Investment Services Guide

UBS Asesores México, S.A. de C.V.

Dear Client:

In accordance with Article 24 of the Sales Practice Regulation (Disposiciones de Carácter General aplicables a las Entidades Financieras y demás Personas que proporcionen Servicios de Inversión) (the "Rules"), we hereby inform you the Investment Services that UBS Asesores México, S.A. de C.V. (herein after "UBS Asesores") offers to its Clients, as well as the characteristics and differences among each of them.

UBS Asesores is registered in the Investment Adviser Registry kept by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) under folio number 30060-001-(14115)-21/06/2016 (the "Registry").

Neither the compliance with the Rules by the Investment Advisors in providing investment services, nor the accuracy or veracity of the information provided, is implied from the registration of UBS Asesores with the referred Registry.

It is important to mention that the National Banking and Securities Commission solely and exclusively supervises UBS Asesores in regards to the provision of securities-portfolio management services whenever an investment decision is made on behalf of third parties, as well as the provision of Securities investment Advisory services, conduction of an analysis and making of personalized investment recommendations, and therefore, it has no power or authority to supervise or regulate any other services provided by investment Advisors.

A. Purpose of the guide

Provide Clients or potential Clients of UBS Asesores, with a description of the Financial Products and Investment Services offered by UBS Asesores, the fees charged for services provided, and the actions taken by UBS Asesores to avoid conflicts of interest in providing the Investment Services.

It should be noted that UBS Asesores does not provide non-advised investment services, but only provides Advised Investment Services.

B. Definitions

For ease of reference purposes, and a better understanding of the guidelines set forth herein, as well as those applicable to the aforementioned products and services, the following definitions are used:

Advisory Services - The activity of providing by UBS Advisers orally or in writing, personalized recommendations or advice to a Client, that suggest making investment decisions on one or more Financial Products, which can be done at the request of said Client or at the initiative of the UBS Asesores itself. In no case will it be understood that the execution of the operations coming from the Investment Advisory is Execution of operations, even when there is an instruction from the Client.

CNBV - The National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores).

Complaint - Any written claim or complaint that is informed to UBS Asesores, its employees or attorneys-in-fact, and made by a Client in connection with the Investment Services.

Client's Investment Profile - Document used by UBS Asesores with its Clients in order to learn their Investment Objectives, by applying the Questionnaire.

Derivatives - Any securities, agreements or other legal acts with a valuation that is dependent upon or derived from one or more underlying commodities, securities, rates or indexes. Derivatives can either be traded over-the-counter or on an exchange, in this case, the so-called Mercado Mexicano de Derivados, S.A. de C.V. (MEXDER).

This definition only covers those derivatives offered or recommended as a result of the Investment Services provided, with an underlying Mandate or Securities-Portfolio Management Agreement. Any others instruments traded pursuant to Master Agreements for derivatives transactions shall be excluded.

Financial Product Profile - Assessment made by UBS Asesores in respect of each Financial Product offered to its Clients.

Financial Products - The securities, derivatives, investment strategies or the portfolio composition.

Investment Advisors - The individuals, other than dealers and brokers active in the Securities Market, that are engaged in the business of providing securities portfolio management professional services as part of a regular business activity, making investment decisions on behalf of third parties, providing securities Investing Advisory Services, conducting analyses and making investment recommendations.

Investment Advisory Services - The professional services provided to Clients, as part of a regular business activity, including the Advisory Services or Securities Portfolio Management.

Investment Non-Advisory Services - The professional services rendered to a Client as part of a regular business activity, including the Marketing or Promotion of Securities or the Execution of Transactions.

Investment Objective - Document used by UBS Asesores in order to learn the Investment Objectives of its Sophisticated Clients, in connection with the investment’s goal and term, the risk tolerance level such Clients should bear, and any limits and restrictions set by such Client.

Investment Objective Questionnaire - A document used by UBS Asesores in order to learn the Investment Objectives of its Sophisticated Clients.

Lead Underwriter - Through UBS Casa de Bolsa, where acting as such upon the terms of the Brokerage Firm Rules (Disposiciones de carácter general aplicables a las Casas de Bolsa).

Rules - The Sales Practice Regulation (in Spanish the Disposiciones de Carácter General aplicables a las Entidades Financieras y demás Personas que proporcionen Servicios de Inversión).

Securities - Any shares, partnership interests, stock, debentures, bonds, warrants, certificates, notes, letters of exchange and other registered or bearer negotiable instruments, whether registered or not with the National Securities Registry, that may be traded in the securities markets referred to in the Securities Exchange Law (Ley del Mercado de Valores), issued as collective instruments and representing the capital stock of a legal entity, a common interest in an asset or a share in a collective credit, or any other individual credit right, as provided for in applicable domestic and foreign laws and regulations.

Securities-Portfolio Management - The making of investment decisions on behalf of Client through the account administration by UBS Asesores, pursuant to a mandate agreement providing the discretionary management of such accounts.

Sophisticated Client - Any person with an average securities investment in an amount equal to or higher than 3,000,000 UDIS, during the immediately preceding 12-month period, or with an annual income equal to or higher than 1,000,000 UDIS, during the immediately preceding 2-year period.

UBS Asesores - UBS Asesores México, S.A. de C.V.

UBS Casa de Bolsa - UBS Casa de Bolsa, S.A. de C.V.

C.    Financial Products and Investment Services

UBS Asesores offers the following Financial Products and Investment Services to its Clients:

1. Financial Products

Through such Financial Entities by means of which an action is taken on behalf of Client:

  • Structured notes issued by third parties
  • Shares of investment funds issued by third parties
  • Capital Market
  • Money Market
  • FX Transactions

The Securities or Derivate financial products offered by UBS Asesores are not designed by UBS Casa de Bolsa, S.A. de C.V.

2. Investment Advisory Services

  • Investing Advisory Services
  • Securities Portfolio Management
  • General Recommendations
  • Reception of instructions for conducting securities transactions with no personalized or general recommendation from UBS Asesores.

D. Fees

UBS Asesores may only charge fees for Investment Services as expressly agreed with its Clients pursuant to service agreements, provided that the same are actual services rendered.

UBS Asesores will provide no service other than Investment Advisory, and Securities Portfolio Management services, and therefore, will not charge for any service other than Investment Services mentioned before.

The fee charged by UBS Asesores to its Clients should be maintained in the maximum thresholds for Investing Advisory or Securities Portfolio Management services.

Fees to be charged by UBS Asesores to its Clients, whose securities' custody is at Mexican Financial Institution (custodian), will be subject to the following caps:

  • Between 1 and 500 basis points annually of the gross asset value of the portfolio which could not exceed 500 basis points annually, and/or.
  • Between 1 and 500 basis points annually in regards to each instruction received per transaction or a minimum absolute amount, which could not exceed 500 basis points annually.
  • Calculation: Average invested capital value * bps / 360 * days of the period or, Transaction value * bps.

Investing Advisory and Securities Portfolio Management services fee when custody is hold by a Foreign Financial Entity (custodian):

  • Between 1 and 500 basis points annually of the gross asset value of the portfolio, or a minimum absolute amount which could not exceed 500 basis points annually.
  • Calculation: Average value * bps / 360 * days of the period.

E. Mechanisms for the reception and attention of Complaints

Clients of UBS Asesores may bring any complaint against UBS Asesores for any services provided and/or transactions conducted.

Client may bring complaints by in writing, provided that the following requirements are fulfilled:

  • Name and address of complainant;
  • Name and address of the attorney-in-fact or person that brings the complaint in the name and on behalf of Client, if any, and the document that evidences the power of attorney to do so, as applicable;
  • Description of the service subject matter of the complaint, describing the facts that give rise to the complaint;
  • Documentation that evidences the engagement of the service subject matter of the complaint.

The opening hours for receiving your queries and complaints are Monday through Friday from 8:00 a.m. at 6:00 p.m. These may be received at the offices of UBS Asesores in Mexico City, located at Pedregal #24, Col. Molino del Rey, Lomas Virreyes, Piso 11, Alcaldía Miguel Hidalgo, Postal Code 11040.

F. Conflict of Interest Policy

UBS Asesores complies with and applies the Rules, by implementing a number of policies and controls aimed at avoiding the existence of conflicts of interest in the provision of the Investment Services, among it has the internal policy of UBS about conflicts of interest Group Policy Conflicts of Interest. Among the principles that have to be observed by UBS Asesores for avoiding conflicts of interests, are as follows:

Confidential-Information General Principles

  • Any non-public information about UBS Asesores, the Clients of UBS Asesores and/or proposed transactions is treated as confidential information, provided that all the employees of UBS Asesores are responsible for maintaining such information in confidence.
  • This obligation applies regardless of whether UBS Asesores is hired by a Client or subject to a written confidentiality obligation.

Conflicts of Interest that may arise from a Securities issue underwriting

It will be deemed that UBS Asesores incurred in a conflict of interest when participating in a Securities issue underwriting, should any of the following events occur:

a) Provide Investment Advisory Services with respect to Securities issued by persons associated to, whether directly or through trusts, and underwritten through UBS Casa de Bolsa acting as Lead Underwriter, as member of the underwriting syndicate or as Participant in the underwriting, and UBS Asesores, its shareholders, board members, partners, directors, officers, attorneys-in-fact or employees hold an interest in the capital or participate in the management bodies of UBS Asesores, attempting to sell to its own Clients up to twenty percent (20%) of the respective issue, save for Sophisticated Clients to whom UBS Services provides the Investing Advisory Service;

b) Provide Advised Investment Services with respect to Securities issued by persons not associated to UBS Asesores, and that are underwritten by the Lead Underwriter, member of the underwriting syndicate or as Participant in the underwriting and UBS Asesores, its shareholders, board members, partners, directors, officers, attorneys-in-fact or employees hold an interest in the capital or participate in the management bodies of UBS Asesores, attempting to sell to its own Clients up to forty percent (40%) of the respective issue, save for Sophisticated Clients to whom UBS Asesores provides the Investing Advisory Service;

c) Make general recommendations to Sophisticated Clients in respect of Securities issued by Persons associated to UBS Asesores, whether directly or through trusts, and underwritten by the Lead Underwriter, or that UBS Casa de Bolsa acts as member of the underwriting syndicate or as Participant in the underwriting and UBS Asesores, attempting to sell such Securities to its own Clients;

d) Provide Investing Advisory Services to Sophisticated Clients resulting in any of the events that call for the performance of the obligation of UBS Asesores to diversify an issue;

e) Provide Investment Advisory Services, or make general recommendations about Securities and Derivatives in respect of which UBS Asesores, its shareholders, board members, partners, directors, officers, attorneys-in-fact or employees, hold an interest in the capital or participate in the body management of UBS Casa de Bolsa, participating in the structuring thereof;

f) Provide Investment Advisory Services in respect of Securities subject matter of a public offering issued by UBS Casa de Bolsa or any issuer that forms part of UBS Casa de Bolsa, resulting in a shareholding among the Clients of UBS Asesores of up to twenty percent of the total issue, save for Sophisticated Clients to whom the Investing Advisory Service is provided;

g) Provide Investment Advisory Services in respect of equity instruments that may be taken into consideration for capital integration purposes pursuant to applicable regulation, if the issuer of such instruments forms part of the same Consortium or Corporate Group to which UBS Asesores forms part; and

h) Obtain, for either itself or any Client/third party, any financial benefit, or avoid a loss, in detriment of the interests of its Clients.

The following events constitute presumptions, unless otherwise proved or evidenced, that UBS Asesores incurred in a conflict of interest, whether acting alone or jointly with others:

  • Provide false, fake or misleading information, obtaining an income, fee or any other consideration for such activities, when any of the events referred to in paragraphs a) to e) above has occurred in respect of UBS Asesores;
  • The staff of such areas in charge of designing and structuring Financial Products, corporate financing, investment banking, Securities underwriting or any other that may imply a conflict of interest, originates any pressure, persuasion or transmission of confidential information in respect of the activities of the individuals working in the areas in charge of providing the Investment Services to its Clients.

Obligations of UBS Asesores upon occurrence of a Conflict of Interest event

If any of the aforementioned Conflict of Interest events occurs in respect of UBS Asesores, UBS Asesores shall perform the following obligations:

a) If any of the Conflict of Interest events referred to in paragraphs a) to e) of the "Conflicts of Interest that may arise from a Securities issue underwriting" section occurs in respect of UBS Asesores, the Investment Adviser shall inform the same to Client, prior to the making of any recommendation or the carrying out of any transaction that would imply the provision of the respective Investment Service, further informing the fee to be received for the underwriting of the Security to be paid by a third party;

b) UBS Asesores shall diversify among its Clients any Securities issues in which the Lead Underwriter and/or UBS Casa de Bolsa is a member of the underwriting syndicate or a Participant in the underwriting, upon occurrence of any of the events referred to in the “Conflicts of Interest that may arise from a Securities issue underwriting” section.

No investment adviser, analyst, attorney-in-fact (for conducting transactions with the public), trader and other employee of UBS Asesores that provides Investment Services may accept economic or otherwise benefits from any person interested in the way in which a general recommendation is made or a transaction is carried out by the former.

G.  Diversification Policies

As provided for in the Rules, regarding the provision of the Investment Services, UBS Asesores has policies and controls aimed at diversifying the investment portfolio of its Clients, based on the investment objectives known.

Investment Portfolio Diversification

Following are the issue diversification limits that must be abided by UBS Asesores if acts as Lead underwriter through UBS Casa de Bolsa, or as a member of the underwriting syndicate or as a Participant in an underwriting, in addition to any other limits established on any issue underwriting to avoid a conflict of interest:

I. In providing Investment Advisory Services:

a) Up to twenty percent of the total Securities issue in a public offering, save for Sophisticated Clients, regarding Securities issued by UBS Casa de Bolsa or Persons associated to UBS Asesores; or

b) Up to forty percent of the total Securities issue in a public offering, if the issuers are persons not associated to UBS Asesores.

II. With respect to paragraph b) above, the forty percent of the total issue may not be exceeded in providing the Investment Advisory Services to Sophisticated Clients, if such issue refers to:

a) Securities subject matter of a public offering, where the proceeds obtained from the same are allocated, in whole or in part, to pay obligations or liabilities in favor of UBS Casa de Bolsa as financial underwriting Entity.

b) Such asset-backed Securities indicated in the Issuer Rules (Circular Única de Emisoras), where the assets belong to UBS Casa de Bolsa.

c) Securities held in an own position of UBS Casa de Bolsa, where it acted in the initial public offering, through UBS Casa de Bolsa, as Lead Underwriter, or as a member of the underwriting syndicate or as a Participant in the underwriting.

Following are the criteria established by UBS Asesores in order to verify the diversification of an investment portfolio prior to carrying out a transaction:

1. That the portfolio concentration does not exceed:

i) 10% in one single asset.

ii) 20% in products of one and the same issuer.

2. That the diversification matches the Investment Objective of Client, subject to the risk limits established for the investment (A, B, C, D, E and F), taking into consideration the Fixed Income, Income, Equity and Liquidity investments.

3. That the portfolio’s products are aligned with the respective Investment Objective.

Regarding Investment Advisory Services, if UBS Asesores carries out a transaction and eventually the limits applicable to a specific portfolio, based on the Investment Objective, are not honored, UBS Asesores shall inform Client, so that the respective actions may be taken.

The Client Investment Objectives established by UBS Asesores are categorized under the following optimal underwriting bands:

Investment Objective

Investment Objective

 

 

Investment Objective

Liquidity

 

Client desires to invest only in “Liquidity” assets and accepts a very low volatility of the equity security.

Investment Objective

A. Fixed Income

 

Client desires to preserve the long-term value of the investment and accepts a very low volatility of the equity security.

Investment Objective

B. Savings

 

Client desires to preserve the long-term value of the investment and accepts a low volatility of the equity security.

Investment Objective

C. Yield

 

Client desires a long-term moderate growth of the investment and accepts a moderate volatility of the equity security.

Investment Objective

D. Balanced

 

Client desires a long-term growth of the investment and accepts a medium volatility of the equity security.

Investment Objective

E. Growth

 

Client desires a long-term material growth of the investment and accepts an above-average volatility of the equity security.

Investment Objective

F. Stock

 

Client desires along-term material growth of the investment and accepts a strong volatility of the equity security.

It is also important to mention that Diversification Policy will be available to be downloaded at any time within the UBS Asesores website, within the following link:

https://www.ubs.com/mx/es/navigation/footer/politica-de-diversification-de-cartera.html

Finally, this Investment Services Guide, and any change thereto, is available to Client at any of the offices of UBS Asesores, as well at the following website address:

https://www.ubs.com/mx/es/wealth-management.html