Summary
Prospectus November 1, 2024
| JPMorgan Preferred and Income Securities
Fund Class/Ticker: R6/JPDRX |
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
1-800-480-4111 or by sending an e-mail request to
Funds.Website.Support@jpmorganfunds.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 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 a high level of current income and total return.
Fees and Expenses of the Fund
The following tables describe 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 examples
below.
“Acquired Fund Fees and Expenses” are expenses
incurred indirectly by the Fund through its ownership of shares in other investment companies,
including affiliated money market funds, other mutual funds, exchange traded funds and business
development companies. The impact of Acquired Fund Fees and Expenses is included in the total
returns of the Fund. Acquired Fund Fees and Expenses are not direct costs of the Fund, are
not used by the Fund to calculate its net asset value per share and are not included in the
calculation of the ratio of expenses to average net assets shown in the Financial Highlights section of the Fund’s prospectus.
| ANNUAL FUND OPERATING EXPENSES
(Expenses that you pay each year as a percentage of the
value of your investment) |
|
| |
Class R6 |
| Management Fees
|
0.50% |
| Distribution (Rule 12b-1) Fees |
NONE |
| Other Expenses
|
0.14 |
| Service Fees
|
NONE |
| Remainder of Other
Expenses |
0.14 |
| Acquired Fund Fees and Expenses |
0.01 |
| Total Annual Fund Operating Expenses |
0.65 |
| Fee Waivers and/or Expense Reimbursements 1 |
-0.10 |
| Total Annual Fund Operating Expenses after Fee Waivers and/or Expense Reimbursements 1 |
0.55 |
1
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, expenses related to trustee elections, and extraordinary expenses) exceed 0.55% of the average daily net assets of Class R6 Shares. 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,
shareholder servicing agent and/or administrator have contractually agreed to waive fees and/or reimburse
expenses in an amount sufficient to offset the respective net fees each collects from the affiliated money market funds on the Fund’s investment in such money market funds. These waivers are in effect through 10/31/25, 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 mutual funds. The Example assumes that you invest $10,000 in
the Fund for the time periods indicated. The Example also assumes that your investment has a 5%
return each year and that the Fund’s operating expenses are equal to the total annual fund operating expenses after fee waivers and expense reimbursements shown in the fee table through 10/31/25 and total annual
fund operating expenses thereafter. Your actual costs may be higher or lower.
| WHETHER OR NOT YOU SELL YOUR SHARES, YOUR COST WOULD BE: | ||||
| |
1 Year |
3 Years |
5 Years |
10 Years |
| CLASS R6 SHARES ($) |
56 |
198 |
352 |
801 |
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 Fund 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 36% of the average value of its portfolio.
What are the Fund’s main investment strategies?
The Fund mainly invests in preferred and debt securities believed to be
attractively valued relative to credit quality and other investment characteristics. Under normal circumstances, the Fund invests at least 80% of its assets in preferred and debt securities issued by U.S. and non-U.S.
issuers and obligors, including traditional preferred securities, hybrid preferred securities
that have investment and economic characteristics of
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both preferred stock and debt securities,
floating rate preferred securities, corporate debt securities, convertible securities and
contingent convertible securities (“CoCos”). “Assets” means net assets
plus the amount of borrowings for investment purposes.
The Fund will
invest at least 25% of its total assets in the financials sector which includes, among other industries, banking, diversified financials, real estate (including real estate investment trusts (“REITs”) and
insurance industries. The Fund has a fundamental policy to concentrate its investments in an
industry or group of industries which includes the banking, diversified financials, real estate
(including real estate investment trusts (“REITs”)) and insurance industries. This means that the Fund will invest 25% or more of its total assets in these related industries on a combined basis and may
invest 25% or more of its total assets in any one of these four industries individually.
The Fund may invest in securities in both U.S. and foreign 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 European markets. In addition, the Fund may invest a significant amount of its assets in securities rated below investment grade or unrated securities deemed by the adviser to be of comparable quality (also
known as junk bonds or high yield bonds) and securities denominated in foreign currencies (some
of which may be below investment grade securities). The Fund’s investments in high yield 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.
As part of the Fund’s principal investment strategy, the adviser seeks to manage distributions
throughout the year to help reduce fluctuations in monthly dividends. As part of the Fund’s
principal investment strategy, the Fund may invest in securities structured as equity or debt
securities of master limited partnerships (MLPs), private placements, restricted securities and
other unregistered securities, sovereign obligations, trust preferreds, U.S. Government Agency Securities and Obligations, variable and floating rate instruments, and zero-coupon, pay-in-kind and deferred payment securities.
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, swaps, credit derivatives and currency derivatives as tools in the management of portfolio assets. The Fund may use derivatives to hedge various
investments, for risk management and/or to increase income or gain to the Fund. In particular,
the Fund may invest in futures and swaps structured as interest rate swaps and total return swaps for duration or hedging purposes or to gain or limit exposure to securities or markets. In addition, the Fund may use swaps
structured as credit default swaps related to individual securities indexes of securities to gain
or limit exposure to securities, to mitigate risk exposure, and manage cash flows. The Fund may also utilize
foreign currency derivatives such as
currency forwards, futures, and foreign exchange swaps to hedge its non-dollar investments back
to the U.S. dollar, but may not always do so.
As part of its principal
investment strategy and for temporary defensive purposes, any portion of the Fund’s total assets may be invested in cash and cash equivalents.
Investment Process – The adviser buys and sells investments for the Fund using a three part process that
includes determining: (1) macro credit strategy, (2) sector strategy, and (3) security strategy.
In establishing the Fund’s macro credit strategy, the adviser evaluates fundamental, technical and valuation factors, along with macro themes from the adviser’s broader fixed income team, to determine the view on
risk for the Fund overall. In the second component of the process, the adviser evaluates sectors
based on a blend of top down analysis, including relative value judgments, and bottom up
fundamental analysis of companies and their respective sectors to determine sector weightings.
The third component of the process (also known as the security strategy) focuses on an evaluation
of individual companies based on fundamental credit metrics, as well as a review of each company’s competitive environment, regulatory risks, bond structure and credit ranking, event risk, relative value and technical
factors such as supply, liquidity of debt issued by the company and equity performance, as
applicable. As part of its evaluation of individual companies, the adviser seeks to assess the impact of environmental, social and governance (ESG) factors on many 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 issuers 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 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
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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.
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.
Preferred Securities Risk. Preferred securities generally have 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, dividends on preferred securities are payable only if declared by the issuer’s board of directors. As a consequence, if the board of directors of an issuer does not
declare dividends or distributions for the relevant dividend or distribution periods, the issuer will not be obligated to pay dividends or distributions on the relevant payment date, and such dividends and
distributions may be forfeited. Holders of preferred securities typically do not have voting
rights except in certain circumstances where they may be given only limited voting rights. Preferred securities also may be subject to optional or mandatory redemption provisions.
Hybrid Preferred Securities Risk. Hybrid preferred securities are debt instruments that have characteristics and risks similar to those of preferred securities. As hybrid
preferred securities typically are 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. Hybrid preferred securities are generally
structured as debt securities that are subordinate to senior debt holders. In addition, the
issuer of such securities may be permitted to defer interest payment. Such securities also may be subject to prepayment risk due to optional or mandatory redemption provisions.
Extension Risk. The Fund invests in securities that may be subject to the risk that a rise in interest rates or credit spreads will extend the life of a security to a
date later than the anticipated repayment date, causing the value of the investment to
decrease.
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. 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 (the “resolution authority") 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.
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 (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.
3
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.
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.
Real
Estate Securities Risk. The value of real estate securities in general, and REITs in particular,
are subject to the same risks as direct investments in real estate and mortgages which include,
but are not limited to, sensitivity to changes in real estate values and property taxes, interest
rate risk, tax and regulatory risk, fluctuations in rent schedules and operating expenses,
adverse changes in local, regional or general economic conditions, deterioration of the real
estate market and the financial circumstances of tenants and sellers, unfavorable changes in
zoning, building, environmental and other laws, the need for unanticipated renovations,
unexpected increases in the cost of energy and environmental factors. In addition, the underlying
mortgage loans may be subject to the risks of default or of prepayments that occur earlier or
later than expected, and such loans may also include so-called “sub-prime” mortgages. The value of REITs will also rise and fall in response to the management skill and creditworthiness of the issuer.
In particular, the value of these securities may decline when interest rates rise and will also
be affected by the real estate market and by the management of the underlying properties. REITs may be more volatile and/or more illiquid than other types of equity securi
ties. 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.
In addition, certain of the companies in which the Fund intends
to invest may have developed or commenced development on properties and may develop additional
properties in the future. Real estate development involves significant risks in addition to those
involved in the ownership and operation of established properties, including the risks that financing, if needed, may not be available on favorable terms for development projects, that construction may not be completed on schedule
(resulting in increased debt service expense and construction costs), that estimates of the costs
of construction may prove to be inaccurate and that properties may not be leased, rented or
operated on profitable terms and therefore will fail to perform in accordance with expectations.
As a result, the value of the Fund’s investment may decrease in 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 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.
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. In addition, the Fund is limited in its ability to
exercise its legal rights or enforce a counterparty’s legal obligations in certain jurisdictions outside of the United States.
Currency Risk. Changes in foreign currency exchange rates will affect the value of the Fund’s securities and 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 the Fund may attempt to hedge its currency exposure into the U.S. dollar, it may not be successful in reducing the effects of currency fluctuations. The Fund may
also hedge from one foreign currency to another. In addition, the Fund’s use of
4
currency hedging may not be successful,
including due to delays in placing trades and other operational limitations, and the use of such
strategies may lower the Fund’s potential returns.
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.
Concentration Risk. Because the Fund will, under ordinary circumstances, invest a significant portion of its assets in securities of companies in the financials sector
including securities in the banking, diversified financials, real estate (including REITs) and
insurance industries, developments affecting the financials and these four industries within this sector may have a disproportionate impact on the Fund. These risks generally include interest rate risk, credit risk and risk
associated with regulatory changes in the financials sector. In addition, companies in the
financial sectors are highly dependent on the supply of short-term financing.
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.
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.
MLP Risk. The Fund invests in both equity and debt securities issued by MLPs. The managing general partner of an MLP may receive an incentive allocation based on increases
in the amount and growth of cash distributions to investors in the MLP. This method of
compensation may create an incentive for the managing general partner to make investments that are riskier
or more speculative than would be the case
in the absence of such compensation arrangements. Certain MLPs may operate in, or have exposure
to, the energy sector. The energy sector can be significantly affected by changes in the prices and supplies of oil and other energy fuels, energy conservation, the success of exploration projects, and tax and other
government regulations, policies of the Organization of Petroleum Exporting Countries (OPEC) and
relationships among OPEC members and between OPEC and oil importing nations. Debt securities of
MLPs are subject to the risks of debt securities in general. For example, such securities are
more sensitive to interest rates than equity interests in MLPs.
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.
Trust Preferred Securities Risk. Trust preferred
securities, also known as “trust preferreds,” are preferred stocks issued by a
special purpose trust subsidiary backed by subordinated debt of the corporate parent. The market
for trust preferred securities may be limited due to restrictions on resale, and the market value
may be more volatile than those of conventional debt securities. The value of trust preferred securities may fluctuate for several reasons, including changes in the financial condition of an issuer, investors’ perception of
the financial condition of an issuer, or the general economic condition of the market for trust
preferred securities.
Derivatives Risk. Derivatives, including futures contracts, options, swaps including interest rate and credit default swaps
and forward contracts, credit derivatives and currency derivatives 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. The Fund may be more volatile than if the Fund had
not been leveraged because the leverage tends to exaggerate any effect on the value of the
Fund’s portfolio securities. 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 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
5
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. 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.
Options Risk. There are significant differences between the securities and options markets that could result in an imperfect correlation between these markets and even a
well conceived transaction may be unsuccessful because of market behavior or unexpected events.
Options may be volatile and there can be no assurance that a liquid secondary market will exist for any particular option at any particular time, even if the contract is traded on an exchange. Exchanges may halt
trading in options thereby making it impossible for the Fund to enter into or close out option
positions and impairing the Fund’s access to assets held to cover such options positions. The Fund may also be at risk that counterparties entering into an option transaction will not fulfill their obligations, particularly
when the Fund utilizes over-the-counter options.
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.
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.
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 Ginnie Mae, Fannie Mae, or 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.
Prepayment Risk. The issuer of certain securities may repay principal in advance, especially when yields fall. In addition, certain of the Fund’s investments such
as preferred securities, hybrid preferred securities and contingent convertible securities may be
subject to optional or mandatory redemption provisions. 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 redeemed, 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.
Newer Fund Risk. The Fund is new with limited operating history. As a result, prospective investors will have only limited information concerning the Fund’s track record
or history to help inform their investment decisions. In addition, until the Fund achieves a
certain size, the performance of certain of its investments may disproportionately impact the
performance of the Fund, which may be subject to heightened volatility. In addition, there can be
no assurance that the Fund will grow to or maintain an economically viable size.
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.
6
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 Class R6 Shares for the past year. The table shows the average annual total returns for the past year and life
of the Fund. The table compares the Fund’s performance to the performance of the Bloomberg U.S. Aggregate Index, the ICE BofA US All Capital Securities Index and a composite benchmark.
The composite benchmark for the Fund is a customized benchmark of the following unmanaged market
indexes: 75% ICE BofA US All Capital Securities Index and 25% Bloomberg Developed Mkt. USD
Contingent Capital Index. Past performance (before and after taxes) is not necessarily an indication of how any class of the Fund will perform in the future. Updated performance information will be available by visiting www.jpmorganfunds.com or by calling 1-800-480-4111.
The performance figures in the bar chart do not reflect any deduction for the front-end sales charge, which is
assessed on Class A Shares. If the sales charge were reflected, the performance figures would
have been lower.
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 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.
SOURCE ICE DATA INDICES, LLC (“ICE DATA”), IS USED WITH PERMISSION. ICE® IS A REGISTERED TRADEMARK OF ICE DATA OR ITS AFFILIATES AND BOFA® IS A REGISTERED TRADEMARK OF BANK OF AMERICA CORPORATION LICENSED BY BANK OF AMERICA CORPORATION AND ITS AFFILIATES (“BOFA”)
AND MAY NOT BE USED WITHOUT BOFA’S PRIOR WRITTEN APPROVAL. ICE DATA, ITS AFFILIATES AND
THEIR RESPECTIVE THIRD PARTY SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS,
EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY DATA INCLUDED IN, RELATED TO, OR DERIVED
THEREFROM. NEITHER ICE DATA, ITS AFFILIATES NOR THEIR RESPECTIVE THIRD PARTY SUPPLIERS SHALL BE
SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR
COMPLETENESS OF THE INDICES OR THE INDEX DATA OR ANY COMPONENT THEREOF, AND THE INDICES AND INDEX
DATA AND ALL COMPONENTS THEREOF ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK. ICE DATA, ITS AFFILIATES AND THEIR RESPECTIVE THIRD PARTY SUPPLIERS DO NOT SPONSOR, ENDORSE, OR
RECOMMEND THE ADVISER, OR ANY OF ITS PRODUCTS OR SERVICES.
| YEAR-BY-YEAR RETURNS - CLASS R6 SHARES |
| Best Quarter |
4th quarter, 2023 |
7.37% |
| Worst Quarter |
1st quarter, 2023 |
-2.12% |
| The Fund’s year-to-date total return |
through |
9/30/24 |
was |
11.14% |
. |
| AVERAGE ANNUAL TOTAL RETURNS
(For periods ended December 31, 2023) |
||
| |
Past |
Life of Fund
since |
| |
1 Year |
03/31/2022 |
| CLASS R6 SHARES |
|
|
| Return Before Taxes |
7.97 % |
0.08 % |
| Return After Taxes on Distributions |
6.29 |
-1.34 |
| Return After Taxes on Distributions and Sale of Fund Shares |
5.33 |
-0.22 |
| BLOOMBERG U.S. AGGREGATE INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
5.53 |
-1.38 |
| ICE BOFA US ALL CAPITAL SECURITIES INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
9.37 |
-0.30 |
| 75% ICE BOFA US ALL CAPITAL SECURITIES INDEX/25% BLOOMBERG DEVELOPED MKT. USD CONTINGENT CAPITAL INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
7.67 |
-0.73 |
Management
J.P. Morgan Investment Management Inc. (the adviser)
| Portfolio Manager |
Managed the Fund Since |
Primary Title with
Investment Adviser |
| Vikas Pathani |
2022 |
Managing Director |
| Lisa Coleman |
2022 |
Managing Director |
| Andreas Michalitsianos |
2022 |
Managing Director |
7
Purchase and Sale of Fund
Shares
Purchase minimums
| For Class R6 Shares |
|
| To establish an account |
$5,000,000 for Discretionary Accounts
$5,000,000 for Institutional Investors $15,000,000 for
Other Investors |
| To add to an account |
No minimum levels |
There is no minimum investment for other eligible Class R6 investors.
In general, you may purchase or redeem shares on any business day:
●
Through your Financial Intermediary or the eligible retirement plan or college saving plan through which you invest in the Fund
●
By
writing to J.P. Morgan Funds Services, P.O. Box 219143, Kansas City, MO 64121-9143
●
After you open an account, by calling J.P. Morgan Funds Services at 1-800-480-4111
Tax
Information
The Fund intends to make distributions that may be taxed as
ordinary income or capital gains, except when your investment is in a 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 Fund and its related companies may pay the financial
intermediary for the sale of Fund 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-PIS-R6-1124