Summary Prospectus July
1, 2024
| JPMorgan Income ETF Ticker: JPIE |
Before you invest, you may want to review the Fund’s Prospectus, which
contains more information about the Fund and its risks. You can find the Fund’s Prospectus and other information about the Fund, including the
Statement of Additional Information, online at www.jpmorganfunds.com/funddocuments. You can also get this information at no cost by calling 1-844-457-6383 or by sending an e-mail request to jpm.xf@jpmorgan.com or by
asking any financial intermediary that offers shares of the Fund. The Fund’s Prospectus and Statement of Additional Information, both dated July 1,
2024, as may be supplemented from time to time are incorporated by reference into this Summary Prospectus.
What is the goal of
the Fund?
The Fund seeks to provide income with a secondary objective of capital appreciation.
Fees and Expenses of the Fund
The following table describes the fees and expenses that you may pay if you buy, hold and sell Shares of the Fund. You may pay other fees, such as brokerage commissions
and other fees to financial intermediaries, which are not reflected in the table and example
below.
| ANNUAL FUND OPERATING EXPENSES1
(Expenses that you pay each year as a percentage of the
value of your investment) |
|
| Management Fees
|
0.40% |
| Total Annual Fund Operating Expenses |
0.40 |
| Fee Waivers and/or Expense Reimbursements 2 |
-0.01 |
| Total Annual Fund Operating Expenses after Fee Waiv- ers and/or Expense Reimbursements 2 |
0.39 |
1
The Fund's management agreement provides that the adviser will pay substantially all expenses of the Fund
(including expenses of the Trust relating to the Fund), except for the management fees, payments under the Fund’s 12b-1 plan (if any), interest expenses, dividend and interest expenses related to short sales,
taxes, acquired fund fees and expenses (other than fees for funds advised by the adviser and/or its affiliates), costs of holding shareholder meetings, and litigation and potential litigation and other extraordinary expenses not incurred in
the ordinary course of the Fund’s business. Additionally, the Fund shall be responsible for its non-operating expenses, including brokerage commissions and fees and expenses associated with the Fund’s securities
lending program, if applicable.
2
The Fund’s adviser and/or its affiliates have contractually agreed to waive fees and/or reimburse expenses
to the extent Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses other than certain money market fund fees as described below, dividend and interest expenses related to short sales, interest,
taxes, expenses related to litigation and potential litigation, costs of shareholder meetings, and extraordinary expenses) exceed 0.39% of the average daily net assets of the Fund. The Fund may invest in one or more money
market funds advised by the adviser or its affiliates (affiliated money market funds). The Fund’s adviser has contractually agreed to waive fees and/or reimburse expenses in an amount sufficient to offset the fees and
expenses of the affiliated money market funds incurred by the Fund because of the Fund’s investment in such money market funds. These waivers are in effect through 6/30/25, at which time it will be determined whether such waivers will be renewed or revised. To the extent that the Fund engages in securities lending, affiliated money market fund fees and expenses resulting
from the Fund’s investment of cash received from securities lending borrowers are not included in Total Annual Fund Operating Expenses and therefore, the above waivers do not apply to such investments.
Example
This Example is
intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. The Example does not take into account brokerage commissions that you pay when purchasing or selling Shares of the
Fund. The Example assumes that you invest $10,000 in the Fund for the time periods indicated. The
Example also assumes that your investment has a 5% return each year and that the Fund’s
operating expenses are equal to the total annual fund operating expenses after fee waivers and
expense reimbursements shown in the fee table through 6/30/25 and total annual fund operating
expenses thereafter. Your actual costs may be higher or lower.
| WHETHER OR NOT YOU SELL YOUR SHARES, YOUR COST
WOULD BE: | ||||
| |
1 Year |
3 Years |
5 Years |
10 Years |
| SHARES ($) |
40 |
127 |
223 |
504 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are held in a
taxable account. These costs, which are not reflected in annual fund operating expenses or in the
Example, affect the Fund’s performance. During the Fund’s most recent fiscal year, the
Fund’s portfolio turnover rate was 162% of the average value of its portfolio.
What are the Fund’s main investment strategies?
The Fund seeks to achieve its objective by investing opportunistically among multiple debt markets and sectors that the Fund’s adviser, J.P. Morgan
Investment Management Inc. (JPMIM or the adviser) believes have high potential to produce income
and have low correlations to each other in order to manage risk. The Fund is flexible and not managed to a benchmark. This allows the Fund to shift its allocations based on changing market conditions, which may result
in investing in a single or multiple markets and sectors. The adviser seeks to manage
distributions throughout the year to help reduce fluctuations in monthly dividends. “Income” in the Fund’s name refers to the Fund’s strategy of seeking to provide income by investing opportunistically across
different markets and sectors.
1
The capital appreciation sought by the Fund
generally arises from decreases in interest rates or improving credit fundamentals for a
particular sector or security.
The Fund has broad flexibility to invest in a wide variety of debt
securities and instruments of any maturity. The Fund may invest in fixed and floating rate debt
securities issued in both U.S. and foreign markets, including countries whose economies are less
developed (emerging markets). The Fund has discretion to focus its investments in one or more
regions or small groups of countries including both U.S. and foreign markets including emerging
markets. The Fund invests primarily in U.S. dollar denominated securities, although the Fund may also invest in non-dollar denominated securities. The Fund currently anticipates that it will invest no more than 10% of its
total assets in non-dollar denominated securities, although, from time to time, the Fund may
invest a greater percentage of its assets in non-dollar denominated securities to take advantage
of market conditions.
In
connection with managing volatility, the Fund seeks to maintain a duration of ten years or less, although, under certain market conditions such as in periods of significant volatility in interest rates and spreads, the Fund’s
duration may be longer than ten years. Duration is a measure of the price sensitivity of a debt
security or a portfolio of debt securities to relative changes in interest rates. For instance, a duration of three years means that a security’s or portfolio’s price would be expected to decrease by approximately 3%
with a 1% increase in interest rates (assuming a parallel shift in yield curve).
Although the Fund has the flexibility to invest above 65% of its total assets in investments that are rated
below investment grade (also known as junk bonds or high yield securities) or the unrated
equivalent to take advantage of market opportunities, under normal market conditions the Fund invests at least 35% of its total assets in investments that, at the time of purchase, are rated investment grade or the unrated
equivalent.
Below investment grade securities may include so-called “distressed debt.” Distressed debt includes securities of issuers experiencing financial or
operating difficulties, securities where the issuer has defaulted in the payment of interest or principal or in the performance of its covenants or agreements, securities of issuers that may be involved in bankruptcy
proceedings, reorganizations or financial restructurings or securities of issuers operating in
troubled industries.
A significant portion of the Fund’s assets may be invested in asset-backed securities, mortgage-related securities and mortgage-backed securities. Such securities may be
structured as collateralized mortgage obligations (CMOs) and stripped mortgage-backed securities,
including those structured such that payments consist of interest-only (IO), principal-only (PO) or
principal and interest. The Fund also may invest in inverse floaters and inverse IOs, which are
debt securities with interest rates that reset in the opposite direction from the market rate to
which the security is indexed. The Fund may also invest in structured investments and adjustable
rate mortgage loans (ARMs). The Fund may invest a significant amount of its assets in sub-prime
mortgage-related securities.
The Fund may invest in securities issued by the U.S. government and its agencies and instrumentalities including U.S. Treasury securities, treasury receipts and obligations
and securities
issued
by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
The Fund may also invest in mortgage pass-through securities including securities eligible to be sold on the “to-be-announced” or TBA market (mortgage TBAs).
The Fund may enter into dollar rolls, in which the Fund sells mortgage-backed securities
including mortgage TBAs and at the same time contracts to buy back very similar securities on a
future date. The Fund may also sell mortgage TBAs short.
The Fund may invest in inflation-linked debt securities including fixed and floating rate debt securities of
varying maturities issued by the U.S. government, its agencies and instrumentalities, such as
Treasury Inflation Protected Securities (TIPS). The Fund may also invest in inflation-linked debt securities issued by other entities such as corporations, foreign governments and foreign issuers. The Fund may invest in loan
participations and assignments (Loans) and commitments to purchase Loans (Unfunded Commitments).
Loans will typically consist of senior floating rate loans (Senior Loans), but may also include secured and unsecured loans, second lien loans or more junior (Junior Loans) and bridge loans.
The Fund may also invest in convertible securities and preferred stock that the adviser believes will produce income or generate return. The Fund also may use bank
obligations, commercial paper, corporate debt securities, custodial receipts, inverse floating
rate instruments, municipal securities, private placements, restricted securities and other unregistered securities, real estate investment trusts (REITs), short-term funding agreements, when-issued securities, delayed delivery
securities and forward commitments, and zero-coupon, pay-in-kind and deferred payment securities.
The securities in which the Fund invests may include debt securities issued by governments and
their agencies, supranational organizations, corporations, and banks.
The Fund has flexibility to utilize derivatives and at times, use of such derivatives may be a principal strategy. Derivatives are instruments that have a value based on another
instrument, exchange rate or index. Derivatives will be used primarily for hedging, including
duration hedging, but may also be used as substitutes for securities in which the Fund can invest. Such derivatives may include futures contracts, options, swaps including interest rate and credit default swaps,
and forward contracts. The Fund may also use derivatives for other hedging purposes (e.g.,
decreasing or increasing exposure to certain securities), to increase income and gain to the Fund, as part of its risk management process by establishing or adjusting exposure to particular securities, markets or
currencies and/or to manage cash flows.
As part of its principal investment strategy and for temporary defensive purposes, any portion of the
Fund’s assets may be invested in cash and cash equivalents.
In buying and selling investments for the Fund, the adviser uses a flexible, opportunistic approach that
combines strategy and sector rotation (asset allocation). Strategy rotation refers to the
shifting of investments among the multiple debt markets in which the Fund may invest. Sector
rotation refers to the shifting of investments from one or more sectors (for example, high yield)
into one or more other sectors (for example, emerging markets). For each strategy/sector, dedicated specialists provide
2
security research and recommendations to
the lead portfolio managers. Buy and sell decisions are based on fundamental, quantitative and
technical analysis, including the expected potential to generate income. As part of its risk management strategy, the adviser typically will invest in multiple strategies/sectors, but, as part of the Fund’s
opportunistic strategy, the adviser has flexibility to invest in a single or small number of
strategies/sectors from time to time. Due to the Fund’s flexible asset allocation approach,
the Fund’s risk exposure may vary and a risk associated with an individual strategy or type of investment may become more pronounced when the Fund utilizes a single strategy or type of investment or only a
few strategies or types of investments. Generally, the adviser will sell a security when, based
on fundamental, quantitative and technical analysis and the considerations described above, the
adviser believes the issuer’s credit quality will deteriorate materially or when the
adviser believes that there is better relative value available in the market in securities of comparable quality. As part of its investment process, the adviser seeks to assess the impact of environmental, social
and governance (ESG) factors on certain issuers or countries in the universe in which the Fund
may invest. The adviser’s assessment is based on an analysis of key opportunities and risks across industries to seek to identify financially material issues with respect to the Fund’s investments in issuers and
ascertain key issues that merit engagement with issuers. These assessments may not be conclusive
and securities or countries that may be negatively impacted by such factors may be purchased and retained by the Fund while the Fund may divest or not invest in securities of issuers that may be positively impacted by such
factors.
The Fund’s Main Investment Risks
The Fund is subject to management risk and may not achieve its objective if the adviser’s expectations regarding particular instruments or markets are not
met.
The Fund is subject to the main risks noted
below, any of which may adversely affect the Fund’s net asset value (NAV), market price,
performance and ability to meet its investment objective.
Interest Rate Risk. The Fund’s investments in bonds and other debt securities will change in value based on changes in
interest rates. If rates increase, the value of these investments generally declines. Securities
with greater interest rate sensitivity and longer maturities generally are subject to greater fluctuations in value. The Fund may invest in variable and floating rate Loans and other variable and floating rate
securities. Although these instruments are generally less sensitive to interest rate changes than
fixed rate instruments, the value of variable and floating rate Loans and other securities may decline if their interest rates do not rise as quickly, or as much, as general interest rates. The Fund may face a heightened level of
interest rate risk due to certain changes in monetary policy. It is difficult to predict the pace
at which central banks or monetary authorities
may change interest rates or the timing, frequency, or magnitude of such changes. Any such changes could be
sudden and could expose debt markets to significant volatility and reduced liquidity for Fund
investments.
General Market Risk. Economies and financial markets throughout the world are becoming increasingly interconnected, which increases the likelihood that events or
conditions in one country or region will adversely impact markets or issuers in other countries
or regions. Securities in the Fund’s portfolio may underperform in comparison to securities in general financial markets, a particular financial market or other asset classes due to a number of factors, including inflation
(or expectations for inflation), deflation (or expectations for deflation), interest rates,
global demand for particular products or resources, market instability, financial system instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers, regulatory events, other governmental
trade or market control programs and related geopolitical events. In addition, the value of the
Fund’s investments may be negatively affected by the occurrence of global events such as war, terrorism, environmental disasters, natural disasters or events, country instability, and infectious disease epidemics or
pandemics.
Credit Risk. The Fund’s investments are subject to the risk that issuers and/or counterparties will fail to make
payments when due or default completely. Prices of the Fund’s investments may be adversely
affected if any of the issuers or counterparties it is invested in are subject to an actual or perceived deterioration in their credit quality. Credit spreads may increase, which may reduce the market values of the Fund’s
securities. Credit spread risk is the risk that economic and market conditions or any actual or
perceived credit deterioration may lead to an increase in the credit spreads (i.e., the difference in yield between two securities of similar maturity but different credit quality) and a decline in price of the issuer’s
securities.
Distribution Risk. The Fund is not designed to provide a predictable level of dividend income. The income payable on debt
securities in general and the availability of investment opportunities varies based on market
conditions. In addition, the Fund may not be effective in identifying income producing securities
and managing distributions; as a result, the level of dividend income will fluctuate. The Fund’s investments are subject to various risks including the risk that the counterparty will not pay income when due which may
adversely impact the level and volatility of dividend income paid by the Fund. The Fund does not
guarantee that distributions will always be paid or that such dividends will not fluctuate.
High Yield Securities and Loan Risk. The Fund invests in instruments including junk bonds, Loans and instruments that may be issued by companies that are highly leveraged, less
creditworthy or financially distressed. These investments are considered to be speculative and
may be subject to greater risk of loss, greater sensitivity to economic changes, valuation difficulties and potential illiquidity. Such investments may be subject to additional risks including subordination to
other creditors, no collateral or limited rights in collateral, lack of a regular trading market,
extended settlement periods, liquidity risks, prepayment risks, potentially less protection under the federal securities laws and lack of publicly available information. The Fund will not have direct recourse
against the issuer of a loan participation.
3
In recent years, there has been a broad
trend of weaker or less restrictive covenant protections in both the Loan and high yield markets.
Among other things, under such weaker or less restrictive covenants, borrowers might be able to exercise more flexibility with respect to certain activities than borrowers who are subject to stronger or more protective covenants.
For example, borrowers might be able to incur more debt, including secured debt, return more
capital to shareholders, remove or reduce assets that are designated as collateral securing Loans or high yield securities, increase the claims against assets that are permitted against collateral securing Loans or
high yield securities or otherwise manage their business in ways that could impact creditors
negatively. In addition, certain privately held borrowers might be permitted to file less frequent, less detailed or less timely financial reporting or other information, which could negatively impact the value of the Loans
or high yield securities issued by such borrowers. Each of these factors might negatively impact
the Loans and high yield instruments held by the Fund.
No active trading market may exist for some Loans and other instruments and certain investments may be subject to restrictions on resale. In addition, the settlement
period for Loans is uncertain as there is no standardized settlement schedule applicable to such
investments. Loans that are deemed to be liquid at the time of purchase may become illiquid. Certain Loans may take more than seven days to settle. The inability to dispose of the Fund’s securities and
other investments in a timely fashion could result in losses to the Fund. Because some
instruments may have a more limited secondary market, liquidity and valuation risk is more
pronounced for the Fund than for funds that invest primarily in other types of fixed income instruments or equity securities. When Loans and other instruments are prepaid, the Fund may have to reinvest in
instruments with a lower yield or fail to recover additional amounts (i.e., premiums) paid for
these instruments, resulting in an unexpected capital loss and/or a decrease in the amount of
dividends and yield. Certain Loans may not be considered securities under the federal securities
laws and, therefore, investments in such Loans may not be subject to certain protections under
those laws. In addition, the adviser may not have access to material non-public information to which other investors may have access.
Covenant Lite Loan
Risk. The Fund may invest in, or obtain exposure to, Loans that are “covenant lite.”
Covenants contained in loan documentation are intended to protect lenders by imposing certain
restrictions and other limitations on a borrower’s operations or assets and by providing certain information and consent rights to lenders. Covenant lite loans may lack financial maintenance covenants that in certain
situations can allow lenders to claim a default on the loan to seek to protect the interests of
the lenders. The absence of financial maintenance covenants in a covenant lite loan might result in a lower recovery in the event of a default by the borrower. Covenant lite loans have become much more prevalent
in recent years.
Foreign Securities and Emerging Markets Risk. U.S. dollar-denominated securities of foreign issuers or U.S. affiliates of foreign issuers may be subject to additional risks not
faced by domestic issuers. These risks include political and economic risks, unstable
governments, civil conflicts and war, greater volatility, decreased market liquidity, expropriation and nationalization risks, sanctions or other measures by the
United States or other governments, and regulatory issues facing issuers in such countries. The Fund may also invest in non-dollar denominated securities. Investments in
non-dollar denominated securities are subject to risks in addition to those summarized above
including currency fluctuations, higher transaction costs, delayed settlement, possible foreign controls on investment, liquidity risks, and less stringent investor protection and disclosure standards of foreign
markets. In certain markets where securities and other instruments are not traded “delivery
versus payment,” the Fund may not receive timely payment for securities or other instruments it has delivered or receive delivery of securities paid for and may be subject to increased risk that the counterparty will fail
to make payments or delivery when due or default completely. Foreign market trading hours,
clearance and settlement procedures, and holiday schedules may limit the Fund's ability to buy and sell securities.
Events and evolving
conditions in certain economies or markets may alter the risks associated with investments tied to countries or regions that historically were perceived as comparatively stable becoming riskier and more volatile. These
risks are magnified in “emerging markets.” Emerging market countries typically have
less-established market economies than developed countries and may face greater social, economic,
regulatory and political uncertainties. In addition, emerging markets typically present greater
illiquidity and price volatility concerns due to smaller or limited local capital markets and
greater difficulty in determining market valuations of securities due to limited public
information on issuers. Certain emerging market countries may be subject to less stringent requirements regarding accounting, auditing, financial reporting and record keeping and therefore, material information
related to an investment may not be available or reliable. Additionally, the Fund may have
substantial difficulties exercising its legal rights or enforcing a counterparty’s legal obligations in certain jurisdictions outside of the United States, in particular in emerging markets countries, which can increase
the risks of loss.
Foreign Issuer Risk. U.S. dollar-denominated securities of foreign issuers or U.S. affiliates of foreign issuers may be subject to
additional risks not faced by domestic issuers. These risks include political and economic risks,
civil conflicts and war, greater volatility, expropriation and nationalization risks, sanctions
or other measures by the United States or other governments, and regulatory issues facing issuers in such foreign countries. Events and evolving conditions in certain economies or markets may alter the risks associated with
investments tied to countries or regions that historically were perceived as comparatively stable
becoming riskier and more volatile.
Geographic Focus Risk. The Fund may focus its investments in one or more regions or small groups of countries. As a result, the Fund’s performance may be subject to greater volatility than a more geographically diversified
fund.
Sovereign Debt Risk. The Fund may invest in securities issued or guaranteed by foreign governmental entities (known as sovereign debt securities). These investments are subject to the risk of payment delays or defaults, due, for
example, to cash flow problems, insufficient foreign currency reserves, political considerations,
large debt positions relative to the country’s economy or failure to implement economic reforms. There is no legal or bankruptcy process for collecting sovereign debt.
4
European Market
Risk. The Fund’s performance will be affected by political, social and economic conditions
in the various countries in which it invests in Europe and in Europe more generally, such as
growth of the economic output (the gross national product), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the
resource self-sufficiency of European countries and interest and monetary exchange rates between
European countries. European financial markets may experience volatility due to concerns about
high government debt levels, credit rating downgrades, rising unemployment, the future of the euro as a common currency, possible restructuring of government debt and other government measures responding to those
concerns, and fiscal and monetary controls imposed on member countries of the European Union. The
risk of investing in Europe may be heightened due to steps taken by the United Kingdom to exit the
European Union. On January 31, 2020, the United Kingdom officially withdrew from the European
Union. As of May 1, 2021, the EU-UK Trade and Cooperation Agreement (TCA) governs certain aspects
of the European Union’s and the United Kingdom’s relationship, many of which are still to be determined, including those related to financial services. Notwithstanding the TCA, significant uncertainty
remains in the market regarding the ramifications of the United Kingdom’s withdrawal from
the European Union. The impact on the United Kingdom and European economies and the broader global
economy could be significant, resulting in increased volatility and illiquidity, currency
fluctuations, impacts on arrangements for trading and on other existing cross-border cooperation
arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise), and in potentially
lower growth for companies in the United Kingdom, Europe and globally, which could have an
adverse effect on the value of the Fund’s investments. In addition, if one or more other
countries were to exit the European Union or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.
Government Securities Risk. The Fund invests in securities issued or guaranteed by the U.S. government or its agencies and instrumentalities (such as securities issued by the Government National Mortgage Association (Ginnie Mae), the
Federal National Mortgage Association (Fannie Mae), or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). U.S. government securities are subject to market risk, interest rate risk and
credit risk. Securities, such as those issued or guaranteed by Ginnie Mae or the U.S. Treasury,
that are backed by the full faith and credit of the United States, are guaranteed only as to the
timely payment of interest and principal when held to maturity and the market prices for such
securities will fluctuate. Notwithstanding that these securities are backed by the full faith and
credit of the United States, circumstances could arise that would prevent the payment of interest or principal. This would result in losses to the Fund. Securities issued or guaranteed by U.S. government-related organizations,
such as Fannie Mae and Freddie Mac, are not backed by the full faith and credit of the U.S.
government and no assurance can be given that the U.S. government will provide financial support.
Therefore, U.S. government-related organizations may not have the funds to meet their payment
obligations in the future.
Currency Risk. Changes in foreign currency exchange rates will affect the value of the Fund’s securities and may affect the price of the Fund’s Shares.
Generally, when the value of the U.S. dollar rises in value relative to a foreign currency, an investment impacted by that currency loses value because that currency is worth less in U.S. dollars. Currency exchange
rates may fluctuate significantly over short periods of time for a number of reasons, including
changes in interest rates. Devaluation of a currency by a country’s government or banking authority also will have a significant impact on the value of any investments denominated in that currency. Currency markets
generally are not as regulated as securities markets, may be riskier than other types of
investments and may increase the volatility of the Fund. Although currently the Fund anticipates at least 50% of the Fund’s net assets will be denominated in U.S. dollars or hedged back to U.S. dollars, the Fund has
the flexibility to have greater exposure to non-U.S. dollar investments. In addition, the
Fund’s use of foreign currency derivatives may not be successful, including due to delays
in placing trades and other operational limitations, in hedging non-dollar investments back to
the U.S. dollar and the use of such strategies may lower the Fund’s potential returns.
Asset-Backed, Mortgage-Related and Mortgage-Backed Securities Risk. The Fund may invest in asset-backed, mortgage-related and mortgage-backed securities including so-called
“sub-prime” mortgages that are subject to certain other risks including prepayment
and call risks. When mortgages and other obligations are prepaid and when securities are called, the Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid
for securities with higher interest rates, resulting in an unexpected capital loss and/or a
decrease in the amount of dividends and yield. In periods of either rising or declining interest rates, the Fund may be subject to extension risk, and may receive principal later than expected. As a result, in periods of rising
interest rates, the Fund may exhibit additional volatility. During periods of difficult or frozen
credit markets, significant changes in interest rates, or deteriorating economic conditions, such securities may decline in value, face valuation difficulties, become more volatile and/or become illiquid. Additionally,
asset-backed, mortgage-related and mortgage-backed securities are subject to risks associated
with their structure and the nature of the assets underlying the securities and the servicing of
those assets. Certain asset-backed, mortgage-related and mortgage-backed securities may face
valuation difficulties and may be less liquid than other types of asset-backed, mortgage-related and mortgage-backed securities, or debt securities.
Collateralized mortgage obligations (CMOs) and stripped mortgage-backed securities, including those structured as interest-only (IOs) and principal-only (POs), are
more volatile and may be more sensitive to the rate of prepayments than other mortgage-related
securities. The risk of default, as described under “Credit
Risk,” for “sub-prime” mortgages is generally higher than other types of
mortgage-backed securities. The structure of some of these securities may be complex and there
may be less available information than other types of debt securities.
The Fund will be exposed to additional risk to the extent that it uses inverse floaters and inverse IOs, which
are debt securities with interest rates that reset in the opposite direction from the market rate
to which the security is indexed. These securities are more volatile and more sensitive to interest rate changes
5
than other types of debt securities. If
interest rates move in a manner not anticipated by the adviser, the Fund could lose all or
substantially all of its investment in inverse IOs.
Prepayment Risk. The issuer of certain securities may repay principal in advance, especially when yields fall. Changes in the rate at which prepayments occur can affect
the return on investment of these securities. When debt obligations are prepaid or when
securities are called, the Fund may have to reinvest in securities with a lower yield. The Fund also may fail to recover additional amounts (i.e., premiums) paid for securities with higher coupons, resulting in an unexpected
capital loss.
Inflation-Linked Security Risk. Inflation-linked debt securities are subject to the effects of changes in market interest rates caused
by factors other than inflation (real interest rates). In general, the price of an
inflation-linked security tends to decline when real interest rates increase. Unlike conventional bonds, the principal and interest payments of inflation-linked securities such as TIPS are adjusted periodically to a
specified rate of inflation (e.g., Non-Seasonally Adjusted Consumer Price Index for all Urban
Consumers (CPI-U)). There can be no assurance that the inflation index used will accurately measure the real rate of inflation. These securities may lose value in the event that the actual rate of inflation is different
than the rate of the inflation index.
Equity Market Risk. The Fund’s investments in preferred shares and convertible securities are subject to equity market risk. The price of equity securities may rise or fall
because of changes in the broad market or changes in a company’s financial condition,
sometimes rapidly or unpredictably. These price movements may result from factors affecting
individual companies, sectors or industries selected for the Fund’s portfolio or the securities market as a whole, such as changes in economic or political conditions. When the value of the Fund’s
portfolio securities goes down, your investment in the Fund decreases in value.
Convertible Securities Risk. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with
fluctuations in the market value of the underlying securities.
Municipal Securities Risk. The risk of a municipal security generally depends on the financial and credit status of the issuer. Changes in a municipality’s financial health may make it difficult for the municipality to make interest
and principal payments when due. This could decrease the Fund’s income or hurt the ability
to preserve capital and liquidity. Under some circumstances, municipal securities might not pay interest unless the state legislature or municipality authorizes money for that purpose.
Mortgage Dollar Roll Risk. The Fund may enter into mortgage dollar rolls involving mortgage pass-through securities including mortgage TBAs and other mortgage-backed securities. During the period between the sale and repurchase in a
mortgage dollar roll transaction, the Fund will not be entitled to receive interest and principal
payments on the securities sold. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or
becomes insolvent, the Fund’s right to repurchase or sell securities may be limited. Short
sales of mortgage TBAs and engaging in mortgage dollar rolls may be subject to leverage risks as
described under “Derivatives Risk.” In addition, mortgage dollar
rolls may increase interest rate risk and
result in an increased portfolio turnover rate which increases costs and may increase taxable
gains.
Zero-Coupon, Pay-In-Kind and Deferred Payment Securities Risk. The market value of a zero-coupon, pay-in-kind or deferred payment security is generally more volatile than the market value of, and is more likely to respond to a greater
degree to changes in interest rates than, other fixed income securities with similar maturities
and credit quality that pay interest periodically. In addition, federal income tax law requires that the holder of a zero-coupon security accrue a portion of the discount at which the security was purchased as taxable income
each year. The Fund may consequently have to dispose of portfolio securities under
disadvantageous circumstances to generate cash to satisfy its requirement as a regulated investment company to distribute all of its net income (including non-cash income attributable to zero-coupon securities). These
actions may reduce the assets to which the Fund’s expenses could otherwise be allocated and
may reduce the Fund’s rate of return.
Preferred Stock Risk. Preferred stock generally has a preference as to dividends and liquidation over an issuer’s common stock
but ranks junior to debt securities in an issuer’s capital structure. Unlike interest
payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption
provisions.
Privately Placed Securities Risk. Privately placed securities generally are less liquid than publicly traded securities and the Fund may not always be able to sell such securities without experiencing delays in finding buyers or reducing
the sale price for such securities. The disposition of some of the securities held by the Fund
may be restricted under federal securities laws. As a result, the Fund may not be able to dispose of such investments at a time when, or at a price at which, it desires to do so and may have to bear expenses of
registering these securities, if necessary. These securities may also be difficult to
value.
REITs Risk. The
Fund’s investments in real estate securities, including REITs, are subject to the same risks as direct investments in real estate and mortgages, and their value will depend on the value of the underlying real estate
interests. These risks include default, prepayments, changes in value resulting from changes in
interest rates and demand for real and rental property, and the management skill and creditworthiness of REIT issuers. The Fund will indirectly bear its proportionate share of expenses, including management fees,
paid by each REIT in which it invests in addition to the expenses of the Fund.
Derivatives Risk. Derivatives, including futures contracts, options, swaps including interest rate and credit default swaps and forward contracts, may be riskier than
other types of investments and may increase the volatility of the Fund. Derivatives may be
particularly sensitive to changes in economic and market conditions and may create leverage, which could result in losses that significantly exceed the Fund’s original investment. Certain derivatives also expose the
Fund to counterparty risk, which is the risk that the derivative counterparty will not fulfill
its contractual obligations (and includes credit risk associated with the counterparty). Certain derivatives are synthetic instruments that attempt to replicate the performance of certain reference assets. With regard to such
derivatives, the Fund does not have a claim on the reference assets and is
6
subject to enhanced counterparty risk.
Derivatives may not perform as expected, so the Fund may not realize the intended benefits. When
used for hedging, the change in value of a derivative may not correlate as expected with the currency, security or other risk being hedged. In addition, given their complexity, derivatives expose the Fund to risks
of mispricing or improper valuation. Certain of the Fund’s transactions in derivatives
could also affect the amount, timing and character of distributions to shareholders which may result in the Fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if
it did not engage in such transactions, which may adversely impact the Fund’s after-tax
returns. Derivatives also can expose the Fund to derivative liquidity risk, which includes risks involving the liquidity demands that derivatives can create to make payments of margin, collateral, or settlement payments to
counterparties, legal risk, which includes the risk of loss resulting from insufficient or
unenforceable contractual documentation, insufficient capacity or authority of the Fund’s counterparty and operational risk, which includes documentation or settlement issues, system failures, inadequate controls and human
error.
Industry and Sector Focus Risk. At times, the Fund may increase the relative emphasis of its investments in a particular industry or sector. The prices of securities of issuers in a particular industry or sector may be more susceptible to
fluctuations due to changes in economic or business conditions, government regulations,
availability of basic resources or supplies, contagion risk within a particular industry or sector or to other industries or sectors, or other events that affect that industry or sector more than securities of issuers in other
industries and sectors. To the extent that the Fund increases the relative emphasis of its
investments in a particular industry or sector, the value of the Fund’s Shares may fluctuate in response to events affecting that industry or sector.
Risk Associated with the Fund Holding Cash, Money Market Instruments and Other Short-Term Investments. The Fund will, at times, hold assets in cash, money market instruments and other short-term investments, which may hurt the
Fund’s performance. These positions may also subject the Fund to additional risks and
costs.
Transactions Risk. The Fund could experience a loss and its liquidity may be negatively impacted when selling securities to meet redemption requests. The risk of loss
increases if the redemption requests are unusually large or frequent or occur in times of overall
market turmoil or declining prices. Similarly, large purchases of Fund Shares may adversely affect the Fund’s performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger
cash position than it ordinarily would.
ETF Shares Trading Risk. Shares are listed for trading on the NYSE Arca, Inc. (the Exchange) and are bought and sold in the secondary market at market prices. The market
prices of Shares are expected to fluctuate, in some cases materially, in response to changes in
the Fund’s NAV, the intraday value of the Fund’s holdings and supply and demand for Shares. The adviser cannot predict whether Shares will trade above, below or at their NAV. Disruptions to creations and redemptions, the
existence of significant market volatility or potential lack of an active trading market for the
Shares (including through a trading halt), as well as other factors, may result in the Shares trading significantly
above (at a premium) or below (at a
discount) to NAV or to the intraday value of the Fund’s holdings. During such periods, you
may incur significant losses if you sell your Shares.
The securities held by the Fund may be traded in markets that close at a different time than the Exchange.
Liquidity in those securities may be reduced after the applicable closing times. Accordingly,
during the time when the Exchange is open but after the applicable market closing, fixing or settlement times, bid-ask spreads on the Exchange and the corresponding premium or discount to the Shares’ NAV may
widen.
Authorized Participant Concentration Risk. Only an authorized participant may engage in creation or redemption transactions directly with the Fund. The Fund has a limited number of intermediaries that act as authorized participants
and none of these authorized participants is or will be obligated to engage in creation or
redemption transactions. To the extent that these intermediaries exit the business or are unable to or choose not to proceed with creation and/or redemption orders with respect to the Fund and no other authorized participant
creates or redeems, Shares may trade at a discount to NAV and possibly face trading halts and/or
delisting.
Cash Transactions Risk. Unlike certain ETFs, the Fund may effect creations and redemptions in cash or partially in cash. Therefore, it may be required to sell portfolio
securities and subsequently recognize gains on such sales that the Fund might not have recognized
if it were to distribute portfolio securities in-kind. As such, investments in Shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind.
High Portfolio Turnover Risk. The Fund will likely engage in active and frequent trading leading to increased portfolio turnover, higher transaction costs, and the possibility that the recognition of capital gains will be
accelerated, including short-term capital gains that will generally be taxable to shareholders as
ordinary income.
You could lose money investing in the Fund.
The Fund’s Past Performance
This section provides some indication of the risks of investing in the Fund. The bar chart shows the performance of the Fund’s Shares over the past two calendar years. The table shows the average annual total returns for the past one
year and life of the Fund. It compares that performance to the Bloomberg U.S. Aggregate Index. Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available by visiting
www.jpmorganfunds.com or by calling 1-844-457-6383 (844-4JPM ETF).
Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates
(collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, or guarantee the
accuracy or completeness of any information
7
herein, or make any
warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, shall have any liability or responsibility for injury or damages
arising in connection therewith.
| YEAR-BY-YEAR RETURNS |
| Best Quarter |
4th quarter, 2023 |
4.75% |
| Worst Quarter |
2nd quarter, 2022 |
-4.99% |
| The Fund’s year-to-date total return |
through |
3/31/24 |
was |
1.00% |
. |
| AVERAGE ANNUAL TOTAL RETURNS
(For periods ended December 31, 2023) |
||
| |
Past |
Life of Fund
since |
| |
1 Year |
10/28/2021 |
| SHARES |
|
|
| Return Before Taxes |
7.51 % |
0.48 % |
| Return After Taxes on Distributions |
5.00 |
-1.53 |
| Return After Taxes on Distributions and Sale of Fund Shares |
4.39 |
-0.50 |
| BLOOMBERG U.S. AGGREGATE INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
5.53 |
-3.82 |
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their Shares through
tax-deferred arrangements such as 401(k) plans or individual retirement
accounts.
Management
J.P. Morgan Investment Management Inc. (the adviser)
| Portfolio Manager |
Managed the Fund Since |
Primary Title with
Investment Adviser |
| J. Andrew Norelli |
2021 |
Managing Director |
| Andrew Headley |
2021 |
Managing Director |
| Thomas Hauser |
2021 |
Managing Director |
Purchase and Sale of Shares
Individual Shares of the Fund may only be purchased and sold in secondary market transactions through brokers
or financial intermediaries. Shares of the Fund are listed for trading on the Exchange, and
because Shares trade at market prices rather than NAV, Shares of the Fund may trade at a price greater than NAV (premium) or less than NAV (discount). Certain affiliates of the Fund and the adviser may purchase and
resell Shares pursuant to this prospectus.
An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay
to purchase Shares of the Fund (bid) and the lowest price a seller is willing to accept for
Shares (ask) when buying or selling Shares in the secondary market (the bid-ask spread).
Recent information, including information about the Fund’s NAV, market price, premiums and discounts,
and bid-ask spreads, is included on the Fund’s website at
jpmorganfunds.com.
Tax Information
To
the extent the Fund makes distributions, those distributions will be taxed as ordinary income or capital gains, except when your investment is in an IRA, 401(k) plan or other tax-advantaged investment plan, in which case you may be
subject to federal income tax upon withdrawal from the tax-advantaged investment
plan.
Payments to Broker-Dealers and Other Financial Intermediaries
If you
purchase Shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the adviser and its related companies may pay the financial intermediary for the sale of Shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or financial
intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
8
SPRO-INC-ETF-724