Products Available for Brokerage Accounts

This section is intended to provide you with a general description of the various products available within a brokerage account. While we will take care in developing and making recommendations to you, securities and investment products involve risk, and you may lose money. There is no guarantee that you will meet your investment goals, or that our recommended investment strategy will perform as anticipated.

Please note that the fees outlined in this Guide are specific to U.S. products and services. If you are a client of the International Private Bank, refer to the Full Service Brokerage with Custody Accounts Fee Schedule—International Clients in Section 5, starting on page 20, or contact your J.P. Morgan team for information on fees and expenses relating to the products and services available to you. Please also be aware that some account types, and certain products and services, may not be available to all clients.

 

Equities/Stocks

Description:

What is a stock?

  • Stocks represent an ownership interest in a company. When you own a company’s stock, you can have an equity interest in the company, or own a fractional portion of the company.
  • A stockholder can achieve returns through price  appreciation/depreciation and dividends.
  • A stock’s market value can change at any moment, depending on market conditions, investor perceptions, or a host of other issues.
  • Owning stocks typically gives you the right to vote on important company issues and policies.
  • Stockholders have a claim on a company’s assets if the company goes bankrupt. However, in the event of liquidation, stockholders will receive what is left after all of the company’s creditors have been paid.

There are different types of stocks:

  • Listed Common stock—Stock that is made available by public companies to the public for purchase (typically through an initial public offering, or an “IPO”), and may also refer to the secondary trading of these shares.
  • Preferred stock—Stock that entitles the holder to a fixed dividend, and whose payment takes priority over that of common stock dividends.
  • Restricted stock—Shares in a company issued in private transactions (for example, to employees as part of their pay), but which cannot be transferred by them until certain conditions have been met.

In addition to exchange-traded securities, we offer equities in the following ways: 

  • Equity syndicate1 —We may participate in an Initial Public Offering (IPO), which is the first sale of shares of a company to the public.
  • Secondary offering—We also may participate in a Secondary Offering, which is the sale of additional shares of a company following an IPO (already trading in public market).

Fees:

As mentioned above, you pay JPMS a commission for each equity transaction, as described in the applicable fee schedule:

 

U.S. Equity Listed Clearing Member Trade Agreement (CMTA)2

CMTA (Executed Away) Fees
Transaction fee (per transaction) US $8.00
Contract fee (per contract) US $0.50

 

Cash Equities—U.S. Secondary Market

Shares Fees per share
1 to 50,000 US $0.06
50,001 or higher US $0.05
Minimum ticket charge US $25.00

 

Risks and other Relevant Information:

An investment in stock involves a number of risks. The following discussion is not meant to be exhaustive, and the risks discussed do not comprise a complete list of all the risks relating to stocks. You should consider these risks as you choose your investments.

  • The price of stocks may rise or fall because of changes in the broad market or changes in a company’s financial condition, or industry-specific risks, sometimes rapidly or unpredictably.
  • If a company becomes insolvent, its stocks are repaid only after all other debts of the company have been repaid. This can result in a potential severe reduction in, or total loss of, the value of the securities.
  • Some securities trade less frequently and in smaller volumes, often stocks of smaller or newer companies. In addition, smaller or newer companies may be more vulnerable to economic, market and industry changes and, thus, can be riskier.
  • Stocks may not be registered, publicly listed or traded on an exchange, and these securities are more likely to be illiquid and therefore subject to a higher degree of liquidity risk than registered or listed securities.
  • Issuers typically compensate JPMS for the distribution of new issues of securities. Similar to other products, compensation JPMS receives may be allocated as revenue to the Private Bank.

Resource(s) to Obtain Additional Information:

Please consult available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

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Fixed Income/Bonds

Description:

  • Bonds are debt securities of an issuer. By buying a bond, the bondholder extends a loan to the bond issuer. In return, the bond issuer promises to pay the bondholder interest periodically, and principal at maturity.
  • Fixed income securities generally provide investors with a steady stream of income, creating a consistent cash flow to investors. An investor can also use fixed income to achieve returns through price appreciation/depreciation.
  • Key risks of bonds and other fixed income investments include interest rate risk, credit risk and inflation risk, as described further below.
  • There are different types of fixed income products. The following is an illustrative list of some, but not all, of the bonds available to investors.
    • Government bonds are debt issued by a federal government to support government spending. Government bonds can pay periodic interest payments called coupon payments. Government bonds are generally considered low-risk investments since the issuing government backs them. Examples include U.S. Treasuries, Japanese Government Bonds and UK Government Bonds.
    • Municipal bonds are loans investors make to local and state governments. They are issued by cities, states, counties, or other local governments. Income from municipal bonds is generally exempt from federal taxation.
    • Agency bonds are bonds issued by a government agency. These bonds do not include those issued by the U.S. Treasury or municipalities, and are not fully guaranteed in the same way as U.S. Treasuries. Agency bonds are also known as agency debt.
    • Corporate bonds are debt obligations issued by corporations to fund capital improvements, expansions, debt refinancing, share buybacks, or acquisitions. Interest is subject to federal, state, and local taxes.
      • Investment grade corporate bonds are typically issued by high-quality corporations, those with credit ratings between AAA to BBB-.
      • High yield corporate bonds have have a higher risk of default or other adverse credit event, but typically pay higher interest rates than higher-rated bonds in order to make them attractive to investors. These bonds are typically less liquid.
    • Emerging market debt is a term used to encompass bonds issued by less developed countries. It does not include borrowing from governments, supranational organizations such as the IMF or private sources, although loans that are securitized and issued to the markets can be included.
    • Brokered CDs are certificates of deposit sold by an intermediary, called a broker. Financial institutions use brokers to market their CDs to help them gain deposits. The rates on brokered CDs tend to be very competitive because the financial institution is competing directly with other institutions for deposits.
  • In addition to exchange-traded securities, we may offer new bond issuance/syndicate, which are bond securities that have been registered, issued and are being sold on a market to the public for the first time.4

Fees:

JPMS charges a mark-up/mark-down for bond transactions. A mark-up is the difference between a security’s lowest current offering price and the price charged to the client, while a mark-down is the difference between the highest current bid price for a security and the lower price that a client receives when selling a bond. Please see the published fee schedule for Full Service Brokerage Accounts—United States for more information.

 

ASSET CLASS ($/BOND)

MAXIMUM MARK-UP

High Grade

20.00

High Yield

25.00

Treasury Bills

0.50

Treasury Notes/Bonds

6.25

Municipal Bonds

25.00

 

Risks and other Relevant Information:

Although fixed income investments are generally perceived to be more conservative than stocks, they are not without risk. Below are some of the major risks associated with fixed income securities.

  • Bond prices rise when interest rates fall and vice versa. Longer-term securities are more prone to price fluctuation than shorter-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to substantial gain or loss. Income is subject to the credit risk of the issuer of the bond. If an issuer defaults, no future income payments will be made.
  • Credit risk is the risk that the issuer of a security may not honor its obligation to pay principal or interest, resulting in a loss to the investor. You should consider the credit risk of an issuer when making an investment decision.
  • There are many fixed income products with different degrees of liquidity. There may be no market for a particular fixed income instrument, and you may not be able to sell the security at the desired time or price. Even when a market exists, there may be a substantial difference between the secondary market bid and ask price for a fixed income instrument. Even when a market exists, there may be a substantial credit spread, which is the difference in yield between two fixed income instruments that have similar maturity but different credit quality. For example, if a 10-year U.S. Treasury note has a yield of 4% and a corporate bond has a yield of 7%, the spread would be (7–4)*100 = 300 basis points.
  • The value of fixed income instruments generally moves in the opposite direction of credit spreads. Values decrease when credit spreads widen, and increase when credit spreads narrow.
  • A callable bond permits the issuer to redeem the bonds before the maturity date. Investors in callable bonds may not receive the bond’s original coupon rate for the entire term of the bond, and once the call date has been reached, the market value of the bond may be capped at the call price.
  • U.S. government securities are issued directly by the U.S. government and are guaranteed by the U.S. Treasury; however, other U.S. government securities issued by an agency of the U.S. government may not carry such a guaranty. The U.S. government may not provide financial support to its agencies if not required to do so by law. Similar risks apply to securities issued by state government agencies and municipalities.
  • Many of the risks in fixed income securities apply to other investments as well. For instance, inflation risk (the risk that returns will not keep pace with inflation) affects every investment. Foreign investments also have currency risk (the risk that currency exchange rate fluctuations may reduce gains or increase losses on foreign investments). Exchange rate volatility also may affect the ability of an issuer to repay its foreign currency denominated debt, thereby increasing credit risk.
  • Issuers typically compensate JPMS for the distribution of new issues of securities. Similar to other products, compensation JPMS receives may be allocated as revenue to the Private Bank. 

Resource(s) to Obtain Additional Information:

Please consult available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

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Structured Investments

Description:

  • Structured Investments (or “Structured Products”), in general terms, are fixed tenor securities that establish payoff profiles and detail potential benefits and risks linked to market outcomes. The underlying reference assets may include single equity or debt securities, indexes, commodities, interest rates and/or foreign currencies, as well as baskets of these reference assets or market measures.
  • Structured Products typically have two underlying component parts—a note and a derivative, which is often an option. The note, in some instances, may pay interest or a coupon rate at a specified rate and interval. (See Section 3.E for further information about derivatives.)
  • When packaged into a single security, the components of a Structured Product have the ability to adjust the underlying reference asset’s overall risk and return profile.
  • Potential investors should consider whether to invest in a Structured Product in light of their own circumstances, investment objectives, tax position and financial condition. Structured Products will be offered by prospectus, term sheet, or offering memorandum, and the offering document will provide more detailed information regarding the Structure. Potential investors should consider carefully all the information and risk factors set forth in the term sheet or Pricing Supplement along with all the information set forth in the Offering Memorandum.

Fees:

  • J.P. Morgan is typically paid a distribution fee of up to 3% of the notional amount of the security. Details on the specific fees and costs associated with each note will be contained in the term sheet for the Structured Product.
  • The issue price of a Structured Product will reflect the costs associated with issuing, selling, structuring and hedging a Structured Product, and will include compensation to an issuer or its affiliate for structuring work involved in packaging a Structured Product as one instrument.
  • Costs and compensation will vary with each Structure. A Structured Product may also include an annual fee embedded in an index or calculation, payable to the issuer or index sponsor (which may be J.P. Morgan or a non–J.P. Morgan affiliate issuer) for structuring or calculating a proprietary index or formula.
  • In addition, the issue price of a Structured Product purchased in a brokerage account will include a fee to compensate J.P. Morgan for marketing and distributing the Structured Product.
  • If a Structured Product has an early redemption feature and is redeemed prior to maturity, the compensation will not be prorated to the period during which the Structured Product was outstanding and, as a result, the rate of compensation will be higher.

Restrictions:

  • Issuers—Only Structured Products issued by J.P. Morgan–approved counterparties will be recommended. All approved counterparties are periodically reviewed.
  • Payoff Profiles—Payoff Profiles offered are documented and vetted through appropriate internal approval channels.
  • Paperless delivery—You must be enrolled in paperless delivery of all investor materials to be approved for Structured Products. If we do not have your electronic consent and email address on file, you will not be able to invest in this product.
  • Clients need to meet Suitability criteria to transact in Structured Products.

Risks and other Relevant Information:

  • Investments in Structured Products may not be suitable for all investors. These types of investments entail varying degrees of risk, and while some Structured Products offer full or partial principal protection, others can result in the loss of the full amount invested. In addition, Structured Products are subject to the issuer’s financial ability to meet its payout obligations.
  • Structured Products may not be publicly listed or traded on an exchange and therefore may be illiquid investments.
  • Prior to maturity, Structured Products will generally only be repurchased by the issuer and only upon terms and conditions acceptable to it, and, in most cases, Structured Products are non-transferable and non-negotiable. In the event that an issuer consents to early liquidation, you will likely not fully participate in any benefits of the Structured Product, such as principal protection, buffers, or enhanced returns.
  • Investing in a Structured Product is not the same as investing directly in the underlying asset. The return on a Structured Product at maturity may not be the same as the return on a direct investment in the underlying asset, and the maximum payment on a Structured Product may be subject to a cap, which would limit appreciation potential compared to a direct investment. Because the amounts payable with respect to a Structured Product are generally calculated based on the value or level of the underlying asset on a specified date or over a limited period of time, the volatility of the asset increases the risk that the return on the Structured Product may be adversely affected by a fluctuation in the level of the underlying asset. The volatility of an asset, particularly a currency or commodity, may be affected by political or economic events, including governmental actions, or by the activities of participants in the relevant markets.
  • Issuers of Structured Products generally hedge their exposure on the Structured Product. Such hedging may involve the issuer, directly or through its affiliates, entering into transactions involving the securities, commodities or currencies or other instruments underlying the Structured Product, or derivative instruments, such as swaps, options or futures, on the underlying asset. By engaging in transactions of this kind, the issuer could adversely affect the value of a Structured Product and could achieve substantial returns from its hedging transactions, while the value of the Structured Product may decline. Issuers and their affiliates also may engage in trading, including trading for hedging purposes, for their proprietary accounts or for other accounts under their management, in the securities, commodities or currencies or other instruments underlying a Structured Product, or in other derivative instruments related to the underlying asset. These trading activities could adversely affect the value of a Structured Product. The issuer and its affiliates may also introduce competing products into the marketplace that adversely affect the value of a Structured Product thereby.
  • We have a conflict of interest when recommending Structured Products issued by J.P. Morgan affiliates because it increases the overall revenue of J.P. Morgan. When playing multiple roles and performing duties, JPMS’s and J.P. Morgan’s economic interests and your economic interests in Structured Products potentially could be adverse. It is also possible that JPMS’s or its affiliates’ hedging or trading activities in connection with Structured Products could result in substantial returns for JPMS or its affiliates while the value of Structured Products decline.
  • Use of Structured Products may not be suitable for all investors. Neither JPMS nor any of its affiliates render tax or legal advice. Therefore, clients are strongly encouraged to consult with outside tax and legal professionals regarding the potential that the use of Structured Products may generate undesired tax liabilities and penalties.

Resource(s) to Obtain Additional Information:

Please consult available offering documents for any security we recommend for a discussion of risks associated with the Structured Product. We can provide these documents to you, or help you to find them.

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Securitized Products

Description:

  • Securitized Products are financial products that pool various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and package the related cash flows to third-party investors as securities, pass-through securities, or collateralized debt obligations (CDOs). Holders are repaid from the cash flows collected from the underlying debt and redistributed through the capital structure of the securitized product. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are generally called asset-backed securities (ABS).

Fees:

JPMS charges a mark-up/mark-down for Securitized Products transactions. A mark-up is the difference between a security’s lowest current offering price and the price charged to the client, while a mark-down is the difference between the highest current bid price for a security and the lower price that a client receives.
 

Securitized Products

Asset Class Minimum Mark-Up Maximum Mark-Up
U.S. Government Agencies ($/Bond) US$0.025 US$1.50
Agency Mortgage-Backed Securities ($/Bond) US$0.063 US$2.00
Non-Agency High Grade Mortgage-Backed Securities ($/Bond) US$0.063 US$2.00

 

Restrictions:

Private Bank clients are required to meet certain criteria to transact in these products.

Risks and other Relevant Information:

  • Risks generally include interest rate risk, basis risk, liquidity risk, prepayment/extension risk and credit risk. While in some transactions the issuer may retain most of the economic credit risk associated with securitized assets, the credit risk of certain asset types may be small compared with these other risks.
  • Default risk is the borrower’s inability to meet interest payment obligations. For ABS, default may occur when certain obligations relating to the underlying collateral are not sufficiently met as detailed in its prospectus. A key indicator of a particular security’s default risk is its credit rating. Different tranches within the ABS are rated differently, with senior classes receiving the highest rating, and subordinated classes receiving correspondingly lower credit ratings. Almost all mortgages, including reverse mortgages, and student loans, are now insured by the government.
  • Fluctuations in interest rates affect floating-rate ABS prices less than fixed-rate securities, as the index against which the ABS rate adjusts will reflect interest rate changes in the economy. Interest rate changes may affect the prepayment rates on underlying loans that back some types of ABS, which can affect yields. Home equity loans tend to be the most sensitive to changes in interest rates, while auto loans, student loans, and credit cards are generally less sensitive to changes in interest rate.

Resource(s) to Obtain Additional Information:

Please consult available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

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Derivatives

Over-the-Counter Derivatives

Description:

  • OTC Derivatives take one of four basic forms, although the forms can be overlapping and one transaction can involve elements of all four forms. These basic forms are 1) swaps, 2) options, 3) forwards, and 4) hybrid instruments, the latter of which are debt obligations with an embedded swap, option or forward.
  • Derivatives can be settled in cash or settled by physical delivery of property against cash. Derivatives that are regulated by the SEC as securities include (a) non-cleared security-based swaps; (b) any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof); (c) any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or (d) any warrant or right to subscribe to or purchase, any of the foregoing.
  • Derivatives are typically used for hedging systematic or market risks such as, among other things, currency fluctuations, market movements, interest rate movements or inflation.
  • A common feature of Derivatives is that the obligations of one or both of the parties are based on the value or market price of one or more underlying financial or commodity markets to which the transaction is linked. You should not enter into an OTC Derivative unless you understand, at a minimum:
    • The fundamentals of the market underlying the Derivative;
    • The legal terms and conditions of the documentation for the Derivative;
    • The extent of the economic risk(s) to which you are exposed as a result of the Derivative (and determine that such risk is suitable for you in light of your financial circumstances and objectives);
    • The tax treatment of the Derivative; and
    • The regulatory treatment of the Derivative.

Fees:

Fees for OTC Derivatives are determined on a contract-by-contract basis, typically calculated as a percentage of the notional amount of the trade, depending on tenor, notional, asset class and complexity of trade. Details on the fees are contained in the OTC term sheet and confirmation for each trade.

Restrictions:

  • Restrictions are based on an approved product list.
  • Clients need to meet certain criteria to trade.
  • Some OTC Derivatives are subject to Dodd-Frank requirements.

Risks and other Relevant Information:

The following points should be considered in deciding whether to enter into a particular OTC Derivative:

  • Market risk: To the extent the obligations or rights associated with an OTC Derivative are linked to prices or values in a particular market, you will be exposed to a risk of loss as a result of price or value movements in that market.
  • Credit risk: You will be dependent upon the financial capacity of J.P. Morgan to meet its obligations under each OTC Derivative contract prior to settlement, and you may incur unsecured credit risk with respect to those obligations.
  • Price transparency: Because the prices and characteristics of non-cleared OTC Derivatives are individually negotiated and there is no central source for obtaining prices, dealers in non-cleared OTC Derivatives may quote different prices for similar transactions. J.P. Morgan does not warrant that its prices will always be the best prices available.
  • Option risk: Option transactions can be very risky. The risk of selling (writing) options is considerably greater than the risk involved in buying options. If you buy an option, you cannot lose more than the premium. If you sell (write) an option, the risk can be unlimited. Fluctuations in currency exchange rates may affect the value of any OTC Option on securities trading in, or denominated in, a foreign currency, as well as the value of any payment or delivery of securities in connection with such OTC Option.
  • Leverage risk: Certain Derivatives can be structured to allow for significant leverage. The use of leverage may have the effect of magnifying an investor’s losses or gains, and can cause an investor to be highly exposed to risk with very little capital or cash investment. As a result, a relatively small, unexpected change in the notional amount of an investor’s position could have a much larger adverse impact on the principal amount invested.
  • Collateral: Collateral may be required to support your obligations under OTC Derivatives. Additional collateral may be required after you have entered into an OTC Derivative.

Resource(s) to Obtain Additional Information:

Please consult available offering or transaction documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

Listed Options

Description:

  • Listed Options are a type of derivative security traded on an exchange. Specifically, options are contracts that grant the right, but not the obligation, to buy or sell an underlying asset at a set price, on or before a certain date.
    • Call options are financial contracts that give the option buyer the right, but not the obligation, to buy an underlying asset at a specified price within a specific time period. The underlying asset can be a stock, bond or commodity.
    • Put options are contracts that give the owner the right, but not the obligation, to sell, or short, an underlying asset at a predetermined price within a specified timeframe.
  • There are three types of listed options, namely American style, European style and Bermudan style.
    • A European option – may only be exercised on expiration.
    • An American option – may be exercised on any trading day on or before expiry.
    • A Bermudan option – may be exercised only on specified dates on or before expiry.
  • Uncovered Option
    • An uncovered (or “naked”) option transaction occurs when an investor buys or sells (writes) an option without owning the position in the underlying asset. There are special risks associated with uncovered option writing that potentially expose the investor to significant loss. Therefore, this type of strategy may not be suitable for all clients, including those generally approved for options transactions.
    • The potential loss of uncovered call writing is unlimited. The writer of an uncovered call is in an extremely risky position, and may incur large losses if the value of the underlying instrument increases above the exercise price.

Fees:

Equity Listed Options – United States

 

Premium Price Fees charged per contract
U.S. $0.01–0.49 US $1.00
U.S. $0.50–0.99 US. $2.00
U.S. $1.00+ US $4.00
Minimum Ticket Chart US $25.00

 

Restrictions:

Listed option exchanges may, from time to time, restrict the types of transactions that are permitted.

Risks and other Relevant Information:

  • Options trading involves additional risk, is not suitable for all investors, and is subject to approval. Before buying and selling options, investors should understand all of their rights and obligations associated with trading options. For example, the risk of selling (writing) options is considerably greater than the risk involved in buying options. If you buy an option, you cannot lose more than the premium. If you sell (write) an option, the risk can be unlimited. Fluctuations in currency exchange rates may affect the value of any OTC Option on securities trading in, or denominated in, a foreign currency, as well as the value of any payment or delivery of securities in connection with such OTC Option.
  • In addition, options can be structured to allow for significant leverage. The use of leverage may have the effect of magnifying an investor’s losses or gains and can cause an investor to be highly exposed to risk with very little capital or cash investment. As a result, a relatively small, unexpected change in the notional amount of an investor’s position could have a much larger adverse impact on the principal amount invested.
  • JPMS or an affiliate may act as Primary Market Maker or Competitive Market Maker in option trades executed on an options exchange, and may have a position (long or short) in such securities and may be on the opposite side of public orders executed in such securities.

Resource(s) to Obtain Additional Information:

  • Please consult available offering or transaction documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.
  • Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options, also known as the options disclosure document issued by the Options Clearing Corporation. It explains the characteristics and risks of exchange-traded options. To view it, go to https://www.theocc.com/about/publications/character-risks.jsp

Foreign Exchange

Description:

A foreign exchange spot transaction involves two parties agreeing to exchange currency at the exchange rate at the time of trade, or “on the spot.” A foreign exchange spot transaction is normally settled within two days.

Fees:

  • Forward4 and spot transactions in foreign exchange are executed by JPMCB and are subject to a mark-up (if you are the buyer) or mark-down (if you are the seller) of up to 1.00% of the notional amount per transaction. If you request that a foreign exchange transaction be executed by J.P. Morgan Private Bank Client Service rather than through your J.P. Morgan Private Bank representative, you will incur fees different from those listed here. In those cases, our fees will be up to 2.00% of the notional amount per transaction.
  • Pricing also varies according to the market conditions at the time of trade and takes into consideration the notional amount (in the case of foreign exchange transactions).

Risks and other Relevant Information:

Foreign currencies or baskets of currencies may be very volatile and may experience significant drops in value over a short period of time. The value of a foreign currency will depend on, among other economic indicators, movements in exchange rates. Risks and special considerations with respect to foreign currencies include, but are not limited to, economic uncertainties, currency devaluations, political and social uncertainties, exchange control regulations, high rates of interest, a history of government and private sector defaults, significant government influence on the economy, less rigorous regulatory and accounting standards than in the United States, relatively less developed financial and other systems, and limited liquidity and higher price volatility of the related securities markets.

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Mutual Funds

The following information applies to mutual funds that are regulated by the SEC in the United States under the Investment Company Act of 1940, as amended. For clients outside of the United States, UCITS, which are regulated by the European Union under the Directive 2014/91/EU, are more suitable. To learn more about UCITS, including associated fees, sales charges, remuneration paid to J.P. Morgan, and expenses, please contact your J.P. Morgan team.

Description:

  • Many investors turn to mutual funds to meet their long-term financial goals. They offer the benefits of diversification and professional management, and are seen as an easy and efficient way to invest. A mutual fund is an investment company that pools assets from many investors and invests the money in stocks, bonds and other securities or assets in some combination. The holdings of the mutual fund are its “portfolio.” Each share of the mutual fund represents an investor’s proportionate ownership of the fund’s holdings and the income those holdings may generate.
  • There is a wide variety of mutual funds available for residents of the United States and outside of the United States, covering a range of strategies and risks, including stock, fixed income, balanced, multi-asset and index funds. Although many mutual funds available through the Private Bank will follow a traditional long-only investment strategy, some mutual funds may utilize more complex investment strategies similar to those employed by private alternative funds, including hedge funds and private equity funds. Please see the section titled “Non-Traditional Mutual Funds and Exchange-Traded Products” for more information regarding these products.
  • All mutual funds carry risk. Your investment will go up and down in value. You can lose some or all of your money. Your earnings can fluctuate too. All mutual funds have costs that lower your investment returns.
  • Your J.P. Morgan team will only recommend J.P. Morgan Mutual Funds to you on the U.S. full service brokerage platform, although certain third-party mutual funds may be purchased upon client request. For clients residing outside of the United States, your J.P. Morgan team will recommend both J.P. Morgan and third-party mutual funds to you on the full service brokerage platform.
  • Before you invest, be sure to read the fund’s prospectus, or Key Investor Information Document for offshore funds, to learn about the fund you’re considering. The fund prospectus contains important information regarding the fund’s investment objectives, strategies, risks, charges, expenses and other matters significant to your investment choice. To obtain a prospectus, please contact your J.P. Morgan team.

Fees and Expenses:

Fees and Charges Paid Directly by Investors—No Loads

  • In general, there are fees you pay to a mutual fund company and/or financial intermediary when you purchase a mutual fund. Mutual funds are offered in different share classes, and these fees may vary based on which share class you purchase. Each share class invests in the same investment portfolio of securities, but has different sales charges and expenses. Some mutual funds charge a fee (known also as a “load”) to purchase shares, which is paid when you buy or sell the fund. 
  • The J.P. Morgan mutual funds we will recommend to you through the Private Bank’s full service brokerage platform do not carry a front-end or other sales charge; only no-load shares are available for purchase.
  • Investors should be aware that funds and the share class of a fund available through the Private Bank full service brokerage platform may differ from the funds or the share classes available to similar accounts managed by or held at JPMS or its affiliates. Clients should contact their J.P. Morgan team for information about any limitations on share classes available through the full service brokerage platform.
  • Other funds and or share classes may be available to you through the Private Bank’s asset-based fee advisory programs. In these programs, you typically pay an annual fee based on a percentage of the value of the assets held in your account, including the value of the fund shares. No-load mutual funds may be purchased directly through many mutual fund companies without intervention of a financial intermediary. Please consult the prospectus for the fund in which you are interested for direction on how to do so.
  • You may purchase load-waived and no-load mutual funds in your You Invest Trade account. Representative-assisted trades are subject to a transactional fee.
  • You may purchase load-waived and no-load mutual funds in your You Invest Trade account. Representative-assisted trades are subject to a transactional fee.
  • For additional information about mutual fund fees, you should also refer to the fund’s prospectus or contact your J.P. Morgan team.

Fees and Expenses Paid to or Indirectly through the Mutual Fund

  • Fund fees and expenses—The ongoing costs of running a fund are called its fees and expenses. The fund pays these fees and expenses from the fund’s assets before distributing any earnings to investors, which reduces the returns of the fund. You can find the fees and expenses of a fund by looking at its “expense ratio,” which is disclosed in a fund’s fact sheet and prospectus/summary prospectus. The expense ratio is the fund’s total annual costs as a percentage of its assets, or net asset value (NAV). Types of fees and expenses include:
    • Management fees —The management fee is paid to the fund’s investment adviser for running the fund and managing its assets. As the funds approved for the Private Bank full service brokerage platform are limited to J.P. Morgan Funds, these fees are paid to J.P. Morgan Investment Management Inc. or its affiliates.
    • 12b-1 fees—Fees paid by some mutual funds pursuant to Rule 12b-1 of the Investment Company Act of 1940. Rule 12b-1 fees allow funds to use fund assets to pay the costs of marketing and distribution of the fund’s shares. The mutual funds and share classes approved for the Private Bank full service brokerage platform do not charge 12b-1 fees, though these fees may be received by J.P. Morgan in connection with other funds held upon client request.
    • Other expenses —Other costs, such as shareholder servicing, recordkeeping, legal and accounting services, custody, transfer agency, and administration, are also included in the fund’s expenses.
  • Other Fees on Transactions—Although you pay no sales charges, you may need to pay other fees on certain mutual fund transactions, including:
    • Redemption fees—Some funds may charge fees to investors who redeem their shares within a specified time period (generally within a few months of purchasing them). These fees are typically up to 2%, and are usually returned to the portfolio to offset the trading costs. 
    • Exchange fees—Exchange privileges allow shareholders to exchange their investment in a fund for another within the same fund family. However, in some cases, you may be charged a small exchange fee for doing so.

For more information about these fund fees and expenses, please refer to the fund prospectus, which can be obtained from your J.P. Morgan team.

Compensation J.P. Morgan receives from Mutual Fund Companies5

  • Shareholder servicing/recordkeeping fees—Many mutual funds or their fund affiliates pay JPMS fees for providing certain administrative services, which may include maintaining and updating separate records for each client, preparing and delivering client statements, tax reporting, proxy voting and solicitation, processing purchase and redemption orders, processing dividends, distributing prospectuses and other fund reports, and responding to client inquiries. The fees for these services are typically called “shareholder servicing fees,” or recordkeeping fees.” The fees for shareholder servicing may be expressed by mutual funds as basis points on assets (generally in the range of 0–0.25%), as is the case with J.P. Morgan Mutual Funds available on the Private Bank full service brokerage platform or, for other funds available through other J.P. Morgan platforms, based on the number of fund positions held. These fees generally are paid from investor assets in mutual funds, but in some cases are subsidized in part by affiliates or the distributor of the mutual funds (such affiliate payments may be referred to as “revenue sharing”).
  • 12b-1 fees—The mutual funds and share classes approved for the Private Bank full service brokerage platform do not charge 12b-1 fees, though these fees may be taken by J.P. Morgan in connection with other funds held upon client request or on other J.P. Morgan platforms.
  • Revenue sharing—Separate from 12b-1 fees and shareholder servicing fees described above and in the mutual fund’s prospectus, mutual fund sponsors or distributors may make additional payments to JPMS or its affiliates in certain sales channels based on overall sales and/or assets. These payments are typically called revenue sharing and are paid from the entity’s revenues or profits, not from the fund’s assets, but the entity’s revenues or profits may reflect fees paid to them by the fund.

For the J.P. Morgan Funds available on the full service brokerage platform, JPMS receives payments as a percentage per year of the amount held in these mutual funds—currently ranging from 0.00% to 0.10%.

  • Conflicts of interest—The level of payments to JPMS varies in any given year. Payments for sales of one fund’s shares may be more or less than the payments JPMS receives from other mutual funds’ advisers, distributors or other entities, and in certain instances, the payments could be significant. While revenue sharing payments will not change the net asset value or price of a fund’s shares, the payments create a conflict of interest, as there may be an incentive to promote and recommend those funds whose sponsors make significant payments over funds that do not. Similarly, JPMS has a conflict in recommending mutual funds that pay these fees instead of ETFs or other securities or products that do not pay any of these fees.

J.P. Morgan Team Compensation for Mutual Funds Sales

Your J.P. Morgan team does not receive commissions or direct payment for specific mutual funds transactions.

Proprietary Mutual Funds and Affiliates Service Provider

Affiliates of J.P. Morgan provide investment management and other services, such as shareholder servicing, custody, fund accounting, administration, distribution, and securities lending, to the J.P. Morgan Mutual Funds for which those affiliates receive fees. Therefore, J.P. Morgan as a firm will receive greater compensation when its clients buy shares of the J.P. Morgan Mutual Funds than if they buy shares of non-affiliated mutual funds.

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Money Market Funds 

Description:

  • These funds seek to pay higher returns than interest-bearing bank accounts. Money market funds invest in high-quality, short-term debt securities and pay dividends that generally reflect short-term interest rates. However, they are not bank accounts, not FDIC-insured and not guaranteed to maintain their value.
  • During extreme market volatility, money market funds may impose:
    • “Redemption gates” that could temporarily prevent you from selling your shares.
    • “Liquidity fees” that could charge up to 2% for selling your shares.
  • Fund companies must designate money market funds (at the strategy level) as retail, institutional or government.
    • Retail money market funds have policies and procedures reasonably designed to limit all beneficial owners to “natural persons” (for example, individuals, but not corporations) and maintain a stable $1.00 NAV.
    • Institutional money market funds  may also impose a “floating NAV” (no longer maintaining a stable price) that would allow the value of its shares to fluctuate in extreme conditions.
    • Government money market funds invest at least 99.5% of their total assets in cash, government securities, or equivalents and maintain a stable $1.00 NAV. 

Restrictions:

Your J.P. Morgan team will only recommend J.P. Morgan Money Market Funds to you on the full service brokerage platform.

Disclosures Language:

An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency, nor is it guaranteed by any private entity, such as its investment adviser or custodian. Although money market funds strive to preserve the value of the investment, it is possible to lose money by investing in them.

Fees and Expenses Paid to or Indirectly through the Money Market Fund

  • Fund fees and expenses—The ongoing costs of running a fund are called its fees and expenses or its Annual Fund Operating Expenses. The fund pays these fees and expenses from its assets before distributing any earnings to investors, which reduces the returns of the fund. You can find the fees and expenses of a fund by looking at its “expense ratio,” which is disclosed in a fund’s fact sheet and prospectus/summary prospectus. The expense ratio is the fund’s total annual costs as a percentage of its assets, or NAV. Types of fees and expenses may include:
    • Management fees—The management fee is paid to the fund’s investment adviser for researching and selecting securities in the portfolio, as well as some administrative expenses.
    • 12b-1 fees—Fees paid by some money market funds pursuant to Rule 12b-1 of the Investment Company Act of 1940. Rule 12b-1 fees allow funds to use fund assets to pay the costs of marketing and distribution of the fund’s shares. The money market funds approved for the Private Bank full service brokerage platform do not charge 12b-1 fees.
    • Other expenses—Other costs, such as shareholder servicing, recordkeeping, legal and accounting services, custody, transfer agency, and administration, are also included in the fund’s expenses.
  • Additional Fees on Transactions—Although you pay no sales charges, you may need to pay other fees with respect to certain transactions, including:
    • Liquidity fees—In times of extreme market volatility, some money market funds may charge fees to investors who redeem their shares, typically up to 2%.
    • Exchange fees—Exchange privileges allow shareholders to exchange their investment in a fund for another within the same fund family. However, in some cases, you may be charged a small exchange fee for doing so.

For complete information about money market fund fees associated with specific funds, you should refer to the fund’s prospectus and Statement of Additional Information.

Compensation J.P. Morgan Receives from Money Market Fund Companies6

  • 12b-1 fees—The money market funds approved for the Private Bank full service brokerage platform do not charge 12b-1 fees.
  • Shareholder servicing/recordkeeping fees—Money market funds or their fund affiliates may pay JPMS fees for providing certain administrative services, which may include maintaining and updating separate records for each client, preparing and delivering client statements, tax reporting, proxy voting and solicitation, processing purchase and redemption orders, processing dividends, distributing prospectuses and other fund reports, and responding to client inquiries. The fees for these services are typically called “shareholder servicing fees,” or “recordkeeping fees.” The fees for shareholder servicing may be expressed by money market funds as basis points on assets (generally in the range of 0% to 0.30%), as is the case with J.P. Morgan Money Market Funds. These fees generally are paid from investor assets in money market funds, but in some cases are subsidized in part by affiliates or the distributor of the money market funds (such affiliate payments may be referred to as “revenue sharing”).
  • Revenue sharing—In addition to the sales charges, 12b-1 fees and shareholder servicing fees described above and in the money market fund’s prospectus, money market fund sponsors or distributors may make additional payments to JPMS or its affiliates in certain sales channels based on overall sales and/or assets. These payments are typically called revenue sharing and are paid from the entity’s revenues or profits, not from the fund’s assets, but the entity’s revenues or profits may reflect fees paid to them by the fund. JPMS may receive a payment as a percentage per year of the amount held in these money market funds. Percentage payments generally range from 0% to 0.10%, as is the case with J.P. Morgan Money Market Funds.

The level of payments to J.P. Morgan varies in any given year. Payments for sales of one fund’s shares may be more or less than the payments received from other money market funds’ advisers, distributors or other entities, and in certain instances, the payments could be significant. While any such payments will not change the NAV or price of a fund’s shares, the payments create a conflict of interest, as there may be an incentive to promote and recommend those funds whose sponsors make significant payments.

J.P. Morgan Team Compensation for Money Market Funds Sales

Your J.P. Morgan team does not receive commissions or direct payment for specific money market fund transactions. 

Proprietary Money Market Funds and Affiliates Service Providers

Affiliates of JPMS provide investment management and other services, such as shareholder servicing, custody, fund accounting, administration, distribution, and securities lending, to the J.P. Morgan Money Market Funds for which those affiliates receive fees. Therefore, J.P. Morgan as a firm will receive greater compensation if its clients buy shares of the J.P. Morgan Money Market Funds than if they buy shares of non-affiliated money market funds.

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Exchange Traded Products (“ETPs”)

Description:

  • Exchange-Traded Products (ETPs) seek to provide investors with exposure to financial instruments, financial benchmarks or investment strategies across a wide range of asset classes. In addition to Exchange-Traded Funds (ETFs), which are index funds or trusts that are listed on an exchange and which are linked to the collective performance of an entire stock or bond portfolio, ETPs include, but are not limited to, Closed-End Funds (CEFs) and Exchange-Traded Notes (ETNs).
  • Like mutual funds, certain ETPs, such as ETFs, are SEC-registered investment companies that offer investors a way to pool their money in a fund that makes investments in stocks, bonds, other assets, or some combination of these investments and, in return, receive an interest in that investment pool. Other types of ETPs, such as ETNs, are structured as trusts or partnerships that may physically hold a precious metal, a portfolio of futures or other derivative contracts on certain commodities or currencies, or are secured debt obligations of financial institutions.
  • Unlike mutual funds, which have their NAVs calculated at the end of each trading day, the prices for ETPs typically change within the trading day, fluctuating with supply and demand. Therefore, for example, the price of an ETF may be different than its NAV. ETP trading occurs on national securities exchanges and other secondary markets, rather than the investment company selling shares directly to, or redeeming their shares directly from, investors (as is the case with mutual funds).
  • Leveraged, inverse or volatility ETPs are highly complex financial instruments and, due to the effects of compounding, their performance over longer periods of time may differ significantly from their stated daily objectives. Leveraged and inverse ETPs typically are designed to achieve their stated performance objectives on a daily basis. Some investors might invest in these ETPs with the expectation that the ETPs may meet their stated daily performance objectives over the long term, as well. Investors should be aware that performance of these ETPs over a period longer than one business day can differ significantly from their stated daily performance objectives. Leveraged and inverse ETPs may pursue a range of investment strategies through the use of swaps, futures contracts, and other derivative instruments, and are inherently more volatile than their underlying benchmark or index. Additionally, leveraged ETP positions will be subject to applicable maintenance margin requirements that may be greater than or differ from margin requirements on their non-leveraged counterparts.
  • There are costs associated with owning ETPs. Before investing in ETPs, you should consider the products’ investment objectives, risks, charges and expenses. Contact your J.P. Morgan team for a prospectus or, if available, a summary prospectus containing this information. ETPs are subject to market fluctuation and the risks of their underlying investments; ETPs are also subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may vary from the published value of the ETP and are not individually redeemed from the fund. For example, the market price of an ETF may be higher or lower than its NAV, and are not individually redeemed from the fund.
  • Please see the section titled “Non-Traditional Mutual Funds and Exchange-Traded Products” for more information regarding these products.

Fees:

Shares Fees per Share
1 to 50,000 US $0.06
50,001 or higher US $0.05
Minimum ticket charge US $25.00

 

Restrictions:

JPMS may restrict activity in certain types of financial instruments including, but not limited to, crypto-linked instruments. Please contact your J.P. Morgan team for product availability through your full service brokerage account.

Risks and Other Relevant Information:

  • The prospectus of an ETP contains important information regarding the investment objectives of the ETP, its merits, risks, charges, expenses and other matters of interest. JPMS will provide a copy of the prospectus to you upon request.
  • ETPs are subject to risks similar to those of stocks. Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. In addition, there is no guarantee that an ETP will track the exact performance of its index.
  • Like mutual funds, some ETPs may not, for example, have the liquidity of traditional ETPs, provide periodic pricing or valuation information to investors, and be subject to the same regulatory requirements as traditional ETPs. These non-traditional ETPs also typically pursue alternative investment strategies. While traditional ETPs generally focus their investment strategies on long-term buy-and-hold stock and bond investing, non-traditional ETPs generally employ more complex trading strategies, such as selling securities short in anticipation of a drop in their price, using leverage, and purchasing options and futures. Some non-traditional funds also focus their investment strategies on investing in gold, commodities (such as copper and oil) or real assets such as real estate. These strategies have generally been associated with alternative investment products such as hedge funds, may charge higher fees, have higher expenses, and have a higher risk of the complete loss of the investment compared to traditional ETPs.

Resource(s) to Obtain Additional Information

Please consult available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

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Alternative Investments

Hedge Funds, Private Equity Funds, Real Estate Funds

Description:

  • Non-traditional, or alternative, investment strategies include investments in hedge funds, private equity funds, real estate funds, and other unregistered funds (including funds that invest in such funds). Such funds are sometimes referred to as private investments or private funds because they are typically organized pursuant to exemptions from registration under federal securities laws and therefore are not offered to the general public.
  • Although interests in private investment funds sometimes may be resold in privately negotiated transactions, the prices realized on these sales could be less than the original investment and are likely to be less than the current NAV.
  • Private funds are offered only by confidential private placement memorandum or similar document (the PPM). The PPM provides important detailed information regarding fees, merits, risks, investment objectives and strategies, and other matters of interest, and should be read carefully before a decision is made on whether to invest.
  • J.P. Morgan affiliates may organize and offer interests in private funds and may have an ownership interest in such funds. In addition, J.P. Morgan affiliates may provide advisory, management, administrative, or other services to J.P. Morgan, and will normally be compensated separately for such functions. JPMS or another J.P. Morgan affiliate may act as placement agent for such interests and in such case will be compensated by the private funds for providing placement services. Such compensation is in addition to fees and commissions you pay in connection with purchasing an interest, or in connection with your investment management, brokerage or custody account.

Fees:

In its capacity as placement agent, J.P. Morgan charges clients an origination fee of up to 2% of the amount invested. In addition, J.P. Morgan also earns a placement fee, paid by the private fund (or sponsor thereof) whose interests are being offered, in an amount of up to 5% of the amounts invested by J.P. Morgan clients. The amounts of any such fees will be disclosed to clients prior to their making an investment. The origination fee is separate from, and in addition to, advisory, management, administrative, placement, performance, servicing or other fees J.P. Morgan may earn from the fund sponsor or the fund for services provided to the fund.

Restrictions:

Only J.P. Morgan–approved hedge funds, private equity funds, real estate funds and other private funds will be recommended. All approved funds are periodically reviewed.

Risks and other Relevant Information

  • Private funds:
    • Often engage in leveraging and other speculative investment practices that may increase the risk of the complete loss of the client’s investment;
    • Can be highly illiquid because no trading market exists and there are restrictions on resale, transfer, withdrawal or redemption of interests;
    • Can be hard to value, and provide infrequent pricing or valuation information;
    • May involve complex tax structures and delays in distributing important tax information;
    • Are not subject to the same regulatory requirements as mutual funds; and
    • Often charge performance fees in addition to management fees.
  • Although private equity and real estate fund interests sometimes may be resold in privately negotiated transactions, the prices realized on these sales could be less than the original investment and are likely to be less than the current NAV. Most private fund investments require the client to maintain an account with J.P. Morgan or one of its affiliates for so long as the client owns the private fund.
  • As described above under “Fees,” J.P. Morgan receives payments from private funds (or sponsors thereof) for the investments made by J.P. Morgan clients. The fees paid to J.P. Morgan by the sponsor or company whose interests are being offered create a potential conflict of interest in the form of an additional financial incentive to J.P. Morgan for making such opportunities available to its clients.

Resource(s) to Obtain Additional Information:

Please consult available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

Morgan Private Ventures

Description:

Morgan Private Ventures (“MPV”) is a program that makes available opportunities to invest in private companies, real estate, venture capital, growth equity and other private investments, including affiliated managed products, to certain highly qualified clients through their full service brokerage accounts. Investment opportunities through MPV are normally offered pursuant to exemptions from registration under the federal securities laws and are therefore highly illiquid.

Fees:

In its capacity as placement agent for an MPV opportunity, J.P. Morgan may charge clients an origination fee which, if charged, will be up to 2% of the amount invested. J.P. Morgan may also earn a placement fee, paid by the sponsor or the company whose interests are being offered. If paid, such placement fee will be in an amount of up to 5% of the amounts invested by J.P. Morgan clients, or will be an amount of 10% of the profit interest received by the investment opportunity sponsor with respect to amounts invested by J.P. Morgan clients. The amounts of any such fees will be disclosed to clients prior to their making an investment.

Restrictions:

Only clients meeting certain requirements, including qualifying as an “accredited investor” within the meaning of Rule 501(a) under the United States Securities Act of 1933, as amended and as an “institutional account” as defined in FINRA Rule 4512(c)m, are eligible to participate.

Risks and other Relevant Information:

  • The fees paid to J.P. Morgan by the sponsor or company whose interests are being offered create a potential conflict of interest in the form of an additional financial incentive to J.P. Morgan for making available to MPV such opportunities.
  • There is generally no secondary market for such opportunities, and no assurance can be given as to the likelihood that an active trading market will develop or the liquidity of such a market; accordingly, no assurance can be given that an investor will be able to sell, transfer, assign or otherwise dispose of an interest in an opportunity. Opportunities may have little or no operating history, and the information available about unregistered opportunities will be less extensive than is available for an entity whose securities are registered. There is no assurance that any opportunity will return the capital invested, or that there will be any return on any capital you invest.

Resource(s) to Obtain Additional Information:

Please consult any available offering documents for any security we recommend for a discussion of risks associated with the product. We can provide these documents to you, or help you to find them.

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1.The firm leading the underwriting process may bring together several firms (or “syndicate”) to distribute the new offering.
2.Clearing Member Trade Agreement (CMTA) is an agreement by which investors enter derivative trades with a limited number of broker-dealers and later consolidate the trades with one broker-dealer for clearing purposes.
3.The firm leading the underwriting process may bring together several firms (or “syndicate”) to distribute the new offering.
4.A forward contract, or futures contract, involves an agreement of contract terms on the current date with the delivery and payment at a specified future date.
5.The fee ranges quoted in this section are generally for the funds approved for purchase on the Private Bank full service brokerage platform. Similar fees may be taken by J.P. Morgan in connection with other funds held upon client request, and applicable rates may differ.
6.The fee ranges in this section are generally for the funds approved for purchase on the Private Bank full service brokerage platform. Similar fees may be taken by J.P. Morgan in connection with other funds held upon client request, and applicable rates may differ.