Prospectus
J.P. Morgan
Exchange-Traded Funds
November 1,
2023
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Ticker |
Listing
Exchange |
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JPMorgan
Equity Focus ETF |
JPEF |
The
NASDAQ Stock Market LLC |
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JPMorgan
Market Expansion Enhanced Equity ETF |
JMEE |
NYSE
Arca |
The
Securities and Exchange Commission and the Commodity Futures Trading Commission
have not approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
JPMorgan
Equity Focus ETF
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Management
Fees |
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Other
Expenses1 |
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Total
Annual Fund Operating Expenses |
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Fee
Waivers and/or Expense Reimbursements2 |
- |
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Total
Annual Fund Operating Expenses after Fee Waiv-
ers
and/or Expense Reimbursements2 |
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1
2
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1
Year |
3
Years |
5
Years |
10
Years |
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SHARES
($) |
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November
1, 2023 | 1
JPMorgan
Equity Focus ETF
(continued)
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.
An investment in this Fund or any other fund may not provide a complete investment program. The suitability of an investment in the Fund should be considered based on the investment objective, strategies and risks described in this prospectus, considered in light of all of the other investments in your portfolio, as well as your risk tolerance, financial goals and time horizons. You may want to consult with a financial advisor to determine if this Fund is suitable for you.
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.
2 | J.P.
Morgan Exchange-Traded Funds
November
1, 2023 | 3
JPMorgan
Equity Focus ETF
(continued)
4 | J.P.
Morgan Exchange-Traded Funds
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Past
1
Year |
Past
5
Years |
Past
10
Years |
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SHARES |
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Return
Before Taxes |
-
% |
% |
% |
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Return
After Taxes on Distributions |
- |
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Return
After Taxes on Distributions and
Sale
of Fund Shares |
- |
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S&P
500 INDEX
(Reflects
No Deduction for Fees,
Expenses,
or Taxes) |
- |
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Management
J.P. Morgan Investment
Management Inc. (the adviser)
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Portfolio
Manager |
Managed
the
Fund
Since |
Primary
Title with
Investment
Adviser |
|
Jonathan
K.L. Simon |
2023 |
Managing
Director |
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Timothy
Parton |
2023 |
Managing
Director |
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Felise
Agranoff |
2023 |
Managing
Director |
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Daniel
J. Percella |
2023 |
Managing
Director |
Messrs. Simon, Percella,
Parton, and Ms. Agranoff also were the predecessor fund’s portfolio managers
since 2011, 2022, 2017 and 2022, respectively.
Mr. Parton has announced his
retirement from the adviser in early 2024. Mr. Parton will continue to serve on
the portfolio management team of the Fund until his retirement, and upon his
retirement, Messrs. Simon and Percella and Ms. Agranoff will continue to be
responsible for the management of the Fund.
Purchase
and Sale of Shares
Individual Shares of the Fund
may only be purchased and sold in secondary market transactions through brokers
or financial intermediaries. Shares of the Fund are listed for trading on the
Exchange, and because Shares trade at market prices rather than NAV, Shares of
the Fund may trade at a price greater than NAV (premium) or less than NAV
(discount). Certain affiliates of the Fund and the adviser may purchase and
resell Shares pursuant to this prospectus.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase Shares of the Fund (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the bid-ask spread).
Recent information, including
information about the Fund’s NAV, market price, premiums and discounts, and
bid-ask spreads, is included on the Fund’s website at
jpmorganfunds.com.
Tax
Information
To the extent the Fund makes
distributions, those distributions will be taxed as ordinary income or capital
gains, except when your investment is in an IRA, 401(k) plan or other
tax-advantaged investment plan, in which case you may be subject to federal
income tax upon withdrawal from the tax-advantaged investment plan.
November
1, 2023 | 5
JPMorgan
Equity Focus ETF
(continued)
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.
6 | J.P.
Morgan Exchange-Traded Funds
JPMorgan
Market Expansion Enhanced Equity ETF
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Management
Fees |
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|
Other
Expenses |
|
|
Total
Annual Fund Operating Expenses |
|
|
Fee
Waivers and/or Expense Reimbursements1 |
- |
|
Total
Annual Fund Operating Expenses after Fee Waiv-
ers
and/or Expense Reimbursements1 |
|
1
|
| ||||
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|
1
Year |
3
Years |
5
Years |
10
Years |
|
SHARES
($) |
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1“S&P 1000 Index,” is a registered service marks of Standard & Poor’s Corporation, which does not sponsor and is in no way affiliated with the Fund. The S&P 1000 Index is a market capitalization weighted combination of the Standard & Poor’s SmallCap 600 and the Standard & Poor’s MidCap 400 Indexes.
November
1, 2023 | 7
JPMorgan
Market Expansion Enhanced Equity ETF
(continued)
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.
An investment in this Fund or any other fund may not provide a complete investment program. The suitability of an investment in the Fund should be considered based on the investment objective, strategies and risks described in this prospectus, considered in light of all of the other investments in your portfolio, as well as your risk tolerance, financial goals and time horizons. You may want to consult with a financial advisor to determine if this Fund is suitable for you.
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.
8 | J.P.
Morgan Exchange-Traded Funds
November
1, 2023 | 9
JPMorgan
Market Expansion Enhanced Equity ETF
(continued)
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|
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|
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|
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|
|
Past
1
Year |
Past
5
Years |
Past
10
Years |
|
SHARES |
|
|
|
|
Return
Before Taxes |
-
% |
% |
% |
|
Return
After Taxes on Distributions |
- |
|
|
|
Return
After Taxes on Distributions and
Sale
of Fund Shares |
- |
|
|
|
S&P
1000 INDEX
(Reflects
No Deduction for Fees,
Expenses,
or Taxes) |
- |
|
|
10 | J.P.
Morgan Exchange-Traded Funds
Management
J.P. Morgan
Investment Management Inc. (the adviser)
|
Portfolio
Manager |
Managed
the
Fund
Since |
Primary
Title with
Investment
Adviser |
|
Phillip
D. Hart |
2022 |
Managing
Director |
|
Wonseok
Choi |
2022 |
Managing
Director |
|
Akash
Gupta |
2022 |
Executive
Director |
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Robert
A. Ippolito |
2022 |
Executive
Director |
Mr. Hart, Mr.
Choi
and Mr. Gupta
also were the predecessor fund’s portfolio managers since 2013, 2019
and 2019,
respectively.
Purchase
and Sale of Shares
Individual
Shares of the Fund may only be purchased and sold in secondary market
transactions through brokers or financial intermediaries. Shares of the Fund are
listed for trading on the Exchange, and because Shares trade at market prices
rather than NAV, Shares of the Fund may trade at a price greater than NAV
(premium) or less than NAV (discount). Certain affiliates of the Fund and the
adviser may purchase and resell Shares pursuant to this prospectus.
An investor
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares of the Fund (bid) and the lowest price a
seller is willing to accept for Shares (ask) when buying or selling Shares in
the secondary market (the bid-ask spread).
Recent
information, including information about the Fund’s NAV, market price, premiums
and discounts, and bid-ask spreads, is included on the Fund’s website at
jpmorganfunds.com.
Tax
Information
To the extent
the Fund makes distributions, those distributions will be taxed as ordinary
income or capital gains, except when your investment is in an IRA, 401(k) plan
or other tax-advantaged investment plan, in which case you may be subject to
federal income tax upon withdrawal from the tax-advantaged investment
plan.
Payments
to Broker-Dealers and Other Financial Intermediaries
If you
purchase Shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the adviser and its related companies may pay the
financial intermediary for the sale of Shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
November
1, 2023 | 11
More About
the Funds
Additional
Information About the Fund’s Investment Strategies
Each Fund is an ETF, which is
a fund that trades like other publicly-traded securities. Each Fund is not an
index fund. Each Fund is actively managed and does not seek to replicate the
performance of a specified index.
The name, investment
objective and policies of a Fund are similar to other funds advised by the
adviser or its affiliates. However, the investment results of a Fund may be
higher or lower than, and there is no guarantee that the investment results of
the Fund will be comparable to, any other of these funds. A new fund or a fund
with fewer assets under management may be more significantly affected by
purchases and redemptions of its Creation Units (as defined below) than a fund
with relatively greater assets under management would be affected by purchases
and redemptions of its shares. As compared to a larger fund, a new or smaller
fund is more likely to sell a comparatively large portion of its portfolio to
meet significant Creation Unit redemptions, or invest a comparatively large
amount of cash to facilitate Creation Unit purchases, in each case when a fund
otherwise would not seek to do so. Such transactions may cause funds to make
investment decisions at inopportune times or prices or miss attractive
investment opportunities. Such transactions may also accelerate the realization
of taxable income if sales of securities resulted in gains and a
fund redeems
Creation Units for cash, or otherwise cause a fund to perform differently than
intended. While such risks may apply to funds of any size, such risks are
heightened in funds with fewer assets under management. In addition, new funds
may not be able to fully implement their investment strategy immediately upon
commencing investment operations, which could reduce investment
performance.
Investment
Strategies
Equity
Focus ETF
The adviser chooses both
growth and value securities for the Fund so that the Fund generally is managed
as a core portfolio and is not normally significantly weighted towards either
growth or value securities. The Fund does, however, have the ability to
proactively invest more heavily in either growth or value securities depending
on market conditions and the convictions of the adviser. The Fund invests in a
limited number of U.S. equity securities, generally not more than 40. In
choosing securities, the Fund seeks to invest in companies with one or more of
the following characteristics:
•
A durable
franchise
•
A sustainable competitive
position relative to its peers
•
A market leader
•
A strong management team
focused on increasing shareholder value
•
A strong balance
sheet
The size of the allocation of
the Fund to growth and value securities will vary based on market conditions,
and the convictions of the adviser each ranging from 35% to 65% of the equity
investments in the Fund.
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
typically invests in equity securities with market capitalizations of $1 billion
or more. In implementing its main strategies, the Fund invests primarily in
common stocks and real estate investment trusts (REITs), but it may also invest
up to 20% of its total assets in common stocks of foreign companies, including
depositary receipts. Depositary receipts are financial instruments representing
a foreign company’s publicly traded securities. A depository receipt trades on a
stock exchange in a country different from the company’s local
market.
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.
To the extent the Fund uses derivatives, the Fund will primarily use futures
contracts to more effectively gain targeted equity exposure from its cash
positions.
If the Fund’s portfolio
managers cannot find attractive investments, the Fund may invest up to 20% of
its total assets in cash and cash equivalents until appropriate investments are
identified.
Investment Process: In
managing the Fund, the portfolio managers employ a process that combines
research, valuation and stock selection.
In selecting growth stocks,
the adviser focuses on durable companies whose growth potential appears to be
underappreciated. These companies are generally going after a large addressable
market with a sustainable competitive advantage, and have strong management
teams. In selecting value stocks, the adviser seeks to invest in companies which
have durable franchises and which appear to be attractively valued and have the
ability to grow intrinsic value per share. In making such evaluations, the
adviser considers a company to be attractively valued based on characteristics
such as the market value that has been added since the company’s inception,
profitability based on both its core operations and on an after taxes basis, and
market expectations of future growth for the company. Companies with durable
franchises generally have a sustainable competitive position relative to peers,
high returns on
12 | J.P.
Morgan Exchange-Traded Funds
capital, a diversified client
or asset base and a strong brand. In considering whether a company has the
ability to increase the intrinsic value per share, the adviser looks at whether
management has earned and grown economic profits, i.e., generated returns in
excess of the cost of capital over time.
The adviser also integrates
financially material ESG factors as part of the Fund’s investment process (ESG
Integration). ESG Integration is the systematic inclusion of ESG issues in
investment analysis and investment decisions. As part of its investment process,
the adviser seeks to assess the impact of 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. In particular, ESG Integration does not change the Fund’s
investment objective, exclude specific types of industries or companies or limit
the Fund’s investable universe. The Fund is not designed for investors who wish
to screen out particular types of companies or investments or are looking for
Funds that meet specific ESG goals.
The adviser may sell a
security due to a change in the company’s fundamentals or a change in the
original reason for purchase of an investment, or if the adviser no longer
considers the security to be attractively valued. Investments may also be sold
if a portfolio manager identifies a stock that he or she believes offers a
better investment opportunity or to reallocate the Fund’s assets between growth
and value securities.
Additional
Investment Strategies
The Fund will invest
primarily in equity securities as described below. The Fund invests in
common
stock as a main
strategy. Although not a main strategy, the Fund’s investment in equity
securities may also include:
•
preferred
securities
•
convertible
securities
•
trust or partnership
interests
•
warrants and rights to buy
common stock
•
equity securities purchased
in initial public offerings
•
master limited
partnerships.
All of these securities may
be included as equity securities for the purpose of calculating the Fund’s 80%
policy.
The following investments may
be part of the Fund’s main investment strategies, some of which may be equity
securities:
•
REITs which are pooled
vehicles which invest primarily in income-producing real estate or loans related
to real estate
•
foreign securities, often in
the form of depositary receipts
•
derivatives, including
futures contracts, options and swaps. In connection with its main investment
strategies, the Fund may use futures to more effectively gain targeted equity
exposure from its cash position. The Fund is also permitted to use derivatives
such as futures, options and swaps in order to hedge various investments, for
risk management and to opportunistically enhance the Fund’s returns. Under
certain market conditions, the Fund’s use of derivatives for cash management or
other investment management purposes could be significant.
Although not main strategies,
the Fund may also utilize the following, some of which may be equity
securities:
•
other investment
companies
•
exchange-traded funds
(ETFs)
•
affiliated money market
funds
•
securities
lending.
ETFs, which are pooled
investment vehicles whose ownership interests are purchased and sold on a
securities exchange, may be passively or actively managed. Passively managed
ETFs generally seek to track the performance of a particular market index,
including broad-based market indexes, as well as indexes relating to particular
sectors, markets, regions or industries. Actively managed ETFs do not seek to
track the performance of a particular market index. Ordinarily, the Fund must
not hold more than 3% of the total assets of another ETF or other investment
company and must limit its investments in a single ETF to 5% of its total assets
and in all ETFs and other investment companies to 10% of its total assets. The
Securities and Exchange Commission adopted an exemptive rule
November
1, 2023 | 13
More About
the Funds
(continued)
that allows any fund to
disregard these 3%, 5% and 10% limitations, subject to certain conditions. The
price movement of an index-based ETF may not track the underlying index and may
result in a loss. In addition, ETFs may trade at a price above (premium) or
below (discount) their net asset value, especially during periods of significant
market volatility or stress, causing investors to pay or receive significantly
more or less than the value of the ETF’s underlying portfolio when they purchase
or sell their ETF shares, respectively.
The Fund will provide
shareholders with at least 60 days’ prior notice of any change in its 80%
investment policies as described below.
The frequency with which the
Fund buys and sells securities will vary from year to year, depending on market
conditions.
Market
Expansion Enhanced Equity ETF
Under normal circumstances,
the Fund will hold at least 80% of its Assets in stocks in the S&P 1000
Index1. The S&P 1000 Index is a
market capitalization weighted combination of the S&P SmallCap
6001 and S&P MidCap
4001 Indexes. Additionally, under
normal circumstances, the Fund will hold at least 80% of its Assets in equity
securities. “Assets” means net assets, plus the amount of borrowings for
investment purposes. The S&P 1000 Index is an index which includes stocks of
small- and mid-capitalization companies. As of September 30, 2023, the market
capitalizations of the companies in the S&P 1000 ranged from $227.78 million
to $16.81 billion. These securities trade on national exchanges, as well as
over-the-counter as part of the National Market System. Because the Fund uses an
enhanced index strategy, not all of the stocks in the S&P 1000 Index are
included in the Fund, and the Fund’s position in an individual stock may be
overweighted or underweighted when compared to the index. In addition, the Fund
may modestly overweight or underweight the sectors and industries within the
index. The Fund seeks returns that modestly exceed those of the S&P 1000
Index over the long term with a modest divergence to the benchmark. In
implementing its main strategies, the Fund invests primarily in common stocks
and real estate investment trusts (REITs).
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 to gain or reduce exposure to its
index, maintain liquidity and minimize transaction costs. In managing cash
flows, the Fund buys futures contracts to invest incoming cash in the market or
sells futures contracts in response to cash outflows, thereby gaining market
exposure to the index while maintaining a cash balance for
liquidity.
Investment Process: The Fund
uses an enhanced index strategy that seeks to provide investment results that
correspond to or incrementally exceed the total return performance of the
S&P 1000 Index. In managing the Fund, the adviser employs a process that
ranks S&P 1000 Index stocks based on its proprietary stock ranking system.
The proprietary ranking system seeks to rank stocks based on company financials,
data science techniques, and proprietary fundamental analysis. The rankings are
used to place stocks into the Fund’s portfolio.
The adviser also integrates
financially material ESG factors as part of the Fund’s investment process (ESG
Integration). ESG Integration is the systematic inclusion of ESG issues in
investment analysis and investment decisions. As part of its investment process,
the adviser seeks to assess the impact of 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. In particular, ESG Integration does not change the Fund’s
investment objective, exclude specific types of industries or companies or limit
the Fund’s investable universe. The Fund is not designed for investors who wish
to screen out particular types of companies or investments or are looking for
funds that meet specific ESG goals.
In general, stocks are
purchased when they are among the top ranked within their sector. Stocks become
candidates for sale when their ranking falls, when they appear unattractive or
when the company is no longer included in the S&P 1000 Index.
Additional
Investment Strategies
The Fund will
invest 80% of its Assets in equity securities as described below. The Fund
invests in common
stock as a main
strategy. Although not a main strategy, the Fund’s investment in equity
securities may also include:
•
preferred
stock
•
convertible
securities
1“S&P 1000 Index,” “S&P SmallCap 600” and “S&P MidCap 400” are registered service marks of Standard & Poor’s Corporation, which does not sponsor and is in no way affiliated with the Fund.
14 | J.P.
Morgan Exchange-Traded Funds
•
trust or
partnership interests
•
warrants and
rights to buy common stock
•
equity
securities purchased in initial public offerings
•
master
limited partnerships.
All of these
securities may be included as equity securities for the purpose of calculating
the Fund’s 80% policy.
The following investments may
be part of the Fund’s main investment strategies, some of which may be equity
securities:
•
REITs which are pooled
vehicles which invest primarily in income-producing real estate or loans related
to real estate
•
derivatives,
including futures contracts, options and swaps. In connection with its main
investment strategies, the Fund may use futures to more effectively gain
targeted equity exposure from its cash position. The Fund is also permitted to
use derivatives such as futures, options and swaps in order to hedge various
investments, for risk management and to opportunistically enhance the Fund’s
returns. Under certain market conditions, the Fund’s use of derivatives for cash
management or other investment management purposes could be
significant.
Although not
main strategies, the Fund may also utilize the following, some of which may be
equity securities:
•
other
investment companies
•
ETFs
•
affiliated
money market funds
•
foreign
securities, often in the form of depositary receipts
•
securities
lending.
ETFs, which are pooled
investment vehicles whose ownership interests are purchased and sold on a
securities exchange, may be passively or actively managed. Passively managed
ETFs generally seek to track the performance of a particular market index,
including broad-based market indexes, as well as indexes relating to particular
sectors, markets, regions or industries. Actively managed ETFs do not seek to
track the performance of a particular market index. Ordinarily, the Fund must
not hold more than 3% of the total assets of another ETF or other investment
company and must limit its investments in a single ETF to 5% of its total assets
and in all ETFs and other investment companies to 10% of its total assets. The
Securities and Exchange Commission adopted an exemptive rule that allows any
fund to disregard these 3%, 5% and 10% limitations, subject to certain
conditions. The price movement of an index-based ETF may not track the
underlying index and may result in a loss. In addition, ETFs may trade at a
price above (premium) or below (discount) their net asset value, especially
during periods of significant market volatility or stress, causing investors to
pay or receive significantly more or less than the value of the ETF’s underlying
portfolio when they purchase or sell their ETF shares, respectively.
The Fund will
provide shareholders with at least 60 days’ prior notice of any change in its
80% investment policies as described below.
The frequency
with which the Fund buys and sells securities will vary from year to year,
depending on market conditions.
Each of
the Funds
|
FUNDAMENTAL
INVESTMENT OBJECTIVES |
|
An
investment objective is fundamental if it cannot be changed without the
consent of a majority of the outstanding shares of the
Fund.
The investment objective for Market Expansion Enhanced Equity ETF is
fundamental. The investment objective for Equity Focus
ETF
can be changed without the consent of a majority of the outstanding shares
of that Fund. |
Securities
Lending.
Each Fund may
engage in securities lending to increase its income. Securities lending involves
the lending of securities owned by a Fund to financial institutions such as
certain broker-dealers in exchange for cash collateral. A Fund will invest cash
collateral in one or more money market funds advised by the adviser or its
affiliates. The adviser or its affiliates will receive additional compensation
from the affiliated money market funds on a Fund’s investment in such money
market funds. During the term of the loan, each Fund is entitled to receive
amounts equivalent to distributions paid on the loaned securities as well as the
return on the cash collateral investments. Upon termination of the loan, each
Fund is required to return the cash collateral to the borrower plus any agreed
upon rebate. Cash collateral investments will be subject to market depreciation
or appreciation, and a
Fund will be
responsible for any loss that might result from its investment of cash
collateral. If the adviser determines to make securities loans, the value of the
securities loaned may not exceed 33 1∕3% of the value of total
assets of a Fund. Loan collateral (including any investment of that collateral)
is not subject to the percentage limitations regarding a Fund’s investments
described elsewhere in this prospectus. Securities
lending is not a principal strategy of the Funds.
November
1, 2023 | 15
More About
the Funds
(continued)
Please note that the Funds
also may use other non-principal strategies that are not described in this
section, but which are described in the Statement of Additional
Information.
Investment
Risks
There can be no assurance
that each Fund will achieve its investment objective.
The main risks associated
with investing in each Fund are summarized in the “Risk/Return Summary” at the
front of this prospectus. In addition to each Fund’s main risks, each Fund may
be subject to additional risks in connection with investments and strategies
used by each Fund from time to time. The table below identifies main risks and
some of the additional risks for each Fund.
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.
An investment in a Fund or any other fund may not provide a complete investment program. The suitability of an investment in a Fund should be considered based on the investment objective, strategies and risks described in this prospectus, considered in light of all of the other investments in your portfolio, as well as your risk tolerance, financial goals and time horizons. You may want to consult with a financial advisor to determine if a Fund is suitable for you.
The Funds are subject to the
main risks designated as such in the table below, any of which may adversely
affect a Fund’s net asset value (NAV), market price, performance and ability to
meet its investment objective. Each Fund may also be subject to additional risks
that are noted in the table below, as well as those that are not described
herein but which are described in the Statement of Additional
Information.
|
|
Equity
Focus ETF |
Market
Expansion
Enhanced
Equity
ETF |
|
Authorized
Participant Concentration Risk |
• |
• |
|
Convertible
Securities Risk |
○ |
○ |
|
Cyber
Security Risk |
○ |
○ |
|
Derivatives
Risk |
• |
• |
|
Equity
Market Risk |
• |
• |
|
Exchange-Traded
Fund (ETF) and Other Investment Company Risk |
○ |
○ |
|
Financials
Sector Risk |
• |
• |
|
Foreign
Securities and Emerging Markets Risks |
• |
○ |
|
General
Market Risk |
• |
• |
|
Index
Investing Risk |
|
• |
|
Industrials
Sector Risk |
|
• |
|
Industry
and Sector Focus Risk |
• |
• |
|
Information
Technology Sector Risk |
• |
|
|
Initial
Public Offering (IPO) Risk |
○ |
○ |
|
Large
Cap Company Risk |
• |
|
|
Market
Trading Risk |
• |
• |
|
Master
Limited Partnerships (MLPs) Risk |
○ |
○ |
|
Preferred
Securities Risk |
○ |
|
|
Real
Estate Securities Risk |
• |
• |
|
Regulatory
and Legal Risk |
○ |
○ |
|
Securities
Lending Risk |
○ |
○ |
|
Smaller
and/or Mid-Sized Company Risk |
• |
• |
|
Strategy
Risk |
• |
|
•
Main
Risks
○
Additional
Risks
16 | J.P.
Morgan Exchange-Traded Funds
|
|
Equity
Focus ETF |
Market
Expansion
Enhanced
Equity
ETF |
|
Transactions
and Liquidity Risk |
○ |
○ |
|
Volcker
Rule Risk |
○ |
○ |
○
Additional
Risks
Equity
Market Risk. The
price of equity securities may rise or fall, sometimes rapidly or unpredictably,
because of changes in the broad market or changes in a company’s financial
condition. These price movements may result from factors affecting individual
companies, sectors or industries selected for a Fund’s portfolio or the
securities market as a whole, such as changes in economic or political
conditions. Equity securities are subject to “stock market risk” meaning that
stock prices in general (or in particular, the prices of the types of securities
in which a Fund invests) may decline over short or extended periods of time.
When the value of a
Fund’s portfolio
securities goes down, your investment in that 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
a 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 a 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.
For example, the outbreak of
COVID-19 negatively affected economies, markets and individual companies
throughout the world, including those in which a Fund invests. The effects of
any future pandemic or other global event to business and market
conditions
may have a
significant negative impact on the performance of a Fund’s investments, increase
a Fund’s volatility, negatively impact a
Fund’s arbitrage
and pricing mechanisms, exacerbate pre-existing political, social and economic
risks to a Fund, and negatively impact broad segments of businesses and
populations. In addition, governments, their regulatory agencies, or
self-regulatory organizations have taken or may take actions in response to a
pandemic or other global event that affects the instruments in which
a
Fund invests, or
the issuers of such instruments, in ways that could have a significant negative
impact on a Fund’s investment performance. The ultimate impact of any pandemic
or other global event and the extent to which the associated conditions and
governmental responses impact a Fund will also depend on future developments,
which are highly uncertain, difficult to accurately predict and subject to
frequent changes.
Strategy
Risk.
Although the
Fund is normally managed as a core portfolio, it may invest more
heavily in
either growth or value securities depending on market conditions and the
convictions of the adviser.
If the Fund invests more
heavily in growth securities, it will be more subject to risks related to growth
investing. Growth investing attempts to identify companies that the adviser
believes will experience rapid earnings growth relative to value or other types
of stock.
The value of
these stocks generally is more sensitive to current or expected earnings than
stocks of other types of companies. Short-term events, such as a failure to meet
industry earnings expectations, can cause dramatic decreases in the growth stock
price compared to other types of stock. Growth stocks may also trade at higher
multiples of current earnings compared to value or other stocks, leading to
inflated prices and thus potentially greater declines in value. During times
when the Fund focuses more heavily on growth stocks, the Fund’s performance may
be better or worse than the performance of equity funds that focus on value
stocks or that have a broader investment style.
If the Fund invests more
heavily in value securities, it will be more subject to risks related to value
investing. Value investing attempts to identify companies that, according to the
adviser’s estimate of their true worth, are undervalued.
The adviser
selects stocks at prices that it believes are temporarily low relative to
factors such as the company’s earnings, cash flow or dividends. A value stock
may decrease in price or may not increase in price as anticipated by the adviser
if other investors fail to recognize the company’s value or the factors that the
adviser believes will cause the stock price to increase do not occur. During
times when the Fund focuses more heavily on value stocks, the Fund’s performance
may be better or worse than the performance of equity funds that focus on growth
stocks or that have a broader investment style.
Large Cap
Company Risk. If
a Fund invests in large cap company securities, it may underperform other funds
during periods when a Fund’s large cap securities are out of favor.
November
1, 2023 | 17
More About
the Funds
(continued)
Smaller
and/or Mid-Sized Company Risk. (Small Cap Company and/or
Mid Cap Company Risk). Investments in smaller and mid-sized 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. In addition, smaller companies may be more
vulnerable to economic, market and industry changes. As a result, share price
changes may be more sudden or erratic than the prices of large capitalization
companies, especially over the short term. Because smaller companies may have
limited product lines, markets or financial resources or may depend on a few key
employees, they may be more susceptible to particular economic events or
competitive factors than large capitalization companies. This may cause
unexpected and frequent decreases in the value of a Fund’s investments. These
risks are higher for small cap companies.
Index
Investing Risk.
Because the Fund uses an enhanced index strategy, securities may be purchased,
retained and sold by the Fund at times when a more actively managed fund would
not do so. If the value of securities that are heavily weighted in the index
changes, you can expect a greater risk of loss than would be the case if the
Fund were not invested in such securities. There is also the risk that the
Fund’s performance may not correlate with the performance of the
index.
Derivatives
Risk. A Fund may
use derivatives in connection with its investment strategies. Derivatives 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 a Fund’s original investment.
Derivatives are subject to the risk that changes in the value of a derivative
may not correlate perfectly with the underlying asset, rate or index. The use of
derivatives may not be successful, resulting in losses to a Fund and the cost of
such strategies may reduce a Fund’s returns. Certain derivatives also expose a
Fund to counterparty risk (the risk that the derivative counterparty will not
fulfill its contractual obligations), including credit risk of the derivative
counterparty. In addition, a Fund may use derivatives for non-hedging purposes,
which increases that Fund’s potential for loss. Certain derivatives are
synthetic instruments that attempt to replicate the performance of certain
reference assets. With regard to such derivatives, a Fund does not have a claim
on the reference assets and is subject to enhanced counterparty
risk.
|
WHAT
IS A DERIVATIVE? |
|
Derivatives
are securities or contracts (like futures and options) that derive their
value from the performance of underlying assets or
securities. |
Investing in derivatives and
engaging in short sales will result in a form of leverage. Leverage involves
special risks. A 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. Registered investment companies are limited in
their ability to engage in derivative transactions.
The possible lack of a liquid
secondary market for derivatives and the resulting inability of a Fund to sell
or otherwise close a derivatives position could expose the Fund to losses and
could make derivatives more difficult for the Fund to value accurately.
Derivatives also can expose a Fund to derivative liquidity risk, which includes
the 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 a
Fund’s counterparty and operational risk, which includes documentation or
settlement issues, system failures, inadequate controls and human
error.
A Fund’s transactions in
futures contracts, swaps and other 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
return.
Industry
and Sector Focus Risk. At times, a 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 a Fund
increases the relative emphasis of its investments in a particular industry or
sector, the value of a Fund’s Shares may fluctuate in response to events
affecting that industry or sector.
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
and
18 | J.P.
Morgan Exchange-Traded Funds
unexpected increases in the
cost of energy and environmental factors. Furthermore, a REIT could fail to
qualify for tax-free pass-through of its income under the Internal Revenue Code
or fail to maintain its exemption from registration under the Investment Company
Act of 1940 (1940 Act), which could produce adverse economic consequences for
the REIT and its investors, including a
Fund.
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
securities. Each 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 a Fund.
In addition, certain of the
companies in which a 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 a Fund’s investment may decrease in value. Real estate securities have
limited diversification and are, therefore, subject to risks inherent in
operating and financing a limited number of projects. Real estate securities are
also subject to heavy cash flow dependency and defaults by borrowers or
tenants.
Financials
Sector Risk.
Financial services companies are subject to extensive governmental regulation
which may limit both the amounts and
types of loans
and other financial commitments they can make, the interest rates and fees they
can charge, the scope of their activities,
the prices they
can charge and the amount of capital they must maintain. Profitability is
largely dependent on the availability and cost of
capital funds
and can fluctuate significantly when interest rates change or due
to increased
competition. In addition, deterioration of the credit markets generally may
cause an adverse impact in a broad range of markets, including U.S. and
international credit and interbank money markets generally, thereby affecting a
wide range of financial institutions and markets. Certain events in the
financials sector may cause an unusually high degree of volatility in the
financial markets, both domestic and foreign, and cause certain financial
services companies to incur large losses. Securities of financial services
companies may experience a dramatic decline in value when such companies
experience substantial declines in the valuations of their assets, take action
to raise capital (such as the issuance of debt or equity
securities),
or cease
operations. Credit losses resulting from financial difficulties of borrowers and
financial losses associated with investment activities can negatively impact the
sector.
Insurance
companies may be subject to severe price competition. Adverse economic, business
or political developments could adversely affect financial institutions engaged
in mortgage finance or other lending or investing activities directly or
indirectly connected to the value of real estate.
Information
Technology Sector Risk.
Technology
companies face intense competition, both domestically and
internationally,
which may have
an adverse effect
on their profit
margins. Technology companies may have limited product lines, markets, financial
resources or personnel. The products of technology companies may face
obsolescence due to rapid technological developments, frequent new product
introduction,
unpredictable
changes in growth rates and competition for the services of qualified
personnel.
Companies in the
information technology sector are heavily dependent on patent and intellectual
property rights.
The
loss or
impairment of these rights may adversely affect the profitability of these
companies.
Industrials
Sector Risk.
The value of
securities issued by companies in the industrials sector may be adversely
affected by supply and demand related to their specific products or services and
industrials sector products in general. The products of manufacturing companies
may face obsolescence due to rapid technological developments and frequent
new
product
introduction. Government regulations, world events, economic conditions and
exchange rates may adversely affect the performance of companies in the
industrials sector.
Companies in the
industrials sector may be adversely affected by liability for environmental
damage and product liability claims. The industrials sector may also be
adversely affected by changes or trends in commodity prices,
which may be
influenced by unpredictable factors. Companies in the industrials sector,
particularly aerospace and defense companies, may also be adversely affected by
government spending policies because companies in this sector tend to rely to a
significant extent on government demand for their products and
services.
Market
Trading Risk
Risk that
Shares of a Fund May Trade at Prices Other Than NAV. Shares of a Fund may trade
on the Exchange at prices above, below or at their most recent NAV. The NAV of a
Fund’s Shares, which is calculated at the end of each business day, will
generally fluctuate with changes in the market value of the Fund’s holdings. The
market prices of the Shares will also fluctuate, in some cases materially, in
accordance with changes in NAV and the intraday value of a Fund’s holdings, as
well as the relative supply of and demand for the
November
1, 2023 | 19
More About
the Funds
(continued)
Shares on the Exchange.
Differences between secondary market prices of Shares and the intraday value of
a Fund’s holdings may be due largely to supply and demand forces in the
secondary market, which may not be the same forces as those influencing prices
for securities held by the Fund at a particular time.
Given the fact that Shares
can be created and redeemed by authorized participants in Creation Units, the
adviser believes that large discounts or premiums to the NAV of Shares should
not be sustained in the long-term. While the creation/redemption feature is
designed to make it likely that Shares normally will trade close to the value of
a Fund’s holdings, market prices are not expected to correlate exactly to a
Fund’s NAV due to timing reasons, supply and demand imbalances and other
factors. In addition, disruptions to creations and redemptions, adverse
developments impacting market makers, authorized participants or other market
participants, or high market volatility may result in market prices for Shares
of a Fund that differ significantly from its NAV or to the intraday value of a
Fund’s holdings. As a
result of these factors, among others, a Fund’s Shares may trade at a premium or
discount to NAV, especially during periods of significant market
volatility.
Given the nature of the
relevant markets for certain of the securities for a Fund, Shares may trade at a
larger premium or discount to NAV than shares of other kinds of
ETFs.
Cost of
Buying or Selling Shares. When you buy or sell Shares
of a Fund through a broker, you will likely incur a brokerage commission or
other charges imposed by brokers. In addition, the market price of Shares, like
the price of any exchange-traded security, includes a “bid-ask spread” charged
by the market makers or other participants that trade the particular security.
The spread of a Fund’s Shares varies over time based on the Fund’s trading
volume and market liquidity and may increase if the Fund’s trading volume, the
spread of the Fund’s underlying securities, or market liquidity decrease. In
times of severe market disruption, including when trading of a Fund’s holdings
may be halted, the bid-ask spread may increase significantly. This means that
Shares may trade at a discount to a Fund’s NAV, and the discount is likely to be
greatest during significant market volatility.
Short
Selling Risk. Shares of a Fund, similar to
shares of other issuers listed on a stock exchange, may be sold short and are
therefore subject to the risk of increased volatility and price decreases
associated with being sold short.
No
Guarantee of Active Trading Market Risk. While Shares are listed on
the Exchange, there can be no assurance that active trading markets for the
Shares will be maintained by market makers or by authorized participants.
JPMorgan Distribution Services, Inc., the distributor of a Fund’s Shares (the
Distributor), does not maintain a secondary market in the Shares.
Trading
Issues Risk. Trading in Shares on the
Exchange may be halted due to market conditions or for reasons that, in the view
of the Exchange, make trading in Shares inadvisable. In addition, trading in
Shares on the Exchange is subject to trading halts caused by extraordinary
market volatility pursuant to the Exchange “circuit breaker” rules. If a trading
halt or unanticipated early closing of the Exchange occurs, a shareholder may be
unable to purchase or sell Shares of a Fund.
There can be no assurance
that the requirements of the Exchange necessary to maintain the listing of a
Fund will continue to be met or will remain unchanged.
Authorized
Participant Concentration Risk. Only an authorized
participant may engage in creation or redemption transactions directly with a
Fund. Each Fund has a limited number of intermediaries that act as authorized
participants and none of these authorized participants is or will be obligated
to engage in creation or redemption transactions. To the extent that these
intermediaries exit the business or are unable to or choose not to proceed with
creation and/or redemption orders with respect to a 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.
Foreign
Securities and Emerging Markets Risks. To the extent a Fund invests
in foreign securities (including depositary receipts), these investments are
subject to special risks in addition to those of U.S. investments. 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, currency fluctuations, higher transaction costs, delayed
settlement, possible foreign controls on investment, and less stringent investor
protection and disclosure standards of foreign markets. The securities markets
of many foreign countries are relatively small, with a limited number of
companies representing a small number of industries. If foreign securities are
denominated and traded in a foreign currency, the value of a
Fund’s foreign
holdings can be affected by currency exchange rates and exchange control
regulations. In certain markets where securities and other instruments are not
traded “delivery versus payment,” a Fund may not receive timely payment for
securities or other instruments it has delivered or receive delivery of
securities paid for and may be subject to increased risk that the counterparty
will fail to make payments or delivery when due or default
completely.
Foreign market trading hours,
clearance and settlement procedures, and holiday schedules may limit a Fund's
ability to buy and sell securities. Investments in foreign markets may also be
adversely affected by governmental actions such as the imposition of capital
controls, nationalization of companies or industries, expropriation of assets or
the imposition of punitive taxes. The governments of certain countries may
prohibit or impose substantial restrictions on foreign investing in their
capital markets or in certain sectors or
20 | J.P.
Morgan Exchange-Traded Funds
industries. In addition, a
foreign government may limit or cause delay in the convertibility or
repatriation of its currency which would adversely affect the U.S. dollar value
and/or liquidity of investments denominated in that currency. Certain foreign
investments may become less liquid in response to market developments or adverse
investor perceptions, or become illiquid after purchase by a Fund, particularly
during periods of market turmoil. Moreover, the growing interconnectivity of
global economies and financial markets has increased the probability that
adverse developments and conditions in one country or region will affect the
stability of economies and financial markets in other countries or regions. A
reduction in trading in securities of issuers located in countries whose
economies are heavily dependent upon trading with key partners may have an
adverse impact on a Fund’s investments.
Securities registration,
custody, and settlement may in some instances be subject to delays and legal and
administrative uncertainties. Foreign investment in the securities markets of
certain foreign countries is restricted or controlled to varying degrees. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of a
Fund. In
addition, the repatriation of investment income, capital or the proceeds of
sales of securities from certain of the countries is controlled under
regulations, including in some cases the need for certain advance government
notification or authority, and if a deterioration occurs in a country’s balance
of payments, the country could impose temporary restrictions on foreign capital
remittances. A Fund also could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment.
Certain Funds may invest in
securities in “emerging markets,” but these are not principal investments for
any Funds. 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. The risks associated with foreign securities are magnified in
countries in “emerging markets.” These countries may have relatively unstable
governments and less-established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries and you may
sustain sudden, and sometimes substantial, fluctuations in the value of your
investments. Certain emerging market countries may be subject to less stringent
requirements regarding accounting, auditing, financial reporting and record
keeping and therefore, material information related to an investment may not be
available or reliable. Additionally, a Fund may have substantial difficulties
exercising its legal rights or enforcing a counterparty’s legal obligations in
certain jurisdictions outside of the United States, in particular in emerging
markets countries, which can increase the risks of loss. A Fund’s investments in
foreign and emerging market securities may also be subject to foreign
withholding taxes and/or other taxes, which would decrease a Fund’s yield on
those securities. Emerging markets are more likely than developed markets to
experience problems with the clearing and settling of trades, as well as the
holding of securities by local banks, agents, and depositories.
Exchange-Traded
Fund (ETF) and Other Investment Company Risk.
A Fund may
invest in shares of other investment companies and ETFs. Shareholders bear both
their proportionate share of a Fund’s expenses and similar expenses of the
underlying investment company or ETF when a Fund invests in shares of another
investment company or ETF. A Fund is subject to the risks associated with the
ETF or investment company’s investments. The price and movement of an ETF
designed to track an index may not track the index and may result in a loss. In
addition, ETFs may trade at a price above (premium) or below (discount) their
NAV, especially during periods of significant market volatility or stress,
causing investors to pay significantly more or less than the value of the ETF’s
underlying portfolio. Certain ETFs traded on exchanges may be thinly traded and
experience large spreads between the “ask” price quoted by a seller and the
“bid” price offered by a buyer.
Convertible
Securities Risk. A
convertible security generally entitles the holder to receive interest paid or
accrued on debt securities or the dividend paid on preferred securities until
the convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities generally have characteristics similar to
both debt and equity securities. 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.
Convertible securities ordinarily provide a stream of income with generally
higher yields than those of common stock of the same or similar issuers.
Convertible securities generally rank senior to common stock in a corporation’s
capital structure but are usually subordinated to comparable nonconvertible
securities. Convertible securities generally do not participate directly in any
dividend increases or decreases of the underlying securities, although the
market prices of convertible securities may be affected by any dividend changes
or other changes in the underlying securities.
Initial
Public Offering (IPO) Risk. IPO securities have no
trading history, and information about the companies may be available for very
limited periods. The prices of securities sold in IPOs may be highly volatile
and their purchase may involve high transaction costs. At any particular time or
from time to time, a Fund may not be able to invest in securities issued in
IPOs, or invest to the extent desired, because, for example, only a small
portion (if any) of the securities being offered in an IPO may be made available
to a Fund. In addition, under certain market conditions, a relatively small
number of companies may issue securities in IPOs. Similarly, as the number of
purchasers to which IPO securities are allocated increases, the number of
securities issued to a Fund may decrease. The performance of a Fund during
periods when it is unable to invest significantly or at all in IPOs may be lower
than during periods when a Fund is able to do so. In addition, as a Fund
increases in size, the impact of IPOs on the Fund’s performance will generally
decrease.
November
1, 2023 | 21
More About
the Funds
(continued)
Master
Limited Partnerships (MLPs) Risk.
A Fund may
invest in MLPs whose ownership interests are publicly traded and that primarily
derive their income from, among other industries, the mining, production,
transportation or processing of minerals or natural resources, although they may
also finance entertainment, research and development, real estate and other
projects. Investments held by an MLP may be relatively illiquid, limiting the
MLP’s ability to vary its portfolio promptly in response to changes in economic
or other conditions. In addition, MLPs may have limited financial resources,
their securities may trade infrequently and in limited volume and they may be
subject to more abrupt or erratic price movements than securities of larger or
more broadly-based companies. The risks of investing in an MLP are generally
those inherent in investing in a partnership as opposed to a corporation. For
example, state law governing partnerships is often less restrictive than state
law governing corporations. Accordingly, there may be fewer protections afforded
investors in an MLP than investors in a corporation. Additional risks involved
with investing in an MLP are risks associated with the specific industry or
industries in which the partnership invests, such as the risks of investing in
real estate, or oil and gas industries.
Securities
Lending Risk.
Each Fund may
engage in securities lending. Securities lending involves counterparty risk,
including the risk that the loaned securities may not be returned or returned in
a timely manner and/or a loss of rights in the collateral if the borrower or the
lending agent defaults. This risk is increased when a Fund’s loans are
concentrated with a single or limited number of borrowers. In addition, a Fund
bears the risk of loss in connection with its investments of the cash collateral
it receives from the borrower. To the extent that the value or return of a
Fund’s investments of the cash collateral declines below the amount owed to a
borrower, a
Fund may incur
losses that exceed the amount it earned on lending the security. In situations
where the adviser does not believe that it is prudent to sell the cash
collateral investments in the market, a Fund may borrow money to repay the
applicable borrower the amount of cash collateral owed to the borrower upon
return of the loaned securities. This will result in financial leverage, which
may cause a Fund to be more volatile because financial leverage tends to
exaggerate the effect of any increase or decrease in the value of a Fund’s
portfolio 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. Preferred shares may carry different rights or
obligations in jurisdictions outside of the United States.
Transactions
and Liquidity Risk.
A Fund could
experience a loss when selling securities to meet redemption requests and its
liquidity may be negatively impacted. The risk of loss increases if the
redemption requests are large or frequent, occur in times of overall market
turmoil or declining prices for the securities sold, or when the securities a
Fund wishes to or is required to sell are illiquid. To the extent a large
proportion of Shares are held by a small number of shareholders (or a single
shareholder), including funds or accounts over which the adviser or its
affiliates have investment discretion, a Fund is subject to the risk that these
shareholders will purchase or redeem Shares in large amounts rapidly or
unexpectedly, including as a result of an asset allocation decision made by the
adviser or its affiliates. To the extent these larger shareholders transact in
the secondary market, such transactions may account for a large percentage of a
Fund’s trading volume on the Exchange, which may have a material effect (upward
or downward) on the market price of Shares. In addition to the other risks
described in this section, these transactions could adversely affect the ability
of a Fund to conduct its investment program. A Fund may be unable to sell
illiquid securities at its desired time or price or the price at which the
securities have been valued for purposes of a Fund’s NAV. Illiquidity can be
caused by a drop in overall market trading volume, an inability to find a ready
buyer, or legal restrictions on the securities’ resale. Certain securities that
were liquid when purchased may later become illiquid, particularly in times of
overall economic distress.
Similarly, large purchases of
Shares may adversely affect a 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. Large redemptions also could accelerate the
realization of capital gains, increase a Fund’s transaction costs and impact the
Fund’s performance. To the extent redemptions are effected in cash, an
investment in a Fund may be less tax-efficient than an investment in an ETF that
distributes portfolio securities entirely in-kind.
Cyber
Security Risk.
As the use of technology has become more prevalent in the course of business,
the Funds have become more susceptible to operational and financial risks
associated with cyber security, including: theft, loss, misuse, improper
release, corruption and destruction of, or unauthorized access to, confidential
or highly restricted data relating to a Fund and its shareholders; and
compromises or failures to systems, networks, devices and applications relating
to the operations of a Fund and its service providers. Cyber security risks may
result in financial losses to a Fund and its shareholders; the inability of a
Fund to transact business with its shareholders; delays or mistakes in the
calculation of a Fund’s NAV or other materials provided to shareholders; the
inability to process transactions with shareholders or other parties; violations
of privacy and other laws; regulatory fines, penalties and
22 | J.P.
Morgan Exchange-Traded Funds
reputational damage; and
compliance and remediation costs, legal fees and other expenses. A Fund’s
service providers (including, but not limited to, the adviser, any sub-advisers,
administrator, transfer agent, and custodian or their agents), financial
intermediaries, companies in which a Fund invests and parties with which a Fund
engages in portfolio or other transactions also may be adversely impacted by
cyber security risks in their own businesses, which could result in losses to a
Fund or its shareholders. While measures have been developed which are designed
to reduce the risks associated with cyber security, there is no guarantee that
those measures will be effective, particularly since the Funds do not directly
control the cyber security defenses or plans of its service providers, financial
intermediaries and companies in which they invest or with which they do
business.
Regulatory
and Legal Risk. U.S. and non-U.S.
governmental agencies and other regulators regularly implement additional
regulations and legislators pass new laws that affect the investments held by a
Fund, the strategies used by a Fund or the level of regulation or taxation
applying to a Fund (such as regulations related to investments in derivatives
and other transactions). These regulations and laws may adversely impact the
investment strategies, performance, costs and operations of a Fund or taxation
of shareholders.
Volcker
Rule Risk. Pursuant to Section 619 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act and certain rules
promulgated thereunder known as the Volcker Rule, if the adviser and/or its
affiliates own 5% or more of the outstanding ownership interests of a Fund after
the permitted seeding period from the implementation of a Fund’s investment
strategy, a Fund could be subject to restrictions on trading that would
adversely impact a Fund’s ability to execute its investment strategy. Generally,
the permitted seeding period is three years from the implementation of a Fund’s
investment strategy, with permissible extensions under certain circumstances. As
a result, the adviser and/or its affiliates may be required to reduce their
ownership interests in a Fund at a time that is sooner than would otherwise be
desirable, which may result in a Fund’s liquidation or, if a Fund is able to
continue operating, may result in losses, increased transaction costs and
adverse tax consequences as a result of the sale of portfolio
securities.
For more information about
risks associated with the types of investments that a Fund purchases, please
read the “Risk/Return Summary” at the front of this prospectus and the Statement
of Additional Information.
Conflicts
of Interest
An investment
in a Fund is subject to a number of actual or potential conflicts of interest.
For example, the Adviser and/or its affiliates provide a variety of different
services to a Fund, for which the Fund compensates them. As a result, the
Adviser and/or its affiliates have an incentive to enter into arrangements with
a Fund, and face conflicts of interest when balancing that incentive against the
best interests of a Fund. The Adviser and/or its affiliates also face conflicts
of interest in their service as investment adviser to other clients, and, from
time to time, make investment decisions that differ from and/or negatively
impact those made by the Adviser on behalf of a Fund. In addition, affiliates of
the Adviser provide a broad range of services and products to their clients and
are major participants in the global currency, equity, commodity, fixed income
and other markets in which a Fund invests or will invest. In certain
circumstances by providing services and products to their clients, these
affiliates’ activities will disadvantage or restrict the Funds and/or benefit
these affiliates. The Adviser may also acquire material non-public information
which would negatively affect the Adviser’s ability to transact in securities
for a Fund. JPMorgan and the Funds have adopted policies and procedures
reasonably designed to appropriately prevent, limit or mitigate conflicts of
interest. In addition, many of the activities that create these conflicts of
interest are limited and/or prohibited by law, unless an exception is available.
For more information about conflicts of interest, see the Potential
Conflicts of Interest section in
the Statement of Additional Information.
Temporary
Defensive and Cash Positions
For liquidity and to respond
to unusual market conditions, the Equity Focus ETF may invest all or most of its
total assets in cash and cash
equivalents for
temporary defensive purposes. These investments may result in a lower yield than
lower-quality or longer-term investments.
Whether engaging in temporary
defensive purposes or otherwise, Market Expansion Enhanced Equity ETF may not
hold more than 10% of its total assets in cash and cash equivalents. These
amounts are in addition to assets held for derivative margin deposits or other
segregated accounts.
|
WHAT
IS A CASH EQUIVALENT? |
|
Cash
equivalents are highly liquid, high-quality instruments with maturities of
three months or less on the date they are purchased.
They
include securities issued by the U.S. government, its agencies and
instrumentalities, repurchase agreements, certificates of
deposit,
bankers’ acceptances, commercial paper, money market mutual funds, and
bank deposit accounts. |
November
1, 2023 | 23
More About
the Funds
(continued)
While a Fund is engaged in a
temporary defensive position, it may not meet its investment objective. These
investments may also be inconsistent with a Fund’s main investment strategies.
Therefore, a Fund will pursue a temporary defensive position only when market
conditions warrant.
S&P
Opco, LLC Disclaimer
The S&P 500 Index and
S&P 1000 Index
(each, an
“Index”) are products 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.
Disclosure
of Portfolio Holdings
A description of the policies
and procedures with respect to the disclosure of the Funds’ portfolio securities
is available in the Funds’
Statement of
Additional Information.
Additional
Fee Waiver and/or Expense Reimbursement
Service providers to a Fund
(as was the case for the predecessor fund) may, from time to time, voluntarily
waive all or a portion of any fees to which they are entitled and/or reimburse
certain expenses as they may determine from time to time. A Fund’s service
providers may discontinue or modify these voluntary actions at any time without
notice. Performance for a Fund
will reflect
(and performance for the predecessor fund reflects) the voluntary waiver of fees
and/or the reimbursement of expenses, if any. Without these voluntary waivers
and/or expense reimbursements, performance would be less favorable.
Additional
Historical Performance Information
Equity
Focus ETF
The historical performance
for the Fund (as represented by the Class R6 Shares of the predecessor fund) in
the bar chart prior to 1/1/19 and in the performance table prior to the Class R6
Shares’ inception on 10/1/18 is based on the Class I Shares of the predecessor
fund, which invest in the same portfolio of securities but are offered in a
different prospectus. The actual returns of Class R6 Shares of the predecessor
fund would have been different than those shown because Class R6 Shares have
different expenses than Class I Shares.
Market
Expansion Enhanced Equity ETF
The historical performance
for the Fund (as represented by the Class R6 Shares of the predecessor fund for
the period prior to the reorganization into the Fund) in the bar chart prior to
1/1/19 and in the performance table prior to the Class R6 Shares’ inception on
10/1/18 is based on the Class I Shares of the predecessor fund. The actual
returns of Class R6 Shares would have been different than those shown for Class
I Shares because Class R6 Shares have different expenses than Class I
Shares.
24 | J.P.
Morgan Exchange-Traded Funds
The Funds’
Management and Administration
Each Fund is a series of J.P.
Morgan Exchange-Traded Fund Trust, a Delaware statutory trust (the Trust). The
Trust is governed by the Board of Trustees, which is responsible for overseeing
all business activities of the Funds.
The Funds’
Investment Adviser
J.P. Morgan Investment
Management Inc. (JPMIM or the adviser) is the investment adviser to the Funds.
JPMIM is located at 383 Madison Avenue, New York, NY 10179. JPMIM also served as
the investment adviser to the predecessor fund.
JPMIM is a
wholly-owned subsidiary of JPMorgan Asset Management Holdings Inc., which is a
wholly-owned subsidiary of JPMorgan Chase & Co. (JPMorgan Chase), a bank
holding company.
In rendering investment
advisory services to the Fund, JPMIM uses the portfolio management, research and
other resources of a foreign (non-U.S.) affiliate of JPMIM and may provide
services to a Fund through a “participating affiliate” arrangement, as that term
is used in relief granted by the staff of the SEC. Under this relief, U.S.
registered investment advisers are allowed to use portfolio management or
research resources of advisory affiliates subject to the regulatory supervision
of the registered investment adviser.
Pursuant to each Fund’s
management agreement, JPMIM is entitled to a management fee, incurred daily and
paid monthly, of a Fund’s average daily net assets. During the most recent
fiscal year ended 6/30/23, JPMIM was paid management fees (after
waivers),
as
shown
below,
as a percentage
of a Fund’s average daily net assets (for the predecessor fund for Equity Focus
ETF):
|
JPMorgan
Equity Focus ETF |
0.45% |
|
JPMorgan
Market Expansion Enhanced Equity ETF |
0.24 |
A discussion of the basis the
Board of Trustees of the Trust used in approving the investment advisory
agreement for the Funds is available in the annual report dated June 30, 2022
for Market Expansion Enhanced Equity ETF and will be available in the first
shareholder report for Equity Focus ETF.
The
Portfolio Managers
Equity
Focus ETF
The portfolio management team
is led by Jonathan K.L. Simon, Managing Director of JPMIM, Timothy Parton,
Managing Director of JPMIM and a CFA charterholder, Felise L. Agranoff, Managing
Director of JPMIM and a CFA charterholder, and Daniel J. Percella, Managing
Director of JPMIM and a CFA charterholder.
Messrs. Simon and Percella
are primarily responsible for the Fund’s value investments while Mr. Parton and
Ms. Agranoff are primarily responsible for the Fund’s growth investments. Mr.
Simon is the lead portfolio manager on the Fund’s value investments and is a
senior member of the U.S. Equity Value portfolio management team. Mr. Simon has
worked as a portfolio manager for JPMIM and its affiliates (or their
predecessors) since 1987 and has been employed by the firm since 1980. Mr.
Percella is a portfolio manager on the Fund’s value investments and shares
authority in the day-to-day management of the Fund. Mr. Percella has been a
portfolio manager since 2014, and prior to that he was a research analyst on the
Small Cap Active Core Team. Mr. Percella has been an employee of JPMIM since
2008. Mr. Parton is the lead portfolio manager on the Fund’s growth investments
and is a senior member of U.S. Equity Growth portfolio management team. Ms.
Agranoff is a portfolio manager and shares authority in the day-to-day
management on the Fund’s growth investments. Mr. Parton has worked as a
portfolio manager for JPMIM or its affiliates (or their predecessors) since 1988
and has been employed by the firm since 1986. Ms. Agranoff is a portfolio
manager and shares authority in the day-to-day management of the Fund. An
employee since 2004, Ms. Agranoff has been a portfolio manager since 2015 and
has been a research analyst in the firm’s U.S. Equity Group since 2004. Messrs.
Simon, Percella, Parton, and Ms. Agranoff also were the predecessor fund’s
portfolio managers since 2011, 2022, 2017 and 2022, respectively.
Mr. Parton has announced his
retirement from JPMIM in early 2024. Mr. Parton will continue to serve on the
portfolio management team of the Fund until his retirement, and upon his
retirement, Messrs. Simon and Percella and Ms. Agranoff will continue to be
responsible for the management of the Fund.
Market
Expansion Enhanced Equity ETF
The portfolio management team
for the Fund utilizes a team-based approach and uses the models, insights and
recommendations of the broader U.S. Structured Equity Team. The portfolio
management team is comprised of Phillip D. Hart, Wonseok Choi, Akash Gupta and
Robert Ippolito. Mr. Hart, a Managing Director of JPMIM and a CFA charterholder,
is the lead portfolio manager for the Fund and is primarily responsible for
portfolio construction. Mr. Hart has worked as a portfolio manager for the U.S.
Structured Equity Team at JPMIM since 2009 and has been employed by the firm
since 2003. Prior to becoming a portfolio manager, he was a qualitative research
analyst within this group. Mr. Choi, Managing Director and director of U.S.
equity quantitative research, is responsible for
November
1, 2023 | 25
The Funds’
Management and Administration
(continued)
Strategic Quantitative
Research. This entails all aspects of process enhancements including, but not
limited to: factors to be included into the investment process as well as
refinements to existing factors, portfolio construction as well as our big data
efforts. Mr. Gupta, Executive Director, is a research analyst and portfolio
manager on the U.S. Structured Equity team. An employee since 2004, Mr. Gupta
previously spent over three years in the sell-side Equity Research Group,
focusing on the electronics manufacturing supply chain sector. He is also a CFA
charterholder and a certified Financial Risk Manager (FRM). Mr. Ippolito,
Executive Director and CFA charterholder, has served as a portfolio manager of
the Fund since November 2022. An employee since 2009, Mr. Ippolito has worked as
a portfolio manager in the U.S. Structured Equity Small and Mid-Cap Group since
2021. Prior to becoming a portfolio manager, Mr. Ippolito was a fundamental
research analyst within the group. Mr. Hart, Mr. Choi
and Mr. Gupta
also were the predecessor fund's portfolio managers since 2013, 2019
and 2019,
respectively.
The Statement of Additional
Information provides additional information about the portfolio managers’
compensation, other accounts managed by the portfolio managers and the portfolio
managers’ ownership of securities in the Funds.
The Funds’
Administrator
JPMIM provides administration
services for and oversees the other service providers of each Fund. JPMIM
receives the following annual fee on behalf of each Fund for administration
services: 0.075% of the first $10 billion of average daily net assets of the
Fund, plus 0.050% of average daily net assets of the Fund between $10 billion
and $20 billion, plus 0.025% of average daily net assets of the Fund between $20
billion and $25 billion, plus 0.010% of the average daily net assets of the Fund
over $25 billion.
The Funds’
Distributor
JPMorgan Distribution
Services, Inc. (the Distributor) is the distributor of the Funds’ Shares. The
Distributor or its agent distributes Creation Units for the Funds on an agency
basis. The Distributor does not maintain a secondary market in Shares of the
Funds. The Distributor has no role in determining the investment policies of the
Funds or the securities that are purchased or sold by the Funds. The
Distributor’s principal address is 1111 Polaris Parkway, Columbus, OH
43240.
Payments
to Financial Intermediaries
JPMIM and, from time to time,
other affiliates of JPMorgan Chase may, at their own expense and out of their
own legitimate profits, provide cash payments to Financial Intermediaries whose
customers invest in Shares of the Funds. For this purpose, Financial
Intermediaries include financial advisors, investment advisers, brokers,
financial planners, banks, insurance companies, retirement or 401(k) plan
administrators and others, including various affiliates of JPMorgan Chase, that
may enter into agreements with JPMIM and/or its affiliates. These cash payments
may relate to marketing activities and presentations, educational training
programs, the support of technology platforms and/or reporting systems, or the
Financial Intermediaries’ making Shares of the Funds available to their
customers. Such compensation may provide such Financial Intermediaries with an
incentive to favor sales of Shares of the Funds over other investment options
they make available to their customers. See the Statement of Additional
Information for more information.
26 | J.P.
Morgan Exchange-Traded Funds
Purchase
and Redemption of Shares
Buying
and Selling Shares
In the
Secondary Market. Most investors will buy and
sell Shares of the Funds in secondary market transactions through brokers.
Shares of the Funds are listed and traded on the secondary market on the
Exchange. Shares can be bought and sold throughout the trading day like other
publicly traded shares. There is no minimum investment. Although Shares are
generally purchased and sold in “round lots” of 100 Shares, brokerage firms
typically permit investors to purchase or sell Shares in smaller “odd lots,” at
no per-Share price differential. When buying or selling Shares through a broker,
you will incur customary brokerage commissions and charges, and you may pay some
or all of the spread between the bid and the offered price in the secondary
market on each leg of a round trip (purchase and sale) transaction. The spread
varies over time for Shares of each Fund based on the Fund’s trading volume and
market liquidity, and is generally lower if the Fund has a lot of trading volume
and market liquidity.
Shares of the Funds trade on
the Exchange at prices that may differ to varying degrees from the daily NAV of
the Shares.
Directly
with the Fund.
Each Fund’s
Shares are issued or redeemed by the Fund at NAV per Share only in a large
specified number of Shares called a “Creation Unit” or multiples thereof.
Investors such as market makers, large investors and institutions who wish to
deal in Creation Units directly with the Fund must have entered into an
authorized participant agreement with the Distributor, or purchase through a
dealer that has entered into such an agreement. Set forth below is a brief
description of the procedures applicable to purchases and redemptions of
Creation Units. For more detailed information, see “Appendix
A -
Purchases and
Redemptions” in the Funds’ Statement of Additional Information.
Beneficial
Ownership. The
Depository Trust Company (DTC) serves as securities depository for the Shares.
(The Shares may be held only in book-entry form; stock certificates will not be
issued.) DTC, or its nominee, is the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on the records
of DTC or its participants (described below). Beneficial owners of Shares are
not entitled to have Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder thereof. Accordingly, to exercise any
rights of a holder of Shares, each beneficial owner must rely on the procedures
of: (i) DTC; (ii) “DTC Participants” (i.e., securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations),
some of whom (and/or their representatives) own DTC; and (iii) “Indirect
Participants” (i.e., brokers, dealers, banks and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly, through which such beneficial owner holds its
interests). The Trust understands that under existing industry practice, in the
event the Trust requests any action of holders of Shares, or a beneficial owner
desires to take any action that DTC, as the record owner of all outstanding
Shares, is entitled to take, DTC would authorize the DTC Participants to take
such action and that the DTC Participants would authorize the Indirect
Participants and beneficial owners acting through such DTC Participants to take
such action and would otherwise act upon the instructions of beneficial owners
owning through them. As described above, the Trust recognizes DTC or its nominee
as the owner of all Shares for all purposes. For more detailed information, see
“Book Entry Only System” in the Funds’ Statement of Additional
Information.
Premium/Discount
Information
Information about the
differences between the daily market price on the Exchange for Shares of a Fund
and the Fund’s NAV can be found on the Fund’s website, www.jpmorganfunds.com.
NAV is the price at which a Fund issues and redeems Shares. It is calculated in
accordance with a Fund’s pricing and valuation policies. The market price
(Market Price) is generally the official closing price of a
Fund’s Shares on
the Exchange. A Fund’s Market Price may be at, above (at a premium) or below (at
a discount) its NAV. The NAV of a
Fund will
fluctuate with changes in the value of its portfolio holdings. The Market Price
of a Fund will fluctuate in accordance with changes in its NAV, as well as
market supply and demand. Shareholders may pay more than NAV when they buy Fund
Shares and receive less than NAV when they sell those Shares because Shares are
bought and sold at current Market Price. The Market Price is also used to
calculate market returns of a Fund.
Pricing
Shares
Investors that purchase or
sell Shares on the secondary market transact at the Market Price on the
Exchange. The Market Price may differ from the Fund’s daily NAV and can be
affected by market forces of supply and demand, economic conditions and other
factors.
The Exchange
disseminates the approximate value of Shares of the Fund periodically throughout
the trading day. This approximate value should not be viewed as a “real-time”
update of the NAV per Share of the Fund because the approximate value may not be
calculated in the same manner as the NAV, which is computed only once a day. The
approximate value is generally determined by using both current market
quotations and/or price quotations obtained from broker-dealers and other market
intermediaries that may trade in the portfolio securities held by the Fund. The
Fund is not involved in, or responsible for, the calculation or dissemination of
the approximate value and the Fund does not make any representation or warranty
as to its accuracy.
November
1, 2023 | 27
Purchase
and Redemption of Shares
(continued)
NAV is calculated each
business day as of the close of The NASDAQ Stock Market LLC (NASDAQ) or the New
York Stock Exchange (NYSE), as applicable, which is typically 4:00 p.m. E.T. On
occasion, the NASDAQ or NYSE will close before 4:00 p.m. E.T. When that happens,
NAV will be calculated as of the time the NASDAQ or NYSE closes, as applicable.
The Funds will not treat an intraday unscheduled disruption or closure in the
NASDAQ or NYSE trading as a closure of the NASDAQ or NYSE,
as applicable,
and will calculate NAV as of 4:00 p.m. E.T. if the particular disruption or
closure directly affects only the NASDAQ or NYSE. The price at which a purchase
of a Creation Unit is effected is based on the next calculation of NAV after the
order is received in proper form in accordance with this prospectus. To the
extent a Fund invests in securities that are primarily listed on foreign
exchanges or other markets that trade on weekends or other days when the Fund
does not price its Shares, the value of the Fund’s Shares may change on days
when you will not be able to purchase or redeem your Shares. The NAV per share
of each Fund is equal to the value of all its assets minus its liabilities,
divided by the number of outstanding Shares.
Securities
for which market quotations are readily available are generally valued at their
current market value. Other securities and assets, including securities for
which market quotations are not readily available, market quotations are
determined not to be reliable, or their value has been materially affected by
events occurring after the close of trading on the exchange or market on which
the security is principally traded but before the Fund’s NAV is calculated, may
be valued at fair value in accordance with policies and procedures adopted by
the Trust’s Board of Trustees. Fair value represents a good faith determination
of the value of a security or other asset based upon specifically applied
procedures. Fair valuation may require subjective determinations. There can be
no assurance that the fair value of an asset is the price at which the asset
could have been sold during the period in which the particular fair value was
used in determining the Fund’s NAV.
Equity
securities listed on a North American, Central American, South American or
Caribbean securities exchange are generally valued at the last sale price on the
exchange on which the security is principally traded. Other foreign equity
securities are fair valued using quotations from independent pricing services,
as applicable. The value of securities listed on the NASDAQ Stock Market, Inc.
is generally the NASDAQ official closing price.
Fixed income
securities are valued using prices supplied by an approved independent third
party or affiliated pricing services or broker/dealers. Those prices are
determined using a variety of inputs and factors as more fully described in the
Statement of Additional Information.
Assets and
liabilities initially expressed in foreign currencies are converted into U.S.
dollars at the prevailing market rates from an approved independent pricing
service as of 4:00 p.m. E.T.
Shares of
ETFs are generally valued at the last sale price on the exchange on which the
ETF is principally traded. Shares of other open-end investment companies are
valued at their respective NAVs.
Options
traded on U.S. securities exchanges are valued at the composite mean price,
using the National Best Bid and Offer quotes.
Options
traded on foreign exchanges are valued at the settled price, or if no settled
price is available, at the last sale price available prior to the calculation of
the Fund’s NAV and will be fair valued by applying fair value factors provided
by independent pricing services, as applicable, for any options involving equity
reference obligations listed on exchanges other than North American, Central
American, South American or Caribbean securities exchanges.
Exchange
traded futures are valued at the last sale price available prior to the
calculation of the Fund’s NAV. Any futures involving equity reference
obligations listed on exchanges other than North American, Central American,
South American or Caribbean securities exchanges will be fair valued by applying
fair value factors provided by independent pricing services, as
applicable.
Non-listed
over-the-counter futures are valued utilizing market quotations provided by
approved pricing services.
Swaps and
structured notes are priced generally by an approved independent third party or
affiliated pricing service or at an evaluated price provided by a counterparty
or broker/dealer.
Any
derivatives involving equity reference obligations listed on exchanges other
than North American, Central American, South American or Caribbean securities
exchanges will be fair valued by applying fair value factors provided by
independent pricing services, as applicable.
Frequent
Purchases and Redemptions
The Funds impose no
restrictions on the frequency of purchases and redemptions. The Board of
Trustees evaluated the risks of market timing activities by the Funds’
shareholders when they considered that no restriction or policy was necessary.
The Board considered that, unlike mutual funds, each Fund issues and redeems its
Shares at NAV only in Creation Units, and the Fund’s Shares may be purchased and
sold on the Exchange at prevailing Market Prices.
28 | J.P.
Morgan Exchange-Traded Funds
Shareholder
Information
Taxes
on Distributions
Each Fund has elected to be
treated and intends to qualify each taxable year as a regulated investment
company. A regulated investment company is not subject to tax at the corporate
level on income and gains from investments that are distributed to shareholders.
A Fund’s failure to qualify as a regulated investment company would result in
corporate-level taxation and, consequently, a reduction in income available for
distribution to shareholders.
Each Fund can earn income and
realize capital gain. Each Fund deducts any expenses and then pays out the
earnings, if any, to shareholders as distributions.
Each Fund generally declares
and distributes net investment income, if any, at least annually. Each Fund will
distribute net realized capital gain, if any, at least annually. For each
taxable year, each Fund will distribute substantially all of its net investment
income and net realized capital gain.
Distributions of net
investment income are generally taxable as ordinary income from dividends.
Dividends of net investment income paid to a non-corporate U.S. shareholder that
are properly reported as qualified dividend income generally will be taxable to
such shareholder at a maximum individual federal income tax rate applicable to
“qualified dividend income” of either 15% or 20%, depending on whether the
individual’s income exceeds certain threshold amounts. The amount of dividend
income that may be so reported by a Fund generally will be limited to the
aggregate of the eligible dividends received by that Fund. In addition, a Fund
must meet certain holding period and other requirements with respect to the
shares on which the Fund received the eligible dividends, and the non-corporate
U.S. shareholder must meet certain holding period and other requirements with
respect to the Fund. The amount of a Fund’s distributions that would otherwise
qualify for this favorable tax treatment may be reduced as a result of a Fund’s
securities lending activities or high portfolio turnover rate. Dividends of net
investment income that are not reported as qualified dividend income and
dividends of net short-term capital gain will be taxable to a U.S. shareholder
as ordinary income.
Distributions of net capital
gain (that is, the excess of the net gains from the sale of investments that a
Fund owned for more than one year over the net losses from investments that the
Fund owned for one year or less) that are properly reported by a Fund as capital
gain dividends will be taxable as long-term capital gain, regardless of how long
you have held your Shares in the Fund. The maximum individual federal income tax
rate applicable to long-term capital gains is generally either 15% or 20%,
depending on whether the individual’s income exceeds certain threshold amounts.
Distributions of net short-term capital gain (that is, the excess of any net
short-term capital gain over net long-term capital loss), if any, will be
taxable to U.S. shareholders as ordinary income. Capital gain of a corporate
shareholder is taxed at the same rate as ordinary income.
An additional 3.8% Medicare
tax is imposed on certain net investment income (including ordinary dividends
and capital gain distributions received from a Fund and net gains from
redemptions or other taxable dispositions of Shares) of U.S. individuals,
estates and trusts to the extent that such person’s “modified adjusted gross
income” (in the case of an individual) or “adjusted gross income” (in the case
of an estate or trust) exceeds certain threshold amounts.
Except when your investment
is in an IRA, 401(k) plan or other tax-advantaged investment plan,
or you are a
tax-exempt investor, if you buy Shares of a Fund before a distribution, you will
be subject to tax on the entire amount of the taxable distribution you receive.
This is known as “buying a dividend”. Distributions are taxable to you even if
they are paid from income or gain earned by a Fund before your investment (and
thus were included in the price you paid for your Shares). Any gain resulting
from the sale or exchange of Shares generally will be taxable as long-term or
short-term gain, depending upon how long you have held the Shares. To avoid
buying a dividend, please check a Fund’s Dividend and Capital Gain Schedule
before you invest.
The Equity Focus ETF’s
investment in foreign securities may be subject to foreign withholding taxes or
other taxes. In that case, the Fund’s yield on those securities would be
decreased. In addition, a Fund’s investment in certain foreign securities or
foreign currencies may increase or accelerate the Fund’s recognition of ordinary
income and may affect the timing or amount of the distributions.
A Fund’s investments in
certain debt securities and derivative instruments may cause the Fund to accrue
and distribute income not yet received. In order to generate sufficient cash to
make the requisite distributions, a Fund may be required to liquidate other
investments in its portfolio that it otherwise would have continued to hold,
including when it is not advantageous to do so. A Fund’s investment in REIT
securities also may result in the Fund’s receipt of cash in excess of the REIT’s
earnings; if the Fund distributes such amounts, such distributions could
constitute a return of capital to Fund shareholders for federal income tax
purposes.
A Fund’s transactions in
futures contracts, short sales, swaps and other derivatives will be subject to
special tax rules, the effect of which may be to accelerate income to the Fund,
defer losses to the Fund, cause adjustments in the holding periods of the Fund’s
securities, and convert short-term capital losses into long-term capital losses.
These rules could therefore affect the amount, timing and character of
distributions from the Fund, and, therefore, may increase the amount of taxes
payable by shareholders. A Fund’s use of these types of transactions 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.
November
1, 2023 | 29
Shareholder
Information
(continued)
The extent to which a Fund
can invest in master limited partnerships is limited by the Fund’s intention to
qualify as a regulated investment company under the Internal Revenue
Code.
Please see the Statement of
Additional Information for additional discussion of the tax consequences of the
above-described and other investments to a Fund and its
shareholders.
The dates on
which dividends and capital gain, if any, will be distributed are available
online at www.jpmorganfunds.com.
Early in each
calendar year, you will receive a notice showing the amount of distributions you
received during the preceding calendar year and the tax status of those
distributions.
Any foreign shareholder would
generally be subject to U.S. tax-withholding on distributions by a Fund, as
discussed in the Statement of Additional Information.
Any investor for whom a Fund
does not have a valid Taxpayer Identification Number may be subject to backup
withholding.
The tax
considerations described in this section do not apply to tax-deferred accounts
or other non-taxable entities.
Taxes
on Exchange-Listed Shares Sales
Currently,
any capital gain or loss realized upon a sale of Shares is generally treated as
long-term capital gain or loss if the Shares have been held for more than one
year and as short-term capital gain or loss if the Shares have been held for one
year or less. Capital loss realized on the sale or exchange of Shares held for
six months or less will be treated as long-term capital loss to the extent of
any capital gain dividends received by the shareholder. The ability to deduct
capital losses may be limited.
Taxes
on Purchase and Redemption of Creation Units
At the time
of purchase, an Authorized Participant who exchanges equity securities for
Creation Units generally will recognize a gain or loss. The gain or loss will be
equal to the difference between the market value of the Creation Units at the
time and the exchanger’s aggregate basis in the securities surrendered and the
cash paid. At redemption, a person who exchanges Creation Units for equity
securities will generally recognize a gain or loss equal to the difference
between the exchanger’s basis in the Creation Units and the aggregate market
value of the securities received and the cash received in connection with the
redemption. The Internal Revenue Service, however, may assert that a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing “wash sales” on the basis that there has
been no significant change in economic position. Persons exchanging securities
should consult their own tax advisor with respect to whether the wash sale rules
apply and when a loss might be deductible.
Under current
federal tax laws, any capital gain or loss realized upon redemption of Creation
Units is generally treated as long-term capital gain or loss if the Shares have
been held for more than one year and as a short-term capital gain or loss if the
Shares have been held for one year or less.
If you
purchase or redeem Creation Units, you will be sent a confirmation statement
showing how many and at what price you purchased or sold Shares.
The above is a general
summary of tax implications of investing in the Funds. Because each investor’s
tax consequences are unique, please consult your tax advisor to see how
investing in a Fund and, for individuals and S corporations, selection of a
particular cost method of accounting will affect your own tax
situation.
Availability
of Proxy Voting Record
The Trustees have delegated
the authority to vote proxies for securities owned by the Funds to JPMIM. A copy
of each Fund’s voting record for the most recent 12-month period ended June 30
is available on the SEC’s website at www.sec.gov or on the Funds’ website at
www.jpmorganfunds.com no later than August 31 of each year. Each Fund’s proxy
voting record will include, among other things, a brief description of the
matter voted on for each portfolio security, and will state how each vote was
cast, for example, for or against the proposal.
Tax-Advantaged
Product Structure
Unlike interests in many
conventional mutual funds, the Shares are traded throughout the day on a
national securities exchange, whereas mutual fund interests are typically only
bought and sold at closing NAVs. The Shares have been designed to be tradable in
the secondary market on a national securities exchange on an intra-day basis,
and to be created and redeemed in Creation Units at each day’s next calculated
NAV. For each of the Funds, Shares are created and redeemed principally in kind.
The in-kind arrangements are designed to protect ongoing shareholders from
adverse effects on a Fund’s portfolio that could arise from frequent cash
creation and redemption transactions. In a conventional mutual fund, redemptions
can have an adverse tax impact on taxable
30 | J.P.
Morgan Exchange-Traded Funds
shareholders because the
mutual fund may need to sell portfolio securities to obtain cash to meet fund
redemptions. These sales may generate taxable gains for the shareholders of the
mutual fund, whereas the Shares’ in-kind redemption mechanism generally will not
lead to a tax event for a Fund or its ongoing shareholders.
Other
Information
For purposes of the 1940 Act,
each Fund is treated as a registered investment company. Section 12(d)(1) of the
1940 Act restricts investments by investment companies in the securities of
other investment companies, including Shares of the Funds. Registered investment
companies are permitted to invest in a Fund beyond the limits set forth in
Section 12(d)(1), subject to certain terms and conditions.
November
1, 2023 | 31
Financial
Highlights
The Financial Highlights
table is intended to help you understand a Fund’s financial performance for the
period of a Fund’s operations. The Funds commenced operations after the assets
of the predecessor funds were transferred to the Funds in a tax-free
reorganization as of the close of business on July 28, 2023 for Equity Focus ETF
and May 6, 2022 for Market Expansion Enhanced Equity ETF. The information for
the Equity Focus ETF in the following table for the Fund’s Shares is the
Financial Highlights of the Fund’s predecessor fund’s Class R6 Shares for the
fiscal periods indicated. For periods prior to May 6, 2022 for Market Expansion
Enhanced Equity ETF, the Financial Highlights information in the following table
for the Fund’s Shares represents the Financial Highlights of the predecessor
fund’s Class R6 Shares for the fiscal periods indicated.
Certain information reflects
financial results for a single Fund or predecessor fund share. The total returns
in the table represent the rate that an investor would have earned or lost on an
investment in a Fund’s Shares or a predecessor fund’s Class R6 Shares (assuming
reinvestment of all dividends and distributions).
The information below has
been audited by PricewaterhouseCoopers LLP, the independent registered public
accounting firm for a Fund, whose reports, along with the Equity Focus ETF’s
predecessor fund’s and the Market Expansion Enhanced Equity ETF’s financial
statements, are included in that Fund’s annual report, which is available upon
request.
|
|
|
|
Per
share operating performance | |||||
|
|
|
|
Investment
operations |
Distributions | ||||
|
|
|
Net asset
value,
beginning
of
period |
Net
investment
income
(loss)(b) |
Net
realized
and
unrealized
gains
(losses) on
investments |
Total from
investment
operations |
Net
investment
income |
Net
realized
gain |
Total
distributions |
|
JPMorgan
Equity Focus Fund |
|
|
|
|
|
|
|
|
|
Class
R6 |
|
|
|
|
|
|
|
|
|
Year
Ended June 30, 2023 |
|
$29.01 |
$0.18 |
$5.20 |
$5.38 |
$(0.15) |
$(0.35) |
$(0.50) |
|
Year
Ended June 30, 2022 |
|
35.62 |
0.16 |
(2.75) |
(2.59) |
(0.11) |
(3.91) |
(4.02) |
|
Year
Ended June 30, 2021 |
|
27.25 |
0.18 |
12.07 |
12.25 |
(0.23) |
(3.65) |
(3.88) |
|
Year
Ended June 30, 2020 |
|
30.48 |
0.30 |
1.69 |
1.99 |
(0.24) |
(4.98) |
(5.22) |
|
October
1, 2018 (f) through June 30, 2019 |
|
34.55 |
0.23 |
(0.05) |
0.18 |
(0.53) |
(3.72) |
(4.25) |
(a)
Annualized for periods less
than one year, unless otherwise noted.
(b)
Calculated based upon average
shares outstanding.
(c)
Not annualized for periods
less than one year.
(d)
Includes adjustments in
accordance with accounting principles generally accepted in the United States of
America and as such, the net asset values for financial reporting purposes and
the returns based upon those net asset values may differ from the net asset
values and returns for shareholder transactions.
(e)
Includes earnings credits and
interest expense, if applicable, each of which is less than 0.005% unless
otherwise noted.
(f)
Commencement of offering of
class of shares.
32 | J.P.
Morgan Exchange-Traded Funds
|
|
Ratios/Supplemental
data | |||||
|
|
|
|
Ratios
to average net assets (a) |
| ||
|
Net asset
value,
end of
period |
Total
return
(excludes
sales
charge)(c)(d) |
Net assets,
end of
period
(000's) |
Net
expenses(e) |
Net
investment
income
(loss) |
Expenses
without
waivers and
reimbursements |
Portfolio
turnover
rate(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$33.89 |
18.85% |
$73,544 |
0.60% |
0.60% |
0.68% |
41% |
|
29.01 |
(8.87) |
35,124 |
0.60 |
0.47 |
0.69 |
29 |
|
35.62 |
47.82 |
34,054 |
0.60 |
0.55 |
0.73 |
58 |
|
27.25 |
6.39 |
23,881 |
0.60 |
1.06 |
0.83 |
44 |
|
30.48 |
2.03 |
22,346 |
0.59 |
1.08 |
0.95 |
45 |
November
1, 2023 | 33
Financial
Highlights
(continued)
|
|
|
Per
share operating performance (a) | |||||
|
|
|
Investment
operations |
Distributions | ||||
|
|
Net
asset
value
beginning
of
period |
Net
investment
income
(loss)(c) |
Net
realized
and
unrealized
gains (losses)
on
investments |
Total
from
investment
operations |
Net
investment
income |
Net
realized
gain |
Total
distributions |
|
JPMorgan
Market Expansion Enhanced Equity ETF
(g) |
|
|
|
|
|
|
|
|
Year
Ended June 30, 2023 |
$45.83 |
$0.67 |
$6.67 |
$7.34 |
$(0.66) |
$(2.39) |
$(3.05) |
|
Year
Ended June 30, 2022 |
62.87 |
0.70 |
(8.03) |
(7.33) |
(0.66) |
(9.05) |
(9.71) |
|
Year
Ended June 30, 2021 |
41.41 |
0.63 |
23.22 |
23.85 |
(0.63) |
(1.76) |
(2.39) |
|
Year
Ended June 30, 2020 |
48.77 |
0.63 |
(4.82) |
(4.19) |
(0.68) |
(2.49) |
(3.17) |
|
October
1, 2018 through June 30, 2019 |
58.92 |
0.54 |
(4.01) |
(3.47) |
(0.68) |
(6.00) |
(6.68) |
|
Year
Ended June 30, 2019 |
57.67 |
0.63 |
(3.24) |
(2.61) |
(0.44) |
(5.95) |
(6.39) |
(a)
Per Share
amounts reflect the conversion of the Predecessor Fund into the Fund as of the
close of business on May 6, 2022.
(b)
Annualized for periods less
than one year, unless otherwise noted.
(c)
Calculated based upan average
shares outstanding.
(d)
Not annualized for periods
less than one year.
(e)
Includes adjustments in
accordance with accounting principles generally accepted in the United States of
America and as such, the net asset values for financial reporting purposes and
the returns based upon those net asset values may differ from the net asset
values and returns for shareholder transactions.
(f)
JPMorgan Market Expansion
Enhanced Equity ETF acquired all of the assets and liabilities of the JPMorgan
Market Expansion Enhanced Index Fund ("Predecessor Fund") in a reorganization on
May 6, 2022. Market price returns are calculated using the official closing
price of the JPMorgan Market Expansion Enhanced Equity ETF on the listing
exchange as of the time that the JPMorgan Market Expansion Enhanced Equity ETF's
NAV is calculated. Prior to the JPMorgan Market Expansion Enhanced Equity ETF's
listing on May 9, 2022, the NAV performance of the Class R6 and the Class I
Shares of the Predecessor Fund are used as proxy market price
returns.
(g)
JPMorgan Market Expansion
Enhanced Equity ETF (the "Fund") acquired all of the assets and liabilities of
the JPMorgan Market Expansion Enhanced Index Fund ("Predecessor Fund") in a
reorganization that occurred as of the close of business on May 6, 2022.
Performance and financial history of the Predecessor Fund's Class R6 Shares have
been adopted by the Fund and will be used going forward. As a result, the
financial highlight information reflects that of the Predecessor Fund's Class R6
Shares for the period October 1, 2018 ("Predecessor Fund's Class R6 Shares
inception date") up through the reorganization and the Predecessor Fund's Class
I Shares for the period July 1, 2018 through June 30, 2019.
34 | J.P.
Morgan Exchange-Traded Funds
|
|
Ratios/Supplemental
data | |||||||
|
|
|
|
|
|
Ratios
to average net assets (b) |
| ||
|
Net asset
value,
end of
period |
Market
price,
end of
period |
Total
Return(d)(e) |
Market
price
total
return(d)(f) |
Net assets,
end of
period |
Net
expenses |
Net
investment
income
(loss) |
Expenses
without
waivers
and
reimbursements |
Portfolio
turnover
rate(d) |
|
|
|
|
|
|
|
|
|
|
|
$50.12 |
$50.16 |
16.61% |
16.73% |
$854,560,372 |
0.24% |
1.38% |
0.36% |
29% |
|
45.83 |
45.82 |
(13.80) |
(13.81) |
833,993,386 |
0.25 |
1.21 |
0.36 |
27 |
|
62.87 |
62.87 |
58.97 |
58.97 |
766,008,977 |
0.25 |
1.18 |
0.35 |
35 |
|
41.41 |
41.41 |
(9.65) |
(9.65) |
500,129,035 |
0.25 |
1.45 |
0.36 |
49 |
|
48.77 |
48.77 |
(4.81) |
(4.81) |
512,511,625 |
0.25 |
1.51 |
0.37 |
36 |
|
48.67 |
48.67 |
(3.56) |
(3.56) |
264,414,719 |
0.34 |
1.14 |
0.61 |
36 |
November
1, 2023 | 35
Additional
Fee and Expense Information
ADDITIONAL
FEE AND EXPENSE INFORMATION
FOR THE JPMORGAN TRUST II (JPMT II) FUNDS AND FORMER ONE GROUP MUTUAL FUNDS
FOR THE JPMORGAN TRUST II (JPMT II) FUNDS AND FORMER ONE GROUP MUTUAL FUNDS
In connection
with the 2004 final settlement between Banc One Investment Advisors Corporation
(BOIA), subsequently known as JPMorgan Investment Advisors Inc. (JPMIA*), with
the New York Attorney General arising out of market timing of certain mutual
funds advised by BOIA, BOIA agreed, among other things, to disclose hypothetical
information regarding investment and expense information to Fund shareholders.
The hypothetical examples are provided for JPMT II Funds or those Funds that
have acquired the assets and liabilities of a JPMT II Fund or a series of One
Group Mutual Funds
The “Gross
Expense Ratio” includes the contractual expenses that make up the investment
advisory, administration and custody fees, fees paid to vendors not affiliated
with JPMIM that provide services to the Fund and other fees and expenses of the
Fund. The “Net Expense Ratio” is Gross Expenses less any fee waivers or expense
reimbursements memorialized in a written contract between the Fund and JPMIM
and/or its affiliates, as applicable.
|
|
|
|
|
|
Net
Expense Ratio |
Gross
Expense Ratio |
|
JPMorgan
Market Expansion Enhanced Equity ETF |
0.24% |
0.36
% |
*
Effective
January 1, 2010, the investment advisory business of JPMIA, which was the
adviser for certain of the J.P. Morgan Funds, was transferred to JPMIM and JPMIM
became the investment adviser for certain J.P. Morgan Funds that were previously
advised by JPMIA.
The Fund’s
annual return is reduced by its fees and expenses for that year. The examples
below are intended to help you understand the annual and cumulative impact of
the Fund’s fees and expenses on your investment through a hypothetical
investment of $10,000 held for the next 10 years. The examples assume the
following:
•
On 11/1/23, you invest
$10,000 in the Fund and you will hold the Shares for the entire 10 year
period;
•
Your
investment has a 5% return each year;
•
The Fund’s
operating expenses remain at the levels discussed below and are not affected by
increases or decreases in Fund assets over time;
•
At the time
of purchase, any applicable initial sales charges (loads) are deducted;
and
•
There is no
sales charge (load) on reinvested dividends.
•
The annual
costs are calculated using the Net Expense Ratios for the period through the
expiration of any fee waivers or expense reimbursements memorialized in a
written contract between the Fund and JPMIM and/or its affiliates; and the Gross
Expense Ratios thereafter.
“Gross Cumulative Return”
shows what the cumulative return on your investment at the end of each 12 month
period (year) ended October 31 would be if Fund expenses are not deducted. “Net
Cumulative Return” shows what the cumulative return on your investment at the
end of each year would be assuming Fund expenses are deducted each year in the
amount shown under “Annual Costs.” “Net Annual Return” shows what effect the
“Annual Costs” will have on the assumed 5% annual return for each
year.
Your
actual costs may be higher or lower than those shown.
36 | J.P.
Morgan Exchange-Traded Funds
|
JPMorgan
Market Expansion Enhanced Equity ETF | ||||
|
|
Class
ETF Shares | |||
|
Period
Ended |
Annual
Costs |
Gross
Cumulative
Return |
Net
Cumulative
Return |
Net
Annual
Return |
|
October
31, 2024 |
$25 |
5.00% |
4.76% |
4.76% |
|
October
31, 2025 |
30 |
10.25 |
9.70 |
4.72 |
|
October
31, 2026 |
40 |
15.76 |
14.79 |
4.64 |
|
October
31, 2027 |
42 |
21.55 |
20.12 |
4.64 |
|
October
31, 2028 |
44 |
27.63 |
25.70 |
4.64 |
|
October
31, 2029 |
46 |
34.01 |
31.53 |
4.64 |
|
October
31, 2030 |
48 |
40.71 |
37.63 |
4.64 |
|
October
31, 2031 |
51 |
47.75 |
44.02 |
4.64 |
|
October
31, 2032 |
53 |
55.13 |
50.70 |
4.64 |
|
October
31, 2033 |
56 |
62.89 |
57.69 |
4.64 |
November
1, 2023 | 37
How
to Reach Us
MORE
INFORMATION
For investors who want more
information on the Funds, the following documents are available free upon
request:
ANNUAL
AND SEMI-ANNUAL REPORTS
The Funds’ annual and
semi-annual reports contain more information about each Fund’s investments and
performance. The annual reports also include details about the market conditions
and investment strategies that have a significant effect on each Fund’s
performance.
STATEMENT
OF ADDITIONAL INFORMATION (SAI)
The SAI contains more
detailed information about the Funds and their policies. It is incorporated by
reference into this prospectus. This means, by law, it is considered to be part
of this prospectus.
You can get a free copy of
these documents and other information, or ask us any questions, by calling us at
1-844-457-6383 (844-4JPMETF) or writing to:
J.P.
Morgan Exchange-Traded Funds
277 Park Avenue
New York, NY 10172
277 Park Avenue
New York, NY 10172
If you buy
your Shares through a Financial Intermediary, you should contact that Financial
Intermediary directly for more information. You can also find information online
at www.jpmorganfunds.com.
Reports, a copy of the SAI,
and other information about the Funds are also available on the EDGAR Database
on the Commission’s Internet site at http://www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: [email protected].
Investment Company Act File
No. for the Funds is 811-22903.
©JPMorgan Chase & Co.,
2023. All rights reserved. November 2023.
PR-CONVEQETF-1123