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Investment Funds in Uruguayan Pesos

Dollar Investment Funds

What is an Investment Fund?

 An Investment Fund is a savings vehicle that pools funds from different persons, whether individuals or legal entities, in order to invest them in different securities (financial instruments) and other assets, with the aim of obtaining a certain return.

What types of instruments do Investment Funds invest in?

 The assets of each Investment Fund are invested in different financial instruments, such as bank deposits, bonds, shares, etc., in accordance with the Investment Policy contained in the Internal Regulations of each Investment Fund.

Who manages the Investment Funds?

 Investment Funds are managed by corporations specially authorized to do so by the Central Bank of Uruguay. These are called “Investment Fund Management Companies” (AFISA). To carry out their management, the AFISA has specialized investment professionals who are constantly monitoring the capital markets and studying different investment alternatives.

What are the advantages of investing in Investment Funds?

Accessibility: Investment Funds allow all persons, regardless of the amount of their savings, to access investment alternatives in Uruguay and around the world, many of which used to be available only to large investors.

Liquidity: The resources invested in an Investment Fund can be redeemed in whole or in part whenever the unitholder wishes. There are no mandatory minimum terms or maturities, subject to the Internal Regulations of each Investment Fund.

Personalized Advice: Depending on each person’s profile, objectives and attitude towards risk, the management company can offer its unitholders professional advice to decide in which Investment Funds to invest.

Professional Management: By investing in Investment Funds, your contributions are managed by a company that has specialized professionals, who must make investments in accordance with mandatory legal rules and with what is established in each Investment Fund’s Internal Regulations.


Diversification: Investment Funds invest their resources in different financial assets, of different types or classes, from different sectors of the economy and even from different countries. This helps reduce the risk that individuals take on when they invest all their savings in a single instrument.
The main risks of an Investment Fund are determined by the type of investment made with the contributors’ resources. These risks are related to:
* Fluctuations in the market price of the instruments in which the Investment Fund invests.
* The solvency of the issuers of the instruments in which the Investment Fund invests.

To limit these risks, Investment Funds invest in a diversified way, that is, in various instruments, issuers, markets and countries.
In addition, each Investment Fund has Internal Regulations that establish its Investment Policy, that is, the type of financial instruments in which the manager is authorized to invest, the investment limits per instrument and other additional restrictions.
Lastly, the Investment Funds and the companies that manage them are subject to the supervision of the Central Bank of Uruguay, which is empowered to access all information regarding the investments of the Investment Fund and the management of the Management Company (AFISA).

What are the “units” of an Investment Fund?

 Contributions made to an Investment Fund are expressed in “units”. These represent each person’s share in the Fund’s assets.
Thus, each time a person makes a contribution to an Investment Fund, they are “acquiring” units of that Investment Fund.
The Management Company must calculate the value of the unit on a daily basis, based on the value of the assets in which the Fund’s resources are invested. Therefore, a contributor can always know how much money they have accumulated in a Fund simply by multiplying the number of units they hold by the corresponding unit value.

How is the return on my investment in an Investment Fund calculated?

The return of an Investment Fund over a given period corresponds to the percentage increase or decrease in the value of the Fund’s units during that period.
For example, if on day 1 the value of a Fund’s unit is 100 and on day 10 it is 104, the return during that period is 4%.
It is important to emphasize that no Investment Fund can project or guarantee a future return, since this depends on how the investments made with its resources perform.

What is FATCA?

FATCA (Foreign Account Tax Compliance Act) was approved by the US government on March 18, 2010. FATCA requires Foreign Financial Institutions (FFIs) to identify, report and (in some cases) withhold funds from US persons. FATCA came into force on July 1, 2014.

What is the objective of FATCA?

The objective is to detect and prevent tax evasion of foreign investments of US residents and citizens. Non-US financial institutions have a significant incentive to comply with this law, as it is the only way to avoid the 30% withholding tax on any US source payments received subject to withholding.

Who does FATCA impact?

FATCA is a broad regime and can impact any natural or legal person, US or foreign, if that person is involved in making or receiving payments that fall within the FATCA scope.

An FFI must comply with FATCA in one of the following ways:

1) In countries with Model 1 Intergovernmental Agreements (IGAs), FFIs must comply under local regulation and report to their tax authority, that will exchange information with the Internal Revenue Service (IRS).

2) In Model 2 IGA countries, FFIs must comply with local regulations, sign a FATCA agreement with the IRS and report directly to the IRS. The requirements for compliance with this law are set out in the IGA signed by that country.

3) In countries that have not signed an IGA (e.g. Argentina), FFIs must sign FATCA agreements with the IRS and report directly to the IRS.

What is the position of Delta Asset Management S.A.?

Delta Asset Management S.A. has agreed to participate in FATCA and to comply with the requirements and obligations of this law so that it can continue to provide quality financial services to its clients.

How does FATCA impact Delta Asset Management S.A.?

We have entered into an agreement with the IRS, under which we must obtain and verify certain information from our clients, report certain US client information to the IRS and eventually withhold from certain recalcitrant clients or Non-Participating Foreign Financial Institutions. FATCA requires us to review our existing customer acceptance and withholding processes and adjust them accordingly, as needed.

What does it mean for customers?

As established by the IRS, FATCA became effective on July 1, 2014.
This law requires us to determine the FATCA status of new clients as of that date, before accepting them as clients, and of pre-existing clients. To this end, they are required to sign a self-certification of their FATCA status as a US person or non-US person.
Reporting of U.S. person accounts to the IRS is done every year no later than March 30. Please contact your tax advisor if you have specific US tax questions or visit www.irs.gov for more information.