guaranteed. UBS will not pay you the contingent coupon for any observation date on which the closing level of the underlying asset is less than the coupon barrier.
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Coupon Barrier(1)
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A specified level of the underlying asset that is less than the initial
level, equal to a percentage of the initial level, as specified on the cover hereof.
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Automatic Call Feature
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UBS will automatically call the Notes if the closing
level of the underlying asset on any observation date prior to the final valuation date is equal to or greater than the
initial level.
If the Notes are subject to an automatic call, UBS
will pay you on the corresponding coupon payment date (which will be the “call settlement date”) a cash payment per
Note equal to your principal amount plus the contingent coupon otherwise due on such date (the “call settlement amount”).
Following an automatic call, no further payments will be made on the Notes.
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Payment at Maturity (per Note)
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If the Notes are not subject to an automatic call
and the final level is equal to or greater than the downside threshold, UBS will pay you a cash payment equal to:
Principal Amount of $1,000
If the Notes are not subject to an automatic call
and the final level is less than the downside threshold, UBS will deliver to you a number of shares of the underlying asset
(with cash paid in lieu of any fractional share), equal to:
Share Delivery Amount
In this scenario, you will receive the share
delivery amount, the value of which is expected to be worth significantly less than the principal amount, resulting in a loss of
a significant portion or all of your initial investment. Specifically, the percentage loss on your initial investment as of the
final valuation date will be equal to the percentage decline in the underlying asset from the initial level to the final level.
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Share Delivery Amount (per Note)(1)
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A number of shares of the underlying asset equal to
the quotient, of (i) the principal amount divided by (ii) the initial level, rounded to the nearest ten thousandth of one share.
Any fractional share included in the share delivery amount will be paid in cash
at an amount equal to the product of the fractional share and the final level. For the avoidance of doubt, if the share delivery
amount is less than 1.0000, at maturity you will receive an amount in cash per Note, if anything, based on the cash value of the
share delivery amount.
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Downside Threshold(1)
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A specified level of the underlying asset that is less than the initial level, equal to a percentage of the initial level, as specified on the cover hereof.
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Initial Level(1)
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The closing level of the underlying asset on the trade date.
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Final Level(1)
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The closing level of the underlying asset on the final valuation date.
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(1) As determined by the calculation agent
and as may be adjusted in the case of certain adjustment events as described under “General Terms of the Securities —
Antidilution Adjustments for Securities Linked to an Underlying Equity or Equity Basket Asset” and “Reorganization
Events for Securities Linked to an Underlying Equity or Equity Basket Asset” in the accompanying product supplement.
Investment
Timeline
Trade Date
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The initial level of the underlying asset is observed and the final terms of the Notes are set.
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Observation
Dates (Quarterly)
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If the closing level is equal to or greater than the
coupon barrier on any observation date (including the final valuation date), UBS will pay you a contingent coupon on the applicable
coupon payment date.
The Notes will be subject to an automatic call if
the closing level of the underlying asset on any observation date prior to the final valuation date is equal to or greater
than the initial level.
If the Notes are subject to an automatic call UBS
will pay you a cash payment per Note equal to your principal amount plus the contingent coupon otherwise due on such date. Following
an automatic call, no further payments will be made on the Notes.
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Maturity Date
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The final level is observed on the final valuation
date.
If the Notes are not subject to an automatic call
and the final level is equal to or greater than the downside threshold, UBS will pay you a cash payment per Note equal to:
Principal Amount of $1,000
If the Notes are not subject to an
automatic call and the final level is less than the downside threshold, UBS will deliver to you a number of shares of the
underlying asset (with cash paid in lieu of any fractional share) per Note, equal to:
Share Delivery Amount
In this scenario, you will receive the share
delivery amount, the value of which is expected to be worth significantly less than the principal amount, resulting in a loss of
a significant portion or all of your initial investment. Specifically, the percentage loss on your initial investment as of the
final valuation date will be equal to the percentage decline in the underlying asset from the initial level to the final level.
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Investing in the Notes involves significant risks.
You may lose a significant portion or all of your initial investment. Any payment or delivery on the Notes, including any repayment
of principal, is subject to the creditworthiness of UBS. If UBS were to default on its obligations, you may not receive any amounts
or shares owed to you under the Notes and you could lose all of your initial investment.
If the Notes are not subject to an automatic
call, you may lose a significant portion or all of your initial investment. Specifically, if the Notes are not subject to an automatic
call and the final level is less than the downside threshold, you will receive the share delivery amount, the value of which is
expected to be worth significantly less than the principal amount, resulting in a loss of a significant portion or all of your
initial investment. In this scenario, the percentage loss on your initial investment as of the final valuation date will be equal to
the percentage decline in the underlying asset from the initial level to the final level.
Observation
Dates(1)(2) and Coupon Payment Dates(1)(2)(3)
Observation Dates
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Coupon
Payment Dates
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August 31, 2020
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September 2, 2020
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November 30, 2020
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December 2, 2020
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March 1, 2021
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March 3, 2021
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Final Valuation Date
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Maturity Date
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(1)
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Subject to the market disruption event provisions set forth in the accompanying product supplement.
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(2)
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If you are able to sell the Notes in the secondary market on an observation date, the purchaser
of the Notes will be deemed to be the record holder on the applicable record date and, therefore, you will not be entitled to any
payment attributable to that observation date.
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(3)
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Two business days following each observation date, except that the coupon payment date for the
final valuation date is the maturity date.
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Key
Risks
An investment in the Notes involves significant risks.
Investing in the Notes is not equivalent to investing in the underlying asset. Some of the key risks that apply to the Notes are
summarized below, but we urge you to read the more detailed explanation of risks relating to the Notes in the “Risk Factors”
section of the accompanying product supplement. We also urge you to consult your investment, legal, tax, accounting and other advisors
before you invest in the Notes.
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Risk of loss at maturity — The Notes differ from ordinary debt securities in
that UBS will not necessarily make periodic coupon payments or repay the principal amount of the Notes at maturity. If the
Notes are not subject to an automatic call and the final level is less than the downside threshold, UBS will deliver to you
the share delivery amount at maturity for each Note that you own (with cash paid in lieu of any fractional share), the value
of which is expected to be worth significantly less than your principal amount, resulting in a loss of a significant portion
or all of your initial investment. If you receive the share delivery amount, the percentage loss on your initial investment,
as of the final valuation date, will be equal to the percentage decline in the level
of the underlying asset from the initial level to the final level. Additionally, in the event that the final level is less
than the downside threshold, any decline in the level of the underlying asset during the period between the final valuation
date and the maturity date will cause your return on the Notes to be less than the return you would have received had UBS
instead paid you the cash value of the share delivery amount as of the final valuation date.
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The contingent repayment of principal applies only at maturity — You should be willing
to hold your Notes to maturity. If you are able to sell your Notes prior to an automatic call or maturity in the secondary market,
you may have to sell them at a loss relative to your initial investment even if the then-current level of the underlying asset
at that time is equal to or greater than the downside threshold. All payments and deliveries on the Notes are subject to the creditworthiness
of UBS.
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You may not receive any contingent coupons with respect to your Notes — UBS will not
necessarily make periodic coupon payments on the Notes. UBS will pay a contingent coupon for each observation date on which the
closing level of the underlying asset is equal to or greater than the coupon barrier. If the closing level of the underlying asset
is less than the coupon barrier on any observation date, UBS will not pay you the contingent coupon applicable to such observation
date. If the closing level of the underlying asset is less than the coupon barrier on each of the observation dates, UBS will not
pay you any contingent coupons during the term of, and you will not receive a positive return on, your Notes. Generally, this non-payment
of the contingent coupon coincides with a period of greater risk of principal loss on your Notes.
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Your potential return on the Notes is limited to any contingent coupons and you will not receive
dividend payments on any underlying asset or have the same rights as holders of the underlying asset — The return potential
of the Notes is limited to the pre-specified contingent coupon rate, regardless of any appreciation of the underlying asset. In
addition, your return on the Notes will vary based on the number of observation dates, if any, in which the requirements of the
contingent coupon have been met prior to maturity or an automatic call. Further, if the Notes are subject to an automatic call,
you will not receive any contingent coupons or any other payment in respect of any observation dates after the applicable call
settlement date. Because the Notes may be subject to an automatic call as early as the first potential call settlement date, the
total return on the Notes could be less than if the Notes remained outstanding until maturity. Furthermore, if the Notes are not
subject to an automatic call, you may be subject to the decline of the underlying asset even though you cannot participate in any
appreciation of the underlying asset. As a result, the return on an investment in the Notes could be less than the return on a
direct investment in the underlying asset. In addition, as an owner of the Notes, you will not receive or be entitled to receive
any dividend payments or other distributions on the underlying asset during the term of the Notes, and any such dividends or distributions
will not be factored into the calculation of any amounts payable on your Notes. Similarly, unless and until you receive the
share delivery amount on the maturity date, you will not have voting rights or any other rights of a holder of the underlying asset.
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A higher contingent coupon rate or lower downside threshold or coupon barrier may reflect greater
expected volatility of the underlying asset, and greater expected volatility generally indicates an increased risk of loss at maturity
— The economic terms for the Notes, including the contingent coupon rate, coupon barrier and downside threshold, are based,
in part, on the expected volatility of the underlying asset at the time the terms of the Notes are set. “Volatility”
refers to the frequency and magnitude of changes in the level of the underlying asset. The greater the expected volatility of the
underlying asset as of the trade date, the greater the expectation is as of that date that the closing level of the underlying
asset could be less than the coupon barrier on any observation date and that the final level of the underlying asset could be less
than the downside threshold on the final valuation date and, as a consequence, indicates an increased risk of not receiving a contingent
coupon and an increased risk of loss, respectively. All things being equal, this greater expected volatility will generally be
reflected in a higher contingent coupon rate than the yield payable on our conventional debt securities with a similar maturity
or on otherwise comparable securities, and/or a lower downside threshold and/or coupon barrier than those terms on otherwise comparable
securities. Therefore, a relatively higher contingent coupon rate may indicate an increased risk of loss. Further, a relatively
lower downside threshold and/or coupon barrier may not necessarily indicate that the Notes have a greater likelihood of a return
of principal at maturity and/or paying contingent coupons. You should be willing to accept the downside market risk of the underlying
asset and the potential to lose a significant portion or all of your initial investment.
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Reinvestment risk — The Notes will be subject to an automatic call if the closing
level of the underlying asset is equal to or greater than the initial level on certain observation dates prior to the final valuation
date, as set forth under “Observation Dates and Coupon Payment Dates” above. Because the Notes could be subject to
an automatic call, the term of your investment may be limited. In the event that the Notes are subject to an automatic call, there
is no guarantee that you would be able to reinvest the proceeds at a comparable return and/or with a comparable contingent coupon
rate for a similar level of risk. In addition, to the extent you are able to reinvest such proceeds in an investment comparable
to the Notes, you may incur transaction costs such as dealer discounts and hedging costs built into the price of the new securities.
Generally, however, the longer the Notes remain outstanding, the less likely the Notes will be subject to an automatic call due
to the decline in the level of the underlying asset and the shorter time remaining for the level of the underlying asset to recover.
Such periods generally coincide with a period of greater risk of principal loss on your Notes.
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Credit risk of UBS — The Notes are unsubordinated, unsecured debt obligations of UBS
and are not, either directly or indirectly, an obligation of any third party. Any payment or delivery to be made on the Notes,
including any repayment of principal, depends on the ability
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of UBS to satisfy its obligations as they come due. As a result, UBS’ actual and
perceived creditworthiness of UBS may affect the market value of the Notes. If UBS were to default on its obligations, you
may not receive any amounts or shares owed to you under the terms of the Notes and you could lose all of your initial
investment.
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Single equity risk — The level of the underlying asset can rise or fall sharply due
to factors specific to that underlying asset and the issuer of such underlying asset (the "underlying asset issuer"),
such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes
and decisions and other events, as well as general market factors, such as general market volatility and levels, interest rates
and economic and political conditions. Recently, the coronavirus infection has caused volatility in the global financial markets
and a slowdown in the global economy. Coronavirus or any other communicable disease or infection may adversely affect the underlying
asset issuer and, therefore, the underlying asset. You, as an investor in the Notes, should make your own investigation into the
underlying asset issuer and the underlying asset for your Notes. For additional information regarding the underlying asset issuer,
please see "Information about the Underlying Asset" in this document and the underlying asset issuer's SEC filings referred
to in that section. We urge you to review financial and other information filed periodically by the applicable underlying asset
issuer with the SEC.
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Fair value considerations.
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The issue price you pay for the Notes will exceed their estimated initial value —
The issue price you pay for the Notes will exceed their estimated initial value as of the trade date due to the inclusion in the
issue price of the underwriting discount, hedging costs, issuance costs and projected profits. As of the close of the relevant
markets on the trade date, we will determine the estimated initial value of the Notes by reference to our internal pricing models
and it will be set forth in the final pricing supplement. The pricing models used to determine the estimated initial value of the
Notes incorporate certain variables, including the level and volatility of the underlying asset, any expected dividends on the
underlying asset, 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
underwriting discount, hedging costs, issuance costs, projected profits and the difference in rates will reduce the economic value
of the Notes to you. Due to these factors, the estimated initial value of the Notes as of the trade date will be less than the
issue price you pay for the Notes.
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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 “—Single
equity risk” above and is impossible to predict. Furthermore, the pricing models that we use are proprietary and rely in
part on certain assumptions about future events, which may prove to be incorrect. As a result, after the 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.
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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.
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Limited or no secondary market and secondary market price considerations.
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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. UBS Securities LLC and its affiliates intend,
but are not required, to make a market for the Notes 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. Furthermore, there can be no assurance that a secondary market
for the Notes will develop. 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.
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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 underwriting discount, hedging costs, issuance costs and theoretical projected trading profit. The portion of such
amounts included in our price will decline to zero on a straight line basis over a period ending no later than the date specified
under “Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)”. 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 intend, but 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 Financial Services Inc. and UBS Securities LLC reflect this temporary positive differential on their customer statements. Investors
should inquire as to the valuation provided on customer account statements provided by unaffiliated dealers.
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Economic and market factors affecting the terms and market price of Notes prior to maturity
— Because structured notes, including the Notes, can be thought of as having a debt component and a derivative component,
factors that influence the values of debt instruments and options and other derivatives will also affect the terms and features
of the Notes at issuance and the market price of the Notes prior to maturity. These factors include the level of the underlying
asset; the volatility of the underlying asset; any dividends paid on the underlying asset; 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; whether the underlying asset is currently or has been less than the coupon barrier; the availability of comparable
instruments; and the creditworthiness of UBS; the then current bid-ask spread for the Notes and the factors discussed under “—
Potential conflict of interest” below. These and other factors are unpredictable and interrelated and may offset or magnify
each other.
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Impact of fees and the use of internal funding rates rather than secondary market credit spreads
on secondary market prices — All other things being equal, the use of the internal funding rates described above under
“— Fair value considerations” as well as the inclusion in the issue price of the underwriting discount, hedging
costs, issuance 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.
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There can be no assurance that the investment view implicit in the Notes will be successful — It is impossible to
predict whether and the extent to which the level of the underlying asset will rise or fall and there can be no assurance that
the closing level of the underlying asset will be equal to or greater than the coupon barrier on any observation date, or, if the
Notes are not subject to an automatic call, that the final level will be equal to or greater than the downside threshold. The level
of the underlying asset will be influenced by complex and interrelated political, economic, financial and other factors that affect
the underlying asset issuer. You should be willing to accept the downside risks of owning equities in general and the underlying
asset in particular, and the risk of losing a significant portion or all of your initial investment.
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There is no affiliation between the underlying asset issuer and UBS, and UBS is not responsible
for any disclosure by such issuer — We are not affiliated with the underlying asset issuer. However, we and our affiliates
may currently, or from time to time in the future engage in business with the underlying asset issuer. However, we are not affiliated
with the underlying asset issuer and are not responsible for such issuer’s public disclosure of information, whether contained
in SEC filings or otherwise. You, as an investor in the Notes, should conduct your own investigation into the underlying asset
and the underlying asset issuer for your Notes. The underlying asset issuer is not involved in the Notes offered hereby in any
way and has no obligation of any sort with respect to your Notes. The underlying asset issuer has no obligation to take your interests
into consideration for any reason, including when taking any corporate actions that might affect the market value of, and return
on, your Notes.
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The calculation agent can make antidilution and reorganization adjustments that affect the market
value of, and return on, the Notes — For antidilution and reorganization events affecting the underlying asset, the calculation
agent may make adjustments to the share delivery amount, initial level, coupon barrier, downside threshold and/or final level,
as applicable, and any other term of the Notes. However, the calculation agent will not make an adjustment in response to every
corporate event that could affect the underlying asset. If an event occurs that does not require the calculation agent to make
an adjustment, the market value of, and return on, the Notes may be materially and adversely affected. In addition, all determinations
and calculations concerning any such adjustments will be made by the calculation agent. You should be aware that the calculation
agent may make any such adjustment, determination or calculation in a manner that differs from that discussed in the accompanying
product supplement or this document as necessary to achieve an equitable result. Following certain reorganization events relating
to the underlying asset issuer where such issuer is not the surviving entity, the determination as to whether the contingent coupon
is payable to you on any coupon payment date, whether the Notes are subject to an automatic call or the payment at maturity may
be based on the equity security of a successor to the underlying asset issuer in combination with any cash or any other assets
distributed to holders of the underlying asset in such reorganization event. If the underlying asset issuer becomes subject to
(i) a reorganization event whereby the underlying asset is exchanged solely for cash, (ii) a merger or consolidation with UBS or
any of its affiliates, or (iii) the underlying asset is delisted or otherwise suspended from trading, the determination as to whether
the contingent coupon is payable to you on any coupon payment date, whether the Notes are subject to an automatic call or the payment
at maturity may be based on a substitute security. Accordingly, in certain instances, you may receive shares of a security other
than the original underlying asset at maturity. The occurrence of any antidilution or reorganization event and the consequent adjustments
may materially and adversely affect the market value of, and return on, the Notes and any payment of any contingent coupons. For
more information, see the sections “General Terms of the Securities — Antidilution Adjustments for Securities Linked
to an Underlying Equity or Equity Basket Asset” and “— Reorganization Events for Securities Linked to an Underlying
Equity or Equity Basket Asset” in the accompanying product supplement.
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Potential UBS impact on the underlying asset — Trading or transactions by UBS or its
affiliates in the underlying asset, listed and/or over-the-counter options, futures, exchange-traded funds or other instruments
with returns linked to the performance of the underlying asset, may adversely affect the market price of that underlying asset
on any observation date (including the final valuation date) and, therefore, the market value of, and return on, the Notes and
any payment of any contingent coupons.
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Potential conflict of interest — UBS and its affiliates may engage in business with
an underlying asset issuer, 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 and which will
make potentially subjective judgments. The calculation agent will determine whether the contingent coupon is payable to you on
any coupon payment date, whether the Notes are subject to an automatic call and the payment at maturity of the Notes, if any, based
on observed levels of the underlying asset. The calculation agent can postpone the determination of the terms of the Notes on the
trade date, any observation date or final valuation date, respectively. As UBS determines the economic terms of the Notes, including
the contingent coupon rate, downside threshold, coupon barrier and share delivery amount, and such terms include the underwriting
discount, 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.
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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 market value of, and
return on, 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 underlying asset to which the Notes are linked.
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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.
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If UBS experiences financial difficulties, FINMA has the power to open restructuring or liquidation
proceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings or measures may have a material
adverse effect on the terms and market value of the Notes and/or the ability of UBS to make payments thereunder — The
Swiss Financial Market Supervisory Authority (“FINMA”) has broad statutory powers to take measures and actions in relation
to UBS if (i) it concludes that there is justified concern that UBS is over-indebted or has serious liquidity problems or (ii)
UBS fails to fulfill the applicable capital adequacy requirements (whether on a standalone or consolidated basis) after expiry
of a deadline set by FINMA. If one of these pre-requisites is met, FINMA is authorized to open restructuring proceedings or liquidation
(bankruptcy) proceedings in respect of, and/or impose protective measures in relation to, UBS. The Swiss Banking Act grants significant
discretion to FINMA in connection with the aforementioned proceedings and measures. In particular, a broad variety of protective
measures may be imposed by FINMA, including a bank moratorium or a maturity postponement, which measures may be ordered by FINMA
either on a stand-alone basis or in connection with restructuring or liquidation proceedings. The resolution regime of the Swiss
Banking Act is further detailed in the FINMA Banking Insolvency Ordinance (“BIO-FINMA”). In a restructuring proceeding,
FINMA, as resolution authority, is competent to approve the resolution plan. The resolution plan may, among other things, provide
for (a) the transfer of all or a portion of UBS’ assets, debts, other liabilities and contracts (which may or may not include
the contractual relationship between UBS and the holders of Notes) to another entity, (b) a stay (for a maximum of two business
days) on the termination of contracts to which UBS is a party, and/or the exercise of (w) rights to terminate, (x) netting rights,
(y) rights to enforce or dispose of collateral or (z) rights to transfer claims, liabilities or collateral under contracts to which
UBS is a party, (c) the conversion of UBS’ debt and/or other obligations, including its obligations under the Notes, into
equity (a “debt-to-equity” swap), and/or (d) the partial or full write-off of obligations owed by UBS (a “write-off”),
including its obligations under the Notes. The BIO-FINMA provides that a debt-to-equity swap and/or a write-off of debt and other
obligations (including the Notes) may only take place after (i) all debt instruments issued by UBS qualifying as additional tier
1 capital or tier 2 capital have been converted into equity or written-off, as applicable, and (ii) the existing equity of UBS
has been fully cancelled. While the BIO-FINMA does not expressly address the order in which a write-off of debt instruments other
than debt instruments qualifying as additional tier 1 capital or tier 2 capital should occur, it states that debt-to-equity swaps
should occur in the following order: first, all subordinated claims not qualifying as regulatory capital; second, all other claims
not excluded by law from a debt-to-equity swap (other than deposits); and third, deposits (in excess of the amount privileged by
law). However, given the broad discretion granted to FINMA as the resolution authority, any restructuring plan in respect of UBS
could provide that the claims under or in connection with the Notes will be partially or fully converted into equity or written-off,
while preserving other obligations of UBS that rank pari passu with, or even junior to, UBS’ obligations under the Notes.
Consequently, holders of Notes may lose all or some of their investment in the Notes. In the case of restructuring proceedings
with respect to a systemically important Swiss bank (such as UBS), the creditors whose claims are affected by the restructuring
plan will not have a right to vote on, reject, or seek the suspension of the restructuring plan. In addition, if a restructuring
plan has been approved by FINMA, the rights of a creditor to seek judicial review of the restructuring plan (e.g., on the grounds
that the plan would unduly prejudice the rights of holders of Notes or otherwise be in violation of the Swiss Banking Act) are
very limited. In particular, a court may not suspend the implementation of the restructuring plan. Furthermore, even if a creditor
successfully challenges the restructuring plan, the court can only require the relevant creditor to be compensated ex post and
there is currently no guidance as to on what basis such compensation would be calculated or how it would be funded.
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Dealer incentives — UBS and its affiliates act in various capacities with respect
to the Notes. We and our affiliates may act as a principal, agent or dealer in connection with the sale of the Notes. Such affiliates,
including the sales representatives, will derive compensation from the distribution of the Notes and such compensation may serve
as an incentive to sell these Notes instead of other investments. We will pay total underwriting compensation in an amount equal
to the underwriting discount listed on the cover hereof per Note to any of our affiliates acting as agents or dealers in connection
with the distribution of the Notes. Given that UBS Securities LLC and its affiliates temporarily maintain a market making premium,
it may have the effect of discouraging UBS Securities LLC and its affiliates from recommending sale of your Notes in the secondary
market.
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Uncertain tax treatment — Significant aspects of the tax treatment of the Notes are
uncertain. You should consult your tax advisor about your tax situation. See “What Are the Tax Consequences of the Notes?”
herein and “Material U.S. Federal Income Tax Consequences”, including the section “—Securities Treated
as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”, in the accompanying product supplement.
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Hypothetical
Examples of How the Notes Might Perform
The below examples are based on hypothetical
terms. The actual terms will be set on the trade date and will be indicated on the cover of the final pricing supplement.
The examples below illustrate the payment upon a call
or at maturity for a $1,000 Note on a hypothetical offering of the Notes, with the following assumptions (amounts may have been
rounded for ease of reference):
Principal Amount:
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$1,000
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Term:
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Approximately 12 months
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Initial Level:
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$50.00
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Contingent Coupon Rate:
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6.00% per annum (or 1.50% per quarter)
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Contingent Coupon:
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$15.00 per quarter
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Observation Dates:
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Quarterly
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Downside Threshold:
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$35.00 (which is 70.00% of the Initial Level)
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Coupon Barrier:
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$35.00 (which is 70.00% of the Initial Level)
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Share Delivery Amount*:
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20.0000
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* Equal to $1,000 divided by the initial level, rounded to the nearest ten thousandth
of one share. If you receive the share delivery amount at maturity, any fractional share included in the share delivery amount
will be paid in cash at an amount equal to the product of the fractional share and the final level. Any fractional share included
in the share delivery amount will be paid in cash at an amount equal to the product of the fractional share and the final level,
and, for the avoidance of doubt, if the share delivery amount is less than 1.0000, at maturity you will receive an amount in cash
per Note, if anything, based on the cash value of the share delivery amount.
Example 1 — The Closing Level of the Underlying
Asset is equal to or greater than the Initial Level on the Observation Date corresponding to the first Potential Call Settlement
Date.
Date
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Closing Level
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Payment or Delivery (per
Note)
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First Observation Date
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$60.00 (equal to or greater than Initial Level)
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$1,015.00 (Call Settlement Amount)
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Total Payment:
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$1,015.00 (a 1.50% total return)
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Because the Notes are subject to an automatic call
following the first observation date (which is approximately 3 months after the trade date), UBS will pay you on the call settlement
date a total of $1,015.00 per Note, reflecting your principal amount plus the applicable contingent coupon, for a 1.50% total return
on the Notes. No further amount will be owed to you under the Notes.
Example 2 — The Notes are NOT Subject to
an Automatic Call and the Final Level of the Underlying Asset is equal to or greater than the Downside Threshold and Coupon Barrier.
Date
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Closing Level
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Payment or Delivery (per
Note)
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First Observation Date
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$45.00 (equal to or greater than Coupon Barrier; less than Initial Level)
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$15.00 (Contingent Coupon)
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Second to Third Observation Dates
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Various (all less than Coupon Barrier)
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$0
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Final Valuation Date
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$48.00 (equal to or greater than Downside Threshold and Coupon Barrier)
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$1,015.00 (Payment at Maturity)
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Total Payment:
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$1,030.00 (a 3.00% total return)
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Because the Notes are not subject to an automatic
call and the final level of the underlying asset is equal to or greater than the downside threshold and coupon barrier, at maturity,
UBS will pay you a total of $1,015.00 per Note, reflecting your principal amount plus the applicable contingent coupon. When added
to the contingent coupon of $15.00 received in respect of the prior observation dates, UBS will have paid you a total of $1,030.00
per Note, for a 3.00% total return on the Notes.
Example 3 — The Notes are NOT Subject to
an Automatic Call and the Final Level of the Underlying Asset is less than the Downside Threshold and Coupon Barrier.
Date
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Closing Level
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Payment or Delivery (per Note)
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First Observation Date
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$47.00 (equal to or greater than Coupon Barrier; less than Initial Level)
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$15.00 (Contingent Coupon)
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Second to Third Observation Dates
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Various (all less than Coupon Barrier)
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$0
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Final Valuation Date
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$20.00 (less than Downside Threshold and Coupon Barrier)
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Share Delivery Amount
= $20.00 x 20.0000
= $400.00*
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Total Payment:
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$415.00 (a 58.50% loss)
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* Represents
the approximate cash value of the share delivery amount on the final valuation date. Because the Notes are physically settled,
the actual value received and the total return on the Notes at maturity depends on the level of the underlying asset on the maturity
date.
Because the Notes are not subject to an automatic call and the final level of
the underlying asset is less than the downside threshold and coupon barrier, at maturity, UBS will deliver the share delivery amount
of 20 shares of the underlying asset (with an amount of cash in lieu of any fractional share, if applicable, equal to the product
of the fractional share and the final level). When added to the contingent coupon of $15.00 received in respect of the prior observation
dates, the value of the share delivery amount and contingent coupons received from UBS would be worth, as of the final valuation
date, a total of $415.00 for a loss on the Notes of 58.50%.
Investors should note that, in the
event that the final level is less than the downside threshold, any decline in the level of the underlying asset during the period
between the final valuation date and the maturity date will cause your return on the Notes to be less than the return you would
have received had we instead paid you an amount in cash equal to the share delivery amount.
Investing in the Notes involves
significant risks. The Notes differ from ordinary debt securities in that UBS is not necessarily obligated to repay the full
amount of your initial investment. If the Notes are not subject to an automatic call, you may lose a significant portion or
all of your initial investment. Specifically, if the Notes are not subject to an automatic call and the final level is less
than the downside threshold, you will receive the share delivery amount, the value of which is expected to be worth
significantly less than the principal amount, resulting in a loss of a significant portion or all of your initial investment.
In this scenario, the percentage loss on your initial investment as of the final valuation date will be equal to the percentage
decline in the underlying asset from the initial level to the final level.
Any payment or delivery on the Notes, including
any payments in respect of an automatic call, contingent coupon or any repayment of principal, is subject to the creditworthiness
of UBS. If UBS were to default on its obligations, you may not receive any amounts or shares owed to you under the Notes and you
could lose all of your initial investment.
Information
about the Underlying Asset
All disclosures contained in this document regarding
the underlying asset are derived from publicly available information. UBS has not conducted any independent review or due diligence
of any publicly available information with respect to the underlying asset. You should make your own investigation into the
underlying asset.
Included below is a brief description
of the underlying asset issuer. This information has been obtained from publicly available sources. Set forth below is a graph
that illustrates the past performance for the underlying asset for the specified period. We obtained the past performance information
set forth below from the Bloomberg Professional® service (“Bloomberg”) without independent verification.
You should not take the historical prices of the underlying asset as an indication of future performance.
The underlying asset is registered under the Securities
Act of 1933, the Securities Exchange Act of 1934 and/or the Investment Company Act of 1940, each as amended. Companies with securities
registered with the SEC are required to file financial and other information specified by the SEC periodically. Information filed
by the underlying asset issuer with the SEC can be reviewed electronically through a website maintained by the SEC. The address
of the SEC’s website is http://www.sec.gov. Information filed with the SEC by the underlying asset issuer can be located
by reference to its SEC file number provided below. In addition, information filed with the SEC can be inspected and copied at
the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of this material can also
be obtained from the Public Reference Section, at prescribed rates.
Apple Inc.
According to publicly
available information, Apple Inc. (“Apple”) designs, manufactures and markets mobile communication and media devices,
personal computers, and portable digital music players, and sells a variety of related software, services, accessories, networking
solutions, and third-party digital content and applications. Information filed by Apple with the SEC can be located by reference
to its SEC file number 001-36743, or its CIK Code: 0000320193. Apple’s website is apple.com. Apple’s common stock is
listed on the Nasdaq Global Select Market under the ticker symbol “AAPL.”
Information from
outside sources is not incorporated by reference in, and should not be considered part of, this document or any document incorporated
herein by reference. UBS has not conducted any independent review or due diligence of any publicly available information with respect
to the underlying asset.
Historical Information
The graph below
illustrates the performance of Apple’s common stock from January 1, 2010 through May 26, 2020, based on the daily closing
levels 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 Apple’s common stock on May 26, 2020 was
$316.73 (the “hypothetical initial level”). The dotted line represents the hypothetical coupon barrier and the hypothetical
downside threshold of $221.71, which is equal to 70.00% of the hypothetical initial level. The actual initial level, downside threshold
and coupon barrier will be determined on the trade date. Past performance of the underlying asset is not indicative of
the future performance of the underlying asset during the term of the Notes.
What
Are the Tax Consequences of the Notes?
The U.S. federal income tax consequences of your
investment in 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. Some of these tax consequences are summarized below, but we urge you to read the more detailed discussion in “Material
U.S. Federal Income Tax Consequences”, including the section “—Securities Treated as Prepaid Derivatives or Prepaid
Forwards with Associated Contingent Coupons”, of the accompanying product supplement and to discuss the tax consequences
of your particular situation with your tax advisor. This discussion is based upon the U.S. Internal Revenue Code of 1986, as amended
(the “Code”), final, temporary and proposed U.S. Treasury Department (the “Treasury”) regulations, rulings
and decisions, in each case, as available and in effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and non-U.S. laws are not addressed herein. No ruling from the U.S. Internal
Revenue Service (the “IRS”) has been sought as to the U.S. federal income tax consequences of your investment in the
Notes, and the following discussion is not binding on the IRS.
U.S. Tax Treatment. Pursuant to the terms of
the Notes, UBS and you agree, in the absence of a statutory or regulatory change or an administrative determination or judicial
ruling to the contrary, to characterize the Notes as prepaid derivative contracts with respect to the underlying asset. If your
Notes are so treated, any contingent coupon that is paid by UBS (including on the maturity date or call settlement date) should
be included in your income as ordinary income in accordance with your regular method of accounting for U.S. federal income tax
purposes.
In addition, excluding amounts attributable to any
contingent coupon, you should generally recognize capital gain or loss upon the taxable disposition of your Notes in an amount
equal to the difference between the amount you receive at such time (other than amounts or proceeds attributable to a contingent
coupon or any amount attributable to any accrued but unpaid contingent coupon) and the amount you paid for your Notes. Such gain
or loss should generally be long-term capital gain or loss if you have held your Notes for more than one year (otherwise such gain
or loss would be short-term capital gain or loss if held for one year or less). However, it is possible that the IRS could assert
that your holding period in respect of your Notes should end on the date on which the amount you are entitled to receive upon automatic
call or maturity of your Notes is determined, even though you will not receive any amounts from the issuer in respect of your Notes
prior to the automatic call or maturity of your Notes. In such a case, you may be treated as having a holding period in respect
of your Notes prior to the automatic call or maturity of your Notes, and such holding period may be treated as less than one year
even if you receive a payment upon the automatic call or maturity of your Notes at a time that is more than one year after the
beginning of your holding period. The deductibility of capital losses is subject to limitations. Although uncertain, it is possible
that proceeds received from the taxable disposition of your Notes prior to a coupon payment date, but that could be attributed
to an expected contingent coupon, could be treated as ordinary income. You should consult your tax advisor regarding this risk.
This discussion does not address the U.S. federal
income tax consequences to you of holding or disposing of any shares of the underlying asset that you may receive in connection
with your investment in the Notes. If you receive the share delivery amount, certain adverse U.S. federal income (and other) tax
consequences might apply to you. In general, your holding period in shares of the underlying asset received in connection with
your investment in the Notes will begin the day after you beneficially receive such shares. The IRS may treat the receipt of shares
at maturity as a taxable settlement of the Notes followed by a purchase of the shares of the underlying asset pursuant to the original
terms of the Notes. If the receipt of shares of the underlying asset is so treated, (i) you should recognize capital gain or loss
equal to the fair market value of the shares received at such time plus the cash you receive in lieu of a fractional share and
the cash previously received (and not included in income)), if any, and the amount you paid for your Note, and (ii) you should
take a basis in such shares in an amount equal to their fair market value at such time. You should refer to information filed with
the SEC or another governmental authority by the underlying asset issuer and consult your tax advisor regarding possible tax consequences
to you of acquiring, holding or otherwise disposing of the underlying asset.
Based on certain factual representations received
from us, our counsel, Cadwalader, Wickersham & Taft LLP, is of the opinion that it would be reasonable to treat your Notes
in the manner described above. However, because there is no authority that specifically addresses the tax treatment of the Notes,
it is possible that your Notes could alternatively be treated for tax purposes as a single contingent payment debt instrument,
or pursuant to some other characterization, such that the timing and character of your income from the Notes could differ materially
and adversely from the treatment described above, as described further under “Material U.S. Federal Income Tax Consequences”,
including the section “—Securities Treated as Prepaid Derivatives or Prepaid Forwards with Associated Contingent Coupons”
in the accompanying product supplement unless and until such time as the IRS and the Treasury determine that some other treatment
is more appropriate.
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 and under “Material
U.S. Federal Income Tax Consequences” in the accompanying product supplement unless and until such time as the IRS and the
Treasury determine that some other treatment is more appropriate.
Notice 2008-2. In 2007, the IRS released a
notice that may affect the taxation of holders of the Notes. According to Notice 2008-2, the IRS and the Treasury are actively
considering whether the holder of an instrument such as the Notes should be required to accrue ordinary income on a current basis.
It is not possible to determine what guidance they will ultimately issue, if any. It is possible, however, that under such guidance,
holders of the Notes will ultimately be required to accrue income currently in excess of any receipt of contingent coupons 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. Both U.S. and non-U.S. holders are urged to consult their tax
advisors concerning the significance and potential impact of the above considerations.
Medicare Tax on Net Investment Income. U.S.
holders that are individuals, estates or certain trusts are subject to an additional 3.8% tax on all or a portion of their “net
investment income,” which may include any income or gain realized with respect to the Notes, to the extent of their net investment
income that when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for
a married taxpayer filing a joint return (or a surviving spouse), $125,000 for a married individual filing a separate return or
the dollar amount at which the highest tax bracket begins for an estate or trust. The 3.8% Medicare tax is determined in a different
manner than the income tax. U.S. holders should consult their tax advisors as to the consequences of the 3.8% Medicare tax.
Specified Foreign Financial Assets. U.S. holders
may be subject to reporting obligations with respect to their Notes if they do not hold their Notes in an account maintained by
a financial institution and the aggregate value of their Notes and certain other “specified foreign financial assets”
(applying certain attribution rules) exceeds an applicable threshold. Significant penalties can apply if a U.S. holder is required
to disclose its Notes and fails to do so.
Non-U.S. Holders. The U.S. federal income tax
treatment of the contingent coupons is unclear. Subject to Section 871(m) of the Code and FATCA, as discussed below, our counsel
is of the opinion that contingent coupons paid to a non-U.S. holder that provides us (and/or the applicable withholding agent)
with a fully completed and validly executed applicable IRS Form W-8 should not be subject to U.S. withholding tax and we do not
intend to withhold any tax on contingent coupons. However, it is possible that the IRS could assert that such payments are subject
to U.S. withholding tax, or that another withholding agent may otherwise determine that withholding is required, in which case
such other withholding agent may withhold up to 30% on such payments (subject to reduction or elimination of such withholding tax
pursuant to an applicable income tax treaty). We will not pay any additional amounts in respect of such withholding. Subject to
Section 897 of the Code and Section 871(m) of the Code, discussed below, gain realized from the taxable disposition of the Notes
generally should not be subject to U.S. tax unless (i) such gain is effectively connected with a trade or business conducted by
the non-U.S. holder in the U.S., (ii) the non-U.S. holder is a non-resident alien individual and is present in the U.S. for 183
days or more during the taxable year of such taxable disposition and certain other conditions are satisfied or (iii) the non-U.S.
holder has certain other present or former connections with the U.S.
If the Notes are physically settled
by delivery to you of a number of shares of the underlying asset equal to the share delivery amount, you may suffer adverse
U.S. federal income tax consequences if you hold such shares of the underlying asset. You may be subject to U.S. withholding
tax on U.S.-source dividends in respect of such underlying asset that you hold. Other adverse tax consequences are also
possible. Non-U.S. holders should carefully review the potential tax consequences to “non-U.S. holders” that are
set forth in the prospectus for the underlying asset.
Section 897. We will not attempt to ascertain
whether the underlying asset issuer would be treated as a “United States real property holding corporation” (“USRPHC”)
within the meaning of Section 897 of the Code. We also have not attempted to determine whether the Notes should be treated as “United
States real property interests” (“USRPI”) as defined in Section 897 of the Code. If the underlying asset issuer
or the Notes were so treated, certain adverse U.S. federal income tax consequences could possibly apply, including subjecting
any gain to a non-U.S. holder in respect of a Note upon a taxable disposition of the Note to the U.S. federal income tax on a net
basis, and the proceeds from such a taxable disposition to a 15% withholding tax. Non-U.S. holders should consult their tax advisors
regarding the potential treatment of the underlying asset issuer for their Notes as a USRPHC and the Notes as USRPI.
Section 871(m). A 30% withholding tax (which
may be reduced by an applicable income tax treaty) is imposed under Section 871(m) of the Code on certain “dividend equivalents”
paid or deemed paid to a non-U.S. holder with respect to a “specified equity-linked instrument” that references one
or more dividend-paying U.S. equity securities. The withholding tax can apply even if the instrument does not provide for payments
that reference dividends. Treasury regulations provide that the withholding tax applies to all dividend equivalents paid or deemed
paid on specified equity-linked instruments that have a delta of one (“delta-one specified equity-linked instruments”)
issued after 2016 and to all dividend equivalents paid or deemed paid on all other specified equity-linked instruments issued after
2018. However, the IRS has issued guidance that states that the Treasury and the IRS intend to amend the effective dates of the
Treasury regulations to provide that withholding on dividend equivalents paid or deemed paid will not apply to specified equity-linked
instruments that are not delta-one specified equity-linked instruments and are issued before January 1, 2023.
Based on our determination that the Notes are not
“delta-one” with respect to the underlying asset, 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 underlying asset
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 underlying asset or the Notes. If you enter, or have entered, into other transactions in respect of the underlying asset
or the Notes 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.
Foreign Account Tax Compliance Act. The Foreign
Account Tax Compliance Act (“FATCA”) was enacted on March 18, 2010, and imposes a 30% U.S. withholding tax on “withholdable
payments” (i.e., certain U.S.-source payments, including interest (and original issue discount), dividends, other fixed or
determinable annual or periodical gain, profits, and income, and on the gross proceeds from a disposition of property of a type
which can produce U.S.-source interest or dividends) and “passthru payments” (i.e., certain payments attributable to
withholdable payments) made to certain foreign financial institutions (and certain of their affiliates) unless the payee foreign
financial institution agrees (or is required), among other things, to disclose the identity of any U.S. individual with an account
of the institution (or the relevant affiliate) and to annually report certain information about such account. FATCA also requires
withholding agents making withholdable payments to certain foreign entities that do not disclose the name, address, and taxpayer
identification number of any substantial U.S. owners (or do not certify that they do not have any substantial U.S. owners) to withhold
tax at a rate of 30%. Under certain circumstances, a holder may be eligible for refunds or credits of such taxes.
Pursuant to final and temporary Treasury regulations
and other IRS guidance, the withholding and reporting requirements under FATCA will generally apply to certain “withholdable
payments”, will not apply to gross proceeds on a sale or disposition, and will apply to certain foreign passthru payments
only to the extent that such payments are made after the date that is two years after final regulations defining the term “foreign
passthru payment” are published. If withholding is required, we (or the applicable paying agent) will not be required to
pay additional amounts with respect to the amounts so withheld. Foreign financial institutions and non-financial foreign entities
located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.
Investors should consult their tax advisors about
the application of FATCA, in particular if they may be classified as financial institutions (or if they hold their Notes through
a foreign entity) under the FATCA rules.
Proposed Legislation. In 2007, legislation
was introduced in Congress that, if it had been enacted, would have required holders of Notes purchased after the bill was enacted
to accrue interest income over the term of the Notes despite the fact that there may not be interest payments over the entire term
of the Notes.
Furthermore, in 2013, the House Ways and Means Committee
released in draft form certain proposed legislation relating to financial instruments. If it had been enacted, the effect of this
legislation generally would have been to require instruments such as the Notes to be marked to market on an annual basis with all
gains and losses to be treated as ordinary, subject to certain exceptions.
It is not possible to predict whether any similar
or identical bills will be enacted in the future, or whether any such bill would affect the tax treatment of your Notes. You are
urged to consult your tax advisor regarding the possible changes in law and their possible impact on the tax treatment of your
Notes.
Both U.S. and non-U.S. holders are urged to consult
their tax advisors concerning the application of U.S. federal income tax laws to their particular situations, as well as any tax
consequences of the purchase, beneficial ownership and disposition of the Notes (and any shares of the underlying asset received)
arising under the laws of any state, local, non-U.S. or other taxing jurisdiction.
Supplemental
Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
We will agree to sell to UBS Securities LLC and UBS
Securities LLC will agree to purchase, all of the Notes at the issue price to the public less the underwriting discount indicated
on the cover hereof. UBS Securities LLC will agree to resell all of the Notes to UBS Financial Services Inc. at a discount from
the issue price to the public equal to the underwriting discount indicated on the cover hereof.
Conflicts of Interest — Each of UBS Securities
LLC and UBS Financial Services Inc. is an affiliate of UBS and, as such, has a “conflict of interest” in this offering
within the meaning of Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive
the net proceeds (excluding the underwriting discount) from the initial public offering of the 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. Neither UBS Securities LLC nor UBS Financial Services Inc. is permitted to sell Notes in this offering
to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
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 5 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 negotiated provisions with selling agents. Notwithstanding
the foregoing, UBS Securities LLC and its affiliates intend, but 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 “Key
Risks — Fair value considerations” and “Key Risks — Limited or no secondary market and secondary market
price considerations” herein.
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.
You should
rely only on the information incorporated by reference or provided in this preliminary pricing supplement, the accompanying product
supplement or the accompanying prospectus. We have not authorized anyone to provide you with different information. We are not
making an offer of these Notes in any state where the offer is not permitted. You should
not assume that the information in this preliminary pricing supplement is accurate as of any date other than the date on the front
of the document.
TABLE OF CONTENTS
|
|
|
|
Preliminary Pricing Supplement
|
|
Investment Description
|
i
|
Features
|
i
|
Key Dates
|
i
|
Note Offering
|
i
|
Additional Information about UBS and the Notes
|
ii
|
Investor Suitability
|
1
|
Preliminary Terms
|
2
|
Investment Timeline
|
3
|
Observation Dates and Coupon Payment Dates
|
4
|
Key Risks
|
5
|
Hypothetical Examples of How the Notes Might Perform
|
9
|
Information About the Underlying Asset
|
11
|
What Are the Tax Consequences of the Notes?
|
12
|
Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
15
|
Product Supplement
|
|
Product Supplement Summary
|
PS-1
|
Specific Terms of Each Security Will Be Described in the Applicable Supplements
|
PS-1
|
The Securities are Part of a Series
|
PS-1
|
Denomination
|
PS-2
|
Coupons
|
PS-2
|
Early Redemption
|
PS-3
|
Payment at Maturity for the Securities
|
PS-3
|
Defined Terms Relating to Payment on the Securities
|
PS-4
|
Valuation Dates
|
PS-5
|
Valuation Periods
|
PS-6
|
Payment Dates
|
PS-6
|
Closing Level
|
PS-7
|
Intraday Level
|
PS-7
|
What are the Tax Consequences of the Securities?
|
PS-8
|
Risk Factors
|
PS-9
|
General Terms of the Securities
|
PS-29
|
Use of Proceeds and Hedging
|
PS-52
|
Material U.S. Federal Income Tax Consequences
|
PS-53
|
Certain ERISA Considerations
|
PS-75
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-76
|
Prospectus
|
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
4
|
Where You Can Find More Information
|
5
|
Presentation of Financial Information
|
6
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
|
UBS
|
7
|
Swiss Regulatory Powers
|
10
|
Use of Proceeds
|
11
|
Description of Debt Securities We May Offer
|
12
|
Description of Warrants We May Offer
|
32
|
Legal Ownership and Book-Entry Issuance
|
47
|
Considerations Relating to Indexed Securities
|
52
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
55
|
U.S. Tax Considerations
|
58
|
Tax Considerations Under the Laws of Switzerland
|
69
|
Benefit Plan Investor Considerations
|
71
|
Plan of Distribution
|
73
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$•
UBS AG Trigger Autocallable Contingent Yield Notes
due
on or about June 4, 2021
Preliminary Pricing Supplement dated May 27, 2020
(To Product Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Financial Services Inc.
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