addendum dated March 2008
PROSPECTUS
September 2007
VISA 2008135483-1 681-0-PC L'apposition du visa ne peut en aucun ca
&argument d e publicite Luxembourg. le 19/03/2008 Commission
de
Y
NOT FOR USE BY OR DISTRIBUTION TO US PERSONS
JPMORGAN INVESTMENT FUNDS (thc "Pund") has been autlioriscd under
part I of' the Luxembourg law of 20 December 2002 relating to
collective investment undertakings ("loi relulive a m orgunismes de
placemenl collectiy', the "Luxembourg I.aw'*) and qualifies as an
Undertaking for Collective Investments in Transferable Securities
("UClTS") under the amended EC Directive 85/61 1 o f 2 0 December
19x5, and may therefore be offered for sale in European IJnion
("EIJ") Member States (subject to registration in countries other
than Luxembourg). In addition, applications to register the Fund
may be made in other countries.
None of'the Shares have been or will be registered under the
CJnited States Securities Act of 1933, as amended (the "1933 Act"),
or under the securities laws ol'any state or political subdivision
o f the United States of America or any of its territories.
possessions or other areas subject to its jurisdiction including
the Commonwealth of Puerto Rico (the "United States"). The Fund has
not bcen and will not be registered under the United States
Investment Companv Act of' 1940. as amended, nor under any other
IJS kdcral laws. Accordingly, except as provided for below, no
Shares are being offered to US Persons or persons who are in the
United States at the time the Shares are offered or sold. For the
purposes of this Prospectus, a US Person includes, but is nut
limited to, a person (including a partnership, corporation, limited
liability company or similar entity) that is a citizcn or a
resident of the United States of America or is organised or
incorporated under the laws of the United States of America. Shares
will only be offered to a US Person at the sole discrction of
either the Directors or the Managcmcnt Company. Certain
restrictions also apply to any subsequent transfer of Shares in the
United States or to US Persons (please see the compulsory
redemption provisions under the section "The Shares - Redemption of
Shares" below). Should a Shareholder become a IJS Person, they may
be sub.ject to US withholding taxes and tax reporting.
If you are in any doubt as to your status, you should consult your
financial or other professional adviser.
The distribution of this Prospectus in other jurisdictions may also
be restricted; persons into whose possession this Prospectus comes
are required to inform themselves about and to observe any such
restrictions. This Prospectus does not constitute an oll'cr by
anyone in any jurisdiction in which such offer is not authoriwd or
to any person to whom it is unlawfiil to make such offer.
Prospective investors should review this Prospectus carefully and
in its entirety and consult with their Icgal. tax and financial
advisers in relation to (i) the legal and regulatory requirements
within their ciwn countries for the subscribing, purchasing,
holding, converting, redeeming or disposing of Shares; (ii) any
foreign exchange restrictions to which they are subject in their
own countrius in relation to the subscribing, purchasing, holding.
converting, redeeming or disposing of Shares; (iii) the legal, tax,
financial or other consequences of subscribing for, purchasing,
holding, converting. redeeming or disposing of Shares: and (iv) any
other consequences of such activities.
Before consent to distribute this Prospectus is granted, certain
jurisdictions require that it be translated into an appropriate
languagc. Unless contrary to local law in the .jurisdiction
concerned, in the event of any inconsistency or ambiguity in
relation to the meaning of any word or phrase in any translation,
the English version shall always prevail.
Any information or representation given or made by any person which
is not contained herein or in any other document which may be
available for inspection by the public should be regarded as
unauthorised and should accordingly not be relied upon. Neither the
delivery of this Prospectus nor the offer, issue or sale of Shares
in the Fund shall under any circumstances constitute a
representation that the information given in this Prospectus is
correct as at any time subsequent to the date hereof.
Certain Shares of tlic Fund are or will on issue be listed on the
Luxembourg Stock Exchange as described more particularly
herein.
The most recent annual report and the latest semi-annual report, if
published thereafter form an integral part of'this Prospectus.
These documents and the Simplified Prospectus(es) published by the
Fund are available at the registered o f i ce of the Fund and from
its local sales agents listed in Appendix I.
Thc Managcmcnt Company or JPMorgan Chase & Co. may use
telephone recording procedures to record, inter alia, transaction
orders or instructions. By giving such instructions or orders by
telephone: the counterparty to such transactions is deemed to
consent to the tape-recording of conversations between such
counterparty and the Management Company or JPMorgan Chase & Co.
and to the use of such tape recordings by the Management Company
and/or JPMorgan Chaw & Co. i n legal proceedings or otherwise
at their discretion.
C O N T E N T S
Principal Features and Glossary
....................................................................................................................................................................
5 Board of Directors
........................................................................................................................................................................................
10 Management and Administration
................................................................................................................................................................
i i investment Policies
........................................................................................................................................................................................
i2
I . Spccitic Investment Policy of each Sub-Fund
............................................................................................
12 2 . Securitics Lcnding
......................................................................................................................................
12 3 . Pooling
........................................................................................................................................................
12 4 . Investment Considerations
..........................................................................................................................
12
The Shares
.....................................................................................................................................................................................................
13 I . Subscription for Shares
...............................................................................................................................
14 2 . Minimurn Subscription and Holding Amounts and Eligibility
for Shares ................................................. 15 3 .
Listing of Shares
.........................................................................................................................................
16 4 . Redemption of Shares
.................................................................................................................................
16 5 . Conversion of Shares
..................................................................................................................................
17 6 . Transfer of Shares
.......................................................................................................................................
17 7 . Restrictions on subscriptions and conversions into certain
Sub-Funds ......................................................
18
General lnformation
.....................................................................................................................................................................................
18
. _
. . .
. .
1 . 2 . 3 . 4 . 5 . 6 . 7 . x . 9 . I0 . 1 1 . 12 . 13 .
. . .
I . 2 . 3 . 4 . 5 . 6 .
1 . 2 . 3 . 4 . 5 . 6 . 7 .
Board of Directors
......................................................................................................................................
24 Management Company and Domiciliary Agent
.........................................................................................
24 Invcstmcnt Managcrs
..................................................................................................................................
25 Custodian. Corporate arid Administrative Agcnt
........................................................................................
25 Commission Sharing Arrangements
...........................................................................................................
26 Brokerage Arrangements
............................................................................................................................
26
. .
1 . The Fund
.....................................................................................................................................................
29 2 . Shareholders
...............................................................................................................................................
29 3 . European IJnion Tax Considerations
..........................................................................................................
29
Appendix I - Information for lnvestors in Certain Countries
...................................................................................................................
31 I . Austria
.........................................................................................................................................................
31 2 . France
.........................................................................................................................................................
31 3 . Kepublic of Ireland
.....................................................................................................................................
31 4 . Italy
.............................................................................................................................................................
33
2
c
. 5 . Thc Netherlands
..........................................................................................................................................
33 6 . Spain
...........................................................................................................................................................
33 7 . United Kingdom
.........................................................................................................................................
33
Appendix 11 - Investment Restrictions and Powers
...................................................................................................................................
35 I’inaiicial Derivative Instrun~cnts
........................................................................................................................
40
Appendix 111 - Sub-Fund Details
.................................................................................................................................................................
46 1 . Classes of Shares
........................................................................................................................................
46
. .
2 . Risk Manageinelit Process ..................................
........................................................................
.Jl’h.lorgan investment Funds - Global Select Equity Fund
......................................................................................................................
63 JPMorgan Investment Funds - Global Teletech Fund
...............................................................................................................................
65
JPMorgan Investment Funds - . lapan SO Equity Fund
.............................................................................................................................
68
JPMorgan Investment Funds - . Japan Select Equity Fund
........................................................................................................................
72 JPMorgan Investment Funds - L‘S SO Equity Fund
...................................................................................................................................
74 JPMorgan Investment Furids - U S Disciplined Equity Fund
....................................................................................................................
76
.JP h.iorg.in investment Funds - U S Dynamic Small Cap Fund
..................................................................................................................
80
. 1PMorg.in investment Funds - U S Equity Fund
........................................................................................................................................
82
. IPMorgan investment Funds - US Market Neutral Fund
........................................................................................................................
84 JPMorgan Investment Funds - L S Select Equity Fund
.............................................................................................................................
86
Total Return Sub-Funds
..............................................................................................................................
88 JPMorgan Investment Funds - Emerging Markets Total Return Fund
(EUR)
......................................................................................
89 JPMorgan Investment Funds - Europe Total Return Fund
......................................................................................................................
91 JPhlorgan Investment Funds - Global Total Return Fund (EUR)
...........................................................................................................
93 JPMorgan Investment Funds -Global Total Return Fund (USD)
...........................................................................................................
95
5 . Balanced Sub-Funds .......
.....................................................................................................................
97 JPJlorgan Investment Funds - Blue and Green Fund
...............................................................................................................................
97 JPMorgan Investment Funds -Global Balanced Fund (Et!R)
.................................................................................................................
99
JPMorgan Investment Funds - Highhridge Statistical Market Neutral
Fund
.........................................................................................
66
JPMorgan Investment Funds - . lapan Brhavioural Finance Equity Fund
...............................................................................................
70
JPMorgan investment Funds - 1:s Dividend Fund
....................................................................................................................................
78
4 .
JPYlorgan Investment Funds - Global Balanced Fund (r!Su)
................................................................................................................
101 JPMorgan Investment Funds -Global Capital Appreciation Fund
.......................................................................................................
103 JPMorgan Investment Funds - Global Capital Preservation Fund
(EUR)
............................................................................................
105 JPMorgan Investment Funds - Global Capital Preservation Fund
(USD)
............................................................................................
107
Convcrtibles Sub-l;uiids
............................................................................................................................
109 JPRlorgan Investment Funds - Global Convertibles Fund (uSD)
..........................................................................................................
109
Bond Sub-Funds
.......................................................................................................................................
110 JPMorgan Investment Funds - Asset-Barked Fund (EIIR)
....................................................................................................................
110
JPMorgan Investment Funds - Europe Corporate Bond Fund
..............................................................................................................
114 JPMorgan Investment Funds - Europe Short Duration Fund
................................................................................................................
116 . JPMorgan Investment Funds - Flexible Bond Fund (EUR)
....................................................................................................................
118
JPMorgan Investment Funds - Glotial Bond Fund (USD)
......................................................................................................................
122 JPMorgan Investment Funds - Global Enhanced Bond Fund
................................................................................................................
124
JPMorgan Investment Funds - Global High Yield Bond Fund
..............................................................................................................
128 JPhlorgan Investment Funds - Global Short Duration Fund
.................................................................................................................
130
JPMorgan Investment Funds - Inflation Plus Fund (EUR)
....................................................................................................................
136 JPMorgan Investment Funds - U S Bond Fund
........................................................................................................................................
138
Moiicy Market Sub-1-unds
........................................................................................................................
142 JPMorgan Investment Funds - Euro Liquid Market Fund
.....................................................................................................................
142
6 .
7 .
JPMorgan Investment Funds - Global Bond Fund (EUR)
......................................................................................................................
120
JPMorgan Investment Funds - Global ex-US Bond Fund
.......................................................................................................................
126
JPhlorgan Investment Funds - Highhridge Income Opportunity Fund
................................................................................................
132 JPMorgan Investment Funds - ilighbridge income Opportunity Plus
Fund
........................................................................................
134
JPMorgan Investment Funds - IJS Dollar Enhanced Yield Fund
...........................................................................................................
130 8 .
Appendix IV - Risk Fartors
.......................................................................................................................................................................
144
. . Derivative Kisks
................................................................................................................................................
I45
4
Principal Features and Glossary
‘l’he following summary is qualified in its entirety by reference
to the more detailed information included elsewhere in this
Prospectus.
Articles
Directors
The Articles of Incorporation ofthe Fund as amended from time to
time.
The benchmark where listed in section 4 of Appendix 111 for cach
Sub-Fund is a point of reference against which the performance of
the Sub-Fund may be measured, unless othenvise stated. The degrcc
of coi-relation with the benchmark may vary from Sub- Fund to
Sub-Fund, depending on factors such as the risk profile. invcstmcnt
objective and investment restrictions of tlic Sub-Fund, and the
concentration of constituents in the benchmark. Where a Sub-Fund’s
benchmark is part of the investment policy, this is stated in the
investment objcctivc and policy of the Sub-Fund in Appendix 111 and
the Sub-Fund will be seeking to outperform such benchmark.
Benchmarks uscd in the calculation of the performance fees are
stated under the section “Management and Fund Charges” and where
Sub-Funds’ currency cxposurc is managed with reference to a
benchmark, the benchmarks are stated in Appendix 111. Where ‘*Not
yet determined” appears in place of the benchmark in Appendix 111.
the Sub-Fund has not yet bccn launched.
The description ‘Total Return Net’ is applied to a benchmark whcn
thc return is quoted net of tax on dividends, “lbtal Keturn Gross‘
is applied to a benchmark when the return quoted is gross of tax on
dividends, and ‘Price Index’ is applied when the return cxcludcs
dividend income.
Shares of cach Class arc issued at the Offer I’rice of such Class
determined on the applicable Valuation Day in accordance with the
relevant provisions under ”Calculation of Bid and Offer
Prices”.
Subject to certain restrictions specified herein, Shareholders may
at any time request redemptions of their Shares at the Bid Price of
the relevant Class determined on the applicable Valuation Day in
accordance with the relevant provisions under “Calculation of Bid
and Offer Prices“.
A week day other than New Year’s Eve: New Year’s Day, Easter
Monday, Christmas Day, thc day prior to and following Christmas
Day, or, if these days do not fall on week days, holidays in lieu
ofthcse days.
As more fully described under “‘l’he Shares - Conversion of Shares”
below, unless specifically indicated to the contrary in the
relevant section of Appendix 111, and subject to compliance with
any conditions (including any minimum subscription amount) of the
Class into which conversion is to be effected, Shareholders may at
any time request conversion of their Shares into Shares of another
existing Class of that or another Sub-Fund, or to Shares of any
other UCITS or other UCls managed by a member of JPMorgan Chase
& Co., on the basis of the Bid Pricc of the original Class and
thu net asset value of tlie other Class. A conversion charge may be
applicable, as more fully described under ”The Shares - Conversion
of Shares“ below.
Commission de Surveillance du Secteur Financier . The regulatory
and supervisory authority of the Fund in Luxembourg.
The assets of the Fund are held under the custody or control of
J.P. Morgan Bank Luxembourg SA.
Forward pricing (a forward price is a price calculated at the
valuation point following tlie Fund’s deal cut off time).
The Board of Directors of the Fund (the ‘.Hoard”, the “Directors”
or the “Hoard of Directors”).
5
Distributor
Dividends
The person or entity duly appointed from time to time by the
Management Company to distribute or arrange for the distribution of
Shares.
Distribution of net income attributable to Share Classes of the
Fund. as set out in the Prospectus under "Dividend Policy".
Documents of the Fund The Articles, Prospectus, Simplified
Prospectus(es), supplementary documents and financial
reports.
Eligible State Any F,U Member State, any member state of the
Organisation for Economic Co-operation and Development ("OECD"),
and any other state which the Directors deem appropriate with
regard to the investment objectives of each Sub-Fund. Eligible
States in this category include countries in Africa, the Americas,
Asia, Australasia and Europe.
EU Member State A member state of the European Union.
EU NEuro
FAT F
Financial Year
Fund
The ollicial single European currency adopted by a number of EU
Membor States participating in the Economic and Monetary Union (as
defined in European Union legislation).
Financial Action Task Force (also referred to as Groupe d'Action
Financiere Internationale "GAFI"). The FATF includes 33 members: 3
1 countries and .jurisdictions (1 5 of the EU Member States;
Argentina: Australia; Brazil; Canada; Hong KondChina; Iceland;
Japan; Mexico; New Zealand: Norway; Russian Federation; Singapore:
South Africa; Swit7erland; Turkey and the United States ofAmerica);
and two international organisations (the European Commission and
the Gulf Co-operation Council).
The financial year of the Fund ends on 3 1 December each
year.
The Fund is an investment company organised under Luxembourg Law as
a societe anonyine qualifying as a societe d'investissement a
capital variable ("SICAV"). The Fund comprises several Sub-Funds.
Each Sub-Fund may have one or more classes of Shares. The Fund is
authorised under Part I of the Luxembourg law of 20 December 2002.
relating to collective investment undertakings and qualifies as an
Undertaking for Collective Invest- meim in Transferable Securities
("UCITS") under the amended EC Directive 85/61 1 of 20 December
1985.
GBP United Kingdom pounds sterling.
Hedged Sliarc Classes Where a Class of Shares is described as
hedged (a "Hedged Share Class"), a substantial part of the assets
of the Sub-Fund attributable to that Class of Shares will be
dcnomiiiated in or hedged into the currency of that Class of
Shares. In the case of a net flow to or from a Hedged Share Class.
the hedging may not be adjusted and reflected in the Net Asset
Value of the Hedged Share Class until one or more business days
following the Valuation Day on which the instruction was accepted.
This may have a positive or negative impact on the value of Shares
in that Hedged Share Class depending on the movement of the
relevant exchange rates.
I t is generally intendcd to hedge the currency exposure of the
underlying holdings into the currency of the Hedged Share Classes
through the utilisatioii of various techniques, including entering
into Over The Counter ("OTC") currency forward contracts and
foreign exchange swap agreements. In cases where the underlying
currency is not liquid, or where the underlying currency is closely
linked to another currency, proxy hedging may be used. The costs
and expenses incurred in connection with any currency transactions
entered into to hedge currency exchange risks associated with
Hedged Share Classes, will be borne exclusively by such Hedgcd
Share Classes and may be aggregated across any Hedged Share Classes
denominated in the same currency in the same Sub-Fund.
Historical Performance Past performance information for each
Sub-Fund is contained in that Sub-Fund's
6
Simplified Prospectus, which is available at the registered oflice
ol‘thc Fund.
Institutional Invcstor(s) An investor, within the meaning of
Article 129 ofthe Luxcmbourg Law of December 2002. which currently
includes insurance companies, pension funds, credit establishments
and other professionals in the financial sector investing either on
their own behalf or on behalf of their clients who are also
investors within the meaning of this definition or under
discretionary management, undertakings for collcctivc investment
and qualified holding companies. Further description of an
Institutional Investor can be found within thc Management and Fund
Charges section.
Investment Manager
ISDA
The Managcnient Company has delegated investment management and
advisory functions for each Sub-Fund to one of the Investment
Managers listed in the Management and Administration section below
and as further specified in respect of each Sub-Fund in Appendix
111.
Thc International Swaps and Derivatives Association is the global
trade association representing participants in the privately
negotiated derivatives industry.
JPMorgan Chase & Co. The Management Company’s ultimate holding
company, whose principal office is located at 270 Park Avenue, New
York, N.Y. 10017-2070. USA and that company’s direct and indirect
subsidiaries and afliliates worldwide.
JPY Japanese Yen.
LlBlD
LlHOH
(London Interbank Bid Ratc). The bid rate that a bank is willing to
pay to attract a deposit from another bank in the London interbank
market.
(London Interbank Offered Rate). The rate of interest at which
hanks borrow funds. in marketable size, from other banks in the
London interbank market.
Listing of Shares The Shares of each Class of each Sub-Fund (except
Class X Shares) are, or will on issue, be listed on the Luxembourg
Stock Exchange unless stated to the contrary in the relevant
section ofAppendix Ill.
Management Company JPMorgan Asset Management (Europe) S.a r.1. has
been designated by the Directors of the Fund as Management Company
to provide investment management, administration and marketing
functions to the Fund with the possibility to delegate part of such
functions to third parties.
Minimum Investment The minimum invcstment levels for initial and
subsequent investments are specified under “The Shares - Minimum
Subscription and I lolding Amounts and Eligibility for Shares”
below.
Mortgage-backed security (MBS)
A security representing an interest in a pool of loans secured by
mortgages. Principal and interest payments on the underlying
mortgages are used to pay principal and interest on the
security.
Net Asset Value per In relation to any Shares of any class, the
value per Share determined in accordance with Share the relevant
provisions described under the heading ”Determination of the Net
Asset Value
of Shares” as set out in the section “General Information”.
Reference Currency The reference currency of a Sub-Fund (or a Class
thereof, if applicable) which, however, does not necessarily
correspond to the currency in which the Sub-Fund’s assets are
invested at any point in time. Where currency is used in the name
of a Sub-Fund. this merely refers to the reference currency of the
Sub-Fund and does not indicate a currency bias within the
portfolio. Individual Share Classes may have different currency
denominations which denote the currency in which the Net Assct
Value pcr Share is expressed. These differ from I ledged Share
Classes which are described above.
7
Regulated Market The market defined in item 13 of Article 1 of the
Council Directive 93/22/EEC of 10 May 1993 on investment services
in the transferable securities field, as amended, as well as any
other market in an Eligible State which is regulated, operates
regularly and is recognised and open to the public.
Risk Considerations As more fully described under Appendix IV,
investors should note that the value of an investment in the Shares
may fluctuate and the value of Shares subscribed by an investor is
not guaranteed.
Shares Shares of each Sub-Fund will be ofrered in registered form.
All Shares must be fully paid for and frsctions will be issued up
to 3 decimal places. Registered Shares will be issued and confirmed
by means of a contract note dispatched to the investor, following
the issue of the Shares. No Share certificates will be issued.
Shares may also be held and transferred through accounts maintained
with clearing systems.
Share C: lass( es)/ Class(es) of Shares
l'ursuant to the Articles of the Fund, the Board of Directors may
decide to issue, within each Sub-Fund, separate classes of Shares
(hereinafter referred to as a "Sharc Class" or "Class of Shares",
as appropriate) whose assets will be coinmonly invested but where a
specific initial or redemption charge structure, fee structure,
minimum subscription amount, currcncy or dividend policy may be
applied. I f different Classes are issued within a Sub-Fund: the
details of each Class are described in the relevant section
ofAppcndix Ill.
Share Dealing
Valuation Day
Shares are available for subscription, conversion and redemption on
each Valuation Day for the relevant Sub-Fund or Sub-Funds, subject
to the limitations and charges set out in the section "The
Shares".
A holder of Shares.
In accordance with the requirements of the Luxembourg Law and
applicable CSSF circulars, the Fund publishes. in addition to this
Prospectus, a Simplified Prospectus for each Sub-Fund which
contains the information required by Schedule C ofAnnexe I to the
aforesaid law. The Simplified Prospectus includes amongst others,
information on the past performance of each Sub-Fund, which will be
updated on an annual basis.
A specific portfolio of assets and liabilities within the Fund
having its own nct asset value and represcntcd by B separate Class
or Classes of Shares, which are distinguished Inainly by their
specific investment policy and objective and/or by the currency in
which they are denominated. The specifications of each Sub-Fund are
described in the relevant section of Appendix I l l to this
Prospectus. The Board may, at any time, decide to create additional
Sub-Funds and, in such case: Appendix I11 KI this Prospectus will
be updated.
A forward contract on a generic pool of mortgage-backed securities.
The specific MRS pools are announced and allocated prior to
delivery date.
An Undertaking for Collective Investment.
An Undertaking for Collective Investment in Transferable Securities
governed by the amended EC Directive 85/61 1 of 20 December
1985.
United States dollars.
The Net Asset Value per Share of each Class is determined on tach
day which is a valuation day for that Sub-Fund. Unless otherwise
specificd in the relevant section of Appendix 111, a "Valuation t h
y " is a Business Day other than a day on which any exchange or
market on which a substantial portion of the relevant Sub-Fund's
investments is traded, is closed or while dealings on any such
exchange or market are restricted or suspended. Requests for issue,
redemption. transfer and convcrsion of Shares of any Class are
accepted by the Fund in 1,uxemboui-g on any Valuation Day of the
relevant Sub-Fund. A list of expected non-valuation days is
available from the Management Company on request.
Value at Risk (VaR) Value at Kisk (VaK) provides a measure of the
potential loss that could arise over a given time interval under
normal market conditions, and at a given confidence level.
All references herein to time are to Luxembourg time unless
otherwise indicated.
Words importing the singular shall, where the context permits,
include the plural and \ w e * versa.
JPMORGAN INVESTMENT FUNDS Societe d'lnvestissement a Capital
Variable
Registered office: 6, route de 'li-eves, 1 ,-2633 Sunningerberg,
Grand Duchy of Luxembourg R.C.S. Luxembourg B 49 663
Board of Directors
Chairman lain 0. S. Saunders: Banker. Duine, Ardfern, Argyll PA3 1
SQN, IJnitcd Kingdom
Directors AndrC Elvinger. Partner, Elvinger, I loss and Prussen, 2,
place Winston Churchill, L-2014 Luxembourg, Grand Duchy of
Luxembourg
Jean Frijns, Professor, Finance and Investments, Antigonelaan 3,
NL-563 1 L R Eindhoven, The Netherlands
Andrea L. HaLcn, Managing Director, JPMorgan Asset Management (UK)
Limited: Finsbury Dials, 20 Finsbury Street. London. EC2Y 9AQ,
United Kingdom
Pierre Jaans, Economist, 3, rue de Kahler, LA356 Garnich, Grand
Duchy of Luxembourg
Herndt May, Vice President, JPMorgan Asset Management (Europe) S.a
r.1.: Austrian Branch, Fuhrichgasse R. 101 0 Wien. Austria.
Robert van der Meer, Professor of Finance, 9A, I.,ange Vijverberg.
N L 2 5 13 AC The Hague. The Netherlands
10
Management and Administration
Management Company and Domiciliary Agent JPMorgan Asset Management
(Europe) S.a r.]., European Bank & Business Centre, 6, route de
Tri-vcs, 1.-2633 Senningerberg, Grand Duchy of LUXcinbQurg
Investment Managers JPMorgan Asset Management (UK) Limited. having
irs principal place ol‘busintss at Fillsbury Ilials, 20 Finsbury
Street. London EC2Y 9AQ, United Kingdom (authorised and regulated
by the Financial Services Authority (FSA))
J.P. Morgan Investment Management Inc., 245 Park Avenue. New York,
NY 10 167, United States of Amcrica
J I’Morgan Asset Management (Japan) Limited, Tokyo Building, 7-3.
Marunouchi 2-chomc Chiyoda-ku, I’okyo 100-6432. Japan
JF Asset Management Limited, 21 st tloor, Chatcr House. 8 Connaught
Road, Central. Hong Kong
American Century Global Investment Management: Inc.. 666 Third
Avcnuc, Ncw York, NY 1001 7, United States ofAmerica
Highbridge Capital Management. LLC, 9 West 57th Street, New York,
NY 10019, United States ofAmerica.
or such other company as the Management Company ma)] appoint as
investment adviser and manager to a specific Sub-Fund and which is
identified as such in the relevant section ofAppendix 111 ofthis
Prospectus.
Custodian, Corporate and Administrative Agent J.P. Morgan Bank
Luxembourg S A . , European Bank & Business Centre. 6: route de
‘I’rkves, 1,-7633 Senningerberg Grand Duchy of Luxembourg
Auditors PricewaterhouscCoopcrs Si r.1.. 400, route d’Esch. E t ?
1443, Ll014 L,uxembourg, Grand Duchy of I.uxernbourg
Luxembourg Legal Advisers Elvinger, Hoss and Prussen, 2, place
Winston Churchill. B.P. 425, L-20 14 Luxembourg, Grand Duchy of
Luxembourg
1 1
Investment Policies
1 . Specific Investment Policy of each Sub-Fund
The Board o f Directors has determined the investment policy and
objective of each of the Sub-F'unds as dcscribcd in Appendix I l l
to this Prospectus. There can be no assurance that the investment
objective for any Sub-Fund will be attained. Pursuit of the
investment policy and objective of any Sub-Fund must be in
compliance with the limits and restrictions set forth in Appendix
1. "Investment Rcstrictions and Powers".
2. Secu r i t ies Lending
Each Sub-Fund may engage in securities lending in compliance with
the limits and restrictions set forth in Appendix I . "Investment
Restrictions and Powers".
In respect of third parties, including members of JPMorgan Chase
&Co., orgariising or structuring securities lending
arrangements or acting as agents in relation to securities lending
transactions, the Fund may share with such third parties the
revenues arising from the securities lending transactions as may be
agreed behveen the Fund and such third parties from time to time.
The Board of Directors will ensure that revenues arising from
securities lending arrangements are in accordance with usual market
practice and that the Fund retains an appropriate share thereof.
The net revenues of the Fund arising from securities lending
transactions are specified in the semi-annual and annual reports
published by the Fund.
3. Pooling
Where the investment policies of the Sub-Funds (and applicable laws
and regulations) so permit, and for the purpose of effective
management, the Board of Directors, in accordance with the
Articles, may pool the management of all or part of the assets of
the Sub-Funds concerned so that each Sub-Fund will participate in
the relevant pool of assets in proportion to the assets contributed
thereto by the relevant Sub-Fund. For further details, see undur
"General Information - Pooling".
4. Investment Considerations
Investing in 1e.w developed or emerging mnrkets
Investors should note that certain of thc Sub-Funds may invest in
less developed or emerging markets as described in the relevant
section of Appendix 1 1 1 for such Sub-Funds. These markets may be
volatile and illiquid and the investments of the Sub-Funds in such
markets ma)' be considered speculative and subject to significant
delays in settlement. 'I'he risk of significant lluctuations in the
net asset value and of the suspension of redemptions in those
Sub-Funds may be higher than for Sub-Funds investing in major world
markets. I n addition: there may be a higher than usual risk of
political, economic, social and religious instability and adverse
changes in govcrnmcnt regulations and laws in less developed or
emerging markets. The assets of Sub-Funds investing in such
markets: as well as the income derived from the Sub-Fund, may also
be affected unfavourably by fluctuations in currency rates and
exchange control and tax regulations and consequently the net asset
value of Shares of these Sub-Funds may be subject to significant
volatility. Somt ol'thesc markets may not be subject to accounting,
auditing and financial reporting standards and practices comparable
to those of more developed countries and the securities markets of
such markets may be subject to unexpected closure. In addition,
there may be less government supervision, legal regulation and less
well defined tax laws and procedures than in countries with more
developed securities markets.
Investors should consult a profcssional adviser as to the
suitability for them of an investment in any Sub-Fund and in
particular any Sub-Fund investing in less developed or emerging
markets. Subscriptions to Sub-Funds investing in such markets
should bc considered only by invcstors who are aware of, and able
to bear, the risks related thereto and such investments should be
made on a long-term basis.
Itrve.$ting in Equity Securities
Investing in equity securities may oRer a higher rate of return
than those in short term and longer term debt securities. However,
the risks associated with investments in equity securities may also
be higher, because the investment performance of equity securities
depends upon factors which are dificult to predict. Such factors
include the possibility of sudden or prolonged market declines and
risks associated with individual companies. I he fundamental risk
associated with any equity portfolio is the risk that the value of
the investments it holds might decrease in value. Equity security
values may fluctuate in response to the activities of an individual
company or in response to general market and/or economic
conditions. Historically, equity securities have provided greater
long-term returns and have entailed greater short-tern1 risks than
other investment choices.
I2
Foreign Currency Evclrunge Trrmsrictions
Sub-Funds may buy and sell securities and receive interest and
dividends in currencies other than the currency in which the
rclevant Sub-Fund's Shares are denominated and accordingly such
Sub-Funds may enter from time to time into currency exchange
transactions either on a spot (i.e. cash) basis or by buying
currency cxchangt. forward contracts.
Neither spot transactions nor forward currency exchange contracts
eliminate fluctuations in the prices of a Sub-Fund's securities or
in foreign exchange rates. or prevent loss if the prices of these
securities should decline.
A Sub-Fund may cntcr into currency exchange transactions in an
attempt to protect against changes in a country's currency exchange
rates between the trade and settlement dates of specific securities
transactions or anticipated securities transactions. A Sub-Fund
rnay also enter into forward contracts to hedge against a change in
such currency exchange rates that would cause a decline in the
value of existing investments denominated or principally traded in
a currency other than the reference currency of that Sub-Fund. To
do this. the Sub-Fund would enter into a forward contract to sell
the currency in which the investment is denominated or principally
traded in exchange for the reference currency of the
Sub-Fund.
Although these transactions are intended to minimise the risk of
loss duc to a decline in the value of the hedged currency, at the
same time they h i t any potential gain that might be realised
should the value of the hedged currency increase. The precise
matching of the forward contract amounts and the value of the
securities involved will not generiilly he possible because the
future value of'sucli securities will change as a consequence of
market movements in the value of such securities bctwecn the date
when the forward contract is entered into and the date when it
matures. Therefore the successful execution o f a hedging s t ra
tqy which matcher; exactly the profile of the investments of*any
Sub-Fund cannot be assured.
Inve.sting iii fruEcr arid jloating rnie Debt Securities
Investment in fixed and floating rate debt securities is subject to
interest rate, sector. securiv and credit risks. Information
relating to the credit quality of the fiscd and floating rate debt
securities o f a particular Sub-Fund is _given in Appendix I l l .
1,ower-rated securities will usually ofrer higher yields than
higher-rated securities to compensate for the reduced
creditworthiness and increased risk of default that these
securities carry. Lower-rated securities generally tend to ieflect
short-term corporate and market developments to a greater extent
than higher-rated securities which react primarily to fluctuations
in the general level of interest ratcs. There are fewer investors
in lower-rated securities, and it may be harder to buy and sell
securities at an optimum time.
Investors should note that credit ratings rnay not necessarily
reflect the true risk of an investment and that the Investment
Manager may use its own set ofcredit rating critcria to perform his
credit analysis, which may differ from the criteria used by the
credit rating agencics.
For the purpose of applying the credit rating to investment
decisions, the Investment Manager considers that all securities
within one category are equivalent. For example, a niinimuni credit
requirement o f A means that all securities rated A or A
complemented by any signs or numbers, regardless of the credit
rating agency, would be considered equivalent.
In instances where two or more credit ratings are published by
independent credit rating agencies for a specific security and
differ, the higher of these ratings shall be adopted.
The volume of transactions effected in certain international bond
markets may be appreciably below that of the world's largest
markets. such as the United States. Accordingly, a Sub-Fund's
investments in such markets may be less liquid and their prices may
be more volatile than coinparable investments in securities trading
in markets with larger trading voluinerj. Moreover, the suttlcmcnt
periods in certain markets may be longer than in others which may
affect portfolio liquidity.
The Shares
Subject to the restrictions described below: Shares of'cach Class
of cach Sub-Fund are freely transfirablc and arc each entitled to
participate equally in the profits and liquidation proceeds
attributable to that Class. The rules governing such allocation are
set forth below. The Shares, which are of no par value and which
must be fully paid upon issue, carry no preferential or pre-emptive
rights, and each one is entitled to one vote at all general
meetings of Shareholders and at all meetings of the Sub-Fund in
which Shares are held. Shares redeemed by the Fund become null and
void.
The Board ofnirectors may restrict or prevent the ownership of its
Shares by any person. firm or corporation, ifthe ownership is such
that it may bo against the interests of the Fund or of the majority
of its Shareholders or of any Sub-Fund or Class therein. Where it
appears to the Board of Directors that a person who is precluded
from holding Shares. either alonu or in conjunction with any other
person, is a beneficial owner of Shares. the Fund may proceed to
compulsory redemption of all Shares so owned.
13
'l'he Management Company and/or JPMorgan Chase & Co. may, at
their absolute discretion, delay the acceptance of any subscription
for Shares of a Class restricted to Institutional Investors until
such date as it has received sufficient evidence on the
qualification of the investor as an Institutional Investor. If it
appears at any time that a holder of Shares of a Class restricted
to Institutional Investors is not an Institutional Investor. the
Management Company will either redeem the relevant Shares in
accordance with the provisions under "Redemption of Shares" below,
or convert such Shares into Shares of a Class which is not
restricted to Institutional Investors (provided there exists such a
Class with similar characteristics) and notify the relevant
Shareholder of such conversion.
IJnlcss otherwise specified in Appendix I l l for any Sub-Fund,
applications for subscriptions, redemptions and conversions from or
to any Sub-Fund will be dealt with on the Valuation Day on which
they are received, provided they are received prior to 2.30 p.ni.
I,uxembourg time on that Valuation Day. Applications received after
such time will be accepted on the next Valuation Day. As a result
ofthis, applications for the subscription, redemption and
conversion of Shares shall be dealt with on an unknown net asset
value basis before the determination oftlic net asset value for
that day.
Specifically, the Fund does not permit market timing (as set out in
CSSF circular 04/146) or related excessive, short-term trading
practices. In order to protect the best interests of Shareholders:
the Fund and/or the Management Company reserve the right to reject
any application for the subscription or conversion of Sharcs from
any investor engaging in such practices or suspected of engaging in
such practices and to take such further action as they. in their
discretion, may deem appropriate or necessary.
Further information in relation to the subscription, conversion and
redemption of Shares is set out below.
1. Subscription for Sharcs
Subscriptions for Shares in each Sub-Fund can be made on any day
that is a Valuation Day for the relevant Sub-Fund. Applications for
Shares should be sent to one of the sales agents (hereinafter
referred to as "Sales Agents") at the address given under
"lnfoimation for Investors in Certain Countries" below or to the
Management Company or, in either case, at the address given in the
annual report.
The initial launch date or offering period for each newly created
or activated Class or Sub-Fund will be disclosed in the application
form and in the latest annual report of the Fund. The application
form will be updated as new Classes or Sub-Funds become available.
The Hoard of Ik-ectors may fix minimum subscription amounts for
each Class which. if applicable, are detailed below under "The
Shares - 2. Minimum Subscription and Holding Amounts and
Eligibility for Shares". The Board of Directors has the discretion,
from time to time: to waive any applicable minimum subscription
amounts. The relevant minimum subscription amount shall not apply
whew the Shat-es arc subscribed for by companies in JPMorgan Chase
& Co. or by third party investment managers or distributors
approved by JPMorgan Chase & Co. who are subscribing on behalf'
of their clients.
Shares of each Class shall be allotted at the Ofher Price of such
Class determined on the Valuation Day on which the application has
been accepted.
A transaction charge may also apply to any subscription or
redemption of Shares. Details of such charge, if any, are provided
in Appendix 111. Shares are normally only issued on receipt of
cleared funds. In the case of subscriptions from approved financial
intermediaries or other investors authorised by the Management
Company, the issue of Shares is conditional upon the receipt of
settlement in cleared hinds within a previously agreed period not
normally exceeding 3 Business Days ( 1 Business Day in the case of
the US Dollar Enhanced Yield I (acc) USL) share class) after
aCCepbdnce of the application for subscription.
If, on the settlement date, banks are not open for business, or an
interbank settlement system is not operational, in the country of
the currency of the relevant Class. then settlement will be on the
next Business Day on which those banks and settlement systems are
open. Payment for Shares must be received by the Custodian in the
reference currency of the rclevant Class. Request for sub-
scriptions in any other major freely convertible currency will only
be accepted if so determined by the Board of Directors and on the
basis of receipt of cleared funds by the Custodian. A currency
exchange service for subscriptions is provided by the Management
Company on behalf of, and at the cost of, the investors. Further
information is available from the Management Company on request.
Payment by cheque will not normally be accepted. The Board of
Directors may from time to time accept subscriptions for Shares
against contribution in kind of securities or other assets which
could be acquired by the relevant Sub- Fund pursuant to its
investment policy and rcstrictions. Any such contribution in kind
will be valued in an auditor's report drawn up in accordance with
the requirements of Luxembourg law. All supplemental costs
associated with contributions in kind will not be borne by the
Fund.
The Board of Directors reserves the right to accept or refuse any
application in whole or in part and for any reason. The Fund may
also limit the distribution of Shares o f a given Class or Sub-Fund
to specific countries. The issue of Shares of a given Class
14
shall be suspended whenever the determination of the Net Asset
Valuc per Share of such Class is suspended by the Fund (see
"General Information - Temporary Suspension of Issues: Redemptions
and Conversions").
Pursuant to the Luxembourg law of 19 February 1973 (as amended).
the law of S April 1993 (as amended) and to the law of 12 November
2004 and ar;sociated circulars of the Luxembourg supervisory
authority, obligations have been outlined to prevent the use of
undertakings f'or collective investment such as the Fund for money
laundering purposes. Within this context a procedure for the
identification of investors has been imposed: the application form
of an investor must be accompanied by such documents set out in the
current version of the application form. which can be obtained from
the Management Company. Such idcntilication procedure may be waived
by the Management Company in the following circumstances:
a) in the case of subscriptions through an intermediary of a
financial sector resident in a country which imposes an
identification obligation equivalent to that required under
Luxembourg law for the prevention of money laundering;
b) in the case of subscription through an intermediary or nominee
whose parent is subject to an identification obligation equivalent
to that required by 1.uxembourg law and where the law applicable to
the parent imposes an equivalent obligation on its subsidiaries or
branches.
It is generally accepted that professionals of the financial sector
resident in a country which has ratilicd the conclusions of the
FATF are deemed to have an identification obligation equivalent to
that required by Luxembourg law.
Confirmation of completed subscriptions will normally be despatched
on the Business Day following the execution of the subscription
instructions. Investors are advised to refer to the terms and
conditions on the application form to inform themselves fully ofthe
terms and conditions to which they are subscribing.
The Management Company may enter into agreements with certain
Distributors (as defined hereafter) pursuant to which they agree to
act as or appoint nominees for investors subscribing for Shares
through their facilities. In such capacity the Distributor may
effect subscriptions, conversions and redemptions of Shares in
nominee name on behalf of individual investors and request the
registration of such operations on the register of Shareholders of
the Fund in such nominee name. The noininee/Distributor maintains
its own records and provides the investor with individualised
information as to its holdings of Shares in the Fund. Except where
local law or custom proscribes the practice. investors may invest
directly in the Fund and not avail thcmsclves o f a nominee
service. Unless otherwise provided by local law. any Shareholder
holding Shares in a nominee account with a Distributor has the
right to claim, at any time, direct title to such Shares.
Regular Savings Plan
Regular Savings Plans are available in certain countries in which
the Fund is authorised, the details ofwhich may be obtained at any
time from the Management Company of the Fund upon request. Fees and
commissions levied during the first year of the investor's Regular
Savings Plan shall not be more than one third ofthe gross amount
invested by the investor in that year.
2. Minimum Subscription arid Holding Amounts and Eligibility for
Shares
'l'he minimum subscription amount and minimum holding requirement
for each Class of Sharcs of each Sub-Fund are shown in Appendix I I
I .
The Hoard of Directors has the discretion: from time to time, to
waive or reduce any applicable mininium subscription amounts. The
relevant minimum subscription amount shall not apply where the
Shares are subscribed for by companies in JPMorgan Chase Clr Co. or
by third party investment managers or distributors approved by
JPMorgan Chase & Co. who arc subscribing on behalf oftheir
clients.
Where the Shareholder of a given Class within a Sub-Fund
accumulates a holding of suficicnt sire to satis@ the minimum
subscription requirements of a 'parallel Share Class' within that
Sub-Fund with lower fees and expenses. the Board of Directors may.
in its absolute discretion. convert the Shareholder's Shares into
Shares in the 'parallel Share Class' with the lower fees and
expenses. A 'parallel Share Class' within a Sub-Fund is one that is
identical in all material respects (including investment and
dividend policy) save for the minimum subscription amount and
expenses applicable to it.
The Hoard of Directors may, at any time, decide to compulsorily
~-cdcem all Shares from Shareholders whose holding is less than the
minimum subscription amount specified in the table in Appendix 111
or who fail to satisfy any other applicable eligibility
requirements set out above or stated in the relevant section of
Appendix I l l . In such case. the Shareholder concerned will
receive one monih's prior notice so as to be able to increase his
holding above such amount or otherwise satisfy the eligibility
requirements.
1s
3. Listing of Shares
Except for Class X Shares: the Shares of each Class of the
Sub-Funds arc, or will be on issue, where appropriate, listed on
thc 1,uxembourg Stock Exchange unless there is a statement to the
contrary in the relevant section of Appendix 111. If the Directors
decide to create additional Sub-Funds or Classes they may, if they
think appropriate, apply for the Shares in those Sub-Funds to be
listed on the I.uxenibourg Stock Exchange. For so long as the
Shares of any Sub-Fund are listed on the I.uxt.inbourg Stock
Exchange, the Fund shall comply with the requirements of the
Luxembourg Stock Exchange relating to those Shares.
4. Rcdernption of Sliarcs
Any Shareholder may apply for redemption of his Shares in part or
in whole on any Valuation Day. Kedemption applications should be
sent to the Management Company at its address at 6 , route de
Trkves. L-2633 Senningerberg, Grand Duchy of 1,usembourg or, if
appropriate, to the address of the relevant Sales Agent (if one has
been appointed to deal with such redemptions) as indicated under
"Information for Investors in Certain Countries" below.
Redemptions shall be erected at the Bid Price of the relevant Class
determined on the Valuation Day on which the redemption application
has been accepted. Kedemption applications will, at the discretion
of the Board of Directors, only be executed where the subscription
proceeds for the relevant Shares will have been received by the
Fund.
The Management Company may at its option carry out any
authentication procedures that it considers appropriate to verify,
confirm or clarify Shareholder payment instructions relating to a
redemption application. This aims to mitigate the risk of error and
fraud for the Fund, its agents or Sharelioldcrs. Where it has not
been possible to complete any authentication procedures to its
satisfaction. tlie Management Company may, delay the processing of
payment instructions to a date later than the cnvisagcd payment
datc for rtdemptions set out in this section, until authentication
procedures have been satisfied. This shall not affect the Valuation
Day on which the redemption application is accepted and shall not
affect the fact that the Bid Price for any redemption shall be
determined on the Valuation Day on which the redemption application
is accepted.
If the Managcnicnt Company is not satisfied with any verilication
or confirmation, it may decline to execute the relevant redemption
instruction until satisfaction is obtained. Neither the Management
Company nor the Fund shall be held responsible to the Shareholder
or anyone if it delays execution or declines to execute redemption
instructions in these circumstanccs.
Redemption payments will normally be made i n the Reference
Currency of the relevant Class and the Custodian will issue payment
instructions therefore to its correspondent bank for payment within
a previously agreed period not noiinally cxcccding 3 Business Days
( 1 Business Day in the case of the IJS Dollar h h a n c e d Yield
I (acc) USD share class) after acceptance of the redemption
application (unless otherwise specified in Appendix 111).
If, in exceptional circumstances, redemption proceeds cannot be
paid within three Business Days (up to live Business Days for deals
placed through certain Distributors, such as JF Funds Limited in
Hong Kong) from the relevant Valuation Day, for example when the
liquidity of the relevant Fund does not permit. payment will be
made as soon as reasonably practicable thereafter (not exceeding,
however, ten Business Days from the relevant Valuation Day) at the
Bid Price calculated on the relevant Valuation Day.
If: on the settlement date, banks are not open for business, or an
interbank settlement system is not operational, in the country of
thc currency of the relevant Class, then settlement will be on the
next Business Day on which those banks and settlement systems are
open. On request, redemption proceeds paid by bank transfer may be
paid in most other currencies, at the cost of the Shareholdor. I n
oxccptional circumstances the Board of Directors may request that a
Shareholder accepts 'redemption in kind' i.e. receives a portlblio
of stock from the Share Class of equivalent value to tlie
appropriate cash redemption payment. In such circumstances the
investor is free to refuse the redemption in kind and to insist
upon cash redemption payment in the reference currency of' the
relevant Class. Where the investor agrees to accept redemption in
kind he will, as far as possible. receive a representative
selection of the Share Class' holdings pro rata to the number of
Shares redeemed. The value of the redemption in kind will be
certified by an auditor's certificate drawn up in accordance with
the requirements of Luxembourg Law. All supplemental costs
associated with redemptions in kind will not be borne by the
Fund.
Unless waived by the Management Company, if; as a result of any
conversion or redemption request, the amount invested by any
Shareholder in a Class of Shares in any one Sub-Fund falls below
the minimum holding for that Class of Shares, it will be treated as
an instruction to redccm or convert, as appropriate, the
Shareholder's total holding in the relevant Class of Shares.
The application form may provide that the Shares of one or more
Sub-Funds may not be offered to, subscribed or owned, directly or
indirectly. by any US Person (as this term is defined on page 1 of
this Prospectus) or may be owned only by certain categories of US
Persons specified therein. Shareholders are required to notify the
Management Company
16
immediately in the event that they are or become US Persons or hold
Shsres for the account or benefit of US Persons or hold Shares in
breach of any law or regulation or otherwise in circumstances
having, or which may have, adverse regulatory, tax or fiscal
consequences for thc Fund or the Shareholders or otherwise be
detrimental to the interests of the Fund. If the Directors or the
Management Company become aware that a Shareholder is holding
Shares in breach of any law or regulation or othcrwisc in
circumstances having, or which may have, adverse regulatory. tax or
fiscal consequences for the Fund or the Shareholders or othcrwise
be detrimental to the interests of the Fund or the Shareholder has
become or is a US Person. the Directors or the Management Company
may. in their sole discretion, redeem the Shares of the Shareholder
in accordance with the provisions of the Articles. Should a
Shareholder become a US Person they may be subject to US
withholding taxes and tax repoiting.
Additionally, if requests for the redemption of more than 10 YO of
the total number of Shares in issuc of any Sub-Fund are received on
any Valuation Day? the Hoard of Directors may decide that
redemption requests in excess of 10% shall be postponed until the
next Valuation Day following that on which the relevant redemption
requests wcrc rcctivcd. Redemption requests which have 1101 been
dcalt with because of such postponement must be given priority to
later requests made on the next following Valuation Day or
Valuation Days until completion of the original rcqucsts.
Redemption of Shares of a given Sub-Fund shall be suspended
whenever the determination of the Net Asset Value per Share of such
Sub-Fund is suspended by the Fund (see "General Information -
Temporary Suspension of Issues, Redemptions and
Conversions").
A Shareholder may not withdraw his request for redemption of Shares
of any one Class except in the event of a suspension of the
detennination of the net asset value of the Class and, in such
event, a withdrawal will be effective only if written notification
is received by the Managemunt Company before the tennination of the
period of suspension. If the redemption request is not with- d r a
w , the Fund shall proceed to redeem on the tjrst applicable
Valuation Day fbllowing the end of the suspension of the
determination ofthe net asset value of the Shares of the relevant
Sub-Fund.
From time to time it may be necessary for the Fund to borrow on a
tcmporary basis to fund redemptions. For restrictions applicable to
the Fund's ability to borrow, see "Investment Restrictions and
Powers" below.
5. Conversion of Shares
'lb the extent described in and permitted by Appendix 111 for
certain Sub-Funds, and subject to any suspension of the
determination of the net asset values concerned, Shareholders have
tlic right to convert all or part oftheir Shares of any Class of a
Sub-Fund into Shares of another existing Class of that or another
Sub-Fund: or to Shares of any other UCITS or other UCls managed by
a mcniber of JPMorgm Chase & Co., by applying for conversion in
the same manner as for issue and redemption of Shares. I lowever?
the right to convert Shares i s subject to compliance with any
conditions (including any minimum subscription amounts and
eligibility requirements) applicable to the Class into which
conversion is to be effected. Therefore, if: as a result o f a
conversion. the value o f a Shareholder's holding in the new Class
would be less than the minimum subscription amount specified above,
under "Minimum Subscription and Holding Amounts and Eligibility for
Shares". or in Appendix Ill, where appropriate, the Board may
decide not to accept the request for conversion of the Shares. I n
addition. if; as a result of a conversion, the value of a
Sharcholdur's holding in the original Class would become less than
the relevant minimum Holding Amount, the Shareholder may be deemed
(ifthe Board so decides) to have requested the conversion of all
ofhis Shares.
The number of Shares issued upon conversion will be based upon the
Bid Price oftlie original Class and the net asset value ofthe other
Class, plus the applicable conversion fee, on the common Valuation
Day on which the conversion request is accepted. If the conversion
rcquest is received before 2.30 p.m. J,uxembourg time on a day
which is not a common Valuation Day For the relevant Classes, the
conversion will be made on the basis of' the prices calculated on
the next following Valuation Day of each of the two Classes
concerned (requests received after 2.30 p.m. 1,uxembourg time on
any Valuation Day being deferred to the next Valuation Day in the
same manner as for issue and redemption of Shares).
The Board of Directors may apply a conversion charge not exceeding
1 YO of the net asset value of the Shares in the new Class. Where a
Shareholder requests a conversion into a Class with a higher
initial charge, then the additional initial charge payable for that
Class may be charged. The Management Company is entitled to any
charges arising f?om convorsions and any rounding adjustment.
6. Transfer of Shares
The transl'cr of registered Shares may normally be efrectcd by
delivery to the relevant Sales Agent or the Management Company of
an instrument of transfer in appropriate form. On receipt of the
transfer request, the relevant Sales Agent or the Management
Company may: after reviewing the endorsement(s), require that the
signature(s) be guaranteed by an approved bank, stock broker or
public notary.
17
Shareholders are advised to contact the relevant Sales Agent or the
Management Company prior to requesting a transfer to ensure that
they have all the correct documentation for the transaction.
7. Restrictions on subscriptions and conversions into certain
Sub-Funds
A Sub-Fund may be closed to new subscriptions or conversions in
(but not to redemptions or conversions out) if. in the opinion 01‘
the Management Company, this is necessary to protect the interests
of existing Shareholders. One such circurnstance would be where the
Sub-Fund has reached a size such that the capacity of the inarkct
and/or the capacity of the Investment Manager has been reached, and
where to permit further inflows would be detrimental to the
performance of the Sub-Fund.
Any Sub-Fund which. in the opinion of the Management Company, is
materially capacity constrained may be closed to new subscriptions
or conversions without notice to Shareholders. Once closed to new
subscriptions or conversions in, a Sub-Fund will not be re-opcncd
until, i n the opinion of the Management Company, the circumstances
which required closure no longer prevail and significant capacity
is available within the Sub-Fund for new investment.
Where closures to new subscriptions or conversions occur, the
website ~vww.inmorlranassetmana~cmcnt.com will be amended to
indicate the change in status of the applicable Sub-Fund or Share
Class. Investors should confirm with the Management Company or
check the website for the current status of Sub-Funds or Share
Classes.
General Information
1 . Organisation
The Fund is an investment company organised as a societe anonyme
under the laws of the Grand-Duchy of Luxembourg and qualifies as a
socikte d‘investissement h capital variable (SlCAVj. The Fund was
incorporated in Luxembourg on 22 December 1994 for an unlimited
period. Its Articles were published in the Memorial, Recueil des
Societes et Associations C*Mkiiiorial”j on 10 February 1995. The
Fund is registered with the Rcgistre de Commerce et des SociCtes,
Luxembourg, under number B 49 663. Amendments to the Articles were
published in the Memorial on 9 September 1996, 19 November 2001 and
7 October 2005.
Consolidated Articles and a notice in respect of the issue and
redemption of the Shares by the Fund are on file with the Regi.we
de Conimerce et des Sociktk.7 in Luxembourg.
The minimum capital requircnient of thc Fund is set out by
Luxembourg Law.
The rights of Shareholders and of creditors concerning a Sub-Fund
of the Fund or which have arisen in connection with the creation
operation or liquidation of a Sub-Fund are exclusively limited to
the assets of that Sub-Fund.
2. Meetings
rT‘he annual general meeting of Shareholders (the “Annual Meeting”)
will be held at the registered office of the Fund in Luxembourg on
the last Friday of the month of April annually at 12.00 noon or, if
any such day is not a bank business day in. Luxembourg. on the ncxt
following bank business day, Notices of all general meetings will
be published in the Memorial, to the extent required by Luxembourg
Law, in the D’ Wort and in such other newspaper as the Board of
Directors shall determine and will be sent to the holders of
registered Shares by post prior to the meeting at their addresses
shown o n the register of‘ Shareholders. Such notices will include
the agenda and will specifj/ the time and place of the meeting and
the conditions of admission. They will also refer to the rules of
quorum and majorities required by Luxembourg Law and laid down in
Articles 67 and 67-1 of the Luxembourg law of 10 August 191 5 on
commcrcial companics (as amended) and in the Articles ofthe
Fund.
Each whole Share confers the right to one vote. The vote on the
payment of a dividend (if any) on a particular Sub-Fund or Class
requires a separate majority vote from the meeting of Shareholdcrs
of the Sub-Fund or Class concerned. The Management Company will
register registered Shares jointly in the names of not tnore than
four Shareholders should they so require. In such case the rights
attached to such a Share must be exercised jointly by ALL those
parties in whose name it is registered except when (ij voting at an
Annual Meeting where only the first named Shareholder may vote,
(ii) the Shareholders have indicated their desire to have
individual signatory powers. or (iiij unless one or more persons
(such as an attorney or executor) islare appointed to do so. Any
change in the Articles affecting the rights of a Sub-Fund or Class
must be approved by a resolution of both the general meeting ofthe
Fund and the Sharcholdw of the Sub-Fund or Class concerned.
3. Reports and Accounts
Audited annual reports shall be published within 4 months following
the end of the accounting year and unaudited semi-annual reports
shall be published within 2 months following the period to which
they refer. An abridged version of the audited annual reports shall
be sent to each registered Shareholder at the address s h o w on
the register of Shareholders. This abridged version encloses a
report of the Directors. a statement of the net assets of the
Sub-Funds and statistical inlbrmation, a statement of operations
and of changes in net assets of the Sub-Funds, notes to the
tinancial statements and an auditor's report. The annual and
semi-annual reports shall be made available at the registered
ofices of the Fund and the Custodian during ordinary office hours.
The Fund's accounting year ends on 3 I December each year.
Tlic reference currency of the Fund is US dollars. The aforesaid
reports will comprise consolidated accounts of the Fund expressed
in US dollars as well as individual information on each Sub-Fund
expressed in the reference currency of each Sub- Fund.
4. Allocation of assets and liabilities among the Sub-Funds
'The assets and liabilities will be allocated among the Sub-Funds
in the following manner:
(a) the proceeds from the issue of each Share of each Sub-Fund are
to be applicd in the books of the Fund to the pool of assets
established for that Sub-Fund and the assets and liabilities and
income and expenditure attributable thereto are applied to such
pool subject to the provisions set forth hereafter;
(b) where any asset is derived from another asset. such derivative
asset is applied in the books of the Fund to the same pool as the
asset from which it was derived and on each revaluation of an
asset. the increase or diminution in value is applied to the
relevant pool;
(c) where the Fund incurs a liability which relates to any asset of
a particular pool or to any action taken in connection with an
asset of a particular pool, such liability is allocatcd to the
relevant pool:
(d) in the case where any asset or liability of the Fund cannot be
considered as being attributable to a particular pool, such asset
or liability is allocated to all the pools in equal parts or, if
the amoiints so justi@, pro rata to the net asset values of the
relevant Sub-Funds;
(e) upon the payment of dividends to the holders of Shares in any
Sub-Fund, the net asset value of such Sub-Fund shall be reduced by
the amount of such dividends.
Under the Articles of the Fund, the Board of Directors may decide
to create within each Sub-Fund one or more Classes whose assets
will be commonly invested pursuant to the specific investment
policy of the Sub-Fund concerned but where a specific initial or
redemption charge structure. fee structure. minimum subscription
amount, hedging policy or dividend policy may be applied to each
Class. A separate net asset value, which will differ as a
consequence of these variable factors. will be calculated Tor cach
Class. If one or more Classes have been created within the same
Sub-Fund, the allocation rules set out above shall apply, as
appropriate, to such Classes.
5. Pooling
For the purpose of effective management, and subject to the
provisions of the Articles and to applicable laws and regulations,
the Board of Directors may invest and manage all or any part of the
portfolio of assets established for two or more Sub-Funds (for the
purposes hereof "Participating Sub-Funds") on a pooled basis. Any
such asset pool shall be formed by hansfcrring to it cash or other
assets (subject to such assets being appropriate with respect to
the investment policy ofthe pool concerned) from each of the
Participating Sub-Funds. 'lliereafter, the Board of Directors may
from time to time make further transfers to each asset pool. Assets
may also be transferred back to a Participating Sub-Fund up to the
amount of the participation of the Class concerned. The Share of a
Participating Sub-Fund in an asset pool shall be measured by
reference to notional units of equal value in the asset pool. On
formation of an asset pool, the Board of Directors shall, in their
discretion, dctcnninc the initial value of notional units (which
shall be expressed in such currency as the Hoard of Directors
consider appropriate) and shall allocate to each Participating
Sub-Fund units having an aggregate value equal to the amount of
cash (or to the value of other assets) contributud. Thereafier, the
value of the notional unit shall be determined by dividing the net
;isset value of the asset pool by the niimber of notional units
subsisting.
When additional cash or assets are contributed to or withdrawn from
an asset pool, the allocation of units of the Participating
Sub-Fund concerned will hc increased or reduced, as the case may
bel by a number of units determined by dividing the amount of cash
or the value of assets contributed or withdrawn by the current
value of a unit. Where a contribution is made in cash, it will
be
19
treated for the purpose of this calculation as reduced by an amount
which the Board of Directors consider appropriate to reflect fiscal
charges and dealing and purchase costs which may be incurred in
investing the cash concerned; in the case of cash withdrawal, a
corresponding addition will be made to reflect costs which may be
incurred in realising securities or other assets of the assct
pool.
Dividends, interest and other distributions of an income nature
received in respect of the assets in an asset pool will be
imincdiately credited to the Participating Sub-Funds in proportion
to their respective participation in the asset pool at the time of
receipt. Upon the dissolution ofthe Fund, the assets in an asset
pool will be allocated to the Participating Sub- Funds in
proportion to their respective participation in the asset
pool.
6. Determination of the Net Asset Value of Shares
The net asset valuc of tlic Shares of each Class is determined in
its reference currency on each Valuation Day by dividing the net
assets attributable to each Class by the number of Shares of such
Class then outstanding. The net assets of each Class are made up of
the value of the assets attributable to such Class less the total
liabilities attributable to such Class calculated at such time as
the Board of Directors shall have set for such purpose.
The value ofthe assets ofthe Fund shall be determined as
follows:
the value of any cash on hand or on deposit, bills and demand notes
and accounts receivable, prepaid expenses, cash dividends and
interest declared or accrued as aforesaid, and not yet received
shall be deemed to be the full amount thereof, unless, however. the
same is unlikely IO be paid or received in full, in which case the
value thereof shall be determined after making such discount as the
Board of Directors may consider appropriate in such case to reflect
the true value thereof:
thc value of securities and/or financial derivative instruments
which arc quoted or dealt in on any stock exchange shall be based
on the latest available price on the rclevant stock exchange;
securities and/or financial derivative instruments dealt in on
another regulated market are valued on the basis of the latest
available price on such market;
'fhe financial derivative instruments which are not listed on any
official stock exchange or traded on any other organised market
will be valued in a reliable and verifiable inailner on a daily
basis and in accordance with market practice;
for non-quoted securitics or securities not traded or dealt in on
any stock exchange or othcr regulated market, as well as quoted or
non-quoted securities on such other market for which no valuation
price is available, or securities for which the quoted prices arc
not representative of the fair market value, the value thereof
shall be determined prudently and in good faith by the Hoard of
Directors on the basis of foreseeable sales prices;
swaps arc v:ilued at their fair value based on the underlying
securities (at close of busincss or intraday) as well as on the
characteristics of the underlying commitments;
Shares or units in UCI-IS and other UCls shall bc valued at their
last available net asset value as reported by such
undertakings;
liquid assets and money market instruments may bc valued at nominal
value plus any accrued interest or on an amortised cost basis. All
other assets, where practice allows: may be valued in the same
manner.
To the extent that the Directors consider that it is in the best
interests of all Shareholders or potential Shareholders, given the
prevailing market conditions and the level of subscriptions or
redemptions requested by Shareholders or potential Shareholders in
relation to the size of the relevant Sub-Fund, securities may be
valued either at their bid or offer prices. The net asset value may
also be adjusted for such suin as may represent the appropriate
provision for dealing charges which may be incurred by the relevant
Sub-Fund under such conditions, provided always that such sum shall
not exceed 1% o f t h e net assct valuc of the Sub-Fund at such
time.
Sub-Funds primarily invested in markets which are closed for
business at the time the Sub-Fund is valued are normally valued
using the prices at the previous close of business. Market
volatility may result in the latest available prices not accurately
reflecting the fair value of the Sub-Fund's investments. This
situation could be exploited by investors who are aware of the
direction of market movement, and who might deal to exploit the
difference between the next published Net Asset Value and the fair
value of the Sub-Fund's investments. By thcsc investors pay ins
less than the fair value for Shares on issue, or receiving more
than the fair value on redemption, other Shareholders may suffer a
dilution in the value of their investment.
To prcvent this, the Fund may. during periods of market volatility,
adjust the Net Asset Value per Share prior to publication to
reflect more accurately the fair valuc o f the Sub-Fund’s
investrnents. The adjustment will be based upon the percentage
change in the benchmark index for the Sub-Fund since the previous
close, provided that such change exceeds the threshold as
determined by the Directors for the relevant Sub-Fund. If an
ad-justrnent is made, it will be applied consistently to all
Classes of Shares in the same Sub-Fund and at the level ofthe
percentage change in the benchmark index.
The Directors are authorised to apply other appropriate valuation
principles for the assets of the Fund a n d h the assets of a given
Class if the aforesaid valuation methods appear impossible or
inappropriate due to extraordinaiy circumstances or events.
Tlic value of assets denominated in a currency other than the
reference currency of a Sub-Fund shall be determined by taking into
account the rate of exchange prevailing at the timu ofthe
determination of the net asset value.
The Net Asset Value per Share of each Class and the Hid and OtTer
Prices thereof arc available at the registered otlice of the
Fund.
7. Calculation of Bid arid Offer Prices
The Offer Price per Share of each Class is calculated by adding an
initial charge, if any, to the Net Asset Value per Share. The
initial charsc will be calculated as a percentage of the Net Asset
Value per Share not exceeding the levels shown in Appendix
111.
The Bid Price per Share of each Class is calculated by deducting a
redemption charge, if any, from the Net Asset Value per Share. The
redemption charge will be calculated as a percentage of the Net
Asset Value per Share, riot exceeding the levels shown in Appendix
1 1 1 .
For publication purposes the Bid and Offer prices will be rounded
to the same number of decimal places as the Net Asset Value per
Share of the relevant Sub-Fund.
8, Temporary Suspension of Issues, Redemptions and
Conversinns
The detei-inination of thc nut asset value of Shares of one or more
Classcs may be suspended during:
any period when any of the principal markets or stock exchanges on
which a substantial portion of the investments of the Sub-Fund
concerned is quoted or dealt in, is closed otherwise than for
ordinary holidays, or during which dealings therein are restricted
or suspended; or
the existence of any state ofalyairs which constitutes an emergency
as a result ofwhich disposal or valuation of assets of the Sub-Fund
concerned would be impracticable: or
any breakdown in the means of cotnmunication or computation
noimally employed in determining the price or valuc of the assets
of the Sub-Fund concerned or the current prices or values on any
market or stock exchange: or
any period when the Fund is unable to repatriate funds for the
purpose of making payments on the redemption of Shares or during
which any transfer of funds involved in the realisation or
acquisition of‘ investments or payments due on redemption of Shares
cannot in the opinion of the Board of’ Directors be effected at
normal rates of exchange; or
any other circumstance or circumstances where a failure to dn so
might result in the Fund or its Shareholders incurring any
liability to taxation or sufr’cring other pecuniary disadvantages
or other detriment which the Fund or its Shareholders might not
otherwise have suffered.
‘I’he Board of Directors has the power to suspend the issue.
redemption and conversion of Shares in one or more Classes for an)’
period during which the determination