JPMorgan Equity Income Fund - R6 - J.P. Morgan Asset Management

As of April 3, 2017, this fund's Select share class has been renamed to I. Please see the prospectus for more details.


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.

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Key Points

  • Portfolio management team led by experienced equity income manager Clare Hart.
  • Invests in high-quality U.S. companies with attractive valuations and healthy dividends.
  • Top-quintile performance vs. peers over the 3-yr. period and top-decile performance over the 10-yr. period.1


EXCESS GROWTH OF $100,000 over 10 years


Chart source: Morningstar, J.P. Morgan Asset Management; as of 6/30/17. Morningstar Large Value Category. Returns for 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.

1Source: Morningstar, Large Value Category. I Shares as of 6/30/17. Ranked: 1-yr. (870/1251), 3-yrs. (167/1091), 5-yrs. (294/936) and 10-yrs. (33/681).


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As of June 30, 2017

Quarter in review
  • The JPMorgan Equity Income Fund (I Class Shares) outperformed the benchmark, the Russell 1000 Value Index, for the quarter ended June 30, 2017.
  • The portfolio benefited from our position in Illinois Tool Works, Inc. (1.5% portfolio weighting). The company reported strong quarterly results as management continued to improve operating profit margins. Additionally, Illinois Tool Works continued to deliver revenue growth ahead of global industrial production. Given the combination of good long-term growth prospects, internal operational performance improvement and the benefits of potential capital reallocation, we maintain a positive view of the company.
  • Stock selection in industrials has been a bright spot largely due to our position in Honeywell International, Inc. (1.5% portfolio weighting). Third Point Partners’ activist involvement, calling for Honeywell to spin off its aerospace division, has acted as a catalyst to drive the share price higher. Importantly, from a fundamental perspective, management is executing well, as evidenced by strong quarterly earnings results. We are encouraged that management clearly remains committed to margin expansion, earnings growth and increasing capital returns.
  • On an absolute basis, ConocoPhillips (1.9% portfolio weighting) was a top detractor. We continue to have a favorable view of the company, given its strong asset portfolio. Management is doing the right things to strengthen the balance sheet, appropriately focused on generating cash and return on capital. Most recently, ConocoPhillips announced the sale of Barnett shale assets, consistent with their plans to divest non-core assets, which should lead to improved margins and capital efficiency.
  • Another energy name, Occidental Petroleum Corp. (2.0% portfolio weighting) also detracted, given the magnitude of the sector’s selloff. However, we continue to be optimistic about the company and used the volatility to add to our position based on the relative valuation and potential growth opportunities.
Looking ahead
  • While valuations are not as compelling as they were a year ago, we still see the best opportunity set in financials given the potential for a steepening yield curve, decreased regulatory pressures and corporate tax reform. We own a diverse set of regional banks, asset managers and insurance companies.
  • Within energy, we’ve continued to trim Exxon Mobil Corp. (1.7% portfolio weighting) in favor of Occidental Petroleum and Chevron Corp. (2.6% portfolio weighting) given our perception of better risk/reward.
  • Taking advantage of shifting consumer preferences, we trimmed our retailers, VF Corp. (0.3% portfolio weighting) and L Brands, Inc. (0.6% portfolio weighting), and initiated a position in McDonald’s Corp. (0.4% portfolio weighting).
  • Within industrials, we’ve taken profits from our top performing names – Honeywell and Illinois Tool Works, using the proceeds to initiate a position in General Electric Co. (0.7% portfolio weighting); the combination of relative underperformance and a streamlined corporate strategy has created an attractive entry point.

Fees and Minimums

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Fund Managers



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 1.04% for A Shares, 1.54% for C Shares, 0.79% for I Shares, 1.29% for R2 Shares, 1.04% for R3 Shares, 0.79% for R4 Shares, 0.59% for R5 Shares and 0.54% 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 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.

Currently, the yield is unaffected by a fee waiver.

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 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.

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
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.