ADDENDUM DATED 21 NOVEMBER 2019

If you are in any doubt about any of the contents of this addendum, you should obtain independentprofessional advice.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited (the “StockExchange”) and Hong Kong Securities Clearing Company Limited (“HKSCC”) take no responsibilityfor the contents of this addendum, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this addendum.

Addendum to the Base Listing Document dated 3 April 2019relating to Non-collateralised Structured Products

to be issued by

UBS AG(incorporated with limited liability in Switzerland)

acting through its London Branch

SponsorUBS SECURITIES ASIA LIMITED

This addendum, for which we accept full responsibility, includes particulars given in compliance withthe Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the“Listing Rules”) for the purpose of giving further information with regard to us. You must read thisaddendum in conjunction with our base listing document dated 3 April 2019 (our “Base ListingDocument”).

We, having made all reasonable enquiries, confirm that to the best of our knowledge and belief theinformation contained in this addendum is accurate and complete in all material respects and notmisleading or deceptive, and there are no other matters the omission of which would make anystatement in this addendum misleading.

The Structured Products involve derivatives. Investors should not invest in the StructuredProducts unless they fully understand and are willing to assume the risks associated with them.

Investors are warned that the price of the Structured Products may fall in value as rapidly asit may rise and holders may sustain a total loss of their investment. Prospective purchasersshould therefore ensure that they understand the nature of the Structured Products andcarefully study the risk factors set out in our Base Listing Document and the relevant launchannouncement and supplemental listing document and, where necessary, seek professionaladvice, before they invest in the Structured Products.

The Structured Products are complex products. You should exercise caution in relation to them.The Structured Products constitute our general unsecured contractual obligations and of noother person and will rank equally among themselves and with all our other unsecuredobligations (save for those obligations preferred by law) upon liquidation. If you purchase theStructured Products, you are relying upon our creditworthiness, and have no rights under theStructured Products against (a) the company which has issued the underlying securities; (b) thetrustee or the manager of the underlying unit trust; or (c) the index compiler of any underlyingindex. If we become insolvent or default on our obligations under the Structured Products, youmay not be able to recover all or even part of the amount due under the Structured Products (ifany).

IMPORTANT INFORMATION

What is this addendum about?

This addendum contains supplemental general information on us, our unaudited third quarter 2019financial information for the quarter period ended 30 September 2019 and the risk management andcontrol applicable to UBS Group AG (our holding company), UBS AG and our subsidiaries (together,“UBS Group”) extracted from UBS Group AG’s third quarter 2019 financial report. This addendumis a supplement to our Base Listing Document.

What documents should you read before investing in the Structured Products?

You must read this addendum together with our Base Listing Document (including any otheraddendum to our Base Listing Document to be issued by us from time to time) and the relevant launchannouncement and supplemental listing document (including any addendum to such launchannouncement and supplemental listing document to be issued by us from time to time) (together, the“Listing Documents”) before investing in any Structured Product.

Where can you inspect the relevant documents?

Copies of this addendum, our Base Listing Document and the relevant launch announcement andsupplemental listing document and other documents set out in the relevant launch announcement andsupplemental listing document may be inspected during usual business hours on any weekday(Saturdays, Sundays and holidays excepted) at the offices of UBS Securities Asia Limited.

本增編、我們的基礎上市文件連同相關發行公佈及補充上市文件及於相關發行公佈及補充上市文件內所列的其他文件，可於平日(星期六、日及假期除外)的一般辦公時間於瑞銀証券亞洲有限公司(UBS Securities Asia Limited) 辦事處查閱。

Are we subject to any litigation?

Save as disclosed in the Listing Documents, we and our subsidiaries are not aware of any litigationor claims of material importance pending or threatened against us or them.

Has our financial position changed since last financial year-end?

There has been no material adverse change in our financial or trading position since 31 December2018.

What are our credit ratings?

Our long term debt ratings are:

Rating agency Rating as of the date of this addendum

Moody’s Deutschland GmbH Aa3 (stable outlook)

S&P Global Ratings Europe Limited A+ (stable outlook)

Rating agencies usually receive a fee from the companies that they rate. When evaluating ourcreditworthiness, you should not solely rely on our credit ratings because:

• a credit rating is not a recommendation to buy, sell or hold the Structured Products;

• ratings of companies may involve difficult-to-quantify factors such as market competition, thesuccess or failure of new products and markets and managerial competence;

• a high credit rating is not necessarily indicative of low risk. Our credit ratings as of the date ofthis addendum are for reference only. Any downgrading of our credit ratings could result in areduction in the value of the Structured Products;

• a credit rating is not an indication of the liquidity or volatility of the Structured Products; and

• a credit rating may be downgraded if our credit quality declines.

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The Structured Products are not rated.

Our credit ratings are subject to change or withdrawal at any time within each rating agency’s sole

discretion. You should conduct your own research using publicly available sources to obtain the latest

information with respect to our ratings from time to time.

How can you get further information about us or the Structured Products?

You may visit http://warrants.ubs.com/en/home_e.cgi to obtain further information about us and/or

the Structured Products.

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TABLE OF CONTENTS

Page

INFORMATION IN RELATION TO US. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

THE UNAUDITED FINANCIAL INFORMATION OF UBS AG

FOR THE QUARTERLY PERIOD ENDED 30 SEPTEMBER 2019 - EXTRACTED

FROM UBS AG’S THIRD QUARTER 2019 FINANCIAL REPORT . . . . . . . . . . . . . . . . . . 25

RISK MANAGEMENT AND CONTROL - EXTRACTED

FROM UBS GROUP AG’S THIRD QUARTER 2019 FINANCIAL REPORT . . . . . . . . . . . 35

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INFORMATION IN RELATION TO US

(1) Updated “Information in relation to us”

The following pages under this section shall replace the information in the section headed

“Information in relation to us” on pages 14 to 17 of our Base Listing Document in its entirety.

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1. Overview

UBS AG with its subsidiaries (together, “UBS AG consolidated”, or “UBS AG Group”; togetherwith UBS Group AG, which is the holding company of UBS AG, and its subsidiaries, “UBSGroup”, “Group”, “UBS” or “UBS Group AG consolidated”) provides financial advice andsolutions to private, institutional and corporate clients worldwide, as well as private clients inSwitzerland. The operational structure of the Group is comprised of the Corporate Center andfour business divisions: Global Wealth Management, Personal & Corporate Banking, AssetManagement and the Investment Bank. UBS’s strategy is centered on its global wealthmanagement business and its personal and corporate banking business in Switzerland,complemented by its focused investment bank and global asset manager.

2. Information about the Issuer

2.1. Corporate Information

The legal and commercial name of the company is UBS AG.

The company was incorporated under the name SBC AG on 28 February 1978 for an unlimitedduration and entered in the Commercial Register of Canton Basel-City on that day. On 8December 1997, the company changed its name to UBS AG. The company in its present form wascreated on 29 June 1998 by the merger of Union Bank of Switzerland (founded 1862) and SwissBank Corporation (founded 1872). UBS AG is entered in the Commercial Registers of CantonZurich and Canton Basel-City. The registration number is CHE-101.329.561.

UBS AG is incorporated and domiciled in Switzerland and operates under the Swiss Code ofObligations as an Aktiengesellschaft, a corporation limited by shares. UBS AG’s Legal EntityIdentifier (LEI) code is BFM8T61CT2L1QCEMIK50.

According to article 2 of the articles of association of UBS AG dated 26 April 2018, the purposeof UBS AG is the operation of a bank. Its scope of operations extends to all types of banking,financial, advisory, trading and service activities in Switzerland and abroad. UBS AG mayestablish branches and representative offices as well as banks, finance companies and otherenterprises of any kind in Switzerland and abroad, hold equity interests in these companies, andconduct their management. UBS AG is authorized to acquire, mortgage and sell real estate andbuilding rights in Switzerland and abroad. UBS AG may borrow and invest money on the capitalmarkets. UBS AG is part of the group of companies controlled by the group parent company UBSGroup AG. It may promote the interests of the group parent company or other group companies.It may provide loans, guarantees and other kinds of financing and security for group companies.

The addresses and telephone numbers of UBS AG’s two registered offices and principal placesof business are: Bahnhofstrasse 45, CH-8001 Zurich, Switzerland, telephone +41 44 234 1111;and Aeschenvorstadt 1, CH-4051 Basel, Switzerland, telephone +41 61 288 5050.

2.2. UBS’s borrowing and funding structure and financing of UBS’s activities

Strategy, objectives and governance

UBS manages its balance sheet, liquidity and funding positions with the overall objective ofoptimizing the value of its franchise across a broad range of market conditions while consideringcurrent and future regulatory constraints. UBS employs a number of measures to monitor thesepositions under normal and stressed conditions. In particular, UBS uses stress scenarios to applybehavioral adjustments to its balance sheet and calibrate the results from these internal stressmodels with external measures, primarily the liquidity coverage ratio and the net stable funding

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ratio. UBS’s liquidity and funding strategy is proposed by Group Treasury, approved by theGroup Asset and Liability Management Committee (“Group ALCO”), which is a committee ofthe Group Executive Board, and is overseen by the Risk Committee of the Board of Directors(“BoD”).

Liquidity and funding limits and targets are set at Group and, where appropriate, at legal entityand business division levels, and are reviewed and reconfirmed at least once a year by the BoD,the Group ALCO, the Group Chief Financial Officer, the Group Treasurer and the businessdivisions, taking into consideration current and projected business strategy and risk tolerance.The principles underlying UBS’s limit and target framework are designed to maximize andsustain the value of UBS’s business franchise and maintain an appropriate balance in the assetand liability structure. Structural limits and targets focus on the structure and composition of thebalance sheet, while supplementary limits and targets are designed to drive the utilization,diversification and allocation of funding resources. To complement and support this framework,Group Treasury monitors the markets for early warning indicators reflecting the current liquiditysituation. The liquidity status indicators are used at Group level to assess both the overall globaland regional situations for potential threats. Market & Treasury Risk Control providesindependent oversight over liquidity and funding risks.

Liabilities and funding management

Group Treasury regularly monitors UBS’s funding status, including concentration risks, with theaim of ensuring that UBS maintains a well-balanced and diversified liability structure. UBS’sfunding risk management aims for the optimal asset and liability structure to finance UBS’sbusinesses reliably and cost-efficiently, and UBS’s funding activities are planned by analysingthe overall liquidity and funding profile of its balance sheet, taking into account the amount ofstable funding that would be needed to support ongoing business activities through periods ofdifficult market conditions.

Capital management objectives

An adequate level of total loss-absorbing capacity (“TLAC”) in accordance with both UBS’sinternal assessment and regulatory requirements is a prerequisite to conducting UBS’s businessactivities. UBS is therefore committed to maintaining a strong TLAC position and sound TLACratios at all times, in order to meet regulatory capital requirements and its target capital ratios,and to support the growth of its businesses.

Capital planning and activities

UBS manages its balance sheet, risk-weighted assets (“RWA”), leverage ratio denominator(“LRD”) and TLAC ratio levels within UBS’s internal limits and targets and on the basis of itsregulatory TLAC requirements. UBS’s strategic focus is to achieve an optimal attribution anduse of financial resources between its business divisions and Corporate Center, as well asbetween its legal entities, while remaining within the limits defined for the Group and allocatedto the business divisions by the BoD. These resource allocations, in turn, affect business plansand earnings projections, which are reflected in UBS’s capital plans. The annual strategicplanning process includes a capital-planning component that is key in defining medium- andlonger-term capital targets. It is based on an attribution of Group RWA and LRD internal limitsto the business divisions. Effective 1 January 2019, changes in resource allocation fromCorporate Center to the business divisions is reflected in the equity attribution to the businessdivisions, alongside other updates to the equity attribution framework.

3. Business Overview

3.1. Organisational Structure of UBS AG

UBS AG is a Swiss bank and the parent company of the UBS AG Group. It is 100% owned byUBS Group AG, which is the holding company of the UBS Group. UBS operates as a group withfour business divisions and a Corporate Center.

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In 2014, UBS began adapting its legal entity structure to improve the resolvability of the Groupin response to too big to fail requirements in Switzerland and recovery and resolution regulationin other countries in which the Group operates. In December 2014, UBS Group AG became theholding company of the Group.

In 2015, UBS AG transferred its personal & corporate banking and wealth managementbusinesses booked in Switzerland to the newly established UBS Switzerland AG, a bankingsubsidiary of UBS AG in Switzerland. In 2016, UBS Americas Holding LLC was designated asthe intermediate holding company for UBS’s subsidiaries in the United States (“US”) and UBSmerged its wealth management subsidiaries in various European countries into UBS Europe SE,UBS’s German-headquartered European subsidiary. Additionally, UBS transferred the majorityof Asset Management’s operating subsidiaries to UBS Asset Management AG. Effective 1 April2019, the portion of the Asset Management business in Switzerland conducted by UBS AG wastransferred from UBS AG to its indirect subsidiary, UBS Asset Management Switzerland AG.

UBS Business Solutions AG, a wholly owned subsidiary of UBS Group AG, was established in2015 and acts as the Group service company. In 2017, UBS’s shared services functions inSwitzerland and the United Kingdom (“UK”) were transferred from UBS AG to UBS BusinessSolutions AG. UBS also completed the transfer of shared services functions in the US to its USservice company, UBS Business Solutions US LLC, a wholly owned subsidiary of UBS AmericasHolding LLC.

In March 2019, UBS Limited, UBS’s UK headquartered subsidiary, was merged into UBSEurope SE prior to the UK’s scheduled departure from the European Union (“EU”). Formerclients and other counterparties of UBS Limited who can be serviced by UBS AG’s LondonBranch were migrated to UBS AG’s London Branch prior to the merger.

UBS continues to consider further changes to the Group’s legal structure in response toregulatory requirements and other external developments. Such changes may include furtherconsolidation of operating subsidiaries in the EU and adjustments to the booking entity orlocation of products and services.

UBS Group AG’s interests in subsidiaries and other entities as of 31 December 2018, includinginterests in significant subsidiaries, are discussed in “Note 31 Interests in subsidiaries and otherentities” to the UBS Group AG’s consolidated financial statements included in the UBS GroupAG and UBS AG Annual Report 2018 published on 15 March 2019 (“Annual Report 2018”).

UBS AG’s interests in subsidiaries and other entities as of 31 December 2018, including interestsin significant subsidiaries, are discussed in “Note 31 Interests in subsidiaries and other entities”to the UBS AG’s consolidated financial statements included in the Annual Report 2018.

3.2. Recent Developments

Accounting, regulatory, legal and other developments

Tightened self-regulation for income-producing real estate

In August 2019, the Swiss Financial Market Supervisory Authority (“FINMA”) approved theSwiss Bankers Association’s revised self-regulation on mortgage lending for income-producingreal estate. The revisions increase the minimum equity required for new and increased mortgageson these properties, from 10% to 25% of the market value at origination, and require mortgagesto amortize to two thirds of the market value at origination within 10 years (previously 15 years).UBS Switzerland AG will be subject to the revised self-regulation that will come into effect on1 January 2020. The overall effect on UBS is expected to be limited.

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Volcker Rule revisions

US regulators have adopted amendments (“2019 Final Rule”) to their regulations implementingthe Volcker Rule prohibitions on proprietary trading and limitations on covered fund activities.The amendments will become effective on 1 January 2020, with compliance voluntary from thatdate, and mandatory from 1 January 2021.

Among other changes, the 2019 Final Rule tailors compliance program obligations for tradingactivities in tiers based on the level of US trading assets and liabilities and relaxes certainconditions for exemptions to the Volcker Rule restrictions to apply to activities engaged in byforeign banking entities outside the United States.

UBS expects it will fall within the “Significant” category, which will require UBS to maintainits compliance program but should eliminate certain reporting requirements. US regulators alsosignalled the intention to propose further amendments to the covered funds provisions of theirVolcker Rule regulations.

Tailoring of regulation for foreign banks in the US

On 10 October 2019, the Board of Governors of the Federal Reserve System adopted twoproposals that tailor how certain capital and liquidity requirements and enhanced prudentialstandards apply to foreign banking organizations (“FBOs”) with significant US operations.Under the final rules, FBOs and their US intermediate holding companies (“IHCs”) will beassigned to categories based on their size measured in total assets as well as on scores relatingto four other risk-based indicators: non-bank assets, a weighted measure of short-term wholesalefunding, off-balance sheet exposure and cross-jurisdictional activity.

Each of UBS Americas Holdings LLC (UBS’s IHC) and UBS’s combined US operations, whichinclude its IHC and US branches of UBS AG, are expected to be a “Category III” firm under thefinal rule. In this category, among other things, UBS Americas Holding LLC will continue to be:(i) required to submit its capital plan annually; (ii) subject to limitations on distributions throughthe Comprehensive Capital Analysis and Review (CCAR) process; and (iii) subject to annualsupervisory stress testing and (iv) subject to the supplementary leverage ratio. It will alsobecome subject to the newly applicable liquidity coverage ratio requirements and the proposednet stable funding ratio requirements. “Category III firms” will be required to conductcompany-run stress tests once every two years, rather than annually, and to submit US resolutionplans once every three years.

China further opening up its financial sector

In July 2019, China’s Office of Financial Stability and Development Committee and the StateAdministration of Foreign Exchange announced measures designed to accelerate the opening upof the financial sector to foreign financial institutions and investors. Measures include: theremoval of foreign ownership limits on securities, fund management and futures companies oneyear earlier, in 2020; encouraging overseas financial institutions to establish and invest in assetand wealth management entities and currency brokers and participate in the bond market; andeliminating requirements and quotas for qualified foreign investors to invest in China. Moredetailed implementation guidance is expected over the coming months.

The accelerated removal of the ownership caps for securities companies means that UBS AG isexpected to be permitted to increase its stake in UBS Securities China from the current level of51% to 100% by 2020. The exact effective date remains to be clarified.

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The Swiss National Bank to adjust the zero interest rate exemption threshold

In September 2019, the Swiss National Bank (“SNB”) announced that it would keep the SNBpolicy rate and interest on sight deposits at the SNB at negative 0.75% and reconfirmed itswillingness to intervene in the foreign exchange market as necessary. The SNB also announcedadjustments to the calculation of the amount of sight deposits at the SNB that are exempt fromnegative interest rates. The exemption threshold will be increased from 20 to 25 times eachbank’s minimum requirement. In addition, the threshold will be updated on a monthly basis.These changes will come into effect on 1 November 2019. The SNB communicated that thisdecision was taken based on the assumption that the low interest rate environment around theworld will persist for some time. UBS maintains significant sight deposits at the SNB. Theadjustments to the exemption threshold calculation are expected to benefit UBS’s net interestincome.

Swiss emergency plan credibility determination

UBS has developed and annually submits to FINMA an emergency plan demonstrating how itwill maintain functions that are systemically important for the Swiss economy in the event of acrisis. UBS has developed a comprehensive emergency plan and has completed substantialmeasures designed to ensure the maintenance of systemically important functions, including thetransfer of systemically important functions to UBS Switzerland AG and the establishment of aseparate service company to provide services to Group companies. FINMA is expected to makea formal determination of whether the emergency plans of Swiss systemically relevant banks are“credible” in early 2020. As a result of this review, FINMA may require UBS to amend the planor put other measures in place.

Developments related to the transition away from IBORs

Liquidity and activity in Alternative Reference Rates (“ARRs”) continue to develop in marketsaround the world, with work progressing to resolve certain issues associated with transitioningaway from interbank offered rates (“IBORs”). Regulatory authorities continue to focus ontransitioning to ARRs by the end of 2021. The Alternative Reference Rates Committee isconsidering potential legislative solutions that would mitigate legal risks related to legacycontracts in the event of IBOR discontinuation. In addition, in October 2019, the US TreasuryDepartment and Internal Revenue Service published proposed regulations providing tax reliefrelated to issues that may arise as a result of the modification of debt, derivative, and otherfinancial contracts from IBOR-based language to ARRs. The European Central Bank publishedthe euro short-term rate (€STR), the risk-free rate for EUR markets, for the first time on 2October 2019, reflecting trading activity on 1 October 2019. The Bank of England WorkingGroup on Sterling Risk-Free Reference Rates continues to be supportive of the development ofa term reference rate (Sterling Overnight Index Average, or SONIA).

UBS has a substantial number of contracts linked to IBORs. The new, risk-free ARRs do notcurrently provide a term structure, which will require a change in the contractual terms ofproducts currently indexed on terms other than overnight. UBS has established across-divisional, cross-regional governance structure and change program to address the scaleand complexity of the transition.

Strategic partnership with Banco do Brasil

In September 2019, UBS announced its intention to enter into a strategic investment bankingpartnership with Banco do Brasil. By building on the complementary strengths of both firms,UBS and Banco do Brasil believe that the formation of a strategic, long-term partnership willcreate a leading investment bank platform in South America with global coverage. It is envisaged

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that UBS will hold the majority (50.01%) of the shares in the partnership, which would beestablished by a contribution of assets by both parties. Closing of the transaction is subject tothe execution of transaction documents as well as obtaining all required internal and externalapprovals.

Structural changes in the Investment Bank

UBS is realigning its Investment Bank to meet the evolving needs of its clients, further focus itsresources on opportunities for profitable growth and allow it to invest in UBS’s digitaltransformation. Corporate Client Solutions (CCS) and Investor Client Services (ICS) will berenamed Global Banking and Global Markets, respectively. Global Banking will adopt a globalcoverage model and will deploy its global industry expertise to meet the needs of its mostimportant clients. Global Markets will combine Equities and Foreign Exchange, Rates andCredit, and will introduce three product verticals (Execution & Platform, Derivatives &Solutions, and Financing). Research and Evidence Lab Innovations will continue to be a criticalpart of the Investment Bank’s advisory and content offering. Associated with these changes,which will be effective 1 January 2020, UBS expects the Investment Bank to incur restructuringexpenses of around USD 100 million in the fourth quarter of 2019.

Separately, UBS is continuing to execute on various strategic initiatives across the Group andis considering opportunities that would leverage its technology capabilities, build on itsstrengths and focus resources on growth areas. These opportunities may include strategicpartnerships, additional collaboration across business divisions, evolution of UBS’s businessmodels and optimization of UBS’s legal entities.

Refer to the “Recent developments” section of the UBS Group AG third quarter 2019 reportpublished on 22 October 2019 (“UBS Group Third Quarter 2019 Report”), as well as to the“Regulatory and legal developments” in the “Our strategy, business model and environment”section of the Annual Report 2018 for further information on key accounting, regulatory andlegal developments.

3.3. Trend Information

As indicated in the UBS Group Third Quarter 2019 Report, stimulus measures and easing ofmonetary policy by central banks may help to mitigate slowing global economic growth over themedium term. Geopolitical tensions and trade disputes continue to impact investor confidence.Positive momentum toward resolving these issues would likely improve confidence and theeconomic outlook. Low and persistent negative interest rates and expectations of furthermonetary easing will adversely affect net interest income compared with last year. UBS’sregional and business diversification, along with actions that UBS is taking, will help to mitigatethese headwinds. Recurring revenues should also benefit from higher invested assets. As itexecutes on its strategy, UBS is balancing investments for growth while managing for efficiency.UBS remains committed to delivering on its capital return objectives and creating sustainablelong-term value for UBS shareholders.

Refer to “Our environment” and “Risk factors” in the “Our strategy, business model andenvironment” section of the Annual Report 2018 for more information.

4. Board of Directors

The BoD consists of at least five and no more than twelve members. All the members of the BoDare elected individually by the Annual General Meeting of Shareholders (“AGM”) for a term ofoffice of one year, which expires after the completion of the next AGM. Shareholders also electthe Chairman upon proposal of the BoD.

The BoD meets as often as business requires, and at least six times a year.

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4.1. Members of the Board of Directors

Member Title

Term of

office Current principal activities outside UBS AG

Axel A. Weber Chairman 2020 Chairman of the Board of Directors of UBS GroupAG; board member of the Swiss Bankers Association;Trustees Board member of Avenir Suisse; AdvisoryBoard member of the “Beirat Zukunft Finanzplatz”;board member of the Swiss Finance Council;Chairman of the board of the Institute of InternationalFinance; member of the European Financial ServicesRound Table; member of the European BankingGroup; member of the International AdvisoryCouncils of the China Banking and InsuranceRegulatory Commission and the China SecuritiesRegulatory Commission; member of the InternationalAdvisory Panel, Monetary Authority of Singapore;member of the Group of Thirty, Washington, D.C.;Chairman of the Board of Trustees of DIW Berlin;Advisory Board member of the Department ofEconomics, University of Zurich; member of theTrilateral Commission.

David Sidwell ViceChairman

2020 Vice Chairman and Senior Independent Director ofthe Board of Directors of UBS Group AG; SeniorAdvisor at Oliver Wyman, New York; board memberof Chubb Limited; board member of GAVI Alliance;Chairman of the Board of Village Care, New York.

Jeremy Anderson Member 2020 Member of the Board of Directors of UBS Group AG;trustee of the UK’s Productivity Leadership Group;trustee of Kingham Hill Trust; trustee of St. HelenBishopsgate.

William C.Dudley

Member 2020 Member of the Board of Directors of UBS Group AG;senior research scholar at the Griswold Center forEconomic Policy Studies at Princeton University;member of the Group of Thirty; member of theCouncil on Foreign Relations.

Reto Francioni Member 2020 Member of the Board of Directors of UBS Group AG;professor at the University of Basel; board member ofCoca-Cola HBC AG (Senior IndependentNon-Executive Director); Chairman of the board ofSwiss International Air Lines AG; board member ofMedTech Innovation Partners AG; executive directorand member of my TAMAR GmBH.

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Member Title

Term of

office Current principal activities outside UBS AG

Fred Hu Member 2020 Member of the Board of Directors of UBS Group AG;non-executive chairman of the board of Yum ChinaHoldings; board member of ICBC; board member ofHong Kong Exchanges and Clearing Ltd.; founderand chairman of Primavera Capital Group; boardmember of China Asset Management; board memberof Minsheng Financial Leasing Co.; trustee of theChina Medical Board; Governor of the ChineseInternational School; co-chairman of the NatureConservancy Asia Pacific Council; director andmember of the Executive Committee of China VentureCapital and Private Equity Association Ltd.; GlobalAdvisory Board member of the Council on ForeignRelations.

Julie G.Richardson

Member 2020 Member of the Board of Directors of UBS Group AG;board member of The Hartford Financial ServicesGroup, Inc. (chairman of the audit committee); boardmember of Yext (chairman of the audit committee);board member of Vereit, Inc. (chairman of thecompensation committee); board member of Datalog.

Isabelle Romy Member 2020 Member of the Board of Directors of UBS Group AG;partner and board member at Froriep Legal AG;professor at the University of Fribourg and at theFederal Institute of Technology, Lausanne; boardmember of Central Real Estate Holding AG (Zurich);board member of Central Real Estate Basel AG; ViceChairman of the Sanction Commission of SIX SwissExchange; member of the Fundraising Committee ofthe Swiss National Committee for UNICEF;Supervisory Board member of the CAS programFinancial Regulation of the University of Bern andUniversity of Geneva.

Robert W. Scully Member 2020 Member of the Board of Directors of UBS Group AG;board member of Chubb Limited (chairperson of theaudit committee); board member of Zoetis Inc.; boardmember of KKR & Co Inc.; board member of TeachFor All.

Beatrice Weder diMauro

Member 2020 Member of the Board of Directors of UBS Group AG;Research Professor and Distinguished Fellow atINSEAD in Singapore; Supervisory Board member ofRobert Bosch GmbH; board member of BombardierInc.; member of the ETH Zurich Foundation Board ofTrustees; member of the Foundation Board of theInternational Center for Monetary and BankingStudies (ICMB).

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Member Title

Term of

office Current principal activities outside UBS AG

Dieter Wemmer Member 2020 Member of the Board of Directors of UBS Group AG;board member of Ørsted A/S; member of the BerlinCenter of Corporate Governance.

Jeanette Wong Member 2020 Member of the Board of Directors of UBS Group AG;board member of Essilor International andEssilorLuxottica; board member of Jurong TownCorporation; board member of PSA International;board member of FFMC Holdings Pte. Ltd.; boardmember of Fullerton Fund Management CompanyLtd.; member of the NUS Business SchoolManagement Advisory Board; member of the GlobalAdvisory Board, Asia, University of Chicago BoothSchool of Business; member of the SecuritiesIndustry Council.

5. Litigation, Regulatory and Similar Matters

UBS operates in a legal and regulatory environment that exposes it to significant litigation andsimilar risks arising from disputes and regulatory proceedings. As a result, UBS (which forpurposes of this section may refer to UBS AG and / or one or more of its subsidiaries, asapplicable) is involved in various disputes and legal proceedings, including litigation,arbitration, and regulatory and criminal investigations.

Such matters are subject to many uncertainties, and the outcome and the timing of resolution areoften difficult to predict, particularly in the earlier stages of a case. There are also situationswhere UBS may enter into a settlement agreement. This may occur in order to avoid the expense,management distraction or reputational implications of continuing to contest liability, even forthose matters for which UBS believes it should be exonerated. The uncertainties inherent in allsuch matters affect the amount and timing of any potential outflows for both matters with respectto which provisions have been established and other contingent liabilities. UBS makesprovisions for such matters brought against it when, in the opinion of management after seekinglegal advice, it is more likely than not that UBS has a present legal or constructive obligationas a result of past events, it is probable that an outflow of resources will be required, and theamount can be reliably estimated. Where these factors are otherwise satisfied, a provision maybe established for claims that have not yet been asserted against UBS, but are neverthelessexpected to be, based on UBS’s experience with similar asserted claims. If any of thoseconditions is not met, such matters result in contingent liabilities. If the amount of an obligationcannot be reliably estimated, a liability exists that is not recognized even if an outflow ofresources is probable. Accordingly, no provision is established even if the potential outflow ofresources with respect to such matters could be significant. Developments relating to a matterthat occur after the relevant reporting period, but prior to the issuance of financial statements,which affect management’s assessment of the provision for such matter (because, for example,the developments provide evidence of conditions that existed at the end of the reporting period),are adjusting events after the reporting period under IAS 10 and must be recognized in thefinancial statements for the reporting period.

Specific litigation, regulatory and other matters are described below, including all such mattersthat management considers to be material and others that management believes to be ofsignificance due to potential financial, reputational and other effects. The amount of damagesclaimed, the size of a transaction or other information is provided where available andappropriate in order to assist users in considering the magnitude of potential exposures.

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In the case of certain matters below, UBS states that it has established a provision, and for the

other matters, it makes no such statement. When UBS makes this statement and it expects

disclosure of the amount of a provision to prejudice seriously its position with other parties in

the matter because it would reveal what UBS believes to be the probable and reliably estimable

outflow, UBS does not disclose that amount. In some cases UBS is subject to confidentiality

obligations that preclude such disclosure. With respect to the matters for which UBS does not

state whether it has established a provision, either (a) it has not established a provision, in which

case the matter is treated as a contingent liability under the applicable accounting standard; or

(b) it has established a provision but expects disclosure of that fact to prejudice seriously its

position with other parties in the matter because it would reveal the fact that UBS believes an

outflow of resources to be probable and reliably estimable.

With respect to certain litigation, regulatory and similar matters for which UBS has established

provisions, UBS is able to estimate the expected timing of outflows. However, the aggregate

amount of the expected outflows for those matters for which it is able to estimate expected

timing is immaterial relative to its current and expected levels of liquidity over the relevant time

periods.

The aggregate amount provisioned for litigation, regulatory and similar matters as a class is

disclosed in “Note 15a Provisions” of the UBS AG’s interim consolidated financial statements

included in the UBS AG third quarter 2019 report published on 25 October 2019 (“UBS AGThird Quarter 2019 Report”). It is not practicable to provide an aggregate estimate of liability

for UBS’s litigation, regulatory and similar matters as a class of contingent liabilities. Doing so

would require UBS to provide speculative legal assessments as to claims and proceedings that

involve unique fact patterns or novel legal theories, that have not yet been initiated or are at

early stages of adjudication, or as to which alleged damages have not been quantified by the

claimants. Although it therefore cannot provide a numerical estimate of the future losses that

could arise from litigation, regulatory and similar matters, UBS believes that the aggregate

amount of possible future losses from this class that are more than remote substantially exceeds

the level of current provisions. Litigation, regulatory and similar matters may also result in

non-monetary penalties and consequences. For example, the non-prosecution agreement

described in item E of this section, which UBS entered into with the US Department of Justice

(“DOJ”), Criminal Division, Fraud Section in connection with UBS’s submissions of benchmark

interest rates, including, among others, the British Bankers’ Association London Interbank

Offered Rate (“LIBOR”), was terminated by the DOJ based on its determination that UBS had

committed a US crime in relation to foreign exchange matters. As a consequence, UBS AG

pleaded guilty to one count of wire fraud for conduct in the LIBOR matter, paid a fine and is

subject to probation through January 2020. A guilty plea to, or conviction of, a crime could have

material consequences for UBS. Resolution of regulatory proceedings may require UBS to obtain

waivers of regulatory disqualifications to maintain certain operations, may entitle regulatory

authorities to limit, suspend or terminate licenses and regulatory authorizations and may permit

financial market utilities to limit, suspend or terminate UBS’s participation in such utilities.

Failure to obtain such waivers, or any limitation, suspension or termination of licenses,

authorizations or participations, could have material consequences for UBS.

The risk of loss associated with litigation, regulatory and similar matters is a component of

operational risk for purposes of determining UBS’s capital requirements. Information

concerning UBS’s capital requirements and the calculation of operational risk for this purpose

is included in the “Capital management” section of the UBS Group Third Quarter 2019 Report.

− 15 −

Provisions for litigation, regulatory and similar matters by business division and inCorporate Center1

USD million

GlobalWealth

Manage-ment

Personal&

CorporateBanking

AssetManage-

mentInvestment

BankCorporate

Center UBS

Balance as of 31 December 2018 1,003 117 0 269 1,438 2,827

Balance as of 30 June 2019 858 114 0 202 1,334 2,509

Increase in provisions recognized in theincome statement 71 0 0 0 0 72

Release of provisions recognized in theincome statement (1) 0 0 0 (4) (4)

Provisions used in conformity withdesignated purpose (42) (1) 0 0 (1) (44)

Foreign currency translation / unwind ofdiscount (20) (4) 0 (5) (1) (29)

Balance as of 30 September 2019 867 110 0 197 1,329 2,503

1 Provisions, if any, for the matters described in this section are recorded in Global Wealth Management (item C,item D and item G) and Corporate Center (item B). Provisions, if any, for the matters described in items A andF of this section are allocated between Global Wealth Management and Personal & Corporate Banking, andprovisions, if any, for the matters described in this section in item E are allocated between the Investment Bankand Corporate Center.

A. Inquiries regarding cross-border wealth management businesses

Tax and regulatory authorities in a number of countries have made inquiries, served requests forinformation or examined employees located in their respective jurisdictions relating to thecross-border wealth management services provided by UBS and other financial institutions. It ispossible that the implementation of automatic tax information exchange and other measuresrelating to cross-border provision of financial services could give rise to further inquiries in thefuture. UBS has received disclosure orders from the Swiss Federal Tax Administration (“FTA”)to transfer information based on requests for international administrative assistance in taxmatters. The requests concern a number of UBS account numbers pertaining to current andformer clients and are based on data from 2006 and 2008. UBS has taken steps to inform affectedclients about the administrative assistance proceedings and their procedural rights, including theright to appeal. The requests are based on data received from the German authorities, who seizedcertain data related to UBS clients booked in Switzerland during their investigations and haveapparently shared this data with other European countries. UBS expects additional countries tofile similar requests.

The Swiss Federal Administrative Court ruled in 2016 that, in the administrative assistanceproceedings related to a French bulk request, UBS has the right to appeal all final FTA clientdata disclosure orders. On 30 July 2018, the Swiss Federal Administrative Court granted UBS’sappeal by holding the French administrative assistance request inadmissible. The FTA filed afinal appeal with the Swiss Federal Supreme Court. The Supreme Court on 26 July 2019,reversed the decision of the Federal Administrative Court. The judges also stated that the FTAmust ensure that the French authorities respect the principle of “speciality”, which requires theinformation furnished may only be used for the purposes specified in the request.

Since 2013, UBS (France) S.A., UBS AG and certain former employees have been underinvestigation in France for alleged complicity in unlawful solicitation of clients on Frenchterritory, regarding the laundering of proceeds of tax fraud, and banking and financialsolicitation by unauthorized persons. In connection with this investigation, the investigatingjudges ordered UBS AG to provide bail of EUR 1.1 billion and UBS (France) S.A. to post bailof EUR 40 million, which was reduced on appeal to EUR 10 million.

− 16 −

A trial in the court of first instance took place from 8 October 2018 until 15 November 2018.On 20 February 2019, the court announced a verdict finding UBS AG guilty of unlawfulsolicitation of clients on French territory and aggravated laundering of the proceeds of tax fraud,and UBS France S.A. guilty of aiding and abetting unlawful solicitation and laundering theproceeds of tax fraud. The court imposed fines aggregating EUR 3.7 billion on UBS AG and UBSFrance S.A. and awarded EUR 800 million of civil damages to the French state. UBS hasappealed the decision. Under French law, the judgment is suspended while the appeal is pending.The Court of Appeal will retry the case de novo as to both the law and the facts, and the finesand penalties can be greater than or less than those imposed by the court of first instance. Asubsequent appeal to the Cour de Cassation, France’s highest court, is possible with respect toquestions of law.

UBS believes that based on both the law and the facts the judgment of the court of first instanceshould be reversed. UBS believes it followed its obligations under Swiss and French law as wellas the European Savings Tax Directive. Even assuming liability, which it contests, UBS believesthe penalties and damage amounts awarded greatly exceed the amounts that could be supportedby the law and the facts. In particular, UBS believes the court incorrectly based the penalty onthe total regularized assets rather than on any unpaid taxes on those assets for which a fraud hasbeen characterized and further incorrectly awarded damages based on costs that were not provenby the civil party. Notwithstanding that UBS believes it should be acquitted, its balance sheetat 30 September 2019 reflected provisions with respect to this matter in an amount of USD 516million. The wide range of possible outcomes in this case contributes to a high degree ofestimation uncertainty. The provision reflected on UBS’s balance sheet at 30 September 2019reflects its best estimate of possible financial implications, although it is reasonably possiblethat actual penalties and civil damages could exceed the provision amount.

In 2016, UBS was notified by the Belgian investigating judge that it is under formalinvestigation regarding the laundering of proceeds of tax fraud, of banking and financialsolicitation by unauthorized persons, and of serious tax fraud. In 2018, tax authorities and aprosecutor’s office in Italy asserted that UBS is potentially liable for taxes and penalties as aresult of its activities in Italy from 2012 to 2017. In June 2019, UBS entered into a settlementagreement with the Italian tax authorities under which it paid EUR 101 million to resolve theclaims asserted by the authority related to UBS AG’s potential permanent establishment in Italy.In October 2019, the Judge of Preliminary Investigations of the Milan Court approved anagreement with the Milan prosecutor under Article 63 of Italian Administrative Law 231 underwhich UBS AG, UBS Switzerland AG and UBS Monaco will pay an aggregate of EUR 10.3million to resolve claims premised on the alleged inadequacy of historical internal controls. Noadmission of wrongdoing was required in connection with this resolution.

UBS’s balance sheet at 30 September 2019 reflected provisions with respect to matters describedin this item A in an amount that UBS believes to be appropriate under the applicable accountingstandard. As in the case of other matters for which UBS has established provisions, the futureoutflow of resources in respect of such matters cannot be determined with certainty based oncurrently available information and accordingly may ultimately prove to be substantially greater(or may be less) than the provision that UBS has recognized.

B. Claims related to sales of residential mortgage-backed securities and mortgages

From 2002 through 2007, prior to the crisis in the US residential loan market, UBS was asubstantial issuer and underwriter of US residential mortgage-backed securities (“RMBS”) andwas a purchaser and seller of US residential mortgages. A subsidiary of UBS, UBS Real EstateSecurities Inc. (“UBS RESI”), acquired pools of residential mortgage loans from originators and(through an affiliate) deposited them into securitization trusts. In this manner, from 2004through 2007, UBS RESI sponsored approximately USD 80 billion in RMBS, based on theoriginal principal balances of the securities issued.

− 17 −

UBS RESI also sold pools of loans acquired from originators to third-party purchasers. These

whole loan sales during the period 2004 through 2007 totalled approximately USD 19 billion inoriginal principal balance.

UBS was not a significant originator of US residential loans. A branch of UBS originatedapproximately USD 1.5 billion in US residential mortgage loans during the period in which itwas active from 2006 to 2008 and securitized less than half of these loans.

Lawsuits related to contractual representations and warranties concerning mortgages andRMBS: When UBS acted as an RMBS sponsor or mortgage seller, it generally made certainrepresentations relating to the characteristics of the underlying loans. In the event of a materialbreach of these representations, UBS was in certain circumstances contractually obligated torepurchase the loans to which the representations related or to indemnify certain parties againstlosses. In 2012, certain RMBS trusts filed an action in the US District Court for the SouthernDistrict of New York seeking to enforce UBS RESI’s obligation to repurchase loans in thecollateral pools for three RMBS securitizations issued and underwritten by UBS with an originalprincipal balance of approximately USD 2 billion. In July 2018, UBS and the trustee entered intoan agreement under which UBS will pay USD 850 million to resolve this matter. A significantportion of this amount will be borne by other parties that indemnified UBS. The settlementremains subject to court approval and proceedings to determine how the settlement funds willbe distributed to RMBS holders. After giving effect to this settlement, UBS considers claimsrelating to substantially all loan repurchase demands to be resolved and believes that newdemands to repurchase US residential mortgage loans are time-barred under a decision renderedby the New York Court of Appeals.

Mortgage-related regulatory matters: Since 2014, the US Attorney’s Office for the EasternDistrict of New York has sought information from UBS pursuant to the Financial InstitutionsReform, Recovery and Enforcement Act of 1989 (“FIRREA”), related to UBS’s RMBS businessfrom 2005 through 2007. On 8 November 2018, the DOJ filed a civil complaint in the DistrictCourt for the Eastern District of New York. The complaint seeks unspecified civil monetarypenalties under FIRREA related to UBS’s issuance, underwriting and sale of 40 RMBStransactions in 2006 and 2007. UBS moved to dismiss the civil complaint on 6 February 2019.

UBS’s balance sheet at 30 September 2019 reflected a provision with respect to mattersdescribed in this item B in an amount that UBS believes to be appropriate under the applicableaccounting standard. As in the case of other matters for which UBS has established provisions,the future outflow of resources in respect of this matter cannot be determined with certaintybased on currently available information and accordingly may ultimately prove to besubstantially greater (or may be less) than the provision that UBS has recognized.

C. Madoff

In relation to the Bernard L. Madoff Investment Securities LLC (“BMIS”) investment fraud,UBS AG, UBS (Luxembourg) S.A. (now UBS Europe SE, Luxembourg branch) and certain otherUBS subsidiaries have been subject to inquiries by a number of regulators, including FINMA andthe Luxembourg Commission de Surveillance du Secteur Financier. Those inquiries concernedtwo third-party funds established under Luxembourg law, substantially all assets of which werewith BMIS, as well as certain funds established in offshore jurisdictions with either direct orindirect exposure to BMIS. These funds faced severe losses, and the Luxembourg funds are inliquidation. The documentation establishing both funds identifies UBS entities in various roles,including custodian, administrator, manager, distributor and promoter, and indicates that UBSemployees serve as board members.

− 18 −

In 2009 and 2010, the liquidators of the two Luxembourg funds filed claims against UBS

entities, non-UBS entities and certain individuals, including current and former UBS employees,

seeking amounts totalling approximately EUR 2.1 billion, which includes amounts that the funds

may be held liable to pay the trustee for the liquidation of BMIS (“BMIS Trustee”).

A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS

entities) for purported losses relating to the Madoff fraud. The majority of these cases have been

filed in Luxembourg, where decisions that the claims in eight test cases were inadmissible have

been affirmed by the Luxembourg Court of Appeal, and the Luxembourg Supreme Court has

dismissed a further appeal in one of the test cases.

In the US, the BMIS Trustee filed claims against UBS entities, among others, in relation to the

two Luxembourg funds and one of the offshore funds. The total amount claimed against all

defendants in these actions was not less than USD 2 billion. In 2014, the US Supreme Court

rejected the BMIS Trustee’s motion for leave to appeal decisions dismissing all claims except

those for the recovery of approximately USD 125 million of payments alleged to be fraudulent

conveyances and preference payments. In 2016, the bankruptcy court dismissed these claims

against the UBS entities. The BMIS Trustee appealed. In February 2019, the Court of Appeals

reversed the dismissal of the BMIS Trustee’s remaining claims. In August 2019, the defendants,

including UBS, filed a petition to the US Supreme Court requesting that it review the Court of

Appeals’ decision. The bankruptcy proceedings have been stayed pending a decision with respect

to that petition.

D. Puerto Rico

Declines since 2013 in the market prices of Puerto Rico municipal bonds and of closed-end funds

(“funds”) that are sole-managed and co-managed by UBS Trust Company of Puerto Rico and

distributed by UBS Financial Services Incorporated of Puerto Rico (“UBS PR”) have led to

multiple regulatory inquiries, as well as customer complaints and arbitrations with aggregate

claimed damages of USD 3.4 billion, of which claims with aggregate claimed damages of USD

2.4 billion have been resolved through settlements, arbitration or withdrawal of the claim. The

claims have been filed by clients in Puerto Rico who own the funds or Puerto Rico municipal

bonds and / or who used their UBS account assets as collateral for UBS non-purpose loans;

customer complaint and arbitration allegations include fraud, misrepresentation and

unsuitability of the funds and of the loans.

A shareholder derivative action was filed in 2014 against various UBS entities and current and

certain former directors of the funds, alleging hundreds of millions of USD in losses in the

funds. In 2015, defendants’ motion to dismiss was denied and a request for permission to appeal

that ruling was denied by the Puerto Rico Supreme Court. In 2014, a federal class action

complaint also was filed against various UBS entities, certain members of UBS PR senior

management and the co-manager of certain of the funds, seeking damages for investor losses in

the funds during the period from May 2008 through May 2014. Following denial of the

plaintiffs’ motion for class certification, the case was dismissed in October 2018.

In 2014 and 2015, UBS entered into settlements with the Office of the Commissioner of

Financial Institutions for the Commonwealth of Puerto Rico, the US Securities and Exchange

Commission (“SEC”) and the Financial Industry Regulatory Authority in relation to their

examinations of UBS’s operations.

− 19 −

In 2011, a purported derivative action was filed on behalf of the Employee Retirement Systemof the Commonwealth of Puerto Rico (“System”) against over 40 defendants, including UBS PR,which was named in connection with its underwriting and consulting services. Plaintiffs allegedthat defendants violated their purported fiduciary duties and contractual obligations inconnection with the issuance and underwriting of USD 3 billion of bonds by the System in 2008and sought damages of over USD 800 million. In 2016, the court granted the System’s requestto join the action as a plaintiff, but ordered that plaintiffs must file an amended complaint. In2017, the court denied defendants’ motion to dismiss the amended complaint.

Beginning in 2015, and continuing through 2017, certain agencies and public corporations of theCommonwealth of Puerto Rico (“Commonwealth”) defaulted on certain interest payments onPuerto Rico bonds. In 2016, US federal legislation created an oversight board with power tooversee Puerto Rico’s finances and to restructure its debt. The oversight board has imposed astay on the exercise of certain creditors’ rights. In 2017, the oversight board placed certain ofthe bonds into a bankruptcy-like proceeding under the supervision of a Federal District Judge.These events, further defaults or any further legislative action to create a legal means ofrestructuring Commonwealth obligations or to impose additional oversight on theCommonwealth’s finances, or any restructuring of the Commonwealth’s obligations, mayincrease the number of claims against UBS concerning Puerto Rico securities, as well aspotential damages sought.

In May 2019, the oversight board filed complaints in Puerto Rico federal district court bringingclaims against financial, legal and accounting firms that had participated in Puerto Ricomunicipal bond offerings, including UBS, seeking a return of underwriting and swap fees paidin connection with those offerings. UBS estimates that it received approximately USD 125million in fees in the relevant offerings.

In August 2019, two US insurance companies that insured issues of Puerto Rico municipal bondssued UBS and seven other underwriters of Puerto Rico municipal bonds, alleging an aggregateof USD 720 million in damages from the defendants. The plaintiffs allege that defendants failedto reasonably investigate financial statements in the offering materials for the insured PuertoRico bonds issued between 2002 and 2007, which plaintiffs allege they relied upon in agreeingto insure the bonds notwithstanding that they had no contractual relationship with theunderwriters.

UBS’s balance sheet at 30 September 2019 reflected provisions with respect to matters describedin this item D in amounts that UBS believes to be appropriate under the applicable accountingstandard. As in the case of other matters for which UBS has established provisions, the futureoutflow of resources in respect of such matters cannot be determined with certainty based oncurrently available information and accordingly may ultimately prove to be substantially greater(or may be less) than the provisions that UBS has recognized.

E. Foreign exchange, LIBOR and benchmark rates, and other trading practices

Foreign exchange-related regulatory matters: Beginning in 2013, numerous authoritiescommenced investigations concerning possible manipulation of foreign exchange markets andprecious metals prices. In 2014 and 2015, UBS reached settlements with the UK FinancialConduct Authority (“FCA”) and the US Commodity Futures Trading Commission (“CFTC”) inconnection with their foreign exchange investigations, FINMA issued an order concluding itsformal proceedings relating to UBS’s foreign exchange and precious metals businesses, and theBoard of Governors of the Federal Reserve System and the Connecticut Department of Bankingissued a Cease and Desist Order and assessed monetary penalties against UBS AG. In 2015, theDOJ’s Criminal Division terminated the 2012 non-prosecution agreement with UBS AG relatedto UBS’s submissions of benchmark interest rates, and UBS AG pleaded guilty to one count ofwire fraud, paid a fine and is subject to probation through January 2020. In 2019 the EuropeanCommission announced two decisions with respect to foreign exchange trading. UBS was

− 20 −

granted immunity by the European Commission in these matters and therefore was not fined.UBS has ongoing obligations to cooperate with these authorities and to undertake certainremediation measures. UBS has also been granted conditional immunity by the AntitrustDivision of the DOJ and by authorities in other jurisdictions in connection with potentialcompetition law violations relating to foreign exchange and precious metals businesses.Investigations relating to foreign exchange matters by certain authorities remain ongoingnotwithstanding these resolutions.

Foreign exchange-related civil litigation: Putative class actions have been filed since 2013 in USfederal courts and in other jurisdictions against UBS and other banks on behalf of putativeclasses of persons who engaged in foreign currency transactions with any of the defendant banks.UBS has resolved US federal court class actions relating to foreign currency transactions withthe defendant banks and persons who transacted in foreign exchange futures contracts andoptions on such futures under a settlement agreement that provides for UBS to pay an aggregateof USD 141 million and provide cooperation to the settlement classes. Certain class membershave excluded themselves from that settlement and have filed individual actions in US andEnglish courts against UBS and other banks, alleging violations of US and European competitionlaws and unjust enrichment.

In 2015, a putative class action was filed in federal court against UBS and numerous other bankson behalf of persons and businesses in the US who directly purchased foreign currency from thedefendants and alleged co-conspirators for their own end use. In March 2017, the court grantedUBS’s (and the other banks’) motions to dismiss the complaint. The plaintiffs filed an amendedcomplaint in August 2017. In March 2018, the court denied the defendants’ motions to dismissthe amended complaint.

In 2017, two putative class actions were filed in federal court in New York against UBS andnumerous other banks on behalf of persons and entities who had indirectly purchased foreignexchange instruments from a defendant or co-conspirator in the US, and a consolidatedcomplaint was filed in June 2017. In March 2018, the court dismissed the consolidatedcomplaint. In October 2018, the court granted plaintiffs’ motion seeking leave to file an amendedcomplaint.

LIBOR and other benchmark-related regulatory matters: Numerous government agencies,including the SEC, the CFTC, the DOJ, the FCA, the UK Serious Fraud Office, the MonetaryAuthority of Singapore, the Hong Kong Monetary Authority, FINMA, various state attorneysgeneral in the US and competition authorities in various jurisdictions have conductedinvestigations regarding potential improper attempts by UBS, among others, to manipulateLIBOR and other benchmark rates at certain times. UBS reached settlements or otherwiseconcluded investigations relating to benchmark interest rates with the investigating authorities.UBS has ongoing obligations to cooperate with the authorities with whom UBS has reachedresolutions and to undertake certain remediation measures with respect to benchmark interestrate submissions. UBS has been granted conditional leniency or conditional immunity fromauthorities in certain jurisdictions, including the Antitrust Division of the DOJ and the SwissCompetition Commission (“WEKO”), in connection with potential antitrust or competition lawviolations related to certain rates. However, UBS has not reached a final settlement with WEKO,as the Secretariat of WEKO has asserted that UBS does not qualify for full immunity.

LIBOR and other benchmark-related civil litigation: A number of putative class actions andother actions are pending in the federal courts in New York against UBS and numerous otherbanks on behalf of parties who transacted in certain interest rate benchmark-based derivatives.Also pending in the US and in other jurisdictions are a number of other actions asserting lossesrelated to various products whose interest rates were linked to LIBOR and other benchmarks,including adjustable rate mortgages, preferred and debt securities, bonds pledged as collateral,loans, depository accounts, investments and other interest-bearing instruments. The complaints

− 21 −

allege manipulation, through various means, of certain benchmark interest rates, including USDLIBOR, Euroyen TIBOR, Yen LIBOR, EURIBOR, CHF LIBOR, GBP LIBOR, SGD SIBOR andSOR and Australian BBSW, and seek unspecified compensatory and other damages undervarying legal theories.

USD LIBOR class and individual actions in the US: In 2013 and 2015, the district court in theUSD LIBOR actions dismissed, in whole or in part, certain plaintiffs’ antitrust claims, federalracketeering claims, CEA claims, and state common law claims. Although the Second Circuitvacated the district court’s judgment dismissing antitrust claims, the district court againdismissed antitrust claims against UBS in 2016. Certain plaintiffs have appealed that decisionto the Second Circuit. Separately, in 2018, the Second Circuit reversed in part the district court’s2015 decision dismissing certain individual plaintiffs’ claims and certain of these actions arenow proceeding. UBS entered into an agreement in 2016 with representatives of a class ofbondholders to settle their USD LIBOR class action. The agreement has received preliminarycourt approval and remains subject to final approval. In 2018, the district court denied plaintiffs’motions for class certification in the USD class actions for claims pending against UBS, andplaintiffs sought permission to appeal that ruling to the Second Circuit. In July 2018, the SecondCircuit denied the petition to appeal of the class of USD lenders and in November 2018 deniedthe petition of the USD exchange class. In January 2019, a putative class action was filed in theDistrict Court for the Southern District of New York against UBS and numerous other banks onbehalf of US residents who, since 1 February 2014, directly transacted with a defendant bank inUSD LIBOR instruments. The complaint asserts antitrust claims. The defendants moved todismiss the complaint on 30 August 2019.

Other benchmark class actions in the US: In 2014, the court in one of the Euroyen TIBORlawsuits dismissed certain of the plaintiffs’ claims, including a federal antitrust claim, for lackof standing. In 2015, this court dismissed the plaintiffs’ federal racketeering claims on the samebasis and affirmed its previous dismissal of the plaintiffs’ antitrust claims against UBS. In 2017,this court also dismissed the other Yen LIBOR / Euroyen TIBOR action in its entirety onstanding grounds, as did the court in the CHF LIBOR action. Also in 2017, the courts in theEURIBOR lawsuit dismissed the cases as to UBS and certain other foreign defendants for lackof personal jurisdiction. Plaintiffs in the other Yen LIBOR, Euroyen TIBOR and the EURIBORactions have appealed the dismissals. In October 2018, the court in the SIBOR / SOR actiondismissed all but one of plaintiffs’ claims against UBS. Plaintiffs in the CHF LIBOR and SIBOR/ SOR actions filed amended complaints following the dismissals, and the courts grantedrenewed motions to dismiss in July 2019 (SIBOR / SOR) and in September 2019 (CHF LIBOR).Plaintiffs in the SIBOR / SOR action have appealed the dismissal. In November 2018, the courtin the BBSW lawsuit dismissed the case as to UBS and certain other foreign defendants for lackof personal jurisdiction. Following that dismissal, plaintiffs in the BBSW action filed anamended complaint in April 2019, which UBS and other defendants named in the amendedcomplaint have moved to dismiss. The court dismissed the GBP LIBOR action in August 2019,and plaintiffs appealed the dismissal in September 2019.

Government bonds: Putative class actions have been filed since 2015 in US federal courtsagainst UBS and other banks on behalf of persons who participated in markets for US Treasurysecurities since 2007. A consolidated complaint was filed in 2017 in the US District Court forthe Southern District of New York alleging that the banks colluded with respect to, andmanipulated prices of, US Treasury securities sold at auction and in the secondary market andasserting claims under the antitrust laws and for unjust enrichment. Defendants’ motions todismiss the consolidated complaint are pending.

UBS and reportedly other banks are responding to investigations and requests for informationfrom various authorities regarding US Treasury securities and other government bond tradingpractices. As a result of its review to date, UBS has taken appropriate action.

− 22 −

With respect to additional matters and jurisdictions not encompassed by the settlements andorders referred to above, UBS’s balance sheet at 30 September 2019 reflected a provision in anamount that UBS believes to be appropriate under the applicable accounting standard. As in thecase of other matters for which UBS has established provisions, the future outflow of resourcesin respect of such matters cannot be determined with certainty based on currently availableinformation and accordingly may ultimately prove to be substantially greater (or may be less)than the provision that UBS has recognized.

F. Swiss retrocessions

The Federal Supreme Court of Switzerland ruled in 2012, in a test case against UBS, thatdistribution fees paid to a firm for distributing third-party and intra-group investment funds andstructured products must be disclosed and surrendered to clients who have entered into adiscretionary mandate agreement with the firm, absent a valid waiver.

FINMA has issued a supervisory note to all Swiss banks in response to the Supreme Courtdecision. UBS has met the FINMA requirements and has notified all potentially affected clients.

The Supreme Court decision has resulted, and may continue to result, in a number of clientrequests for UBS to disclose and potentially surrender retrocessions. Client requests are assessedon a case-by-case basis. Considerations taken into account when assessing these cases include,among other things, the existence of a discretionary mandate and whether or not the clientdocumentation contained a valid waiver with respect to distribution fees.

UBS’s balance sheet at 30 September 2019 reflected a provision with respect to mattersdescribed in this item F in an amount that UBS believes to be appropriate under the applicableaccounting standard. The ultimate exposure will depend on client requests and the resolutionthereof, factors that are difficult to predict and assess. Hence, as in the case of other matters forwhich UBS has established provisions, the future outflow of resources in respect of such matterscannot be determined with certainty based on currently available information and accordinglymay ultimately prove to be substantially greater (or may be less) than the provision that UBS hasrecognized.

G. Securities transaction pricing and disclosure

UBS identified and reported to the relevant authorities instances in which some Global WealthManagement clients booked in Hong Kong and Singapore may have been charged inappropriatespreads on debt securities transactions between 2008 and 2015. UBS intends to reimburseaffected customers on a basis agreed with the relevant authorities. UBS expects the relevantauthorities will subject UBS to reprimands and fines as a result of their investigations.

UBS’s balance sheet at 30 September 2019 reflected a provision with respect to the matterdescribed in this item G in an amount that UBS believes to be appropriate under the applicableaccounting standard. The future outflow of resources in respect of this matter cannot bedetermined with certainty based on currently available information and accordingly mayultimately prove to be greater (or may be less) than the provision that UBS has recognized.

5.1. Material Contracts

No material contracts have been entered into outside of the ordinary course of UBS AG’s or UBSAG Group’s business, which could result in any member of the UBS AG Group being under anobligation or entitlement that is material to UBS AG’s ability to meet its obligations to theinvestors in relation to the issued securities.

− 23 −

5.2. Significant Changes in the Financial or Trading Position and Performance; MaterialAdverse Change in Prospects

Except as otherwise indicated in this document (including the documents incorporated herein by

reference), no material changes have occurred in UBS AG’s assets and liabilities, financial

position or profits and losses since 30 September 2019.

There has been no material adverse change in the prospects of UBS AG or UBS AG Group since

31 December 2018.

− 24 −

THE UNAUDITED FINANCIAL INFORMATION OFUBS AG FOR THE QUARTERLY PERIOD ENDED 30 SEPTEMBER 2019

- EXTRACTED FROM UBS AG’S THIRD QUARTER2019 FINANCIAL REPORT

The information set out below in this section has been extracted without adjustment from the

unaudited third quarter 2019 financial report of UBS AG for the quarterly period ended 30 September

2019 released on 25 October 2019. The page numbers of the third quarter 2019 financial report appear

on the bottom left or right hand side of the pages in this addendum.

The third quarter 2019 financial report is available for inspection at the office of the Sponsor specified

on the back page. You may also visit our website at

https://www.ubs.com/global/en/investor-relations/financial-information/quarterly-reporting/2019.html

to access such report.

− 25 −

17

UBS AG interim consolidatedfinancial statements (unaudited)

Income statementFor the quarter ended Year-to-date

USD million Note 330.9.19 30.6.19 30.9.18 30.9.19 30.9.18Interest income from financial instruments measured at amortized cost and fair value throughother comprehensive income 3 2,704 2,755 2,542 8,133 7,430Interest expense from financial instruments measured at amortized cost 3 (1,805) (1,986) (1,673) (5,703) (4,683)

Interest income from financial instruments measured at fair value through profit or loss 3 1,211 1,259 1,116 3,815 3,327

Interest expense from financial instruments measured at fair value through profit or loss 3 (1,043) (1,025) (823) (3,074) (2,309)

Net interest income 3 1,067 1,003 1,161 3,171 3,765

Other net income from financial instruments measured at fair value through profit or loss 1,585 1,936 1,691 5,457 5,659

Credit loss (expense) / recovery 9 (38) (12) (10) (70) (64)

Fee and commission income 4 4,822 4,908 4,875 14,296 14,923

Fee and commission expense 4 (396) (434) (409) (1,238) (1,263)

Net fee and commission income 4 4,426 4,474 4,466 13,057 13,660

Other income 5 147 232 218 547 540

Total operating income 7,187 7,632 7,526 22,162 23,559

Personnel expenses 6 3,438 3,571 3,398 10,478 10,730

General and administrative expenses 7 2,101 2,004 2,277 6,131 6,981

Depreciation and impairment of property, equipment and software 387 381 269 1,148 758

Amortization and impairment of intangible assets 16 18 15 50 48

Total operating expenses 5,942 5,975 5,960 17,807 18,517

Operating profit / (loss) before tax 1,245 1,657 1,566 4,355 5,042

Tax expense / (benefit) 8 276 349 421 1,012 1,202

Net profit / (loss) 969 1,308 1,145 3,343 3,840

Net profit / (loss) attributable to non-controlling interests 1 1 3 0 6

NNet profit / (loss) attributable to shareholders 967 1,307 1,142 3,343 3,834

− 26 −

UBS AG interim consolidated financial statements (unaudited)

18

Statement of comprehensive income

For the quarter ended Year-to-date

USD million 330.9.19 30.6.19 30.9.18 30.9.19 30.9.18

Comprehensive income attributable to shareholders

NNet profit / (loss) 967 1,307 1,142 3,343 3,834

OOther comprehensive income that may be reclassified to the income statement

FForeign currency translation

Foreign currency translation movements related to net assets of foreign operations, before tax (659) 294 31 (516) (572)

Effective portion of changes in fair value of hedging instruments designated as net investment hedges, before tax 300 (121) 107 205 160

Foreign currency translation differences on foreign operations reclassified to the income statement 45 3 5 49 11Effective portion of changes in fair value of hedging instruments designated as net investment hedges reclassified to the income statement 1 (13) 0 (12) 0Income tax relating to foreign currency translations, including the impact of net investment hedges 0 (2) (2) 0 (2)Subtotal foreign currency translation, net of tax (314) 161 141 (275) (403)

FFinancial assets measured at fair value through other comprehensive income

Net unrealized gains / (losses), before tax 30 90 (25) 201 (124)

Impairment charges reclassified to the income statement from equity 0 0 0 0 0

Realized gains reclassified to the income statement from equity (26) (2) 0 (30) 0

Realized losses reclassified to the income statement from equity 1 1 0 2 0

Income tax relating to net unrealized gains / (losses) (4) (24) 6 (45) 35Subtotal financial assets measured at fair value through other comprehensive income, net of tax 0 65 (18) 128 (89)

CCash flow hedges of interest rate risk

Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax 542 987 (257) 2,116 (859)

Net (gains) / losses reclassified to the income statement from equity (49) (24) (46) (93) (251)

Income tax relating to cash flow hedges (76) (191) 65 (374) 224Subtotal cash flow hedges, net of tax 417 773 (237) 1,649 (885)

TTotal other comprehensive income that may be reclassified to the income statement, net of tax 103 999 (115) 1,501 (1,378)

OOther comprehensive income that will not be reclassified to the income statement

DDefined benefit plans

Gains / (losses) on defined benefit plans, before tax 1,459 18 (45) 1,317 171

Income tax relating to defined benefit plans (283) (7) 2 (306) 26

Subtotal defined benefit plans, net of tax 1,176 11 (43) 1,011 197

OOwn credit on financial liabilities designated at fair value

Gains / (losses) from own credit on financial liabilities designated at fair value, before tax 1 72 (289) (253) 141

Income tax relating to own credit on financial liabilities designated at fair value 0 0 2 8 0

Subtotal own credit on financial liabilities designated at fair value, net of tax 1 72 (288) (245) 141

TTotal other comprehensive income that will not be reclassified to the income statement, net of tax 1,177 83 (331) 767 338

TTotal other comprehensive income 1,280 1,082 (446) 2,268 (1,040)

TTotal comprehensive income attributable to shareholders 2,248 2,389 696 5,611 2,795

− 27 −

19

Statement of comprehensive income (continued)For the quarter ended Year-to-date

USD million 330.9.19 30.6.19 30.9.18 30.9.19 30.9.18

Comprehensive income attributable to non-controlling interests

NNet profit / (loss) 1 1 3 0 6

OOther comprehensive income that will not be reclassified to the income statement

Foreign currency translation movements, before tax (6) (6) 1 (8) (2)

Income tax relating to foreign currency translation movements 0 0 0 0 0

Subtotal foreign currency translation, net of tax (6) (6) 1 (8) (2)

TTotal other comprehensive income that will not be reclassified to the income statement, net of tax (6) (6) 1 (8) (2)

TTotal comprehensive income attributable to non-controlling interests (5) (5) 4 (8) 4

Total comprehensive income

NNet profit / (loss) 969 1,308 1,145 3,343 3,840

OOther comprehensive income 1,274 1,076 (445) 2,260 (1,042)

of which: other comprehensive income that may be reclassified to the income statement 103 999 (115) 1,501 (1,378)

of which: other comprehensive income that will not be reclassified to the income statement 1,171 77 (330) 759 336

TTotal comprehensive income 2,243 2,384 700 5,603 2,798

− 28 −

UBS AG interim consolidated financial statements (unaudited)

20

Balance sheetUSD million Note 330.9.19 30.6.19 31.12.18

AssetsCash and balances at central banks 91,292 101,457 108,370

Loans and advances to banks 12,938 12,682 16,642

Receivables from securities financing transactions 91,954 92,919 95,349

Cash collateral receivables on derivative instruments 11 25,659 23,774 23,603

Loans and advances to customers 9 321,666 324,288 321,482

Other financial assets measured at amortized cost 12 23,597 22,225 22,637

TTotal financial assets measured at amortized cost 567,107 577,345 588,084

Financial assets at fair value held for trading 10 116,020 120,232 104,513

of which: assets pledged as collateral that may be sold or repledged by counterparties 40,412 36,010 32,121

Derivative financial instruments 10, 11 134,242 121,687 126,212

Brokerage receivables 10 17,653 16,915 16,840

Financial assets at fair value not held for trading 10 92,869 89,269 82,387

TTotal financial assets measured at fair value through profit or loss 360,783 348,103 329,953

FFinancial assets measured at fair value through other comprehensive income 10 6,993 7,422 6,667

Investments in associates 1,009 1,049 1,099

Property, equipment and software 11,559 11,725 8,479

Goodwill and intangible assets 6,560 6,624 6,647

Deferred tax assets 9,456 9,545 10,066

Other non-financial assets 12 8,580 6,833 7,062

TTotal assets 972,048 968,645 958,055

− 29 −

21

Balance sheet (continued)USD million Note 330.9.19 30.6.19 31.12.18

LiabilitiesAmounts due to banks 8,235 9,494 10,962

Payables from securities financing transactions 5,570 6,798 10,296

Cash collateral payables on derivative instruments 11 32,291 31,449 28,906

Customer deposits 429,143 435,582 421,986

Funding from UBS Group AG and its subsidiaries 47,554 45,224 41,202

Debt issued measured at amortized cost 14 69,739 75,679 91,245

Other financial liabilities measured at amortized cost 12 11,062 10,927 7,576

TTotal financial liabilities measured at amortized cost 603,594 615,153 612,174

Financial liabilities at fair value held for trading 10 33,502 32,277 28,949

Derivative financial instruments 10, 11 131,435 121,087 125,723

Brokerage payables designated at fair value 10 38,260 36,929 38,420

Debt issued designated at fair value 10, 13 66,709 67,984 57,031

Other financial liabilities designated at fair value 10, 12 34,782 34,407 33,594

TTotal financial liabilities measured at fair value through profit or loss 304,689 292,684 283,717

Provisions 15 2,928 2,978 3,457

Other non-financial liabilities 12 6,059 5,301 6,275

TTotal liabilities 917,271 916,116 905,624

Equity

Share capital 338 338 338

Share premium 24,660 24,654 24,655

Retained earnings 24,175 22,017 23,317

Other comprehensive income recognized directly in equity, net of tax 5,440 5,350 3,946

EEquity attributable to shareholders 54,613 52,359 52,256

Equity attributable to non-controlling interests 163 170 176

TTotal equity 54,776 52,529 52,432

TTotal liabilities and equity 972,048 968,645 958,055

− 30 −

Notes to the UBS AG interim consolidated financial statements (unaudited)

26

Notes to the UBS AG interim consolidated financial statements (unaudited)

Note 1 Basis of accounting

Basis of preparation

The consolidated financial statements (the financial statements) of UBS AG and its subsidiaries (together, “UBS AG”) are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and are presented in US dollars (USD), which is also the functional currency of UBS AG’s Head Office, UBS AG’s London Branch and UBS AG’s US-based operations. These interim financial statements are prepared in accordance with IAS 34, Interim Financial Reporting.

In preparing these interim financial statements, the same accounting policies and methods of computation have been applied as in the UBS AG consolidated annual financial statements for the period ended 31 December 2018, except for the changes described in this note. These interim financial statements are unaudited and should be read in conjunction with UBS AG’s audited consolidated financial statements included in the Annual Report 2018. In the opinion of management, all necessary adjustments were made for a fair presentation of UBS AG’s financial position, results of operations and cash flows.

Preparation of these interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities. These estimates and assumptions are based on the best available information. Actual results in the future could differ from such estimates and such differences may be material to the financial statements. Revisions to estimates, based on regular reviews, are recognized in the period in which they occur. For more information about areas of estimation uncertainty that are considered to require critical judgment, refer to “Note 1a Significant accounting policies” in the “Consolidated financial statements” section of the Annual Report 2018.

Adoption of IFRS 16, Leases

Application and transition effectEffective from 1 January 2019, UBS AG adopted IFRS 16, Leases, which replaced IAS 17, Leases, and sets out the principles for the recognition, measurement, presentation and disclosure of leases.

IFRS 16 introduces a single lessee accounting model and fundamentally changes how UBS AG accounts for operating leases when acting as a lessee, with a requirement to record a right-of-use asset and lease liability on the balance sheet. UBS AG is a lessee in a number of leases, primarily of real estate, including offices, retail branches and sales offices, with a smaller number of IT hardware leases. As permitted by the transitional provisions of IFRS 16, UBS AG elected to apply the modified retrospective approach and has not restated comparative figures. Overall, adoption of IFRS 16 resulted in a USD 3.4 billion increase in both total assets and total liabilities in UBS AG’s consolidated financial statements. There was no effect on equity.

→ Refer to the tables on the next page for more information

UBS AG applied the following practical expedients that are permitted on transition to IFRS 16 where UBS AG is the lessee in a lease previously classified as an operating lease:– to not reassess whether or not a contract contained a lease;– to rely on previous assessments of whether such contracts

were considered onerous;– to rely on previous sale-and-leaseback assessments;– to adjust lease terms with the benefit of hindsight with

respect to whether extension or termination options arereasonably certain of being exercised;

– to discount lease liabilities using UBS AG’s incrementalborrowing rate in each currency as at 1 January 2019;

– to initially measure the right-of-use asset at an amount equalto the lease liability for leases previously classified asoperating leases, adjusted for existing lease balances such asrent prepayments, rent accruals, lease incentives and onerouslease provisions, but excluding initial direct costs; and

– to not apply IFRS 16 to leases in which the remaining termwill end within 12 months from the transition date.

− 31 −

27

Note 1 Basis of accounting (continued)

The measurement of leases previously classified as finance leases where UBS AG acts as a lessee has not changed on transition to IFRS 16. Similarly, UBS AG has made no adjustments where UBS AG acts as a lessor, in either a finance or operating lease, of physical assets it owns. Where UBS AG acts as an intermediate lessor, i.e., where UBS AG enters into a head lease and sub-leases the asset to a third party, the sub-lease has been

classified as either a finance or operating lease based primarily on whether the sub-lease term consumes the majority of the remaining useful life of the right-of-use asset arising from the head lease as at the transition date.

The following table reconciles the obligations in respect of operating leases as at 31 December 2018 to the opening lease liabilities recognized on 1 January 2019:

Reconciliation between operating lease commitments disclosed under IAS 17 and lease liabilities recognized under IFRS 16

USD million

Total undiscounted operating lease commitments as of 31 December 2018 4,546

Leases with a remaining term of less than one year as of 1 January 2019 (18)

Excluded service components (296)

Reassessment of lease term for extension or termination options 424

Total undiscounted lease payments 4,657

Discounted at a weighted average incremental borrowing rate of 3.07% (720)

IFRS 16 transition adjustment 3,937

Finance lease liabilities as of 31 December 2018 19

Carrying amount of total lease liabilities as of 1 January 2019 3,956

The following table provides details on the determination of right-of-use assets on transition:

Determination of right-of-use (RoU) assets on transition

USD million Carrying amount

Recognition of gross RoU assets upon adoption of IFRS 16 (IFRS 16 transition adjustment) 3,937

Offset by liabilities recognized as of 31 December 2018 (515)

of which: other non-financial liabilities (lease incentives) (204)

of which: other financial liabilities measured at amortized cost (rent accruals) (180)

of which: provisions (onerous lease provisions) (131)

Increase in total assets resulting from the adoption of IFRS 16 on 1 January 20191 3,422

Reclassification of assets recognized as of 31 December 2018 as an addition to RoU assets 38

of which: other financial assets measured at amortized cost (finance lease assets recognized under IAS 17 as of 31 December 2018) 19

of which: other non-financial assets (prepaid rent) 19

Reclassification of finance lease receivables from subleases to other financial assets measured at amortized cost resulting in a reduction of RoU assets (176)

Total right-of-use assets as of 1 January 2019 presented within Property, equipment and software 3,2841 Total liabilities increased by the same amount upon adoption of IFRS 16.

Lease liabilities are presented within Other financial liabilities measured at amortized cost and right-of-use assets within Property, equipment and software. Finance lease receivables are included within Other financial assets measured at amortized cost. Due to the practical expedients taken on transition, there was no effect on equity. The weighted average lease term on 1 January 2019 was approximately 9 years.

During the third quarter of 2019 the depreciation expense for right-of-use assets presented within Depreciation and impairment of property, equipment and software was USD 112 million (second quarter of 2019: USD 113 million; first quarter of 2019: USD 113 million). The interest expense on lease liabilities

presented within Interest expense from financial instruments measured at amortized cost was USD 29 million (second quarter of 2019: USD 30 million; first quarter of 2019: USD 30 million) and other rent expenses (including non-lease components paid to landlords) presented within General and administrative expenses were USD 14 million (second quarter of 2019: USD 12 million; first quarter of 2019: USD 16 million). This compares with total rent expenses presented in General and administrative expenses of USD 142 million, USD 143 million and USD 147 million for the quarters ended 30 September 2018, 30 June 2018 and 31 March 2018, respectively.

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Notes to the UBS AG interim consolidated financial statements (unaudited)

28

Note 1 Basis of accounting (continued)

Update to significant accounting policy – Leasing (disclosed in “Note 1a item 15 Leasing” in the “Consolidated financial statements” section of the Annual Report 2018)UBS AG predominantly enters into lease contracts, or contracts that include lease components, as a lessee of real estate, including offices, retail branches and sales offices, with a small number of IT hardware leases. UBS AG identifies non-lease components of a contract and accounts for them separately from lease components.

When UBS AG is a lessee in a lease arrangement, UBS AG recognizes a lease liability and corresponding right-of-use asset at the commencement of the lease term when UBS AG acquires control of the physical use of the asset. Lease liabilities are presented within Other financial liabilities measured at amortized cost and right-of-use assets within Property, equipment and software. The lease liability is measured based on the present value of the lease payments over the lease term, discounted using UBS AG’s unsecured borrowing rate given that the rate implicit in a lease is generally not observable to the lessee. Interest expense on the lease liability is presented within Interest expense from financial instruments measured at amortized cost. The right-of-use asset is recorded at an amount equal to the lease liability but is adjusted for rent prepayments, initial direct costs, any costs to refurbish the leased asset or lease incentives received. The right-of-use asset is depreciated over the shorter of the lease term or the useful life of the underlying asset, with the depreciation presented within Depreciation and impairment of property, equipment and software.

Lease payments generally include fixed payments and variable payments that depend on an index (such as an inflation index). When a lease contains an extension or termination option that UBS AG considers reasonably certain to be exercised, the expected rental payments or costs of termination are included within the lease payments used to generate the lease liability. UBS AG does not typically enter into leases with purchase options or residual value guarantees.

Where UBS AG acts as a lessor or sub-lessor under a finance lease, a receivable is recognized in Other financial assets measured at amortized cost at an amount equal to the present value of the aggregate of the lease payments plus any unguaranteed residual value that UBS AG expects to recover at the end of the lease term. Initial direct costs are also included in the initial measurement of the lease receivable. Lease payments received during the lease term are allocated as repayments of the outstanding receivable. Interest income reflects a constant periodic rate of return on UBS AG’s net investment using the interest rate implicit in the lease (or, for sub-leases, the rate for the head lease). UBS AG reviews the estimated unguaranteed

residual value annually, and if the estimated residual value to be realized is less than the amount assumed at lease inception, a loss is recognized for the expected shortfall. Where UBS AG acts as a lessor or sub-lessor in an operating lease, UBS AG recognizes the operating lease income on a straight-line basis over the lease term.

Lease receivables are subject to impairment requirements as set out in “Note 1a item 3g” in the “Consolidated financial statements” section of the Annual Report 2018. Expected credit losses (ECL) on lease receivables are determined following the general impairment model within IFRS 9, Financial Instruments, without utilizing the simplified approach of always measuring impairment at the amount of lifetime ECL.

Other changes to accounting policies

Changes in Corporate Center segment reporting, cost and resource allocation to business divisions Effective from 1 January 2019, UBS AG made changes to Corporate Center segment reporting, as well as cost and resource allocation to business divisions.

→ Refer to Note 2 for more information

Presentation of dividend income and expense from financial instruments measured at fair value through profit or lossEffective from 1 January 2019, UBS AG refined the presentation of dividend income and expense. This resulted in a reclassification of dividends from Interest income (expense) from financial instruments measured at fair value through profit or loss into Other net income from financial instruments measured at fair value through profit or loss (prior to 1 January 2019: Other net income from fair value changes on financial instruments). The change aligns the presentation of dividends with related fair value changes from the equity instruments and economic hedges removing volatility that has historically arisen within both Net interest income and Other net income from fair value changes on financial instruments. There is no effect on Total operating income or Net profit / (loss). Prior periods have been restated for this presentational change and the effect on the respective reporting lines is outlined in the table below.

Refer to “Note 1d International Financial Reporting Standards and Interpretations to be adopted in 2019 and later and other changes” in the “Consolidated financial statements” section of the Annual Report 2018 for further details on standards adopted by UBS AG from 1 January 2019, none of which had a material effect on UBS AG’s financial statements.

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29

Note 1 Basis of accounting (continued)

Changes to the presentation of dividend income and expense from financial instruments measured at fair value through profit or loss

For the quarter ended For the year ended

USD million 31.3.18 30.6.18 30.9.18 31.12.18 31.12.18

Interest income from financial instruments measured at fair value through profit or loss (572) (636) (699) (401) (2,308)

Interest expense from financial instruments measured at fair value through profit or loss 160 846 175 151 1,331

Net interest income (412) 210 (524) (250) (976)

Other net income from financial instruments measured at fair value through profit or loss 412 (210) 524 250 976

Changes in accounting standards to be adopted in future reporting periods

Amendments to IAS 39, IFRS 9 and IFRS 7 (Interest Rate Benchmark Reform)In September 2019, the IASB issued Interest Rate Benchmark Reform, Amendments to IFRS 9, IAS 39 and IFRS 7, enabling hedge accounting to continue during the period of uncertainty before existing interest rate benchmarks are replaced with alternative risk-free interest rates. The amendments are mandatorily effective from 1 January 2020, with early adoption permitted, and apply to hedge relationships that exist at the beginning of the reporting period or are designated thereafter,

and to the gains or losses that exist in OCI on adoption. Adopting these amendments will allow UBS AG to maintain current hedge accounting relationships and to assume that the current benchmark rates will continue to exist, with no consequential impact on the financial statements. In addition, the amendments bring in a number of new disclosure requirements to provide detail on the effects arising from the change in interest rate benchmarks. UBS AG is continuing to assess the effects of the amendments and will shortly determine whether it expects to early adopt the revisions in the fourth quarter of 2019 or instead from their mandatory effective date in the first quarter of 2020.

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RISK MANAGEMENT AND CONTROL - EXTRACTED FROMUBS GROUP AG’S THIRD QUARTER 2019 FINANCIAL REPORT

The information set out below in this section has been extracted without adjustment from the third

quarter 2019 financial report of UBS Group AG. The page numbers of the third quarter 2019 financial

report appear on the bottom left or right hand side of the pages in this addendum.

The third quarter 2019 financial report is available for inspection at the office of the Sponsor specified

on the back page. You may also visit our website at

https://www.ubs.com/global/en/investor-relations/financial-information/quarterly-reporting/2019.html

to access such report.

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41

Risk management and control

This section provides information about key developments during the reporting period and should be read in conjunction with the “Risk management and control” section of our Annual Report 2018.

Credit risk

Total net credit loss expenses in the third quarter of 2019 were USD 38 million, reflecting net expenses of USD 43 million related to credit-impaired (stage 3) positions and recoveries of USD 5 million related to stage 1 and stage 2 positions. The net stage 3 expenses of USD 43 million were recognized across a number of defaulted positions: USD 29 million in Personal & Corporate

Banking, mainly related to a single exposure; USD 8 million in the Investment Bank; and USD 6 million in Global Wealth Management.

Overall credit risk exposures were broadly unchanged during the third quarter of 2019.

We aim to manage our Swiss lending portfolios prudently and remain watchful for signs of deterioration that could affect our counterparties.

Within the Investment Bank, our leveraged loan underwriting business’s overall ability to distribute risk remained sound. Loan underwriting exposures are held for trading, with fair values reflecting the market conditions at the end of the quarter.

Banking and traded products exposure in our business divisions and Corporate Center330.9.19

USD millionGGlobal WealthManagement

PPersonal &Corporate

BankingAAsset

ManagementIInvestment

BankCCorporate

Center GGroupBBanking products1

Gross exposure (IFRS 9) 231,438 182,077 2,692 51,480 23,491 491,177of which: loans and advances to customers (on-balance sheet) 171,608 132,222 0 10,639 6,489 320,958of which: guarantees and loan commitments (off-balance sheet) 5,157 19,932 0 17,523 81 42,692

TTraded products2, 3

Gross exposure 10,419 1,018 0 35,879 47,316of which: over-the-counter derivatives 7,322 978 0 10,277 18,577of which: securities financing transactions 287 0 0 18,835 19,122of which: exchange-traded derivatives 2,810 40 0 6,766 9,617

OOther credit lines, gross4 10,352 19,911 0 2,196 138 32,597

Total credit-impaired exposure, gross (stage 3)1 858 1,828 0 115 417 3,218Total allowances and provisions for expected credit losses (stages 1 to 3) 205 688 0 113 35 1,041

of which: stage 1 57 74 0 26 3 160of which: stage 2 28 131 0 13 0 173of which: stage 3 (allowances and provisions for credit-impaired exposures) 120 483 0 74 32 709

30.6.19

USD millionGlobal Wealth Management

Personal &Corporate

BankingAsset

ManagementInvestment

BankCorporate

Center GroupBBanking products1

Gross exposure (IFRS 9) 238,391 185,403 2,480 50,430 26,970 503,674of which: loans and advances to customers (on-balance sheet) 171,612 135,115 0 9,787 6,896 323,410of which: guarantees and loan commitments (off-balance sheet) 5,954 20,574 0 17,416 329 44,273

TTraded products2, 3

Gross exposure 9,486 935 0 32,377 42,798of which: over-the-counter derivatives 6,858 885 0 9,522 17,264of which: securities financing transactions 269 0 0 17,323 17,592of which: exchange-traded derivatives 2,359 50 0 5,533 7,942

OOther credit lines, gross4 6,959 20,351 0 2,028 142 29,480

Total credit-impaired exposure, gross (stage 3)1 529 1,859 0 100 432 2,920Total allowances and provisions for expected credit losses (stages 1 to 3) 210 675 0 112 33 1,030

of which: stage 1 57 77 0 43 2 180of which: stage 2 28 131 0 4 0 163of which: stage 3 (allowances and provisions for credit-impaired exposures) 124 467 0 65 30 687

11 IFRS 9 gross exposure including other financial assets at amortized cost, but excluding cash, receivables from securities financing transactions, cash collateral receivables on derivative instruments, financial assets at FVOCI, irrevocable committed prolongation of existing loans and unconditionally revocable committed credit lines and forward starting reverse repurchase and securities borrowing agreements. 2 Internal management view of credit risk, which differs in certain respects from IFRS. 3 As counterparty risk for traded products is managed at counterparty level, no further split between exposures in the Investment Bank and Corporate Center is provided. 4 Unconditionally revocable committed credit lines.

− 36 −

Risk management and control

42

Global Wealth Management and Personal & Corporate Banking loans and advances to customers, grossGlobal Wealth Management Personal & Corporate Banking

USD million 330.9.19 30.6.19 330.9.19 30.6.19Secured by residential property 53,506 53,464 96,288 98,160

Secured by commercial / industrial property 2,346 2,325 16,725 17,132

Secured by cash 15,098 14,849 1,444 1,426

Secured by securities 89,577 90,484 1,678 1,804

Secured by guarantees and other collateral 9,978 9,463 5,221 5,825

Unsecured loans and advances to customers 1,104 1,027 10,867 10,768

TTotal loans and advances to customers, gross 171,608 171,612 132,222 135,115AAllowances (92) (93) (592) (577)TTotal loans and advances to customers, net of allowances 171,517 171,519 131,629 134,537

Market risk

Market risks remain generally at low levels due to our continued focus on managing tail risks. Average management value-at-risk (VaR) (1-day, 95% confidence level) increased marginally to USD 12 million from USD 11 million in the previous quarter.

There were no Group VaR negative backtesting exceptions in the third quarter of 2019, and the total number of negative backtesting exceptions within the most recent 250 business-days remained at 1. The FINMA VaR multiplier for market risk RWA was unchanged compared with the previous quarter, at 3.

Management value-at-risk (1-day, 95% confidence, 5 years of historical data) of our business divisions andCorporate Center by general market risk type1

Average by risk type

USD million Min. Max. Period end Average EquityInterest

ratesCredit

spreadsForeign

exchange CommoditiesGlobal Wealth Management 0 1 0 1 0 1 1 0 0

Personal & Corporate Banking 0 0 0 0 0 0 0 0 0

Asset Management 0 0 0 0 0 0 0 0 0

Investment Bank 6 17 10 10 8 7 4 3 2

Corporate Center 4 8 5 6 1 6 2 1 0

Diversification effect2,3 (4) (5) (1) (4) (2) (1) 0

Total as of 30.9.19 8 18 11 12 8 9 4 3 2

Total as of 30.6.19 9 15 12 11 7 9 4 4 21 Statistics at individual levels may not be summed to deduce the corresponding aggregate figures. The minima and maxima for each level may occur on different days, and, likewise, the VaR for each business line or risk type, being driven by the extreme loss tail of the corresponding distribution of simulated profits and losses for that business line or risk type, may well be driven by different days in the historical time series, rendering invalid the simple summation of figures to arrive at the aggregate total. 2 Difference between the sum of the standalone VaR for the business divisions and Corporate Center and the VaR for the Group as a whole. 3 As the minimum and maximum occur on different days for different business divisions and Corporate Center, it is not meaningful to calculate a portfolio diversification effect.

− 37 −

43

As of 30 September 2019, the interest rate sensitivity of our banking book to a +1-basis-point parallel shift in yield curves was negative USD 24.3 million, compared with negative USD 22.2 million as of 30 June 2019. The change in interest rate sensitivity was driven by market moves (interest rates decreased substantially over the quarter), issuance of additional tier 1 (AT1) capital instruments and active risk management of the exposures in the banking book. The reported interest rate sensitivity excludes the AT1 capital instruments as per FINMA Pillar 3 disclosure requirements and our equity, goodwill and real estate with a modeled sensitivity of approximately USD 4 million per basis point in Swiss francs and USD 15 million per basis point in US dollars.

The most adverse of the six FINMA interest rate scenarios was the “Parallel up” scenario, which resulted in a change in the economic value of equity of negative USD 4.9 billion, representing a pro forma effect equal to 9.7% of tier 1 capital, which is well below the regulatory outlier test of 15% of tier 1 capital. The immediate effect of the “Parallel up” scenario on

tier 1 capital as of 30 September 2019 would be a reduction of 1.3%, or USD 0.6 billion, arising from the part of our banking book that is measured at fair value through profit or loss and from the financial assets measured at fair value through other comprehensive income. This scenario would also have a positive effect on net interest income.

→ Refer to “Interest rate risk in the banking book” in the “Market

risk” section of our Annual Report 2018 and the 30 June 2019

Pillar 3 report available under “Pillar 3 disclosures” at

www.ubs.com/investors, for more information about the

management of interest rate risk in the banking book

→ Refer to “Sensitivity to interest rate movements” in the “Group

performance” section of this report for more information about

the effects of increases in interest rates on the equity, capital

and net interest income of Global Wealth Management and

Personal & Corporate Banking

→ Refer to the 30 September 2019 Pillar 3 report available under

“Pillar 3 disclosures” at www.ubs.com/investors

Interest rate risk – banking bookUSD million ++1 bp PParallel up1 PParallel down1 SSteepener2 FFlattener3 SShort-term up4 SShort-term down5

CHF (2.4) (344.7) 391.5 (230.0) 159.2 9.1 (7.1)

EUR (0.5) (93.3) 118.1 4.6 (15.2) (42.2) 55.0

GBP 0.1 7.5 (23.9) (11.2) 10.3 15.0 (14.3)

USD (20.7) (4,359.8) 3,647.0 (402.6) (601.1) (2,151.9) 2,328.2

Other (0.7) (152.1) 169.2 (7.8) (21.4) (75.6) 87.1

TTotal effect on economic value of equity as per Pillar 3 requirement as of 30.9.19 (24.3) (4,942.3) 4,301.9 (647.1) (468.2) (2,245.6) 2,449.0

Additional tier 1 (AT1) capital instruments 5.2 1,008.2 (1,085.4) (26.1) 250.7 632.2 (661.0)

TTotal including AT1 capital instruments as of 30.9.19 (19.1) (3,934.2) 3,216.4 (673.2) (217.5) (1,613.4) 1,788.1

Total effect on economic value of equity as per Pillar 3 requirement as of 30.6.19 (22.2) (4,503.5) 3,807.0 (748.8) (298.0) (1,908.5) 2,048.5

Total including AT1 capital instruments as of 30.6.19 (17.2) (3,539.3) 2,767.5 (762.2) (68.7) (1,310.2) 1,423.611 Rates across all tenors move by ±150 bps for Swiss franc, ±200 bps for euro and US dollar and ±250 bps for pound sterling. 2 Short-term rates decrease and long-term rates increase. 3 Short-term rates increase and long-term rates decrease. 4 Short-term rates increase more than long-term rates. 5 Short-term rates decrease more than long-term rates.

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Risk management and control

44

Country risk

We remain watchful of developments in Europe and political shifts in a number of countries. Our direct exposure to peripheral European countries is limited, although we have significant country risk exposure to major European economies, including the UK, Germany and France. The UK’s process of withdrawing from the EU remains an area of concern.

Tensions in the Middle East have increased following an attack on Saudi energy facilities and led to disruption of world oil supplies.

We are closely monitoring the growing risks stemming from ongoing US trade policy shifts, and their potential effects on key markets, economies and countries.

We also continue to closely monitor our direct exposure to China. In addition, a number of emerging markets are facing economic, political and market pressures, such as Argentina, which has had a major negative market correction and may soon need to reprofile its sovereign debt.

Our exposure to emerging market countries is well diversified.

→ Refer to the “Risk management and control” section of our

Annual Report 2018 for more information

Exposures to eurozone countries rated lower than AAA / Aaa by at least one major rating agency USD million 330.9.19 30.6.19

BBanking products, gross1 TTraded productsTTrading

inventory TTotal TotalBBefore

hedgesNNet of

hedgesBBefore

hedgesNNet of

hedgesNNet long

per issuerNNet of

hedgesNet of

hedgesAustria 128 127 251 206 2,461 2,840 2,793 474 467Belgium 156 156 190 190 32 378 378 234 234Finland 8 8 73 73 156 236 236 228 228France 451 451 1,222 1,133 1,946 3,619 3,530 3,402 3,309Greece 13 3 0 0 15 28 18 16 10Ireland2 244 244 124 124 555 923 923 833 826Italy 753 629 347 331 336 1,436 1,296 1,151 986Portugal 18 17 58 58 31 107 107 73 72Spain 423 395 29 29 1,029 1,480 1,452 740 739Other3 281 265 6 6 17 304 288 326 310Total 2,476 2,295 2,299 2,149 6,578 11,352 11,022 7,477 7,18111 Before deduction of IFRS 9 ECL allowances and provisions. 2 The majority of the Ireland exposure relates to funds and foreign bank subsidiaries. 3 Represents aggregate exposures to Andorra, Cyprus, Estonia, Latvia, Lithuania, Malta, Monaco, Montenegro, San Marino, Slovakia and Slovenia.

Operational risk

There have been no significant changes in the operational risk environment over the quarter, with financial crime, conduct and culture, and operational resilience (particularly with respect to cyber risks and data management) remaining the dominant themes for UBS and the industry. We continue to prioritize our efforts to meet the developing nature of these risks and to invest

heavily in our detection capabilities and core systems as part of our financial crime prevention program, with a focus on improving these to meet regulatory expectations, including to address the requirements of the May 2018 cease and desist order issued by the Office of the Comptroller of the Currency related to our US branch know-your-customer and anti-money laundering programs.

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PARTIES

HEAD OFFICE OF THE ISSUER

UBS AG

Bahnhofstrasse 45CH-8001 Zurich

Switzerlandand

Aeschenvorstadt 1CH-4051 Basel

Switzerland

OFFICE OF THE ISSUER

UBS AG, London Branch

5 BroadgateLondon

EC2M 2QSUnited Kingdom

PLACE OF BUSINESS OF THE ISSUER IN HONG KONG

52nd FloorTwo International Finance Centre

8 Finance StreetCentral

Hong Kong

SPONSOR

UBS Securities Asia Limited

52nd FloorTwo International Finance Centre

8 Finance StreetCentral

Hong Kong

LEGAL ADVISORS AS TO HONG KONG LAW

King & Wood Mallesons

13th FloorGloucester Tower

The Landmark15 Queen’s Road Central

CentralHong Kong

AUDITORS

Ernst & Young Ltd

Aeschengraben 9P.O. Box 2149 CH-4002 Basel

Switzerland

LIQUIDITY PROVIDER

UBS Securities Hong Kong Limited

52nd FloorTwo International Finance Centre

8 Finance StreetCentral

Hong Kong

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191422-05