Investment Services Guide

UBS Asesores México, S.A. de C.V.

Dear Customer:

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 Customers, as well as the characteristics and differences thereof.

UBS Asesores is registered with 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 the services, nor the accuracy or veracity of the information provided, is implied from the registration of UBS Asesores with the 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 in the name and 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.

  • Purpose of the guide

Provide Customers or potential customers of UBS Asesores México, S.A. de C.V., 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.

  • 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:

Commission – 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 Customer in connection with the Investment Services.

Customer Investment Profile – Document used by UBS Asesores with its Customers 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 Management Agreement. Any others instruments traded pursuant to Master Agreements for derivatives transactions shall be excluded.

Discretionary Mandate – The making of investment decisions on behalf of Customer through an account management by UBS Asesores, pursuant to mandate agreements providing for the discretionary management of such accounts.

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

Financial Products – The making of personalized recommendations or provision of advice to a Customer by UBS Asesores, suggesting the making of investment decisions with respect to one or more Financial Products, upon request of Customer or in the discretion of UBS Asesores. In no event shall the carrying out of a transaction arising from the Investing Advisory Services be deemed the Completion of a transaction, even if an instruction from Customer exists.

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 in the name and on behalf of third parties, providing securities Investing Advisory Services, conducting analyses and making investment recommendations.

Investment Advisory Services – The professional services provided to Customers, as part of a regular business activity, including the Investing Advisory Services or Discretionary Mandate.

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

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

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

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 Rules (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.

Sophisticated Customer – 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. Products and Investment Services

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

1. Financial Products

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

  • 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
  • Discretionary Mandate
  • 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 Customers pursuant to service agreements, provided that the same are actual services rendered.

UBS Asesores will provide no service other than Investment Advisory Services, Investing Advisory Services and Discretionary Mandate services, and therefore, charge no other consideration for any service other than Investment Services.

A fee will be charged if UBS Asesores provides Investing Advisory Services or Discretionary Mandate services.

Fees to be charged by UBS Asesores to its Customers will be subject to the following caps:

Investing Advisory Services and Discretionary Mandate services fee when custody is hold by a Mexican Financial Entity (custodian):

  • ·         Between 1 and 500 basis points annually of the gross asset value of the investments that are subject to Investment Advisory Services and 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 Services and Discretionary Mandate 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, 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 value * bps / 360 * days of the period or, Transaction value * bps

Investing Advisory Services and Discretionary Mandate 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, and/or.
  • Calculation: Average value * bps / 360 * days of the period.

E. Inquiry/ Complaint Policy

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

Customer may bring complaints by hand, in writing, via email, or through any other adequate means, provided that the following requirements are fulfilled:

  • Name and address of complainant;
  • Name and address of the representative or person that brings the complaint in the name and on behalf of Customer, if any, and the document that evidences the respective authority 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.

Inquiries and complaints may be received from Monday to Friday, 8:00 a.m. to 6:00 p.m.

  • 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, as follows:

Confidential-Information General Principales

  • Any non-public information about UBS Asesores, the Customers 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 must be performed regardless that UBS Asesores is retained by a Customer or subject to a confidentiality obligation in writing.

Conflicts of Interest that may arise from an issue underwriting

It will be deemed that UBS Asesores incurred in a conflict of interest when participating in an 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, 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 customers up to twenty percent (20%) of the respective issue, save for Sophisticated Customers 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, 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 customers up to forty percent (40%) of the respective issue, save for Sophisticated Customers to whom UBS Services provides the Investing Advisory Service;

c) Make general recommendations to Sophisticated Customers 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 customers;

d) Provide Investing Advisory Services to Sophisticated Customers 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, 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 customers of UBS Asesores of up to twenty percent of the total issue, save for Sophisticated Customers 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 customer/third party, any financial benefit, or avoid a loss, in detriment of the interests of its customers.

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 customers.

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 an issue underwriting" section occurs in respect of UBS Asesores, the Investment Adviser shall inform the same to Customer, 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 Customers 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 an 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.

  • 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 customers, based on the investment objectives known.

Investment Portafolio 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:

  • In providing Investment Advisory Services:

a) Up to twenty percent of the total Securities issue in a public offering, save for Sophisticated Customers, 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.

  • 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 Customers, 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 de Emisores), 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:

  • 10% in one single asset.
  • 20% in products of one and the same issuer.

2. That the diversification matches the Investment Objective of Customer, 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 Customer, so that the respective actions may be taken.

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

Investment Objective

Investment Objective

 

 

Investment Objective

Liquidity

 

 

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

 

Investment Objective

A. Fixed Income

 

 

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

 

Investment Objective

B. Savings

 

 

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

 

Investment Objective

C. Yield

 

 

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

 

Investment Objective

D. Balanced

 

 

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

 

Investment Objective

E. Growth

 

 

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

 

Investment Objective

F. Stock

 

 

Customer 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

This Investment Services Guide, and any change thereto, is available to Customer at the following website address:

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

The guide will also be available to Customer at any of the offices of UBS Asesores.