Summary
Prospectus November 19, 2024
| JPMorgan Active High Yield ETF
Ticker: JPHY |
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 November 19, 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 achieve a return in excess to the benchmark by investing primarily in below investment grade
corporate debt securities. A high level of current income is the Fund’s primary objective
and capital appreciation is a secondary objective.
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 |
0.45% |
| Total Annual Fund Operating Expenses |
0.45 |
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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 $10,000 in the Fund for the time periods indicated. The Example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Your actual costs may be higher or lower.
| WHETHER OR NOT YOU SELL YOUR SHARES, YOUR
COST WOULD BE: | ||
| |
1 Year |
3 Years |
| SHARES ($) |
46 |
144 |
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. The Fund has not yet commenced operations as of the date of this
prospectus. Therefore, there is no portfolio turnover rate for the Fund to report at this time.
What are the Fund’s main investment strategies?
The Fund seeks to achieve its investment objective of outperforming the Fund’s benchmark, the ICE BofA US High Yield Constrained Index (the benchmark), by
investing in all types of high yield, high risk debt securities. The Fund also may invest in
convertible securities, preferred stock, common stock and privately placed securities.
Under normal circumstances, the Fund invests at least 80% of its Assets in bonds and other debt securities,
such as convertible securities, that are rated below investment grade or unrated. For purposes of
this policy, “Assets” means net assets plus the amount of borrowings for investment purposes. 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), S&P Global
Ratings (S&P), Fitch Rating (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.
Up to 20% of the Fund’s total assets may be invested in other securities, including investment grade securities. The Fund’s average weighted maturity ordinarily will
range between three and ten years, although the Fund may shorten its weighted average maturity to
as little as two years if deemed appropriate for temporary defensive purposes. The Fund may have a longer or shorter average weighted maturity under certain market conditions.
The Fund may invest up to 100% of the Fund’s total assets in below investment grade or unrated
securities. Such securities are also known as “junk bonds,” “high yield bonds” and “noninvestment grade bonds.” Such 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,
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securities of issuers that may be involved
in bankruptcy proceedings, reorganizations or financial restructurings or securities of issuers
operating in troubled industries. The Fund may invest in securities that are issued by companies that are highly leveraged, less creditworthy or financially distressed. All securities will be U.S. dollar-denominated
although they may be issued by a foreign corporation, government or its agencies and
instrumentalities.
In addition to direct investments in securities, derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may be used as
substitutes for securities in which the Fund can invest. The Fund may use futures contracts,
options and swaps to hedge various investments, for risk management and/or to increase income or gain to the Fund. In particular, the Fund may invest in swaps structured as credit default swaps to gain exposure to other
securities in order to mitigate risk exposure or to manage cash flow needs.
Although the Fund predominantly invests in debt securities and
income producing securities, it may also invest in common stock from time to time. In addition,
the Fund may acquire and hold such securities (or rights to acquire such securities) in
connection with an amendment, waiver, conversion or exchange of fixed income securities, in
connection with the bankruptcy or workout of distressed fixed income securities, or upon the
exercise of a right or warrant obtained on account of a fixed income security. In connection with
a company’s reorganization, the Fund, either alone or in conjunction with other creditors,
may provide financing to a debtor-in-possession by investing in notes or other securities issued
by a company. The Fund may also hold commitments to purchase bonds, convertible securities and
preferred or common stock (Unfunded Commitments) as a principal investment strategy.
The adviser seeks to achieve its investment objective by focusing on value
in buying and selling securities for the Fund by looking at individual securities against the context of broader market factors. For each issuer, the adviser performs an in-depth analysis of the issuer, including business
prospects, management, capital requirements, capital structure, enterprise value and security
structure and covenants. In addition, the adviser monitors investments on an ongoing basis by staying abreast of positive and negative credit developments expediting the review of the Fund’s investments
that are considered to be the most risky. Generally, the adviser will sell a security when, based
on fundamental credit 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. Based on this investment process, the adviser
overweights and underweights its sector and security investments relative to the benchmark. As part of its investment process, the adviser seeks to assess the impact of environmental, social and governance (ESG) factors on
certain issuers 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 securities and ascertain key issues that merit
engagement with issuers. These assessments may not be conclusive, and securities of issuers 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.
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.
High Yield Securities Risk. The Fund may invest in securities that are issued by companies that are highly leveraged, less creditworthy or financially distressed. These investments (also known as junk bonds) are considered to be
speculative and are subject to greater risk of loss, greater sensitivity to economic changes,
valuation difficulties and potential illiquidity.
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.
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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.
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.
Prepayment Risk. The issuer of certain securities may repay principal in advance, especially when yields fall. Changes in the
rate at which prepayments or redemptions 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.
Smaller Company Risk. Investments in smaller companies (mid cap and small cap companies) may be riskier, less liquid, more volatile and more vulnerable to economic, market and industry changes than investment in larger, more
established companies. Investments in smaller companies may trade less frequently and in smaller
volumes than investments in larger companies. As a result, changes in the price of investments in such companies may be more sudden or erratic than the prices of investments of large capitalization companies, especially
over the short term. These risks are higher for small cap companies.
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.
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 securities. Although these instruments are generally
less sensitive to interest rate changes than fixed rate instruments, the value of variable and
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.
Derivatives Risk. Derivatives, including currency
forwards and futures, may be riskier than other types of investments because they may be more
sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the Fund’s original investment. Many derivatives create leverage
thereby causing the Fund to be more volatile than it would be if it had not used derivatives.
Certain derivatives also expose the Fund to counterparty risk (the risk that the derivative
counterparty will not fulfill its contractual obligations), including the credit risk of the derivative counterparty. Certain derivatives are synthetic instruments that attempt to replicate 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. 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. 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.
Foreign Securities 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
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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.
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.
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.
Contingent convertible securities or CoCos are subject to additional risk factors. A contingent
convertible security is a hybrid debt security typically issued by a non-U.S. bank that may be convertible into equity or may be written down if a pre-specified trigger event such as a decline in capital ratio below a
prescribed threshold occurs. If such a trigger event occurs, the Fund may lose the principal
amount invested on a permanent or temporary basis or the contingent convertible security may be converted to equity. In addition to being subject to a possible write-down upon the occurrence of a trigger event,
contingent convertible securities may also be subject to a permanent write-down or conversion
into equity (in whole or in part), if the applicable bank regulator or other public administrative authority having responsibility for managing the orderly dissolution of an institution has determined that the issuer is not
viable. Even though the Fund does not invest in common stock as a principal investment strategy,
the Fund will be subject to increased equity market risk in the event that such securities are converted to equity. Coupon payments on contingent convertibles securities may be discretionary and may be cancelled by the
issuer. Holders of contingent convertible securities may suffer a loss of capital when comparable
equity holders do not. As contingent convertible securities may be perpetual or have long-dated
maturities, they may face greater interest rate sensitivity and may be subject to greater
fluctuations in value than securities with shorter maturity dates. Such securities also may be subject to prepayment risk due to optional or mandatory redemption provisions.
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.
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.
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.
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 Cboe BZX Exchange, 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. The Fund has a limited number of institutions that may act as authorized participants
on an agency basis (i.e., on behalf of other market participants). 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.
Authorized participant concentration risk may be heightened for ETFs that invest in securities issued by non-U.S. issuers.
4
You could lose money investing in the
Fund.
The Fund’s Past
Performance
The Fund has not commenced operations as of the date
of this prospectus and therefore, has no reportable performance history. Once the Fund has operated for at least one calendar year, a bar chart and performance table will be included
in the prospectus to show the performance of the Fund. When such information is included, this
section will provide some indication of the risks of investing in the Fund by showing changes in the Fund’s performance history from year to year and showing how the Fund’s average annual total
returns compare with those of a broad measure of market performance. Although past performance of the Fund is no guarantee of how it will perform in the future, historical performance may give you some indication of the risks of investing in the Fund.
Updated performance information is available by visiting
www.jpmorganfunds.com or by calling 1-844-457-6383 (844-4JPM ETF).
Management
J.P. Morgan Investment Management Inc. (the adviser)
| Portfolio Manager |
Managed the Fund Since |
Primary Title with
Investment Adviser |
| Robert Cook |
2024 |
Managing Director |
| Thomas Hauser |
2024 |
Managing Director |
| Jeffrey Lovell |
2024 |
Managing Director |
| John Lux |
2024 |
Managing Director |
| Edward Gibbons |
2024 |
Executive 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 (when available), 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.
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