H. Federal
Income Taxes — Each Fund
is treated as a separate taxable entity for Federal income tax purposes.
Each Fund's policy is to comply with the provisions of the
Internal Revenue Code (the “Code”) applicable to regulated investment companies
and to distribute to shareholders all of its distributable net
investment income and net realized capital gains on investments. Accordingly, no
provision for Federal income tax is necessary. Management has
reviewed the Funds' tax positions for all open tax years and has determined that
as of December 31, 2022, no liability for Federal income tax is
required in the Funds' financial statements for net unrecognized tax benefits.
However, management’s conclusions may be subject to future review based
on changes in, or the interpretation of, the accounting standards or tax laws
and regulations. Each Fund's Federal tax returns for the prior three
fiscal years, or since inception if shorter, remain subject to examination by
the Internal Revenue Service.
I. Distributions
to Shareholders —
Distributions from net investment income, if any, are generally declared and
paid at least monthly for Equity Premium Income ETF
and Nasdaq Equity Premium Income ETF, at least annually for ActiveBuilders U.S.
Large Cap Equity ETF and Active Growth ETF, and at least
quarterly for Active Value ETF. Net realized capital gains, if any, are
distributed at least annually. The amount of distributions from net investment income and
net realized capital gains is determined in accordance with Federal income tax
regulations, which may differ from GAAP. To the extent these
“book/tax” differences are permanent in nature (i.e., that they result from
other than timing of recognition — “temporary differences”), such amounts are
reclassified within the capital accounts based on their Federal tax basis
treatment.
3. Fees
and Other Transactions with Affiliates
A. Management
Fee—
JPMIM manages the investments of each Fund pursuant to a Management Agreement.
For such services, JPMIM is paid a fee which is accrued
daily and paid no more frequently than monthly based on each Fund's respective
average daily net assets at the following rate:
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ActiveBuilders
U.S. Large Cap Equity ETF |
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Equity
Premium Income ETF |
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Nasdaq
Equity Premium Income ETF |
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Under each Management
Agreement, JPMIM is responsible for substantially all expenses of each Fund,
(including expenses of the Trust relating to each Fund), except
for the management fees, payments under the Funds' 12b-1 plan (if any), interest
expenses, dividend and interest expenses related to short
sales, taxes, acquired fund fees and expenses (other than fees for funds advised
by the Adviser and/or its affiliates), costs of holding shareholder meetings,
and litigation and potential litigation and other extraordinary expenses not
incurred in the ordinary course of each Fund’s business.
Additionally, each Fund is responsible for its non-operating expenses, including
brokerage commissions and fees and expenses associated with each Fund’s
securities lending program, if applicable. For the avoidance of doubt, the
Adviser’s payment of such expenses may be accomplished through a Fund’s
payment of such expenses and a corresponding reduction in the fee payable to the
Adviser, provided, however, that if the amount of expenses paid by a
Fund exceeds the fee payable to the Adviser, the Adviser will reimburse that
Fund for such amount.
B. Administration
Fee —
JPMIM provides administration services to the Funds. Pursuant to each Management
Agreement, JPMIM is compensated as described in Note
3.A.
JPMorgan Chase Bank,
N.A. (“JPMCB”), a wholly-owned subsidiary of JPMorgan, serves as the Funds'
sub-administrator (the “Sub-administrator”). For its services as
Sub-administrator, JPMCB receives a portion of the management fees payable to
JPMIM.
C. Custodian,
Accounting and Transfer Agent Fees—
JPMCB provides custody, accounting and transfer agency services to the Funds.
For performing these
services, JPMIM pays JPMCB transaction and asset-based fees that vary according
to the number of transactions and positions, plus out-of-pocket
expenses.
Additionally,
Authorized Participants generally pay transaction fees associated with the
creation and redemption of Fund shares. These fees are paid to JPMIM to offset
certain custodian charges that are covered by each Management
Agreement.
Interest income
earned on cash balances at the custodian, if any, is included in Interest income
from affiliates on the Statements of Operations.
Interest expense paid
to the custodian related to cash overdrafts, if any, is included in Interest
expense to affiliates on the Statements of Operations.
