INVESTMENT INSIGHTS. Valuation, diversification, income and growth International Investing. NOT FDIC INSURED No BANK GUARANTEE MAY LOSE VALUE

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1 INVESTMENT INSIGHTS Valuation, diversification, income and growth International Investing NOT FDIC INSURED No BANK GUARANTEE MAY LOSE VALUE

2 Valuation, diversification, income and growth Today 368 of the world s 500 largest companies are domiciled outside the U.S., 1 with the U.S. economy representing less than 20% of global GDP. Despite the large and growing investment opportunities outside our borders, U.S. investors continue to demonstrate a home country bias. While international markets have become larger, diverse and more complex, J.P. Morgan has a long history of analyzing and investing in them. As early as 1866, J.P. Morgan and predecessor firms have a heritage of intelligent investing in growing economies across the globe. In fact, J.P. Morgan created and launched the first ADR in 1927 for a British retailer. This breadth of global experience and depth of resources allows us to assess the complexities and opportunities that international markets present today. J.P. Morgan s sponsorship of the 1866 Chilean bond issue marks the beginning of our long involvement in international markets. 1 Source: Fortune magazine, July 2013.

3 Broadened horizons Even as market conditions improve, investors significantly underallocate to international equities, which comprise half of the world s equity market capitalization, but constitute less than one-third of equity fund assets held by U.S. investors. Non-U.S. markets offer a number of attractive features. Valuations of international stocks are below their historical averages as well as pre-recession highs despite slowly improving economic fundamentals and stronger corporate balance sheets. International equities can provide increased dividend income and improved diversification. Emerging economies are expected to continue driving global economic growth over the long term. European companies are investing heavily outside Europe and, as a result, are well-positioned to access growth in emerging markets. Investment prospects outside the U.S. continue to improve. As global markets recover from the Great Recession at differing speeds, reacting and sometimes overreacting to headlines and new developments, active managers with a strong research presence in various regions can tune out the dissonance and uncover valuable investment opportunities. U.S. stocks comprise 49% of global equity market cap but 74% of investors portfolios Weights in MSCI All Country World Index by regions Equity fund assets by region (U.S. investors) 49% U.S. 41% International developed markets 11% Emerging markets 74% 21% 5% U.S. International developed markets Emerging markets Source: Standard & Poor s, MSCI, FactSet, J.P. Morgan Asset Management. Totals may not sum to 100% due to rounding. Data as of 3/31/14. Right chart includes active mutual funds, passive mutual funds and ETFs, but excludes Morningstar Sector Stock categories. Pacific/Asia ex-japan Stock category assets split 50% into Non-U.S. Developed and 50% into Emerging Markets. World Stock category assets split 50% into U.S. and 50% into Non-U.S. Developed. Non-U.S. Developed includes Foreign Large Blend, Value, Growth; Foreign Small/Mid Blend, Value, Growth; Japan Stock; Diversified Pacific/Asia; Europe Stock. Emerging Markets includes Diversified Emerging Markets; India Equity; China Region; Latin America Stock. Data as of 3/31/14. For illustrative purposes only. Diversification does not guarantee investment returns and does not eliminate the risk of loss. International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Also, some overseas markets may not be as politically and economically stable as the United States and other nations. Investments in emerging markets could lead to more volatility. As mentioned above, the normal risks of investing in foreign countries are heightened when investing in emerging markets. In addition, the small size of securities markets and the low trading volume may lead to a lack of liquidity, which leads to increased volatility. Also, emerging markets may not provide adequate legal protection for private or foreign investment or private property. Diversification does not guarantee investment returns and does not eliminate the risk of loss. There is no guarantee that companies that can issue dividends will declare, continue to pay or increase dividends. j.p. morgan ASSET MANAGEMENT 1

4 Improving international economies and sideways markets create opportunities Global economies and markets crashed in unison during the 2008 financial crisis. Since then, U.S. equities have surpassed their pre-recession highs driven by strong corporate earnings. In contrast, both developed international stocks (Europe, Australasia and Far East, or EAFE) and emerging market stocks remain below 2007 levels and thus may have more room to grow over the long term as conditions continue to improve. Unlike the S&P 500, non-u.s. markets have not climbed back to pre-recession highs U.S., INTERnATIONAL DEVELOPED AND EMERGING MARKET EQUITY returns since 2007 peaks (10/9/07 3/31/14) S&P 500 3/31/14: MSCI EAFE 3/31/14: MSCI EME 3/31/14: / Source: Standard and Poor s, MSCI. Data as of 3/31/14. For illustrative purposes only. The chart shows the relative performance of U.S., EAFE and emerging markets stocks, including dividends, based on a common start date of October 9, 2007 the pre-recession peak of the U.S. stock market. Initial values for all three market indexes are indexed to international investing valuation, diversification, income and growth

5 Some international valuations are low compared to the U.S. and their historic norms Broadly speaking, international equity valuations fall below their historical averages, as well as those of U.S. equities. As a result, valuations in specific markets, countries and industries may present attractive opportunities as economic conditions improve from the depths of the financial crisis of Spreads on sovereign debt are gradually normalizing and the breakup of the eurozone is no longer likely. While macroeconomic growth is one factor in analyzing equity investments over the long term, purchase price and valuation may play a more significant role in the evaluation of return potential. The valuation of international companies is often dependent on success and growth across multiple geographic regions. J.P. Morgan Asset Management s global network of research analysts and market strategists can provide invaluable insight aimed at uncovering the long-term macroeconomic and company-specific drivers of investment returns in a global economy. International equity valuations are, on aggregate, below historical averages Current valuations versus historic averages 6 5 Standard deviation from global average EM Index Russia China Brazil Thailand Taiwan Korea South Africa Mexico Indonesia India EAFE Index France U.K. Australia Germany Japan Canada Switzerland U.S. Source: MSCI, FactSet, J.P. Morgan Asset Management. Data as of 3/31/14. For illustrative purposes only. How to read a box and whisker chart Expensive relative to own history Cheap relative to own history Current Expensive relative to world Cheap relative to world j.p. morgan ASSET MANAGEMENT 3

6 International equities can improve portfolio diversification and generate income Investing in a stock portfolio concentrated in one country even one as big as the U.S. can lead to a bumpy ride. Because global equity markets don t move in lockstep, diversifying across countries can help lower portfolio volatility while providing access to larger markets and therefore broader opportunities. In this low-rate environment, some countries equity market dividend yields are comparable to or exceed yields on their long-term government bonds. International equities have tended to offer a higher yield than their U.S. counterparts. In France and the U.K., for example, the equity yield has been nearly twice that of U.S. stocks. International equities can offer compelling dividend yields relative to local government bonds Equity dividend yields vs. 10-year government bond yield 10-year government bond yield 4.3% 3.7% 3.1% 2.8% 2.8% 2.4% 1.9% 1.9% U.S. Australia U.K. France Switzerland Canada MSCI ACWI Japan Source: FactSet, MSCI, J.P. Morgan Asset Management. Yields shown are that of the appropriate MSCI index. Data as of 3/31/14. For illustrative purposes only. 4 international investing valuation, diversification, income and growth

7 European companies are positioned for growth While Europe s overall economy has been slow to recover, many individual companies have improved their financial positions. Since 2008, European firms have reduced their debt-to-equity ratios and have increased the amount of cash on their balance sheets. After aggressively deleveraging, they can now choose to re-leverage by borrowing at historically low rates funding future growth initiatives and potentially increasing cash returned to shareholders. European corporations continue to improve their balance sheets MSCI EUROPE: RATIO OF TOTAL DEBT TO TOTAL EQUITY 350% 300% 250% Average: 268% 3/31/14: 184% 200% 150% Source: MSCI, OECD, Morgan Stanley, FactSet, J.P. Morgan Asset Management. Data as of 3/31/14. For illustrative purposes only. Fluctuating Currencies Impact International Returns International investments can involve behind-the-scenes currency exchanges between the currency of the investor and the currency of the investment. A change in the value of either currency will impact returns. For a U.S. investor, if the dollar appreciates (i.e., becomes more valuable) versus the euro, returns from stocks denominated in euros will be lower. Because it now takes fewer dollars to buy the same euro-denominated stock, the stock is therefore worth fewer dollars. But if the dollar weakens (i.e., the euro appreciates versus the dollar), it now takes more dollars to buy the same euro-denominated stock and so its price increases when measured in dollars. Impact of currency fluctuation on investment returns Initial exchange rate ($ per ) Assume 5% local market return ( ) New exchange rate ($ per ) Initial investment Initial value ( ) Dollar depreciation $100 $ $1.35 ($ depreciation) Dollar appreciation $100 $ $1.25 ($ appreciation) Dollars returned Currency impact on return Total return $109 +4% 9% (5% + 4%) $101 4% 1% (5% 4%) Source: J.P. Morgan Asset Management. For illustrative purposes only. j.p. morgan ASSET MANAGEMENT 5

8 Despite recent volatility, urbanization and demographics will continue to drive emerging market growth In emerging markets, urbanization is driving economic growth, and is likely to continue to do so. As individuals move to cities, demand for infrastructure roads, apartments, offices and public transportation can dramatically increase. The higher productivity of urban workers relative to agricultural workers allows city dwellers to produce more goods and therefore to generate higher wages. In turn, these higher wages increase the demand for entertainment and consumer goods, such as electronics and clothing. The impact of these changes is amplified in those markets with younger populations and therefore proportionally more people of working age. Economic growth, continued development and increased consumer spending, in turn, require more energy, more raw materials, an expansion of the banking sector and rapid changes in technology. This virtuous circle of economic growth presents opportunities for companies exposed to emerging markets, regardless of where they are domiciled. Emerging market urbanization is in its infancy Urbanization ratios and GDP per capita ( ) $60,000 U.S. Japan $50,000 $40,000 $30,000 Emerging markets, with a population of about 6 billion people [about 85% of the world s population], are still in the earliest stages of urbanization. South Korea $20,000 $10,000 India China $0 15% 35% 55% 75% 95% Source: FactSet, United Nations, J.P. Morgan Global Economics Research, J.P. Morgan Asset Management. Data as of 3/31/14. For illustrative purposes only. 6 international investing valuation, diversification, income and growth

9 Emerging markets, continued growth Though most developed international markets have put the Great Recession behind them, they still face low economic growth. In contrast, the International Monetary Fund still expects that more than half of global growth over the next four years will come from emerging markets. Emerging market economies are expected to continue growing Emerging market country real GDP growth, Year-over-year change 10% Historical JPM Securities Inc. forecast 8% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 6% 4% 2% 0-2% -4% Emerging Markets China India Korea South Africa Brazil Russia Mexico Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management. Forecast and aggregate data come from J.P. Morgan Global Economic Research. Historical growth data collected from FactSet Economics. Data as of 3/31/14. For illustrative purposes only. j.p. morgan ASSET MANAGEMENT 7

10 European headquarters, global opportunity To accurately measure the potential of non-u.s. equities, it is critical to evaluate not just the economic and growth prospects for the international markets where these companies are domiciled, but also the markets where they do business. Many firms with headquarters in Europe are now generating significant revenue from outside the continent. On average, European companies now pull in about one-third of their revenue from emerging markets. For many firms, that ratio is much higher. Skilled active equity managers leveraging global research capabilities can identify firms that successfully access these areas of expansion. On average, European firms generate roughly a third of revenue from emerging markets MSCI EUROPE: GEOGRAPHICAL SOURCES OF REVENUE 46% Developed Europe 18% North America 33% Emerging Markets 3% Other Source: MSCI. Data as of 3/31/14. For illustrative purposes only. J.P. Morgan s diverse range of international funds Fund Approach International Equity Core with growth tilt International Value Total Emerging Markets 1 Intrepid European Style-pure Multi-asset Dynamic Approximate holdings Emerging Markets Equity Long-term with quality bias Market capitalization Large cap Large cap Mid cap bias Multi cap Large cap Investment style Core/blend Opportunistic value Core Value/quality/ momentum Quality/growth Typical active share range % 60 80% N/A 60 80% 65 85% For illustrative purposes only. 1 The JPMorgan Total Emerging Market Fund holds a blend of debt and equity securities, as well as currencies. Approximate holdings represent only the equity portion of the Fund. 2 Active share is a measure of the degree of active management within a fund. It measures the percentage of holdings that differ from the benchmark index. For example, the composition of a fund with an active share of 10% will more closely resemble the composition of its index than will a fund with an active share of 50%. It is calculated by taking the sum of the absolute value of the differences of the weight of each holding in the manager s portfolio versus the weight of each holding in the benchmark index and dividing by two. 8 international investing valuation, diversification, income and growth

11 Why J.P. Morgan: Research and experience drive investing success in International markets 1 J.P. Morgan s disciplined investment process, together with its global network of investment experts, is well suited to identify opportunities across disparate but often interconnected international equity markets. Deep experience Globally, our 800 investment professionals average over 16 years of industry experience with more than 10 years of tenure at J.P. Morgan. They make about 10,000 company visits each year. Strong global and local presence Deeply resourced global research with $150 million annual budget. 95 portfolio managers and 82 analysts located in Europe. 87 portfolio managers and 48 analysts based in Asia. Today we manage $192 billion 2 in non-u.s. stocks, roughly half of our total equity assets under management. A track record of success J.P. Morgan International Value Fund was ranked #1 in the International Large Cap Value space by Lipper (2014). Our European analysts were ranked #1 in 19 out of 32 sectors by Thomson Reuters (2013). J.P. Morgan awarded Asset Manager of the Year by AsianInvestor (2013). 1 As of 12/31/13. 2 As of 3/31/14.

12 NEXT STEPS } International equities represent a large and growing opportunity for U.S. investors. For more information, consult your financial professional to discuss the role they can play in your portfolio. JPMorgan International Equity Fund: Offers core international exposure by focusing on proprietary research at the local and global sector levels. JPMorgan International Value Fund: Applies a value-oriented strategy to find stocks of established companies in developed markets. JPMorgan Total Emerging Markets Fund: Employs strategic and tactical asset selection and allocation processes to actively invest in equity and debt instruments. JPMorgan Intrepid European Fund: Invests primarily in equities securities issued by companies with principal business activities in Western Europe. JPMorgan Emerging Markets Equity Fund: Seeks to provide high total return by leveraging an emerging market analyst network to help determine a stock s long-term potential. To learn more about J.P. Morgan Funds, please call or visit jpmorganfunds.com. Contact JPMorgan Distribution Services, Inc. at for a fund prospectus. You can also visit us at Investors should carefully consider the investment objectives and risks as well as charges and expenses of the mutual fund before investing. The prospectus contains this and other information about the mutual fund. Read the prospectus carefully before investing. Past performance is not indicative of future results. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable. These views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. J.P. Morgan Funds are distributed by JPMorgan Distribution Services, Inc., which is an affiliate of JPMorgan Chase & Co. Affiliates of JPMorgan Chase & Co. receive fees for providing various services to the funds. JPMorgan Distribution Services, Inc., member FINRA/SIPC. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. 270 Park Avenue, New York, NY JPMorgan Chase & Co. II-INTL-Investing NOT FDIC INSURED No BANK GUARANTEE MAY LOSE VALUE

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