07/01/2022 | Press release | Distributed by Public on 07/01/2022 06:05
J.P. MORGAN TAX AWARE FUNDS
JPMorgan Tax Aware Equity Fund
JPMorgan Tax Aware Real Return Fund
(a series of JPMorgan Trust I)
J.P. MORGAN INCOME FUNDS
JPMorgan Preferred and Income Securities Fund
(a series of JPMorgan Trust IV)
(the "Funds")
(All Share Classes)
Supplement dated July 1, 2022
to the Current Statements of Additional Information, as supplemented
The Statement of Additional Information Part II (SAI Part II) for the above J.P. Morgan Mutual Funds is replaced in its entirety with the attached SAI Part II.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE
STATEMENTS OF ADDITIONAL INFORMATION FOR FUTURE REFERENCE
INVESTMENT STRATEGIES AND POLICIES
|
5
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Asset-Backed Securities
|
5
|
Auction Rate Securities
|
7
|
Bank Obligations
|
7
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Commercial Paper
|
8
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Convertible Securities
|
8
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Custodial Receipts
|
9
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Debt Instruments
|
9
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Below Investment Grade Securities
|
9
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Corporate Debt Securities
|
9
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High Yield/High Risk Securities/Junk Bonds
|
9
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Inflation-Linked Debt Securities
|
10
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Variable and Floating Rate Instruments
|
11
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Zero-Coupon, Pay-in-Kind and Deferred Payment Securities
|
13
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Negative Interest Rates
|
13
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Impact of Market Conditions on the Risks associated with Debt Securities
|
13
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Demand Features
|
14
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Equity Securities, Warrants and Rights
|
14
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Common Stock
|
14
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Common Stock Warrants and Rights
|
14
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Preferred Stock
|
15
|
Initial Public Offerings
|
15
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Foreign Investments (including Foreign Currencies)
|
15
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Risk Factors of Foreign Investments
|
15
|
Brady Bonds
|
17
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Global Depositary Notes
|
17
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Obligations of Supranational Entities
|
17
|
Sukuk
|
17
|
Emerging Market Securities
|
18
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Sovereign Obligations
|
19
|
Foreign Currency Transactions
|
19
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Risk Factors in Foreign Currency Transactions
|
23
|
Insurance-Linked Securities
|
24
|
Inverse Floaters and Interest Rate Caps
|
25
|
Investment Company Securities and Exchange-Traded Funds
|
25
|
Investment Company Securities
|
25
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Exchange-Traded Funds
|
26
|
Loans
|
27
|
Miscellaneous Investment Strategies and Risks
|
31
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Borrowings
|
31
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LIBOR Discontinuance or Unavailability Risk
|
32
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Commodity-Linked Derivatives
|
32
|
Commodity-Related Pooled Investment Vehicles
|
32
|
Cyber Security Risk
|
33
|
Volcker Rule Risk
|
33
|
Exchange-Traded Notes
|
34
|
Impact of Large Redemptions and Purchases of Fund Shares
|
34
|
Capital Gains
|
34
|
Government Intervention in Financial Markets
|
35
|
Interest Bearing Deposit Facility
|
35
|
Interfund Lending
|
35
|
Master Limited Partnerships
|
36
|
YieldCos
|
36
|
New Financial Products
|
37
|
Private Placements, Restricted Securities and Other Unregistered Securities
|
37
|
Securities Issued in Connection with Reorganizations and Corporate Restructuring
|
37
|
Stapled Securities
|
38
|
Temporary Defensive Positions
|
38
|
Infectious Disease Risk
|
38
|
Mortgage-Related Securities
|
38
|
Mortgages (Directly Held)
|
38
|
Mortgage-Backed Securities
|
39
|
GSE Credit Risk Transfer Securities and GSE Credit-Linked Notes
|
42
|
Mortgage TBAs
|
42
|
Mortgage Dollar Rolls
|
42
|
Stripped Mortgage-Backed Securities
|
42
|
Privately Issued Mortgage-Related Securities
|
43
|
Adjustable Rate Mortgage Loans
|
44
|
Risk Factors of Mortgage-Related Securities
|
45
|
Risks Related to GSE Credit Risk Transfer Securities and GSE Credit-Linked Notes
|
47
|
Municipal Securities
|
48
|
Risk Factors in Municipal Securities
|
50
|
Limitations on the Use of Municipal Securities
|
51
|
Options and Futures Transactions
|
51
|
Purchasing Put and Call Options
|
52
|
Selling (Writing) Put and Call Options on Securities
|
52
|
Engaging in Straddles and Spreads
|
53
|
Options on Indexes
|
53
|
Exchange-Traded and OTC Options
|
54
|
Futures Contracts
|
54
|
Cash Equitization
|
55
|
Options on Futures Contracts
|
55
|
Combined Positions
|
55
|
Correlation of Price Changes
|
55
|
Liquidity of Options and Futures Contracts
|
56
|
Foreign Investment Risk
|
56
|
Position Limits
|
56
|
Asset Coverage for Futures Contracts and Options Positions
|
56
|
Real Estate Investment Trusts ("REITs")
|
56
|
Recent Events Relating to the Overall Economy
|
57
|
Derivatives
|
57
|
Repurchase Agreements
|
58
|
Reverse Repurchase Agreements
|
58
|
Securities Lending
|
59
|
Short Selling
|
60
|
Short-Term Funding Agreements
|
60
|
Special Purpose Acquisition Companies
|
61
|
Structured Investments
|
61
|
Credit Linked Notes
|
62
|
Equity-Linked Notes
|
62
|
Participation Notes and Participatory Notes
|
63
|
Swaps and Related Swap Products
|
64
|
Credit Default Swaps
|
65
|
Synthetic Variable Rate Instruments
|
66
|
Treasury Receipts
|
67
|
Trust Preferred Securities
|
67
|
U.S. Government Obligations
|
67
|
When-Issued Securities, Delayed Delivery Securities and Forward Commitments
|
68
|
ADDITIONAL INFORMATION REGARDING FUND INVESTMENT PRACTICES
|
69
|
ESG Integration
|
69
|
Investments in the Asia Pacific Region
|
69
|
Investments in the European Market
|
69
|
Investments in the Commonwealth of Puerto Rico
|
70
|
Investments in the Greater China Region
|
71
|
Investments in India
|
80
|
Investments in Japan
|
81
|
Investments in the Middle East and Africa
|
81
|
Investments in Latin America
|
83
|
Investments in Russia
|
84
|
RISK MANAGEMENT
|
86
|
LIQUIDITY RISK MANAGEMENT PROGRAM
|
86
|
SPECIAL FACTORS AFFECTING CERTAIN FUNDS
|
86
|
RISK RELATED TO MANAGEMENT OF CERTAIN SIMILAR FUNDS
|
87
|
DIVERSIFICATION
|
87
|
DISTRIBUTIONS AND TAX MATTERS
|
87
|
Qualification as a Regulated Investment Company
|
87
|
Excise Tax on Regulated Investment Companies
|
89
|
Fund Distributions
|
89
|
Sale or Redemption of Shares
|
91
|
Fund Investments
|
92
|
Investment in Other Funds
|
96
|
Backup Withholding
|
96
|
Foreign Shareholders
|
97
|
Foreign Taxes
|
98
|
Exempt-Interest Dividends
|
99
|
State and Local Tax Matters
|
99
|
Tax Shelter Reporting Regulations
|
100
|
General Considerations
|
100
|
TRUSTEES
|
100
|
Qualifications of Trustees
|
106
|
Board Leadership Structure
|
110
|
Standing Committees
|
110
|
Trustee Compensation
|
113
|
OFFICERS
|
113
|
INVESTMENT ADVISER AND SUB-ADVISERS
|
114
|
J.P. Morgan Investment Management Inc
|
115
|
J.P. Morgan Private Investments, Inc.
|
116
|
Fuller & Thaler Asset Management, Inc.
|
117
|
POTENTIAL CONFLICTS OF INTEREST
|
117
|
PORTFOLIO MANAGER COMPENSATION
|
123
|
CODES OF ETHICS
|
124
|
PORTFOLIO TRANSACTIONS
|
124
|
Investment Decisions and Portfolio Transactions
|
124
|
Brokerage and Research Services
|
125
|
OVERVIEW OF SERVICE PROVIDER AGREEMENTS
|
128
|
ADMINISTRATOR
|
128
|
DISTRIBUTOR
|
130
|
DISTRIBUTION PLAN
|
130
|
CUSTODIAN
|
132
|
CUSTODY AND FUND ACCOUNTING FEES AND EXPENSES
|
132
|
Fees Prior to December 1, 2019
|
132
|
Fees Beginning December 1, 2019
|
133
|
TRANSFER AGENT
|
134
|
SECURITIES LENDING AGENT
|
134
|
SHAREHOLDER SERVICING
|
135
|
EXPENSES
|
136
|
FINANCIAL INTERMEDIARIES
|
137
|
ADDITIONAL COMPENSATION TO FINANCIAL INTERMEDIARIES
|
137
|
TRUST COUNSEL
|
141
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
141
|
DIVIDENDS AND DISTRIBUTIONS
|
141
|
NET ASSET VALUE
|
141
|
DELAWARE TRUSTS
|
143
|
MASSACHUSETTS TRUSTS
|
144
|
MARYLAND CORPORATION
|
145
|
DESCRIPTION OF SHARES
|
145
|
Shares of JPMT I, JPMT II and JPMT IV
|
145
|
Shares of JPMMFIT and UMF
|
146
|
Shares of JPMFMFG
|
148
|
PORTFOLIO HOLDINGS DISCLOSURE
|
148
|
PROXY VOTING PROCEDURES AND GUIDELINES
|
150
|
ADDITIONAL INFORMATION
|
159
|
APPENDIX A - PURCHASES, REDEMPTIONS AND EXCHANGES
|
A-1
|
APPENDIX B - DESCRIPTION OF RATINGS
|
B-1
|
Name (Year of Birth; Term of Office,
and Length of Time Served)(1)
|
Principal Occupation(s)
During Past 5 Years
|
Number of Funds
in Fund Complex
Overseen by
Trustee(1)
|
Other Trusteeships/
Directorships Held
During the Past 5 Years
|
Independent Trustees
|
|||
John F. Finn
(1947); Chair since 2020;
Trustee, since 1998.
|
Chairman, Gardner,
Inc. (supply chain
management company
serving industrial and
consumer markets)
(serving in various
roles 1974-present).
|
168
|
Director, Greif, Inc.
(GEF) (industrial
package products and
services) (2007-present);
Trustee, Columbus
Association for the
Performing Arts (1988-
present).
|
Stephen P. Fisher
(1959); Trustee, since 2018.
|
Retired; Chairman and
Chief Executive
Officer, NYLIFE
Distributors LLC
(registered broker-
dealer) (serving in
various roles 2008-
2013); Chairman,
NYLIM Service
Company LLC
(transfer agent) (2008-
2017); New York Life
Investment
Management LLC
(registered investment
adviser) (serving in
various roles 2005-
2017); Chairman,
IndexIQ Advisors LLC
(registered investment
adviser for ETFs)
(2014-2017); President,
MainStay VP Funds
Trust (2007-2017),
MainStay DefinedTerm
Municipal
Opportunities Fund
(2011-2017) and Main-
Stay Funds Trust
(2007-2017) (registered
investment companies).
|
168
|
Honors Program
Advisory Board
Member, The Zicklin
School of Business,
Baruch College, The
City University of New
York (2017-present).
|
Gary L. French
(1951); Trustee, since 2014.
|
Real Estate Investor
(2011-2020);
Investment
management industry
Consultant and Expert
Witness (2011-present);
Senior Consultant for
The Regulatory
Fundamentals Group
LLC (2011-2017).
|
168
|
Independent Trustee, The
China Fund, Inc. (2013-
2019); Exchange Traded
Concepts Trust II (2012-
2014); Exchange Traded
Concepts Trust I (2011-
2014).
|
Name (Year of Birth; Term of Office,
and Length of Time Served)(1)
|
Principal Occupation(s)
During Past 5 Years
|
Number of Funds
in Fund Complex
Overseen by
Trustee(1)
|
Other Trusteeships/
Directorships Held
During the Past 5 Years
|
Kathleen M. Gallagher
(1958); Trustee, since 2018.
|
Retired; Chief
Investment Officer -
Benefit Plans, Ford
Motor Company
(serving in various
roles 1985-2016).
|
168
|
Non-Executive Director,
Legal & General
Investment Management
(Holdings) (2018-
present); Non-Executive
Director, Legal &
General Investment
Management America
(U.S. Holdings)
(financial services and
insurance) (2017-
present); Advisory Board
Member, State Street
Global Advisors Total
Portfolio Solutions
(2017-present); Member,
Client Advisory Council,
Financial Engines, LLC
(registered investment
adviser) (2011-2016);
Director, Ford Pension
Funds Investment
Management Ltd. (2007-
2016).
|
Robert J. Grassi
(1957); Trustee, since 2014.
|
Sole Proprietor,
Academy Hills
Advisors LLC (2012-
present); Pension
Director, Corning
Incorporated (2002-
2012).
|
168
|
None.
|
Frankie D. Hughes
(1952); Trustee, since 2008.
|
President, Ashland
Hughes Properties
(property management)
(2014-present);
President and Chief
Investment Officer,
Hughes Capital
Management, Inc.
(fixed income asset
management) (1993-
2014).
|
168
|
None.
|
Name (Year of Birth; Term of Office,
and Length of Time Served)(1)
|
Principal Occupation(s)
During Past 5 Years
|
Number of Funds
in Fund Complex
Overseen by
Trustee(1)
|
Other Trusteeships/
Directorships Held
During the Past 5 Years
|
Raymond Kanner
(1953); Trustee, since 2017.
|
Retired; Managing
Director and Chief
Investment Officer,
IBM Retirement Funds
(2007-2016).
|
168
|
Advisory Board
Member, Penso
Advisors, LLC (2020-
present); Advisory Board
Member, Los Angeles
Capital (2018-present);
Advisory Board
Member, State Street
Global Advisors Total
Portfolio Solutions
(2017-present); Acting
Executive Director,
Committee on
Investment of Employee
Benefit Assets (CIEBA)
(2016-2017); Advisory
Board Member,
Betterment for Business
(robo advisor) (2016-
2017); Advisory Board
Member, BlueStar
Indexes (index creator)
(2013-2017); Director,
Emerging Markets
Growth Fund (registered
investment company)
(1997-2016); Member,
Russell Index Client
Advisory Board (2001-
2015).
|
Thomas P. Lemke
(1954); Trustee, since 2014.
|
Retired since 2013.
|
168
|
(1) Independent Trustee
of Advisors' Inner Circle
III fund platform,
consisting of the
following: (i) the
Advisors' Inner Circle
Fund III, (ii) the Gallery
Trust, (iii) the Schroder
Series Trust, (iv) the
Delaware Wilshire
Private Markets Fund
(since 2020), (v) Chiron
Capital Allocation Fund
Ltd., and (vi) formerly
the Winton Diversified
Opportunities Fund
(2014-2018); and (2)
Independent Trustee of
the Symmetry Panoramic
Trust (since 2018).
|
Lawrence R. Maffia
(1950); Trustee, since 2014.
|
Retired; Director and
President, ICI Mutual
Insurance Company
(2006-2013).
|
168
|
Director, ICI Mutual
Insurance Company
(1999-2013).
|
Name (Year of Birth; Term of Office,
and Length of Time Served)(1)
|
Principal Occupation(s)
During Past 5 Years
|
Number of Funds
in Fund Complex
Overseen by
Trustee(1)
|
Other Trusteeships/
Directorships Held
During the Past 5 Years
|
Mary E. Martinez
(1960); Vice Chair since 2021;
Trustee, since 2013.
|
Associate, Special
Properties, a Christie's
International Real
Estate Affiliate (2010-
present); Managing
Director, Bank of
America (asset
management) (2007-
2008); Chief Operating
Officer, U.S. Trust
Asset Management,
U.S. Trust Company
(asset management)
(2003-2007);
President, Excelsior
Funds (registered
investment companies)
(2004-2005).
|
168
|
None.
|
Marilyn McCoy
(1948); Trustee, since 1999.
|
Vice President of
Administration and
Planning, Northwestern
University (1985-
present).
|
168
|
None.
|
Dr. Robert A. Oden, Jr.
(1946); Trustee, since 1997.
|
Retired; President,
Carleton College
(2002-2010);
President, Kenyon
College (1995-2002).
|
168
|
Trustee, The Coldwater
Conservation Fund;
Trustee, American
Museum of Fly Fishing
(2013-present); Trustee
and Vice Chair, Trout
Unlimited (2017-2021);
Trustee, Dartmouth-
Hitchcock Medical
Center (2011-2020).
|
Marian U. Pardo
(1946); Trustee, since 2013.
|
Managing Director and
Founder, Virtual
Capital Management
LLC (investment
consulting) (2007-
present); Managing
Director, Credit Suisse
Asset Management
(portfolio manager)
(2003-2006).
|
168
|
Board Chair and
Member, Board of
Governors, Columbus
Citizens Foundation
(not-for-profit
supporting philanthropic
and cultural programs)
(2006-present).
|
Name (Year of Birth; Term of Office,
and Length of Time Served)(1)
|
Principal Occupation(s)
During Past 5 Years
|
Number of Funds
in Fund Complex
Overseen by
Trustee(1)
|
Other Trusteeships/
Directorships Held
During the Past 5 Years
|
Emily A. Youssouf
(1951); Trustee, since 2014.
|
Adjunct Professor
(2011-present) and
Clinical Professor
(2009-2011), NYU
Schack Institute of Real
Estate; Board Member
and Member of the
Audit Committee
(2013-present), Chair
of Finance Committee
(2019-present),
Member of Related
Parties Committee
(2013-2018) and
Member of the
Enterprise Risk
Committee (2015-
2018), PennyMac
Financial Services,
Inc.; Board Member
(2005-2018), Chair of
Capital Committee
(2006-2016), Chair of
Audit Committee
(2005-2018), Member
of Finance Committee
(2005-2018) and Chair
of IT Committee
(2016-2018), NYC
Health and Hospitals
Corporation.
|
168
|
Trustee, NYC School
Construction Authority
(2009-present); Board
Member, NYS Job
Development Authority
(2008-present); Trustee
and Chair of the Audit
Committee of the Transit
Center Foundation
(2015-2019).
|
Interested Trustees
|
|||
Robert F. Deutsch(3)
(1957); Trustee, since 2014.
|
Retired; Head of ETF
Business for JPMorgan
Asset Management
(2013-2017); Head of
Global Liquidity
Business for JPMorgan
Asset Management
(2003-2013).
|
168
|
Treasurer and Director of
the JUST Capital
Foundation (2017-
present).
|
Nina O. Shenker(3)
(1957); Trustee, since 2022.
|
Vice Chair (2017-
2021), General Counsel
and Managing Director
(2008-2016), Associate
General Counsel and
Managing Director
(2004-2008), J.P.
Morgan Asset & Wealth
Management.
|
168
|
Director and Member of
Legal and Human
Resources
Subcommittees,
American Jewish Joint
Distribution Committee
(2018-present).
|
Name of Committee
|
Members
|
Committee Chair
|
Audit and Valuation Committee
|
Ms. Gallagher
Mr. Finn
Mr. French
Mr. Kanner
|
Ms. Gallagher
|
Compliance Committee
|
Ms. Pardo
Mr. Fisher
Ms. Hughes
Mr. Lemke
|
Ms. Pardo
|
Governance Committee
|
Mr. Finn
Ms. Martinez
Ms. McCoy
Dr. Oden
|
Mr. Finn
|
ETF Committee
|
Mr. Deutsch
Mr. Finn
Mr. Grassi
Mr. Maffia
Ms. Martinez
Ms. Shenker
Ms. Youssouf
|
Mr. Deutsch
|
Equity Committee
|
Mr. Kanner
Mr. French
Mr. Maffia
Ms. Pardo
|
Mr. Kanner
|
Fixed Income Committee
|
Dr. Oden
Mr. Grassi
Ms. Hughes
Ms. Martinez
Ms. Shenker
Ms. Youssouf
|
Dr. Oden
|
Money Market and Alternative
Products Committee
|
Mr. Fisher
Mr. Deutsch
Ms. Gallagher
Mr. Lemke
Ms. McCoy
|
Mr. Fisher
|
Name (Year of Birth),
Positions Held with
the Trusts (Since)
|
Principal Occupations During Past 5 Years
|
Brian S. Shlissel (1964),
President and Principal
Executive Officer (2016)*
|
Managing Director and Chief Administrative Officer for J.P.
Morgan pooled vehicles, J.P. Morgan Investment Management Inc.
since 2014.
|
Timothy J. Clemens (1975),
Treasurer and Principal
Financial Officer (2018)
|
Executive Director, J.P. Morgan Investment Management Inc. since
February 2016. Mr. Clemens has been with J.P. Morgan Investment
Management Inc. since 2013.
|
Gregory S. Samuels (1980),
Secretary (2019)** (formerly
Assistant Secretary 2010-2019)
|
Managing Director and Assistant General Counsel, JPMorgan
Chase. Mr. Samuels has been with JPMorgan Chase since 2010.
|
Stephen M. Ungerman (1953),
Chief Compliance Officer
(2005)
|
Managing Director, JPMorgan Chase & Co.; Mr. Ungerman has
been with JPMorgan Chase & Co. since 2000.
|
Kiesha Astwood-Smith (1973),
Assistant Secretary (2021)**
|
Vice President and Assistant General Counsel, JPMorgan Chase
since June 2021; Senior Director and Counsel, Equitable Financial
Life Insurance Company (formerly, AXA Equitable Life Insurance
Company) from September 2015 through June 2021.
|
Matthew Beck (1988),
Assistant Secretary (2021)***
|
Vice President and Assistant General Counsel, JPMorgan Chase
since May 2021; Senior Legal Counsel, Ultimus Fund Solutions
from May 2018 through May 2021; General Counsel, The
Nottingham Company from April 2014 through May 2018.
|
Name (Year of Birth),
Positions Held with
the Trusts (Since)
|
Principal Occupations During Past 5 Years
|
Elizabeth A. Davin (1964),
Assistant Secretary (2005)***
|
Executive Director and Assistant General Counsel, JPMorgan
Chase. Ms. Davin has been with JPMorgan Chase (formerly Bank
One Corporation) since 2004.
|
Jessica K. Ditullio (1962),
Assistant Secretary (2005)***
|
Executive Director and Assistant General Counsel, JPMorgan
Chase. Ms. Ditullio has been with JPMorgan Chase (formerly Bank
One Corporation) since 1990.
|
Anthony Geron (1971), Assistant
Secretary (2018)**
|
Vice President and Assistant General Counsel, JPMorgan Chase
since September 2018; Lead Director and Counsel, AXA Equitable
Life Insurance Company from 2015 to 2018 and Senior Director and
Counsel, AXA Equitable Life Insurance Company from 2014 to
2015.
|
Carmine Lekstutis (1980),
Assistant Secretary (2011)**
|
Executive Director and Assistant General Counsel, JPMorgan
Chase. Mr. Lekstutis has been with JPMorgan Chase since 2011.
|
Max Vogel (1990),
Assistant Secretary (2021)**
|
Vice President and Assistant General Counsel, JPMorgan Chase
since June 2021; Associate, Proskauer Rose LLP (law firm) from
March 2017 to June 2021; Associate, Stroock & Stroock & Lavan
LLP (law firm) from October 2015 to March 2017.
|
Zachary E. Vonnegut-Gabovitch
(1986),
Assistant Secretary (2017)**
|
Vice President and Assistant General Counsel, JPMorgan Chase
since September 2016.
|
Michael M. D'Ambrosio (1969),
Assistant Treasurer (2012)
|
Managing Director, J.P. Morgan Investment Management Inc. Mr.
D'Ambrosio has been with J.P. Morgan Investment Management
Inc. since 2012.
|
Aleksandr Fleytekh (1972),
Assistant Treasurer (2019)
|
Vice President, J.P. Morgan Investment Management Inc. since
February 2012.
|
Shannon Gaines (1977),
Assistant Treasurer (2018)***
|
Vice President, J.P. Morgan Investment Management Inc. since
January 2014.
|
Jeffrey D. House (1972),
Assistant Treasurer (2017)***
|
Vice President, J.P. Morgan Investment Management Inc. since July
2006.
|
Michael Mannarino (1985),
Assistant Treasurer (2020)
|
Vice President, J.P. Morgan Investment Management Inc. since
2014.
|
Joseph Parascondola (1963),
Assistant Treasurer (2011)*
|
Executive Director, J.P. Morgan Investment Management Inc. Mr.
Parascondola has been with J.P. Morgan Investment Management
Inc. since 2006.
|
Gillian I. Sands (1969), Assistant
Treasurer (2012)
|
Executive Director, J.P. Morgan Investment Management Inc. since
September 2012.
|
Money Market Funds:
|
||
Tier One
|
First $250 billion
|
0.0013%
|
Tier Two
|
Over $250 billion
|
0.0010%
|
Complex Assets1 Funds:
|
||
Tier One
|
First $75 billion
|
0.00425%
|
Tier Two
|
Next $25 billion
|
0.0040%
|
Tier Three
|
Over $100 billion
|
0.0035%
|
Non-Complex Assets Funds:
|
||
Tier One
|
First $75 billion
|
0.0025%
|
Tier Two
|
Next $25 billion
|
0.0020%
|
Tier Three
|
Over $100 billion
|
0.0015%
|
Other Fees:
|
||
Fund of Funds (for a Fund of Funds that invests in J.P.
Morgan Funds only)
|
$17,5002
|
|
Additional Share Classes (this additional class expense
applies after the fifth class)
|
$2,000
|
|
Daily Market-based Net Asset Value Calculation for
Money Market Funds
|
$15,000 per Fund
|
|
Hourly Net Asset Value Calculation for Money Market
Funds
|
$5,000 per Fund
|
|
Floating NAV Support for Money Market Funds
|
$100,000 per Fund
|
Annual Minimums:
(except for certain Funds of Funds which are subject to the fee described
above)
|
|
Money Market Funds
|
$15,000 per Fund
|
All Other Funds
|
$20,000 per Fund
|
Money Market Funds1:
|
||
Tier One
|
First $250 billion
|
0.0013%
|
Tier Two
|
Over $250 billion
|
0.0010%
|
All Funds except Money Market Funds:
|
||
Tier One
|
Up to $100 billion
|
0.00375%
|
Tier Two
|
$100 billion to $175 billion
|
0.0030%
|
Tier Three
|
Over $175 billion
|
0.0020%
|
Other Fees:
|
||
Additional Share Classes (this additional class
expense applies after the tenth class)
|
$2,000 per Class
|
|
Daily Market-based Net Asset Value Calculation
for Money Market Funds
|
$15,000 per Fund
|
|
Hourly Net Asset Value Calculation for Money
Market Funds
|
$5,000 per Fund
|
|
Floating NAV Support for Money Market Funds
|
$85,000 per Fund
|
Annual Minimums:
|
|
Money Market Funds
|
$15,000 per Fund
|
All Other Funds
|
$20,000 per Fund
|
A-1
|
A short-term obligation rated 'A-1' is rated in the highest category by S&P Global
Ratings. The obligor's capacity to meet its financial commitments on the obligation is
strong. Within this category, certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial commitments on these
obligations is extremely strong.
|
A-2
|
A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its financial commitments on the
obligation is satisfactory.
|
A-3
|
A short-term obligation rated 'A-3' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to weaken an
obligor's capacity to meet its financial commitments on the obligation.
|
B
|
A short-term obligation rated 'B' is regarded as vulnerable and has significant
speculative characteristics. The obligor currently has the capacity to meet its financial
commitments; however, it faces major ongoing uncertainties that could lead to the
obligor's inadequate capacity to meet its financial commitments.
|
C
|
A short-term obligation rated 'C' is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the obligor
to meet its financial commitments on the obligation.
|
D
|
A short-term obligation rated 'D' is in default or in breach of an imputed promise. For
non-hybrid capital instruments, the 'D' rating category is used when payments on an
obligation are not made on the date due, unless S&P Global Ratings believes that such
payments will be made within any stated grace period. However, any stated grace period
longer than five business days will be treated as five business days. The 'D' rating also
will be used upon the filing of a bankruptcy petition or the taking of a similar action and
where default on an obligation is a virtual certainty, for example due to automatic stay
provisions. A rating on an obligation is lowered to 'D' if it is subject to a distressed debt
restructuring.
|
F1
|
HIGHEST SHORT-TERM CREDIT QUALITY. Indicates the strongest intrinsic
capacity for timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
|
F2
|
GOOD SHORT-TERM CREDIT QUALITY. Good intrinsic capacity for timely payment
of financial commitments.
|
F3
|
FAIR SHORT-TERM CREDIT QUALITY. The intrinsic capacity for timely payment of
financial commitments is adequate.
|
B
|
SPECULATIVE SHORT-TERM CREDIT QUALITY. Minimal capacity for timely
payment of financial commitments, plus heightened vulnerability to near term adverse
changes in financial and economic conditions.
|
C
|
HIGH SHORT-TERM DEFAULT RISK. Default is a real possibility.
|
RD
|
RESTRICTED DEFAULT. Indicates an entity that has defaulted on one or more of its
financial commitments, although it continues to meet other financial obligations.
Typically applicable to entity ratings only.
|
D
|
DEFAULT. Indicates a broad-based default event for an entity, or the default of a short-
term obligation.
|
P-1
|
Ratings of Prime-1 reflect a superior ability to repay short-term debt obligations.
|
P-2
|
Ratings of Prime-2 reflect a strong ability to repay short-term debt obligations.
|
P-3
|
Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.
|
NP
|
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime
rating categories.
|
R-1 (high)
|
Highest credit quality. The capacity for the payment of short-term financial obligations
as they fall due is exceptionally high. Unlikely to be adversely affected by future events.
|
R-1 (middle)
|
Superior credit quality. The capacity for the payment of short-term financial obligations
as they fall due is very high. Differs from R-1 (high) by a relatively modest degree.
Unlikely to be significantly vulnerable to future events.
|
R-1 (low)
|
Good credit quality. The capacity for the payment of short-term financial obligations as
they fall due is substantial. Overall strength is not as favorable as higher rating
categories. May be vulnerable to future events, but qualifying negative factors are
considered manageable.
|
R-2 (high)
|
Upper end of adequate credit quality. The capacity for the payment of short-term
financial obligations as they fall due is acceptable. May be vulnerable to future events.
|
R-2 (middle)
|
Adequate credit quality. The capacity for the payment of short-term financial
obligations as they fall due is acceptable. May be vulnerable to future events or may be
exposed to other factors that could reduce credit quality.
|
R-2 (low)
|
Lower end of adequate credit quality. The capacity for the payment of short-term
financial obligations as they fall due is acceptable. May be vulnerable to future events.
A number of challenges are present that could affect the issuer's ability to meet such
obligations.
|
R-3
|
Lowest end of adequate credit quality. There is a capacity for the payment of short-term
financial obligations as they fall due. May be vulnerable to future events and the
certainty of meeting such obligations could be impacted by a variety of developments.
|
R-4
|
Speculative credit quality. The capacity for the payment of short-term financial
obligations as they fall due is uncertain.
|
R-5
|
Highly speculative credit quality. There is a high level of uncertainty as to the capacity
to meet short-term financial obligations as they fall due.
|
D
|
When the issuer has filed under any applicable bankruptcy, insolvency or winding up
statute or there is a failure to satisfy an obligation after the exhaustion of grace periods,
a downgrade to D may occur. DBRS Morningstar may also use SD (Selective Default)
in cases where only some securities are impacted, such as the case of a "distressed
exchange."
|
AAA
|
An obligation rated 'AAA' has the highest rating assigned by S&P Global Ratings. The
obligor's capacity to meet its financial commitments on the obligation is extremely
strong.
|
AA
|
An obligation rated 'AA' differs from the highest-rated obligations only to a small
degree. The obligor's capacity to meet its financial commitments on the obligation is
very strong.
|
A
|
An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial commitments on the obligation is
still strong.
|
BBB
|
An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to weaken the obligor's
capacity to meet its financial commitments on the obligation.
|
BB,B,CCC,CC
and C
|
Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant
speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the
highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major exposure to
adverse conditions.
|
BB
|
An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions that could lead to the obligor's inadequate capacity to
meet its financial commitments on the obligation.
|
B
|
An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB',
but the obligor currently has the capacity to meet its financial commitments on the
obligation. Adverse business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitments on the obligation.
|
CCC
|
An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its
financial commitments on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet its financial
commitments on the obligation.
|
CC
|
An obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC' rating
is used when a default has not yet occurred but S&P Global Ratings expects default to
be a virtual certainty, regardless of the anticipated time to default.
|
C
|
An obligation rated 'C' is currently highly vulnerable to nonpayment, and the obligation
is expected to have lower relative seniority or lower ultimate recovery compared with
obligations that are rated higher.
|
D
|
An obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid
capital instruments, the 'D' rating category is used when payments on an obligation are
not made on the date due, unless S&P Global Ratings believes that such payments will
be made within five business days in the absence of a stated grace period or within the
earlier of the stated grace period or 30 calendar days. The 'D' rating also will be used
upon the filing of a bankruptcy petition or the taking of similar action and where default
on an obligation is a virtual certainty, for example due to automatic stay provisions. A
rating on an obligation is lowered to 'D' if it is subject to a distressed debt restructuring.
|
AAA
|
HIGHEST CREDIT QUALITY. 'AAA' ratings denote the lowest expectation of default
risk. They are assigned only in cases of exceptionally strong capacity for payment of
financial commitments. This capacity is highly unlikely to be adversely affected by
foreseeable events.
|
AA
|
VERY HIGH CREDIT QUALITY. 'AA' ratings denote expectations of very low default
risk. They indicate very strong capacity for payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events.
|
A
|
HIGH CREDIT QUALITY. 'A' ratings denote expectations of low default risk. The
capacity for payment of financial commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to adverse business or economic conditions than is the
case for higher ratings.
|
BBB
|
GOOD CREDIT QUALITY. 'BBB' ratings indicate that expectations of default risk are
currently low. The capacity for payment of financial commitments is considered
adequate, but adverse business or economic conditions are more likely to impair this
capacity.
|
BB
|
SPECULATIVE. 'BB' ratings indicate an elevated vulnerability to default risk,
particularly in the event of adverse changes in business or economic conditions over
time; however, business or financial flexibility exists that supports the servicing of
financial commitments.
|
B
|
HIGHLY SPECULATIVE. 'B' ratings indicate that material default risk is present, but a
limited margin of safety remains. Financial commitments are currently being met;
however, capacity for continued payment is vulnerable to deterioration in the business
and economic environment.
|
CCC
|
SUBSTANTIAL CREDIT RISK. Default is a real possibility.
|
CC
|
VERY HIGH LEVELS OF CREDIT RISK. Default of some kind appears probable.
|
C
|
NEAR DEFAULT. A default or default-like process has begun, or the issuer is in
standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired.
Conditions that are indicative of a 'C' category rating for an issuer include:
|
•the issuer has entered into a grace or cure period following non-payment of a
material financial obligation;
•the issuer has entered into a temporary negotiated waiver or standstill agreement
following a payment default on a material financial obligation;
•the formal announcement by the issuer or their agent of a distressed debt exchange;
•a closed financing vehicle where payment capacity is irrevocably impaired such that
it is not expected to pay interest and/or principal in full during the life of the
transaction, but where no payment default is imminent.
|
|
RD
|
RESTRICTED DEFAULT. 'RD' ratings indicate an issuer that in Fitch's opinion has
experienced:
|
•an uncured payment default or distressed debt exchange on a bond, loan or other
material financial obligation, but
•has not entered into bankruptcy filings, administration, receivership, liquidation or
other formal winding-up procedure, and
•has not otherwise ceased operating. This would include:
•the selective payment default on a specific class or currency of debt;
•the uncured expiry of any applicable grace period, cure period or default forbearance
period following a payment default on a bank loan, capital markets security or other
material financial obligation;
•the extension of multiple waivers or forbearance periods upon a payment default on
one or more material financial obligations, either in series or in parallel; ordinary
execution of a distressed debt exchange on one or more material financial
obligations.
|
|
D
|
DEFAULT. 'D' ratings indicate an issuer that in Fitch Ratings' opinion has entered
into bankruptcy filings, administration, receivership, liquidation or other formal
winding-up procedure or that has otherwise ceased business.
|
Aaa
|
Obligations rated Aaa are judged to be of the highest quality, with minimal risk.
|
Aa
|
Obligations rated Aa are judged to be of high quality and are subject to very low credit
risk.
|
A
|
Obligations rated A are judged to be upper-medium-grade and are subject to low credit
risk.
|
Baa
|
Obligations rated Baa are subject to moderate credit risk. They are considered medium-
grade and as such may possess certain speculative characteristics.
|
Ba
|
Obligations rated Ba are judged to have speculative elements and are subject to
substantial credit risk.
|
B
|
Obligations rated B are considered speculative and are subject to high credit risk.
|
Caa
|
Obligations rated Caa are judged to be of poor standing and are subject to very high
credit risk.
|
Ca
|
Obligations rated Ca are highly speculative and are likely in, or very near, default, with
some prospect of recovery in principal and interest.
|
C
|
Obligations rated C are the lowest-rated class of bonds and are typically in default, with
little prospect for recovery of principal or interest.
|
AAA
|
Highest credit quality. The capacity for the payment of financial obligations is
exceptionally high and unlikely to be adversely affected by future events.
|
AA
|
Superior credit quality. The capacity for the payment of financial obligations is
considered high. Credit quality differs from AAA only to a small degree. Unlikely to be
significantly vulnerable to future events.
|
A
|
Good credit quality. The capacity for the payment of financial obligations is substantial,
but of lesser credit quality than AA. May be vulnerable to future events, but qualifying
negative factors are considered manageable.
|
BBB
|
Adequate credit quality. The capacity for the payment of financial obligations is
considered acceptable. May be vulnerable to future events.
|
BB
|
Speculative, non-investment grade credit quality. The capacity for the payment of
financial obligations is uncertain. Vulnerable to future events.
|
B
|
Highly speculative credit quality. There is a high level of uncertainty as to the capacity
to meet financial obligations.
|
CCC/CC/C
|
Very highly speculative credit quality. In danger of defaulting on financial obligations.
There is little difference between these three categories, although CC and C ratings are
normally applied to obligations that are seen as highly likely to default, or subordinated
to obligations rated in the CCC to B range. Obligations in respect of which default has
not technically taken place but is considered inevitable may be rated in the C category.
|
D
|
When the issuer has filed under any applicable bankruptcy, insolvency or winding up
statute or there is a failure to satisfy an obligation after the exhaustion of grace periods,
a downgrade to D may occur. DBRS Morningstar may also use SD (Selective Default)
in cases where only some securities are impacted, such as the case of a "distressed
exchange."
|
AAA
|
An insurer rated 'AAA' has extremely strong financial security characteristics. 'AAA' is
the highest insurer financial strength rating assigned by S&P Global Ratings.
|
AA
|
An insurer rated 'AA' has very strong financial security characteristics, differing only
slightly from those rated higher.
|
A
|
An insurer rated 'A' has strong financial security characteristics, but is somewhat more
likely to be affected by adverse business conditions than are insurers with higher ratings.
|
BBB
|
An insurer rated 'BBB' has good financial security characteristics, but is more likely to
be affected by adverse business conditions than are higher-rated insurers.
|
BB, B, CCC,
and CC
|
An insurer rated 'BB' or lower is regarded as having vulnerable characteristics that may
outweigh its strengths, 'BB' indicates the least degree of vulnerability within the range
and 'CC' the highest.
|
BB
|
An insurer rated 'BB' has marginal financial security characteristics. Positive attributes
exist, but adverse business conditions could lead to insufficient ability to meet financial
commitments.
|
B
|
An insurer rated 'B' has weak financial security characteristics. Adverse business
conditions will likely impair its ability to meet financial commitments.
|
CCC
|
An insurer rated 'CCC' has very weak financial security characteristics, and is
dependent on favorable business conditions to meet financial commitments.
|
CC
|
An insurer rated 'CC' has extremely weak financial security characteristics and is likely
not to meet some of its financial commitments.
|
SD and D
|
An insurer rated 'SD' (selective default) or 'D' is in default on one or more of its
insurance policy obligations.
The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of
similar action if payments on a policy obligation are at risk. A 'D' rating is assigned
when S&P Global Ratings believes that the default will be a general default and that the
obligor will fail to pay substantially all of its obligations in full in accordance with the
policy terms.
An 'SD' rating is assigned when S&P Global Ratings believes that the insurer has
selectively defaulted on a specific class of policies but it will continue to meet its
payment obligations on other classes of obligations. An 'SD' includes the completion of
a distressed debt restructuring. Claim denials due to lack of coverage or other legally
permitted defenses are not considered defaults.
|
AAA
|
EXCEPTIONALLY STRONG. 'AAA' IFS Ratings denote the lowest expectation of
ceased or interrupted payments. They are assigned only in the case of exceptionally
strong capacity to meet policyholder and contract obligations. This capacity is highly
unlikely to be adversely affected by foreseeable events.
|
AA
|
VERY STRONG. 'AA' IFS Ratings denote a very low expectation of ceased or
interrupted payments. They indicate very strong capacity to meet policyholder and
contract obligations. This capacity is not significantly vulnerable to foreseeable events.
|
A
|
STRONG. 'A' IFS Ratings denote a low expectation of ceased or interrupted payments.
They indicate strong capacity to meet policyholder and contract obligations. This
capacity may, nonetheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
|
BBB
|
GOOD. 'BBB' IFS Ratings indicate that there is currently a low expectation of ceased
or interrupted payments. The capacity to meet policyholder and contract obligations on
a timely basis is considered adequate, but adverse changes in circumstances and
economic conditions are more likely to impact this capacity.
|
BB
|
MODERATELY WEAK. 'BB' IFS Ratings indicate that there is an elevated
vulnerability to ceased or interrupted payments, particularly as the result of adverse
economic or market changes over time. However, business or financial alternatives may
be available to allow for policyholder and contract obligations to be met in a timely
manner.
|
B
|
WEAK. 'B' IFS Ratings indicate two possible conditions. If obligations are still being
met on a timely basis, there is significant risk that ceased or interrupted payments could
occur in the future, but a limited margin of safety remains. Capacity for continued
timely payments is contingent upon a sustained, favorable business and economic
environment, and favorable market conditions. Alternatively, a 'B' IFS Rating is
assigned to obligations that have experienced ceased or interrupted payments, but with
the potential for extremely high recoveries. Such obligations would possess a recovery
assessment of 'RR1' (Outstanding).
|
CCC
|
VERY WEAK. 'CCC' IFS Ratings indicate two possible conditions. If obligations are
still being met on a timely basis, there is a real possibility that ceased or interrupted
payments could occur in the future. Capacity for continued timely payments is solely
reliant upon a sustained, favorable business and economic environment, and favorable
market conditions. Alternatively, a 'CCC' IFS Rating is assigned to obligations that have
experienced ceased or interrupted payments, and with the potential for average to
superior recoveries. Such obligations would possess a recovery assessment of 'RR2'
(Superior), 'RR3' (Good), and 'RR4' (Average).
|
CC
|
EXTREMELY WEAK. 'CC' IFS Ratings indicate two possible conditions. If
obligations are still being met on a timely basis, it is probable that ceased or interrupted
payments will occur in the future. Alternatively, a 'CC' IFS Rating is assigned to
obligations that have experienced ceased or interrupted payments, with the potential for
average to below-average recoveries. Such obligations would possess a recovery
assessment of 'RR4' (Average) or 'RR5' (Below Average).
|
C
|
DISTRESSED. 'C' IFS Ratings indicate two possible conditions. If obligations are still
being met on a timely basis, ceased or interrupted payments are imminent. Alternatively,
a 'C' IFS Rating is assigned to obligations that have experienced ceased or interrupted
payments, and with the potential for below average to poor recoveries. Such obligations
would possess a recovery assessment of 'RR5' (Below Average) or 'RR6' (Poor).
|
F1
|
Insurers are viewed as having a strong capacity to meet their near-term obligations.
When an insurer rated in this rating category is designated with a (+) sign, it is viewed
as having a very strong capacity to meet near-term obligations.
|
F2
|
Insurers are viewed as having a good capacity to meet their near-term obligations.
|
F3
|
Insurers are viewed as having an adequate capacity to meet their near-term obligations.
|
B
|
Insurers are viewed as having a weak capacity to meet their near-term obligations.
|
C
|
Insurers are viewed as having a very weak capacity to meet their near-term obligations.
|
RR1
|
OUTSTANDING RECOVERY PROSPECTS GIVEN DEFAULT. 'RR1' rated securities
have characteristics consistent with securities historically recovering 91%-100% of
current principal and related interest.
|
RR2
|
SUPERIOR RECOVERY PROSPECTS GIVEN DEFAULT. 'RR2' rated securities have
characteristics consistent with securities historically recovering 71%-90% of current
principal and related interest.
|
RR3
|
GOOD RECOVERY PROSPECTS GIVEN DEFAULT. 'RR3' rated securities have
characteristics consistent with securities historically recovering 51%-70% of current
principal and related interest.
|
RR4
|
AVERAGE RECOVERY PROSPECTS GIVEN DEFAULT. 'RR4' rated securities have
characteristics consistent with securities historically recovering 31%-50% of current
principal and related interest.
|
RR5
|
BELOW AVERAGE RECOVERY PROSPECTS GIVEN DEFAULT. 'RR5' rated
securities have characteristics consistent with securities historically recovering 11%-
30% of current principal and related interest.
|
RR6
|
POOR RECOVERY PROSPECTS GIVEN DEFAULT. 'RR6' rated securities have
characteristics consistent with securities historically recovering 0%-10% of current
principal and related interest.
|
Aaa
|
Insurance companies rated Aaa are judged to be of the highest quality, subject to the
lowest level of credit risk.
|
Aa
|
Insurance companies rated Aa are judged to be of high quality and are subject to very
low credit risk.
|
A
|
Insurance companies rated A are judged to be upper-medium grade and are subject to
low credit risk.
|
Baa
|
Insurance companies rated Baa are judged to be medium-grade and subject to moderate
credit risk and as such may possess certain speculative characteristics.
|
Ba
|
Insurance companies rated Ba are judged to be speculative and are subject to substantial
credit risk.
|
B
|
Insurance companies rated B are considered speculative and are subject to high credit
risk.
|
Caa
|
Insurance companies rated Caa are judged to be speculative of poor standing and are
subject to very high credit risk.
|
Ca
|
Insurance companies rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
|
C
|
Insurance companies rated C are the lowest rated and are typically in default, with little
prospect for recovery of principal or interest.
|
P-1
|
Ratings of Prime-1 reflect a superior ability to repay short-term debt obligations.
|
P-2
|
Ratings of Prime-2 reflect a strong ability to repay short-term debt obligations.
|
P-3
|
Ratings of Prime-3 reflect an acceptable ability to repay short-term obligations.
|
P-4
|
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime
rating categories.
|
SP-1
|
Strong capacity to pay principal and interest. An issue determined to possess a very
strong capacity to pay debt service is given a plus (+) designation.
|
SP-2
|
Satisfactory capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.
|
SP-3
|
Speculative capacity to pay principal and interest.
|
D
|
'D' is assigned upon failure to pay the note when due, completion of a distressed debt
restructuring, or the filing of a bankruptcy petition or the taking of similar action and
where default on an obligation is a virtual certainty, for example, due to automatic stay
provisions.
|
MIG 1
|
This designation denotes superior credit quality. Excellent protection is afforded by
established cash flows, highly reliable liquidity support or demonstrated broad-based
access to the market for refinancing.
|
MIG 2
|
This designation denotes strong credit quality. Margins of protection are ample,
although not as large as in the preceding group.
|
MIG 3
|
This designation denotes acceptable credit quality. Liquidity and cash-flow protection
may be narrow, and market access for refinancing is likely to be less well-established.
|
SG
|
This designation denotes speculative-grade credit quality. Debt instruments in this
category may lack sufficient margins of protection.
|
VMIG 1
|
This designation denotes superior credit quality. Excellent protection is afforded by the
superior short-term credit strength of the liquidity provider and structural and legal
protections that ensure the timely payment of purchase price upon demand.
|
VMIG 2
|
This designation denotes strong credit quality. Good protection is afforded by the strong
short-term credit strength of the liquidity provider and structural and legal protections
that ensure the timely payment of purchase price upon demand.
|
VMIG 3
|
This designation denotes acceptable credit quality. Adequate protection is afforded by
the satisfactory short-term credit strength of the liquidity provider and structural and
legal protections that ensure the timely payment of purchase price upon demand.
|
SG
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This designation denotes speculative-grade credit quality. Demand features rated in this
category may be supported by a liquidity provider that does not have a sufficiently
strong short-term rating or may lack the structural or legal protections necessary to
ensure the timely payment of purchase price upon demand.
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Pfd-1
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Preferred shares rated Pfd-1 are generally of superior credit quality, and are supported
by entities with strong earnings and balance sheet characteristics. Pfd-1 ratings
generally correspond with issuers with a AAA or AA category reference point1.
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Pfd-2
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Preferred shares rated Pfd-2 are generally of good credit quality. Protection of dividends
and principal is still substantial, but earnings, the balance sheet and coverage ratios are
not as strong as Pfd-1 rated companies. Generally, Pfd-2 ratings correspond with issuers
with an A category or higher reference point.
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Pfd-3
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Preferred shares rated Pfd-3 are generally of adequate credit quality. While protection of
dividends and principal is still considered acceptable, the issuing entity is more
susceptible to adverse changes in financial and economic conditions, and there may be
other adverse conditions present which detract from debt protection. Pfd-3 ratings
generally correspond with issuers with a BBB category or higher reference point.
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Pfd-4
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Preferred shares rated Pfd-4 are generally speculative, where the degree of protection
afforded to dividends and principal is uncertain, particularly during periods of economic
adversity. Issuers with preferred shares rated Pfd-4 generally correspond with issuers
with a BB category or higher reference point.
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Pfd-5
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Preferred shares rated Pfd-5 are generally highly speculative and the ability of the entity
to maintain timely dividend and principal payments in the future is highly uncertain.
Entities with a Pfd-5 rating generally correspond with issuers with a B category or
higher reference point. Preferred shares rated Pfd-5 often have characteristics that, if not
remedied, may lead to default.
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D
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When the issuer has filed under any applicable bankruptcy, insolvency or winding up or
the issuer is in default per the legal documents, a downgrade to D may occur. Because
preferred share dividends are only payable when approved, the non-payment of a
preferred share dividend does not necessarily result in a D. DBRS Morningstar may also
use SD (Selective Default) in cases where only some securities are impacted, such as the
case of a "distressed exchange". See the Default Definition document posted on the
website for more information.
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