Summary
Prospectus November 1, 2024
| JPMorgan Hedged Equity 3 Fund
Class/Ticker: A/JHTAX; C/JHTCX; I/JHQTX
|
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 capital appreciation.
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. You may qualify for
sales charge discounts on purchases of Class A Shares if you and your family invest, or agree to
invest in the future, at least $50,000 in the J.P. Morgan Funds. More information about these and other discounts is available from your financial intermediary and in “Investing with J.P. Morgan
Funds — SALES CHARGES AND FINANCIAL INTERMEDIARY COMPENSATION” on page 144 and in “Financial Intermediary-Specific Sales Charge Waivers” in Appendix A of the prospectus and in
“PURCHASES, REDEMPTIONS AND EXCHANGES” in Appendix A to Part II of the Statement of Additional Information.
| SHAREHOLDER FEES (Fees paid directly from your investment) | |||
| |
Class A |
Class C |
Class I |
| Maximum Sales Charge
(Load) Imposed on Purchases as a % of the Offering Price |
5.25% |
NONE |
NONE |
| Maximum Deferred Sales Charge (Load) as a % of Original Cost of the Shares |
NONE1 |
1.00% |
NONE |
1
For purchases under $1 million.
| ANNUAL FUND OPERATING EXPENSES
(Expenses that you pay each year as a percentage of the
value of your investment) |
|||
| |
Class A |
Class C |
Class I |
| Management Fees
|
0.25% |
0.25% |
0.25% |
| Distribution (Rule 12b-1) Fees |
0.25 |
0.75 |
NONE |
| Other Expenses
|
0.35 |
0.35 |
0.35 |
| Service Fees
|
0.25 |
0.25 |
0.25 |
| Remainder of Other Expenses
|
0.10 |
0.10 |
0.10 |
| Total Annual Fund Operating Expenses
|
0.85 |
1.35 |
0.60 |
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 $10,000 in the Fund for the time periods indicated. The Example also assumes that your investment has a 5% return each year and that
the Fund’s operating expenses remain the same. Your actual costs may be higher or
lower.
| IF YOU SELL YOUR SHARES, YOUR COST WOULD BE:
| ||||
| |
1 Year |
3 Years |
5 Years |
10 Years |
| CLASS A SHARES ($) |
607 |
782 |
972 |
1,519 |
| CLASS C SHARES ($) |
237 |
428 |
739 |
1,487 |
| CLASS I SHARES ($) |
61 |
192 |
335 |
750 |
| IF YOU DO NOT SELL YOUR SHARES, YOUR COST
WOULD BE: | ||||
| |
1 Year |
3 Years |
5 Years |
10 Years |
| CLASS A SHARES ($) |
607 |
782 |
972 |
1,519 |
| CLASS C SHARES ($) |
137 |
428 |
739 |
1,487 |
| CLASS I SHARES ($) |
61 |
192 |
335 |
750 |
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 56% of the average value of its portfolio.
What are the Fund’s main investment strategies?
The Fund seeks to provide capital appreciation through participation in the broad equity markets while hedging overall market exposure relative to traditional
long-only equity strategies.
Under normal circumstances, the Fund
invests at least 80% of its Assets in equity securities. “Assets” means net assets plus the amount of borrowings for investment purposes. The Fund uses an enhanced index strategy to invest in these
equity securities, which primarily consist of common stocks of large capitalization
1
U.S. companies. Because the Fund uses an
enhanced index strategy, not all of the stocks in the S&P 500 Index, its primary benchmark,
are included in the Fund, and the Fund’s position in an individual stock may be overweighted or underweighted when compared to the index. The Fund will also systematically purchase and sell exchange traded put options
and sell exchange traded call options, employing an option overlay known as a “Put/Spread
Collar” strategy. The options may be based on the S&P 500 Index or on exchange-traded funds (ETFs) that replicate the S&P 500 Index (S&P 500 ETFs). The combination of the diversified portfolio of
equity securities, the downside protection from index put options and the income from the index
call options is intended to provide the Fund with a portion of the returns associated with equity market investments while exposing investors to less risk than traditional long-only equity strategies. Specifically, the Fund
seeks to provide a competitive risk adjusted return over a full market cycle (defined as three to
five years) relative to the S&P 500 Index with lower volatility than traditional long-only equity strategies.
The Fund typically holds options for three month periods (each, an “hedge period”) for the purpose
of seeking to provide more predictable returns in any market cycle during the applicable hedge
period. The put option spread is generally maintained at a level intended to reduce the Fund’s exposure to a market decline by offsetting losses resulting from a decrease in the market. As a result of writing call options to
offset the costs associated with the put option spread, some upside may be foregone in certain
market environments. The quarterly hedge periods are based on returns from the first business day of March through the last business day of May; the first business day of June through the last business day of
August; the first business day of September through the last business day of November; and the
first business day of December through the last business day of February of the following calendar year.
The Fund’s investments in equity securities will be primarily in common stocks of U.S. companies with market capitalizations similar to those within the universe of the
S&P 500 Index. As of the reconstitution of the S&P 500 Index on September 30, 2024, the
market capitalizations of the companies in the index ranged from $3.14 billion to $3.54 trillion. Sector by sector, the Fund’s weightings are similar to those of the S&P 500 Index. Within each sector, however, the Fund modestly
overweights equity securities that it considers undervalued or fairly valued while modestly
underweighting or not holding equity securities that appear overvalued. Because each stock’s weighting in the Fund is controlled relative to that stock’s weight in the S&P 500 Index, the Fund’s weighted
average market capitalization will be close to that of the S&P 500 Index.
The Fund constructs a Put/Spread Collar by buying a put option on the
S&P 500 Index at a higher strike price and writing (or selling) a put option on the same index at a relatively lower strike price, resulting in what is known as a put option spread, while simultaneously selling a S&P 500
Index call option. The Fund may need to construct additional Put/Spread Collars if the size of
the Fund increases, either through purchases or appreciation. The Fund’s options overlay strategy is intended to provide the Fund with downside protection, while foregoing some upside potential. A put option spread seeks to
protect the Fund against a decline in price, but only to the extent of the difference between the
strike prices of the put option purchased and the put option sold. Entering into put option spreads is typically less expensive than a strategy of only purchasing put
options and may benefit the Fund in a flat to upwardly moving market by reducing the cost of the downside protection; the downside protection of the put option spread,
however, is limited as compared to just owning a put option. The premiums received from writing
index call options are intended to provide income which substantially offsets the cost of the put option spread, but writing the options also reduces the Fund’s ability to profit from increases in the value of
its equity portfolio because in rising markets the call option will be exercised once the market
price rises to the option’s strike price. While the Fund typically constructs the Put/Spread Collar utilizing index options, it may also construct the Put/Spread Collar utilizing options on S&P 500 ETFs.
Options positions are marked to market daily. The value of options is affected by changes in the value and dividend rates of the securities represented in the S&P
500 Index underlying the option, changes in interest rates, changes in the actual or perceived
volatility of the S&P 500 Index and the remaining time to the options’ expiration, as well as trading conditions in the options market.
In addition to the use of the Put/Spread Collar strategy described above, the Fund may use future contracts,
primarily futures on indexes, to more effectively gain targeted equity exposure from its cash
positions and to hedge the Fund’s portfolio if it is unable to purchase or write the necessary options for its overlay strategy.
The Fund is also permitted to use other derivatives such as futures, options and swaps in order to hedge
various investments and for risk management. Under certain market conditions, the Fund’s
use of other derivatives for cash management or other investment management purposes could be significant.
Investment Process — Enhanced Index: To implement the enhanced index strategy, the adviser employs a three-step process that combines research, valuation and stock
selection. The adviser takes an in-depth look at company prospects, which is designed to provide
insight into a company’s real growth potential. The research findings allow the adviser to rank the companies in each sector group according to their relative value. As part of its investment process, 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 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.
On behalf of the Fund, the adviser then buys and sells equity securities,
using the research and valuation rankings as a basis. In general, the adviser buys equity securities that are identified as attractive and considers selling them when they appear less attractive based on the Fund’s process.
Along with attractive valuation, the adviser often considers a number of other
criteria:
●
catalysts that could trigger a rise in a stock’s price
●
impact on the overall risk of the portfolio relative to the S&P 500 Index
2
●
high perceived potential reward compared to perceived potential risk
●
possible temporary mispricings caused by apparent market overreactions.
Investment Process — Options Overlay Strategy: To implement the
Put/Spread Collar strategy, the adviser utilizes exchange traded equity options based either on the S&P 500 Index or on S&P 500 ETFs. The Put/Spread Collar is constructed by buying a put option at a higher strike price while
writing a put option at a relatively lower strike price and simultaneously selling a call option
that substantially offsets the cost of the put option spread. The Put/Spread Collar strategy is an actively managed process and is designed to provide a continuous market hedge for the portfolio. The put option spread is
generally maintained at a level intended to protect the Fund from a decrease in the market of 5%
to 20%, with potential upside generally capped at 3.5-5.5%. The upside cap could be more or less depending on market conditions. The options are systematically reset on at least a quarterly basis to better capitalize on
current market conditions and opportunities while seeking to provide predictable returns in all
market cycles.
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.
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.
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.
Strategy
Risk. The Fund’s investment strategies may not always provide greater market protection
than other equity instruments particularly in rising equity markets when the Fund is expected to
underperform traditional long-only equity strategies. In addition, as a result of the structure of the options overlay strategy, the Fund is not expected to provide market protection during times of low market volatility;
during such periods, the Fund is expected to perform in line with broad equity
markets.
Options Risk. The value of the Fund’s positions in equity index options or options on S&P 500 ETFs will fluctuate
in response to changes in the value of the underlying index. Writing index call options or
options on S&P 500 ETFs can reduce equity market risk, but it limits the opportunity to profit from an increase in the market value of stocks in exchange for upfront cash at the time of selling the call option. The Fund also
risks losing all or part of the cash paid for purchasing put options. Unusual market conditions
or the lack of a ready market for any particular option at a specific time may reduce the effectiveness of the Fund’s option strategies, and for these and other reasons, the Fund’s option strategies may
not reduce the Fund’s volatility to the extent desired and could result in losses.
Large Cap Company Risk. Because the Fund invests
principally in large cap company securities, it may underperform other funds during periods when
the Fund’s large cap securities are out of favor.
Mid Cap Company Risk. Investments in mid cap companies may be riskier, less liquid, more volatile and more vulnerable to economic, market and industry changes than
investments in larger, more established companies. The securities of smaller companies may trade
less frequently and in smaller volumes than securities of larger companies. As a result, changes in the price of securities issued by such companies may be more sudden or erratic than the prices of other equity
securities, especially over the short term.
Derivatives Risk. Derivatives, including options and futures contracts, 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. 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 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 security
or other risk being hedged. In addition, given
3
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.
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.
Technology Sector Risk. Market or economic factors impacting technology companies could have a major effect on the value of the Fund’s investments. The value of
stocks of technology companies is particularly vulnerable to rapid changes in technology product
cycles, rapid product obsolescence and frequent new product introduction, unpredictable changes in
growth rates and competition for the services of qualified personnel, and government regulation
and competition, both domestically and internationally, including competition from foreign
competitors with lower production costs. Stocks of technology companies, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market. Technology companies are heavily dependent on
patent and intellectual property rights, the loss or impairment of which may adversely affect
profitability.
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.
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 I Shares over the past two calendar year. The table shows the average annual total returns for the past
one year and life of the Fund. The table compares the Fund’s performance to the
performance of
the S&P 500 Index and the ICE BofA 3-Month US Treasury Bill 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 is available by
visiting www.jpmorganfunds.com or by calling 1-800-480-4111.
The S&P 500 Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its
affiliates and have been licensed for use by the adviser. Copyright © 2023. S&P Dow Jones Indices LLC, a subsidiary of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction
in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC.
For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones
Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector
that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark
Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
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.
4
| YEAR-BY-YEAR RETURNS — CLASS I SHARES |
| Best Quarter |
4th quarter, 2023 |
7.76% |
| Worst Quarter |
2nd quarter, 2022 |
-10.94% |
| The Fund’s year-to-date total return |
through |
9/30/24 |
was |
15.16% |
. |
| AVERAGE ANNUAL TOTAL RETURNS
(For periods ended December 31, 2023) |
||
| |
Past |
Life of Fund
since |
| |
1 Year |
02/26/2021 |
| CLASS I SHARES |
|
|
| Return Before Taxes |
18.60 % |
4.96 % |
| Return After Taxes on Distributions |
18.32 |
4.67 |
| Return After Taxes on Distributions and Sale of Fund Shares |
11.19 |
3.79 |
| CLASS A SHARES |
|
|
| Return Before Taxes |
12.16 |
2.74 |
| CLASS C SHARES |
|
|
| Return Before Taxes |
16.72 |
4.17 |
| S&P 500 INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
26.29 |
9.96 |
| ICE BOFA 3-MONTH US TREASURY BILL INDEX (Reflects No Deduction for Fees, Expenses, or Taxes) |
5.05 |
2.29 |
After-tax returns are shown only for the Class I Shares, and after-tax returns for the other classes will vary. 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 your tax situation and may differ from those shown. 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 |
| Hamilton Reiner |
2021 |
Managing Director |
| Raffaele Zingone |
2021 |
Managing Director |
| Matthew Bensen |
2024 |
Vice President |
| Judy Jansen |
2024 |
Vice President |
Purchase and Sale of Fund Shares
Purchase minimums
| For Class A and Class C Shares |
|
| To establish an account |
$1,000 |
| To add to an account |
$50 |
| For Class I Shares |
|
| To establish an account |
$1,000,000 |
| To add to an account |
No minimum levels |
In general, you may purchase or redeem shares on any business day:
●
Through your Financial Intermediary
●
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 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 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.
5
