JPMorgan Equity Income Fund - R5 - J.P. Morgan Asset Management
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JPMorgan Equity Income Fund
(OIERX)
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JPMORGAN EQUITY INCOME FUND

A conservative approach to equities pays dividends.

The Equity Income Fund focuses on high-quality U.S. companies with healthy and sustainable dividends, which seeks to provide lower volatility access to stock market growth.
 

Fund Story   Commentary  

Key Points

Expertise
  • Managed by a strong investment team, leveraging the insights of over 25 U.S. equity research analysts.
Portfolio
  • Invests in high-quality U.S. companies with attractive valuations and healthy dividends.
Success
  • Top-quintile performance vs. peers over the 3-year period and top-decile performance over the 10-year period.1

 

EXCESS GROWTH OF $100,000 over 10 years

Compared to benchmark and category average, in thousands (difference vs. benchmark)



 

Chart source: Morningstar, J.P. Morgan Asset Management; as of 12/31/16. Morningstar Large Value Category. Returns for Select Share class. Other share classes may have higher expenses, which would result in lower returns. Ten-year growth with dividends and capital gains reinvested. There is no direct correlation between a hypothetical investment and the anticipated performance of the Fund. The $0 value for benchmark growth is the baseline for the over and under comparison.

1Source: Morningstar, Large Value Category. Select Shares as of 12/31/16. Ranked: 1-yr. (557/1268), 3-yrs. (152/1088), 5-yrs. (319/934) and 10-yrs. (39/680).

Performance

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Fees and Minimums

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Portfolio

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Management and Commentary

Fund Managers

For more information about this fund, please see the commentary posted below. 
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Commentary

Quarter in review:
  • The JPMorgan Equity Income Fund (Select Class Shares) underperformed its benchmark, the Russell 1000 Value Index, for the quarter ended December 31, 2016.
  • Stock selection in the more cyclical areas of the market, specifically materials and industrials, was the biggest detractor from results in the fourth quarter. Mainly it’s a story about what the Fund didn’t own rather than what it did, so we did not fully participate in the commodity-linked metals and mining rally. Nucor Corp., United States Steel Corp. and Freeport-McMoRan Inc. rallied sharply, yet all fall outside of our typical investment universe. While these undercurrents have posed a short-term challenge for the Fund’s style, we continue to stick to its strategy by investing in high-quality companies with durable franchises, consistent patterns of earnings and strong management teams that are focused on generating shareholder returns.
  • Alternatively, stock selection in information technology most positively impacted results in the quarter, largely attributable to our position in Microsoft Corp. Azure, Microsoft’s cloud computing platform, is doing well as evidenced by some announcements that demand is ramping up with large companies. We continue to believe in management’s proven success at executing Microsoft’s business strategy. We’re also excited about the long-term prospects for the company as it furthers the transition into cloud computing, a major growth area.
Looking ahead:
  • Our approach to investing will not change; we are still looking to own the best stocks with the best dividend yields we can find. Higher interest rates, loosening regulations, return-on-equity expansion and a strong U.S. economy are significant drivers for financials. Given these tailwinds and current valuations, the financials sector remains the largest absolute weight in the portfolio. Alternatively, we feel that valuations are stretched in utilities, consumer staples and real estate investment trusts, so we have limited exposure to these sectors. We are confident in our approach for the long term in buying quality companies at reasonable valuations with better-than-average dividend yields, and see good opportunities in 2017.

Documents

Disclaimer

1Please refer to the prospectus for additional information about cut-off times.

Total return assumes reinvestment of income.

The cap on annual operating expenses is guaranteed in a fee waiver contract with the investment advisor, administrator and distributor. The cap does not extend to acquired fund costs, dividend expenses relating to short sales, interest, taxes, extraordinary expenses and expenses related to the Board of Trustees' deferred compensation plan. The cap may be modified or discontinued after 10/31/2017. "Total reductions" includes all applicable fee waivers and expense reimbursements.

Mutual funds have fees that reduce their performance: indexes do not. You cannot invest directly in an index.

The Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

The performance of the Lipper Equity Income Funds Index includes expenses associated with a mutual fund, such as investment management fees. These expenses are not identical to the expenses charged by the Fund.

Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges, where applicable. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees and/or reimbursement of certain expenses for certain periods since the inception date. If fees had not been waived and/or certain expenses were not reimbursed, performance would have been less favorable.

©2017, American Bankers Association, CUSIP Database provided by the Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. All rights reserved.
The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
The following risks could cause the fund to lose money or perform more poorly than other investments. For more complete risk information, see the prospectus.

The currency for the calculation corresponds to the currency of the country for which the awards are calculated and relies on monthly data. Classification averages are calculated with all eligible share classes for each eligible classification. The calculation periods extend over 36, 60, and 120 months. For a detailed explanation please review the Lipper Leaders methodology document on www.lipperweb.com.
Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user's own risk. This is not an offer to buy or sell securities.

The prices of equity securities are sensitive to a wide range of factors, from economic to company-specific news, and can fluctuate rapidly and unpredictably, causing an investment to decrease in value.

There is no guarantee that companies will declare, continue to pay or increase dividends.
Total return assumes reinvestment of income.

The top 10 holdings listed reflect only the Fund's long-term investments. Short-term investments are excluded. Holdings are subject to change. The holdings listed should not be considered recommendations to purchase or sell a particular security. Each individual security is calculated as a percentage of the aggregate market value of the securities held in the Fund and does not include the use of derivative positions, where applicable.

P/E ratio: the number by which earnings per share is multiplied to estimate a stock's value.

P/B ratio: the relationship between a stock's price and the book value of that stock.

Beta measures a fund's volatility in comparison to the market as a whole. A beta of 1.00 indicates a fund has been exactly as volatile as the market.

Sharpe ratio measures the fund's excess return compared to a risk-free investment. The higher the Sharpe ratio, the better the returns relative to the risk taken.

Tracking Error: The active risk of the portfolio, which determines the annualized standard deviation of the excess returns between the portfolio and the benchmark.

Alpha: The relationship between the performance of the Fund and its beta over a three-year period of time.

Standard deviation/Volatility: A statistical measure of the degree to which the Fund's returns have varied from its historical average. The higher the standard deviation, the wider the range of returns from its average and the greater the historical volatility. The standard deviation is calculated over a 36-month period based on Fund's monthly returns. The standard deviation shown is based on the Fund's Class A Shares or the oldest share class, where Class A Shares are not available.

R2: The percentage of a Fund's movements that result from movements in the index ranging from 0 to 100. A Fund with an R2 of 100 means that 100 percent of the Fund's movement can completely be explained by movements in the Fund's external index benchmark.

EPS: Total earnings divided by the number of shares outstanding.

Risk measures are calculated based upon the Funds' broad-based index as stated in the prospectus.