Summary Prospectus July
1, 2024
| JPMorgan USD Emerging Markets Sovereign Bond
ETF Ticker: JPMB |
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 investment results that closely correspond, before fees and expenses, to the performance of the JPMorgan Emerging Markets Risk-Aware Bond
Index.
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
|
0.39% |
| Total Annual Fund Operating Expenses |
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.
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 $10,000 in the Fund for the time periods indicated. The
Example also assumes that your investment has a 5% return each year and that the Fund’s
operating expenses remain the same. Your actual costs may be higher or lower.
| WHETHER OR NOT YOU SELL YOUR SHARES, YOUR COST
WOULD BE: | ||||
| |
1 Year |
3 Years |
5 Years |
10 Years |
| SHARES ($) |
40 |
125 |
219 |
493 |
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 26% of the average value of its portfolio.
What are the Fund’s main investment strategies?
The Fund seeks investment results that closely correspond, before fees and expenses, to the performance of the JPMorgan Emerging Markets Risk-Aware Bond Index (the
Underlying Index). The Fund will invest at least 80% of its Assets in securities included in the
Underlying Index. “Assets” means net assets, plus the amount of borrowing for investment purposes. The Underlying Index is comprised of liquid, U.S. dollar-denominated sovereign and quasi-sovereign fixed and
floating rate debt securities from emerging markets selected using a rules-based methodology that
was developed and is owned by the adviser. The Underlying Index defines “quasi-sovereign debt securities” as debt securities issued by an entity that is 100% guaranteed or 100% owned by a national government. The
Underlying Index is owned, maintained and calculated by J.P. Morgan Securities LLC (JPMS or the
Index Provider), which selects securities in accordance with the methodology from among the components of the J.P. Morgan Emerging Market Bond Index Global Diversified, which was developed and is maintained by the
Index Provider. The adviser licenses the Underlying Index from the Index Provider. The Index
Provider and the adviser are both wholly-owned subsidiaries of JPMorgan Chase & Co., a publicly-held financial services holding company. The Underlying Index starts with the J.P. Morgan Emerging Market Bond
Index Global Diversified and applies a proprietary methodology that filters for liquidity and for
country risk and allocates risk based on credit rating. Historically, the J.P. Morgan Emerging Markets Bond Index Global Diversified has included bonds issued by the countries of Angola, Argentina, Armenia,
Azerbaijan, Belize, Bolivia, Brazil, Cameroon, Chile, China, Colombia, Costa Rica, Cote
D’Ivoire, Croatia, Dominican Republic, Ecuador, Egypt, El Salvador, Ethiopia, Gabon, Georgia, Ghana, Guatemala, Honduras, Hungary, India, Indonesia, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, Latvia, Lebanon, Lithuania,
Malaysia, Mexico, Mongolia, Morocco, Mozambique, Namibia, Nigeria, Oman, Pakistan, Panama,
Paraguay, Peru, Philippines, Poland,
1
Romania, Russian Federation, Senegal,
Serbia, Slovakia, South Africa, Sri Lanka, Suriname, Trinidad and Tobago, Tunisia, Turkey,
Ukraine, Uruguay, Venezuela, Vietnam, Zambia; however, this universe of countries may change in accordance with the Index Provider’s determination of eligible emerging market countries and there is no assurance
that a particular country will be represented in the Underlying Index at any given
time.
The Fund, using a
“passive” or indexing investment approach, attempts to closely correspond to the performance of the Underlying Index. Unlike many investment companies, the Fund does not seek to outperform the Underlying Index
and does not seek temporary defensive positions when markets decline or appear
overvalued.
The Fund uses a combination of stratified sampling and optimization techniques in order to seek to track the performance of the Underlying Index. The Fund’s
goal in utilizing these techniques is to minimize tracking error to the Underlying Index.
Stratified sampling involves grouping the securities in the Underlying Index into subgroups (for example, grouping the securities by ratings, maturity, sector or country) and selecting securities from each subgroup
to match the aggregate weights of the Underlying Index. Optimization utilizes mathematical
techniques to select securities by trading off between the desired characteristics of the Underling Index (for example, the risk and return of securities in the Underlying Index) and specified constraints (for example,
trade size, issuer ratings, sectors, duration of securities, bid/ask spreads, and portfolio
turnover). The Fund aims to ensure that the Fund’s exposures to important risk factors including, but not limited to, interest rate exposure, credit exposure and country and regional exposure, are aligned as closely as possible
with the Underlying Index.
To the extent the Fund uses the stratified sampling and optimization strategy, it would hold a significant number of the constituent securities of the Underlying
Index, but may not track the Underlying Index with the same degree of accuracy as would an
investment vehicle replicating the entire Underlying Index. Even when the Fund is utilizing a stratified sampling and optimization strategy, it must invest at least 80% of its Assets in securities included in the Underlying
Index. The Fund’s portfolio will be rebalanced monthly within each country and
semi-annually across countries in accordance with the rebalancing of the Underlying Index. In
addition, the Fund may take into account other considerations including, but not limited to,
transaction costs, liquidity, capacity, tax implications and the bid/ask spread of the Fund when
implementing the Fund’s stratified sampling and optimization techniques. The Fund will use
quantitative models in some instances to quantify the tradeoffs of these considerations and the Fund’s alignment with the Underlying Index.
The Fund may
invest without limit in securities that are rated below investment grade (also known as junk bonds or high yield securities) by Moody’s Investor Service, Inc. (Moody’s), Standard & Poor’s Corporation
(S&P), Fitch Ratings (Fitch) or the equivalent by another national rating organization or securities that are unrated but are deemed by the adviser to be of comparable quality.
As part of its principal
investment strategy, the Fund may invest in private placements. The Fund’s debt investments are not subject to specific duration or average weighted maturity limitations.
The Fund may invest up to 20% of its assets in exchange-traded futures contracts, credit default swaps and
other exchange-traded funds (ETFs) to seek performance that corresponds to the Underlying Index,
particularly in emerging markets where it is otherwise difficult to gain access, as well as in securities not included in the Underlying Index, but which the adviser believes will help the Fund track the Underlying
Index.
To the extent that the securities in the Underlying Index are concentrated in one or more industries or groups of industries, the Fund may concentrate in such industries or
groups of industries.
The
Fund is non-diversified.
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.
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 Underlying Index or 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.
Foreign Securities and Emerging Markets Risk. Investments in foreign issuers are subject to additional risks, including 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, higher transaction costs, delayed settlement, possible foreign controls on investment,
2
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 countries 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. The Underlying Index (and therefore the Fund) does not directly weight securities on the
basis of investor protection considerations and/or the availability and quality of information regarding 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.
Asia Pacific Market Risk. The economies in the Asia Pacific region are in all stages of economic development and may be intertwined. The small size of securities markets and the low trading volume in some countries in the Asia
Pacific region may lead to a lack of liquidity. The share prices of companies in the region tend
to be volatile and there is a significant possibility of loss. Many of the countries in the region are developing, both politically and economically, and as a result companies in the region may be subject to risks like
nationalization or other forms of government interference, and/or may be heavily reliant on only
a few industries or commodities. Investments in the region may also be subject to currency risks, such as restrictions on the flow of money in and out of the country, extreme volatility relative to the U.S. dollar, and
devaluation, all of which could decrease the value of the Fund.
Greater China Region Risk. In addition to the risks listed under “Foreign Securities and Emerging Markets Risk,” investments in Mainland China and Hong Kong are
subject to significant legal, regulatory, monetary and economic risks, as well as the potential
for regional and global conflicts, including actions that are contrary to the interests of the U.S. Investments in Mainland China involve political and legal uncertainties, currency fluctuations and aggressive currency controls, the
risk of confiscatory taxation, and nationalization or expropriation of assets, which could
adversely affect and significantly diminish the values of the Mainland Chinese companies in which the Fund invests. The Mainland Chinese securities markets are emerging markets characterized by greater price volatility. Mainland
China is
dominated by
the one-party rule of the Communist Party, and the Mainland Chinese government exercises significant control over Mainland China’s economic growth. There is the potential of increased tariffs and restrictions on
trade between the United States and Mainland China. An increase in tariffs or trade restrictions,
or even the threat of such developments, could lead to a significant reduction in international trade, which could have a negative impact on Mainland Chinese companies and a commensurately negative impact on the
Fund.
The political reunification of Mainland China and Taiwan, over which Mainland China continues to claim sovereignty, is a highly complex issue. There is the potential for
future political, military or economic disturbances that may have an adverse impact on the values
of the Fund’s investments in Mainland China and elsewhere, or make certain Fund investments impractical or impossible. Any escalation of hostility between Mainland China and Taiwan would likely have a significant
adverse impact on the value and liquidity of the Fund’s investments in both Mainland China
and elsewhere, causing substantial investment losses for the Fund.
Hong Kong is a Special Administrative Region of the People’s Republic of China. Since Hong Kong reverted
to Chinese sovereignty in 1997, it has been governed by the Basic Law. Under the Basic Law, Hong
Kong was guaranteed a high degree of autonomy in certain matters, including economic matters,
until 2047. Attempts by the government of Mainland China to exert greater control over Hong
Kong’s economic, political or legal structures or its existing social policy, could negatively affect investor confidence in Hong Kong (as has been the case previously during certain periods), which in
turn could negatively affect markets and business performance.
Chinese operating companies sometimes rely on variable interest entity (VIE) structures to raise capital from non-Chinese investors, even though such arrangements are not
formally recognized under Chinese law. In a VIE structure, a Mainland China-based operating
company establishes an entity (typically offshore) that enters into service and other contracts with the Mainland Chinese company designed to provide economic exposure to the company. The offshore entity then issues
exchange-traded shares that are sold to the public, including non-Chinese investors (such as the
Fund). Shares of the offshore entity are not equity ownership interests in the Mainland Chinese
operating company and therefore the ability of the offshore entity to control the activities at the Mainland Chinese company are limited and the Mainland Chinese company may engage in activities that negatively impact
investment value. Under a VIE structure, the Fund will typically have little or no ability to
influence the Mainland China-based operating company through proxy voting or other means because it is not a Mainland Chinese company owner/shareholder. The VIE structure is designed to provide the offshore entity
(and in turn, investors in the entity) with economic exposure to the Mainland Chinese company
that replicates equity ownership, without actual equity ownership of the Mainland Chinese operating
company. VIE structures are used due to Mainland Chinese government prohibitions on foreign
ownership of companies in certain industries and it is not clear that the contracts are
enforceable or that the structures will otherwise work as intended. Intervention by the Mainland
Chinese government with respect to VIE structures could adversely affect the Mainland Chinese
operating company’s performance, the enforceability of the offshore entity’s contractual arrangements
3
with the Mainland Chinese company and the
value of the offshore entity’s shares. If this were to occur, the market value of the
Fund’s associated portfolio holdings would likely fall, causing substantial investment losses for the Fund.
EMEA (Europe/Middle East/Africa) Region Risk. The economies of EMEA countries are all considered emerging market economies. The democratization process in Eastern Europe is still relatively new, and political turmoil and uprising
remains a threat. Russia’s military invasion of Ukraine in February 2022, responses by the
United States and other countries to the invasion and the potential for wider conflict within the region have increased and may continue to increase volatility and uncertainty in financial markets worldwide. Many Middle Eastern
economies have little or no democratic tradition and are currently facing greater political and
economic uncertainty, which could result in significant economic downturn. Many African nations have a history of dictatorship, military intervention and corruption. Russia, the Middle East and many African
nations are also highly reliant on income from sales of commodities (such as oil), and their
economies are therefore vulnerable to changes in the global prices of these commodities and currencies. As global demand for commodities fluctuates, the Russian economy and many Middle Eastern and African economies may be
significantly impacted.
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.
India Risk. Government actions, bureaucratic obstacles and inconsistent economic reform within the Indian government
have had a significant effect on the economy and could adversely affect market conditions,
economic growth and the profitability of private enterprises. Global economic developments may
inhibit the flow of foreign capital on which India is dependent to sustain its growth. Large portions of many Indian companies remain in the hands of individuals and corporate governance standards of Indian companies may be
weaker and less transparent, which may increase the risk of loss and unequal treatment of
investors. Investments in India are subject to risks presented by investments in an emerging market
country, including liquidity risk, which may result in extreme volatility in the prices of Indian
securities. Religious, cultural and military disputes persist in India, and between India and
Pakistan (as well as between sectarian groups within each country). In addition, the Indian
economy could be adversely impacted by natural disasters and acts of terrorism. Both India and
Pakistan have tested nuclear arms, and the threat of deployment of such weapons could hinder development of the Indian economy, and escalating tensions could impact the broader region.
Latin American Market Risk. The economies of countries in Latin America are all considered emerging market economies. High interest, inflation (in some cases substantial and prolonged), and unemployment rates generally characterize
each economy. Because commodities such as agricultural products, minerals, and metals represent a
significant percentage of exports of many Latin American countries, the economies of those
countries are particularly sensitive to fluctuations in commodity prices. Investments in the
region may also be subject to currency risks, such as restrictions on the flow of money in and out
of the country, extreme volatility relative to the U.S. dollar, and devaluation, all of which
could decrease the value of the Fund.
Governments of many Latin American countries exercise substantial influence over many aspects of the private sector, and any such exercise could have a significant
effect on companies in which the Fund invests. Other Latin American market risks include foreign
exchange controls, difficulties in pricing securities, defaults on sovereign debt, difficulties in
enforcing favorable legal judgments in local courts, political and social instability and the
significant percentage of the market represented by a small number of issuers.
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.
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 rise, 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 debt
4
securities. Although these instruments are
generally less sensitive to interest rate changes than fixed rate instruments, the value of
floating rate 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.
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. If an issuer’s or counterparty’s financial
condition worsens, the credit quality of the issuer or counterparty may deteriorate, making it difficult for the Fund to sell such investments.
Index Related Risk.
The Fund’s return may not track the return of the Underlying Index for a number of reasons and therefore may not achieve its investment objective. For example, the Fund incurs a number of operating expenses not
applicable to the Underlying Index, and incurs costs in buying and selling securities, especially
when rebalancing the Fund’s securities holdings to reflect changes in the composition of the Underlying Index. These transaction costs may be higher for a Fund investing in foreign securities. In addition, the
Fund’s return may differ from the return of the Underlying Index as a result of, among other
things, pricing differences (including differences between a security’s price at the local
market close and the Fund’s valuation of a security at the time of calculation of the Fund’s NAV) and the inability to purchase certain securities included in the Underlying Index due to regulatory or other
restrictions.
In addition, when the Fund uses a representative sampling approach, the Fund may not be as well correlated with the return of the Underlying Index as when the Fund
purchases all of the securities in the Underlying Index in the proportions in which they are
represented in the Underlying Index. To the extent the Fund calculates its NAV based on fair value prices and the value of the Underlying Index is based on securities’ closing prices on local foreign markets
(i.e., the value of the Underlying Index is not based on fair value prices), the Fund’s
ability to track the performance of the Underlying Index may be adversely affected.
Errors in the construction or calculation of the Underlying Index may occur from time to time. Any such errors may not be identified and corrected by the Index Provider for
some period of time, which may have an adverse impact on the Fund and its
shareholders.
The risk that
the Fund may not track the performance of the Underlying Index may be heightened during times of increased market volatility or other unusual market conditions.
Passive Management Risk. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not generally sell a security because the
security’s issuer was in financial trouble unless that security is removed from the
Underlying Index. As a result, the Fund’s performance could be lower than funds that
actively shift their portfolio assets to take advantage of market opportunities or lessen the impact of a market decline or a decline in the value of one or more issuers. The Fund will not take defensive positions
under any market conditions, including in declining markets.
Sampling Risk. To the extent the Fund
uses a representative sampling approach, it will hold a smaller number of securities than are in
the Underlying Index. As a result, an adverse development respecting an issuer of securities held by the Fund could result in a greater decline in the Fund’s NAV than would be the case if the Fund held all of the
securities in the Underlying Index. Conversely, a positive development relating to an issuer of
securities in the Underlying Index that is not held by the Fund could cause the Fund to underperform the Underlying Index. To the extent the assets in the Fund are smaller, these risks may be greater.
High Yield Securities Risk. The Fund invests in securities including junk bonds and instruments that are 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, liquidity risks, prepayment risks, and lack of publicly available information. High yield
securities that are deemed to be liquid at the time of purchase may become illiquid.
In recent years,
there has been a broad trend of weaker or less restrictive covenant protections in the high yield market. 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 high yield
securities, increase the claims against assets that are permitted against collateral securing
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 high
yield securities issued by such borrowers. Each of these factors might negatively impact the high
yield instruments held by the Fund.
No active trading market may exist for some instruments and certain investments may be subject to restrictions on resale. 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 may be more pronounced for the Fund. When 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.
Derivatives Risk. Derivatives, including foreign forward currency contracts, options, futures contracts and swaps, may be riskier than other types of investments and may
increase the volatility of the Fund. Derivatives may be 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 expose the Fund to counterparty risk, which is the risk that the
derivative counterparty will not fulfill its contractual obligations (and
5
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 subject to enhanced counterparty risk. Derivatives may not perform as expected, so the Fund may
not realize the intended benefits. In addition, given their complexity, derivatives expose the
Fund to risks of mispricing or improper valuation. 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.
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.
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.
Structured Investment Risk. Certain structured investments including credit default swaps are synthetic instruments that attempt to replicate the performance of certain reference assets. With regard to such instruments, the Fund
does not have a claim on the reference assets and is subject to enhanced counterparty
risk.
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.
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.
Non-Diversified Fund Risk. Since the Fund is non-diversified, it may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. This increased investment in fewer issuers may
result in the Fund’s Shares being more sensitive to economic results of those issuing the
securities. The value of the Fund’s Shares may also be more volatile than the value of a fund which invests in more securities.
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 five calendar years. The table shows the average annual total returns for the past one
year, five years and life of the Fund. It compares that performance to the JPMorgan Emerging Markets Risk-Aware Bond 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).
6
| YEAR-BY-YEAR RETURNS |
| Best Quarter |
2nd quarter, 2020 |
11.55% |
| Worst Quarter |
1st quarter, 2020 |
-14.39% |
| The Fund’s year-to-date total return |
through |
3/31/24 |
was |
-0.38% |
. |
| AVERAGE ANNUAL TOTAL RETURNS
(For periods ended December 31, 2023) |
|||
| |
Past |
Past |
Life of Fund
since |
| |
1 Year |
5 Years |
01/29/2018 |
| SHARES |
|
|
|
| Return Before Taxes |
9.74 % |
2.27 % |
1.03 % |
| Return After Taxes on Distributions |
7.00 |
0.24 |
-0.97 |
| Return After Taxes on Distributions and Sale of Fund Shares |
5.67 |
0.90 |
-0.05 |
| JPMORGAN EMERGING MARKETS RISK-AWARE BOND INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
10.00 |
2.79 |
1.54 |
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 |
| Andrew Bartlett |
2023 |
Executive Director |
| Supreet Khandate |
2023 |
Vice President |
| Kush Purohit |
2023 |
Vice President |
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.
7
