UBS has filed a registration statement (including
a prospectus, as supplemented by an index supplement and a product supplement for the Notes) with the Securities and Exchange Commission
(the “SEC”), for the Notes to which this document relates. 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 the Notes. 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.
You may access these documents on the SEC website at www.sec.gov as
follows:
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” beginning on page PS-9 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, the index supplement and this document,
the following hierarchy will govern: first, this document; second, the accompanying product supplement; third, the index 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.
Preliminary
Terms
Issuer
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UBS AG London Branch
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Principal Amount
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$10 per Note
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Term
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Approximately 24 months, unless subject to an issuer call. In the event that we make any change to the expected trade date and settlement date, the calculation agent may adjust the call dates, the final valuation date and the coupon payment dates (including the maturity date) to ensure that the stated term of the Notes remains the same.
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Underlying
Asset
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Dow Jones Industrial Average®
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Coupon Payments &
Coupon Rate
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UBS will pay a coupon on each coupon payment date
(including the maturity date) in arrears in equal installments, regardless of the performance of the underlying asset, unless UBS
has previously elected to call the Notes.
The coupon will be a fixed amount based upon equal
installments at a per annum rate (the “coupon rate”) and will be set on the trade date. The table below sets forth
the range for the coupon rate and the hypothetical coupon for each Note that would be paid on each coupon payment date on which
the Notes are still outstanding; the total coupon payable will be based on the actual coupon rate and coupon, which will be determined
on the trade date and on the duration of the Notes.
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Coupon Rate
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4.00% - 4.60%
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Coupon
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$0.0333 - $0.0383
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Issuer Call Feature
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UBS may elect to call the Notes at its discretion,
in whole, but not in part, on any call date regardless of the performance of the underlying asset on such call date.
If UBS elects to call the Notes, UBS will pay you
on the coupon payment date following such call date (the “call settlement date”) a cash payment per Note equal to the
principal amount plus the coupon otherwise due (the “call settlement amount”), and no further payments will be made
on the Notes. Before UBS elects to call the Notes on a call date, UBS will deliver written notice to the trustee.
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Payment at Maturity (per Note)
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If UBS does not elect to call the Notes and the
final level is equal to or greater than the downside threshold, UBS will pay you a cash payment equal to:
Principal Amount of $10
If UBS does not elect to call the Notes and the
final level is less than the downside threshold, UBS will pay you a cash payment that is less than the principal amount, if
anything, equal to:
$10 ´
(1 + Underlying Return)
In this case, you will suffer a percentage loss
on your initial investment equal to the underlying return and, in extreme situations, you could lose all of your initial investment.
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Underlying Return
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The quotient, expressed as a percentage, of the following
formula:
Final Level – Initial Level
Initial Level
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Downside Threshold(1)
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A specified level of the underlying asset that is less than the initial level, equal to a percentage of the initial level, as specified on the cover hereof.
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Initial Level(1)
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The closing level of the underlying asset on the trade date.
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Final Level(1)
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The closing level of the underlying asset on the final valuation date.
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(1) As determined by the calculation agent and
as may be adjusted as described under “General Terms of the Securities — Discontinuance of or Adjustment to an Underlying
Index; Alteration of Method of Calculation”, as described in the accompanying product supplement.
Investment
Timeline
Trade Date
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The initial level of the underlying asset is observed and the final terms of the Notes are set.
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¯
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Coupon
Payment Dates
(if UBS has not previously elected
to call the Notes)
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UBS pays the applicable coupon.
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¯
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Call Dates Prior to the Final Valuation Date
(Monthly, beginning after 3 months)
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UBS may elect to call the Notes at its discretion,
in whole, but not in part, on any call date regardless of the performance of the underlying asset on such call date.
If UBS elects to call the Notes, UBS will pay you
on the call settlement date a cash payment per Note equal to the principal amount plus the coupon otherwise due, and no further
payments will be made on the Notes. Before UBS elects to call the Notes, UBS will deliver written notice to the trustee. If UBS
does not elect to call the Notes, investors will have the potential for downside market risk at maturity.
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¯
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Maturity Date
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The final level is observed on the final valuation
date and the underlying return of the underlying asset is calculated.
If UBS does not elect to call the Notes and the
final level is equal to or greater than the downside threshold, UBS will pay you a cash payment per Note equal to:
Principal Amount of $10
If UBS does not elect to call the Notes and the
final level is less than the downside threshold, UBS will pay you a cash payment per Note that is less than the principal amount,
if anything, equal to:
$10 ´
(1 + Underlying Return)
In this case, you will suffer a percentage loss
on your initial investment equal to the underlying return and, in extreme situations, you could lose all of your initial investment.
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Investing in the Notes involves significant risks.
In exchange for receiving a coupon on the Notes, you are accepting the risk of losing a significant portion or all of your initial
investment at maturity if the final level is less than the downside threshold. UBS may elect to call the Notes at its discretion,
in whole, but not in part, on any call date regardless of the performance of the underlying asset. Any payment on the Notes, including
any payments in respect of an issuer call 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.
You will lose a significant portion or all of your
initial investment if UBS does not elect to call the Notes and the final level is less than the downside threshold. Specifically,
if UBS does not elect to call the Notes and the final level is less than the downside threshold, you will lose a percentage of
your principal amount equal to the underlying return and, in extreme situations, you could lose all of your initial investment.
Call
Dates(1) and Coupon Payment Dates(1)(2)
Call Dates
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Coupon Payment Dates/Call
Settlement Dates
(if called)
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Call Dates
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Coupon Payment Dates/Call
Settlement Dates
(if called)
|
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July 14, 2020
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July 12, 2021
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July 14, 2021
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August 12, 2020
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August 10, 2021
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August 12, 2021
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September 10, 2020
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September 14, 2020
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September 10, 2021
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September 14, 2021
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October 13, 2020
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October 15, 2020
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October 12, 2021
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October 14, 2021
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November 10, 2020
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November 13, 2020
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November 10, 2021
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November 15, 2021
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December 10, 2020
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December 14, 2020
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December 10, 2021
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December 14, 2021
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January 11, 2021
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January 13, 2021
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January 10, 2022
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January 12, 2022
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February 10, 2021
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February 12, 2021
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February 10, 2022
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February 14, 2022
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March 10, 2021
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March 12, 2021
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March 10, 2022
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March 14, 2022
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April 12, 2021
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April 14, 2021
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April 11, 2022
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April 13, 2022
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May 10, 2021
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May 12, 2021
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May 10, 2022
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May 12, 2022
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June 10, 2021
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June 14, 2021
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Final Valuation Date*
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Maturity Date
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* The final valuation date
is not a call 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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Three business days following each call date, except that the coupon payment date for the final
valuation date is the maturity date.
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Key
Risks
An investment in the Notes involves significant risks.
Investing in the Notes is not equivalent to investing in the underlying asset or in the underlying constituents. Some of the key
risks that apply to the Notes are summarized below, but we urge you to read the more detailed explanation of risks relating to
the Notes in the “Risk Factors” section of the accompanying product supplement. We also urge you to consult your investment,
legal, tax, accounting and other advisors regarding an investment 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 repay the principal amount of the Notes at maturity. If UBS does not elect to call the Notes and the final
level is less than the downside threshold, you will lose a percentage of your principal amount equal to the underlying return and,
in extreme situations, you could lose all of your initial investment.
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¨
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The stated payout from the issuer applies only upon an issuer call or at maturity — You should be willing to hold
your Notes to an issuer call or maturity. If you are able to sell your Notes prior maturity in the secondary market, you may have
to sell them at a loss relative to your initial investment even if the then-current level of the underlying asset at that time
is equal to or greater than the downside threshold. All payments on the Notes are subject to the creditworthiness of UBS.
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¨
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Your potential return on the Notes is limited to the coupon rate and you will not participate
in any appreciation of the underlying asset or underlying constituents and you will not have the same rights as holders of any
underlying constituents — The return potential of the Notes is limited to the pre-specified coupon rate, regardless of
any appreciation of the underlying asset. If UBS elects to call the Notes, you will not receive any coupons or any other payment
in respect of any coupon payment date after the call settlement date, and your return on the Notes would be less than if the Notes
remained outstanding until maturity. If UBS does not elect to call the Notes, you may be subject to the decline of the underlying
asset even though you cannot participate in any appreciation of the underlying asset or underlying constituents. As a result, the
return on an investment in the Notes could be less than the return on a hypothetical direct investment in the underlying asset
or underlying constituents. In addition, as an owner of the Notes, you will not have voting rights or any other rights of a holder
of the underlying constituents.
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¨
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A higher coupon rate or lower downside threshold may reflect greater expected volatility of
the underlying asset, and greater expected volatility generally indicates an increased risk of loss at maturity — The
economic terms for the Notes, including the coupon rate and downside threshold, are based, in part, on the expected volatility
of the underlying asset at the time the terms of the Notes are set. “Volatility” refers to the frequency and magnitude
of changes in the level of the underlying asset. The greater the expected volatility of the underlying asset as of the trade date,
the greater the expectation is as of that date that the final level of the underlying asset could be less than the downside threshold
and, as a consequence, indicates an increased risk of loss. All things being equal, this greater expected volatility will generally
be reflected in a higher coupon rate than the yield payable on our conventional debt securities with a similar maturity or on otherwise
comparable securities, and/or a lower downside threshold than those terms on otherwise comparable securities. Therefore, a relatively
higher coupon rate may indicate an increased risk of loss. Further, a relatively lower downside threshold may not necessarily indicate
that the Notes have a greater likelihood of a return of principal at maturity. You should be willing to accept the downside market
risk of the underlying asset and the potential to lose a significant portion or all of your initial investment.
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¨
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UBS may elect to call the Notes and the Notes are subject to reinvestment risk — UBS
may elect to call the Notes at its discretion, in whole, but not in part, on any call date regardless of the performance of the
underlying asset. If UBS elects to call your Notes early, you will no longer have the opportunity to receive any coupons after
the applicable call settlement date. UBS may elect to call the Notes as early as the first call date and therefore you may not
have the opportunity to receive any coupons after the applicable call settlement date. In the event UBS elects to call the Notes,
there is no guarantee that you would be able to reinvest the proceeds at a comparable return and/or with a comparable coupon rate
for a similar level of risk. Further, UBS’ right to call the Notes may also adversely impact your ability to sell your Notes
in the secondary market.
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It is more likely that UBS
will elect to call the Notes prior to maturity when the remaining coupons payable on the Notes are greater than the interest that
would be payable on other instruments issued by UBS of comparable maturity, terms and credit rating trading in the market. The
greater likelihood of UBS calling the Notes in that environment increases the risk that you will not be able to reinvest the proceeds
from the called Notes in an equivalent investment with a similar coupon rate. 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 notes. UBS is less likely to call the Notes prior to maturity when the remaining coupons payable on the Notes
are less than the interest that would be payable on other comparable instruments issued by UBS. Therefore, the Notes are more likely
to remain outstanding when the remaining amount payable on the Notes is less than what would be payable on other comparable instruments.
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¨
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An investment in Notes with coupon and issuer call features may be more sensitive to interest
rate risk than an investment in securities without such features — Because of the issuer call and coupon features of
the Notes, you will bear greater exposure to fluctuations in interest rates than if you purchased securities without such features.
In particular, you may be negatively affected if prevailing interest rates begin to rise, and the coupon rate on the Notes may
be less than the amount of interest you could earn on other investments with a similar level of risk available at such time. In
addition, if you tried to sell your Notes at such time, the value of your Notes in any secondary market transaction would also
be adversely affected. Conversely, in the event that prevailing interest rates are low relative to the coupon rate and UBS elects
to call the Notes, there is no guarantee that you will be able to reinvest the proceeds from an investment in the Notes at a comparable
rate of return for a similar level of risk.
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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
payments in respect of an issuer call or any repayment of principal, depends on the ability of UBS to satisfy its obligations as
they come due. As a result, UBS’ actual and perceived
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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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Market risk — The return on the Notes, which may be negative, is directly linked to the performance of the underlying
asset and indirectly linked to the value of the underlying constituents. The level of the underlying asset can rise or fall sharply
due to factors specific to the underlying asset and its underlying constituents and their issuers (each, an “underlying constituent
issuer”), such as stock price volatility, earnings and financial conditions, corporate, industry and regulatory developments,
management changes and decisions and other events, as well as general market factors, such as general stock market or commodity
market volatility and levels, interest rates and economic and political conditions. Recently, the coronavirus infection has caused
volatility in the global financial markets and a slowdown in the global economy. Coronavirus or any other communicable disease
or infection may adversely affect the underlying constituent issuers and, therefore, the underlying asset. You, as an investor
in the Notes, should conduct your own investigation into the underlying asset and underlying constituents.
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¨
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Fair value considerations.
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¨
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The issue price you pay for the Notes will exceed their estimated initial value —
The issue price you pay for the Notes will exceed their estimated initial value as of the trade date due to the inclusion in the
issue price of the underwriting discount, hedging costs, issuance costs and projected profits. As of the close of the relevant
markets on the trade date, we will determine the estimated initial value of the Notes by reference to our internal pricing models
and it will be set forth in the final pricing supplement. The pricing models used to determine the estimated initial value of the
Notes incorporate certain variables, including the level and volatility of the underlying asset and underlying constituents, any
expected dividends on the underlying constituents, prevailing interest rates, the term of the Notes and our internal funding rate.
Our internal funding rate is typically lower than the rate we would pay to issue conventional fixed or floating rate debt securities
of a similar term. The underwriting discount, hedging costs, issuance costs, projected profits and the difference in rates will
reduce the economic value of the Notes to you. Due to these factors, the estimated initial value of the Notes as of the trade date
will be less than the issue price you pay for the Notes.
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¨
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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 “—Market
risk” above and is impossible to predict. Furthermore, the pricing models that we use are proprietary and rely in part on
certain assumptions about future events, which may prove to be incorrect. As a result, after the trade date, if you attempt to
sell the Notes in the secondary market, the actual value you would receive may differ, perhaps materially, from the estimated initial
value of the Notes determined by reference to our internal pricing models. The estimated initial value of the Notes does not represent
a minimum or maximum price at which we or any of our affiliates would be willing to purchase your Notes in any secondary market
at any time.
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¨
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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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¨
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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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¨
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The price at which UBS Securities LLC and its affiliates may offer to buy the Notes in the secondary
market (if any) may be greater than UBS’ valuation of the Notes at that time, greater than any other secondary market prices
provided by unaffiliated dealers (if any) and, depending on your broker, greater than the valuation provided on your customer account
statements — For a limited period of time following the issuance of the Notes, UBS Securities LLC or its affiliates may
offer to buy or sell such Notes at a price that exceeds (i) our valuation of the Notes at that time based on our internal pricing
models, (ii) any secondary market prices provided by unaffiliated dealers (if any) and (iii) depending on your broker, the valuation
provided on customer account statements. The price that UBS Securities LLC may initially offer to buy such Notes following issuance
will exceed the valuations indicated by our internal pricing models due to the inclusion for a limited period of time of the aggregate
value of the underwriting discount, hedging costs, issuance costs and theoretical projected trading profit. The portion of such
amounts included in our price will decline to zero on a straight line basis over a period ending no later than the date specified
under “Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)”. Thereafter, if UBS Securities
LLC or an affiliate makes secondary markets in the Notes, it will do so at prices that reflect our estimated value determined by
reference to our internal pricing models at that time. The temporary positive differential relative to our internal pricing models
arises from requests from and arrangements made by UBS Securities LLC with the selling agents of structured debt securities such
as the Notes. As described above, UBS Securities LLC and its affiliates intend, but are not required, to make a market for the
Notes and may stop making a market at any time. The price at which UBS Securities LLC or an affiliate may make secondary markets
at any time (if at all) will also reflect its then current bid-ask spread for similar sized trades of structured debt securities.
UBS Financial Services Inc. and UBS Securities LLC reflect this temporary positive differential
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on their customer statements.
Investors should inquire as to the valuation provided on customer account statements provided by unaffiliated dealers.
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¨
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Economic and market factors affecting the terms and market price of Notes prior to maturity
— Because structured notes, including the Notes, can be thought of as having a debt component and a derivative component,
factors that influence the values of debt instruments and options and other derivatives will also affect the terms and features
of the Notes at issuance and the market price of the Notes prior to maturity. These factors include the level of the underlying
asset; the volatility of the underlying asset and underlying constituents; any dividends paid on the underlying constituents; the
time remaining to the maturity of the Notes; interest rates in the markets; geopolitical conditions and economic, financial, political,
force majeure and regulatory or judicial events; the availability of comparable instruments; and the creditworthiness of UBS; the
then current bid-ask spread for the Notes and the factors discussed under “— Potential conflict of interest”
below. These and other factors are unpredictable and interrelated and may offset or magnify each other.
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¨
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Impact of fees and the use of internal funding rates rather than secondary market credit spreads
on secondary market prices — All other things being equal, the use of the internal funding rates described above under
“— Fair value considerations” as well as the inclusion in the issue price of the underwriting discount, hedging
costs, issuance costs and any projected profits are, subject to the temporary mitigating effect of UBS Securities LLC’s and
its affiliates’ market making premium, expected to reduce the price at which you may be able to sell the Notes in any secondary
market.
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¨
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There can be no assurance that the investment view implicit in the Notes will be successful
— It is impossible to predict whether and the extent to which the level of the underlying asset will rise or fall. There
can be no assurance as to whether or not UBS will elect to call the Notes and, if not called, whether the final level will be equal
to or greater than the downside threshold. The level of the underlying asset will be influenced by complex and interrelated political,
economic, financial and other factors that affect the underlying constituent issuers. You should be willing to accept the downside
risks of associated with the relevant markets tracked by the underlying asset in general and the underlying asset and underlying
constituents in particular, and the risk of losing a significant portion or all of your initial investment.
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¨
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UBS cannot control actions by the index sponsor and the index sponsor has no obligation to consider
your interests — UBS and its affiliates are not affiliated with the index sponsor as specified under “Information
About the Underlying Asset” (the "index sponsor") and have no ability to control or predict their actions, including
any errors in or discontinuation of public disclosure regarding methods or policies relating to the calculation of the underlying
asset. The index sponsor is not involved in the Notes offering in any way and has no obligation to consider your interest as an
owner of the Notes in taking any actions that might affect the market value of, and any amounts payable on, your Notes.
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¨
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The underlying asset reflects price return, not total return — The return on your
Notes is based on the performance of the underlying asset, which reflects the changes in the market prices of the underlying constituents.
They are not, however, linked to a “total return” index or strategy, which, in addition to reflecting those price returns,
would also reflect dividends paid on the underlying constituents. The return on your Notes will not include such a total return
feature or dividend component.
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¨
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Changes affecting the underlying asset could have an adverse effect on the market value of,
and any amounts payable on, the Notes — The policies of the index sponsor concerning additions, deletions and substitutions
of the underlying constituents and the manner in which the index sponsor takes account of certain changes affecting those underlying
constituents may adversely affect the level of the underlying asset. The policies of the index sponsor with respect to the calculation
of the underlying asset could also adversely affect the levels of the underlying asset. The index sponsor may discontinue or suspend
calculation or dissemination of the underlying asset. Any such actions could have an adverse effect on the market value of, and
any amounts payable on, the Notes.
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¨
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Potential UBS impact on the underlying asset — Trading or transactions by UBS or its
affiliates in the underlying asset or any underlying constituent, listed and/or over-the-counter options, futures, exchange-traded
funds or other instruments with returns linked to the performance of the underlying asset or any underlying constituent, may adversely
affect the level of the underlying asset on any day during the term of the Notes (including the final valuation date) and, therefore,
the market value of, and any amounts payable on, the Notes.
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¨
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Potential conflict of interest — UBS and its affiliates may engage in business with
an underlying constituent issuer, which may present a conflict between the obligations of UBS and you, as a holder of the Notes.
Moreover, UBS may elect to call the Notes pursuant to the issuer call feature. If UBS so elects, the decision may be based on factors
contrary to those favorable to a holder of the Notes, such as, but not limited to, those described above under “— UBS
may elect to call the Notes and the Notes are subject to reinvestment risk” and “— An investment in Notes
with coupon and issuer call features may be more sensitive to interest rate risk than an investment in securities without such
features”. 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 the payment at maturity of the
Notes, if any, based on observed levels of the underlying asset. The calculation agent can postpone the determination of the terms
of the Notes on the trade date and the final valuation date. As UBS determines the economic terms of the Notes, including the coupon
rate, call dates and downside threshold, and such terms include the underwriting discount, hedging costs, issuance costs and projected
profits, the Notes represent a package of economic terms. There are other potential conflicts of interest insofar as an investor
could potentially get better economic terms if that investor entered into exchange-traded and/or OTC derivatives or other instruments
with third parties, assuming that such instruments were available and the investor had the ability to assemble and enter into such
instruments.
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¨
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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 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
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should make their own independent
investigation of the merits of investing in the Notes and the underlying asset to which the Notes are linked.
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¨
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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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¨
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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.
|
|
¨
|
Dealer incentives — UBS and its affiliates act in various capacities with respect
to the Notes. We and our affiliates may act as a principal, agent or dealer in connection with the sale of the Notes. Such affiliates,
including the sales representatives, will derive compensation from the distribution of the Notes and such compensation may serve
as an incentive to sell these Notes instead of other investments. We will pay total underwriting compensation in an amount equal
to the underwriting discount listed on the cover hereof per Note to any of our affiliates acting as agents or dealers in connection
with the distribution of the Notes. Given that UBS Securities LLC and its affiliates temporarily maintain a market making premium,
it may have the effect of discouraging UBS Securities LLC and its affiliates from recommending sale of your Notes in the secondary
market.
|
|
¨
|
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 Investment Units Containing a Debt Instrument and a Put Option Contract” in the accompanying product supplement.
|
Hypothetical
Examples of How the Notes Might Perform and Return Table
The below examples and hypothetical return at maturity
table 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 $10 Note on a hypothetical offering of the Notes, with the following assumptions (amounts may have been rounded
for ease of reference):
Principal Amount:
|
$10.00
|
Term:
|
Approximately 24 months
|
Initial Level:
|
27,000
|
Coupon Rate*:
|
3.60% per annum (or 0.30% per month)
|
Coupon:
|
$0.03 per month
|
Call Dates:
|
Monthly (beginning after 3 months)
|
Downside Threshold:
|
14,850 (which is 55.00% of the Initial Level)
|
Dividend Yield on the Underlying Asset**:
|
1%
|
* Coupons will be paid in arrears
in equal installments during the term of the Notes on each Coupon Payment Date, unless UBS has previously elected to call the Notes.
The total coupons paid will be based on the duration of the Notes.
** Hypothetical dividend yield holders of the underlying asset might receive
over the term of the Notes. The assumed dividend yield represents a hypothetical dividend return that may vary from the actual
dividend yield for the underlying asset. Regardless, investors in the Notes will not receive any dividends paid on the underlying
asset.
Example 1 — UBS elects to call the Notes on the first Call Date.
Payment on Call Settlement Date:
|
$10.03
|
Coupons Previously Paid:
|
$ 0.06
|
Total:
|
$10.09
|
Total Return on the Notes:
|
0.90%
|
Because UBS elects to call the Notes on the first call date (which is approximately
3 months after the trade date), UBS will pay on the call settlement date a cash payment equal to $10.03 per Note, reflecting the
principal amount plus the coupon for the corresponding coupon payment date. When added to the coupon payments of $0.06 received
in respect of the prior coupon payment dates, UBS will have paid you a total of $10.09 per Note for a 0.90% total return on the
Notes. No further amount will be owed to you under the Notes.
Example 2 — UBS elects to call the Notes on the third Call Date.
Payment on Call Settlement Date:
|
$10.03
|
Coupons Previously Paid:
|
$ 0.12
|
Total:
|
$10.15
|
Total Return on the Notes:
|
1.50%
|
Because UBS elects to call the Notes on the third call date (which is approximately
5 months after the trade date), UBS will pay on the call settlement date a cash payment equal to $10.03 per Note, reflecting the
principal amount plus the coupon for the corresponding coupon payment date. When added to the coupon payments of $0.12 received
in respect of the prior coupon payment dates, UBS will have paid you a total of $10.15 per Note for a 1.50% total return on the
Notes. No further amount will be owed to you under the Notes.
Example 3 — UBS does not elect to call the Notes and the Final Level
is equal to or greater than the Downside Threshold.
Final Level:
|
17,000
|
Payment on Maturity Date:
|
$10.03
|
Coupons Previously Paid:
|
$ 0.69
|
Total:
|
$10.72
|
Total Return on the Notes:
|
7.20%
|
Because UBS does not elect to call the Notes and the final level is equal
to or greater than the Downside Threshold, at maturity, UBS will pay you a total of $10.03 per Note, reflecting the principal amount
plus the coupon for the maturity date. When added to the coupon payments of $0.69 received in respect of the prior coupon payment
dates, UBS will have paid you a total of $10.72 per Note for a 7.20% total return on the Notes.
Example 4 — UBS does not elect to call the Notes and the Final Level
is less than the Downside Threshold.
Final Level:
|
8,100
|
Payment on Maturity Date:
|
$3.03
|
Coupons Previously Paid:
|
$0.69
|
Total:
|
$3.72
|
Total Return on the Notes:
|
-62.80%
|
Because UBS does not elect to call the Notes and the final level is less
than the Downside Threshold, at maturity, UBS will pay you a total of $3.03 per Note, reflecting the payment at maturity plus the
coupon for the maturity date. When added to the coupon payments of $0.69 received in respect of the prior coupon payment dates,
UBS will have paid you a total of $3.72 per Note for a loss of 62.80% on the Notes.
Hypothetical Return at Maturity
The table below illustrates the payment at maturity if UBS does not elect
to call the Notes based on the assumptions above (the actual terms for each Note will be determined on the trade date; amounts
have been rounded for ease of reference).
Underlying Asset
|
The Hypothetical Final Level is
Equal to or Greater Than the
Hypothetical Downside Threshold
|
The Hypothetical Final Level
is Less Than the Hypothetical
Downside Threshold
|
Hypothetical Final Level
|
Underlying Return
|
Total Return on the Underlying Asset at Maturity(1 )
|
Total Payment at Maturity + Coupon
Payments
|
Total Return on the Notes at Maturity
|
Total Payment at Maturity + Coupon Payments(2)
|
Total Return on the Notes
|
37,800.00
|
40.00%
|
41.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
36,450.00
|
35.00%
|
36.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
35,100.00
|
30.00%
|
31.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
33,750.00
|
25.00%
|
26.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
32,400.00
|
20.00%
|
21.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
31,050.00
|
15.00%
|
16.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
29,700.00
|
10.00%
|
11.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
28,350.00
|
5.00%
|
6.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
27,000.00
|
0.00%
|
1.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
24,300.00
|
-10.00%
|
-9.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
21,600.00
|
-20.00%
|
-19.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
18,900.00
|
-30.00%
|
-29.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
16,200.00
|
-40.00%
|
-39.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
14,850.00
|
-45.00%
|
-44.00%
|
$10.72
|
7.20%
|
n/a
|
n/a
|
13,500.00
|
-50.00%
|
-49.00%
|
n/a
|
n/a
|
$5.72
|
-42.80%
|
12,150.00
|
-55.00%
|
-54.00%
|
n/a
|
n/a
|
$5.22
|
-47.80%
|
10,800.00
|
-60.00%
|
-59.00%
|
n/a
|
n/a
|
$4.72
|
-52.80%
|
9,450.00
|
-65.00%
|
-64.00%
|
n/a
|
n/a
|
$4.22
|
-57.80%
|
8,100.00
|
-70.00%
|
-69.00%
|
n/a
|
n/a
|
$3.72
|
-62.80%
|
6,750.00
|
-75.00%
|
-74.00%
|
n/a
|
n/a
|
$3.22
|
-67.80%
|
5,400.00
|
-80.00%
|
-79.00%
|
n/a
|
n/a
|
$2.72
|
-72.80%
|
2,700.00
|
-90.00%
|
-89.00%
|
n/a
|
n/a
|
$1.72
|
-82.80%
|
0.00
|
-100.00%
|
-99.00%
|
n/a
|
n/a
|
$0.72
|
-92.80%
|
|
(1)
|
The total return on the underlying asset at maturity includes a hypothetical 1% cash dividend payment.
|
|
(2)
|
Payment consists of the payment at maturity plus hypothetical coupon payments of 3.60% per annum. The total return on the Notes
at maturity will depend on the final level of the underlying asset.
|
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 UBS does not elect to call the Notes, you may lose a significant portion or all of your initial investment.
Specifically, if UBS does not elect to call the Notes and the final level is less than the downside threshold, you will lose a
percentage of your principal amount equal to the underlying return and, in extreme situations, you could lose all of your initial
investment. UBS may elect to call the Notes at its discretion, in whole, but not in part, on any call date regardless of the performance
of the underlying asset.
Any payment on the Notes, including any payments
in respect of an issuer call 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 Asset
Dow Jones Industrial Average®
We have derived all information regarding the Dow
Jones Industrial Average® (“INDU”) contained in this document, including, without limitation, its composition,
methods of calculation and changes in its components from publicly available information. Such information reflects the policies
of, and is subject to change by S&P Dow Jones Indices LLC (the “index sponsor” or "S&P Dow Jones Indices")
and/or its affiliates.
INDU is published by S&P Dow Jones, but S&P
Dow Jones has no obligation to continue to publish INDU, and may discontinue publication of INDU at any time. INDU is determined,
comprised and calculated by S&P Dow Jones without regard to the Notes.
As discussed more fully in the index supplement under
the heading “Underlying Indices and Underlying Index Publishers — Dow Jones Industrial Average®”,
INDU is a price-weighted index composed of 30 common stocks selected at the discretion of the Averages Committee. The Averages
Committee is comprised of composed of three representatives of S&P Dow Jones Indices and two representatives of The Wall Street
Journal. The Averages Committee selects the index components as the largest and leading stocks of the sectors that are representative
of the U.S. equity market. INDU does not include producers of goods and services in the transportation and utilities industries.
The Averages Committee may revise index policy covering rules for selecting companies, treatment of dividends, share counts or
other matters.
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 the underlying asset from January 1, 2010 through June 5, 2020, based on the daily closing levels as reported by Bloomberg Professional®
service (“Bloomberg”), without independent verification. UBS has not conducted any independent review or due diligence
of publicly available information obtained from Bloomberg. The closing level of the underlying asset on June 5, 2020 was 27,110.98
(the “hypothetical initial level”). The dotted line represents the hypothetical downside threshold of 14,911.04, which
is equal to 55.00% of the hypothetical initial level. The actual initial level 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.
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 Investment Units Containing
a Debt Instrument and a Put Option Contract”, of the accompanying product supplement and to discuss the tax consequences
of your particular situation with your tax advisor. This discussion is based upon the U.S. Internal Revenue Code of 1986, as amended
(the “Code”), final, temporary and proposed U.S. Treasury Department (the “Treasury”) regulations, rulings
and decisions, in each case, as available and in effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and non-U.S. laws are not addressed herein. No ruling from the U.S. Internal
Revenue Service (the “IRS”) has been sought as to the U.S. federal income tax consequences of your investment in the
Notes, and the following discussion is not binding on the IRS.
U.S. Tax Consequences. The U.S. federal income
tax consequences of your investment in the Notes are complex and uncertain. By purchasing a Note, you and UBS hereby agree, in
the absence of a statutory or regulatory change or an administrative determination or judicial ruling to the contrary, to characterize
a Note for all tax purposes as an investment unit consisting of a non-contingent debt instrument and a put option contract in respect
of the underlying asset. The terms of the Notes require (in the absence of a statutory or regulatory change or an administrative
determination or judicial ruling to the contrary) that you treat your Notes for U.S. federal income tax purposes as consisting
of two components:
Debt component — We intend to treat the
debt component as having a term greater than one year, so that the amounts treated as interest on the debt component would be includable
in income by you in accordance with your regular method of accounting for interest for U.S. federal income purposes. If, however,
the debt component were treated as having a term of one year or less, amounts treated as interest on the debt component would be
subject to the general rules governing interest payments on short-term notes and would be required to be accrued by accrual-basis
taxpayers (and cash-basis taxpayers who elect to accrue interest currently) on either the straight-line method, or, if elected,
the constant yield method, compounded daily. Cash-basis taxpayers who do not elect to accrue interest currently would include interest
in income upon receipt of such interest.
Put option component — The put option
component would generally not be taxed until the taxable disposition of the Notes. At such time, the put option component would
be taxed as a short-term capital gain.
With respect to coupon payments you receive, you agree
to treat such payments as consisting of interest on the debt component and a payment with respect to the put option as follows:
Coupon Rate
(to be determined
on trade date)
|
Interest on Debt Component
(to be determined
on trade date)
|
Put Option Component
(to be determined
on trade date)
|
4.00% - 4.60% per annum
|
[●]% per annum
|
[●]% per annum
|
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”, including the section "— Securities Treated as Investment Units Containing
a Debt Instrument and a Put Option Contract", in the accompanying product supplement unless and until such time as some other
treatment is more appropriate.
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 Investment Units Containing a Debt Instrument and a Put Option Contract",
in the accompanying product supplement unless and until such time as the IRS and the Treasury determine that some other treatment
is more appropriate.
Notice 2008-2. In 2007, the IRS released a
notice that may affect the taxation of holders of the Notes. According to Notice 2008-2, the IRS and the Treasury are actively
considering the appropriate tax treatment of holders of certain types of structured notes. Legislation has also been proposed in
Congress that would require the holders of certain prepaid forward contracts to accrue income during the term of the transaction.
It is not clear whether the Notice applies to instruments such as the Notes. Furthermore, it is not possible to determine what
guidance or legislation will ultimately result, if any, and whether such guidance or legislation will affect the tax treatment
of the Notes. Both U.S. and non-U.S. holders are urged to consult their tax advisors concerning the significance and potential
impact of the above considerations.
Medicare Tax on Net Investment Income. U.S.
holders that are individuals, estates or certain trusts are subject to an additional 3.8% tax on all or a portion of their “net
investment income,” which may include any income or gain realized with respect to the Notes, to the extent of their net investment
income that when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for
a married taxpayer filing a joint return (or a surviving spouse), $125,000 for a married individual filing a separate return or
the dollar amount at which the highest tax bracket begins for an estate or trust. The 3.8% Medicare tax is determined in a different
manner than the income tax. U.S. holders should consult their tax advisors as to the consequences of the 3.8% Medicare tax.
Specified Foreign Financial Assets. U.S. holders
may be subject to reporting obligations with respect to their Notes if they do not hold their Notes in an account maintained by
a financial institution and the aggregate value of their Notes and certain other “specified foreign financial assets”
(applying certain attribution rules) exceeds an applicable threshold. Significant penalties can apply if a U.S. holder is required
to disclose its Notes and fails to do so.
Non-U.S. Holders. If you are a non-U.S. holder,
subject to Section 871(m) of the Code and “FATCA,” discussed below, you should generally not be subject to U.S. withholding
tax with respect to payments on your Notes or to generally applicable information reporting and backup withholding requirements
with respect to payments on your Notes if you comply with certain certification and identification requirements as to your non-U.S.
status by providing us (and/or the applicable withholding agent) with a fully completed and validly executed applicable IRS Form
W-8. 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 constituent 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 such entity 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 the Note to the U.S. federal income tax on a net basis, and
the proceeds from such a taxable disposition to a 15% withholding tax. Non-U.S. holders should consult their tax advisors regarding
the potential treatment of any such entity 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 or indices containing U.S. equity securities. The withholding tax can apply even
if the instrument does not provide for payments that reference dividends. Treasury regulations provide that the withholding tax
applies to all dividend equivalents paid or deemed paid on specified equity-linked instruments that have a delta of one (“delta-one
specified equity-linked instruments”) issued after 2016 and to all dividend equivalents paid or deemed paid on all other
specified equity-linked instruments issued after 2018. However, the IRS has issued guidance that states that the Treasury and the
IRS intend to amend the effective dates of the Treasury regulations to provide that withholding on dividend equivalents paid or
deemed paid will not apply to specified equity-linked instruments that are not delta-one specified equity-linked instruments and
are issued before January 1, 2023.
Based on our determination that the Notes are not
“delta-one” with respect to the underlying asset or any underlying constituent, our counsel is of the opinion that
the Notes should not be delta-one specified equity-linked instruments and thus should not be subject to withholding on dividend
equivalents. Our determination is not binding on the IRS, and the IRS may disagree with this determination. Furthermore, the application
of Section 871(m) of the Code will depend on our determinations made upon issuance of the Notes. If withholding is required, we
will not make payments of any additional amounts.
Nevertheless, after issuance, it is possible that
your Notes could be deemed to be reissued for tax purposes upon the occurrence of certain events affecting the underlying asset,
the underlying constituents or your Notes, and following such occurrence your Notes could be treated as delta-one specified equity-linked
instruments that are subject to withholding on dividend equivalents. It is also possible that withholding tax or other tax under
Section 871(m) of the Code could apply to the Notes under these rules if you enter, or have entered, into certain other transactions
in respect of the underlying asset, the underlying constituents or the Notes. If you enter, or have entered, into other transactions
in respect of the underlying asset, the underlying constituents or the Notes should consult your tax advisor regarding the application
of Section 871(m) of the Code to your Notes in the context of your other transactions.
Because of the uncertainty regarding the application
of the 30% withholding tax on dividend equivalents to the Notes, you are urged to consult your tax advisor regarding the potential
application of Section 871(m) of the Code and the 30% withholding tax to an investment in the Notes.
Foreign Account Tax Compliance Act. The Foreign
Account Tax Compliance Act (“FATCA”) was enacted on March 18, 2010, and imposes a 30% U.S. withholding tax on “withholdable
payments” (i.e., certain U.S.-source payments, including interest (and original issue discount), dividends, other fixed or
determinable annual or periodical gain, profits, and income, and on the gross proceeds from a disposition of property of a type
which can produce U.S.-source interest or dividends) and “passthru payments” (i.e., certain payments attributable to
withholdable payments) made to certain foreign financial institutions (and certain of their affiliates) unless the payee foreign
financial institution agrees (or is required), among other things, to disclose the identity of any U.S. individual with an account
of the institution (or the relevant affiliate) and to annually report certain information about such account. FATCA also requires
withholding agents making withholdable payments to certain foreign entities that do not disclose the name, address, and taxpayer
identification number of any substantial U.S. owners (or do not certify that they do not have any substantial U.S. owners) to withhold
tax at a rate of 30%. Under certain circumstances, a holder may be eligible for refunds or credits of such taxes.
Pursuant to final and temporary Treasury regulations
and other IRS guidance, the withholding and reporting requirements under FATCA will generally apply to certain “withholdable
payments”, will not apply to gross proceeds on a sale or disposition, and will apply to certain foreign passthru payments
only to the extent that such payments are made after the date that is two years after final regulations defining the term “foreign
passthru payment” are published. If withholding is required, we (or the applicable paying agent) will not be required to
pay additional amounts with respect to the amounts so withheld. Foreign financial institutions and non-financial foreign entities
located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.
Investors should consult their tax advisors about
the application of FATCA, in particular if they may be classified as financial institutions (or if
they hold their Notes through a foreign entity) under
the FATCA rules.
Proposed Legislation. In 2007, legislation
was introduced in Congress that, if it had been enacted, would have required accrual of income on certain prepaid forward contracts
prior to maturity.
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 put option component of 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 will agree to resell all of the Notes to UBS Financial Services Inc. at a discount from
the issue price to the public equal to the underwriting discount indicated on the cover hereof.
Conflicts of Interest — Each of UBS Securities
LLC and UBS Financial Services Inc. is an affiliate of UBS and, as such, has a “conflict of interest” in this offering
within the meaning of Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBS will receive
the net proceeds (excluding the underwriting discount) from the initial public offering of the Notes, thus creating an additional
conflict of interest within the meaning of FINRA Rule 5121. Consequently, the offering is being conducted in compliance with the
provisions of FINRA Rule 5121. Neither UBS Securities LLC nor UBS Financial Services Inc. is permitted to sell Notes in this offering
to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
UBS Securities LLC and its affiliates may offer
to buy or sell the Notes in the secondary market (if any) at prices greater than UBS’ internal valuation — The
value of the Notes at any time will vary based on many factors that cannot be predicted. However, the price (not including UBS
Securities LLC’s or any affiliate’s customary bid-ask spreads) at which UBS Securities LLC or any affiliate would offer
to buy or sell the Notes immediately after the trade date in the secondary market is expected to exceed the estimated initial value
of the Notes as determined by reference to our internal pricing models. The amount of the excess will decline to zero on a straight
line basis over a period ending no later than 4 months after the trade date, provided that UBS Securities LLC may shorten the period
based on various factors, including the magnitude of purchases and other negotiated provisions with selling agents. Notwithstanding
the foregoing, UBS Securities LLC and its affiliates intend, but are not required to make a market for the Notes and may stop making
a market at any time. For more information about secondary market offers and the estimated initial value of the Notes, see “Key
Risks — Fair value considerations” and “Key Risks — Limited or no secondary market and secondary market
price considerations” herein.
Prohibition of Sales to EEA Retail Investors —
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means
a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended
(“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where that customer would not
qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined
in Directive 2003/71/EC, as amended. Consequently no key information document required by Regulation (EU) No 1286/2014, as amended
(the “PRIIPs Regulation”), for offering or selling the Notes or otherwise making them available to retail investors
in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor
in the EEA may be unlawful under the PRIIPs Regulation.
You should rely only on the information
incorporated by reference or provided in this preliminary pricing supplement, the accompanying product supplement, the index supplement
or the accompanying prospectus. We have not authorized anyone to provide you with different information. We are not making an offer
of these Notes in any state where the offer is not permitted. You should not assume that the information in this preliminary pricing
supplement is accurate as of any date other than the date on the front of the document.
TABLE OF CONTENTS
Preliminary
Pricing Supplement
|
|
Investment Description
|
i
|
Features
|
i
|
Key Dates
|
i
|
Note Offering
|
i
|
Additional Information about UBS and the Notes
|
ii
|
Investor Suitability
|
1
|
Preliminary Terms
|
2
|
Investment Timeline
|
2
|
Call Dates(1) and Coupon Payment Dates(1)(2)
|
3
|
Key Risks
|
4
|
Hypothetical Examples of How the Notes Might Perform
|
8
|
Information about the Underlying Asset
|
10
|
What Are the Tax Consequences of the Notes?
|
11
|
Supplemental Plan of Distribution (Conflicts of Interest); Secondary Markets (if any)
|
14
|
Product Supplement
|
|
Product Supplement Summary
|
PS-1
|
Specific Terms of Each Security Will Be Described in the Applicable Supplements
|
PS-1
|
The Securities are Part of a Series
|
PS-1
|
Denomination
|
PS-2
|
Coupons
|
PS-2
|
Early Redemption
|
PS-3
|
Payment at Maturity for the Securities
|
PS-3
|
Defined Terms Relating to Payment on the Securities
|
PS-4
|
Valuation Dates
|
PS-5
|
Valuation Periods
|
PS-6
|
Payment Dates
|
PS-6
|
Closing Level
|
PS-7
|
Intraday Level
|
PS-7
|
What are the Tax Consequences of the Securities?
|
PS-8
|
Risk Factors
|
PS-9
|
General Terms of the Securities
|
PS-29
|
Use of Proceeds and Hedging
|
PS-52
|
Material U.S. Federal Income Tax Consequences
|
PS-53
|
Certain ERISA Considerations
|
PS-75
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
PS-76
|
Index Supplement
|
|
Index Supplement Summary
|
IS-1
|
Underlying Indices And Underlying Index Publishers
|
IS-2
|
Dow Jones Industrial AverageTM
|
IS-2
|
NASDAQ-100 Index®
|
IS-4
|
Russell 2000® Index
|
IS-10
|
S&P 500® Index
|
IS-15
|
Commodity Indices
|
IS-20
|
Bloomberg Commodity IndexSM
|
IS-20
|
UBS Bloomberg Constant Maturity Commodity Index
Excess Return
|
IS-27
|
Non-U.S. Indices
|
IS-32
|
EURO STOXX 50® Index
|
IS-32
|
FTSETM 100 Index
|
IS-38
|
Hang Seng China Enterprises Index
|
IS-41
|
MSCI Indexes
|
IS-45
|
MSCI-EAFE® Index
|
IS-45
|
MSCI® Emerging Markets IndexSM
|
IS-45
|
MSCI® Europe Index
|
IS-45
|
Prospectus
|
|
Introduction
|
1
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
Incorporation of Information About UBS AG
|
4
|
Where You Can Find More Information
|
5
|
Presentation of Financial Information
|
6
|
Limitations on Enforcement of U.S. Laws Against UBS, Its Management and Others
|
6
|
UBS
|
7
|
Swiss Regulatory Powers
|
10
|
Use of Proceeds
|
11
|
Description of Debt Securities We May Offer
|
12
|
Description of Warrants We May Offer
|
32
|
Legal Ownership and Book-Entry Issuance
|
47
|
Considerations Relating to Indexed Securities
|
52
|
Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
|
55
|
U.S. Tax Considerations
|
58
|
Tax Considerations Under the Laws of Switzerland
|
69
|
Benefit Plan Investor Considerations
|
71
|
Plan of Distribution
|
73
|
Conflicts of Interest
|
75
|
Validity of the Securities
|
76
|
Experts
|
76
|
$•
UBS AG
Trigger Callable Yield Notes
due on or about June 15, 2022
Preliminary Pricing Supplement dated June 8, 2020
(To Product Supplement dated October 31, 2018,
Index Supplement dated October 31, 2018
and Prospectus dated October 31, 2018)
UBS Investment Bank
UBS Financial Services Inc.
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