Annual Report
J.P. Morgan Exchange-Traded Funds
February 28, 2022
Ticker | Listing Exchange | |||
JPMorgan BetaBuilders MSCI US REIT ETF | BBRE | Cboe BZX Exchange, Inc. |
Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, any bank and are not insured or guaranteed by the FDIC, the Federal Reserve Board or any other government agency. You could lose money if you sell when the Fund’s share price is lower than when you invested.
Past performance is no guarantee of future performance. The general market views expressed in this report are opinions based on market and other conditions through the end of the reporting period and are subject to change without notice. These views are not intended to predict the future performance of the Fund or the securities markets.
Prospective investors should refer to the Fund’s prospectus for a discussion of the Fund’s investment objectives, strategies and risks. Call J.P. Morgan Exchange-Traded Funds at (844) 457-6383 for a prospectus containing more complete information about the Fund, including management fees and other expenses. Please read it carefully before investing.
Shares are bought and sold throughout the day on an exchange at market price (not at net asset value) through a brokerage account, and are not individually subscribed and redeemed from the Fund. Shares may only be subscribed and redeemed directly from the Fund by Authorized Participants, in large creation/redemption units. Brokerage commissions will reduce returns.
April 12, 2022 (Unaudited)
Dear Shareholder,
While global financial markets largely generated positive returns during the first half of 2021, accelerating inflation, periodic resurgences in the pandemic and the military conflict in Ukraine weighed on financial markets and led to mixed returns for the twelve-month fiscal period ended February 28, 2022. Overall, equities markets outperformed fixed-income markets and U.S. equities outperformed other developed markets and emerging markets equities during the period.
“The trajectory of the pandemic, the timing and magnitude of Fed interest rate activity and the duration and scope of the conflict in Ukraine are likely to remain the fundamental drivers of the global economy and financial market performance in the year ahead.” —Brian S. Shlissel |
The U.S. Federal Reserve (the “Fed”) continued to hold interest rates at historically low levels throughout the period. However, in the face of rising inflation and better-than-expected job growth, the Fed began to adopt a less accommodative tone in the second half of the period, and in November 2021, the central bank began to taper off monthly asset purchases under its quantitative easing program. While the emergence of the Omicron variant of COVID-19 toward the end of 2021 led to the reimposition of social restrictions — particularly in the U.K. and Europe — and disrupted return-to-office plans in the U.S., economic data indicated that consumer spending and job growth remained strong through the end of 2021 and into 2022.
In the year ahead, economists generally expect the U.S. economy to continue to expand, driven by surging household wealth and hope of progress in managing the pandemic. However, inflationary pressures from rising demand and tight labor markets led the Fed in to raise interest rates in March 2022 —the first rate increase since December 2018. The central bank also signaled its intent to raise rates six more times this year. The conflict in Ukraine and the multilateral sanctions imposed on Russia have helped raise prices for petroleum, natural gas and a range of other commodities. The trajectory of the pandemic, the timing and magnitude of Fed interest rate activity and the duration and scope of the conflict in Ukraine are likely to remain the fundamental drivers of the global economy and financial market performance in the year ahead.
Regardless of the economic environment, our diversified platform of innovative investment solutions is designed to equip investors with the tools to build durable portfolios that can serve to meet their financial goals.
Sincerely,
Brian S. Shlissel
President — J.P. Morgan Funds
J.P Morgan Asset Management
1-844-4JPM-ETF or jpmorgan.com/etfs for more information
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 1 |
JPMorgan BetaBuilders MSCI US REIT ETF
TWELVE MONTHS ENDED FEBRUARY 28, 2022 (Unaudited)
REPORTING PERIOD RETURN: | ||||
Net Asset Value* | 23.55% | |||
Market Price** | 23.45% | |||
MSCI US REIT Custom Capped Index | 23.75% | |||
MSCI US REIT Index | 23.75% | |||
Net Assets as of 2/28/2022 | $ | 1,357,276,384 | ||
Ticker | BBRE |
INVESTMENT OBJECTIVE***
The JPMorgan BetaBuilders MSCI US REIT ETF (the “Fund”) seeks investment results that closely correspond, before fees and expenses, to the performance of the MSCI US REIT Custom Capped Index (the “Underlying Index”).
INVESTMENT APPROACH
The Underlying Index is a free-float adjusted market-cap weighted index designed to measure the performance of U.S. equity real estate investment trusts (REIT) securities. Using a passive investment approach, the Fund attempts to replicate the Underlying Index as closely as possible and invests at least 80% of its assets in securities included in the Underlying Index. The Underlying Index includes a capping methodology, which is designed to prevent the weight of any single issuer, and the aggregate weight of issuers representing over 5% of the Underlying Index, from exceeding a maximum of 25% of the Underlying Index.
HOW DID THE MARKET PERFORM?
Overall, the real estate sector was a leading performer within the U.S. equity market as the economy largely continued to rebound from 2020 pandemic lows. Low interest rates, federal stimulus and recovery spending, record corporate earnings and strong consumer spending all contributed to the 2021 equity market rally.
Within large capitalization stocks, real estate was the second-best performing sector for the period, after the energy sector, as a boom in U.S. consumer wealth and demand for new homes, second homes and rental properties soared. Home prices in the U.S. rose an estimated 18.8% in 2021, according to the S&P/Case-Shiller U.S. National Home Price Index. The self-storage, industrial and housing sectors outperformed other real estate sectors during the twelve month ended February 28, 2022. The hotels sector largely generated negative returns for the period, while health care sector had the smallest positive returns.
The spread of the Delta variant of COVID-19 in mid-2021 weighed on the tourism and hospitality stocks just as the global reopening of economies allowed a nascent rebound in consumer travel. The emergence of the Omicron variant in late
2021 put additional pressure on the hospitality and office sectors as return-to-office plans were interrupted by rising infection rates. For the twelve months ended February 28, 2022, the S&P 500 Index returned 16.39% and the MSCI US REIT Index returned 23.75%
HOW DID THE FUND PERFORM?
For the twelve months ended February 28, 2022, the Fund performed in line with both the Underlying Index and the MSCI US REIT Index, before considering the effects of operating expenses, fees and tax management of the Fund’s portfolio.
The Fund’s and the Underlying Index’s exposures to the specialized and residential REIT sectors were leading contributors to absolute performance. The Fund’s and the Underlying Index’s exposure to the security & alarm services sector was the sole detractor from absolute performance.
HOW WAS THE FUND POSITIONED?
At the end of the reporting period, the Fund’s and the Underlying Index’s largest allocations were to the apartments and diversifed REIT sectors and the smallest allocations were to the hotels and regional malls REIT sectors.
TOP TEN EQUITY HOLDINGS
OF THE PORTFOLIO AS OF FEBRUARY 28, 2022 |
PERCENT
OF TOTAL INVESTMENTS |
|||||||
1. | Prologis, Inc. | 9.0 | % | |||||
2. | Equinix, Inc. | 5.3 | ||||||
3. | Public Storage | 4.7 | ||||||
4. | Simon Property Group, Inc. | 3.8 | ||||||
5. | Digital Realty Trust, Inc. | 3.2 | ||||||
6. | Realty Income Corp. | 3.1 | ||||||
7. | Welltower, Inc. | 3.0 | ||||||
8. | AvalonBay Communities, Inc. | 2.8 | ||||||
9. | Equity Residential | 2.5 | ||||||
10. | Alexandria Real Estate Equities, Inc. | 2.3 |
2 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
PORTFOLIO
COMPOSITION BY SECTOR |
PERCENT
OF TOTAL INVESTMENTS |
|||
Apartments | 25.1 | % | ||
Diversified | 17.6 | |||
Industrial | 13.3 | |||
Storage | 10.1 | |||
Health Care | 9.9 | |||
Office | 9.2 | |||
Shopping Centers | 4.9 | |||
Regional Malls | 4.2 | |||
Hotels | 3.9 | |||
Short-Term Investments | 1.8 |
* | The return shown is based on net asset value and may differ from the return shown in the financial highlights, which reflects adjustments made to the net asset value in accordance with accounting principles generally accepted in the United States of America. The net asset value was $99.98 as of February 28, 2022. |
** | Market price return was calculated assuming an initial investment made at the market price at the beginning of the reporting period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. The price used to calculate the market price return was the closing price on the Cboe BZX Exchange, Inc. As of February 28, 2022, the closing price was $100.02. |
*** | The adviser seeks to achieve the Fund’s objective. There can be no guarantee it will be achieved. |
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 3 |
JPMorgan BetaBuilders MSCI US REIT ETF
FUND COMMENTARY
TWELVE MONTHS ENDED FEBRUARY 28, 2022 (Unaudited) (continued)
AVERAGE ANNUAL TOTAL RETURNS AS OF FEBRUARY 28, 2022 (Unaudited) |
||||||||||||
INCEPTION DATE | 1 YEAR | SINCE INCEPTION | ||||||||||
JPMorgan BetaBuilders MSCI US REIT ETF |
||||||||||||
Net Asset Value |
June 15, 2018 | 23.55% | 10.62% | |||||||||
Market Price |
23.45% | 10.63% |
LIFE OF FUND PERFORMANCE (6/15/18 TO 2/28/22)
The performance quoted is past performance and is not a guarantee of future results. Exchange-traded funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For up-to-date, month-end performance information please call 1-844-457-6383.
Fund commenced operations on June 15, 2018.
The graph illustrates comparative performance for $10,000 invested in shares of the JPMorgan BetaBuilders MSCI US REIT ETF and the MSCI US REIT Custom Capped Index from June 15, 2018 to February 28, 2022. The performance of the Fund reflects the deduction of Fund expenses and assumes reinvestment of all dividends and capital gain distributions, if any. The performance of the MSCI US REIT Custom Capped Index does not reflect the deduction of expenses associated with an exchange-traded fund and has been adjusted to reflect reinvestment of all dividends and capital gain distributions of the securities included in the respective Index, if applicable.
The MSCI US REIT Custom Capped Index is designed to measure the performance of the US equity REIT market across all market capitalizations. It starts with the universe and weightings of stocks in the MSCI US REIT Index and applies certain investment limits designed to prevent the weight of any single issuer, and the aggregate weight of issuers representing over 5% of the MSCI US REIT Custom Capped Index, from exceeding a maximum of 25% of the MSCI US REIT Custom Capped Index.
For periods presented prior to the adoption of a unitary fee structure, Fund performance reflects the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower. Also, performance shown in this section does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on gains resulting from redemption or sale of Fund shares.
The returns shown are based on net asset values calculated for shareholder transactions and may differ from the returns shown in the financial highlights, which reflect adjustments made to the net asset values in accordance with accounting principles generally accepted in the United States of America.
4 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
JPMorgan BetaBuilders MSCI US REIT ETF
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF FEBRUARY 28, 2022
INVESTMENTS | SHARES | VALUE($) | ||||||
Common Stocks — 99.8% |
| |||||||
Apartments — 25.5% |
| |||||||
Agree Realty Corp., REIT (a) |
80,282 | 5,150,090 | ||||||
American Campus Communities, Inc., REIT |
160,105 | 8,615,250 | ||||||
American Homes 4 Rent, Class A, REIT |
345,628 | 13,137,320 | ||||||
Apartment Income REIT Corp., REIT |
180,611 | 9,321,334 | ||||||
Apartment Investment and Management Co., Class A, REIT* |
175,146 | 1,250,542 | ||||||
AvalonBay Communities, Inc., REIT |
160,784 | 38,361,455 | ||||||
Camden Property Trust, REIT |
117,602 | 19,417,266 | ||||||
Centerspace, REIT |
16,439 | 1,545,102 | ||||||
Equity LifeStyle Properties, Inc., REIT |
200,930 | 14,993,397 | ||||||
Equity Residential, REIT |
409,904 | 34,964,811 | ||||||
Essential Properties Realty Trust, Inc., REIT |
139,866 | 3,535,813 | ||||||
Essex Property Trust, Inc., REIT |
74,885 | 23,751,275 | ||||||
Four Corners Property Trust, Inc., REIT |
88,996 | 2,347,715 | ||||||
Getty Realty Corp., REIT |
44,334 | 1,221,402 | ||||||
Independence Realty Trust, Inc., REIT |
120,929 | 3,055,876 | ||||||
Invitation Homes, Inc., REIT |
686,638 | 25,954,916 | ||||||
Mid-America Apartment Communities, Inc., REIT |
132,473 | 27,105,301 | ||||||
National Retail Properties, Inc., REIT |
202,063 | 8,609,904 | ||||||
NexPoint Residential Trust, Inc., REIT |
26,153 | 2,222,220 | ||||||
Realty Income Corp., REIT |
651,073 | 43,029,415 | ||||||
Spirit Realty Capital, Inc., REIT |
141,892 | 6,579,532 | ||||||
STORE Capital Corp., REIT |
282,357 | 8,674,007 | ||||||
Sun Communities, Inc., REIT |
133,419 | 24,148,839 | ||||||
UDR, Inc., REIT (a) |
355,744 | 19,519,673 | ||||||
|
|
|||||||
346,512,455 | ||||||||
|
|
|||||||
Diversified — 17.8% |
| |||||||
Alexander & Baldwin, Inc., REIT |
83,440 | 1,871,559 | ||||||
American Assets Trust, Inc., REIT |
59,138 | 2,162,085 | ||||||
Armada Hoffler Properties, Inc., REIT |
70,777 | 1,039,006 | ||||||
Broadstone Net Lease, Inc., REIT |
185,539 | 4,018,775 | ||||||
CorePoint Lodging, Inc., REIT* |
47,061 | 751,564 | ||||||
CyrusOne, Inc., REIT |
147,018 | 13,283,076 | ||||||
Digital Realty Trust, Inc., REIT |
326,527 | 44,055,023 | ||||||
DigitalBridge Group, Inc., REIT* (a) |
590,798 | 4,283,286 | ||||||
Duke Realty Corp., REIT |
438,193 | 23,224,229 | ||||||
EPR Properties, REIT (a) |
86,085 | 4,287,033 | ||||||
Equinix, Inc., REIT |
103,592 | 73,522,350 | ||||||
Gaming and Leisure Properties, Inc., REIT |
260,520 | 11,830,213 | ||||||
Gladstone Commercial Corp., REIT |
42,879 | 908,606 | ||||||
Gladstone Land Corp., REIT |
37,389 | 1,117,557 | ||||||
Global Net Lease, Inc., REIT |
119,221 | 1,694,130 | ||||||
iStar, Inc., REIT (a) |
79,944 | 2,008,193 |
INVESTMENTS | SHARES | VALUE($) | ||||||
Diversified — continued |
| |||||||
LXP Industrial Trust, REIT |
325,409 | 5,030,823 | ||||||
Necessity Retail REIT, Inc. (The), REIT |
142,093 | 1,000,335 | ||||||
One Liberty Properties, Inc., REIT |
19,262 | 559,754 | ||||||
PS Business Parks, Inc., REIT |
23,767 | 3,785,846 | ||||||
Safehold, Inc., REIT (a) |
19,521 | 1,197,809 | ||||||
UMH Properties, Inc., REIT |
56,390 | 1,300,353 | ||||||
VICI Properties, Inc., REIT (a) |
723,634 | 20,232,807 | ||||||
Washington, REIT |
97,391 | 2,275,054 | ||||||
WP Carey, Inc., REIT |
214,324 | 16,588,678 | ||||||
|
|
|||||||
242,028,144 | ||||||||
|
|
|||||||
Health Care — 10.1% |
| |||||||
CareTrust REIT, Inc., REIT |
111,630 | 1,953,525 | ||||||
Community Healthcare Trust, Inc., REIT |
27,316 | 1,139,077 | ||||||
Diversified Trust, REIT Healthcare |
274,993 | 791,980 | ||||||
Global Medical REIT, Inc., REIT |
70,190 | 1,101,983 | ||||||
Healthcare Realty Trust, Inc., REIT |
169,745 | 4,426,950 | ||||||
Healthcare Trust of America, Inc., Class A, REIT |
254,087 | 7,467,617 | ||||||
Healthpeak Properties, Inc., REIT |
620,247 | 19,264,872 | ||||||
LTC Properties, Inc., REIT |
45,316 | 1,533,040 | ||||||
Medical Properties Trust, Inc., REIT |
686,099 | 13,955,254 | ||||||
National Health Investors, Inc., REIT |
50,126 | 2,672,217 | ||||||
Omega Healthcare Investors, Inc., REIT |
274,967 | 7,745,820 | ||||||
Physicians Realty Trust, REIT |
253,451 | 4,121,113 | ||||||
Sabra Health Care REIT, Inc., REIT |
263,127 | 3,533,796 | ||||||
Universal Health Realty Income Trust, REIT |
15,865 | 906,050 | ||||||
Ventas, Inc., REIT |
459,273 | 24,800,742 | ||||||
Welltower, Inc., REIT |
500,822 | 41,713,464 | ||||||
|
|
|||||||
137,127,500 | ||||||||
|
|
|||||||
Hotels — 4.0% |
| |||||||
Apple Hospitality REIT, Inc., REIT |
249,589 | 4,415,229 | ||||||
Chatham Lodging Trust, REIT* |
56,122 | 771,678 | ||||||
DiamondRock Hospitality Co., REIT* |
242,341 | 2,314,357 | ||||||
Host Hotels & Resorts, Inc., REIT* |
821,545 | 15,009,627 | ||||||
MGM Growth Properties LLC, Class A, REIT |
180,247 | 6,825,954 | ||||||
Park Hotels & Resorts, Inc., REIT* |
272,088 | 5,126,138 | ||||||
Pebblebrook Hotel Trust, REIT |
151,177 | 3,402,994 | ||||||
RLJ Lodging Trust, REIT |
191,660 | 2,681,323 | ||||||
Ryman Hospitality Properties, Inc., REIT* |
60,185 | 5,302,900 | ||||||
Service Properties Trust, REIT |
189,944 | 1,639,217 | ||||||
Summit Hotel Properties, Inc., REIT* |
122,465 | 1,211,179 | ||||||
Sunstone Hotel Investors, Inc., REIT* |
252,350 | 2,669,863 | ||||||
Xenia Hotels & Resorts, Inc., REIT* |
131,405 | 2,436,249 | ||||||
|
|
|||||||
53,806,708 | ||||||||
|
|
SEE NOTES TO FINANCIAL STATEMENTS.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 5 |
JPMorgan BetaBuilders MSCI US REIT ETF
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF FEBRUARY 28, 2022 (continued)
INVESTMENTS | SHARES | VALUE($) | ||||||
Common Stocks — continued |
| |||||||
Industrial — 13.5% |
| |||||||
Americold Realty Trust, REIT |
306,945 | 8,201,570 | ||||||
EastGroup Properties, Inc., REIT |
46,817 | 8,930,811 | ||||||
First Industrial Realty Trust, Inc., REIT |
149,909 | 8,631,760 | ||||||
Industrial Logistics Properties Trust, REIT |
75,239 | 1,683,097 | ||||||
Innovative Industrial Properties, Inc., REIT |
27,522 | 5,186,796 | ||||||
Plymouth Industrial REIT, Inc., REIT |
37,814 | 986,189 | ||||||
Prologis, Inc., REIT |
850,632 | 124,064,677 | ||||||
Rexford Industrial Realty, Inc., REIT |
174,296 | 12,223,379 | ||||||
STAG Industrial, Inc., REIT |
201,369 | 7,845,336 | ||||||
Terreno Realty Corp., REIT |
86,101 | 5,922,888 | ||||||
|
|
|||||||
183,676,503 | ||||||||
|
|
|||||||
Office — 9.3% |
| |||||||
Alexandria Real Estate Equities, Inc., REIT |
169,380 | 32,080,572 | ||||||
Boston Properties, Inc., REIT |
170,754 | 20,884,922 | ||||||
Brandywine Realty Trust, REIT |
196,880 | 2,624,410 | ||||||
City Office REIT, Inc., REIT |
50,121 | 863,084 | ||||||
Corporate Office Properties Trust, REIT |
129,237 | 3,387,302 | ||||||
Cousins Properties, Inc., REIT |
183,992 | 7,107,611 | ||||||
Douglas Emmett, Inc., REIT |
201,903 | 6,400,325 | ||||||
Easterly Government Properties, Inc., REIT |
99,124 | 2,063,762 | ||||||
Empire State Realty Trust, Inc., Class A, REIT |
168,661 | 1,595,533 | ||||||
Equity Commonwealth, REIT* |
139,116 | 3,696,312 | ||||||
Franklin Street Properties Corp., REIT |
115,449 | 667,295 | ||||||
Highwoods Properties, Inc., REIT |
120,105 | 5,236,578 | ||||||
Hudson Pacific Properties, Inc., REIT |
175,439 | 4,631,590 | ||||||
JBG SMITH Properties, REIT |
134,344 | 3,584,298 | ||||||
Kilroy Realty Corp., REIT |
120,600 | 8,637,372 | ||||||
Office Properties Income Trust, REIT |
55,704 | 1,395,385 | ||||||
Orion Office REIT, Inc., REIT* |
65,151 | 1,109,521 | ||||||
Paramount Group, Inc., REIT |
201,544 | 2,255,277 | ||||||
Piedmont Office Realty Trust, Inc., Class A, REIT |
142,829 | 2,433,806 | ||||||
SL Green Realty Corp., REIT (a) |
76,786 | 6,106,023 | ||||||
Veris Residential, Inc., REIT* |
83,717 | 1,414,817 | ||||||
Vornado Realty Trust, REIT |
187,468 | 8,113,615 | ||||||
|
|
|||||||
126,289,410 | ||||||||
|
|
|||||||
Regional Malls — 4.3% |
| |||||||
Macerich Co. (The), REIT (a) |
245,127 | 3,750,443 | ||||||
Simon Property Group, Inc., REIT |
378,099 | 52,011,299 | ||||||
Tanger Factory Outlet Centers, Inc., REIT (a) |
119,652 | 1,995,795 | ||||||
|
|
|||||||
57,757,537 | ||||||||
|
|
INVESTMENTS | SHARES | VALUE($) | ||||||
Shopping Centers — 5.0% |
| |||||||
Acadia Realty Trust, REIT |
101,785 | 2,182,270 | ||||||
Alexander’s, Inc., REIT |
2,640 | 669,029 | ||||||
Brixmor Property Group, Inc., REIT |
341,715 | 8,583,881 | ||||||
Federal Realty Investment Trust, REIT |
80,563 | 9,472,598 | ||||||
Kimco Realty Corp., REIT |
709,247 | 16,688,582 | ||||||
Kite Realty Group Trust, REIT |
251,997 | 5,526,294 | ||||||
NETSTREIT Corp., REIT |
45,590 | 1,009,363 | ||||||
Phillips Edison & Co., Inc., REIT |
22,568 | 729,398 | ||||||
Regency Centers Corp., REIT |
177,309 | 11,682,890 | ||||||
Retail Opportunity Investments Corp., REIT |
139,715 | 2,537,224 | ||||||
RPT Realty, REIT |
96,968 | 1,255,736 | ||||||
Saul Centers, Inc., REIT |
16,365 | 753,281 | ||||||
Seritage Growth Properties, Class A, REIT* (a) |
45,187 | 460,455 | ||||||
SITE Centers Corp., REIT |
194,417 | 3,023,184 | ||||||
Urban Edge Properties, REIT |
134,781 | 2,455,710 | ||||||
Urstadt Biddle Properties, Inc., Class A, REIT |
34,603 | 651,574 | ||||||
|
|
|||||||
67,681,469 | ||||||||
|
|
|||||||
Storage — 10.3% |
| |||||||
CubeSmart, REIT |
251,745 | 12,136,626 | ||||||
Extra Space Storage, Inc., REIT |
154,042 | 28,983,002 | ||||||
Iron Mountain, Inc., REIT |
333,163 | 16,384,956 | ||||||
Life Storage, Inc., REIT |
94,364 | 11,945,539 | ||||||
National Storage Affiliates Trust, REIT |
97,365 | 5,673,459 | ||||||
Public Storage, REIT |
181,594 | 64,469,502 | ||||||
|
|
|||||||
139,593,084 | ||||||||
|
|
|||||||
Total
Common Stocks |
|
1,354,472,810 | ||||||
|
|
|||||||
Short-Term Investments — 1.8% |
| |||||||
Investment Companies — 0.8% |
||||||||
JPMorgan
U.S. Government Money Market Fund Class IM Shares,
0.03% (b) (c) |
11,322,728 | 11,322,728 | ||||||
|
|
|||||||
Investment of Cash Collateral From Securities Loaned — 1.0% |
| |||||||
JPMorgan Securities Lending Money Market Fund Agency SL Class Shares, 0.10% (b) (c) |
10,998,598 | 10,994,199 | ||||||
JPMorgan U.S. Government Money Market Fund Class IM Shares, 0.03% (b) (c) |
2,282,053 | 2,282,053 | ||||||
|
|
|||||||
Total
Investment of Cash Collateral From Securities Loaned |
|
13,276,252 | ||||||
|
|
|||||||
Total
Short-Term Investments |
|
24,598,980 | ||||||
|
|
|||||||
Total
Investments — 101.6% |
|
1,379,071,790 | ||||||
Liabilities
in Excess of |
|
(21,795,406 | ) | |||||
|
|
|||||||
NET ASSETS — 100.0% |
|
1,357,276,384 | ||||||
|
|
Percentages indicated are based on net assets.
SEE NOTES TO FINANCIAL STATEMENTS.
6 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
Abbreviations
REIT |
Real Estate Investment Trust | |
(a) |
The security or a portion of this security is on loan at February 28, 2022. The total value of securities on loan at February 28, 2022 is $12,045,404. | |
(b) |
Investment in an affiliated fund, which is registered under the Investment Company Act of 1940, as amended, and is advised by J.P. Morgan Investment Management Inc. | |
(c) |
The rate shown is the current yield as of February 28, 2022. | |
* |
Non-income producing security. |
Futures contracts outstanding as of February 28, 2022: | ||||||||||||||||||||
DESCRIPTION | NUMBER OF CONTRACTS |
EXPIRATION DATE |
TRADING CURRENCY |
NOTIONAL AMOUNT($) |
VALUE
AND UNREALIZED APPRECIATION (DEPRECIATION)($) |
|||||||||||||||
Long Contracts |
| |||||||||||||||||||
DJ US Real Estate Index |
75 | 03/2022 | USD | 2,964,000 | (16,373 | ) | ||||||||||||||
|
|
Abbreviations
USD |
United States Dollar |
SEE NOTES TO FINANCIAL STATEMENTS.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 7 |
STATEMENT OF ASSETS AND LIABILITIES
AS OF FEBRUARY 28, 2022
JPMorgan BetaBuilders MSCI US REIT ETF |
||||
ASSETS: |
| |||
Investments in non-affiliates, at value |
$ | 1,354,472,810 | ||
Investments in affiliates, at value |
11,322,728 | |||
Investments of cash collateral received from securities loaned, at value (See Note 2.B.) |
13,276,252 | |||
Deposits at broker for futures contracts |
777,000 | |||
Receivables: |
||||
Investment securities sold |
105,392,800 | |||
Fund shares sold |
22,496,224 | |||
Dividends from non-affiliates |
799,602 | |||
Dividends from affiliates |
8 | |||
Securities lending income (See Note 2.B.) |
2,783 | |||
Other assets |
877 | |||
|
|
|||
Total Assets |
1,508,541,084 | |||
|
|
|||
LIABILITIES: |
| |||
Payables: |
||||
Due to custodian |
14,523 | |||
Investment securities purchased |
35,164,524 | |||
Collateral received on securities loaned (See Note 2.B.) |
13,276,252 | |||
Fund shares redeemed |
102,482,798 | |||
Variation margin on futures contracts |
205,075 | |||
Accrued liabilities: |
||||
Management fees (See Note 3.A.) |
121,528 | |||
|
|
|||
Total Liabilities |
151,264,700 | |||
|
|
|||
Net Assets |
$ | 1,357,276,384 | ||
|
|
|||
NET ASSETS: |
| |||
Paid-in-Capital |
$ | 1,311,032,102 | ||
Total distributable earnings (loss) |
46,244,282 | |||
|
|
|||
Total Net Assets |
$ | 1,357,276,384 | ||
|
|
|||
Outstanding
number of shares |
13,575,000 | |||
|
|
|||
Net asset value, per share |
$ | 99.98 | ||
|
|
|||
Cost of investments in non-affiliates |
$ | 1,302,649,291 | ||
Cost of investments in affiliates |
11,322,728 | |||
Investment securities on loan, at value (See Note 2.B.) |
12,045,404 | |||
Cost of investment of cash collateral (See Note 2.B.) |
13,277,352 |
SEE NOTES TO FINANCIAL STATEMENTS.
8 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 2022
JPMorgan BetaBuilders MSCI US REIT ETF |
||||
INVESTMENT INCOME: |
| |||
Dividend income from non-affiliates |
$ | 27,927,239 | ||
Dividend income from affiliates |
1,842 | |||
Non-cash dividend income from non-affiliates |
1,602,769 | |||
Income from securities lending (net) (See Note 2.B.) |
75,533 | |||
|
|
|||
Total investment income |
29,607,383 | |||
|
|
|||
EXPENSES: |
| |||
Management fees (See Note 3.A.) |
1,565,402 | |||
Interest expense to non-affiliates |
2,261 | |||
Other |
23,879 | |||
|
|
|||
Total expenses |
1,591,542 | |||
|
|
|||
Net investment income (loss) |
28,015,841 | |||
|
|
|||
REALIZED/UNREALIZED GAINS (LOSSES): |
||||
Net realized gain (loss) on transactions from: |
| |||
Investments in non-affiliates |
9,804,888 | |||
In-kind redemptions of investments in non-affiliates (See Note 4) |
110,157,744 | |||
Futures contracts |
974,353 | |||
|
|
|||
Net realized gain (loss) |
120,936,985 | |||
|
|
|||
Change in net unrealized appreciation/depreciation on: |
| |||
Investments in non-affiliates |
136,558,799 | |||
Investments in affiliates |
(1,100 | ) | ||
Futures contracts |
(306,170 | ) | ||
|
|
|||
Change in net unrealized appreciation/depreciation |
136,251,529 | |||
|
|
|||
Net realized/unrealized gains (losses) |
257,188,514 | |||
|
|
|||
Change in net assets resulting from operations |
$ | 285,204,355 | ||
|
|
SEE NOTES TO FINANCIAL STATEMENTS.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 9 |
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS INDICATED
JPMorgan BetaBuilders MSCI US REIT ETF | ||||||||
Year Ended February 28, 2022 |
Year Ended February 28, 2021 |
|||||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS: |
| |||||||
Net investment income (loss) |
$ | 28,015,841 | $ | 26,168,486 | ||||
Net realized gain (loss) |
120,936,985 | (56,950,563 | ) | |||||
Change in net unrealized appreciation/depreciation |
136,251,529 | (1,730,474 | ) | |||||
|
|
|
|
|||||
Change in net assets resulting from operations |
285,204,355 | (32,512,551 | ) | |||||
|
|
|
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS: |
| |||||||
Total distributions to shareholders |
(27,102,001 | ) | (32,859,372 | ) | ||||
|
|
|
|
|||||
CAPITAL TRANSACTIONS: |
| |||||||
Change in net assets resulting from capital transactions |
155,051,115 | (196,802,655 | ) | |||||
|
|
|
|
|||||
NET ASSETS: |
| |||||||
Change in net assets |
413,153,469 | (262,174,578 | ) | |||||
Beginning of period |
944,122,915 | 1,206,297,493 | ||||||
|
|
|
|
|||||
End of period |
$ | 1,357,276,384 | $ | 944,122,915 | ||||
|
|
|
|
|||||
CAPITAL TRANSACTIONS: |
||||||||
Proceeds from shares issued |
$ | 741,079,084 | $ | 405,994,191 | ||||
Cost of shares redeemed |
(586,027,969 | ) | (602,796,846 | ) | ||||
|
|
|
|
|||||
Total change in net assets resulting from capital transactions |
$ | 155,051,115 | $ | (196,802,655 | ) | |||
|
|
|
|
|||||
SHARE TRANSACTIONS: |
| |||||||
Issued |
8,000,000 | 5,500,000 | ||||||
Redeemed |
(5,875,000 | ) | (8,650,000 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in shares from share transactions |
2,125,000 | (3,150,000 | ) | |||||
|
|
|
|
SEE NOTES TO FINANCIAL STATEMENTS.
10 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
THIS PAGE IS INTENTIONALLY LEFT BLANK.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 11 |
FOR THE PERIODS INDICATED
Per share operating performance | ||||||||||||||||||||||||||||
Investment operations | Distributions | |||||||||||||||||||||||||||
Net asset value, beginning of period |
Net investment income (loss) (b) |
Net
realized and unrealized gains (losses) on investments |
Total from investment operations |
Net investment income |
Net realized gain |
Total distributions |
||||||||||||||||||||||
JPMorgan BetaBuilders MSCI US REIT ETF |
||||||||||||||||||||||||||||
Year Ended February 28, 2022 |
$ | 82.46 | $ | 1.93 | $ | 17.48 | $ | 19.41 | $ | (1.89 | ) | $ | — | $ | (1.89 | ) | ||||||||||||
Year Ended February 28, 2021 |
82.62 | 2.07 | 0.28 | (f) | 2.35 | (2.51 | ) | — | (2.51 | ) | ||||||||||||||||||
Year Ended February 29, 2020 |
81.21 | 2.55 | 0.80 | (f) | 3.35 | (1.85 | ) | (0.09 | ) | (1.94 | ) | |||||||||||||||||
June 15, 2018 (h) through February 28, 2019 |
75.67 | 1.85 | 5.10 | 6.95 | (1.35 | ) | (0.06 | ) | (1.41 | ) |
(a) |
Annualized for periods less than one year, unless otherwise indicated. |
(b) |
Calculated based upon average shares outstanding. |
(c) |
Not annualized for periods less than one year. |
(d) |
Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. |
(e) |
Prior to December 9, 2019, market price return was calculated assuming an initial investment made at the market price at the beginning of the reporting period, reinvestment of all dividends and distributions at market price during the period, and sale at the market price on the last day of the period. The price used to calculate the market price return was the midpoint of the bid/ask spread at the close of business on the listing exchange of the fund. Effective December 9, 2019, the closing price was used to calculate the market price return; however, any prices used in the calculation for market price return prior to December 9, 2019, would have used the midpoint of the bid/ask spread at the close of business on the exchange. |
(f) |
Calculation of the net realized and unrealized gains (losses) per share do not correlate with the Fund’s net realized and unrealized gains (losses) presented in the Statement of Operations due to the timing of capital transactions in relation to the fluctuating market values of the Fund’s investments. |
(g) |
Prior to November 1, 2019, the Fund may have waived fees if expenses exceeded the expense cap. On November 1, 2019, the Fund adopted a unitary fee structure where a management fee is accrued by the fund based on prior day net assets and other expenses are paid by the Advisor. |
(h) |
Commencement of operations. |
(i) |
Since the Shares of the Fund did not trade in the secondary market until the day after the Fund’s inception, for the period from the inception to the first day of secondary market trading, the NAV is used as a proxy for the secondary market trading price to calculate the market returns. |
(j) |
Certain non-recurring expenses incurred by the Fund were not annualized for the period indicated. |
SEE NOTES TO FINANCIAL STATEMENTS.
12 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
|
Ratios/Supplemental data | |||||||||||||||||||||||||||||||||
Ratios to average net assets (a) | ||||||||||||||||||||||||||||||||||
Net asset |
Market price, end of period |
Total return (c)(d) |
Market price total return (c)(e) |
Net
assets, end of period |
Net expenses |
Net investment income (loss) |
Expenses without waivers and reimbursements |
Portfolio turnover rate (c) |
||||||||||||||||||||||||||
$ | 99.98 | $ | 100.02 | 23.55 | % | 23.45 | % | $ | 1,357,276,384 | 0.11 | % | 1.96 | % | 0.11 | % | 5 | % | |||||||||||||||||
82.46 | 82.56 | 3.37 | 3.36 | 944,122,915 | 0.11 | 2.82 | 0.11 | 7 | ||||||||||||||||||||||||||
82.62 | 82.73 | 4.06 | 4.18 | 1,206,297,493 | 0.11 | 2.88 | 0.16 | (g) | 5 | |||||||||||||||||||||||||
81.21 | 81.22 | 9.40 | 9.41 | (i) | 136,028,924 | 0.11 | (j) | 3.37 | 0.40 | (g)(j) | 5 |
SEE NOTES TO FINANCIAL STATEMENTS.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 13 |
AS OF FEBRUARY 28, 2022
1. Organization
J.P. Morgan Exchange-Traded Fund Trust (the “Trust”) was formed on February 25, 2010, and is governed by a Declaration of Trust as amended and restated February 19, 2014, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. JPMorgan BetaBuilders MSCI US REIT ETF (the “Fund” or “MSCI US REIT ETF”) is a separate diversified series of the Trust covered in this report.
The investment objective of the Fund is to seek investment results that closely correspond, before fees and expenses, to the performance of the MSCI US REIT Custom Capped Index.
J.P. Morgan Investment Management Inc. (“JPMIM”), an indirect, wholly-owned subsidiary of JPMorgan Chase & Co. (“JPMorgan”), acts as Adviser (the “Adviser”) and Administrator (the “Administrator”) to the Fund.
Shares of the Fund are listed and traded at market price on the Cboe BZX Exchange, Inc. Market prices for the Fund’s shares may be different from its net asset value (“NAV”). The Fund issues and redeems its shares on a continuous basis, through JPMorgan Distribution Services, Inc. (the “Distributor” or “JPMDS”), an indirect, wholly-owned subsidiary of JPMorgan, at NAV in large blocks of shares, typically 25,000 shares, referred to as “Creation Units.”
Creation Units are issued and redeemed principally in-kind for a basket of securities. A cash amount may be substituted if the Fund has sizeable exposure to market or sponsor restricted securities. Shares are generally traded in the secondary market in amounts less than a Creation Unit at market prices that change throughout the day. Only individuals or institutions that have entered into an authorized participant agreement with the Distributor may do business directly with the Fund (each, an “Authorized Participant”).
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 — Investment Companies, which is part of U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
A. Valuation of Investments — Investments are valued in accordance with GAAP and the Fund’s valuation policies set forth by, and under the supervision and responsibility of, the Board of Trustees of the Trust (the “Board”), which established the following approach to valuation, as described more fully below: (i) investments for which market quotations are readily available shall be valued at their market value and (ii) all other investments for which market quotations are not readily available shall be valued at their fair value as determined in good faith by the Board.
The Administrator has established the J.P. Morgan Asset Management Americas Valuation Committee (“AVC”) to assist the Board with the oversight and monitoring of the valuation of the Fund’s investments. The Administrator implements the valuation policies of the Fund’s investments, as directed by the Board. The AVC oversees and carries out the policies for the valuation of investments held in the Fund. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight including, but not limited to, consideration of macro or security specific events, market events, and pricing vendor and broker due diligence. The Administrator is responsible for discussing and assessing the potential impacts to the fair values on an ongoing basis, and, at least on a quarterly basis, with the AVC and the Board.
Equities and other exchange-traded instruments are valued at the last sale price or official market closing price on the primary exchange on which the instrument is traded before the NAV of the Fund is calculated on a valuation date.
Investments in open-end investment companies (“Underlying Funds”) are valued at each Underlying Fund’s NAV per share as of the report date.
Futures contracts are generally valued on the basis of available market quotations.
Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer-related events after the report date and prior to issuance of the report are not reflected herein.
The various inputs that are used in determining the valuation of the Fund’s investments are summarized into the three broad levels listed below.
• |
Level 1 — Unadjusted inputs using quoted prices in active markets for identical investments. |
• |
Level 2 — Other significant observable inputs including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest rates, prepayment speeds, credit risk, etc.) or other market corroborated inputs. |
• |
Level 3 — Significant inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s assumptions in determining the fair value of investments). |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input, both individually and in the aggregate, that is significant to the fair value measurement. The inputs or methodology used for valuing instruments are not necessarily an indication of the risk associated with investing in those instruments.
14 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
The following table represents each valuation input as presented on the Schedule of Portfolio Investments (“SOI”):
Level
1 Quoted prices |
Level
2 Other significant observable inputs |
Level
3 Significant unobservable inputs |
Total | |||||||||||||
Total Investments in Securities (a) |
$ | 1,379,071,790 | $ | — | $ | — | $ | 1,379,071,790 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Depreciation in Other Financial Instruments |
| |||||||||||||||
Futures Contracts (a) |
$ | (16,373 | ) | $ | — | $ | — | $ | (16,373 | ) | ||||||
|
|
|
|
|
|
|
|
(a) |
Please refer to the SOI for specifics of portfolio holdings. |
B. Securities Lending — The Fund is authorized to engage in securities lending in order to generate additional income. The Fund is able to lend to approved borrowers. Citibank N.A. (“Citibank”) serves as lending agent for the Fund, pursuant to a Securities Lending Agency Agreement (the “Securities Lending Agency Agreement”). Securities loaned are collateralized by cash equal to at least 100% of the market value plus accrued interest on the securities lent, which is invested in the Class IM Shares of the JPMorgan U.S. Government Money Market Fund and the Agency SL Class Shares of the JPMorgan Securities Lending Money Market Fund. The Fund retains the interest earned on cash collateral investments but is required to pay the borrower a rebate for the use of the cash collateral. In cases where the lent security is of high value to borrowers, there may be a negative rebate (i.e., a net payment from the borrower to the Fund). Upon termination of a loan, the Fund is required to return to the borrower an amount equal to the cash collateral, plus any rebate owed to the borrowers. The remaining maturities of the securities lending transactions are considered overnight and continuous. Loans are subject to termination by the Fund or the borrower at any time.
The net income earned on the securities lending (after payment of rebates and Citibank’s fee) is included on the Statement of Operations as Income from securities lending (net). The Fund also receives payments from the borrower during the period of the loan, equivalent to dividends and interest earned on the securities loaned, which are recorded as Dividend or Interest income, respectively, on the Statement of Operations.
Under the Securities Lending Agency Agreement, Citibank marks to market the loaned securities on a daily basis. In the event the cash received from the borrower is less than 102% of the value of the loaned securities (105% for loans of non-U.S. securities), Citibank requests additional cash from the borrower so as to maintain a collateralization level of at least 102% of the value of the loaned securities plus accrued interest (105% for loans of non-U.S. securities), subject to certain de minimis amounts.
The value of securities out on loan is recorded as an asset on the Statement of Assets and Liabilities. The value of the cash collateral received is recorded as a liability on the Statement of Assets and Liabilities and details of collateral investments are disclosed on the SOI.
The Fund bears the risk of loss associated with the collateral investments and is not entitled to additional collateral from the borrower to cover any such losses. To the extent that the value of the collateral investments declines below the amount owed to a borrower, the Fund may incur losses that exceed the amount it earned on lending the security. Upon termination of a loan, the Fund may use leverage (borrow money) to repay the borrower for cash collateral posted if the Adviser does not believe that it is prudent to sell the collateral investments to fund the payment of this liability. Securities lending activity is subject to master netting arrangements.
The following table presents the Fund’s value of the securities on loan with Citibank, net of amounts available for offset under the master netting arrangements and any related collateral received or posted by the Fund as of February 28, 2022.
Investment Securities On Loan, at value, Presented in the Statement of Assets and Liabilities |
Cash
Collateral Posted by Borrower* |
Net Amount Due to Counterparty (not less than zero) |
||||||||||
$ | 12,045,404 | $ | (12,045,404 | ) | $ | — |
* |
Collateral posted reflects the value of securities on loan and does not include any additional amounts received from the borrower. |
Securities lending also involves counterparty risks, including the risk that the loaned securities may not be returned in a timely manner or at all. Subject to certain conditions, Citibank has agreed to indemnify the Fund from losses resulting from a borrower’s failure to return a loaned security.
JPMIM voluntarily waived management fees charged to the Fund to reduce the impact of the cash collateral investment in the JPMorgan U.S. Government Money Market Fund from 0.12% to 0.06%. For the year ended February 28, 2022, JPMIM waived fees associated with the Fund’s investment in the JPMorgan U.S. Government Money Market Fund as follows:
$ | 4,203 |
The above waiver is included in the determination of earnings on cash collateral investment and in the calculation of Citibank’s compensation and is included on the Statement of Operations as Income from securities lending (net).
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 15 |
NOTES TO FINANCIAL STATEMENTS
AS OF FEBRUARY 28, 2022 (continued)
C. Investment Transactions with Affiliates — The Fund invested in Underlying Funds, which are advised by the Adviser. An issuer which is under common control with the Fund may be considered an affiliate. For the purposes of the financial statements, the Fund assumes the issuers listed in the table below to be affiliated issuers. Underlying Funds’ distributions may be reinvested into such Underlying Funds. Reinvestment amounts are included in the purchases at cost amounts in the table below.
For the year ended February 28, 2022 | ||||||||||||||||||||||||||||||||||||
Security Description | Value
at February 28, 2021 |
Purchases at Cost |
Proceeds from Sales |
Net Realized Gain |
Change
in Unrealized Appreciation/ (Depreciation) |
Value
at February 28, 2022 |
Shares
at February 28, 2022 |
Dividend Income |
Capital
Gain Distributions |
|||||||||||||||||||||||||||
JPMorgan
Securities Lending Money Market Fund Agency SL
Class Shares, |
$ | 36,809,152 | $ | 321,000,000 | $ | 346,788,612 | $ | (25,241 | )* | $ | (1,100 | ) | $ | 10,994,199 | 10,998,598 | $ | 46,292 | * | $ | — | ||||||||||||||||
JPMorgan U.S. Government Money Market Fund Class IM Shares, 0.03% (a)(b) |
— | 72,622,357 | 61,299,629 | — | — | 11,322,728 | 11,322,728 | 1,567 | — | |||||||||||||||||||||||||||
JPMorgan U.S. Government Money Market Fund Class IM Shares, 0.03% (a)(b) |
3,725,951 | $ | 133,972,123 | $ | 135,416,021 | — | — | 2,282,053 | 2,282,053 | $ | 1,675 | * | — | |||||||||||||||||||||||
JPMorgan U.S. Government Money Market Fund Class Institutional Shares, 0.01% (a)(b) |
9,743,503 | 18,745,011 | 28,488,514 | — | — | — | — | 275 | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
$ | 50,278,606 | $ | 546,339,491 | $ | 571,992,776 | $ | (25,241 | ) | $ | (1,100 | ) | $ | 24,598,980 | $ | 49,809 | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Investment in an affiliated fund, which is registered under the Investment Company Act of 1940, as amended, and is advised by J.P. Morgan Investment Management Inc. |
(b) |
The rate shown is the current yield as of February 28, 2022. |
* |
Amount is included on the Statements of Operations as Income from securities lending (net) (after payments of rebates and Citibank’s fee). |
D. Futures Contracts — The Fund used index futures contracts to gain or reduce exposure to the stock market, or maintain liquidity or minimize transaction costs. The Fund also purchased futures contracts to invest incoming cash in the market or sold futures in response to cash outflows, thereby simulating an invested position in the underlying index while maintaining a cash balance for liquidity.
Futures contracts provide for the delayed delivery of the underlying instrument at a fixed price or are settled for a cash amount based on the change in the value of the underlying instrument at a specific date in the future. Upon entering into a futures contract, the Fund is required to deposit with the broker, cash or securities in an amount equal to a certain percentage of the contract amount, which is referred to as the initial margin deposit. Subsequent payments, referred to as variation margin, are made or received by the Fund periodically and are based on changes in the market value of open futures contracts. Changes in the market value of open futures contracts are recorded as Change in net unrealized appreciation/depreciation on futures contracts on the Statement of Operations. Realized gains or losses, representing the difference between the value of the contract at the time it was opened and the value at the time it was closed, are reported on the Statement of Operations at the closing or expiration of the futures contract. Securities deposited as initial margin are designated on the SOI, while cash deposited, which is considered restricted, is recorded on the Statement of Assets and Liabilities. A receivable from and/or a payable to brokers for the daily variation margin is also recorded on the Statement of Assets and Liabilities.
The use of futures contracts exposes the Fund to equity price risk. The Fund may be subject to the risk that the change in the value of the futures contract may not correlate perfectly with the underlying instrument. Use of long futures contracts subjects the Fund to risk of loss in excess of the amounts shown on the Statement of Assets and Liabilities, up to the notional amount of the futures contracts. Use of short futures contracts subjects the Fund to unlimited risk of loss. The Fund may enter into futures contracts only on exchanges or boards of trade. The exchange or board of trade acts as the counterparty to each futures transaction; therefore, the Fund’s credit risk is limited to failure of the exchange or board of trade. Under some circumstances, futures exchanges may establish daily limits on the amount that the price of a futures contract can vary from the previous day’s settlement price, which could effectively prevent liquidation of positions.
The Fund’s futures contracts are not subject to master netting arrangements (the right to close out all transactions traded with a counterparty and net amounts owed or due across transactions).
16 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
The table below discloses the volume of the Fund’s futures contracts activity during the year ended February 28, 2022:
Futures Contracts : |
||||
Average Notional Balance Long |
$ | 9,178,645 | ||
Ending Notional Balance Long |
2,964,000 |
E. Security Transactions and Investment Income — Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on a specifically identified cost basis. Dividend income is recorded on the ex-dividend date or when the Fund first learns of the dividend.
To the extent such information is publicly available, the Fund records distributions received in excess of income earned from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Fund adjusts the estimated amounts of the components of distributions (and consequently its net investment income) as necessary, once the issuers provide information about the actual composition of the distributions.
F. Federal Income Taxes — The Fund is treated as a separate taxable entity for Federal income tax purposes. The 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 Fund’s tax positions for all open tax years and has determined that as of February 28, 2022, no liability for Federal income tax is required in the Fund’s 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. The Fund’s Federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
G. Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid at least quarterly. 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.
The following amounts were reclassified within the capital accounts:
Paid-in-Capital |
Accumulated income |
Accumulated net realized gains (losses) |
||||||||
$111,850,405 | $ | 323,409 | $ | (112,173,814 | ) |
The reclassifications for the Fund relate primarily to redemptions in-kind.
3. Fees and Other Transactions with Affiliates
A. Management Fee — JPMIM manages the investments of the Fund pursuant to the Management Agreement. For such services, JPMIM is paid a fee, which is accrued daily and paid no more frequently than monthly at an annual rate of 0.11% of the Fund’s average daily net assets. Under the Management Agreement, JPMIM is responsible for substantially all expenses of the Fund, (including expenses of the Trust relating to the Fund), except for the management fee, payments under the Fund’s 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 the Fund’s business. Additionally, the Fund is responsible for its non-operating expenses, including brokerage commissions and fees and expenses associated with the Fund’s securities lending program, if applicable. For the avoidance of doubt, the Adviser’s payment of such expenses may be accomplished through the 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 the Fund exceeds the fee payable to the Adviser, the Adviser will reimburse the Fund for such amount.
B. Administration Fee — JPMIM provides administration services to the Fund. Pursuant to the Management Agreement for the Fund, JPMIM is compensated as described in Note 3.A.
JPMorgan Chase Bank, N.A. (“JPMCB”), a wholly-owned subsidiary of JPMorgan, serves as the Fund’s 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 Fund. 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.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 17 |
NOTES TO FINANCIAL STATEMENTS
AS OF FEBRUARY 28, 2022 (continued)
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 the Management Agreement.
Interest income earned on cash balances at the custodian, if any, is included in Interest income from affiliates on the Statement of Operations.
Interest expense paid to the custodian related to cash overdrafts, if any, is included in Interest expense to affiliates on the Statement of Operations.
D. Distribution Services — The Distributor or its agent distributes Creation Units for the Fund on an agency basis. The Distributor does not maintain a secondary market in shares of the Fund. JPMDS receives no fees for their distribution services under the distribution agreement with the Trust (the “Distribution Agreement”). Although the Trust does not pay any fees under the Distribution Agreement, JPMIM pays JPMDS for certain distribution related services.
E. Waivers and Reimbursements — The Fund may invest in one or more money market funds advised by the Adviser (affiliated money market funds). The fees for the affiliated money market funds are covered under the Management Agreement as described in Note 3.A.
F. Other — Certain officers of the Trust are affiliated with the Adviser, the Administrator and JPMDS. Such officers receive no compensation from the Fund for serving in their respective roles.
The Board designated and appointed a Chief Compliance Officer to the Fund pursuant to Rule 38a-1 under the 1940 Act. The fees associated with the office of the Chief Compliance Officer are paid for by JPMIM as described in Note 3.A.
The Securities and Exchange Commission (“SEC”) has granted an exemptive order permitting the Fund to engage in principal transactions with J.P. Morgan Securities LLC, an affiliated broker, involving taxable money market instruments, subject to certain conditions.
4. Investment Transactions
During the year ended February 28, 2022, purchases and sales of investments (excluding short-term investments) were as follows:
Purchases (excluding U.S. Government) |
Sales (excluding U.S. Government) |
|||||||
$ | 83,884,873 | $ | 62,823,250 |
During the year ended February 28, 2022, there were no purchases or sales of U.S. Government securities.
For the year ended February 28, 2022, in-kind transactions associated with creations and redemptions were as follows:
In-Kind Creations |
In-Kind Redemptions |
|||||||
$ | 731,117,991 | $ | 576,862,235 |
During the year ended February 28, 2022, the Fund delivered portfolio securities for the redemption of Fund Shares (in-kind redemptions). Cash and portfolio securities were transferred for redemptions at fair value. For financial reporting purposes, the Fund recorded net realized gains and losses in connection with each in-kind redemption transaction.
5. Federal Income Tax Matters
For Federal income tax purposes, the estimated cost and unrealized appreciation (depreciation) in value of investments held at February 28, 2022 were as follows:
Aggregate Cost |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
Net
Unrealized Appreciation (Depreciation) |
|||||||||||||
$ | 1,331,462,411 | $ | 126,967,400 | $ | 79,374,394 | $ | 47,593,006 |
The difference between book and tax basis appreciation (depreciation) on investments is primarily attributed to wash sale loss deferrals.
The tax character of distributions paid during the year ended February 28, 2022 was as follows:
Ordinary Income* |
Total Distributions Paid |
|||||||
$ | 27,102,001 | $ | 27,102,001 |
* Short-term gain distributions are treated as ordinary income for income tax purposes.
18 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
The tax character of distributions paid during the year ended February 28, 2021 was as follows:
Ordinary Income* |
Total Distributions Paid |
|||||||
$ | 32,859,372 | $ | 32,859,372 |
* |
Short-term gain distributions are treated as ordinary income for income tax purposes. |
As of February 28, 2022, the estimated components of net assets (excluding paid-in-capital) on a tax basis were as follows:
Current Distributable Ordinary Income |
Current Distributable Long-Term Capital Gain (Tax Basis Capital Loss Carryover) |
Unrealized Appreciation (Depreciation) |
||||||||||
$ | 414,192 | $ | (1,762,128 | ) | $ | 47,593,006 |
The cumulative timing differences primarily consist of late year capital loss deferrals and wash sale loss deferrals.
As of February 28, 2022, the Fund had net capital loss carryforwards which are available to offset future realized gains as follows:
Capital Loss Carryforward Character |
||||||||
Short-Term | Long-Term | |||||||
$ | 1,762,128 | $ | — |
During the year ended February 28, 2022, the Fund utilized capital loss carryforwards as follows:
Capital Loss Utilized | ||||||||
Short-Term | Long-Term | |||||||
$ | 9,062,678 | $ | — |
6. Capital Share Transactions
The Trust issues and redeems shares of the Fund only in Creation Units through the Distributor at NAV. Capital shares transactions detail can be found in the Statement of Changes in Net Assets.
Shares of the Fund may only be purchased or redeemed by Authorized Participants. Such Authorized Participants may from time to time hold, of record or beneficially, a substantial percentage of the Fund’s shares outstanding and act as executing or clearing broker for investment transactions on behalf of the Fund. An Authorized Participant is either (1) a “Participating Party” or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation (“NSCC”); or (2) a DTC Participant; which, in either case, must have executed an agreement with the Distributor.
7. Risks, Concentrations and Indemnifications
In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown. The amount of exposure would depend on future claims that may be brought against the Fund. However, based on experience, the Fund expects the risk of loss to be remote.
As of February 28, 2022, JPMorgan SmartRetirement Funds and JPMorgan SmartRetirement Blend Funds, which are affiliated funds of funds, owned in the aggregate, shares representing more than 10% of the net assets of the Fund as follows:
JPMorgan SmartRetirement Blend Funds |
JPMorgan SmartRetirement Funds |
|||||||
42.0 | % | 26.0 | % |
Significant shareholder transactions by these shareholders may impact the Fund’s performance and liquidity.
Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic and market conditions and could result in losses that significantly exceed the Fund’s original investment. Many derivatives create leverage thereby causing the Fund to be more volatile than they would have been if they had not used derivatives. Derivatives also expose the Fund to counterparty risk (the risk that the derivative counterparty will not fulfill its contractual obligations), including credit risk of the derivative counterparty. The possible lack of a liquid secondary market for derivatives and the resulting inability of the Fund to sell or otherwise close a derivatives position could expose the Fund to losses.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 19 |
NOTES TO FINANCIAL STATEMENTS
AS OF FEBRUARY 28, 2022 (continued)
Disruptions to creations and redemptions, the existence of significant market volatility or potential lack of an active trading market for the Shares (including through a trading halt), as well as other factors, may result in Shares trading significantly above (at a premium) or below (at a discount) to the NAV or to the intraday value of the Fund’s holdings. During such periods, investors may incur significant losses if shares are sold.
The Fund may not track the return of its underlying index for a number of reasons and therefore may not achieve its investment objective. For example, the Fund incurs a number of operating expenses not applicable to its underlying index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the underlying index. In addition, the Fund’s return may differ from the return of its underlying index as a result of, among other things, pricing differences and the inability to purchase certain securities included in the underlying index due to regulatory or other restrictions. To the extent of the previously outlined items, the Fund’s return may differ from the return of the underlying index.
Because the Fund invests in Real Estate Investment Trusts (“REITs”), the Fund may be subject to certain risks similar to those associated with direct investments in real estate. REITs may be affected by changes in the value of their underlying properties and by defaults by tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareholders, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time.
The Fund is subject to infectious disease epidemics/pandemics risk. The worldwide outbreak of COVID-19, a novel coronavirus disease, has negatively affected economies, markets and individual companies throughout the world. The effects of this COVID-19 pandemic to public health, and business and market conditions, including exchange trading suspensions and closures may continue to have a significant negative impact on the performance of the Fund’s investments, increase the Fund’s volatility, negatively impact the Fund’s arbitrage and pricing mechanisms, exacerbate other pre-existing political, social and economic risks to the Fund and negatively impact broad segments of businesses and populations. The Fund’s operations may be interrupted as a result, which may have a significant negative impact on investment performance. In addition, governments, their regulatory agencies, or self-regulatory organizations may take actions in response to the pandemic that affect the instruments in which the Fund invests, or the issuers of such instruments, in ways that could also have a significant negative impact on the Fund’s investment performance. The full impact of this COVID-19 pandemic, or other future epidemics/pandemics, is currently unknown.
20 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of J.P. Morgan Exchange-Traded Fund Trust and Shareholders of JPMorgan BetaBuilders MSCI US REIT ETF
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of portfolio investments, of JPMorgan BetaBuilders MSCI US REIT ETF (one of the funds constituting J.P. Morgan Exchange-Traded Fund Trust, referred to hereafter as the “Fund”) as of February 28, 2022, the related statement of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the three years in the period ended February 28, 2022 and for the period June 15, 2018 (commencement of operations) through February 28, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 28, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended February 28, 2022 and the financial highlights for each of the three years in the period ended February 28, 2022 and for the period June 15, 2018 (commencement of operations) through February 28, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
April 27, 2022
We have served as the auditor of one or more investment companies in the JPMorgan Funds complex since 1993.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 21 |
(Unaudited)
The Fund’s Statements of Additional Information includes additional information about the Fund’s Trustees and is available, without charge, upon request by calling 1-844-457-6383 or on the J.P. Morgan Funds’ website at www.jpmorganfunds.com.
Name (Year of Birth; Positions With the Funds since) (1) |
Principal Occupation During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee (2) |
Other Directorships Held During the Past 5 Years | |||||
Independent Trustees |
||||||||
John F. Finn (1947); Chair since 2022; Trustee since 1998. | Chairman, Gardner, Inc. (supply chain management company serving industrial and consumer markets) (serving in various roles 1974-present). | 172 | 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 MainStay Funds Trust (2007-2017) (registered investment companies). | 172 | 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). | 172 | Independent Trustee, The China Fund, Inc. (2013-2019); Exchange Traded Concepts Trust II (2012-2014); Exchange Traded Concepts Trust I (2011-2014). | |||||
Kathleen M. Gallagher (1958); Trustee since 2008. | Retired; Chief Investment Officer — Benefit Plans, Ford Motor Company (serving in various roles 1985-2016). | 172 | 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). | 172 | 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). |
172 | None |
22 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
Name (Year of Birth; Positions With the Funds since) |
Principal Occupation During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee (1) |
Other Directorships Held During the Past 5 Years | |||
Independent Trustees (continued) |
||||||
Raymond Kanner (1953); Trustee since 2017. | Retired; Managing Director and Chief Investment Officer, IBM Retirement Funds (2007-2016). | 172 | 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; Executive Vice President and General Counsel, Legg Mason (2005-2013). | 172 | SEI family of funds — Independent Trustee of Advisors’ Inner Circle Fund III (20 portfolios) (from February 2014 to present); Independent Trustee of Winton Diversified Opportunities Fund (from December 2014 to 2018); Independent Trustee of Gallery Trust (from August 2015 to present); Independent Trustee of Schroder Series Trust (from February 2017 to present); Independent Trustee of Schroder Global Series Trust (from February 2017 to present); Independent Trustee of O’Connor EQUUS (May 2014-April 2016); Independent Trustee of Winton Series Trust (December 2014-March 2017); Independent Trustee of AXA Premier VIP Trust (2014-June 2017); Independent Director of The Victory Funds (or their predecessor funds) (35 portfolios) (2014-March 2015); Symmetry Panoramic Trust (16 portfolios) (2018-present). | |||
Lawrence R. Maffia (1950); Trustee since 2014. | Retired; Director and President, ICI Mutual Insurance Company (2006-2013). | 172 | Director, ICI Mutual Insurance Company (1999-2013). | |||
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). | 172 | None |
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 23 |
TRUSTEES
(Unaudited) (continued)
Name (Year
of Birth; Positions With the Funds since) (1) |
Principal
Occupation During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee (2) |
Other
Directorships Held During the Past 5 Years | |||||
Independent Trustees (continued) |
|
|||||||
Marilyn McCoy (1948); Trustee since 1999. | Vice President of Administration and Planning, Northwestern University (1985-present). | 172 | None | |||||
Dr. Robert A. Oden, Jr. (1946); Trustee since 1997. | Retired; President, Carleton College (2002-2010); President, Kenyon College (1995-2002). | 172 |
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). | 172 | Board Chair and Member, Board of Governors, Columbus Citizens Foundation (not-for-profit supporting philanthropic and cultural programs) (2006-present). | |||||
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. | 172 | 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** (1957); Trustee since 2014. | Retired; Head of the Global ETF Business for JPMorgan Asset Management (2013-2017); Head of the Global Liquidity Business for JPMorgan Asset Management (2003-2013). | 172 | Board of Directors of the JUST Capital Foundation (2017–present). | |||||
Nina O. Shenker** (1957) Trustee since 2022. | Vice Chair (2017-Present), General Counsel and Managing Director (2008-2016), Associate General Counsel and Managing Director (2004-2008), J.P. Morgan Asset & Wealth Management. | 172 | Director and Member of Executive Committee and Legal and Human Resources Subcommittees, American Jewish Joint Distribution Committee (2018-present). |
(1) |
The year shown is the first year in which a Trustee became a member of any of the following: the Mutual Fund Board, the ETF Board, the heritage J.P. Morgan Funds or the heritage One Group Mutual Funds. Trustees serve an indefinite term, until resignation, retirement, removal or death. The Board’s current retirement policy sets retirement at the end of the calendar year in which the Trustee attains the age of 75, provided that any Board member who was a member of the Mutual Fund Board prior to January 1, 2022 and was born prior to January 1, 1950 shall retire from the Board at the end of the calendar year in which the Trustee attains the age of 78. |
(2) |
A Fund Complex means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and investor services or have a common investment adviser or have an investment adviser that is an affiliated person of the investment adviser of any of the other registered investment companies. The J.P. Morgan Funds Complex for which the Board of Trustees serves currently includes nine registered investment companies (172 J.P. Morgan Funds). |
* |
In connection with prior employment with JPMorgan Chase, Ms. Pardo was the recipient of non- qualified pension plan payments from JPMorgan Chase in the amount of approximately $2,055 per month, which she irrevocably waived effective January 1, 2013, and deferred compensation payments from JPMorgan Chase in the amount of approximately $7,294 per year, which ended in January 2013. In addition, Ms. Pardo receives payments from a fully-funded qualified plan, which is not an obligation of JPMorgan Chase. |
** |
Designation as an “Interested Trustee” is based on prior employment by the Adviser or an affiliate of the Adviser or interests in a control person of the Adviser. |
The contact address for each of the Trustees is 277 Park Avenue, New York, NY 10172.
24 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
(Unaudited)
Name (Year of Birth), Positions Held with the Trust (Since) |
Principal Occupations During Past 5 Years | |
Brian S. Shlissel (1964), President and Principal Executive Officer (2021)* |
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 (2020), Assistant Treasurer (2019-2020) |
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 (2022)** (formerly Assistant Secretary 2014-2022) |
Managing Director and Assistant General Counsel, JPMorgan Chase. Mr. Samuels has been with JPMorgan Chase since 2010. | |
Stephen M. Ungerman (1953), Chief Compliance Officer (2014) |
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. | |
Elizabeth A. Davin (1964), Assistant Secretary (2022)*** (formerly Secretary 2018-2022) |
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 (2014)*** |
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 (2019)** |
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 (2014)** |
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 through June 2021; Associate, Stroock & Stroock & Lavan LLP (law firm) from October 2015 through March 2017. | |
Zachary E. Vonnegut-Gabovitch (1986), Assistant Secretary (2017)** | Vice President and Assistant General Counsel, JPMorgan Chase since September 2016. | |
Frederick J. Cavaliere (1978), Assistant Treasurer (2015)* |
Executive Director, J.P. Morgan Investment Management Inc. Mr. Cavaliere has been with JPMorgan since May 2006. | |
Michael M. D’Ambrosio (1969), Assistant Treasurer (2014) |
Managing Director, J.P. Morgan Investment Management Inc. Mr. D’Ambrosio has been with J.P. Morgan Investment Management Inc. since 2012. | |
Shannon Gaines (1977), Assistant Treasurer (2019)*** |
Vice President, J.P. Morgan Investment Management Inc. since January 2014. | |
Nektarios E. Manolakakis (1972), Assistant Treasurer (2020) |
Executive Director, J.P. Morgan Investment Management Inc. Mr. Manolakakis has been with J.P. Morgan Investment Management Inc. since 2014; Vice President, J.P. Morgan Corporate & Investment Bank 2010-2014. | |
Todd McEwen (1981), Assistant Treasurer (2020)*** |
Vice President, J.P. Morgan Investment Management Inc. Mr. McEwen has been with J.P. Morgan Investment Management Inc. since 2010. | |
Paul Shield (1960), Vice President and Assistant Treasurer (2016) |
Managing Director and head of Business Management for JPMorgan Asset Management’s Exchange Traded Fund platform since 2013. |
The contact address for each of the officers, unless otherwise noted, is 277 Park Avenue, New York, NY 10172.
* |
The contact address for the officer is 575 Washington Boulevard, Jersey City, NJ 07310. |
** |
The contact address for the officer is 4 New York Plaza, New York, NY 10004. |
*** |
The contact address for the officer is 1111 Polaris Parkway, Columbus, OH 43240. |
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 25 |
SCHEDULE OF SHAREHOLDER EXPENSES
(Unaudited)
Hypothetical $1,000 Investment
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on your purchase and sales of Fund shares and (2) ongoing costs, primarily management fees. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these ongoing costs with the ongoing costs of investing in other funds. The examples assume that you had a $1,000 investment at the beginning of the reporting period September 1, 2021 and continued to hold your shares at the end of the reporting period, February 28, 2022.
Actual Expenses
For the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other Funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The examples also assume all dividends and distributions have been reinvested.
Beginning Account Value September 1, 2021 |
Ending Account Value February 28, 2022 |
Annualized Expense Ratio* |
Expenses Paid During the Period |
|||||||||||||
JPMorgan BetaBuilders MSCI US REIT ETF |
||||||||||||||||
Actual |
$ | 1,000.00 | $ | 989.20 | 0.11 | % | $ | 0.54 | ||||||||
Hypothetical |
1,000.00 | 1,024.25 | 0.11 | 0.55 |
* |
Expenses are equal to each Fund’s annualized net expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
26 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
BOARD APPROVAL OF MANAGEMENT AGREEMENT
(Unaudited)
JPMorgan BetaBuilders MSCI US REIT ETF
The Board of Trustees of the JPMorgan Exchange-Traded Fund Trust (the “Trust”) met regularly throughout the year ended December 31, 2021 (the “Board of Trustees” or the “Board”) and considered factors that are relevant to their annual consideration of management agreements at each meeting. The Board also met specifically to consider management agreement annual renewals. The Board of Trustees held meetings on November 9, 2021 and December 14-15, 2021, at which the Trustees considered the continuation of the management agreement (the “Management Agreement”) for JPMorgan BetaBuilders MSCI US REIT ETF (the “Fund”). The meetings were held by videoconference in reliance upon the Division of Investment Management Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019. In connection with these meetings, the Board reviewed and considered performance, expense and other information individually for the Fund. The Trustees, including a majority of the Trustees who are not “Interested Persons” (as defined in the 1940 Act) of any party to the Management Agreement or any of their affiliates, approved the continuation of the Management Agreement.
As part of their review of the Management Agreement, the Trustees considered and reviewed performance and other information about the Fund received from the Adviser. This information included the Fund’s performance as compared to the performance of its benchmark and analyses by the Adviser of the Fund’s performance. In addition, in preparation for the December meeting, the Trustees requested, received and evaluated extensive materials from the Adviser, including performance and expense information compiled by Broadridge Investor Communications Solutions Inc. (“Broadridge”), an independent provider of investment company data, and met with representatives of Broadridge. Before voting on the Management Agreement, the Trustees reviewed the Management Agreement with representatives of the Adviser, counsel to the Trust and independent legal counsel and received a memorandum from independent legal counsel to the Trustees discussing the legal standards for their consideration of the Management Agreement. The Trustees also discussed the Management Agreement with independent legal counsel in executive sessions at which no representatives of the Adviser were present.
A summary of the material factors evaluated by the Trustees in determining whether to approve the Management Agreement is provided below. The Trustees considered information provided with respect to the Fund over the course of the year, as well as the materials furnished specifically in connection with this annual renewal process. Each Trustee attributed his or her own evaluation of the significance of the various factors and no factor alone was considered determinative. As part of their review process, the Trustees considered and placed emphasis
on relevant information in light of changing circumstances in market and economic conditions. The Trustees determined that the compensation received by the Adviser from the Fund under the Management Agreement was fair and reasonable and that the continuance of the Management Agreement was in the best interests of the Fund and its shareholders.
The factors summarized below were considered and discussed by the Trustees in reaching their conclusions:
Nature, Extent and Quality of Services Provided by the Adviser
The Trustees received and considered information regarding the nature, extent and quality of the services provided to the Fund under its Management Agreement. The Trustees took into account information furnished throughout the year at Trustee meetings, as well as the materials furnished specifically in connection with this annual review process. Among other things, the Trustees considered:
(i) |
The background and experience of the Adviser’s senior management and investment personnel; |
(ii) |
The qualifications, backgrounds and responsibilities of the portfolio management team primarily responsible for the day-to-day management of the Fund; |
(iii) |
The investment strategy for the Fund, and the infrastructure supporting the portfolio management team; |
(iv) |
Information about the structure and distribution strategy of the Fund and how it fits within the Trust’s other fund offerings; |
(v) |
The administration services provided by the Adviser under the Management Agreement; |
(vi) |
Their knowledge of the nature and quality of the services provided by the Adviser and its affiliates gained from their experience as Trustees of the Trust and in the financial industry generally; |
(vii) |
The overall reputation and capabilities of the Adviser and its affiliates; |
(viii) |
The commitment of the Adviser to provide high quality service to the Fund; |
(ix) |
Their overall confidence in the Adviser’s integrity; |
(x) |
The Adviser’s responsiveness to requests for additional information, questions or concerns raised by them; and |
(xi) |
The Adviser’s business continuity plan and steps the Adviser and its affiliates were taking to provide ongoing services to the Fund during the COVID-19 pandemic, and the Adviser’s and its affiliates’ success in continuing to provide services to the Fund and its shareholders throughout this period. |
Based upon these considerations and other factors, the Trustees concluded that they were satisfied with the nature, extent and quality of services to be provided to the Fund by the Adviser.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 27 |
BOARD APPROVAL OF MANAGEMENT AGREEMENT
(Unaudited) (continued)
Costs of Services Provided and Profitability to the Adviser and its Affiliates
The Trustees received, reviewed, considered and discussed information regarding the profitability to the Adviser and its affiliates in providing services to the Fund. The Trustees recognized that this information is not audited and represents the Adviser’s determination of its and its affiliates’ revenues from the contractual services provided to the Fund, less expenses of providing such services. Expenses include direct and indirect costs and are calculated using allocation methodologies developed by the Adviser. The Trustees also recognized that it is difficult to make direct comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the fact that publicly-traded fund managers’ operating profits and net income are net of distribution and marketing expenses. Based upon their review, the Trustees concluded that the profitability to the Adviser under the Management Agreement was not unreasonable in light of the services and benefits provided to the Fund.
The Trustees also considered (i) that under the Management Agreement, the Adviser earns fees from the Fund for providing administrative services and (ii) fees paid to J.P. Morgan Chase Bank, N.A. (“JPMCB”), an affiliate of the Adviser, for custody, transfer agency and other related services for the Fund.
Fall-Out Benefits
The Trustees reviewed information regarding potential “fall-out” or ancillary benefits received by the Adviser and its affiliates as a result of their relationships with the Fund. Additionally, the Trustees considered that any fall-out or ancillary benefits would be comparable to those related to the other funds in the complex.
The Trustees also considered the benefits the Adviser receives as the result of JPMCB’s roles as custodian, fund accountant and transfer agent for the Fund, including the profitability of those arrangements to JPMCB.
Economies of Scale
The Trustees considered the extent to which the Fund benefits from economies of scale. The Trustees noted that the management fee schedule for the Fund does not contain breakpoints. The Trustees considered that shareholders benefited when the Fund was new and not achieving economies of scale. The Trustees considered the fact that increases in assets would not lead to fee decreases even if economies of scale are achieved, but also that the Trustees would have the opportunity to further review the appropriateness of the fee payable to the Adviser under the Management Agreement in the future. After considering the factors identified above, the Trustees concluded that the Fund’s shareholders will receive the benefits of potential economies of scale.
Fees Relative to Adviser’s Other Clients
The Trustees requested, received and considered information about the nature and extent of investment advisory services and fee rates offered to other investment companies and/or institutional accounts advised by the Adviser in the same asset class as the Fund. The Trustees noted the Adviser’s view that it does not manage other accounts with substantially similar investment strategies as that of the Fund. The Trustees concluded that the fees charged to the Fund in comparison to those charged to such other clients were reasonable.
Investment Performance
The Trustees considered the Fund’s investment strategy and processes, portfolio management teams and competitive positioning against peer funds, as identified by Broadridge and/or management. As part of this review, the Trustees reviewed the Fund’s performance against its benchmark and considered the Fund’s performance information provided at regular Board meetings by the Adviser. After consideration, the Trustees determined that the Fund’s performance was consistent with its investment objective.
Management Fees and Expense Ratios
The Trustees considered the contractual management fee rate paid by the Fund to the Adviser and compared the rate to the information prepared by Broadridge concerning management fee rates paid by other funds in the same Morningstar category as the Fund. This review included ranking of the Fund within an expense universe made up of funds with the same Morningstar investment classification and objective (the “Universe”), as well as a subset of funds within the Universe (the “Peer Group”). The Trustees reviewed a description of Broadridge’s methodology for selecting funds in the Peer Group and Universe, as applicable, and noted that Universe and Peer Group quintile rankings were not calculated if the number of funds in the Universe and/or Peer Group did not meet a predetermined minimum. The Trustees also reviewed information about other expenses and the total expense ratio for the Fund. The Trustees compared the management fee for the Fund to fees charged to mutual funds and/or institutional accounts with similar investment objectives or in similar asset classes managed by the Adviser. The Trustees recognized that it is difficult to make comparisons of management fees because there are variations in the services that are included in the fees paid by other accounts. The Trustees considered how the Fund is positioned against peer funds, as identified by management and/or Broadridge and noted that the Fund’s management fee was appropriate as compared to identified peer funds. The Trustees’ determinations as a result of the review of the Fund’s management fees and expense ratios are summarized below:
The Trustees noted that the Fund’s net management fee and actual total expenses were in the third and second quintile, respectively, of the Peer Group, and in the first quintile of the
28 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
Universe. After considering the factors identified above, in light of this information, the Trustees concluded that the management fee was satisfactory.
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 29 |
LIQUIDITY RISK MANAGEMENT PROGRAM
(Unaudited)
The JPMorgan BetaBuilders MSCI US REIT ETF has adopted the J.P. Morgan Funds and J.P. Morgan Exchange-Traded Funds Amended and Restated Liquidity Risk Management Program (the “Program”) under Rule 22e-4 under the Investment Company Act of 1930, as amended (the “Liquidity Rule”). The Program seeks to assess, manage and review the Fund’s Liquidity Risk. “Liquidity Risk” is defined as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors’ interests in the fund. Among other things, the Liquidity Rule requires that a written report be provided to the Board of Trustees (the “Board”) on an annual basis that addresses the operation of the Program and assesses the adequacy and effectiveness of its implementation, including the operation of any Highly Liquid Investment Minimum (“HLIM”), where applicable, and any material changes to the Program.
The Board has appointed J.P. Morgan Asset Management’s Liquidity Risk Forum to be the program administrator for the Program (the “Program Administrator”). In addition to regular reporting at each of its quarterly meetings, on February 8, 2022, the Board reviewed the Program Administrator’s annual written report (the “Report”) concerning the operation of the Program for the period from January 1, 2021 through December 31, 2021 (the “Program Reporting Period”). The Report addressed the operation of the Program and assessed its adequacy and effectiveness of implementation, including, where applicable, the operation of a Fund’s HLIM. During the Program Reporting Period, the Program was amended, pursuant to an exemptive order from the Securities and Exchange Commission, to permit the Fund to use liquidity definitions and classification methodologies that differ from the requirements under the Liquidity Rule in some respects. The Report discussed the implementation of these changes. No other material changes were made to the Program during the Program Reporting Period.
The Report summarized the operation of the Program and the information and factors considered by the Program Administrator in assessing whether the Program has been adequately and effectively implemented with respect to the Fund. Such information and factors included, among other things: (1) the effectiveness of the Program with respect to the identification of each Fund that qualifies as an “In-Kind ETF” (as defined in the Liquidity Rule); (2) the liquidity risk framework used to assess, manage, and periodically review each Fund’s Liquidity Risk and the results of this assessment; (3) the methodology and inputs for classifying the investments of a Fund (other than an In-Kind ETF) into one of the required liquidity categories that reflect an estimate of the liquidity of those investments under current market conditions (and, for In-Kind ETFs, the methodology and inputs for determining whether any investments should be classified as “Illiquid Investments” (as defined or modified under the Program)); (4) whether a Fund (other than an In-Kind ETF) invested primarily in “Highly Liquid
Investments” (as defined or modified under the Program); (5) whether an HLIM should be established for a Fund (other than an In-Kind ETF) and the procedures for monitoring any HLIM; (6) whether a Fund invested more than 15% of its assets in “Illiquid Investments” and the procedures for monitoring for this limit; and (7) specific liquidity events arising during the Program Reporting Period. The Report further summarized the conditions of the exemptive order.
Based on this review, the Report concluded that: (1) the Program continues to be reasonably designed to effectively assess and manage the Fund’s Liquidity Risk; and (2) the Program has been adequately and effectively implemented with respect to the Fund during the Program Reporting Period.
30 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
(Unaudited)
Certain tax information for the J.P. Morgan Funds is required to be provided to shareholders based upon the Fund’s income and distributions for the taxable year ended February 28, 2022. The information and distributions reported in this letter may differ from the information and taxable distributions reported to the shareholders for the calendar year ending December 31, 2022. The information necessary to complete your income tax returns for the calendar year ending December 31, 2022 will be provided under separate cover.
Section 199A Income
The Fund had the following amount, or maximum allowable amount, of ordinary income distributions treated as section 199A dividends for the fiscal year ended February 28, 2022:
Qualified Business Income |
||||
$ | 26,431,800 |
FEBRUARY 28, 2022 | J.P. MORGAN EXCHANGE-TRADED FUNDS | 31 |
SPECIAL SHAREHOLDER MEETING RESULTS
(Unaudited)
The Trust held a special meeting of shareholders on October 27, 2021, for the purpose of considering and voting upon the election of Trustees:
Trustees were elected by the shareholders of all of the series of the Trust (other than Funds that launched subsequent to the record date), including the Fund. The results of the voting were as follows:
Votes Received (Amounts in thousands) |
||||
Independent Nominee |
||||
John F. Finn |
||||
In Favor |
932,618 | |||
Withheld |
6,740 | |||
Steven P. Fisher | ||||
In Favor |
937,481 | |||
Withheld |
1,877 | |||
Gary L. French | ||||
In Favor |
936,343 | |||
Withheld |
3,014 | |||
Kathleen M. Gallagher | ||||
In Favor |
937,527 | |||
Withheld |
1,831 | |||
Robert J. Grassi | ||||
In Favor |
936,385 | |||
Withheld |
2,973 | |||
Frankie D. Hughes | ||||
In Favor |
937,172 | |||
Withheld |
2,186 | |||
Raymond Kanner | ||||
In Favor |
937,371 | |||
Withheld |
1,987 | |||
Thomas P. Lemke | ||||
In Favor |
936,312 | |||
Withheld |
3,046 |
Votes Received (Amounts in thousands) |
||||
Lawrence R. Maffia |
||||
In Favor |
935,575 | |||
Withheld |
3,783 | |||
Mary E. Martinez | ||||
In Favor |
937,595 | |||
Withheld |
1,762 | |||
Marilyn McCoy | ||||
In Favor |
937,226 | |||
Withheld |
2,132 | |||
Dr. Robert A. Oden, Jr. | ||||
In Favor |
932,572 | |||
Withheld |
6,785 | |||
Marian U. Pardo | ||||
In Favor |
937,464 | |||
Withheld |
1,894 | |||
Emily A. Youssouf | ||||
In Favor |
936,422 | |||
Withheld |
2,936 | |||
Interested Nominee |
||||
Robert F. Deutsch | ||||
In Favor |
936,144 | |||
Withheld |
3,214 | |||
Nina O. Shenker | ||||
In Favor |
937,258 | |||
Withheld |
2,100 |
32 | J.P. MORGAN EXCHANGE-TRADED FUNDS | FEBRUARY 28, 2022 |
J.P. Morgan Exchange-Traded Funds are distributed by JPMorgan Distribution Services, Inc., an indirect, wholly-owned subsidiary of JPMorgan Chase & Co.
Contact J.P. Morgan Exchange-Traded Funds at 1-844-457-6383 (844-4JPM ETF) for a fund prospectus. You can also visit us at www.jpmorganfunds.com. Investors should carefully consider the investment objectives and risks as well as charges and expenses of the fund before investing. The prospectus contains this and other information about the fund. Read the prospectus carefully before investing.
Investors may obtain information about the Securities Investor Protection Corporation (SIPC), including the SIPC brochure, by visiting www.sipc.org or by calling SIPC at 202-371-8300.
The Fund files a complete schedule of its fund holdings for the first and third quarters of its fiscal year with the SEC as an exhibit to its report on Form N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at http://www.sec.gov. The Fund’s quarterly holdings can be found by visiting the J.P. Morgan Funds’ website at www.jpmorganfunds.com.
A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s holdings is available in the prospectus and Statement of Additional Information.
A copy of proxy policies and procedures is available without charge upon request by calling 1-844-457-6383 and on the Fund’s website at www.jpmorganfunds.com. A description of such policies and procedures is on the SEC’s website at www.sec.gov. The Trustees have delegated the authority to vote proxies for securities owned by the Fund to the Adviser. A copy of the Fund’s voting record for the most recent 12-month period ended June 30 is available on the SEC’s website at www.sec.gov or at the Fund’s website at www.jpmorganfunds.com no later than August 31 of each year. The Fund’s proxy voting record will include, among other things, a brief description of the matter voted on for each fund security, and will state how each vote was cast, for example, for or against the proposal.
J.P. Morgan Asset Management is the brand name for the asset management businesses of JPMorgan Chase & Co. and its affiliates worldwide.
© JPMorgan Chase & Co., 2022. All rights reserved. February 2022. | AN-RETF-222 |