JPMorgan Mid Cap Value Fund - I - J.P. Morgan Asset Management
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This share class currently has a limited offering, and as of April 3, 2017, this fund's Select share class has been renamed to I. Please see the prospectus for more details.

JPMORGAN MID CAP VALUE FUND

Finding value in the middle.

Drawing on the insights of a deeply experienced team, the Mid Cap Value Fund takes a disciplined approach to identifying high-quality, attractively valued mid-cap companies.

Fund Story  

Key Points

Expertise
  • Portfolio management team is led by Jonathan Simon, an experienced value manager with over 36 years of industry experience — all at J.P. Morgan.
Portfolio
  • Seeks to identify high quality companies that appear to be undervalued and have the potential for capital appreciation.
Success
  • Top-quintile performance for the 3- and 5-year periods, and only fund in its category to produce positive returns in 17 out of 19 years.1
EXCESS GROWTH OF $100,000 OVER 10 YEARS

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

1Source: Morningstar as of 3/31/17. Mid-Cap Blend Category. I Shares. Ranked as follows: 1-yr. (341/441), 3-yrs. (61/377), 5-yrs. (33/340) and 10-yrs. (43/219). Past performance does not guarantee future results.

Chart source: Morningstar, J.P. Morgan Asset Management; as of 3/31/17. US OE Mid-Cap Blend category. I 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.

Value investing: Why flexibility matters

February 29, 2016

Value Advantage PM Jonathan Simon explains how market cap flexibility helps him access today's opportunities.

Performance

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Commentary

As of June 30, 2017

Quarter in review
  • The JPMorgan Mid Cap Value Fund (I Class Shares) outperformed its benchmark, the Russell Midcap Value Index, for the quarter ended June 30, 2017.
  • Our position in Expedia, Inc. (1.6% portfolio weighting) has been a top contributor as investors are recognizing some of the company’s strong underlying fundamentals. We think that online travel is an area of secular growth as travel spending expands and bookings activity continues to shift online. We’ve long held a position in Expedia since it is the leading player in a duopoly of online travel agencies in the U.S., and management has a great track record of creating value for shareholders.
  • The portfolio benefitted from our position in Ball Corp. (1.5% portfolio weighting). The company finally offered positive news to investors, which provided comfort that management will deliver on prior promises to generate synergies from the recent acquisition with Rexam. We continue to have a favorable view of Ball Corp. given its scale in the industry and the lower cyclicality of its earnings pattern relative to basic materials peers.
  • Stock selection in consumer staples was a performance headwind amidst continued challenges for Kroger Co. (0.8% portfolio weighting). The combination of increased competition and food deflation has weighed on results. Despite negative sentiment, we still think that Kroger is relatively well-positioned as the premier player in grocery.
  • Our position in AutoZone, Inc. (0.8% portfolio weighting) detracted after the company reported its first negative same-store sales results in four years, as both the tax refund delay and impact from a warm winter weighed on results. Investors reacted negatively to these developments, which in our view created an attractive opportunity to add to our position. From our perspective, long-term industry growth remains intact as the big four players in auto parts retailing continue to take share as the industry consolidates. We like the fact that AutoZone is a rational, high-margin, high-return business with barriers to entry in the form of a complex supply chain.
Looking ahead
  • While financials still represent an attractive opportunity set, we’d look to trim if we find more compelling opportunities.
  • Although consumer discretionary remains a large allocation and overweight, the composition of this exposure has shifted away from bricks and mortar retail (we trimmed Tiffany & Co. (1.0% portfolio weighting) and Ralph Lauren Corp. (0.4% portfolio weighting) and towards business models that face less competitive pressures from Amazon, such as AutoZone and Genuine Parts Co. (0.9% portfolio weighting).
  • While it is challenging for us to find the types of companies we like owning in energy and remain underweight, we built our position in Williams Cos., Inc. (1.4% portfolio weighting) given sustained underperformance amidst a weak commodity backdrop.
  • As retail real estate investment trusts continue to underperform, we are finding compelling risk/reward opportunities since we don’t think company-specific fundamentals have deteriorated as much as the multiples have contracted (Federal Realty Investment Trust (0.5% portfolio weighting) and Brixmor Property Group, Inc. (0.6% portfolio weighting).

Fees and Minimums

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Portfolio

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Management

Fund Managers

Documents

Disclaimer

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

Total return assumes reinvestment of income.

The Fund's adviser and/or its affiliates have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses, dividend and interest expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation and extraordinary expenses) exceed 1.24% for A Shares, 1.75% for C Shares, 0.99% for I Shares, 0.75% for L Shares, 1.50% for R2 Shares, 1.25% for R3 Shares, 1.00% for R4 Shares, 0.85% for R5 Shares and 0.75% for R6 Shares of the average daily net assets. The Fund may invest in one or more money market funds advised by the adviser or its affiliates (affiliated money market funds). The Fund's adviser has contractually agreed to waive fees and/or reimburse expenses in an amount sufficient to offset the fees and expenses of the affiliated money market funds incurred by the Fund because of the Fund's investment in such money market funds. This waiver is in effect through 10/31/2017 for A Shares, 10/31/2017 for C Shares, 10/31/2017 for I Shares, 10/31/2017 for L Shares, 10/31/2017 for R2 Shares, 10/31/2017 for R3 Shares, 10/31/2017 for R4 Shares, 10/31/2017 for R5 Shares and 10/31/2017 for R6 Shares, at which time the adviser and/or its affiliates will determine whether to renew or revise it. The difference between net and gross fees includes all applicable fee waivers and expense reimbursements.

The quoted performance of the Fund includes performance of a predecessor fund/share class prior to the Fund's commencement of operations. Please refer to the current prospectus for further information.

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

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

The performance of the Lipper Mid-Cap Value 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.

The performance of the Lipper Multi-Cap Core 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. An individual cannot invest directly in an index.

Total return figures (for the fund and any index quoted) assume payment of fees and reinvestment of dividends (after the highest applicable foreign withholding tax) and distributions. Without fee waivers, fund returns would have been lower. Due to rounding, some values may not total 100%.

©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.Rankings do not take sales loads into account.
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.

Mid-cap funds typically carry more risk than funds investing in well-established "blue-chip" companies and have historically experienced a greater degree of volatility than the average stock.
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.

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.