JPMorgan Funds Audited Annual Report - JP Morgan Asset ...

JPMorgan Funds
Notes to the Financial Statements (continued)
As at 30 June 2013
Other Information
Shareholders should note that, where the dividend rate is in excess of the investment income of the Share Class, dividends will be paid out of the capital
attributed to the Share Class, as well as from realised and unrealised capital gains. This may be tax inefficient for investors in certain countries. Investors
should consult their local tax adviser about their own position. Share Classes with the suffix “(div)”, “(fix)”, “(inc)” and “(mth)” do not distribute the reportable
income in accordance with the United Kingdom tax legislation relating to offshore funds.
5. Taxation
Under current law and practice, the SICAV is not subject to any taxes in Luxembourg on income or capital gains, nor are dividends distributed by the SICAV
liable to any withholding tax. The only tax to which the SICAV in Luxembourg is subject is the subscription tax, (“Taxe d’abonnement”) up to a rate of 0.05%
per annum based on the net asset value attributed to each Share Class at the end of the relevant quarter, calculated and paid quarterly. A reduced tax rateof
0.01% per annum of the net assets will be applicable to Share Classes as indentified in the Appendix. The 0.01% and 0.05% rates described above, as
appropriate, are not applicable for the portion of the assets of the SICAV invested in other Luxembourg collective investment undertakings which are
themselves already subject to the Taxe d’abonnement.
No stamp duty or other tax is payable on the issue of shares in the SICAV in the Grand Duchy of Luxembourg. No tax is payable on realised or unrealised
capital appreciation of the assets of the SICAV in the Grand Duchy of Luxembourg. Although the SICAV’s realised capital gains, whether short or long-term,
are not expected to become taxable in another country, the shareholders must be aware and recognise that such a possibility is not totally excluded. The
regular income of the SICAV from some of its securities, as well as interest earned on its cash deposits in certain countries, may be subject to withholding
taxes at varying rates, which normally cannot be recovered.
The SICAV has instigated proceedings to reclaim tax withheld by certain Member States of the European Union on dividend payments it has received. The
decision to initiate proceedings against any particular Member State is the result of an analysis of the likely costs and potential benefits of doing so. The
likelihood of successfully reclaiming such amounts together with the estimated time to complete proceedings varies across Member States. Any costs
associated with this decision have been charged to the relevant Sub-Funds and have been included within total costs for the purposes of determining the
relevant expense cap or TER and no amount has been recorded in the SICAV for any possible amounts to be received under this action.
Certain Sub-Funds of the SICAV may have invested into Norwegian, Finnish and Polish stocks for which tax reclaim has been successful. As such, amounts
have been recorded, where applicable, on a cash basis under Other Income.
Certain Sub-Funds of the SICAV may invest on the Brazilian markets and are consequently subject to a local tax upon purchase of Brazilian Real, the BRL IOF
Tax. On 5 June 2013, the BRL IOFtax on foreign exchange inflows relating to the purchase of fixed income instruments was reduced from 6% to 0% on inflows
with a trade date of 5 June 2013 and onwards. This tax has been recorded, where applicable, under Sundry Fees.
6. Statement of Changes in Investments
A list, specifying for each investment within each Sub-Fund the total purchases and sales which occurred during the year under review, may be obtained free
of charge upon request at the registered office of the SICAV. Additional information on investments within each Sub-Fund’s portfolio is available to
shareholders at the registered office of the SICAV.
7. Fees and Expenses
a) All Sub-Funds - Share Classes A, B, C, D, J and T
The fees and expenses charged to these Classes of shares are set at a fixed percentage of the total net assets of each Class of shares. This fixed percentage
covers all fees and expenses connected with the management of these Classes of shares, including Investment Management Fees, Shareholder Servicing
Fees and Other Operating and Administrative Expenses, which include but are not limited to Custody, Registrar and Transfer Agent Fees; it does not cover
taxes paid on investments, brokerage’s expense, the taxe d’abonnement, the interest, extraordinary costs or performance fees, if any.
No other costs are charged to these Classes of shares, and the Management Company absorbs any difference that may arise between the actual costs of the
operations of these Classes of shares and the fixed percentage. To the extent that the actual operating costs are less than the fixed percentage, the excess is
paid to the Management Company and included within “Management and Advisory Fees”. To the extent that actual operating costs exceed the fixed
percentage, the amount borne by the Management Company will be separately disclosed as a “Fee Waiver’’ in the Combined Statement of Net Assets and the
Combined Statement of Operations and Changes in Net Assets.
This fixed annual rate of fees and expenses is categorised as a Total Expense Ratio. The fixed annual rates of fees for each Class of shares are shown in the
Appendix.
b) All Sub-Funds - Share Classes I and P
The maximum total fees and expenses to be borne by shareholders on these Classes of shares of any Sub-Fund will not exceed a capped percentage of the
total net assets attributable to that Class. These capped fees and expenses comprise Investment Management Fees plus other Operating and Administrative
Expenses including but not limited to Custody, Fiduciary, Accounting, Transfer Agency Fees and Taxes; it does not cover performance fees, if any.
This capped annual rate of fees and expenses is categorised as a Capped Expense Ratio. The capped annual rates of fees for each Class of shares are shown in
the Appendix.
c) All Sub-Funds - Share Classes X and Y
The Annual Management Fee that would normally be payable in respect of the X Share Classes and Y Share Classes are administratively levied and collected
by the Global Distributor directly from the shareholder or through the relevant J.P.Morgan Chase & Co entity.
The maximum Operating and Administrative Expenses to be borne by the Class X and Class Y shareholders of any Sub-Fund will not exceed a capped
percentage of the total net assets attributable to that Class, as set out in the Appendix.
Sub-Funds may invest in UCITS and other UCIs managed by the Management Company, the Investment Manager or any other member of JPMorgan Chase &
Co. The avoidance of a double-charge of the Annual Management and Advisory Fee on such assets is achieved by either a) excluding the assets from the net
assets on which the Annual Management and Advisory Fee is calculated; or b) investing in UCITS or UCIs via classes that do not accrue an Annual
Management and Advisory Fee or other equivalent fees payable to the relevant Investment Manager’s group; or c) the Annual Management and Advisory
Fee being netted off by a rebate to the SICAV or Sub-Fund of the Annual Management and Advisory Fee (or equivalent) charged to the underlying UCITS or
UCIs; or d) charging only the difference between the Annual Management and Advisory Fee of the SICAV or Sub-Fund and the Annual Management and
Advisory Fee (or equivalent) charged to the underlying UCITS or UCIs.
The Management Company may decide from time to time, in order to protect the interests of the Fund’s shareholders, to reduce the fees payable to the
Management Company.
Refer to Note 14g regarding changes in the Structure of the Share Classes’ Operating and Administrative Expenses.
d) Performance Fees
Pursuant to the Investment Management Agreement, as set out in the Appendix to the Prospectus, the Investment Manager is entitled to receive from the
net assets of certain Sub-Funds or Classes, an annual performance-based incentive fee (the “Performance Fee”) if the performance of the Sub-Fund exceeds
the return from the benchmark, subject to the operation of a Claw-Back Mechanism or of a High Water Mark as defined in Appendix V and as specified in
Appendix III for each Sub-Fund. On each Valuation Day, an accrual for the previous Valuation Day’s Performance Fee is made, when appropriate, and the
final Performance Fee is payable annually. Pursuant to the provisions of the relevant Investment Management Agreement, the Investment Manager may be
entitled to receive the performance Fee from the Management Company.
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