What is the goal of the Fund?
The Fund seeks total return.
Fees and Expenses of the Fund
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Acquired Fund Fees and Expenses are expenses incurred indirectly by the Fund through
its ownership of shares in other investment companies, including affiliated money market funds, other mutual funds, exchange-traded funds and business development companies. The impact of Acquired Fund Fees and Expenses is included in the total
returns of the Fund. Acquired Fund Fees and Expenses are not direct costs of the Fund, are not used to calculate the Funds net asset value per share and are not included in the calculation of the ratio of expenses to average net assets shown
in the Financial Highlights section of the Funds prospectus.
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ANNUAL FUND OPERATING
EXPENSES
1
(Expenses that you pay each year as a percentage of the value
of your investment)
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Class R6
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Management Fees
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0.85
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%
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Distribution (Rule
12b-1)
Fees
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NONE
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Other Expenses
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1.01
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Shareholder Service Fees
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NONE
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Remainder of Other Expenses
2
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1.01
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Acquired Fund Fees and Expenses
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0.03
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Total Annual Fund Operating Expenses
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1.89
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Fee Waivers and Expense Reimbursements
3,4
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(1.01
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)
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Total Annual Fund Operating Expenses After Fee Waivers and Expense Reimbursements
1
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0.88
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1
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Includes the operating expenses of JPM Commodities Strategy Fund, Ltd., the Funds wholly-owned subsidiary.
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2
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Includes the advisory fee paid by the subsidiary to its adviser and other expenses of the subsidiary (excluding Acquired Fund Fees and Expenses).
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3
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The Funds adviser has agreed to waive the advisory fee that it receives from the Fund in an amount equal to the advisory fee paid by the subsidiary to its adviser.
This waiver will continue in effect so long as the Fund invests in the subsidiary and may not be terminated without approval by the Funds Board.
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4
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The Funds adviser, administrator and distributor (the Service Providers) have contractually agreed to waive fees and/or reimburse expenses to the extent total annual
fund operating expenses of the Fund, inclusive of the subsidiary (excluding Acquired Fund Fees and Expenses, dividend expenses relating to short sales, interest, taxes, expenses related to litigation and potential litigation, extraordinary expenses
and expenses related to the Board of Trustees deferred compensation plan) exceed 0.85% of the average daily net assets of Class R6 Shares. This contract cannot be terminated prior to 3/1/15 at which time the Service Providers will determine
whether or not to renew or revise it.
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Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods
indicated. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses are equal to the total annual fund operating expenses after fee waivers and expense reimbursements shown in the fee table
through 2/28/15 and total annual fund operating expenses thereafter. Your actual costs may be higher or lower.
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WHETHER YOU SELL YOUR SHARES, YOUR COST
WOULD BE:
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1 Year
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3 Years
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5 Years
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10 Years
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CLASS R6 SHARES ($)
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90
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496
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927
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2,129
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Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and
may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, or in the Example, affect the Funds performance. During the Funds most recent fiscal
period (December 17, 2012 through October 31, 2013), the Funds portfolio turnover rate was 0% of the average value of its portfolio.
1
What are the Funds main investment strategies?
The Fund seeks to achieve its objective by investing in a diversified portfolio of commodity-linked derivatives. The Fund will also invest in fixed income
securities.
Commodity Investments
The Fund invests in commodity-linked derivative instruments, such as commodity-linked notes, swap agreements, commodity options, futures and options on
futures that provide exposure to the investment returns of the commodities markets without investing directly in physical commodities. Commodities are assets that have tangible properties, such as oil, metals, and agricultural products. Derivatives
are instruments that have a value based on another instrument, exchange rate or index and will generally be used as substitutes for commodities.
The Fund will gain exposure to commodity markets by investing up to 25% of its total assets in the JPM Commodities Strategy Fund Ltd., a wholly owned
subsidiary of the Fund organized under the laws of the Cayman Islands (the Subsidiary). The Subsidiary is also advised by J.P. Morgan Investment Management Inc. (JPMIM or Adviser) and has the same investment objective as the Fund. The Subsidiary
(unlike the Fund) may invest without limitation in commodity futures contracts, commodity-linked swap agreements and other commodity-linked derivative instruments, including derivative instruments linked to the value of a particular commodity,
commodity index or commodity futures contract, or a subset of commodities or commodity futures contracts. However, the Subsidiary is otherwise subject to the same fundamental,
non-fundamental
and certain other
investment restrictions as the Fund.
The Fund intends to provide long exposure to the commodities markets. In addition, the Subsidiary may
use short positions in commodities to reduce exposure to the commodities market. Although, the long and short positions held by the Subsidiary will vary in size as market opportunities change, the Fund intends to maintain a net exposure to the
commodities market within a range of 70% to 130% of the value of the Funds net assets. The Subsidiary may use derivatives to obtain long or short exposure in an attempt to increase the Subsidiarys income or gain, to hedge various
investments and for risk management. In rising markets, the Fund expects that the value of the long positions will appreciate more rapidly than the short positions, and in declining markets, that the value of the short positions will appreciate more
rapidly than the long positions.
The Funds or the Subsidiarys investments in commodity-linked derivative instruments may deviate from
the returns of any particular commodity index. The Fund or the Subsidiary may also overweight or underweight its exposure to a subset of commodities, such that the Fund has greater or lesser exposure
to a subset of commodities than is represented by a particular commodity index.
Fixed
Income Investments
Assets not invested in commodity-linked derivatives, currency-linked derivatives or the Subsidiary will be invested in
high quality, short-term fixed income securities. The fixed income portion of the Fund is intended to provide liquidity and preserve capital. The Funds fixed income securities may include: obligations of the U.S. Treasury, including Treasury
bills, bonds and notes and other obligations issued or guaranteed by the U.S. Treasury; Treasury Inflation Protected Securities (TIPS); securities issued or guaranteed by the U.S. government, its agencies or instrumentalities; high quality
commercial paper and other short-term debt securities, including floating and variable rate demand notes, of U.S. and foreign corporations; debt securities issued or guaranteed by U.S., foreign, and supranational banks, including certificates of
deposit, time deposits and other short-term securities; repurchase agreements fully collateralized by U.S. Treasury and U.S. government securities; and corporate debt obligations. The Fund generally will only buy securities that have remaining
maturities of 397 days or less. The dollar-weighted average maturity of the Funds fixed income investments will generally be 90 days or less. The Fund may also invest in affiliated money market funds.
The Subsidiary will also invest in fixed income securities, either as investments or to serve as margin or collateral for its derivative positions.
Investment Process:
JPMIM uses a global
quarterly and weekly investment process that applies fundamental, quantitative, and technical analysis to develop investment themes in each commodity market. The process includes a global team of investors across markets and sectors. JPMIM utilizes
the output of the global investment process to position the Funds exposure to the broader commodities market. JPMIM uses sector investment specialists to perform fundamental and quantitative analysis on each commodity and utilizes their inputs
in its decision to over/underweight individual commodity holdings relative to the Funds benchmark. JPMIM seeks to enhance returns by using its analysis of each commodity to decide the time to delivery of each holding.
Fixed Income Investments Process
JPMIM seeks
to develop an appropriate fixed income portfolio and buys and sells securities by considering the differences in yields among securities of different maturities, market sectors and issuers.
The frequency with which the Fund buys and sells securities will vary from year to year, depending on market conditions.
The Fund is
non-diversified.
2
The Funds Main Investment Risks
The Fund is subject to management risk and may not achieve its objective if the advisers expectations regarding particular securities 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.
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.
Commodity Risk.
Because the Fund will have a significant portion of its assets concentrated in commodity-linked securities,
developments affecting commodities will have a disproportionate impact on the Fund. The Funds investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investments in traditional securities,
particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular
industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased
return but, at the same time, creates the possibility for greater loss (including the likelihood of greater volatility of the Funds net asset value), and there can be no assurance that the Funds use of leverage will be successful.
CFTC Regulation Risk.
The Fund is subject to regulation by the Commodity Futures Trading Commission (CFTC) as a commodity pool
and the Adviser is subject to regulation as a commodity pool operator with respect to the Fund. As a result, the Fund is subject to various CFTC requirements, including certain registration, disclosure and operational requirements.
Compliance with these requirements may increase Fund expenses.
Derivatives Risk.
Derivatives, including commodity-linked notes, swap
agreements, commodity options, futures and options on futures, 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 the Funds original investment. Many derivatives create leverage thereby causing the Fund to
be more volatile than it would be if it had not used derivatives. Derivatives also expose the Fund to counterparty risk (the risk that the derivative counterparty will not fulfill its contractual obligations) and to the credit risk of the derivative
counterparty. Certain derivatives are synthetic instruments that attempt to replicate the performance of certain reference assets. With regard to such derivatives, the Fund does not have a claim on the reference assets and is subject to enhanced
counterparty risk.
Swap Agreement Risk.
In addition to the risks associated with derivatives in general, the Fund will also be subject to
risks related to swap agreements. The Subsidiary may use swaps to establish both long and short positions in order to gain the desired exposure. The Funds losses are potentially unlimited in short sale positions. Short sales are speculative
transactions and involve special risks, including greater reliance on the Advisers ability to accurately anticipate the future value of an instrument. Because swap agreements are not exchange-traded, but are private contracts into which the
Fund and a swap counterparty enter as principals, the Fund may experience a loss or delay in recovering assets if the counterparty defaults on its obligations. The Fund will segregate or earmark liquid assets at its custodian bank in an amount
sufficient to cover its obligations under swap agreements.
Counterparty Risk.
Commodity-linked derivatives, repurchase agreements, swap
agreements and other forms of financial instruments that involve counterparties subject the Fund to the risk that the counterparty could default on its obligations under the agreement, either through the counterpartys bankruptcy or failure to
perform its obligations. In the event of default, the Fund could experience lengthy delays in recovering some or all of its assets or no recovery at all.
Interest Rate Risk.
The Funds investments in bonds and other debt securities will change in value based on changes in interest rates. If rates increase, the value of the Funds investments
generally declines. On the other hand, if rates fall, the value of the investments generally increases. Your investment will decline in value if the value of the investments decreases. Securities with greater interest rate sensitivity and longer
maturities tend to produce higher yields, but are subject to greater fluctuations in value. Usually, the changes in the value of fixed income securities will not affect cash income generated, but may affect the value of your investment. Given the
historically low interest rate environment, risks associated with rising rates are heightened.
3
Government Securities Risk.
The Fund invests in securities issued or guaranteed by the U.S. government
or its agencies and instrumentalities (such as securities issued by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), or the Federal Home Loan Mortgage Corporation (Freddie Mac)). U.S.
government securities are subject to market risk, interest rate risk and credit risk. Securities, such as those issued or guaranteed by Ginnie Mae or the U.S. Treasury, that are backed by the full faith and credit of the United States are guaranteed
only as to the timely payment of interest and principal when held to maturity and the market prices for such securities will fluctuate. Notwithstanding that these securities are backed by the full faith and credit of the United States, circumstances
could arise that would prevent the payment of interest or principal. This would result in losses to the Fund. Securities issued or guaranteed by U.S. government related organizations, such as Fannie Mae and Freddie Mac, are not backed by the full
faith and credit of the U.S. government and no assurance can be given that the U.S. government will provide financial support. Therefore, U.S. government related organizations may not have the funds to meet their payment obligations in the future.
Tax Risk.
The Fund gains exposure to the commodities markets through investments in commodity-linked derivative instruments, including
commodity index-linked notes, swap agreements, commodity options, futures, and options on futures. The Fund intends to gain exposure indirectly to commodity markets by investing in its Subsidiary, which invests primarily in commodity-linked
derivative instruments. In order for the Fund to qualify as a regulated investment company under Subchapter M of Internal Revenue Code, as amended (the Code), the Fund must derive at least 90 percent of its gross income each taxable year from
certain qualifying sources of income. The Funds intention to qualify as a regulated investment company may limit its ability to make certain investments including, without limitation, investments in certain commodity-linked derivatives. The
IRS has issued a revenue ruling which holds that income derived from certain commodity-linked swaps is not qualifying income under Subchapter M of the Code. The IRS has issued private letter rulings to other taxpayers in which the IRS concluded that
income from certain commodity-linked notes is qualifying income and that income derived from a wholly-owned subsidiary will also constitute qualifying income. While the Fund might apply for its own private letter ruling from the IRS confirming that
income from the Funds investment in certain commodity-linked notes and income from the Funds investment in the Subsidiary will constitute qualifying income, there can be no assurance that the IRS will issue the ruling to the Fund or that
the IRS will not change its position that income derived from commodity-linked notes and wholly-owned subsidiaries is qualifying income. The IRS currently has suspended issuing these types of private letter rulings pending
further internal review. The tax treatment of commodity-linked notes, other commodity-linked derivatives and the Funds investments in the Subsidiary may be adversely affected by future
legislation, Treasury regulations and/or guidance issued by the IRS that could affect whether income from such investments is qualifying income under Subchapter M of the Code, or otherwise alter the character, timing and/or amount of the Funds
taxable income or any gains and distributions made by the Fund. The Funds investment in the Subsidiary and its use of commodity-linked notes involve specific risks. See
Subsidiary Risk
for further information regarding the
Subsidiary, including the risks associated with investing in the Subsidiary. See
Commodity Risk
and
Derivatives Risk
for further information regarding commodity-linked notes, including the risks associated with
these instruments.
Subsidiary Risk.
By investing in the Subsidiary, the Fund is indirectly exposed to the risks associated with the
Subsidiarys investments. The derivatives and other investments held by the Subsidiary are generally similar to those that are permitted to be held by the Fund and are subject to the same risks that apply to similar investments if held directly
by the Fund. These risks are described elsewhere in this prospectus. There can be no assurance that the investment objective of the Subsidiary will be achieved. The Subsidiary is not registered under the Investment Company Act of 1940 (1940 Act),
and is not subject to all the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and
could adversely affect the Fund.
Non-Diversified
Fund Risk.
Since the Fund is
non-diversified,
it may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. This increased investment in fewer issuers may result in the Funds
shares being more sensitive to economic results of those issuing the securities.
Investment Company Risk.
The Fund may invest in shares of
other investment companies. Shareholders bear both their proportionate share of the Funds expenses and similar expenses of the underlying investment company when the Fund invests in shares of another investment company.
Redemption Risk.
The Fund could experience a loss when selling portfolio holdings to meet redemption requests by shareholders. The risk of
loss increases if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining
prices.
4
Investments in the Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank and are
not insured or guaranteed by the FDIC, the Federal Reserve Board or any other government agency.
You could lose money investing in the Fund.
The Funds Past Performance
This section
provides some indication of the risks of investing in the Fund. The bar chart shows how the performance of the Funds Class R6 Shares has varied from year to year for the past calendar year. The table shows the average annual total returns over
the past year and the life of the Fund. It compares that performance to the Dow Jones-UBS Commodity Index Total Return and Lipper Commodities General Funds Average, an index based on the total return of certain mutual funds within the Funds
designated category as determined by Lipper. Unlike the other index, the Lipper index includes the expenses of the mutual funds included in the index. Past performance (before an dafter taxes) is not necessarily an indication of how the Fund will
perform in the future.
Updated performance information is available by visiting www.jpmorganfunds.com or by calling 1-800-480-4111.
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Best Quarter
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3rd quarter, 2013
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1.82%
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Worst Quarter
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2nd quarter, 2013
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9.58%
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AVERAGE ANNUAL TOTAL RETURNS
(For periods ended December 31, 2013)
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Past
1 Year
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Life of
Fund
(Since
12/17/12)
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CLASS R6 SHARES
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Return Before Taxes
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(11.04
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)%
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(11.57
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)%
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Return After Taxes on Distributions
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(11.04
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)
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(11.58
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)
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Return After Taxes on Distributions and Sale of Fund Shares
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(6.25
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)
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(8.82
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)
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Dow Jones-UBS Commodity Index Total Return
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(Reflects No Deduction for Fees, Expenses or Taxes)
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(9.52
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)
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(9.52
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)
1
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Lipper Commodities General Funds Average
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(Reflects No Deduction for Taxes)
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(8.23
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)
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(8.42
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)
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1
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The Fund commenced operations on 12/17/12. Performance for the benchmark is from 12/31/12.
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After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the
investors tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.
Management
Investment Adviser
J.P. Morgan Investment Management Inc.
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Portfolio
Manager
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Managed
Fund
Since
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Primary Title with
Investment Adviser
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Robert Michele
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2012
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Managing Director
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Peter E. Kocubinski
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2012
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Executive Director
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Christopher Tufts
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2012
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Managing Director
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Purchase and Sale of Fund Shares
Purchase minimums
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For Class R6 Shares
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To establish an account
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$15,000,000 for Direct Investors
$5,000,000 for Discretionary
Accounts
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To add to an account
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No minimum levels
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There is no investment minimum for other Class R6 eligible investors.
5
In general, you may purchase or redeem shares on any business day:
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|
Through your Financial Intermediary or the eligibility retirement plan or college savings plan through which you invest in the Fund
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By writing to J.P. Morgan Funds Services, P.O. Box 8528, Boston, MA 02266-8528
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After you open an account, by calling J.P. Morgan Funds Services at
1-800-480-4111
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Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains, except when your investment is in a 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 account investment plan.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the
financial intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker dealer or financial intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediarys website for more information.
SPRO-CSTRAT-R6-214
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