UBS has filed a registration statement
(including a prospectus, as supplemented by a product supplement for the Notes) with the Securities and Exchange Commission (the
“SEC”), for the offering to which this document relates. Before you invest, you should read these documents and any
other documents related to the Notes that UBS has filed with the SEC for more complete information about UBS and this offering.
You may obtain these documents for free from the SEC website at www.sec.gov. Our Central
Index Key,or CIK, on the SEC website is 0001114446.
References to “UBS”,
“we”, “our” and “us” refer only to UBS AG and not to its consolidated subsidiaries. In this
document, “Trigger Autocallable Contingent Yield Notes” or the “Notes” refer to the Notes that are offered
hereby. Also, references to the “accompanying product supplement” or “Market-Linked Securities product supplement”
mean the UBS product supplement, dated October 31, 2018 and references to the “accompanying prospectus” mean the UBS
prospectus, titled “Debt Securities and Warrants”, dated October 31, 2018.
This document, 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 all other prior 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 “Key
Risks” beginning on page 5 and in “Risk Factors” in the accompanying product supplement, as the Notes involve
risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other
advisors before deciding to invest in the Notes.
If there is any inconsistency between
the terms of the Notes described in the accompanying prospectus, the accompanying product supplement and this document, the following
hierarchy will govern: first, this document; second, the accompanying product supplement; and last, the accompanying prospectus.
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.
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 Assets ” herein for more information on the underlying assets. 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 3 years, 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 contingent coupon observation dates,
autocall observation dates, coupon payment dates and potential call settlement dates, as well as the final
valuation date and maturity date, to ensure that the stated term of the Notes remains the same.
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Underlying
Assets:
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The common stock of Bank of America Corporation, the
common stock of FedEx Corporation and the common stock of Mastercard Incorporated
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Contingent Coupon and Contingent Coupon Rate:
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If the closing level of
each underlying asset is equal to or greater than its coupon barrier on any contingent coupon observation date (including
the final valuation date), UBS will pay you the contingent coupon applicable to such contingent coupon observation date
on the related coupon payment date.
If the closing level of any underlying asset is less than its
coupon barrier on any contingent coupon observation date (including the final valuation date), the contingent coupon applicable to such
contingent coupon 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 is a fixed
amount based upon equal periodic installments at the contingent coupon rate, which
is a per annum rate. The table below sets forth the contingent coupon rate and contingent coupon for each Note that would be applicable
to each contingent coupon observation date on which the closing level of each underlying asset is greater than or equal to its
coupon barrier.
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Contingent Coupon Rate
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12.00%
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Contingent Coupon
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$10.00
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Contingent
coupons on the Notes are not guaranteed. UBS will not pay you the contingent coupon for any contingent coupon observation
date on which the closing level of any underlying asset is less than its coupon barrier.
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Automatic Call
Feature:
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UBS will automatically
call the Notes if the closing level of each underlying asset on any autocall observation date is equal to or
greater than its call threshold 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. 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 of each underlying asset is equal to or greater than its 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 of any underlying asset is less than its downside threshold, UBS will pay you a cash payment that is less than the
principal amount, if anything, equal to:
$1,000 ´ (1 + Underlying Return of the
Least Performing Underlying Asset)
In such a case, you will suffer a percentage
loss on your initial investment equal to the underlying return of the least performing underlying asset regardless of the underlying
return of any other underlying asset and, in extreme situations, you could lose all of your initial investment.
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Least Performing Underlying
Asset:
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The underlying asset with the
lowest underlying return as compared to the other underlying assets.
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Underlying Return:
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For each underlying asset, the quotient, expressed as a
percentage, of the following formula:
Final Level – Initial Level
Initial Level
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Call Threshold Level:(1)
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For each
underlying asset, a specified level of the underlying asset that is less than its initial level, equal to a percentage of its
initial level, as indicated on the cover and as determined by the calculation agent.
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Downside
Threshold:(1)
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For each underlying
asset, a specified level of the underlying asset that is less than its initial level, equal to a percentage of its initial level, as
indicated on the cover hereof.
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Coupon
Barrier:(1)
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For each underlying asset, a
specified level of the underlying asset that is less than its initial level, equal to a percentage of the initial level, as
indicated on the cover hereof.
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Initial Level:(1)
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The closing level of each
underlying asset on the trade date.
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Final Level:(1)
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The closing level
of each 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 each underlying asset is observed and the final terms of the Notes are set.
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¯
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Each
Contingent
Coupon
Observation
Date (Monthly)
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If the closing level of each underlying asset is equal to or greater than its coupon barrier on a contingent coupon observation date, UBS will pay you a contingent coupon on the corresponding coupon payment date.
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¯
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Each
Autocall Observation Date (Quarterly, beginning after 6 months)
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If the closing level of each underlying asset is equal to or greater than its call threshold level on any autocall observation date, the Notes will be automatically called and UBS will pay you on the call settlement date a cash payment per Note equal to $1,000 plus the contingent coupon otherwise due on such date.
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¯
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Maturity Date
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If the Notes are not subject
to an automatic call and the final level of each underlying asset is equal to or greater than its 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 of any underlying asset is less than its downside threshold, UBS will pay you a cash
payment that is less than the principal amount, if anything, equal to:
$1,000 x (1+ Underlying Return of the
Least Performing Underlying Asset)
In such a case, you will
suffer a percentage loss on your initial investment equal to the underlying return of the least performing underlying asset
regardless of the underlying return of any other underlying asset and, in extreme situations, you could lose all of
your initial investment.
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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 on the Notes, including any repayment of principal, is
subject to the creditworthiness of UBS. If UBS were to default on its payment obligations, you may not receive any amounts 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 of any underlying asset is less than its downside threshold, you will lose a percentage of your principal amount
equal to the underlying return of the least performing underlying asset and, in extreme situations, you could lose all of your
initial investment.
You will
be exposed to the market risk of each underlying asset on each autocall observation date, contingent coupon observation
date and on the final valuation date and any decline in the level of one underlying asset may negatively affect your return
and will not be offset or mitigated by a lesser decline or any potential increase in the level of any other underlying
asset.
Contingent
Coupon Observation Dates, (1) Autocall
Observation Dates, (1) Coupon
Payment Dates(1)(2)
and Potential Call Settlement Dates
(1)(2)
Contingent Coupon Observation Dates
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Coupon Payment Dates
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Contingent Coupon Observation Dates
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Coupon Payment Dates
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July 17, 2020
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July 22, 2020
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January 18, 2022
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January 21, 2022
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August 17, 2020
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August 20, 2020
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February 17, 2022
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February 23, 2022
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September 17, 2020
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September 22, 2020
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March 17, 2022*
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March 22, 2022**
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October 19, 2020
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October 22, 2020
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April 18, 2022
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April 21, 2022
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November 17, 2020
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November 20, 2020
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May 17, 2022
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May 20, 2022
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December 17, 2020*
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December 22, 2020**
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June 17, 2022*
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June 22, 2022**
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January 19, 2021
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January 22, 2021
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July 18, 2022
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July 21, 2022
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February 17, 2021
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February 22, 2021
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August 17, 2022
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August 22, 2022
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March 17, 2021*
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March 22, 2021**
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September 19, 2022*
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September 22, 2022**
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April 19, 2021
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April 22, 2021
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October 17, 2022
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October 20, 2022
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May 17, 2021
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May 20, 2021
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November 17, 2022
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November 22, 2022
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June 17, 2021*
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June 22, 2021**
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December 19, 2022*
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December 22, 2022**
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July 19, 2021
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July 22, 2021
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January 17, 2023
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January 20, 2023
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August 17, 2021
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August 20, 2021
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February 17, 2023
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February 23, 2023
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September 17, 2021*
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September 22, 2021**
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March 17, 2023*
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March 22, 2023**
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October 18, 2021
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October 21, 2021
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April 17, 2023
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April 20, 2023
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November 17, 2021
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November 22, 2021
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May 17, 2023
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May 22, 2023
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December 17, 2021*
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December 22, 2021**
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Final Valuation Date
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Maturity Date
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*
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This date is also an autocall observation date. The Notes are not callable until the first potential call
settlement date, which is December 22, 2020.
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**
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This date is also a potential call settlement 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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3 business days following each contingent coupon 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 directly in the least performing underlying asset. Some of the 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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·
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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 of any underlying asset is less than its downside threshold, you will lose a percentage of your principal amount
equal to the underlying return of the least performing underlying asset and, in extreme situations, you could lose all of your
initial investment.
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·
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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 level of each underlying asset is equal to or greater than its
downside threshold. All payments on the Notes are subject to the creditworthiness of UBS.
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·
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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 contingent coupon observation date on which the closing level of each underlying asset is equal to or greater than its coupon
barrier. If the closing level of any underlying asset is less than its coupon barrier on any contingent coupon observation date,
UBS will not pay you the contingent coupon applicable to such contingent coupon observation date. If the closing level of any underlying
asset is less than its coupon barrier on each of the contingent coupon 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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·
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Your potential return on the Notes is limited to the contingent coupons and you will not participate in any appreciation of
any underlying asset — The return potential of the Notes is limited to the pre-specified contingent coupon rate, regardless of any
appreciation of any underlying asset. In addition, your return on the Notes will vary based on the number of contingent coupon
observation dates, if any, on 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 contingent coupon 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 least performing underlying asset even though you cannot participate
in any appreciation of any underlying asset. As a result, the return on an investment in the Notes could be less than the return
on a direct investment in any or all of the underlying assets. In addition, as an owner of the Notes, you will not have voting
rights or any other rights of a holder of any underlying asset.
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·
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A higher contingent coupon rate or lower downside thresholds or coupon barriers may reflect greater expected volatility of
the underlying assets, and greater expected volatility generally indicates an increased risk of loss at maturity — The economic terms for the Notes, including the contingent
coupon rate, call threshold levels, coupon barriers and downside thresholds, are based, in part, on the expected volatility of
each 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 each underlying asset. The greater the expected volatility of each underlying asset as of the trade
date, the greater the expectation is as of that date that the closing level of each underlying asset could be less than its coupon
barrier on any contingent coupon observation date, its call threshold level on any autocall observation date and that the final
level of at least one underlying asset could be less than its 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 lower downside thresholds
and/or coupon barriers than those terms on otherwise comparable securities. Therefore, a relatively higher contingent coupon rate
may indicate an increased risk of loss. Further, relatively lower downside thresholds and/or coupon barriers 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 least performing underlying asset and the potential to lose
a significant portion or all of your initial investment.
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·
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Reinvestment risk — The Notes
will be subject to an automatic call if the closing level of each underlying asset is equal to or greater than its call threshold
level on any autocall observation date as set forth under “Contingent Coupon Observation Dates, Autocall Observation Dates,
Coupon Payment Dates and Potential Call Settlement Dates” above. Because the Notes could be subject to an automatic call
as early as the first autocall observation date, 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 an underlying asset and the shorter time remaining for the level
of any such underlying asset to recover. Such periods generally coincide with a period
of greater risk of principal loss on your Notes.
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·
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You are exposed to the market risk of each underlying asset — Your return on the Notes is not linked to a basket
consisting of the underlying assets. Rather, it will be contingent upon the performance of each individual underlying asset. Unlike
an instrument with a return linked to a basket of common stocks or other underlying securities, in which risk is mitigated and
diversified among all of the components of the basket, you will be exposed equally to the risks related to each underlying asset.
Poor performance by any underlying asset over the term of the Notes will negatively affect your return and will not be offset or
mitigated by a positive performance by any other underlying asset. For instance, you may receive a negative return equal to the
underlying return of the least performing underlying asset if the closing level of one underlying asset is less than its downside
threshold on the final valuation date, even if the underlying return of any other underlying asset is positive or has not declined
as much. Accordingly, your investment is subject to the market risk of each underlying asset.
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·
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Because the Notes are linked to the least performing underlying asset, you are exposed to a
greater risk of no contingent coupons and losing a significant portion or all of your initial investment at maturity than if the
Notes were linked to fewer underlying assets or a single underlying asset — The risk that you will not receive any
contingent coupons and lose a significant portion or all of your initial investment in the Notes is greater if you invest in the
Notes than the risk of investing in substantially similar securities that are linked to the performance of fewer underlying assets
or a single underlying asset. With more underlying assets, it is more likely that the closing level of any underlying asset will be
less than its coupon barrier on any contingent coupon observation date, its call threshold level on any autocall observation date or
will decline to a closing level that is less than its downside threshold than if the Notes were linked to fewer underlying assets or
a single underlying asset.
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In addition, the lower the correlation is between the performance of a pair of underlying assets,
the more likely it is that one of the underlying assets will decline in value to a closing level or final level, as applicable, that
is less than its call threshold level, coupon barrier or downside threshold on any autocall observation date, contingent coupon
observation date or on the final valuation date, respectively. Although the correlation of the underlying assets’ performance
may change over the term of the Notes, the economic terms of the Notes, including the contingent coupon rate, call threshold levels,
downside thresholds and coupon barriers are determined, in part, based on the correlation of the underlying assets’
performance calculated using our internal models at the time when the terms of the Notes are finalized. All things being equal, a
higher contingent coupon rate and lower downside threshold and coupon barrier is generally associated with lower correlation of the
underlying assets. Therefore, if the performance of a pair of underlying assets is not correlated to each other or is negatively
correlated, the risk that you will not receive any contingent coupons or that the final level of any underlying asset is less than
its downside threshold will occur is even greater despite a lower downside threshold and coupon barrier. Therefore, it is more
likely that you will not receive any contingent coupons and that you will lose a significant portion or all of your initial
investment at maturity.
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·
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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 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, UBS’s actual and perceived creditworthiness
may affect the market value of the Notes. If 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 all of your initial investment.
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·
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Single equity risk — The return
on the Notes, which may be negative, is directly linked to the performance of the underlying assets. The levels of the underlying
assets can rise or fall sharply due to factors specific to each underlying asset and their issuers (each, an "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 stock and commodity market
volatility and levels, interest rates and economic and political conditions. Recently, the coronavirus infection has caused volatility
in the global financial markets and a slowdown in the global economy. Coronavirus or any other communicable disease
or infection may adversely affect the underlying asset issuers and, therefore, the underlying assets. You, as an investor in the
Notes, should conduct your own investigation into the underlying asset issuers and the underlying assets for your Notes. For additional
information regarding the underlying asset issuers, please see “Information about the Underlying Assets” herein and
the underlying asset issuers' SEC filings referred to in that section. We urge you to review financial and other information filed
periodically by the underlying asset issuers with the SEC.
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·
|
Fair value considerations.
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|
o
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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 and
other 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 levels
and volatility of the underlying assets, the correlation of the underlying assets, any expected dividends of the underlying assets,
if applicable, 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 and other costs, projected profits and the difference
in rates will reduce the economic value of the Notes to you. Due to these factors, the estimated initial value of the Notes as
of the trade date will be less than the issue price you pay for the Notes.
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|
o
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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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|
o
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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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·
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Limited or no secondary market and secondary market price considerations.
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o
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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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|
o
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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 statement —
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
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.
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o
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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 levels of the underlying assets; the volatility of the underlying assets; the correlation of the underlying
assets; the dividend rate paid on the underlying assets, if applicable; 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 each of the underlying assets is currently or has been less than its coupon barrier; the
availability of comparable instruments; 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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o
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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 and other costs and any projected profits are, subject to the temporary mitigating effect
of UBS Securities LLC’s and its affiliates’ market making premium, expected to reduce the price at which you may
be able to sell the Notes in any secondary market.
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·
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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 levels of the underlying assets will rise or fall and
there can be no assurance that the closing level of each underlying asset will be equal to or greater than its call threshold level
or coupon barrier on any autocall observation date or contingent coupon observation date, respectively, or, if the Notes are not
subject to an automatic call, that the final level of each underlying asset will be equal to or greater than its downside threshold.
The level of each underlying asset will be influenced by complex and interrelated political, economic, financial and other factors
that affect the underlying asset issuers. You should be willing to accept the downside risks of owning equities in general and the
underlying assets in particular, and the risk of losing a significant portion or all of your initial investment.
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·
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The calculation agent can make antidilution and reorganization adjustments that affect the
payment to you at maturity — For antidilution and reorganization events affecting an underlying asset, the calculation
agent may make adjustments to its initial level, call threshold 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 an underlying asset. If an event occurs that does not require the calculation agent to make an
adjustment, the market value of the Notes and the payment at maturity 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 herein as necessary to achieve an
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equitable result. Following certain reorganization events
relating to an 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 amount you receive at
maturity may be based on the equity security of a successor to such underlying asset issuer in combination with any cash or any
other assets distributed to holders of such underlying asset in such reorganization
event. If an underlying asset issuer becomes subject to (i) a reorganization event whereby such underlying asset is exchanged solely
for cash, (ii) a merger or consolidation with UBS or any of its affiliates, or (iii) such 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 amount you receive at maturity may be based on a substitute security. The occurrence
of any antidilution or reorganization event and the consequent adjustments may materially and adversely affect the value of the
Notes and your payment at maturity, if any. 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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·
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There is no affiliation between the underlying asset issuers and UBS, and UBS is not responsible for any disclosure by such
issuers — We are not affiliated with the underlying asset issuers. However, we and our affiliates may currently, or
from time to time in the future engage in business with the underlying asset issuers. However, we are not affiliated with the underlying
asset issuers and are not responsible for such issuers' 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
assets and the underlying asset issuers. The underlying asset issuers are not involved in the Notes offered hereby in any way and
have no obligation of any sort with respect to your Notes. The underlying asset issuers have no obligation to take your interests
into consideration for any reason, including when taking any corporate actions that might affect the market value of, or any amounts
payable on, your Notes.
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Potential UBS impact on the underlying assets — Trading or transactions by UBS or
its affiliates in the underlying assets, listed and/or over-the-counter options, futures, exchange-traded funds or other instruments
with returns linked to the performance of the underlying assets, may adversely affect the levels of the underlying assets and,
therefore, the market value of, or any amounts payable on, the Notes.
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Potential conflicts 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 assets. The calculation agent can postpone the determination
of the initial level, closing level or final level of any underlying asset (and therefore the settlement date, the related
coupon payment date or the maturity date, as applicable), on the trade date, any autocall observation date, any contingent
coupon observation date or the final valuation date, respectively, if a market disruption event occurs and is continuing on
such date. As UBS determines the economic terms of the Notes, including the contingent coupon rate, call threshold levels,
downside thresholds and coupon barriers, and such terms include the underwriting discount, hedging costs, issuance and other
costs and projected profits, the Notes represent a package of economic terms. There are other potential conflicts of interest
insofar as an investor could potentially get better economic terms if that investor entered into exchange-traded and/or OTC
derivatives or other instruments with third parties, assuming that such instruments were available and the investor had the
ability to assemble and enter into such instruments.
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Additionally, UBS and its affiliates act in various capacities with respect to the Notes, including as a principal, agent or
dealer in connection with the sale of the Notes. Such affiliates, and any other third-party dealers, 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.
Furthermore, given that UBS Securities LLC and its affiliates temporarily maintain a market making premium, it may have the effect
of discouraging UBS Securities LLC and its affiliates from recommending sale of your Notes in the secondary market.
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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 any amounts payable 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 assets 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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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 3 years
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Contingent Coupon Rate:
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6.00% per annum (or 0.50% per month)
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Contingent Coupon:
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$5.00 per month
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Contingent Coupon Observation Dates:
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Monthly
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Autocall Observation Dates
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Quarterly
(beginning after 6 months)
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Initial Level:
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Underlying Asset A
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$50.00
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Underlying Asset B
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$75.00
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Underlying Asset C
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$100.00
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Call Threshold Level:
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Underlying Asset A
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$50.00 (which is 100.00% of the initial level)
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Underlying Asset B
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$75.00 (which is 100.00% of the initial level)
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Underlying Asset C
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$100.00 (which
is 100.00% of the initial level)
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Downside Threshold:
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Underlying Asset A
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$25.00 (which is 50.00% of the initial level)
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Underlying Asset B
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$37.50 (which is 50.00% of the initial level)
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Underlying Asset C
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$50.00 (which is 50.00% of the initial level)
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Coupon Barrier:
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Underlying Asset A
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$25.00 (which is 50.00% of the initial level)
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Underlying Asset B
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$37.50 (which is 50.00% of the initial level)
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Underlying Asset C
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$50.00 (which is 50.00% of the initial level)
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Example 1 — The Closing Level of
each Underlying Asset is equal to or greater than its Call Threshold Level on each of the first three Contingent Coupon Observation
Dates and the first Autocall Observation Date
Date
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Closing Level
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Payment (per Note)
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First through
fifth Contingent Coupon Observation Dates
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Underlying Asset A: Various (all equal to or greater than Call Threshold
Level)
Underlying Asset B: Various (all equal to or greater than Call Threshold
Level)
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$25.00 (Aggregate Contingent Coupons)
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Underlying Asset C: Various (equal to or greater than Call Threshold Level)
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Sixth Contingent Coupon Observation Date and First Autocall Observation
Date
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Underlying Asset A: $51.00 (equal to or greater than Call Threshold Level)
Underlying Asset B: $76.00 (equal to or greater than Call Threshold Level)
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$1,005.00 (Call Settlement Amount)
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Underlying
Asset C: $102.00 (equal to or greater than Call Threshold Level)
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Total Payment:
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$1,030.00 (a 3.00% total return)
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Because the initial level of each underlying asset is equal
to or greater than its call threshold level on the first autocall observation date (which is approximately 6 months after the trade
date), the Notes will be called on the corresponding call settlement date and UBS will pay you a total of $1,005.00 per Note, reflecting
your principal amount plus the applicable contingent coupon. When added to the contingent coupons of $25.00 received in respect
of the prior contingent coupon observation dates, UBS will have paid you a total of $1,030.00 per Note for a 3.00% 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 each Underlying Asset is equal to or greater than its Downside Threshold and Coupon Barrier
Date
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Closing Level
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Payment (per Note)
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First through
fifth Contingent Coupon Observation Dates
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Underlying Asset A: Various (all equal to or greater than Call Threshold
Level)
Underlying Asset B: Various (all equal to or greater than Call Threshold
Level)
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$25.00 (Aggregate Contingent Coupons)
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Underlying Asset C: Various (all equal to or greater than Call Threshold Level)
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Sixth through Thirty-fifth Contingent Coupon Observation Dates and
First through Tenth Autocall Observation Dates
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Underlying Asset A: Various (all less than Call Threshold Level
and Coupon Barrier)
Underlying Asset B: Various (all equal to or greater than Call Threshold
Level)
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$0.00
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Underlying Asset C: Various (all equal to or greater than Call Threshold Level)
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Final Valuation Date
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Underlying Asset A: $35.00 (equal to or greater than Downside Threshold
and Coupon Barrier)
Underlying Asset B: $80.61 (equal to or greater than Downside Threshold
and Coupon Barrier)
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$1,005.00 (Payment at Maturity)
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Underlying Asset C: $98.00 (equal to or greater than Downside Threshold and Coupon Barrier)
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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 each underlying asset is equal to or greater than its downside threshold and coupon barrier,
at maturity, UBS will pay you a total of $1,005.00 per Note, reflecting your principal amount plus the applicable contingent coupon.
When added to the contingent coupons of $25.00 received in respect of the prior contingent coupon 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 — Notes are NOT subject to an Automatic
Call and the Final Level of an Underlying Asset is less than its Downside Threshold and Coupon Barrier
Date
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Closing Level
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Payment (per Note)
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First through fifth Contingent Coupon Observation Dates
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Underlying Asset A: Various (all equal to or greater than Call Threshold
Level)
Underlying Asset B: Various (all equal to or greater than Call Threshold
Level)
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$25.00 (Aggregate Contingent Coupons)
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Underlying Asset C: Various (all equal to or greater than Call Threshold Level)
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Sixth through Thirty-fifth Contingent Coupon Observation Dates and First
through Tenth Autocall Observation Dates
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Underlying Asset A: Various (all less than Call Threshold Level
and Coupon Barrier)
Underlying Asset B: Various (all equal to or greater than Call Threshold
Level)
Underlying Asset C: Various (all equal to or greater than Call Threshold
Level)
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$0.00
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Final Valuation Date
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Underlying Asset A: $20.00 (less than Downside Threshold and Coupon
Barrier)
Underlying Asset B: $86.36 (equal to or greater than Downside Threshold and Coupon Barrier)
Underlying Asset C: $279.19 (equal to or greater than Downside Threshold and Coupon Barrier)
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$1,000.00 × [1 + Underlying Return of the Least Performing Underlying
Asset] =
$1,000.00 × [1+(-60.00)%] =
$1,000.00 × 0.40 =
$400.00 (Payment at Maturity)
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Total Payment:
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$425.00 (a 57.50% loss)
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Because the Notes are not subject to an automatic call and
the final level of Underlying Asset A is less than its Coupon Barrier and Downside Threshold, at maturity UBS will pay you $400.00
per Note. When added to the contingent coupons of $25.00 received in respect of the prior contingent coupon observation dates,
UBS will have paid you $425.00 per Note for a loss on the Notes of 57.50%.
We make no representation or warranty as to which of the
underlying assets will be the least performing underlying asset for the purposes of calculating your actual payment at maturity.
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 of any underlying asset is less than its
Downside Threshold, you will lose a percentage of your principal amount equal to the underlying return of the least performing
underlying asset and, in extreme situations, you could lose all of your initial investment.
You will be exposed to the market risk of each underlying asset on each autocall observation date, contingent
coupon observation date and on the final valuation date and any decline in the level of one underlying asset may negatively affect
your return and will not be offset or mitigated by a lesser decline or any potential increase in the level of any other underlying
asset. Any payment 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 payment obligations, you may not receive any
amounts owed to you under the Notes and you could lose all of your initial investment.
Information About the Underlying Assets
All disclosures contained in this document regarding each
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 any underlying asset. You should make your own investigation in to each
underlying asset.
Included on the following pages is a brief description of each underlying
asset issuer. This information has been obtained from publicly available sources. Set forth below are graphs that illustrate the
past performance for each underlying asset. 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 each underlying asset as an indication of future performance.
Each underlying asset is registered under 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 each 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.
Bank of America Corporation
According to publicly available information,
Bank of America Corporation ("Bank of America") is a bank holding company which, through its subsidiaries, offers banking,
investing, asset management and other financial and risk management products and services. Information filed by Bank of America with
the SEC can be located by reference to its SEC file number: 001-06523, or its CIK Code: 0000070858. Bank of America's website is
bankofamerica.com. Bank of America's common stock is listed on the New York Stock Exchange under the ticker symbol "BAC."
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 Bank of America's common stock for the period from January 1, 2010 through May 29, 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 any
publicly available information obtained from Bloomberg. The closing level of Bank of America's common stock on May 29, 2020 was
$24.12 (its "hypothetical initial level"). The dotted lines represent a hypothetical call threshold level of $24.12, and a
hypothetical downside threshold and a hypothetical coupon barrier of $12.06, which are equal to 100.00% and 50.00%, respectively, of
its hypothetical initial level. The actual call threshold level, coupon barrier and downside threshold will be set 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.
FedEx Corporation
According to publicly available information,
FedEx Corporation ("FedEx") provides a portfolio of transportation, e-commerce and business services through companies competing
collectively, operating independently and managed collaboratively, under the FedEx brand. Information filed by FedEx with the SEC
can be located by reference to its SEC file number: 001-15829, or its CIK Code: 0001048911. FedEx's website is fedex.com. FedEx's
common stock is listed on the New York Stock Exchange under the ticker symbol "FDX."
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 FedEx's common stock for the period from January 1, 2010 through May 29, 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 any publicly available
information obtained from Bloomberg. The closing level of FedEx's common stock on May 29, 2020 was $130.56 (its "hypothetical
initial level"). The dotted lines represent a hypothetical call threshold level of $130.56, and a hypothetical downside threshold
and a hypothetical coupon barrier of $65.28, which are equal to 100.00% and 50.00%, respectively, of its hypothetical initial level.
The actual call threshold level, coupon barrier and downside threshold will be set 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.
Mastercard Incorporated
According to publicly available information,
Mastercard Incorporated ("Mastercard") is a technology company that provides financial transaction processing services and offering
payment processing services for credit and debit cards and related products and services. Information filed by Mastercard with the
SEC can be located by reference to its SEC file number: 001-32877, or its CIK Code: 0001141391. Mastercard's website is
mastercard.com. Mastercard's common stock is listed on the New York Stock Exchange under the ticker symbol "MA."
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 Mastercard's common stock for the period from January 1, 2010 through May 29, 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 any publicly
available information obtained from Bloomberg. The closing level of Mastercard's common stock on May 29, 2020 was $300.89 (its
"hypothetical initial level"). The dotted lines represent a hypothetical call threshold level of $300.89, and a hypothetical
downside threshold and a hypothetical coupon barrier of $150.45, which are equal to 100.00% and 50.00%, respectively, of its
hypothetical initial level. The actual call threshold level, coupon barrier and downside threshold will be set 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.
Correlation of the Underlying Assets:
The graph below illustrates the daily
performance of the underlying assets from January 1, 2010 through May 29, 2020. For comparison purposes, each underlying asset
has been normalized to have a closing level of 100 on January 1, 2010 by dividing the closing level of that underlying asset on
each trading day by the closing level of that underlying asset on January 1, 2010 and multiplying by 100. We obtained the closing
levels used to determine the normalized closing levels set forth below from Bloomberg, without independent verification.
The closer the relationship of the daily
returns of the underlying assets over a given period, the more positively correlated those underlying assets are. The lower (or
more negative) the correlation among the underlying assets, the less likely it is that those underlying assets will move in the
same direction and therefore, the greater the potential for one of those underlying assets to be less than its call threshold level,
coupon barrier or downside threshold on an autocall observation date, contingent coupon observation date or on the final valuation
date, respectively. This is because the less positively correlated the underlying assets are, the greater the likelihood that at
least one of the underlying assets will decrease in value. However, even if the underlying assets have a higher positive correlation,
one or more of the underlying assets might close below its call threshold level, coupon barrier or downside threshold on an autocall
observation date, contingent coupon observation date or the final valuation date, respectively, as the underlying assets may decrease
in value together. Although the correlation of the underlying assets’ performance may change over the term of the Notes,
the correlations referenced in setting the terms of the Notes are calculated using UBS’ internal models at the time when
the terms of the Notes are set and are not derived from the daily returns of the underlying assets over the period set forth below.
A higher contingent coupon rate is generally associated with lower correlation of the underlying assets, which reflects a greater
potential for missed contingent coupons and for a loss on your investment at maturity. See “Key Risks — A higher contingent
coupon rate or lower downside thresholds or coupon barriers may reflect greater expected volatility of the underlying assets, and
greater expected volatility generally indicates an increased risk of loss at maturity”, “— You
are exposed to the market risk of each underlying asset” and “— Because the Notes are linked to the least
performing underlying asset, you are exposed to a greater risk of no contingent coupons and losing a significant portion or all
of your initial investment at maturity than if the Notes were linked to fewer underlying assets or a single underlying asset”
herein.
Past performance of the underlying assets is not indicative of
the future performance of the underlying assets.
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”, in
the accompanying product supplement and to discuss the tax consequences of your particular situation with your tax advisor.
This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), final, temporary and
proposed U.S. Department of the Treasury (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 assets. If your Notes are so
treated, any contingent coupon that is paid by UBS (including on the maturity date or upon an automatic call) 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
determining our information reporting obligations, if any, we intend to treat the contingent coupons as ordinary income.
In addition, excluding amounts or
proceeds attributable to any contingent coupons, you should generally recognize 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 coupons) 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 should be short-term capital gain or loss if held for one year or less).
The deductibility of capital losses is subject to limitations. Although uncertain, it is possible that proceeds received from
the taxable disposition of your Notes prior to a contingent coupon observation date that are attributable to an
expected contingent coupon, could be treated as ordinary income. You should
consult your tax advisor regarding this risk.
Based on certain factual representations received from us, our counsel, Cadwalader, Wickersham & Taft
LLP, is of the opinion that it would be reasonable to treat your 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 — Securities Treated as Prepaid Derivatives
or Prepaid Forwards with Associated Contingent Coupons” in the accompanying product supplement unless and until such time
as the IRS and the Treasury determine that some other treatment is more appropriate.
Notice 2008-2. In 2007, the IRS
has 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 with respect to their consequences with respect
to 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 the discussions below with respect to Section
871(m) of the Code and FATCA, 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
the other withholding agent may withhold up to 30% on such payments (subject to reduction or elimination of such withholding
tax pursuant to an applicable income tax treaty). We will not pay any additional amounts in respect of such withholding.
Subject to Section 897 of the Code and Section 871(m) of the Code, discussed below, gain realized from the taxable
disposition of a Note generally should not be subject to U.S. tax unless (i) such gain is effectively connected with a trade
or business conducted by the non-U.S. holder in the U.S., (ii) the non-U.S. holder is a non-resident alien individual and is
present in the U.S. for 183 days or more during the taxable year of such taxable disposition and certain other conditions are
satisfied or (iii) the non-U.S. holder has certain other present or former connections with the U.S.
Section 897. We will not attempt
to ascertain whether any underlying 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 any underlying asset issuer and 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 a Note to
U.S. federal income tax on a net basis, and the proceeds from such a taxable disposition could be subject to a 15% withholding
tax. Non-U.S. holders should consult their tax advisors regarding the potential treatment of an underlying asset issuer 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 any 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 an underlying asset or the 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 a you
enter, or have entered, into certain other transactions in respect of an underlying asset or the Notes. If you enter, or have entered,
into other transactions in respect of an underlying asset 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, non-U.S. holders are urged to consult their tax advisors 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 be no 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 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 intends to resell the Notes to one or more third-party dealers at a discount
from the issue price to public equal to the underwriting discount indicated on the cover hereof. Certain of such third-party dealers
may resell the Notes to other securities dealers at the issue price to the public less an underwriting discount up to the underwriting
discount indicated in the above table. Certain unaffiliated registered investment advisers or fee-based advisory accounts may purchase
Notes from a third-party dealer at a purchase price of at least $965.00 per principal amount of the Notes, and such third-party
dealers, with respect to such sales, may forgo some or all of the underwriting discount. Additionally, we or one of our affiliates
may pay a fee to an unaffiliated broker-dealer for providing certain electronic platform services with respect to this offering.
Conflicts of Interest — UBS Securities LLC is an
affiliate of UBS and, as such, has a “conflict of interest” in this offering within the meaning of Financial Industry
Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive the net proceeds (excluding the
underwriting discount) from the initial public offering of the 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 is not 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 6 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” of this document.
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
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Preliminary Pricing Supplement
|
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Investment Description
|
i
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Features
|
i
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Key Dates
|
i
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|
Note Offering
|
i
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Additional Information about UBS and the Notes
|
ii
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Investor Suitability
|
1
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Preliminary Terms
|
2
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Investment Timeline
|
3
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Contingent Coupon Observation Dates, Autocall Observation Dates and Coupon Payment Dates
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4
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Key Risks
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5
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Hypothetical Examples of How the Notes Might Perform
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8
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Information About the Underlying Assets
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10
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Correlation of the Underlying Assets
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13
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What Are the Tax Consequences of the Notes?
|
14
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Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
16
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Product Supplement
|
|
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Product Supplement Summary
|
PS-1
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Specific Terms of Each Security Will Be Described in the Applicable Supplements
|
PS-1
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The Securities are Part of a Series
|
PS-1
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Denomination
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PS-2
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Coupons
|
PS-2
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Early Redemption
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PS-3
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Payment at Maturity for the Securities
|
PS-3
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Defined Terms Relating to Payment on the Securities
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PS-4
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Valuation Dates
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PS-5
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Valuation Periods
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PS-6
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Payment Dates
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PS-6
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Closing Level
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PS-7
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Intraday Level
|
PS-7
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What are the Tax Consequences of the Securities?
|
PS-8
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Risk Factors
|
PS-9
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General Terms of the Securities
|
PS-29
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Use of Proceeds and Hedging
|
PS-52
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Material U.S. Federal Income Tax Consequences
|
PS-53
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|
Certain ERISA Considerations
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PS-75
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Supplemental Plan of Distribution (Conflicts of Interest)
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PS-76
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Prospectus
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Introduction
|
1
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Cautionary Note Regarding Forward-Looking Statements
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3
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Incorporation of Information About UBS AG
|
4
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Where You Can Find More Information
|
5
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Presentation of Financial Information
|
6
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Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
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UBS
|
7
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Swiss Regulatory Powers
|
10
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Use of Proceeds
|
11
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Description of Debt Securities We May Offer
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12
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Description of Warrants We May Offer
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32
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Legal Ownership and Book-Entry Issuance
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47
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Considerations Relating to Indexed Securities
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52
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Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
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55
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U.S. Tax Considerations
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58
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Tax Considerations Under the Laws of Switzerland
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69
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Benefit Plan Investor Considerations
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71
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Plan of Distribution
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73
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Conflicts of Interest
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75
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Validity of the Securities
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76
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Experts
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76
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$• UBS AG
Trigger Autocallable Contingent
Yield
Notes due on or about June 22, 2023
Preliminary Pricing Supplement dated June 1, 2020
(To Product Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Securities LLC
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