A. About Our Investment Advisory Programs This brochure describes our retail and certain institutional wrap fee and non-wrap fee investment Advisory Programs. We offer a variety of advisory services to address different investment needs, including: We do not hold ourselves out as specializing in a particular type of advisory service or strategy. Instead, our Programs offer a broad variety of strategies, SMA Managers, asset allocations and features. In certain cases, the Advisory and consulting services available in our programs may be provided by Financial Advisors that are registered with companies that are affiliated with us. These Programs offer advisory services which allow you to manage your account in a number of ways: – You can delegate investment discretion to our Financial Advisors or UBS Asset Management – You can access the discretionary investment services of SMA investment managers – You can work with your Financial Advisor in those programs over which you retain investment discretion – You can use any combination of the above Generally, these Programs are designed for: – Clients who want to implement a medium to long term investment plan – Clients who seek and use the advice and guidance of an investment professional either in their self-directed accounts or by delegating management of their assets to a portfolio manager and/or SMA Manager – Investors who prefer the consistency of fee-based pricing – Clients who are looking for investment advice, custody, trading and execution services, and performance reporting in an all-inclusive account instead of accessing those services separately – For CAP Select: clients who are looking for a diversified asset allocation of alternative investment vehicles – The IC Program also provides consulting services to institutional clients who choose to custody their assets away from UBS. Under those circumstances, the consulting services are offered in a non-wrap fee relationship. However, these programs may not be appropriate for clients with the following preferences: A short-term investment horizon A desire to maintain consistently high levels of cash or money market funds in their accounts Clients who want to maintain highly concentrated positions that will not be sold regardless of market conditions Investors who anticipate continuous withdrawals from their accounts Cash and Securities Concentration: Advisory Programs are not appropriate for clients who want to maintain a high level of cash and/or highly concentrated positions that will not be sold regardless of market conditions. If you hold high level of cash and/or highly concentrated positions in your Advisory Accounts, then you do so against our recommendation and with the understanding that the value of those securities will be included for purposes of calculating the Program fee, resulting in a higher fee to us. Cash in advisory accounts is automatically swept to sweep programs offered by our affiliated Bank. The interest you earn from the sweep is significantly lower than the advisory fee you pay to us. You may hold excess cash or concentrated positions in a brokerage account without incurring the Program Fee. If your account continues to be outside of the cash and concentration guidelines over a specified period of time, then your account will be removed from the Program. Concentrated equity positions may be held in Concentrated Equity Solutions (“CES”) SMA strategy (See section F. 2. (Managed Account Consulting Program for additional information). Limitations of Product Offerings: While we offer an extensive list of investment options and SMA strategies, the offerings are limited to those approved for sale or recommendation at the Firm. We do not offer or recommend every SMA Manager, investment or strategy available in the industry. There are important differences among these Programs in terms of services, structure and administration, the depth of research conducted on the managers available in the programs, Program Fees and the compensation that Financial Advisors receive. Please review this brochure carefully as you decide which program is appropriate for your investment needs. In the future, we envision m ost of the Advisory Programs evolving to a "Unified Advisory Solution" (UAS). UAS will consolidate certain distinct Advisory Programs described in this Brochure and make these advisory options available in a single client account. If at that time, you have more than one Advisory Account with us, we may combine these accounts into the one Unified Advisory Solution account. We will provide prior written notice to you regarding these changes and how they would affect your Accounts, fees and the services we provide to you. We offer other Advisory services not described in this brochure. If you would like more information, please ask your Financial Advisor for the Form ADV Disclosure Brochure for these programs and services: See "Section C – Advisory Business; Advisory Services" for additional details. B. Advisory Programs: Fee Schedules, Minimum Program type Programs included Discretionary Programs Portfolio Management Program UBS Advice Portfolio Program Advisor Allocation Program Separately managed account (SMA) programs ACCESS and Managed Accounts Consulting Unified managed account program UBS Strategic Wealth Portfolio Non-Discretionary Advisory programs PACE UBS Strategic Advisor Portfolio Based Advisory Programs UBS Consolidated Advisory Program Institutional Consulting Alternative Investments Advisory UBS CAP Select Investments and Minimum Annual Fees The following programs offer the flexibility to negotiate either a flat-fee or a tiered (break-point) fee schedule: - ACCESS - Managed Accounts Consulting (MAC) – Portfolio Management Program (PMP) – Institutional Consulting (IC) Flat Fee Option: the agreed-upon annual fee is a fixed percentage of the assets in the Account. That percentage does not change as the value of your Account changes. Tiered (Break-point) Fee Schedule: the negotiated fee, also a percentage of the assets, varies based on asset levels and changes as you increase or decrease assets in your account. Specific “break-points” for each asset level are defined in your Program application (the “Application”). You may request to have two or more eligible Advisory Accounts treated as related accounts to qualify for certain break-point discounts. Please discuss your options with your Financial Advisor. If you negotiated a discount to the UBS Investment Advisory Fee schedule, that discount will apply only to the break-point asset level (i.e., the asset level that qualifies you for reduced fees) indicated in your Application. As a result, your UBS Investment Advisory Fee and overall Program Fee may change in the future as you increase the assets in your account and trigger the breakpoints listed in your application. Fixed Fees: The IC Program also permits fixed annual hard-dollar fees when IC services are provided on a non-discretionary basis and the assets are held away from UBS. With a flat hard-dollar fee, your fee remains the same dollar amount, regardless of changes in your assets. All rates listed below indicate the maximum annual fees in each Program. These fees do not include management and administrative fees and expenses of pooled investment vehicles that may be held in the account. DISCRETIONARY PROGRAMS Program Name ADVISOR ALLOCATION PROGRAM UBS ADVICE PORTFOLIO PROGRAM PORTFOLIO MANAGEMENT PROGRAM (PMP) Minimum Account Size The minimum account opening size: $25,000. Will be higher when SMA sub-accounts are included in the Target Allocation and will depend on the SMA Managers’ minimums. Some SMA strategies have different minimums in AAP and SWP than in the ACCESS or MAC Programs. SMA strategies in SWP/AAP have minimums ranging from $25,000 to $5,000,000 $5,000 in eligible assets $25,000 in eligible assets Fee Schedule UBS Investment Advisory Fee: All assets: 2.50% (SMA Manager Fee is additional) The Advisor Allocation Program has a “Blended Program Fee” that includes a UBS Investment Advisory Fee which applies to all assets in the Account and additional SMA Manager fees for the investment management services in the SMA sub-accounts. SMA Manager Fees vary depending on the strategy and manager(s) selected by your Financial Advisor. All Assets: 1.25% All Assets and strategy types (Equity, Balanced and Fixed Income Accounts): 2.50% PMP Liquidity Portfolios: 1.00% Minimum Annual Fee No minimum annual fee No minimum annual fee No minimum annual fee SMA Manager’s Fee (including Premium Services Fee)3 The SMA Manager’s Fee is in addition to the UBS Investment Advisory Fee. Not all strategies have an additional SMA Manager Fee. Fees are based on a percentage of assets under management and generally range from 0.00% to 0.50% for all accounts. Not applicable. UBS Financial Services will pay UBS Asset Management for its sub-advisory services from its own resources. Clients will not pay a separate investment management fee. Not applicable Fee Options Asset-based fee Asset-based fee Asset-based fee Automatic Rebalancing Options Yes Yes No SEPARATELY MANAGED ACCOUNTS PROGRAMS AND UNIFIED MANAGED ACCOUNTS PROGRAM Program Name ACCESS Managed Accounts Consulting (MAC) Strategic Wealth Portfolio (SWP) Relationship Type Single contract, sub-advisory program. Client hires UBS-FS and authorizes UBS- FS to hire manager and make manager changes on client’s behalf. Dual contract, consulting program. Client hires UBS- FS as consultant and hires manager (directly) to manage the account. A unified managed account (with discretionary (SMA- sub-accounts) and non-discretionary subaccounts) that offers separately managed accounts, mutual funds, and exchange traded funds (ETFs), within a single account. Separately managed accounts are sub-advised as in ACCESS. Minimum Account Size $25,000. Certain strategies have minimums from $5,000 to over $1,000,000 $100,000 or the manager’s minimum (whichever is greater). $10,000,000 for MAC accounts held at an outside custodian, subject to limited exceptions. The minimum account opening size: $100,000. Can be higher when SMA sub-accounts are included in the Target Allocation and will depend on the SMA Managers’ minimums. Some SMA strategies have different minimums in SWP than in the ACCESS or MAC Programs. SMA strategies in SWP/AAP have minimums ranging from $25,000 to $5,000,000 Fee Schedule Maximum Fee UBS Investment Advisory Fee: All assets and strategy types: 2.50% (SMA Manager Fee is additional) UBS Investment Advisory Fee: All assets and strategy types: 2.50% (SMA Manager Fee is additional) UBS Investment Advisory Fee: All assets: 2.50% (SMA Manager Fee is additional) The Strategic Wealth Portfolio Program has a “Blended Program Fee” that includes a UBS Investment Advisory Fee which applies to all assets in the Account and additional SMA Manager fees for the investment management services in the SMA sub-accounts. SMA Manager Fees vary depending on the strategy and manager(s) you selected. Minimum Annual Fee No minimum annual fee No minimum annual fee No minimum annual fee SMA Manager’s Fee (including Premium Services Fee) The SMA Manager’s fee is in addition to the UBS Investment Advisory Fee. Not all strategies have an additional SMA Manager Fee. Fees are based on a percentage of assets under management Generally range from 0.00% to 0.50% for all accounts. Fee is negotiated between the client and the manager. Generally range from 0.02% to 2.00% for all accounts. . Generally range from 0.00% to 0.50% for all accounts. Fee Options Asset-based fee Asset-based fee Asset-based fee Automatic Rebalancing Options No No Yes The ACCESS, SWP, AAP, MAC and IC programs offer some of the same SMA strategies for different SMA Manager fees. The amount of the fee paid to each SMA Manager is a function of that SMA Manager’s investment style and the fee negotiated with the SMA Manager either by UBS (in ACCESS, SWP, AAP) or by you in the MAC and IC Programs. Depending on your asset level and ability to negotiate the investment management fee with the SMA Manager in the dual- contract structure of the MAC and IC programs, you may find that the single-contract structure in ACCESS, AAP and SWP provides a more cost-effective option or vice versa. In addition, based on the combination of our UBS Investment Advisory Fees and your SMA Manager’s Fees, the overall Program Fee for your SMA account in MAC or IC may exceed 3% of the account value. Please review your options and overall costs carefully with your Financial Advisor before investing. NON-DISCRETIONARY ADVISORY PROGRAMS Program Name PACE Select PACE Multi UBS Strategic Advisor Eligible Investments UBS Mutual Funds (100% mutual funds) Affiliated and Non-Affiliated Mutual Funds (100% mutual funds) A combination of equities open- and closed-end mutual funds, ETFs, fixed-income securities, approved unit investment trusts (UITs), options, certain alternative investments, structured products and other securities. Minimum Account Size $10,000 $5,000 $25,000 in eligible billable assets. If you link to another Strategic Advisor account, only one of the Related Accounts is subject to this minimum requirement. Each other Related Account is subject to a minimum account size of $10,000 in eligible assets. Fee Schedule Maximum Fee All assets: 2.50% All assets: 2.50% All assets: 2.50% Minimum No minimum annual fee No minimum annual fee No minimum annual fee Fee Options Asset-based fee Asset-based fee Asset-based fee Automatic Rebalancing Options Yes Yes No PORTFOLIO BASED ADVISORY PROGRAMS Name UBS Consolidated Advisory Program (UBS-CAP) UBS Institutional Consulting (IC) UBS-CAP and IC services include, but are not limited to: 1) assistance in the development and preparation of investment policy guidelines or an investment policy statement for IC clients; 2) the preparation of an asset allocation study and analysis that allocates your investment assets among various asset categories or classes; 3) selection of separate account managers, mutual funds and alternative investments; 4) portfolio evaluation and review; 5) ongoing investment management consulting on items such as reviewing the asset allocation and investment policy and the impact of capital market developments on the overall investment strategy. Implementation Options and Eligible Programs All implementation Options: Alternative Investments, Non- Researched Assets and Held Away Assets permitted at certain levels. Non-Discretionary: All advisory programs are eligible for the CAP Relationship except PACE Select, PACE Multi and the Advice Advantage Program. Strategic Advisor accounts are eligible only if they do not hold alternative investments. Non-Discretionary: All programs eligible except PMP, AAP, PACE Select, PACE Multi and UBS Advice Portfolio Program. Limited Power of Attorney for Implementation of Client Directed Investment Activities: All programs eligible except PACE Select, PACE Multi. MAC is limited to Researched Managers only. LPOA excludes Strategic Advisor accounts, non-researched assets, non-researched managers (MAC Eligible), Publicly Registered Non-Traded REITs and BDCs. Client retains all authority over the implementation of investment advice in those accounts and investments. N/A Power of Attorney for Limited Financial Advisor Discretion Services: Eligible programs include ACCESS, MAC (Researched Managers only) and PMP. PACE Select, PACE Multi and Advice Portfolio Program accounts are not eligible for this relationship type. Strategic Advisor (only accounts without alternative investments) and SWP accounts and non-researched assets, private equity, private real estate, REITs and BDCs may be included in the CAP relationship but are excluded from the LPOA. Client retains all authority over the implementation of investment advice in those accounts and investments. Discretion over private equity and real estate assets may be granted on a limited exception basis for unsolicited client requests for relationships that meet certain asset thresholds. IC: Eligible programs include ACCESS, MAC (Researched Managers only), and Advisor Allocation Program. Alternative investments can be included. Minimum Relationship Size $10,000,000 (relationship size) Non-Discretionary Services: $1 million Discretionary Services: $5 million Eligible Clients All clients that meet the minimum relationship size other than qualified, defined benefit, and employee directed plans are eligible for UBS-CAP. All institutional clients that meet the minimum relationship size are eligible for IC. Fee Schedule All assets: 2.50% (the SMA Manager Fee in ACCESS, MAC, SWP and AAP is in addition to the UBS-CAP fee). See the ACCESS, MAC, SWP and AAP Program descriptions for details. The SMA Manager Fee in ACCESS, MAC, and AAP is in addition to the IC program fee). See the ACCESS, MAC, and AAP Program descriptions for details. Non-discretionary services. Assets Maximum program fee $1 – 10 million 2.00% $10 – 25 million 1.50% $25 – 50 million 1.30% $50 – 100 million 1.10% $100 – 250 million 0.90% $250 – 500 million 0.70% $500 – 1 Billion 0.50% > $1 Billion 0.30% PORTFOLIO BASED ADVISORY PROGRAMS Name UBS Consolidated Advisory Program (UBS-CAP) UBS Institutional Consulting (IC) Discretionary services: Assets Maximum program Fee $5 – 25 million 1.80% $25 – 50 million 1.55% $50 – 100 million 1.30% $100 – 250 million 1.05% $250 – 500 million 0.80% $500 – 1 Billion 0.58% > $1 Billion 0.33% In limited circumstances, IC can offer one-time project services for a flat fee. For those clients eligible for both UBS-CAP and IC, your financial advisor has a conflict of interest in recommending the program with the higher overall compensation to us and our affiliates and higher cost to the client. Minimum Annual No minimum annual fee $10,000 or the maximum program fee based on the fee schedule with respect to services selected and the value of Eligible Investments, whichever is less. Fee Options Asset-based fee Asset-based or hard dollar for held away only; project services available as a one-time fee ALTERNATIVE INVESTMENTS ADVISORY PROGRAM Program Name UBS Consolidated Advisory Program Select (CAP Select) UBS Consolidated Advisory Program - Select CAP Select services include, but are not limited to: 1) assistance in the development and preparation of investment policy guidelines; 2) the preparation of an asset allocation study and analysis that allocates your investment assets among various alternative investments asset categories or classes; 3) selection of alternative investments; 4) portfolio evaluation and review; 5) ongoing investment management consulting on items such as reviewing the asset allocation and investment policy and the impact of capital market developments on the overall investment strategy. Implementation Options You may establish a CAP Select relationship on a fully non-discretionary basis (without any limited power of attorney) or you may delegate certain activities to your Financial Advisor in this Program by selecting the Limited Power of Attorney option in the CAP Select Application and executing the Agreement and Application. CAP Select offers (1) Limited Power of Attorney for Implementation of Client Directed Investment Activities and (2) Power of Attorney for Limited Financial Advisor Discretion Services. You may establish a CAP Select Program Account on a stand-alone basis, or in conjunction with a UBS CAP Program Account. CAP Select eligible assets are limited to alternative investment vehicles held at UBS. Discretion over private equity and real estate assets may be granted on a limited exception basis for unsolicited client requests for relationships that meet certain asset thresholds. Minimum Relationship Size $25,000,000 (relationship size) Fee Schedule Maximum Fee All assets: up to 1.00% CAP Select is an advice-only program in which the fee you pay is solely for the investment advice and performance reporting provided in the Program. Custody, trading and execution fees are not applicable or assessed in this Program. Minimum Annual No minimum annual fee Fee Options Asset-based fee (Advice-Only / Non-Wrap) Billing practices vary by Program. Please see “Account Requirements and Types of Clients—Billing Practices” for a description. We reserve the right, in our sole discretion, to institute special pricing features, change account minimums for new accounts, impose higher account minimums for certain strategies or portfolios that may be offered from time to time, terminate accounts that fall below the minimum account value requirements, or require that additional cash or securities be deposited to bring an account up to the required minimum. Limited Advisory Program Options in Wealth Advice Center: The Wealth Advice Center (WAC) supports primarily the needs of mass affluent investors through a team-based approach. The advice and services provided by the WAC Financial Advisors is limited to an offering and service model designed for these households. As such, not all products and services available at UBS Financial Services Inc. are available through the UBS Wealth Advice Center. New clients to the UBS Wealth Advice Center are currently limited to two different advisory programs: ACCESS and the Advice Portfolio Program. Clients already enrolled in the PACE Multi Advisor Program or the PACE Select Advisor Program are permitted to enroll additional accounts in those programs, if appropriate. In addition, select employers have limited their participants to the PACE Multi Advisor Program and PACE Select Advisor Program. WAC clients in this scenario are permitted to enroll in PACE Multi Advisor or PACE Select Advisor, if appropriate. We can change the products and services available through the Wealth Advice Center at any time, in our discretion. Various Roles and Services of your UBS Financial Advisor: The services of our Financial Advisors vary depending on the Program you select and can encompass different levels of discretion available in our Advisory Programs. For example, Financial Advisors who manage accounts on a discretionary basis in the PMP and AAP Programs may also provide services to you and to other clients outside of those Programs as non- discretionary investment advisers in PACE, SWP, Strategic Advisor and the SMA Programs. The same Financial Advisors can also provide services to you and other clients in connection with brokerage accounts in their capacity as broker-dealer representatives. As a result, Financial Advisors participating in PMP and AAP may dedicate time to activities other than discretionary portfolio management. Further, the management of accounts for which they exercise discretion in PMP and AAP will differ from each other and from other accounts for which they provide services, including differences in investment methodology, asset allocation and/or investment recommendations. In addition, we, our Financial Advisor and our affiliates may give advice and take action in the performance of our duties to clients which differs from advice given, or the timing and nature of actions taken, with respect to other clients’ accounts. Financial Advisors who participate in the PMP and AAP Programs have an incentive to recommend their services in PMP and AAP over those of third party SMA Managers in other Advisory Programs or over traditional commission-based brokerage services. In addition, we and our Financial Advisors have a conflict of interest in recommending the services of related persons in managing client accounts because this will result in higher overall compensation to us and our affiliates than if third-party managers were used. Only Financial Advisors who have received the internal designation of Institutional Consultant may provide IC services. For more information on the Institutional Consultant title see “Education and Business Standards for Financial Advisors Participating in Our Advisory Programs.” 1. Your Program Fee; Services Included in Your Program Fee: The Programs described in the Brochure, except for CAP Select, charge a “wrap fee”. The IC Program charges a “wrap fee” if the assets are held at UBS. For IC clients that hold their assets away from UBS, the IC program fee is for advice only, but it is still based on assets under management. That means the total Program Fee that you pay in the Programs described in this brochure covers: the UBS Investment Advisory Fee which covers investment advice and consulting services of UBS and your Financial Advisor trading, execution and settlement for trading through UBS custody at UBS performance reporting for accounts custodied at UBS (IC also provides performance reporting for accounts custodied away from UBS) and related account services that we provide to you depending on the program that you select, may include portfolio management as well. If applicable, given your Program selection, the total Program Fee includes the SMA Manager Fee. Since your Program Fee for the wrap-fee programs covers trading and execution costs, separate brokerage commissions will not be charged to your Account. However, because our Programs are investment advisory programs and the advice and guidance of your Financial Advisor is the primary service of the Programs, you should not enroll in our Programs in order to obtain ancillary services such as custody, trading and execution, or assume that you will receive any particular benefit from the availability of those services in the Programs. For example, depending on the circumstances, Program Accounts may have low or no trading (such as may be the case with a “buy and hold” strategy) or the securities or other investments traded might not typically incur commissions or other transaction-based charges (such as can be the case with some fixed income securities and mutual funds). Moreover, other broker- dealers offer custody and trade execution services on discounted or complimentary basis. The maximum annual rates for the UBS Investment Advisory Fee are listed in the fee schedules above. CAP Select is an advice-only program in which the fee you pay is solely for the investment advice and performance reporting provided in the Program. If you hold assets away from UBS, the IC Program is available on an advice-only basis. Custody, trading and execution fees are not applicable or assessed in the CAP Select Program and in the IC Program if you elect to hold assets away from UBS. Your Fees Can Change: The UBS Investment Advisory Fee, SMA Manager Fees (or Premium Services Fees) and overall Program Fee for your Account(s) may change over the course of your relationship with us. The Fees for an Account may be changed either by sending you prior written notice of the change with an opportunity for you to object to the change, or obtaining your prior verbal consent which we will confirm in writing for your records when fees are increased or decreased. The IC program requires written consent for a fee increase. The fee change will be effective for the next quarterly billing cycle. Your continued use of our services will constitute your agreement to the change. Your Financial Advisor receives a percentage of the UBS Investment Advisory Fees you pay to us. Fees are Negotiable. The fees we charge in our Programs are negotiable and may differ from client to client, and for clients in the Wealth Advice Center, based on a number of factors. These factors include, but are not limited to, the type and size of the account, the number and range of supplemental Advisory and client-related services to be provided to the account, the scope of the engagement and the complexity of services. Although the UBS Advisory Fee is negotiable and can be waived in certain instances, we limit the ability of Financial Advisors to negotiate below certain levels (“hard floors”). The hard floors differ based on relationship size, strategy type, and for separately managed accounts offered in the ACCESS, SWP, and AAP Programs with no additional manager fee. Discount Sharing: We have discount sharing requirements in our Advisory Programs to ensure fees are not priced below specified levels. Discount sharing does not apply to accounts in the Wealth Advice Center or to certain Managed Options Strategies. Discount sharing levels and hard floors vary by style and in some instances by the types of strategies available in a Program. For example: the discount sharing levels and hard floors for an equity strategy are different than for a fixed income strategy; and, within those categories, hard floors levels differ for separately managed accounts offered in the ACCESS, SWP and AAP programs with no additional manager fee. Financial Advisors receive less than their standard payout when accounts are priced below the discount sharing levels. This creates an incentive for Financial Advisors to price accounts at or above those levels. If a Financial Advisor wishes to discount the UBS Investment Advisory Fee below certain levels (but not below the hard floors), he/she may have the opportunity to do so but may earn reduced compensation associated with the discount. These discount sharing fee levels are typically higher for equity and balanced strategies than for fixed income strategies, and as such this creates an incentive for Financial Advisors to recommend fixed income strategies. However, the Advisory fee charged to clients for fixed income strategies is traditionally lower than for equity and balanced strategies. Financial Advisors are incentivized to price accounts at the stated fee schedules. All assets held at UBS (including brokerage assets) that are part of your marketing relationship may be used by your Financial Advisor to determine pricing for your Advisory Accounts. These waivers provide those Financial Advisors the flexibility to price advisory accounts at lower fee levels which can benefit clients, but also provides an incentive for them to recommend moving from brokerage to advisory programs to their clients which creates a conflict of interest between the interest of the Financial Advisor and the interest of the Client. Customized pricing and Financial Advisor compensation may be approved for advisory relationships with assets over a certain amount. Advisory Accounts enrolled in UBS-CAP and CAP Select are subject to the Equity/Balanced and Pooled Investment Vehicle (PIV) Discount Sharing schedule that is the same for all programs, and account types. Discount sharing is waived for client accounts enrolled in the IC program, except for accounts enrolled in an SMA Advantage strategy. IC accounts priced below certain levels may not be eligible for SMA Advantage strategies, or if they are eligible, your Financial Advisor may be subject to a reduced payout for those accounts which creates a conflict of interest by incentivizing them to recommend allocations to other investments that do not have a reduced payout. We address our conflicts of interest by maintaining policies and procedures requiring that Advisors act in your best interest, reasonably supervising their activities and disclosing these conflicts so that you can make fully informed decisions. Proprietary SMA Advantage strategies that charge a Premium Services Fee are not available to retirement IC clients. During a promotional period in 2023, discount sharing thresholds were temporarily suspended for certain accounts that invested in fixed income strategies in ACCESS, MAC and PMP when specified criteria were met. The minimum fees for such accounts were also reduced to 15 basis points. Client pricing and Financial Advisor discount sharing waivers remain for the life of the Advisory account while invested in a fixed income strategy – unless there are changes to the program or Advisory fee. This creates a conflict of interest as it incentivizes Financial Advisors to recommend maintaining accounts in these fixed income strategies over other strategy types. While clients can benefit from the reduced fee, Financial Advisors also benefit by receiving compensation based on the entire fee charged to the accounts instead of having those payouts reduced by discount sharing. UBS offers a dedicated liquidity strategy available to Financial Advisors and their clients in the discretionary PMP Advisory program. The maximum UBS Advisory fee for clients enrolled in the liquidity strategy is 1.0%, with Financial Advisors not subject to discount sharing on applicable accounts, regardless of account assets or relationship size. Fees as well as other account requirements vary as a result of the application of prior policies depending on when your account was first opened. Fees for certain Advisory services described in this Brochure are reduced for our employees, certain family members or employees of our affiliates. We reserve the right to change those fees upon termination of employment with the firm. Other types of fee arrangements—such as a fixed fee arrangement—are available in certain programs. We may enter into special agreements to provide other services involving specific clients, Financial Advisors or any of our branch offices. For more information regarding the above, contact your Financial Advisor. Program Fees are expressed as an annual rate that is prorated for the quarterly or other billing period and is applied to the asset value of the account. For billing purposes, asset value means the total fair market value of the eligible securities in your Advisory Account, including, where applicable, the value of margin loans, dividends and accrued interest. Options Overlay Strategy and Mandate Amounts: The Program Fee for Options Overlay Strategies is typically based on a "Mandate" amount of the strategy, selected by the client, not the value of eligible assets in the Account, as is the practice for most Advisory Programs. The Mandate amount is the amount of collateral you are willing to put at risk. While the actual value of assets in your Account will fluctuate over time, the Mandate remains constant unless you change it by notifying your Financial Advisor or UBS lowers the Mandate. In cases where UBS lowers the Mandate, we will notify you in writing of the change. Depending on the value of your account, this practice of billing on the Mandate amount will result in higher compensation to UBS and your Portfolio Manager than if the Program Fee was based on the value of eligible assets in your account. See "Account Requirements and Types of Clients; Billing Practices" for more information. You should consider the impact of these billing practices carefully before investing in these strategies. Important Considerations of an Asset-Based Fee Option. We set and evaluate the reasonability of UBS Investment Advisory Fees in the Programs based on the investment advisory services we offer, without regard – and attributing no economic benefit – to any ancillary services such as custody, trading and execution available in the Programs. You should expect that lower fees are available from other firms offering the same or comparable services. You may pay more or less in a UBS Financial Services Inc. wrap- fee program than you might otherwise pay if you purchased the services separately, through other firms, or if you chose to purchase the same or similar securities in a brokerage account without the investment advisory services of your Financial Advisor. For example, depending on your asset allocation or strategy selection, you may find that the individual investments of your strategy or allocation are available to you outside of the Program for more or less than you would pay in the Program. Several factors affect whether your fees and costs are more or less in a fee-based program, including: - Size of the portfolio - Whether we serve as custodian for your account assets - The types of investments you select, or are made by the SMA Manager, Portfolio Manager or Financial Advisor - Whether such investments carry additional administrative or management fees - The trading activity in the Account and the types of securities traded - Whether your SMA Manager uses our trading and execution capabilities or those of other broker-dealers to execute transactions for your accounts - Whether you have large cash holdings (i.e., cash or cash equivalents such as bank account deposits or money market funds offered as so-called sweep vehicles) in an Account and whether investment advisory fees are charged on those cash holdings - The actual costs of the services if purchased separately Your Program Fee will not be adjusted if, among other things: - Your Account has low or no trading activity, - Your SMA Manager chooses to trade away from us, and your trades are subject to commissions or other charges imposed by other broker-dealers - You choose to custody or trade your assets at another financial institution, - You have large cash holdings, or - You decide not to implement or follow the investment advice we provide to you. Accordingly, you should evaluate UBS Investment Advisory Fees based solely on the investment advisory services we provide, without regard to any ancillary services provided such as custody, trading and execution services. SMA Manager Fees: Certain SMA strategies are available in several programs at different fee levels. Therefore, the Program and/or SMA Manager Fee you pay will vary, depending on the Program you select and the structure of the program (dual, single contract, unified account, discretionary or non-discretionary program). For example: The ACCESS, MAC and IC programs offer some of the same SMA strategies. Depending on your asset level and ability to negotiate the SMA Manager Fee with the SMA Manager in the dual-contract structure of the MAC or IC programs, you may find that the single- contract structure in ACCESS provides a more cost-effective option or vice versa. In addition, based on the combination of our UBS Investment Advisory Fees and your SMA Manager’s Fees, the overall Program Fee for your SMA account in MAC or IC may exceed 3% of the account value. We may, in our discretion, and in order to address fiduciary obligations, offer the Programs to trust clients for which our affiliate serves as trustee at substantially discounted rates than those listed. Fees charged by SMA Managers can vary significantly, depending on the type of investment services offered. See the SMA Program description tables above for the fee ranges in the various Programs. SMA Advantage Strategies: Select strategies referred to as “SMA Advantage strategies” in the ACCESS, AAP and SWP Programs, including those offered by our affiliate UBS Asset Management (AM), are available with no additional SMA Manager fee charged to Clients. UBS Financial Services negotiates the SMA Manager Fee with the Managers based on an institutional fee schedule that is substantially lower than the ranges listed above and will pay that fee out of its own resources. The Managers charge additional fees for certain strategies or additional services determined to be premium solutions, such as personalized tax management and sustainable investing. The fees for those value-add services will be paid by Clients (“Premium Services Fee”). All Managers are invited to participate in SMA Advantage and may choose to participate at any time during their relationship with UBS. Participation is optional and it does not impact the availability of a Manager’s strategy on the UBS Financial Services Inc. platform. If a manager elects to participate in SMA Advantage for some or all of its strategies, existing clients invested in those strategies will see a decrease in the SMA Manager fee, which we will communicate to you. Managers in SMA Advantage may opt out of the SMA Advantage Program at any time. A manager’s decision to no longer participate in SMA Advantage will not impact the availability of the strategy(s) on the UBS platform. Clients invested in strategies being removed from SMA Advantage will be required to pay the Investment Manager Fee for that strategy, which will increase their overall fee, depending on the Investment Manager Fee and if the strategy included a premium fee within SMA Advantage. Existing clients enrolled in a strategy that is removed from the SMA Advantage program will receive notification prior to being charged the Investment Manager Fee. We do not charge an SMA Manager Fee or Premium Services Fee to Plan or IRA clients invested in a SMA strategy managed by a UBS affiliated Investment Manager in the AAP Program. Financial Advisors have a conflict of interest and an opportunity to charge a higher UBS Investment Advisory Fee when clients enroll in Investment Advisory Programs that do not include an additional SMA Manager fee. Similarly, differences in SMA Manager fees create a conflict of interest and provide an opportunity for Financial Advisors to charge a higher UBS Investment Advisory Fee for a strategy with lower or no SMA Manager Fees than they would for strategies that charge a higher SMA Manager Fee. UBS applies higher hard floors on the UBS Advisory Fee when accounts enroll in SMA Advantage. Depending on the size of the overall relationship, this can limit the ability to negotiate a lower UBS Investment Advisory Fee when the SMA Advantage strategies are used compared to strategies that charge a separate SMA Manager Fee. C. Fees/Other Charges Not Covered by your Program Fee Depending on your Program and investment selections, you will pay other charges in addition to the wrap fee, some of which may add to the compensation that we receive. Program Fees will not be reduced or offset by these fees. These additional fees will reduce the overall return of your account. Our UBS Investment Advisory Fees do not include: SMA Manager Fees. Our UBS Investment Advisory Fee does not include the services of your SMA Manager in programs that offer those services. Your SMA Manager will charge a separate fee for discretionary portfolio management services, which UBS negotiates in the ACCESS, AAP and SWP Programs. You are responsible for negotiating SMA Manager fees in the MAC and IC Programs, except for MAC Accounts in the UBS CAP or IC Program with Limited Power of Attorney, where your Financial Advisor negotiates on your behalf. The SMA Manager Fees when added to UBS Investment Advisory Fees, comprise your total “Program Fee.” Trade Execution Cost through other Broker Dealers: Commission charges for transactions for your account that your SMA Manager or we, at your direction, effect through other broker-dealers. See Item 5D Trading and Execution Practices Error! Reference source not found.for important information about step-out trades and how they can impact the overall costs of trading for your portfolio. If your SMA Manager will not be executing transactions with UBS, our SMA programs may not be an appropriate option if your SMA Manager does not take action to ensure that you do not incur additional costs; - custody fees and trading fees imposed by other financial institutions if you choose to custody and/or trade your assets at other financial institutions (for example, investments held away from UBS in UBS-CAP or IC); - fees associated with custody, delivery and conversion of precious metals imposed by affiliates, or other financial institutions; - mark-ups/mark-downs on principal transactions with us, our affiliates or other broker-dealers; - internal trust fees; - costs relating to trading in and holding foreign securities (other than commissions otherwise payable to us); - internal administrative, management, redemption (see below) and performance fees imposed by collective investment vehicles such as open-end and closed-end mutual funds, UITs, hedge funds and other alternative investments, exchange- traded funds or real estate investment trusts; - subject to certain exceptions, redemption fees charged by mutual funds for active trading in your Accounts (see “Mutual Fund Redemption Fees for Active Trading” below); and - other specialized charges, such as transfer taxes, and fees we charge to customers to off-set fees we pay to exchanges and/or regulatory agencies on certain transactions. Either UBS Financial Services or UBS Bank USA will also charge interest on any outstanding loan balances (including margin loans) to clients who borrow money from us or UBS Bank USA. Clients also may be charged additional fees for specific account services, such as: Account Transfer Fee Wire transfer charges Annual Account Service Fees for retirement accounts Fees relating to custody and transactions in physical securities Voluntary corporate action fees Fees for RMA and BSA services where such services are available for the account Mutual Fund Redemption Fees for Active Trading. The mutual funds you hold in your Accounts may charge redemption fees if shares are sold within a certain period of time after they are purchased, also known as active trading. These fees may also apply to the redemption portion of an exchange transaction if shares are exchanged among funds (whether through direct exchanges or through sales and new purchases) in the same family of funds more frequently than is permitted by each fund’s prospectus. The amount charged as a redemption fee, the length of time you must hold your shares to avoid a redemption fee and the number and frequency of exchanges among funds you may make without paying a redemption fee, varies from one mutual fund to another. This information is included in each Fund’s prospectus. If you have questions about whether a redemption fee will apply to a transaction you wish to make, please ask your Financial Advisor for a prospectus for the applicable mutual fund. If charged, redemption fees will be in addition to the Program Fee and will be your responsibility. You will not be charged redemption fees for mutual fund assets in UBS Strategic Wealth Portfolio, ACCESS, UBS Advice Advantage, and PACE programs, resulting solely from automatic transactions effected for your allocation, including periodic automatic account rebalancing, periodic automatic withdrawals from your account or withdrawals to pay your Program Fee you have selected these features. If due to system limitations or errors, your account is charged redemption fees as a result of periodic automatic account rebalancing, periodic automatic withdrawals from your account or withdrawals to pay your Program Fee, we will credit your Account for the amount of those fees. Redemption fees incurred for any other reason and as a result of your trading instructions (including tax harvest instructions in our SMA programs) will be your responsibility. D. Compensation to Financial Advisors, Market Directors and Associate Market Executives (“Advisors”) Who Recommend Advisory Programs Our standard compensation plan for Advisors consists of (1) a guaranteed monthly minimum draw required by applicable law; (2) a monthly earned payout based on the Advisor’s production if it is greater than the monthly minimum draw; (3) a Year-End Award; (4) a Client Growth Award; and (5) a Productivity Award. Both the monthly production payout and any Year-End Award are determined using an overall Incentive Grid Rate (a percentage) for each Advisor. Incentive Grid Rates range from 30% to 60%, with 10% to 15% of the rate credited toward the Year End Award, which is generally paid on a deferred schedule. The Incentive Grid Rate increases as an Advisor’s production increases. Financial Advisors are eligible for various incentive awards based on a variety of factors including but not limited to length of service, net new assets, and production levels. Monthly Earned Payout The payout is a percentage (referred to as a production payout rate) of the production (generally transaction revenue and investment advisory program fees) that each Advisor generates during that month, minus deferrals and adjustments specified in our Advisor Compensation Plan. Account maintenance fees and advisory fees that are priced below a specific level are not eligible for a production payout or monthly credit(s) towards the determination of the year end award Advisors working as part of a fully approved documented and active team that meets minimum production requirements can qualify for a higher production payout rate than they would receive working as an individual. Generally, Advisors are not paid on households that fall under the following thresholds:
• Wealth Management US households: $250,000
• International households: $2,000,000 (effective July 2024; currently $1,000,000)
• Private Wealth Management households: $2,000,000 However, Advisors receive compensation at a reduced incentive grid rate for production generated by those households if they transfer or refer them to the Wealth Advice Center or the International Wealth Solutions Group. Because Financial Advisors are generally not paid on households below the thresholds if they support them directly in the branches, there is a conflict of interest and an incentive for the Financial Advisor to transfer/or refer such households to the Wealth Advice Center or to the International Wealth Solutions Group because it will generate compensation for the referring Financial Advisor that would not otherwise be received. We reserve the right, at our discretion and without prior notice, to change the methods by which we compensate our Advisors and employees, including reducing and/or denying production payout and/or awards at our discretion for any reason. For our Investment Advisory Programs (asset-based fee programs) the Incentive Grid Rate is applied to the program fees credited to the Financial Advisor by the Firm, but the payout is generally reduced for accounts priced below certain thresholds. See "Discount Sharing". Advisory accounts in relationships with assets over certain thresholds may have customized pricing and/or payout rates as approved by the Firm. The differences in the way we compensate Advisors for the products we offer creates financial incentives for Advisors to recommend certain products and account types over others, to encourage clients to purchase multiple products and services, and to choose a payment structure for products and services that generates greater compensation. We address our conflicts of interest by maintaining policies and procedures requiring that Advisors act in your best interest, reasonably supervising their activities and disclosing these conflicts so that you can make fully informed decisions. Other compensation practices Under certain circumstances (e.g., acquisitions and recruitment or particular programs or designations, such as Wealth Advice Center, Wealth Planning Associate, Financial Advisor Associates, Institutional Consulting ("IC"), Retirement Plan Consulting Services ("RPCS"), Retirement Plan Advisor (“RPA”), and Retirement Plan Manager (“RPM”), some Financial Advisors or producing Market Directors and Associate Market Executives are compensated differently. Compensation for Advisors recruited from other firms: In general, if your Advisor is joining UBS from another firm, you should discuss the reasons your Advisor decided to change firms and any costs or changes in services you incur by transferring your accounts to UBS. Typically, UBS pays Financial Advisors financial incentives when they join and on an ongoing basis as described below. Advisors are eligible to receive incentives at the time they join (based on prior firm revenue) and are eligible to receive additional incentives while employed at UBS, based on reaching certain minimum asset and/or production levels or other targets within a specified period of time after joining UBS. In some cases, to maintain the incentives, the recruited Financial Advisors are required to achieve and maintain asset levels as determined at the time of joining UBS. Generally these incentives are the continuance of monthly payments for up to 12 years, unless the threshold/levels are not met. These payments can be substantial and take various forms, including salary guarantees, loans, transition bonus payments and various forms of compensation to encourage Advisors to join UBS, and are also contingent on your Advisor's continued employment. Therefore, even if the fees you pay at UBS remain the same or are less, the transfer of your assets to UBS contribute to your Financial Advisor's ability to meet such targets and to receive additional loans and/or compensation even if not directly related to your account or the fees you pay to us. These practices create an incentive and a conflict of interest for your Financial Advisor to recommend the transfer of your account assets to UBS since a significant part of the Financial Advisor's compensation is often contingent on the Financial Advisor achieving a pre-determined level of revenue and/or assets at UBS. You should carefully consider whether your Financial Advisor's advice is aligned with your investment strategy and goals. Compensation for Field Leadership Elements of our field leader compensation are based on revenues and sources of profit to the firm. This creates an incentive for our management team to encourage Advisors to recommend products and services that result in more revenue and/or are more profitable to the firm, and can create a conflict of interest. Regardless of these incentives, we maintain policies and procedures and supervisory processes designed to ensure that Financial Advisors meet the standard of conduct applicable to each client. Compensation to Financial Advisors in the UBS Wealth Advice Center, the International Wealth Solutions Group and the Access Desk: All UBS Wealth Advice Center, International Wealth Solutions Group and the Access Desk Financial Advisors receive an annual salary and are also eligible to earn an annual discretionary incentive compensation award. Financial Advisors in the Wealth Advice Center receive more production credits for investment advisory enrollments and additional investments than for products or transactions in brokerage accounts. This creates a conflict of interest and an incentive for the Financial Advisors to recommend Advisory Accounts over other products, services and transactions. Production credits earned on Advisory products are based on the time required to execute, which includes Financial Advisor effort, product complexity and time required to complete the transaction. 1. Compensation to UBS Portfolio Managers and Financial Advisors in our Advisory Programs . The Advice Portfolio Program is managed by Portfolio Managers employed by our affiliated, UBS Asset Management. Those Portfolio Managers do not receive a portion of the UBS Investment Advisory Fee paid by clients in the Program. Financial Advisors receive a portion of the UBS Investment Advisory Fee you pay to us. The entire UBS Investment Advisory Fee you pay is allocated to the branch office and it is used as the basis to calculate the percentage of the Program Fee that is paid to your Financial Advisor. The percentage payable to Financial Advisors acting in the PMP and AAP Programs is based on their total production level at UBS. Although, generally, the percentage is the same across all advisory accounts serviced by the Financial Advisor, the actual amount paid to the Financial Advisor can vary by Program depending on the fees. Financial Advisors who participate in the PMP and AAP Programs have an incentive to recommend their discretionary services in those Programs over those of third party SMA Managers in other Advisory Programs or over traditional commission-based brokerage services. Financial Advisors have a conflict of interest and an opportunity to charge a higher UBS Investment Advisory Fee when clients enroll in Investment Advisory Programs that do not include an additional SMA Manager fee. Generally, Financial Advisors in UBS-CAP and IC will receive the same payout level across all Accounts enrolled in UBS-CAP or IC, respectively, regardless of Program type or strategy in which those assets are invested. Financial Advisors who do not participate in PMP or AAP may refer their clients to Financial Advisors acting as Portfolio Managers in the PMP Program or to Financial Advisors in AAP. In those instances, the PMP Portfolio Manager or AAP Financial Advisor shares a portion of his/her fee with the referring Financial Advisor. 2. Compensation to SMA Managers in the ACCESS, MAC, SWP and AAP Programs. We pay the SMA Manager Fee (including Premium Services Fees) portion of the total Program Fee to your SMA Manager as compensation for their services. The amount of the Program Fee paid to each SMA Manager is a function of that SMA Manager’s investment style and the fee we negotiated with the SMA Manager or for MAC and IC Managers, the fee you negotiated directly with the Manager. SMA Managers fees can vary significantly, depending on the type of investment services offered. Not all strategies in ACCESS, SWP and AAP have an additional SMA Manager Fee ( See Item 4 section 1. Your Program Fee “SMA Advantage Strategies. When fees are charged, the annual fees paid to SMA Managers are based on a percentage of assets under management and, for ACCESS, SWP and AAP, generally range from 0.00% to 0.50% for all accounts. For MAC accounts the annual fees paid to SMA Managers generally range from .02% to 2.00% of assets under management. The compensation payable to SMA Managers is typically higher for equity and balanced strategies than it is for fixed income strategies. We calculate SMA Manager Fees for ACCESS, SWP and AAP and for MAC accounts where the SMA Manager Fee is deducted directly from the account, in accordance with UBS's billing practices as described in Item 5.C. Billing Practices. We pay the SMA Manager Fees on your behalf based on all activity (i.e., initial billing, quarterly billing, prior quarter fee adjustment) and assets in their strategies. E. Description of Our Discretionary Programs: Advice Portfolio Program, Portfolio Management Program (PMP) and Advisor Allocation Program The Discretionary Programs described in this brochure offer you the portfolio management services of UBS Financial Advisors (PMP Program, Advisor Allocation Program), and UBS Asset Management (UBS Advice Portfolio Program). By selecting our Discretionary Programs, you authorize: (1) UBS to act as your investment adviser and give UBS the power to execute transactions (i.e., buy, sell or otherwise trade securities or other investments) for your Program account without consulting you; (2) to take any actions necessary to open and maintain your account or to complete and pay for transactions for your account and, (3) if we deem appropriate, to delegate investment management discretion of all or a portion of your Account to a sub-advisor, model provider or overlay manager, including those affiliated with UBS. Your delegation of investment authority gives UBS the sole authority to manage your account and make all investment decisions for your account without discussing these transactions with you. This authority specifically includes the authority to hire and fire SMA Managers and sub- advisers for your account, who will, depending on the strategy selected, charge additional fees for the services they provide, including fees for premium services such as personalized tax management and sustainable investing. You will be responsible for the payment of any SMA Manager Fees (including Premium Services Fees). Generally, your UBS Portfolio Manager or Financial Advisor will be limited to investing in those securities classified as eligible for the Program you selected. See “Account Requirements and Types of Clients—Eligible and Ineligible Assets” for a description of our practices and consult your Financial Advisor for the specific details regarding the eligibility of specific assets and securities in the Program you select. UBS Asset Management will have primary responsibility for the day-to-day management of accounts in the Advice Portfolio Program including, where applicable, the selection of tax lots for redemption or liquidation in your account. Your PMP and AAP applications will include the name of the Financial Advisor(s) who will be exercising discretion over your assets in those Programs, or the name of his/her group (although only a dedicated PMP or AAP Financial Advisor may exercise discretion over your account). He/she will have primary responsibility for the day-to-day management of your account. For PMP and AAP accounts opened after you have established your first Advisory account, we will confirm in writing your UBS Portfolio Manager or AAP Financial Advisor or the name of his/her group. Primary responsibility for the supervision of the PMP and AAP accounts lies with the PMP/AAP Financial Advisor’s Branch Office Manager. Portfolio Manager Termination from the Discretionary Programs. We retain the authority to remove any UBS Portfolio Manager, AAP Financial Advisor, sub-advisor or model portfolio or strategy from the Discretionary Programs at any time and to transfer day-to-day management responsibility of your account to another UBS Portfolio Manager, AAP Financial Advisor(s), sub-advisor or Branch Office Manager at any time without first notifying you or obtaining your consent. Financial Advisors who participate in the AAP or PMP Programs may also provide services to you outside of the Program as non- discretionary investment advisers and in their capacity as broker-dealer representatives. Please see ”Various Roles and Services of Your UBS Financial Advisor” and “Conducting Business with UBS: Investment Advisory and Broker-Dealer Services” for a description of the material distinctions between our Advisory and broker-dealer services and our obligations. 1. UBS Advice Portfolio Program The UBS Advice Portfolio Program is a wrap fee program that offers clients a digital solution in which UBS Asset Management manages the assets under a specific investment strategy/style selected by the client. UBS Asset Management is responsible for the development and ongoing maintenance of the model portfolios used in the Program and leverages a proprietary portfolio management algorithm licensed from Nvest, Inc., parent company of SigFig Wealth Management LLC (“SigFig”), for ongoing monitoring, rebalancing and tax loss harvesting. The algorithm, which is used to manage individual Accounts, has been customized to incorporate UBS views on capital market assumptions, asset allocation, security selection, trade and rebalancing thresholds and profiling questionnaire. The algorithm generates a recommended target allocation and recommended portfolio based on your responses to the Questionnaire. Once your Account is enrolled in the Program, the algorithm reviews your Account on a daily basis to determine if rebalancing is necessary or, if selected, if tax harvesting opportunities are available. Because these reviews occur automatically, the algorithm might rebalance accounts without regard to market conditions or on a more frequent basis than you might expect and does not address prolonged changes in market conditions. Pursuant to the terms of its licensing agreement with SigFig, UBS pays SigFig a fee based on the assets enrolled in the UBS Advice Portfolio Program in addition to software maintenance and other fees. SigFig is an SEC-registered investment adviser; however, SigFig is not acting as an investment adviser or sub-adviser to clients in the UBS Advice Portfolio Program. SigFig offers investment advisory services using their proprietary algorithm but without the UBS customizations, research and portfolio management. Those products are available to you away from UBS at different, and sometimes lower, fees than the UBS Advice Portfolio Program. UBS Financial Services Inc. and SigFig entered into a strategic alliance to develop financial technology for UBS Global Wealth Management, which included an equity investment in SigFig. Neither UBS Financial Services Inc. nor any of its affiliates or employees control directly or indirectly the operations of SigFig or its affiliated companies. The UBS Advice Portfolio Program is accessible through the UBS Advice Advantage service, a digital service that features UBS analytics, including portfolio diagnostics on your investments at UBS and held away. The service is a broker-dealer service that is available to you free of charge. It also provides access to the UBS Advice Portfolio Program, a “digital” discretionary investment advisory program in which UBS manages your assets for an asset-based fee. You do not have to enroll in the Program in order to use the free service. Key Assumptions of the Algorithm: The key assumptions of the algorithm are rooted in the UBS Capital Market Assumptions (CMAs), Strategic Asset Allocation (SAA), and covariance matrix assumptions. CMAs can be defined broadly as the estimated returns, variances (risk), and correlations between individual asset classes. The CMAs are a core component of the process used to measure the estimated risk and return of a portfolio and also establish the Firm’s Strategic Asset Allocation (SAA) models. Our SAAs consist of a series of portfolio allocation models – each designed with different client types in mind. Each SAA reflects our capital market assumptions and a set of typical investor characteristics, such as tax status and risk tolerance. Our risk bands represent the lower and upper bound risk levels for each of the five investor risk profiles: Conservative; Moderately Conservative; Moderate; Moderately Aggressive; and Aggressive. UBS Advice Portfolio model portfolios are constructed to generally deliver the strategic asset allocation for a given investor risk profile, with asset class exposure typically implemented with exchange traded funds (ETFs). Model ETFs are selected based upon a number of criteria, including but not limited to asset allocation fit, cost, liquidity, and implementation ability in the context of minimum investment requirements for the UBS Advice Portfolio program. Replacement or restriction securities for the models are also selected under these criteria, but also follow other selection criteria that may allow for clients to benefit from tax loss harvesting trades. A guiding assumption of the algorithm is that it will keep clients within their selected risk profile by monitoring account level volatility according to the CMAs and SAAs. In instances where an account drifts beyond the bands of its risk profile, it will be automatically rebalanced to the target model SAA. Further, individual asset classes also have thresholds in regards to the amount that they may deviate from the target model SAA. In instances where any asset class has drifted beyond a set threshold, the algorithm will automatically rebalance the entire account to the target model SAA. There are additional limitations in relation to the automated Tax Loss Harvesting (TLH) logic within the algorithm. See “Tax Loss Harvesting” Section below for details. UBS Asset Management Portfolio Managers oversee the algorithm. They are responsible for setting the model’s strategic asset allocation, identifying the appropriate securities, identifying the tax loss harvesting securities and the creation of the “white list,” which are equivalent securities that can be used in place of the primary portfolio holdings when there is an account restriction or tax loss harvesting transaction that necessitates an alternative holding. Portfolio Managers may manually override the algorithm in the scenarios listed above. Beyond this oversight, human involvement in the management of individual client, accounts includes, but is not limited to, the following: corporate action monitoring, monitoring for ineligible securities for strategy and trading activity, position control (monitoring the allocation of accounts to align to model within designated thresholds), review and release of trades, Principal Agency (ineligible transactions), and monitoring of individual account volatility. Circumstances that may cause the Portfolio Managers to manually override the algorithm include the following situations: - Volatile market conditions - Investment Committee discretion - Technology failures - Trading volumes - The availability of funds - Other matters reasonably beyond our control Strategies and Models. The UBS Advice Portfolio Program offers investment strategies that consist of diversified portfolios of exchange traded funds (ETFs) and cash in a single account that is managed on a discretionary basis by UBS Asset Management consistent with the investment strategy you select. ETFs not chosen for inclusion in the portfolios may have characteristics similar or superior to the mutual funds or ETFs selected for inclusion. There is no guarantee the diversified portfolios will meet their objectives or will result in positive investment returns. Digital Investment Advisory Program. UBS Advice Portfolio is a digital program in which all documents and disclosures pertaining to your Account(s) in the Program will be delivered to you electronically. Your enrollment in the Program is conditioned on your acceptance of electronic delivery for all Program related documents and disclosures. You may change your electronic delivery instructions at any time by contacting your Financial Advisor or by logging onto www.ubs.com/edelivery. However, removal of the electronic delivery preference for the UBS Advice Portfolio account will result in termination from the Program and the preference for Accounts enrolled in other Advisory Programs will be changed to paper delivery of documents. Digital Enrollment: Risk Profile Questionnaire, Investment Strategy Selection and Suitability. To enroll in the UBS Advice Portfolio Program, you will answer a series of questions to determine your risk profile. Based on your responses, you will be presented with an investment strategy. You can select that investment strategy for your Account or customize it to your preferences so long as it remains consistent with your risk profile. You can also change your investment strategy in the future if there is a change in your financial situation, investment goals, or ability to tolerate risk, or for any other reason. You must use an online process to enroll in the UBS Advice Portfolio Program. You can do so directly through the online tool or with the assistance of a Financial Advisor. The enrollment process seeks to determine whether the Program is appropriate for you and, if so, to recommend an investment strategy aligned to your risk tolerance and objectives, but the process may not elicit the same information from you as a face-to-face interview would. The UBS Advice Portfolio Program does not consider your concentration in any securities, income, debt, assets held outside the Account, or other financial considerations and as such is not a complete investment program and may not be suitable for all investors. You should consider the suitability of the Program based on your financial needs and investment objectives. While assistance from your Financial Advisor is available to you, you are responsible for the answers, which determine which investment strategy will be presented to you for your selection and approval. You should carefully consider whether your participation in the Program, and whether any investment strategy you choose, is appropriate for your investment needs and goals prior to enrollment. You may change your investment strategy at any time by going online and completing a new Questionnaire. Any assistance you may receive from a Financial Advisor is for educational purposes only. You are solely responsible for enrolling in the Program, choosing your investing strategy. Neither UBS nor any of its employees are responsible for your decisions. The Program is intended for medium to long-term investors and is not a cash management program. Updates to your Information and Financial Advisor Support. If a material change occurs to your goals, financial circumstances, or investment objectives, or if you wish to impose or modify reasonable restrictions on the management of your Account, it is your responsibility to promptly update your information online or contact your Financial Advisors so that they can update the information on your behalf. UBS will not change your portfolio selection unless you update your investment profile through UBS Online Services. A UBS Financial Advisor will be available by telephone or web chat to respond to your questions and assist you with any changes or updates to your Account or personal information. Changes to the goals, financial circumstances or investment objectives for other Accounts you have with UBS will not change the information for your UBS Advice Portfolio Program. Investment Restrictions. You may elect to impose investment restrictions on the management of your Account. See Item 5B.3 Investment Restrictions & investment Policy Statement Investment Restrictions for details regarding the types of restrictions available in these ETF portfolios. Imposing investment restrictions on the management of your Account, will not disqualify you from enrolling in the tax loss harvesting service. Aggregation. UBS aggregates purchase or sale orders for your Account(s) in the UBS Advice Portfolio Program. In certain circumstances, such as terminations, withdrawals, risk profile changes, additional funds, or similar events, UBS may not aggregate your purchase or sale order. No Trading Access. UBS will make the trading decisions in your Account. Once you enroll in the Program, you will not be able to place trades in your Account. Tax Loss Harvesting. You can add tax loss harvesting services at any time during or after enrollment in the UBS Advice Portfolio Program. The service is available for taxable accounts only and applies to select UBS Advice Portfolio model securities and other securities that we have designated as acceptable substitutes to the primary model securities. The service has important limitations which you should consider prior to enrolling as such limitations may impact the overall value of the service to you. If you enroll, it will apply to all taxable UBS Advice Portfolio Program accounts in which you are the owner, including joint accounts. We may not execute tax loss harvesting for specific securities in your account if we determine doing so will impact UBS’s ability to manage your account. Once this feature is added, your election will be applied to all additional taxable accounts you establish in the Program. We will implement tax loss harvesting services during the initial funding and ongoing management of your account subject to the following limitations: (1) Securities must be held for at least 30 days to be eligible for tax loss harvesting and must have a qualifying loss as defined in (4) below; (2) Tax loss harvesting will be applied to securities in your Account only if we have designated an acceptable replacement security. The designation of acceptable replacements can change frequently due to availability of the securities and at the discretion of UBS; (3) the feature is applied to accounts enrolled in the UBS Advice Portfolio program, not to your entire portfolio at UBS. This is important because tax losses are subject to “wash sales” rules. A wash sale occurs when you sell a security and buy within a 30-day period a substantially identical security. If you or a spouse buy or sell any securities that overlap with the UBS Advice Portfolio’s selected securities in another account during the wash sale period, these losses may be disallowed; (4) for ETFs, only tax lots with losses with certain minimum levels from the cost basis are considered an eligible lot for tax loss harvesting, and within each individual security these eligible lots must be equal to or greater than $500. Tax loss harvesting (TLH) opportunities depend on a variety of factors, including but not limited to market fluctuations, position cost basis, and account size. Securities prices must fluctuate to some degree to create unrealized losses for potential TLH opportunities. Generally, declining markets produce more conducive environments for tax loss harvesting. The algorithm conducts daily scans for 1) a specific percentage level loss in qualifying lots and 2) a pre-determined dollar loss for that security. These two criteria in combination serve to trigger a tax loss harvesting trade. Generally, larger accounts will meet the criteria for tax loss harvesting more frequently than smaller accounts due to the dollar loss threshold. Frequent or recurring deposits may also impact our ability to tax loss harvest. There is no guarantee that the necessary conditions will exist on a frequent basis for meaningful TLH trades to occur in your account. Tax loss harvesting will not be performed on asset classes that do not have suitable replacement securities. The availability of suitable replacement securities for asset classes is subject to change (without notice to you) as it is based on the availability of qualifying replacement securities as determined by UBS in its discretion. Tax loss harvesting is not intended to eliminate taxes altogether, but to offset current year taxable gains. UBS does not provide tax advice and the tax loss harvesting service is not meant and should not be construed as such. You are responsible for any tax implications and/or tax obligations resulting from your decision to enroll in the Program, your selection of investment strategies, and the selection of Tax Loss Harvesting features for your Accounts. You should consult with your own professional tax counselor with respect to tax matters. We attempt to select “similar” investments to replace existing investments as part of the strategies based on certain established security attributes, e.g., historical returns, correlations, and portfolio construction. We do not warrant or guarantee that these similar investments will, in fact, perform similarly to the replaced investments, nor do we warrant or guarantee that this tax loss harvest with a replacement will in fact lower the investor’s tax obligations. We require written notification of specific restricted securities if you are prohibited from investing in any individual investment. Such prohibitions may alter the “similar” investment we select as part of the strategies and may alter the effectiveness of the strategies. You must notify us immediately if any of the investments recommended or purchased as part of the strategy violate such restrictions. Withdrawals – You may withdraw assets from your Account by completing an online request or contacting your Financial Advisor. If the market value of the Account falls below the minimum asset threshold due to withdrawal of assets, UBS will require you to deposit additional money or eligible securities to bring the Account to the required minimum. UBS reserves the right to terminate the Account if the Account is not brought up to the required minimum. Withdrawals from IRA accounts may incur tax consequences, which will be your sole responsibility. Rebalancing. UBS will use portfolio management software to rebalance your UBS Advice Portfolio Program Accounts periodically by buying and selling ETF shares. Your Advice Portfolio Account’s asset allocation and/or the risk profile for your chosen investment strategy will be considered when evaluating the need to rebalance. UBS will rebalance accounts if the allocation of the ETFs in your Account deviates from target levels by more than an amount specified in the Program’s parameters, which are subject to change from time to time. Your Account(s) will be rebalanced if your Account moves outside its targeted risk profile, if you change your risk profile or when you seek to impose or modify restrictions on the management of your Account. While the system will monitor your Account daily, it does not mean your Account will be traded daily. During periods where your Account does not drift outside of the established parameters, no rebalancing trades will be required. Accounts will be automatically rebalanced according in instances where the account value drops below a minimum account value, UBS may be unable to rebalance the account to meet the parameters. In these situations, you may be required to restore your account assets to a minimum account value or, in certain circumstances, may be required to end your participation in the Program. UBS Advice Portfolio Program; Automatic Services and Redemptions For assets in the UBS Advice Portfolio, you may instruct UBS to make cash available to you by redeeming portfolio shares in accordance with your instructions. When making redemptions from your account, we first consider your investment strategy and redeem those investments where your account is overweighted. You may select the day of the month that the funds are desired (in months where your selected day is not available, funds will be made available the prior business day). Note that if automated redemption takes your account balance below the technical minimum required for the Program, UBS may terminate your account from the Program. 2. Portfolio Management Program (PMP) Strategies and Models. The Portfolio Management Program offers a variety of investment strategies and models managed by trained Financial Advisors who manage client assets on a discretionary basis. Concentrated Strategies Risks: Concentrated strategies are available in PMP, through Portfolio Managers whose strategies have been pre- approved at UBS. Please review these descriptions carefully and contact your Portfolio Manager with any questions. With our approval, you may authorize your Portfolio Manager to implement a concentrated strategy— focusing heavily on securities in certain, sectors or geographic regions. This type of concentrated strategy can be more volatile and presents a greater risk of loss, especially over the short term. The more concentrated your portfolio, the higher your risk exposure will typically be. These portfolios may not be diversified, may hold securities representing only one or a limited number of economic sectors or only be invested in international securities, may include only a limited number of companies in certain sectors and may invest in new or emerging businesses or securities of foreign companies that present risks not typically associated with U.S. equity investments. Because a concentrated portfolio may hold a limited number of securities, movements in securities prices could have a greater impact on the value of the portfolio than would occur if the portfolio held more securities. These portfolios may not be appropriate for investors who are not willing to accept a much greater risk of loss and volatility of investment returns than the general stock market (as typically measured by the S&P 500 Index) and may not be an appropriate investment for a significant portion of a client’s investable assets. We may impose special suitability requirements with respect to these portfolios. Important information regarding Options Overlay Strategies Options Overlay Strategies are available in the Portfolio Management Program and MAC. Options Overlay Strategies seek to generate income through the strategic sale and purchase of index or equity options. Most of these strategies are designed to perform best when the markets are relatively range bound and/or historical patterns of market volatility in the market persist. Some strategies perform best when markets are increasing and others while markets are decreasing. Option writing strategies are most challenged and are not designed to perform well during periods when markets make extreme directional moves and/or experience extreme changes in volatility. The options trades are collateralized with marginable securities such as bonds, stocks or cash held in an account. Using the margin release of securities in order to purchase or sell short the options positions for the Options Overlay Strategy is known as leverage. You may be required to contribute additional cash or securities as collateral to support the strategy. The maximum losses incurred can be significantly higher than the premiums received. As a result, the potential downside risk of the strategy exceeds the potential upside gain. In addition, it is possible that the investment advisory fee you pay for this strategy or any losses resulting from this strategy could potentially cause a margin debit to occur. Carrying a margin debit would cause margin interest to be charged. The interest rate charged on any negative balances (margin loans) may exceed the rate of return on accounts the client uses as collateral. Options are complex instruments that are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Options Overlay Strategies are aggressive and carry a high degree of risk. You should not authorize the use of sophisticated option strategies unless you are prepared to sustain large losses. You should understand the risks of options trading and margin borrowing thoroughly before investing in this type of strategy. Investing in an Options Overlay Strategy will involve the use of leverage, which increases the risk associated with your collateral accounts, in some instances substantially, especially for collateral accounts that have an account profile of conservative or moderate, and as a result, increases your overall risk profile. In addition, you should see the section of this brochure which further describes the risks and potential conflicts of utilizing margin and lending in our investment advisory programs. The Program Fee imposed for the Options Overlay Strategy is in addition to any commissions, fees, or advisory fees you are charged on the accounts you use as collateral. Specifically, for Advisory accounts used as collateral, we will include any margin balances in the calculation of your account’s asset based fee; the use of margin in your advisory account will increase the compensation paid to UBS FS and our affiliates. See section below titled PMP and AAP Programs and Conflicts of Interest for additional important information. 3. Advisor Allocation Program The Advisor Allocation Program is a discretionary unified managed account. Please see the section below “Unified Managed Accounts” for a description of the features and services of the Program. F. Separately Managed Accounts Programs, SMA Manager Sub-Accounts in the Strategic Wealth Portfolio the Advisor Allocation Unified Managed Accounts Programs SMA Programs: Structure/Hiring the SMA and Overlay Managers: ACCESS, AAP and SWP are “sub-advised” programs. That means you enter into an investment advisory agreement with us and we, in turn, hire the SMA Manager(s) on your behalf, or for the select SMA model strategies, including Strategist Models, an Overlay Manager, to manage your assets in the strategy you selected or implement models from the Model Providers. Once we accept your Account, we provide the SMA Manager or Overlay Manager, as applicable, with your responses to the completed Risk Profile Questionnaire and restrictions prior to the manager accepting the account. MAC and ACCESS are different in some very important ways. In particular, in the ACCESS program, you delegate discretion to us and direct us to hire a sub-advisor or Overlay Manager to manage your assets or implement the selected strategies through Model Providers. However, in the MAC program, your relationship and your investment agreement are directly with your SMA Manager. UBS will act as your consultant, but you delegate discretionary authority over your accounts directly to your SMA Manager in a separate agreement with them. The MAC program requires that you enter into two separate agreements, one with UBS for advisory services and one directly with your SMA Manager for investment management services. You are responsible for negotiating the terms, fees and conditions of your agreement with your MAC SMA Manager. If your MAC SMA strategy is also available in other Programs, you should consider that based on the combination of our fees and your MAC SMA Manager fees, the overall fee for your MAC Account may be higher than the total fee you would pay in other Programs. You should consider these options carefully as some may be more cost-efficient to you. We have a conflict in recommending the services of affiliated managers in managing client accounts because this will result in higher overall compensation to us and our affiliates than if third-party managers were used. 1. ACCESS (single contract) ACCESS offers you the portfolio management services of a select, pre-screened group of SMA strategies. ACCESS is a "sub-advised" program in which you hire UBS to assist you in the selection of SMA strategies and authorize us to hire the SMA Manager or Overlay Manager on your behalf. Model SMA Strategies For Model Strategies, the Overlay Manager manages your assets in accordance with the selected strategy as developed by a “Model Provider.” The Model Provider develops the strategy and maintains a Model that they provide to the Overlay Manager for implementation. Model Providers that manage discretionary strategies based on the same Model Strategies available in the Programs will generally trade their discretionary accounts first prior to providing the model updates to the Overlay Manager. Depending on the trading volume, that trading activity can impact the price (up or down) at which clients in the Model Strategies purchase the same securities. UBS does not offer SMA strategies in which Model Providers manage discretionary strategies based on the

same Models available in the Programs. You will not enter into a separate investment advisory agreement with a Model Provider or Overlay Manager. The Model Provider will not know your identity, does not manage your Account and is not a fiduciary to you in connection with the services it provides. The investment decisions for the Model Strategies will be implemented by the Overlay Manager in accordance with the investment recommendations and instructions provided to it by the Model Provider. Model Providers provide advisory services under agreements with UBS and the Overlay Manager by providing investment recommendations for the Models. The Overlay Manager will generally implement the Model Provider’s recommendations without change, subject to any investment restrictions you place on your Account, cash requests or deposits, and other operational or investment considerations. The Overlay Manager may determine, in its sole discretion, in light of operational or investment considerations, to deviate from the Strategist Model (e.g., to select another security or increase the cash allocation within a model portfolio). By choosing a Model Strategy for your Account, you grant the Overlay Manager investment discretion and trading authority for investments in the account. The Overlay Manager has full trading authority and may invest, reinvest, purchase, sell, exchange, convert and otherwise trade assets, without any prior notice. UBS does not select or otherwise advise the Overlay Manager in the selection of securities for your Account. Model Provider and Overlay Manager Fees. The Model Strategies are available in the ACCESS, Strategic Wealth Portfolio and Advisor Allocation Programs with the following two fee structures:
• Client pays the investment management fee to the Overlay Manager. In this arrangement, the client pays a fee to the Overlay Manager for the services provided in implementing the Model in the strategy account. The Overlay Manager and Model Provider separately negotiate a fee to be paid by Overlay Manager to Model Provider for access to the Model. UBS does not compensate the Overlay Manager for its services. Neither UBS, nor the client, pays any compensation to the Model provider.
• UBS pays the investment management fee to the Overlay Manager. In this arrangement, utilized for Strategist Models (see “Strategist Models” below), the client does not pay a separate Overlay Manager Fee. UBS compensates the Overlay Manager for its services out of its own resources. The Model Provider is not paid an account management fee by UBS or clients invested in the Strategist Model. The Model Provider is compensated in this arrangement by the management fees the Model Provider or its affiliate(s) receive for the management services it provides to the Model Provider’s proprietary products (generally mutual funds and ETFs) the Model Provider includes in the Strategist Models. For select strategies, the Overlay Manager may offer additional, premium services such as tax management. If you select a strategy with premium services, you will be responsible for paying the Overlay Manager fee for those services. The Overlay Manager fees for models that include a premium offering such as tax management range from 10bps to 13bps. Model Providers provide additional compensation to UBS in the form of revenue sharing for Model Provider’s proprietary mutual funds included in the models. See Mutual Fund Revenue sharing. Mutual Fund Revenue sharing. In the Strategist Model fee arrangement, due to the compensation arrangement described above, the Model Providers will in most circumstances exclusively utilize only their proprietary products, such as mutual funds or exchange trades funds, when selecting investments for the model. The Model Provider receives compensation for investments in their proprietary products and therefore has an incentive to include them in their model(s). By doing so, the Model Provider is not considering alternative products from other firms that may have features, including cost and fee structures, that may be preferable as compared to the Model Provider’s proprietary products. When selecting products from among its proprietary products for inclusion in the Model, Model Provider will have an incentive to choose products that pay them higher fees. The Model Provider may also have trading or other policies that favor the Model Provider’s proprietary products and directly managed strategies over the Strategists Models on the UBS platform. The respective Form ADV disclosure brochures for the Model Provider and the Overlay Manager will provide additional important information regarding these arrangements. Review of Model Providers and Overlay Managers The Model Provider and Overlay manager are subject to the research process applied to all researched SMA Managers. As is standard in the ACCESS, Strategic Wealth Portfolio and Advisor Allocation Programs, UBS can replace or terminate a Model Provider or Overlay Manager with notice to you. Strategist Models Strategist Models are separately managed account models (“Strategist Models”) provided by affiliated and third-party investment managers (“Model Providers”) to a third-party manager we have selected to serve as an overlay manager (the “Overlay Manager”) to implement the model in strategy client accounts. The Strategist Models consist of a selection of securities identified by the Model Provider in various assets classes, holdings and weightings that is designed by the Model Provider to meet the objectives of a particular investment style or discipline. Model Providers provide changes to the Strategist Models directly to the Overlay Manager for implementation. 2. Managed Accounts Consulting (MAC) (dual contract) MAC Manager Research. We provide different levels of SMA Manager due diligence and reviews in our MAC program. The level of due diligence we undertake varies depending on whether a Manager's strategy is considered MAC Researched or MAC Eligible. Please see “Portfolio Manager Selection and Evaluation—Selecting an SMA Manager; Our Investment Manager Evaluation Process.” MAC SMA Manager Fee: In the MAC Program, you are solely responsible for negotiating your investment management agreement and the SMA Manager fees directly with the manager. We will not hire your MAC SMA Manager nor will we negotiate fees or execute agreements on your behalf, unless you have delegated such responsibility to us in UBS-CAP through one of the Limited Power of Attorney implementation options. However, even in those circumstances our negotiations on your behalf are limited to fees (as long as there is an LPOA) and not to any other contractual matters. You should consider that based on the combination of our fees and your SMA Manager’s fees, the overall fee for your MAC account may exceed 3% of the account value. The services we offer through MAC may be available to you on a more cost-efficient basis in other UBS programs. You should consider all those options and costs carefully before selecting an SMA Manager and an SMA Program. Concentrated Equity Solutions The MAC Program offers Concentrated Equity Solutions (“CES”). CES are separately managed account (“SMA”) strategies that seek to address the risk (specific to an individual equity security, rather than general market risk inherent in equity securities) associated with a concentrated individual equity holding. Generally, these strategies implement the strategy objectives using options trades on a client's existing concentrated equity position. Options are complex instruments and you should ensure you understand their features and risks, as well as how they will be utilized by the strategy manager, before investing in a CES strategy. These strategies have various investment objectives typically seeking to generate cash flows from options premium, help exit a stock holding, or provide a degree of downside protection should the stock go down in value. The pursuit of these objectives will limit (to varying degrees depending on the strategy) your ability to fully participate in potential future appreciation of the stock price. CES strategies where covered calls are written against the underlying stock position will significantly reduce the investor’s upside participation in the underlying concentrated equity position, especially during rapidly rising markets. The asymmetric return profile of the option component of covered call writing strategies (limited upside benefits for strategy investors, as compared to much greater potential downside risk) can be attributed to the strategy’s negatively skewed return characteristics. If the account incurs losses in connection with repurchasing outstanding call option positions and the losses are not offset by the option premiums received, investors will need to fund the account to close the outstanding option positions. Therefore, strategies that include covered call writing should only be considered by investors with the ability to deposit additional cash into the account to offset potential losses in their option positions over time. Concentrated Equity Solutions Manager Fees For CES strategies, the manager is not involved in the selection of the underlying stock position(s) held in the account and will manage the account in order to pursue the strategy in connection with the underlying stock position(s) you deposit in the account. Although the CES strategy manager will not research or manage the underlying equity positions held in the account, the asset- based billing for your CES strategy advisory account will include billing for the value of the concentrated equity position held in the account. Certain CES strategies will require the account to be approved for margin which means you may incur a margin debit balance in your account. We charge interest according to our Firm's usual credit practices if payment of our fees or certain trading/market activity results in a debit balance in your Account. A portion of your CES Advisory Account may be held in cash, cash equivalents or money market instruments which are subject to the Program Fees so long as they remain in the account. Some CES strategies seek to generate cash flows and, therefore, cash may accumulate in the account over time. CES strategy managers do not manage cash positions in the account. Cash, however, may be utilized to cover security purchases made by the Investment Manager. Since you will be billed advisory fees on the cash held in the account, you should monitor the levels of cash in your CES account over time to determine if such levels are necessary for the account based on your selected strategy. Concentrated Equity Solutions Account Performance The underlying stock position deposited into the CES account will be unique to each client and, therefore, performance for each CES investor will vary significantly. Management of Your SMA Account and SMA sub-accounts in SWP and AAP. For the SMA Programs described in this brochure and the SMA sub-accounts in SWP and AAP, your SMA Manager has the sole authority to manage your account (or the portion they manage in SWP and AAP, referred to as sub- accounts), and will make all investment decisions for your account/sub-account without discussing these transactions with you or us. Your SMA Manager will generally be limited to investing in those securities classified as eligible for the program you selected. Please see “Account Requirements and Types of Clients—Eligible and Ineligible Assets” for a description of our practices and consult your Financial Advisor for the specific details regarding asset/security eligibility in your program. We will execute transactions in your program accounts/sub- accounts based on the instructions we receive from your SMA Manager. In addition, neither UBS Financial Services nor your Financial Advisor will have discretionary authority with respect to, nor will we solicit your SMA Managers regarding, the purchase or sale of securities for your SMA accounts/sub- accounts. We are not responsible for: - Your choice of SMA Manager - Their day-to-day investment decisions (including their selection of tax lots for sale or redemption) - Their performance - The SMA Manager’s compliance with applicable laws, rules or regulations - The SMA Manager’s compliance with best execution obligations - Other matters within the SMA Manager's control, including implementation of your rebalancing election where the manager has assumed the responsibility to manage your account We reserve the right to refuse to execute any transaction in our program accounts if we reasonably believe that it would violate any applicable law or rule—including the rules of any regulatory agency or self-regulatory organization. We may also refuse to execute any transaction that would be inconsistent with any of our policies and procedures. 3. Asset Allocation Services in our Non- Discretionary, Unified Managed Account, Portfolio Advisory Programs and Alternative Investments Advisory Programs We will provide you with an asset allocation proposal for accounts you establish in our UBS-CAP, CAP Select, PACE, Strategic Advisor, and Strategic Wealth Portfolio (SWP) programs and Advisor Allocation Program. For non-discretionary Programs, your Financial Advisor will review the results of your Risk Profile Questionnaire with you and assist you in developing an asset allocation for your Advisory Account, your UBS-CAP, CAP Select portfolio, or your IC portfolio. For AAP, your Financial Advisor has discretion to select the asset allocation of your AAP Account based on the results of your Risk Profile Questionnaire. The asset allocations are based on the information you provided to us in your Risk Profile Questionnaire and discussions with you regarding an appropriate allocation (Target Allocation) of your Program Assets. The Target Allocation represents an investment strategy that seeks to balance your investment objectives with your risk tolerance. You may accept the Target Allocation for the Program Assets in your Account, or your UBS-CAP, CAP Select, or IC Portfolio, or you may customize it based on your preferences to include different asset categories or different allocations to one or more asset classes as long as it is consistent with the risk tolerance and investment objectives for your Account or CAP or IC Portfolio. You may consult with your Financial Advisor about these choices. The allocation you or your AAP Financial Advisor select for your Target Allocation is intended to be the basis for the initial and ongoing investment advice of your Program Assets. However, you, or your Financial Advisor in AAP, may decide to implement your Target Allocation over a period of time, or change it from time to time as long as it does not exceed your stated risk tolerance. Once you or your AAP Financial Advisor select your Target Allocation, we will implement the Asset Allocation without taking into consideration your potential tax consequences. You are responsible for any tax liabilities which result from transactions in your Account (including any redemptions or upon the termination of participation in the Program). Changes to the Target Allocation may result in tax consequences to you. Please consult a qualified tax professional regarding the potential tax implications of these transactions before investing in these Programs. For more information on our asset allocations please see “Methods of Analysis, Investment Strategies and Risk of Loss—Our Asset Allocations.” Due to the non-discretionary nature of your SWP, PACE, Strategic Advisor accounts, Client Directed CAP and CAP Select options, and IC it is your responsibility to determine whether and how to implement the target asset allocation/investment strategy, and to ensure that your asset allocation continues to be consistent with your goals and risk tolerance over time. The asset allocation for UBS- CAP and IC encompasses all Advisory Accounts in your UBS- CAP Portfolio or IC Portfolio respectively, while for other Programs, your asset allocation reflects only your assets invested in your individual Program Account and do not constitute advice regarding other accounts, whether held at UBS or elsewhere. You may deviate from your target asset allocation only by a pre- determined level based on your risk tolerance. The rebalancing feature, where available, will assist you in maintaining your Account(s) in line with your target asset allocation. However, deviations from the risk tolerance may still occur for a variety of reasons; for example, due to market movement, or for accounts that do not meet the rebalancing thresholds. See Rebalancing Your Asset Allocation for information about Programs that offer rebalancing options and the rebalancing process overall. We will notify you if your allocation shifts and is no longer consistent within your risk profile and if those inconsistencies continue for a period of time. You are responsible for addressing any inconsistencies between your asset allocation and your risk tolerance. If you do not take action to update the account profile or modify your asset allocation, the account may be terminated. Your Program Fees will be assessed regardless of whether or not you follow our recommended allocation. Automatic Rebalancing and Your Asset Allocations: Automatic rebalancing is available in the PACE, AAP and SWP Programs. This feature assists in maintaining your Account in line with the Target Asset Allocation. However, deviations from your Target Allocation or risk tolerance will occur due to, among other things, fluctuations in the market value of securities in the Account before rebalancing, any investment restrictions you impose on management of the account and any tax selling agreement, or if the account does not meet the rebalancing thresholds. In PACE and Strategic Advisor, we will notify you if your allocation shifts and is no longer consistent with your stated risk profile. You are responsible for addressing those inconsistencies between your asset allocation and your risk tolerance. 4. Unified Managed Account Programs: UBS Strategic Wealth Portfolio Program (SWP) and Advisor Allocation Program (AAP) The Advisor Allocation Program and Strategic Wealth Portfolio Program are Unified Managed Account Programs that offer different levels of discretion to accommodate individual client preferences. SWP and AAP share certain features, services and basic requirements which are outlined below. Both Programs offer the option to invest in SMA strategies, mutual funds and ETFs which are held in separate “sub-accounts”. The primary difference between the SWP and AAP Programs is the level of discretion you will delegate to your Financial Advisor. If your or your Financial Advisor selects SMA strategies for your Account, you will be charged the applicable SMA Manager Fee or Premium Services Fee, which will vary depending upon the strategy, in addition to the UBS Investment Advisory Fee. UMA Account Structure: Depending on your asset allocation, your Account will be invested in a combination of investment products—including individual equities or fixed-income in the SMA sub-accounts,– mutual funds, exchange traded funds and other securities available through the Programs. In both Programs, your assets will be held in one account, but divided within that account into investment sub-accounts. For example, your assets may be divided among SMA sub-accounts and a subaccount with mutual funds and ETFs. The sub-accounts offer different levels of discretion, features, and services as described below.
• The SWP Program requires minimum of 3 sub- accounts or at least 2 SMA sub-accounts.
• The AAP Program account requires a minimum of 5 sub- accounts if the allocation includes only mutual funds and ETFs, or at least 3 sub-accounts if there is at least one SMA sub-account. Currently each of these Programs have a maximum of 35 sub- accounts. SWP Non-Discretionary Services by UBS Financial Services Inc.: If you select to include SMA strategies in your SWP Account, the SMA Manager(s) you select will manage those assets on your behalf on a discretionary basis. The Advisory services we provide to you in SWP are non-discretionary—meaning that you retain sole discretion over the purchase and sale of mutual funds, ETFs and the selection of SMA strategies for your Account and must authorize each transaction and SMA manager selection in advance. If you select SMA strategies for your Account, the SMA Managers will manage the assets allocated to them on a discretionary basis without the input or recommendation of your Financial Advisor. You may impose investment restrictions for the assets managed by SMA Managers. You may not impose investment restrictions for the mutual funds and ETF sub-accounts. Note that Accounts without an SMA sub-account are serviced on a fully non-discretionary basis with the client retaining all investment decisions over the assets invested in those Accounts. The SWP Program does not offer overlay management services at the Account level. AAP Discretionary Services: Your Financial Advisor has discretion to: (1) select a Target Allocation based on your responses to the Risk Profile Questionnaire; (2) implement the Target Allocation by investing in mutual funds, ETFs and researched SMA strategies, including those managed by UBS affiliates; (3) change the Target Allocation and investments at any time as long as those changes remain consistent with the risk profile and investment objectives you provided for your Account; (4) establish, and change, the rebalancing frequency and thresholds which are designed to maintain your Account in line with the Target Allocation. Your Financial Advisor can rebalance or reallocate the account at any time. The initial Target Allocation, investments and rebalancing thresholds for your AAP Account will be described in a written proposal and we will notify you when your Financial Advisor makes changes. Your Financial Advisor has discretion over the purchase and sale of mutual funds and ETFs and the selection of the SMA strategies in AAP, however, only the SMA manager has discretion over the purchase and sales of assets in the SMA sub-accounts. SMA Sub-Accounts; Management of Your Account; Discretionary Authority of Separately Managed Assets. The SMA sub-accounts in SWP and AAP are managed on an individual basis by the selected SMA Manager(s). The SMA Managers will manage the SMA sub- accounts on a discretionary basis and are responsible for rebalancing the SMA sub-account they manage. See Item 5D Error! Reference source not found. in Item 5.D. below for additional information on Execution and Trading Practices).).Neither UBS Financial Services nor your Financial Advisor will have discretionary authority with respect to, nor will we solicit your SMA Managers regarding, the purchase or sale of securities for your SMA accounts/sub-accounts. Transactions in Mutual Fund and ETF Sub-Accounts The following rules apply to mutual fund and ETF purchases authorized by you in SWP (“Non-Discretionary Asset”) or purchased by your Financial Advisor in AAP (“FA-Discretionary Assets”):
• All purchases and redemptions of Non-Discretionary Assets and FA Discretionary Assets, as applicable, will be made proportionally based on the Target Allocation selected for the Account.
• Investments will be subject to maintaining the minimum cash level required for billing and other liquidity needs, and to meet the minimum trade requirements (currently $200 and subject to change).
• The initial cash level will be approximately 1% of the asset value of the Non-Discretionary Assets or FA Discretionary Asset sub-account, as applicable, and can fluctuate between 0.5% and 1.5%. If the cash level is outside of this range, the sub- account will be rebalanced to a cash level of approximately 1%; however, if the trade dollar amount required is at or below the minimum trade requirement, no trades will be executed. The per-share value of certain investments can cause the cash level to exceed 1.5% of the asset value of the Non-Discretionary Asset or FA Discretionary sub- account, as applicable. In the event the cash level does increase, it will be maintained at this higher percentage. All account changes, including transactions in Non-Discretionary Assets, are subject to a systematic administrative review to ensure consistency with your Target Allocation. We will also ensure that any required paperwork is complete. As a result, transactions are not executed until after the administrative review is completed, and it may take several days for your allocation changes to be effected in your account. Because prices fluctuate during the trading day, the prices you receive at the time the trades are executed may be better or worse than the prices at the time you authorized the changes to your account. Rebalancing and Reallocation of your SWP and AAP Asset Allocation The SWP and AAP Programs offer several rebalancing options. See Rebalancing Your Asset Allocation: Rebalancing options, process, thresholds and limitations Rebalancing Your Asset Allocation for a description of the rebalancing options, process, thresholds and limitations. Contributions and Withdrawals: Contributions to and Withdrawals from your SWP and AAP Accounts will be handled as follows: (i) Cash contributions will be allocated to the most under- weighted sub-account(s), relative to the target weight of the investment strategy selected. (ii) If you contribute securities to your account, either UBS and/or your SMA Manager will liquidate those securities and allocate the proceeds to the most underweighted sub-accounts first. (iii) If you request a withdrawal from your Account, monies will be withdrawn from the overweighted sub-account(s) with the greatest deviation from the Target Allocation. We will follow that process unless those withdrawals would result in the sub-accounts falling below their respective investment minimum. In those circumstances, withdrawals will be made first, proportionally, from those sub-accounts that do not have investment minimums. Withdrawals that cause the value of any sub-account to go below the respective investments' minimum may require that you (for SWP) or your Financial Advisor (for AAP) change the target weightings of your investment strategy or select new investments in order to meet investment minimums. (iv) If you do not withdraw the cash from the account within 35 days it will be reinvested according the funding rules described above. We will continue to charge the Program Fee on cash until it is withdrawn. G. Non-Discretionary Advisory Programs Depending on your Program selection, your account will be invested in the following manner: PACE: all mutual funds Strategic Advisor: A combination of equities, open- and closed-end mutual funds, ETFs, fixed-income securities, approved unit investment trusts (UITs), options, certain alternative investments, structured products and other securities. Both PACE and Strategic Advisor are asset allocation programs. Please see the section “Asset Allocation Services in our Non-Discretionary and Unified Managed Account Programs” for information about our asset allocation services, notification process for inconsistencies between your Target Allocation and Risk Profile. Transactions for Your Strategic Advisor Account and PACE Asset Allocation. We will execute transactions for your Strategic Advisor account and PACE investments based solely on your instructions; and neither UBS nor your Financial Advisor will have any discretion over the investment of your Program assets in the PACE and Strategic Advisor accounts. Unsolicited Transactions. You may execute security transactions that we have recommended to you (solicited transactions) as well as select transactions in Strategic Advisor you execute without consultation with, or recommendation from, us (unsolicited transactions on eligible investment products). These unsolicited transactions are solely your responsibility and neither UBS nor your Financial Advisor will act as your investment adviser with respect to those transactions. The advice and guidance of your Financial Advisor is a key service of the Programs. A pattern of unsolicited trading may indicate that the Program you selected is no longer appropriate for you as you are not leveraging the advice of your Financial Advisor. This may result in the revocation of your online trading access (for Strategic Advisor Accounts) and/or termination of your Account from the Program. Strategic Advisor is the only advisory program that provides clients with access to online trading. Clients with Strategic Advisor Accounts enrolled in the IC program are not eligible for access to online trading. After you have completed an unsolicited transaction and have acquired a security on your own and without our advice, for so long as you hold that position in your Program Account, we will take that asset into consideration: as part of your overall account assets, when we give you periodic asset allocation advice, when we value your account holdings, when we provide you with analyses and reports on your account’s performance, and we may also make recommendations that you consider selling the asset if, and when, we deem it appropriate. As a result, we will include any security you acquire in an unsolicited transaction as part of your account assets in calculating your Advisory fee if you continue to hold the asset in your account. 1. UBS Strategic Advisor Program Eligible Assets and Non-Billable Assets in Strategic Advisor The Section “Account Requirements Eligible and Ineligible Assets” describes our general policies regarding eligible assets in our Advisory programs. Strategic Advisor provides a greater level of flexibility than other Advisory programs as it pertains to eligible assets—i.e., those assets held in your account that are subject to our advice. Specifically, the Strategic Advisor program permits you to hold, but not to purchase, certain assets deemed ineligible in other programs such as the following: - B share class and C share class mutual funds - Open-end mutual funds not approved for the Program - UITs not approved for the Program - ETFs and closed-end funds not approved for the program - Alternative investments not approved for the Program, including hedge funds, hedge fund of funds, managed futures, and restricted stock. Except for certain accounts grandfathered under prior guidelines, private equity, private real estate funds, and private placements are not eligible to be held or purchased in a Strategic Advisor account even if the asset is non-billable. While these assets may be held in Strategic Advisor Accounts, and therefore subject to our ongoing advice, they are excluded from the calculations of your Program Fees due to the additional compensation that we receive in connection with those investments. These “Non-billable assets” will not be included when determining the minimum account opening requirement, but they will be included in the performance reports for your Strategic Advisor account. Strategic Advisor Accounts holding Eligible Non-Billable Assets may not be enrolled in UBS-CAP or the IC program. 2. PACE—Personalized Asset Consulting and Evaluation PACE Select Advisors Trust (“PACE Select”) and PACE Multi Advisor (“PACE Multi”) Programs PACE Select and PACE Multi share certain features, services and basic requirements which are outlined below. PACE combines our ability to evaluate your investment objectives and risk tolerance with professional investment advice and offers the convenience of style specific mutual funds in PACE Select, and a broad array of mutual funds (non- proprietary and proprietary) available in PACE Multi. In PACE Select, you may choose a combination of the investment styles and asset classes available through the PACE Select Advisors Trust (the “Trust”), a series of proprietary mutual fund investment portfolios (the “Select Portfolios”). In PACE Multi, you may choose among a variety of no load and load waived shares of mutual funds (“Funds”). The PACE Select Trust is a UBS proprietary product managed by our affiliate, UBS Asset Management. PACE Multi offers both affiliated and non-affiliated mutual funds. We and/or our affiliates are compensated for providing investment management, distribution and other services to the Select Portfolios and affiliated Funds (“Affiliated Funds”) available through these Programs. In addition to our wrap fee services, a PACE client also receives the following services: Asset Allocation and Investment Selection. There are differences in the allocations and investment options available in PACE Multi and PACE Select. The PACE Multi default for equity allocations is a Large-Mid-Small allocation. PACE Select only offers a Large/SMID (“SMID” is a combination of small and mid-cap mutual funds) asset allocation for the equity portion of your investment. Based on your Questionnaire, we will recommend a mix of asset classes that are consistent with your tolerance for risk. Once you select an appropriate asset allocation for your Program Assets and investments from the investment styles available in each Program, we will execute those transactions in your Program Accounts according to your Target Allocation. You will make all investment decisions in the Program other than automatic service transactions, if you choose that option (described under “PACE Automatic Investment Options”). Your account contributions and withdrawals will be invested and redeemed in accordance with your Target Allocation. Please see “Classification and Availability of Investments, SMA Managers, Mutual Funds, Alternative Investments and PACE Select Trust Portfolios” for a description of our practices regarding the availability of investments in our Programs. Removal of a fund from the Program may cause you to have a taxable event or incur other costs. If you are invested in a discontinued Select Portfolio or fund, your Financial Advisor can help you determine what action to take. You may decide to replace the discontinued Select Portfolio or fund or sell your shares. We will notify you of the removal or termination of a Select Portfolio or fund and will indicate what action, if any, is suggested. If we discontinue a Select Portfolio, you may incur a tax liability. PACE Select: You may choose from among the following fifteen (15) Select Portfolios of the Trust: 1. UBS Government Money Market Investments 2. PACE Mortgage-Backed Securities 3. PACE Municipal Fixed Income 4. PACE Intermediate Fixed Income 5. PACE Strategic Fixed Income 6. PACE High Yield 7. PACE Large Cap Value 8. PACE Large Cap Growth 9. PACE Small/Medium Value 10. PACE Small/Medium Growth 11. PACE International Equity 12. PACE Global Real Estate 13. PACE International Emerging Markets 14. PACE Global Fixed Income 15. PACE Alternative Strategies PACE Multi Advisor: You may choose shares of non-affiliated funds and certain designated share classes of affiliated funds and an affiliated money market fund. Account Structure, Fund Eligibility and Impact on PACE Multi Asset Allocation. The PACE allocation is held as a separate investment or sub- account in a brokerage account. As a result, you may buy and hold assets in your account that are not invested through the PACE Program, including mutual funds that are not eligible in PACE (“Non-PACE Assets”). You do not need to liquidate securities prior to your participation in PACE because you may hold those securities in your brokerage portion of your account. Neither UBS nor your Financial Advisor will act as your investment advisor with respect to your Non-PACE assets. We will execute transactions in your Non-PACE assets as you direct, as your broker-dealer, and will charge you our customary brokerage commissions or other fees. The PACE Fee does not apply to these other assets or transactions. Non-PACE assets will not be included in your PACE asset allocation or performance report but will be included in your account statements. We review our offerings in the PACE Multi Program periodically and make new funds eligible for the Program. If a new fund or new share class is made eligible in PACE Multi and you already own that fund or share in the same brokerage account in which you hold the PACE allocation, those existing holdings will be automatically moved to your PACE allocation when the fund/share is made eligible. Those changes may impact your asset allocation and risk tolerance as well as increase the level of assets on which the PACE fee is charged. You will need to include a target allocation for such funds in order to avoid liquidation upon account rebalancing (see below). These changes should be discussed with your Financial Advisor. Automatic rebalancing will consider all eligible funds whether a target allocation is established or not. If an eligible Fund does not have a target allocation assigned to it, it will be fully liquidated. If you have a target allocation to a fund not currently held in your PACE account, it will be purchased. By executing the Relationship Agreement you authorize us to liquidate and purchase those positions, as applicable under the circumstances. We are not responsible for the tax implications of such liquidations. The shares will be included for performance purposes once they are eligible regardless of how long they are held. The newly eligible fund or share class will be included in the calculation of the account’s average daily balance during the applicable quarter and will be included in your Program Assets on the last day of the quarter for billing purposes unless the exception explained above applies. Please see Item 5.C. Billing Practices for details. See also Transferred Shares for a description of billing practices applicable to Transferred Shares. PACE Automatic Investment Options. We offer several automatic investment options to PACE Multi and PACE Select clients, including: - Automatic Rebalancing - Automatic Redemptions - Automatic Purchases The investment options are administrative in nature and will normally be done on the day or date selected by you on the application. We may delay the processing of these services under certain circumstances as described below. Rebalancing Options. The PACE Program includes mandatory annual rebalancing. Your PACE asset allocation will be reviewed automatically for rebalancing on an annual basis unless you choose to have rebalancing occur on a semi- annual basis or quarterly basis. See: Rebalancing Your Asset Allocation for a description of the rebalancing process, thresholds and limitations. PACE Automatic Purchases. You may choose to have funds automatically invested based on your Target Allocation, with an amount between $250, an amount determined by UBS, or an amount you specify. Depending on your selection, funds will be invested as follows: Monthly: on the 15th of every month (or, if the 15th is not a business day, the next business day), or the last business day of every month, Quarterly: the last business day of every calendar quarter. You may also designate the duration of your automatic purchases or the total target investment amount on the Application. The contribution will first buy the Funds/ Portfolios that are underweighted, as compared to your Target Allocation and then invest the remaining portion according to the Target Allocation. We process this service by automatically withdrawing the designated dollar amount from your brokerage account (either cash balances or money market redemption proceeds) and subsequently investing in PACE Program Assets. If there are insufficient funds in your account on the trade date to purchase the full amount specified in your PACE Application, no purchase will be made. If you invest Plan assets through PACE and select the automatic purchase option, please note that you must carefully monitor your contributions to prevent them from inadvertently exceeding federal limits on your annual contribution. As of the date of this Brochure, depending on your account type and/or account ownership, the following cash sweep options from the brokerage account that holds your PACE asset allocation are available for the PACE auto services: UBS Bank Sweep Programs, UBS FDIC-Insured Deposit Program, UBS RMA Government Money Market Fund or UBS Liquid Assets Government Fund. PACE Automatic Redemptions. You may have $250 or more of Program Assets redeemed automatically from Program Assets in proportion to your Target Allocation. Based on your instructions, redemptions will be processed so that cash is available in your account on: the 15th (or, if the 15th is not a business day, the prior business day) of every month, the last business day of every month, or the last business day of every calendar quarter. Shares will be redeemed from each fund that is currently overweighted as compared to your Target Allocation and then redeeming the remaining portion according to your Target Allocation. Additional methods in which a client may redeem shares may be introduced including offering redemptions on a pro-rata basis. We will request redemption two Business Days before the date you select, or such other date as may be necessary to ensure that cash is available in your account on the date selected. Redemption proceeds are deposited in your account and are not automatically forwarded to you. Automatic Redemptions: If an automatic redemption causes PACE Program Assets to be reduced below levels that impact the management or servicing of the Account, we may ask you to restore your Program Assets to the amount of the Opening Date account minimum within 30 days. If you do not restore your Program Assets to this minimum as requested, we will have the right to terminate your participation in PACE. No automatic redemption will occur if (i) insufficient shares in any Fund are available to process the redemption proportionately in accordance with your Target Allocation; (ii) when the auto redemption request is greater than the account value; and (iii) the redemption request pertains to fund no longer eligible in the Program. We may delay the automatic services described above under certain circumstances to ensure the orderly processing of services. See “Delays in Rebalancing Process and Automatic Services.” Rebalancing Your Asset Allocation: Rebalancing Options, Process, Thresholds and Limitations PACE Program: includes mandatory annual rebalancing. Your PACE asset allocation will be reviewed automatically for rebalancing on an annual basis unless you choose to have rebalancing occur on a semi- annual basis or quarterly basis. and will bring your asset allocation back to your target allocation, overriding the Rebalancing Thresholds described below. SWP: you must select a rebalancing option (annual, semi-annual or quarterly) when you establish an Account in the Program. AAP:, your Financial Advisor can rebalance or reallocate the AAP Account at any time and will also select an automated rebalancing option (quarterly, annual or semi-annual) to help ensure the account remains aligned with the Target Allocation. In addition to automatic rebalancing, you have the option to rebalance upon request at any time. Your PACE, SWP and AAP Program Assets will be automatically reviewed for rebalancing to your Target Allocation based on the rebalancing frequency selected for the Account. Rebalancing Thresholds: Rebalancing will occur (subject to our minimum trade requirement) if, on the rebalancing date, your Account is above the minimum funding requirement and the current allocation in any one PACE eligible mutual fund or SWP/AAP sub-account deviates from their Target Allocation by more than 3%, 5% of the total Program Assets. or 10% for taxable accounts (“Rebalancing Thresholds”).. Taxable accounts have the option of selecting annual rebalancing when there is a deviation of more than 10% from the Target Allocation in any mutual fund in PACE or SWP / AAP sub-account. For example, in an account that rebalances annually with a +/- 5% deviation, a mutual fund in PACE or SWP / AAP sub-account with a 30% target allocation would trigger a rebalance if its value reached 25% or 35% of the account value. Automatic Rebalancing to the Client Target Allocation – with updates to the Capital Market Assumptions (Available to PACE Select clients only) – By selecting this option, you elect to have Program Assets reviewed, and if necessary, automatically rebalanced on a periodic basis to be consistent with the UBS capital market assumptions. Your Client Target Allocation is based on our proprietary capital market assumptions; those allocations may be updated and may change periodically. Your affirmative consent is not required to implement these changes; however, you will receive notice and an opportunity to elect out of automatic rebalancing when we change the Asset Allocation. When the automatic rebalance is performed, the rebalance will override your 3%, 5% or 10% threshold which was elected when your PACE account was opened. Additionally, we may re-schedule your rebalance earlier or later than your scheduled annual, semi-annual, or quarterly rebalance if necessary in order to rebalance your account when the Capital Market Assumptions are updated. Accounts are rebalanced as follows:
• Annual rebalancing: o PACE: Annual Rebalancing will occur on or near 13 months from the anniversary of your account opening date, and then, subsequently, 13 months from the previous rebalance date. Accounts scheduled for annual rebalancing in Nov/Dec will be rebalanced in January to avoid tax trading at year end. o SWP/AAP: generally will occur during the week following the anniversary of your account opening date.
• Semi-annual rebalancing: o PACE: Semi-Annual Rebalancing is generally done in February and August. o SWP / AAP: generally will occur during the week following each sixth month (180 day) and annual anniversary of your account opening date.
• Quarterly rebalancing: o PACE: Quarterly Rebalancing is generally done during the third week in February, May, August and November. o SWP / AAP: will generally occur during the week following each three month (90 day), sixth month (180 day), nine month (270 day) and annual anniversary of your account opening date.
• SWP / AAP Accounts scheduled for rebalancing (quarterly, annual, semi- annual or automatic) in November, December and January, will be rebalanced in or around the first week of February of the following year to avoid any impact to tax trading at the end of the year.
• Automatic rebalancing for any account where the risk of the current allocation is higher (more aggressive) (or, for AAP, also lower) than the Account’s stated risk tolerance for 6 consecutive quarters for SWP and PACE and 4 consecutive quarters for AAP will take place during the 7th quarter for SWP and PACE, and the 5th quarter for AAP
• Rebalancing will bring your asset allocation back to your Target Allocation, overriding the Rebalancing Threshold selected or applicable to the Account. If in the 7th quarter for SWP and PACE or 5th quarter for AAP, the account comes back into its risk band but is still out by the Rebalancing Threshold selected, the account will be rebalanced according to the option selected for the Account. Your Advisory Account Review will show whether your allocation is no longer within the standard deviation range for your stated risk profile. In addition, regardless of the Rebalancing Threshold selected, automatic rebalancing will be conducted for:
• SWP and PACE Accounts that have a single mutual fund or exchange traded fund (ETF) position concentration, as applicable, greater than 70% for 6 consecutive quarters. This rebalancing will take place during the 7th quarter if the concentration remains above 70% and will bring the asset allocation back to your Target Allocation. .
• ISWP Accounts with single SMA strategy concentration greater than 70% will be automatically rebalanced during the 7th quarter if the concentration remains above 70% and will bring the asset allocation back to your Target Allocation. Note: accounts that are evaluated as part of an Advisory Account Group will have higher concentration guidelines.
• AAP Accounts that deviate from established Program guidelines for specified time periods. These AAP guidelines include single mutual fund or ETF position concentrations greater than 35%, or single SMA strategy concentration greater than 70%, for 4 consecutive quarters. AAP Accounts are rebalanced during the 5th quarter if the concentration remains above the guideline and will bring the asset allocation back to the Target Allocation. Note: AAP Accounts that are evaluated as part of an Advisory Account Group will have higher concentration guidelines.
• Your SMA Manager(s) are responsible for the separately managed portion of your SWP and AAP Accounts, while UBS will rebalance your SWP Non-Discretionary assets and your AAP FA Discretionary Assets. Your accounts will be rebalanced by selling investments in the overweighted mutual funds in PACE and SWP/AAP sub- accounts and purchasing a corresponding dollar amount of investments in the underweighted mutual funds or sub-accounts, as applicable. Rebalancing transactions will be processed provided that the sale and the purchase meet our trade minimums, which for PACE are the greater of $50 or 50 basis points, not to exceed $2500. A $25 dollar trade minimum will be used if all trades during the rebalance are below $50. The minimum trade requirement in SWP/AAP is currently $200. We reserve the right to change the rebalancing percentage measure or the minimum dollar amount of individual rebalancing transactions. Rebalancing is completed as promptly as possible. In the event that we are unable to initiate rebalancing as described above due to reasons beyond our control, we will initiate rebalancing as soon as practicable. Rebalancing will not occur if the account:
• has a pending/unprocessed trade
• has a margin debit or
• value is below the minimum funding required for the target weight of the investment strategy you selected; however, reallocation/rebalancing will occur for an account that is below the minimum funding required so long as the reallocation rebalancing will not further reduce the asset levels of those sub-accounts. Rebalancing and reallocation may take up to seven (7) business days to fully implement. However, rebalancing or reallocation of fixed income strategies may take significantly longer to fully implement. Delays in Rebalancing and Automatic Services: We will process the automatic services and rebalancing as described above unless market conditions, technology failures, illiquid securities, securities with limited redemption schedules, trading volumes, the availability of funds and orderly purchase and redemption procedures or other matters beyond our control reasonably preclude us from accurately processing on the required dates or otherwise cause delays in processing, in which case we may alter the date (day) to the next available date that such processing can be accurately completed. In addition, we may adjust the date on which reviews and rebalancing are done, if necessary, to ensure accurate processing of the review or rebalancing. We may also adjust the rebalancing date if UBS is in the process of reviewing its proprietary capital market assumptions to avoid duplicative rebalancing of accounts and ensure accurate and orderly processing. Depending on the circumstances and in order to ensure the accurate processing of the automatic investment options, including rebalancing, we may take any of the following actions: - Alter or delay the rebalancing day to the next available date - Change the rebalancing percentage for that rebalancing event only or the minimum dollar amount of the individual rebalancing transactions - Process rebalancing for accounts for PACE Select and PACE Multi on different days - Process rebalancing for taxable and non-taxable accounts on different days - Rebalance all accounts based on a random rotation process We may also suspend a rebalancing event or an automatic service event (purchases and redemptions), if based on the factors described above, we cannot ensure the orderly and accurate processing of the rebalancing or the automatic service. We will notify you of that suspension and offer you the option to have your account manually rebalanced for that period. H. Portfolio Advisory and Alternative Investments Advisory Programs UBS-CAP and IC are "Portfolio Based Advisory Programs" which means that they are advisory programs in which our services are provided to you for certain eligible UBS Advisory Accounts on a portfolio level instead of individually at the account level. The primary difference between the programs is that UBS-CAP is designed for retail investors and IC is designed for institutional investors. While the UBS-CAP program permits assets that are held away from UBS to be included only on a limited basis, IC permits clients to elect to hold at UBS or to hold away without limits. The programs also offer differing levels of investment discretion and they permit different advisory programs to be included within the respective program, (See Portfolio Based Advisory Programs in group of Financial Advisors who provide specialized investment advisory consulting services to investors, but the eligibility criteria for those advisors differs between the Programs. See Section Education & Business Standards for FA Education In addition to being available as an overall advisory contract per client tax ID or client identifier, UBS-CAP is also available, where appropriate, to multiple related entities (multi-TINs) owned by or related to the same party which based on the structure and ownership should be managed under the same Investment Policy Guideline ("IPG") Asset Allocation and aggregated for performance reporting. It is important that you understand how the portfolio level services available to you in UBS-CAP and IC alter or modify the services and options available in the individual UBS advisory programs in which your Portfolio may be invested. Those distinctions include the review and application of certain Advisory Program guidelines to your UBS-CAP and IC Portfolio respectively instead of individually to each Advisory Account and, if selected, the delegation of certain activities to UBS and your Financial Advisor through the execution of a limited power of attorney. CAP Select and IC held away are advice-only programs in which the fee you pay is solely for the investment advice and performance provided in the Program. Custody, trading and execution fees are not applicable or assessed in CAP Select or when you elect to hold your assets away from UBS in the IC program. While the UBS-CAP Program offers clients the ability to hold a certain percentage of their asset allocation in alternative investments, CAP Select is designed for clients who want 100% of their assets in CAP Select invested in a diversified asset allocation consisting only of alternative investment vehicles. Only alternative investments held at UBS are eligible to be held in the Program. You may establish a CAP Select Program Account on a stand- alone basis or in conjunction with a UBS-CAP Account Portfolio. UBS-CAP, CAP Select and IC services include, but are not limited to: 1) assistance in the development and preparation of an investment policy guideline (in UBS-CAP and CAP Select) and an investment policy statement in IC; 2) the preparation of an asset allocation analysis for the allocation of your investment assets among various asset categories or classes; 3) for UBS- CAP and IC, selection of separate account managers, mutual funds, ETFs and alternative investments; 4) for UBS Select the selection of alternative investments; 5) portfolio evaluation and review; 6 ) ongoing investment management consulting on such items as review of the asset allocation and investment policy and the impact of capital market developments on the overall investment strategy. You may establish a UBS-CAP, CAP Select, or IC relationship on a fully non- discretionary basis (without any limited power of attorney) or you may delegate certain activities to your UBS Financial Advisor by selecting that option in the respective Program’s Application and executing the Agreement, Application and Limited Power of Attorney. You are not required to provide limited power of attorney authority to your Financial Advisor or any other UBS employee in order to participate in the Programs. If you provide such authority, you can terminate the limited power of attorney at any time by notifying your Financial Advisor in writing. Asset Allocation and Investment Policy Guidelines. The Programs provide assistance in the development and preparation of an asset allocation and an investment policy guideline(in UBS-CAP) or investment policy statement (in IC) which, in the case of UBS-CAP and IC can encompass a portfolio level review across a variety of advisory accounts held at UBS. These services typically involve analyzing your liquidity requirements, performance goals and risk tolerance levels based on the information you provided to us. We will review the investment policy guidelines or statement with you on an annual basis and will assist you in incorporating any changes you determine are appropriate. We will monitor your portfolio to determine if it is in compliance with your asset allocation guidelines as stated in your investment policy guidelines or statement, and will recommend changes to you when we determine they are appropriate. The Firm does not provide legal, tax or actuarial advice. We will not be responsible for ensuring that your investment policy guidelines or statement and asset allocation choices comply with all specific legal, actuarial or other requirements that apply to you. That responsibility rests solely with you and you should consult with your legal and tax advisors regarding those matters. Investment Searches. As appropriate, we will recommend and present for your consideration eligible investment types for each Program. For UBS-CAP and IC that includes investment manager(s) and/or other investments, such as, mutual funds, exchange traded investments, collective trusts, and/or alternative investments, while CAP Select recommendations are limited to alternative investments held at UBS (eligible investments in all three programs are collectively referred to as “investments”) that align with your investment policy guidelines and asset allocation strategy. Investment recommendations are limited to those which are offered by the Firm and/or for which the Firm has conducted due diligence or has otherwise reviewed. We cannot assure you that we will continue to offer or review any of the investments identified through our searches. IC Program Retirement Accounts and Proprietary Funds. For Retirement Plan clients enrolled in the IC program, our investment searches will not include UBS affiliated/proprietary mutual or sub advised funds unless such investments or strategies are eligible within the IC Program and made available at no additional cost to client. Portfolio Review, Evaluation and Reporting. In addition to individual performance reports for your individual Program Accounts, we will provide annual portfolio evaluation and review of all Accounts in your CAP Select Account and for UBS- CAP Portfolio (the latter on a consolidated basis), including reviewing performance on an absolute and relative basis. Clients in the IC program will not receive individual performance reports for your individual Program Accounts. Instead, IC clients receive a quarterly portfolio evaluation and review of all Accounts in your IC Portfolio on a consolidated basis, including performance on an absolute and relative basis. For accounts held at other institutions, those reports and evaluations will be based on information provided by your custodian Based on your overall objectives and performance of your investments, we will assist you in evaluating potential adjustments and, if appropriate, we will assist you in conducting a search for new investment managers or investments. We can also provide reports which include performance information, comparisons and other information for a variety of investment strategies. UBS-CAP and CAP Select will provide quarterly performance reports to you upon request. In IC, our portfolio evaluation and review may also include investment managers or investments which you retained or purchased without our recommendation. Our inclusion of these investments is solely for the purpose of providing a holistic portfolio evaluation and does not constitute an endorsement that you continue to hold those investments or retain those managers and we will ask you for a written acknowledgment that UBS does not provide recommendations regarding such investments. In addition, assets held in other UBS programs outside of your IC Program relationship may also be included in our portfolio evaluation in order to provide a holistic evaluation of your portfolio, but those assets are included for informational purposes only and are not part of the assets for which IC services are provided. Investment Advisory Program Selection; Implementation of UBS-CAP, CAP Select, and IC Services. You can implement your UBS-CAP and IC asset allocation and the results of investment searches through one or several advisory programs offered by the Firm. It is important you understand that these programs are separate and distinct and offer different services, features, fee schedules, structure and administration, depth of research conducted on the managers available in the programs, and compensation to Financial Advisors. Please review the descriptions of those programs included in this Form ADV Disclosure Brochure carefully as you decide which programs are appropriate for your investment needs. We will provide UBS- CAP or IC Services described above for all Program Accounts established under your name and social security number, TIN, or multi-TIN or client identifier where appropriate – the eligible Advisory Programs based on the implementation option you have selected (i) Non-Discretionary; (ii) Non-Discretionary Limited POA for implementation of Client Directed Investment Activities (available in CAP and CAP Select only); and (iii) POA for Limited FA Discretion Services. The UBS Advisory Programs eligible for UBS-CAP and IC as well as the different implementation options are described in the section "Advisory Programs; Fee Schedules, Minimum Investments and Minimum Annual Fees; UBS Consolidated Advisory and IC Programs". Unless you select the POA for Limited FA Discretion Services option, you retain, and will exercise, final decision-making authority and responsibility for the selection of any investment advisory program, establishment of specific accounts at UBS, selection of alternative investments and selection and hiring of investment manager(s) as well as for the implementation of any investment plan or strategy resulting from the services provided under UBS-CAP, CAP Select and/or IC, as applicable. Limited Power of Attorney Implementation Options. UBS-CAP and CAP Select offer two types of limited power of attorney implementation options. IC offers only one limited power of attorney implementation option. Although the activities covered under each option are similar, the most important distinction, and one you should consider carefully when reviewing these options, is the level of involvement you will have, and the discretion you grant to your Financial Advisor, to select advisory programs, investment managers, alternative investments and establish accounts on your behalf. Regardless of the power of attorney option you choose, if any, the actions taken by your Financial Advisor will be based on the Investment Policy Guidelines and asset allocation you select and approve for your UBS-CAP, CAP Select, and/or IC Portfolios. Neither your Financial Advisor nor any UBS employee is authorized to change or approve your Investment Policy Guidelines or your asset allocation on your behalf. You can terminate the limited power of attorney at any time by notifying your Financial Advisor in writing. Termination of a power of attorney will result in the conversion of your UBS-CAP and/or CAP Select relationship, as applicable, to fully non-discretionary and you will be responsible for all activities previously delegated to UBS and your Financial Advisor under the relevant power of attorney. Termination of a power of attorney in IC will result in termination of the IC relationship and conversion of IC accounts to brokerage accounts. Any Advisory Accounts (for example, ACCESS, SWP, Strategic Advisor, etc. that were part of the IC relationship will remain in those Programs unless you also terminate the Advisory Accounts in those Programs. Upon termination, you will be responsible for all activities previously delegated to UBS and your Financial Advisor under the power of attorney. Limited Power of Attorney for Implementation of Client Directed Investment Activities in UBS-CAP and CAP Select. This option authorizes UBS and your Financial Advisor to take actions on your behalf to implement your program and investment selections based on your instructions. With this option, you determine how you want to implement your asset allocation by selecting the Advisory Programs in which you want to participate, the investment managers you want to engage, and the alternative investments in which you want to invest. Your Financial Advisor then implements your instructions on your behalf, negotiates and executes agreements at your direction, and establishes accounts in the programs you selected. If you include assets held away from UBS, your Financial Advisor will also be authorized to establish an additional account at UBS for tracking and billing purposes if applicable. Under this option for CAP Select, you will select the alternative investments in which you want to invest and your Financial Advisor will execute the subscription documents based on your instructions. Power of Attorney for Limited Financial Advisor Discretion Services for UBS-CAP, CAP Select and IC In contrast to the Limited Power of Attorney for Implementation of Client Directed Investment Activities, the Power of Attorney for Limited FA Discretion Services authorizes your Financial Advisor to implement your asset allocation by selecting the UBS advisory programs, investment managers and alternative investments in which your assets will be invested without first consulting with you. For CAP Select, this power of attorney will authorize your Financial Advisor to select the alternative investments to implement your CAP Select asset allocation without consulting with you first. Financial Advisors will also have the authority, as applicable based on the eligible assets in each Program, to replace investment managers, redeem alternative investments, close Advisory Program accounts, and transfer funds between Advisory Accounts at UBS in compliance with your asset allocation and Investment Policy Guidelines or Investment Policy Statement. Power of Attorney for Limited Financial Advisor Discretion Services including private equity and Real Estate The Limited Power of Attorney for Discretion excludes private equity and real estate investments in UBS-CAP and CAP Select. A LPOA over private equity and real estate assets may be granted on a limited exception basis in UBS-CAP and CAP Select for unsolicited client requests for relationships that meet certain asset thresholds. The Limited Power of Attorney executed in IC permits discretion over private equity and real estate assets. Core Activities Covered Under all Types of LPOA:
• Client-Directed Option: You approve your IPG and Asset Allocation; you decide, your Financial Advisor implements.
• Limited FA Discretion Option: You approve your IPG or IPS and Asset Allocation; your Financial Advisor decides how to implement your asset allocation and selects, as applicable, the Advisory Programs, investment managers and alternative investments without consulting you. 1. Negotiating investment management fees (only) with affiliated and unaffiliated third party researched investment managers in the MAC Program and executing investment management agreements on your behalf for your UBS-CAP or IC Portfolio. 2. Establishing advisory accounts on your behalf in eligible Advisory Programs (See Advisory Programs; Fee Schedules, Minimum Investments and Minimum Annual Fees; UBS Consolidated Advisory and IC Programs" for details on eligible Programs). For the Client Directed Option you will provide the Risk Profile for each Account to your Financial Advisor. For the Limited FA Discretion option, your Financial Advisor will complete the Risk Profile Questionnaires for individual Accounts based on the Program Questionnaire you completed at the time you established your UBS-CAP, CAP Select, or IC Relationship (or as such may be amended throughout your relationship with us). 3. Establishing an account at UBS for billing purposes for Assets Held Away if such assets are included as part of your UBS-CAP Portfolio, if applicable. 4. Completing risk profiles required to establish Advisory Accounts based on UBS-CAP or IC Portfolio Questionnaire. 5. Executing subscription, redemption and tender documentation for researched alternative investments you select in UBS-CAP or CAP Select or that your Financial Advisor selects on your behalf in IC (proprietary and non-proprietary hedge funds, fund of funds and, where available as an option, private equity) to purchase in UBS accounts, including forms for the conversion of brokerage share classes to advisory/institutional share classes when applicable in UBS-CAP, CAP Select, or IC; 6. Take any actions necessary to open and maintain your account(s) in the eligible Advisory Programs, complete and pay for transactions, UBS Investment Advisory Fees, and SMA Manager Fees in your account(s); and 7. Except as described below, execute any other document or agreement which UBS considers necessary or appropriate to carry out the intent of your UBS-CAP, CAP Select or IC Agreement and your investment instructions. In addition to the core POA services described above, the Limited FA Discretion Implementation options also covers: 8. The selection of UBS investment advisory programs to implement the client approved asset allocation and IPG or IPS for UBS-CAP or IC Portfolio from the list of eligible programs; 9. Select, hire and fire third party investment managers in eligible Advisory Programs for UBS-CAP and IC, as well as select, subscribe and redeem alternative investments on your behalf; 10. Transfer and reallocate UBS-CAP assets between ACCESS, MAC, Portfolio Management Program Accounts 11. Transfer and reallocate IC assets between ACCESS, MAC, AAP and IC Accounts. 12. Select, hire and fire internal PMP Portfolio Managers for UBS-CAP, inclusive of negotiating advisory fees with internal PMP Portfolio Managers (where your Financial Advisor is not the portfolio manager). In addition to the core POA services described above, the LPOA in IC and the Limited FA Discretion including Private Equity and Real Estate Implementation option in UBS-CAP and CAP Select also covers: Authority to select, subscribe and redeem alternative investments on your behalf for Private Equity and Real Estate investments. The Limited Power of Attorney Options do NOT grant UBS or its Financial Advisors the authority to: 1. Execute the Advisory Relationship Agreement; 2. Execute the UBS Client Relationship Agreement for Brokerage Accounts; 3. Change Program Fees for any Advisory Account without first discussing it with you and obtaining your consent; 4. Change account preferences (proxy voting, trade confirmations, or investment restrictions) without first discussing it with you and obtaining your consent; 5. Exercise investment discretion in the selection to purchase or sell any securities in the Strategic Advisor, PACE and SWP, ACCESS and MAC Programs or with respect to assets held at other financial institutions; 6. (For the Client Directed Option and the Limited FA Discretion Option in UBS-CAP and CAP Select) Establish accounts in the PACE and UBS Advice Portfolio Programs. For the Limited FA Discretion option for UBS-CAP and CAP Select, the restriction also applies to establishing accounts in Strategic Advisor and Strategic Wealth Portfolio; 7. Exercise proxy voting authority for your Accounts in Strategic Advisor, PACE and the non-discretionary sleeves in SWP; 8. Execute the Client Acknowledgement Form for Non- Researched Assets on your behalf, or execute any documents, agreements, forms or subscription or redemption documents in connection with Non-Researched Assets or issue any investment instructions to the custodian of such assets; 9. (For Limited FA Discretion in UBS-CAP and CAP Select) Execute subscription, redemption, tender or any other documentation for any private equity and private real estate investments. This applies to UBS-CAP and CAP Select. The LPOA for Limited FA Discretion over private equity and real estate investments is a separate document for UBS-CAP and CAP Select available only on a limited exception basis for clients who specifically requests such services on an unsolicited basis and who meet certain qualification thresholds; 10. For both the Client Directed Option and the Limited FA Discretion option in UBS-CAP and CAP Select execute subscription, redemption, tender or any other documentation for any REITs and any forms for the conversion of brokerage share classes to advisory/institutional share classes where applicable; 11. Sign any complex products risk disclosure statements required to be signed by clients, including but not limited to, the documents and disclosures required to enroll in the Yield Enhancement Strategy (YES) in PMP, any third-party options overlay SMA manager or Concentrated Equity Solutions strategy or any structured product related documents; 12. Name beneficiaries for any IRA accounts. The Power of Attorney for Client Directed Implementation in UBS-CAP and CAP Select also excludes the following: 1. Deciding the manner in which your assets will be allocated or the programs in which accounts will be established; 2. Designating him/herself as your portfolio manager in the PMP Program without your consent; 3. Transferring assets between your accounts without your instructions and consent. UBS will not be required to sign or complete (i) any certificate regarding your tax status, (ii) documentation for non-advisory products, including brokerage account agreements for trading accounts, (iii) trust certificates or corporate resolutions, or (iv) any document to the extent that you have not provided UBS with sufficient current information to complete the document accurately and completely. Additional Services available in IC IC also offers several additional services available as part of your IC program fee or on a project basis. IC offers oversight services where, for a negotiated rate, we will review services performed by third party Financial Advisors or consultants under parameters agreed to in your IC service agreement. We may also consult with you on matters related to news and developments in the capital markets and asset classes based on information generally available from us or our affiliates, or more specifically prepared for you based on publicly available information. We can provide education services. Additional services may be available as agreed to between us. UBS Investment Advisory Fees, Additional Fees for Investment Management Services and Important Information About Certain Investments. UBS Investment Advisory Fees. The annual UBS Investment Advisory Fee is a fixed percentage of the assets in all of your account(s) under the Programs. For UBS-CAP and IC, the UBS Investment Advisory Fee covers the investment advice provided by UBS and your Financial Advisor, custody, trading and execution services for account(s) held at UBS Financial Services Inc. and performance reporting services. Except in limited situations, all accounts you establish, or those established on your behalf, will be billed at the same rate selected in the Application (or as such may be changed with your consent during the course of the relationship established). The fees must be levelized for IC relationships and for UBS-CAP relationships with a POA for Limited FA Discretion Services. UBS-CAP offers the option to have all of your accounts in your CAP Portfolio priced at the same level such that Financial Advisors in UBS-CAP who also act as your portfolio manager in PMP will receive the same payout level across all Accounts enrolled in UBS-CAP regardless of Program type or strategy. However, based on discussions with your Financial Advisor, you may agree to different fee schedules for different account types. If you do so, you understand that for accounts with higher fees, your Financial Advisor will receive higher compensation than for other accounts in your UBS-CAP Portfolio. CAP Select is an advice-only program in which the fee you pay is solely for investment advice and performance reporting provided in the Program. Custody, trading and execution fees are not applicable or assessed in this Program. The UBS-CAP and IC Investment Advisory Fee does NOT include the investment management fees charged by any SMA Manager in the Programs. In addition, certain investments such as mutual funds, ETFs and alternative investments have internal expenses (for example, management, shareholder servicing and performance fees) that are not included in the UBS Investment Advisory fee. You will pay those fees separately to the managers and sponsors of those investments (including UBS affiliates if you have invested in UBS products) in your role as shareholder of those funds. See "Fees / Other Charges Not Covered by your Program Fee” for more information about other fees not covered by the Investment Advisory Fee. Assets Held Away; Custody: UBS-CAP and CAP Select are not designed for clients who hold all or a substantial portion of their Portfolio at other financial institutions. CAP Select is limited to alternative investments offered on the UBS platform. Generally, we require clients with Advisory Accounts to custody their account assets at UBS. In limited circumstances, for UBS-CAP, we may accept certain relationships that hold a limited portion of their alternative investment assets in the custody of other financial institutions t h a t meet the definition of a qualified custodian. If you decide to include these assets as part of your UBS-CAP Portfolio, you may be required to establish an account at UBS for tracking of the investments and billing purposes of these assets. While this option is available as an accommodation to clients in the UBS-CAP and CAP Select Programs, we do not recommend doing so, for the following reasons:
• You will incur additional costs in excess of your UBS program fee (for example, custody costs).
• Billing for your Account, including the accurate processing of rebates if applicable, is the responsibility of your custodian, not UBS. Non-discretionary IC services are available to institutional clients that elect to hold the assets in the IC relationship away from UBS (“IC Held Away”). If clients elect IC Held Away, our services do not include custody, trade execution, or any other fees imposed by the other financial institution. Your Financial Advisor will not offer advice about whether to hold assets away from UBS. If you decide to implement the results of investment searches performed as part of an IC relationship through an account held at another financial institution, such implementation is not part of IC services and will result in your payment of custody, brokerage and execution fees collected by the other financial institution. Because all of the assets covered by a UBS-CAP or IC Agreement will be billed at the same UBS Investment Advisory Fee rate, if you decide to include assets held at other financial institutions, you will be paying for services that you are not utilizing as it pertains to those assets, specifically, custody, trading and execution. Your UBS Investment Advisory Fee will not be reduced as a result of additional costs you incur as a result of holding assets at other financial institutions. Alternative Investments Funds. When consistent with your investment objectives, risk tolerance and financial circumstances, and upon your request, we may recommend to you alternative investments approved for distribution through the Firm. Investments presented for your consideration will be limited to those that offer advisory/institutional share classes designed to be purchased and held in fee-based accounts. Offering documents for appropriate investment vehicles will be delivered directly to you even in instances in which you have executed a power of attorney for Limited FA Discretion Services. If you selected a non-discretionary or a client-directed investment activities implementation option, you are solely responsible for your decision to invest in an alternative investment fund. Alternative investments are speculative in nature and the investors bear the costs and fees of these funds, including asset-based fees, expenses, and incentive-based compensation. If you hold or purchase (or we purchase on your behalf) an alternative investment fund sponsored or offered by UBS or its affiliates, the Firm or its affiliate will receive compensation, possibly including a share of investment advisory fees by the Fund and performance fees, for providing various services to the alternative investment fund that will be based, in part, on the amount of assets you invest in the fund. With the exception of retirement clients in IC, if you selected the POA for Limited FA Discretion Services, you consent to UBS directing your Account to invest in portfolios, hedge funds or funds of funds managed or sponsored by UBS or its affiliates (each an "Affiliated Fund"). Privately-offered alternative investment funds, such as hedge funds, funds or funds or private equity are sold only to qualified investors, and only by means of offering documents that include information about the risks, performance and expenses of the funds. Please review and consider those risks carefully before adopting Investment Policy Guidelines or IPS that include such investments. Alternative investment funds are speculative and involve significant risks, performance may be volatile, and investors may lose all or a substantial amount of their investment in an alternative investments fund. An alternative investment may engage in leverage and other speculative investment practices that may increase the risk of investment loss. Interests in alternative investments funds typically will be illiquid and no secondary market for interests usually develops, they are long-term investments (e.g., 10-15 years), are subject to restrictions on transfer, may suspend redemptions, and may not be required to provide periodic pricing or valuation information to investors. In addition, an alternative investment fund may hold back a portion of redemption proceeds, usually in the range of 10%, to cover accrued expenses, contingencies and liabilities. Although only funds that offer advisory or institutional share classes are available in UBS-CAP and IC, such investments will be subject to the respective Program Fee. Given the long-term nature of these investments, it may be more cost-efficient in the long term for you to invest in the brokerage share class and maintain these investments in a brokerage account. We cannot, and do not, guarantee that investing in the advisory share class plus the Program Fee is the more cost-efficient option in the long-term. You must review those options carefully before investing. Eligible Non-Researched Investments in UBS-CAP and IC. You may request that ”Eligible Non-Researched“ investments be included in the asset allocation analysis and performance reports for your UBS-CAP or IC relationship. In UBS-CAP and IC, Eligible Non-Researched Investments are limited to hedge funds, funds of funds and private equity investments held away from UBS and MAC Eligible strategies only. In IC, Eligible Non- Researched can also include any eligible investment type for which you sign a letter acknowledging that UBS will not provide advice on such assets. The UBS-CAP and IC POA cannot be used for Eligible Non-Researched investments of any kind. UBS's investment advice in UBS-CAP and IC as it pertains to Eligible Non-Researched Investments is limited to asset allocation, IPG or IPS development, and performance reviews. Specifically, the inclusion of these investments in an asset allocation analysis does not constitute a recommendation that you continue to hold or add to those investments. Financial Advisors and any other UBS employees are prohibited from making specific investment recommendations to buy or hold these investments on an ongoing basis as UBS does not perform initial or ongoing due diligence on these investments or strategies. Inclusion of Eligible Non-Researched Investments is an accommodation only and they cannot represent a significant portion of the portfolio. High levels of these investments may lead to termination of the relationship. Non-Researched investments for CAP Select. Non-Researched Investments are not subject to the Firm's due diligence or research process or otherwise approved for sale, solicitation or recommendation by UBS and its Financial Advisors and employees. Only Eligible Non-Researched Investments for which there is a written acknowledgement on file may be included in UBS-CAP or IC services and for purposes of calculating the UBS-CAP or IC Program Fee. Because the value of such Eligible Non-Researched Investments will be included for purposes of calculating your Program Fee, you should carefully consider that, as it pertains to those non- researched assets, you will be incurring costs and not fully utilizing the benefits and services offered in UBS-CAP or IC. We reserve the right to accept or decline these requests. Non-researched assets may not constitute a significant portion of the UBS-CAP or IC Portfolio. Your decision to include non-researched assets in UBS-CAP or IC is against our recommendation and doing so will result in additional costs to you and higher compensation to UBS and your Financial Advisor. See Asset Allocation & Investment Policy Guidelines; Asset Allocation for information about Implementing your Asset Allocation