AVAILABLE FOR PUBLIC CIRCULATION NEW JPMorgan Global Bond Fund December 2015 Asset Management Company of the Year 2014 Fundamental Strategies, Asia + Important information 1. The Fund invests primarily in global investment grade debt securities. The Fund will have limited RMB denominated underlying investments. 2. The Fund is exposed to interest rate risks which may affect the price of bonds, credit, currency, investment grade bond, liquidity and Eurozone sovereign debt crisis risks, and, for currency hedged classes, risks associated with the currency hedged classes and class currency. For RMB hedged class, risks associated with the RMB currency and currency hedged classes risks. RMB is currently not freely convertible and RMB convertibility from offshore RMB (CNH) to onshore RMB (CNY) is a managed currency process subject to foreign exchange control policies of and restrictions imposed by the Chinese government. There can be no assurance that RMB will not be subject to devaluation at some point. The Manager may, under extreme market conditions when there is not sufficient RMB for currency conversion and with the approval of the Trustee, pay redemption monies and/or distributions in USD. 3. Where the income generated by the Fund is insufficient to pay a distribution as the Fund declares, the Manager may at its discretion determine such distributions may be paid from capital including realised and unrealised capital gains. Investors should note that the payment of distributions out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to that original investment. Any payments of distributions by the Fund may result in an immediate decrease in the net asset value per unit. 4. Investors may be subject to substantial losses. 5. Investors should not solely rely on this document to make any investment decision. Global investing - A less volatile choice Monthly distribution classes available (Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3 ) Flexible country and sector allocation to lower volatility while capitalising on rising USD investment opportunities RMB investor friendly SFC-authorised global bond fund with RMB-hedged share classes*! Investors should seek professional advice regarding the suitability of any investment product. + Issued by The Asset, 2014 award, reflecting performance of previous calendar year. * Source: Morningstar and the authorised funds listed on the Securities and Futures Commission (SFC) website as of 30.11.2015. The authorisation from SFC does not imply official recommendation. www.jpmorganam.com.hk
Why we believe the JPMorgan Global Bond Fund is suitable for retail investors in the current market environment? What is the likely market environment in the next 6-12 months? Gradual U.S. Fed tightening and rising Treasury yields to be countered by the European Central Bank (ECB) and Bank of Japan s monetary easing policies Improving U.S. economy, ECB bond buying and demand for yield to benefit global credit sectors Greater macro uncertainty and swings in capital flows present challenges Divergent growth rates and monetary policies to lead to higher currency volatility vs What does the new JPMorgan Global Bond Fund offer? Being globally diversified with active duration management becomes critical as central bank policies diverge The Fund offers a wide universe for dynamic sector and industry selection Turn challenges into opportunities by seeking to maximise total return potential from a range of alpha sources: Country, Sector, Issuer, Duration and Currency Structural appreciation of the USD supports the case for USD hedging Investors should seek professional advice regarding the suitability of any investment products. Benefit from J.P. Morgan s fixed income expertise J.P. Morgan Asset Management s some 200-strong Global Fixed Income, Currency and Commodities (GFICC) team manages around USD415 billion. The team currently manages a wide range of strategies across the global fixed income universe including U.S. bonds, global bonds, high yield bonds, emerging market debt, unconstrained/specialty and global solutions. JPMorgan Global Bond Fund is managed by three highly experienced portfolio managers, Iain Stealey, Linda Raggi and Stephen Chang. They are supported by the expert insights of our fixed income specialists based in local markets across the globe who have an average of 18 years of industry experience. JPMORGAN GLOBAL BOND FUND - FUND MANAGERS IAIN STEALEY LINDA RAGGI STEPHEN CHANG Source: J.P. Morgan Asset Management, as of September 2015. JPMORGAN GLOBAL BOND FUND 2
Why invest in the JPMorgan Global Bond Fund? LOWER VOLATILITY A Lower-volatility Solution for Choppy Market Conditions GLOBALLY DIVERSIFIED INCOME OPPORTUNITIES The JPMorgan Global Bond Fund invests primarily in global debt securities markets. Historically, global bond investing is a diversified fixed income strategy which exhibits lower volatility. The Fund s benchmark Barclays Global Aggregate ex Securitised Index (USD hedged) representing a broad global bond universe covering U.S., Canadian, pan-european and Asia Pacific bonds has demonstrated resilience over various market cycles in the longer term. 10-year volatility of benchmark 2.78% LONGER-TERM RESILIENCE OF GLOBAL BONDS ACROSS MARKET AND INTEREST RATE CYCLES 170 150 130 110 90 70 50 Rising Interest Rates Global financial crisis Eurozone crisis and U.S. downgrade U.S. tapering talk Oil price collapse Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 6% 5 4 3 2 1 0 Barclays Global Aggregate ex Securitised Index (USD hedged) 10yr U.S. Treasury Yield (RHS) Source: J.P. Morgan Asset Management, Bloomberg, Barclays, as of 30.11.2015. Index numbers are rebased to 100 in April 2005. In the face of rising rates in the U.S. and loosening from central banks in the Eurozone and Japan, the Fund s globally diversified holdings that also take into consideration duration will likely help drive alpha for investors. The Fund is dynamically managed to invest in various rates markets with relatively low correlations. This active approach not only helps to identify the best opportunities but also to reduce volatility. GENERALLY LOW CORRELATIONS AMONG INTEREST RATE MARKETS Correlations of 5-year Government Yields USD GBP JPY EUR AUD USD 1 GBP 0.731 1 JPY 0.189 0.249 1 EUR 0.014-0.002-0.215 1 AUD 0.498 0.446 0.057-0.063 1 Source: J.P. Morgan Asset Management, Bloomberg, as of 30.11.2015. Government yield correlations calculated based on monthly data over the past 10 years. JPMORGAN GLOBAL BOND FUND 3
Globally Diversified, Best Ideas Portfolio LOWER VOLATILITY In today s complex and challenging fixed income markets, traditional bond investing may no longer provide such an attractive long-term risk/reward profile. Our solution to this investment challenge is to adopt a more flexible approach; to take advantage of different alpha sources including country, sector, issuer, duration and currency when investing in bonds. GLOBALLY DIVERSIFIED INCOME OPPORTUNITIES By providing access to the best ideas of J.P. Morgan s globally integrated and highly experienced team of fixed income investment specialists, the JPMorgan Global Bond Fund enhances investors bond positioning to help capitalise on our highest conviction fixed income ideas, wherever they exist. COUNTRY BREAKDOWN Others 13.3% Germany 4.0% Canada 4.4% 36.0% United States Spain 4.6% France 5.3% 8.1% Italy 10.1% 14.2% Japan United Kingdom Source: J.P. Morgan Asset Management, as of 30.11.2015. The Fund offers investors access to a wide range of global debt securities issued by international governments, quasi-government organisations, agencies, financial institutions and corporations, with the aim of achieving a return in excess of global bond markets. The Fund s diversified portfolio in terms of country and sector will likely benefit from regular income and the potential for capital growth. SECTOR BREAKDOWN 58.8% Government Average rating A+ RATING BREAKDOWN Agency 1.4% Supranationals 1.6% Mortgage (Non-Call) 3.6% Net Liquidity 6.4% 7.3% High Yield Bonds Source: J.P. Morgan Asset Management, as of 30.11.2015. 20.9% Corporate (Investment Grade) AAA 30.1% AA 11.5% A 25.1% BBB 19.6% 7.3% <BBB With its focus on high-quality issues which usually have a very low default rate, the Fund invests at least 80% of its non-cash assets in investment grade global debt securities. Furthermore, to capture other attractive opportunities in the fixed income space, the Fund will also have some exposure to high yield bonds. Investment Grade Source: J.P. Morgan Asset Management, Moody's, S&P, Fitch, as of 30.11.2015. JPMORGAN GLOBAL BOND FUND 4
USD-hedged Portfolio Maximising Potential Gains on USD Strength While the Fund is globally diversified, in an environment of expected dollar strength, the portfolio is hedged back to the USD with a view to maximising its USD exposure, minimising the potential weakness of other currencies, and potentially lowering overall volatility. U.S. DOLLAR PERFORMANCE Index 130 120 U.S. Dollar Index (DXY) Real Trade Weighted Exchange Rate Index (REER) 110 100 90 80 70 '86 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 Source: Federal Reserve, U.S. Bureau of Economic Analysis, Reuters, FactSet, J.P. Morgan Asset Management Guide to the Markets Asia 4Q 2015. Data reflect most recently available as of 30.09.2015. The Real Trade Weighted Exchange Rate Index is the weighted average of a country s currency relative to a basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country s currency, with other countries within the basket. The Dollar Index is a trade-weighted index calculated using six major world currencies. RMB Investor Friendly LOWER VOLATILITY As China has been gradually liberalising its financial markets and currency, the RMB has been gaining popularity among local investors. The pool of RMB deposits in Hong Kong has grown to a staggering RMB854 billion as of October 2015^. GLOBALLY DIVERSIFIED INCOME OPPORTUNITIES The Fund is the first SFC-authorised global bond fund to offer RMB-hedged share classes* with distributive and accumulative choices giving RMB investors another avenue for investment. In an environment of low or even negative interest rates, the hunt for yield is likely to continue. Investors searching for yield in a global bond fund might consider investing in the Fund. In addition to RMB, the Fund also offers USD, HKD, AUD Hedged, CAD Hedged, NZD Hedged Classes. ^ Source: J.P. Morgan Asset Management, HKMA, as of 30.11.2015. * Source: Morningstar and the authorised funds listed on the Securities and Futures Commission (SFC) website as of 30.11.2015. The authorisation from SFC does not imply official recommendation. HISTORICAL DISTRIBUTIONS Ex-dividend date (d/m/y) Distribution per unit / Annualised yield # USD (mth) Class USD 0.0250 3.07% USD 0.0250 3.08% HKD (mth) Class HKD 0.0250 3.07% HKD 0.0250 3.08% AUD Hedged AUD 0.0418 5.18% AUD 0.0415 5.16% CAD Hedged CAD 0.0271 3.33% CAD 0.0271 3.34% NZD Hedged NZD 0.0482 5.98% NZD 0.0476 5.93% RMB Hedged RMB 0.0574 7.19% RMB 0.0532 6.68% 30.10.2015 30.11.2015 # Refer to important information 3 Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Positive distribution yield does not imply positive return. Annualised yield = [(1+distribution per unit/ex-dividend NAV)^12]-1. The annualised dividend yield is calculated based on the monthly dividend distribution with dividend reinvested, and may be higher or lower than the actual annual dividend yield. JPMORGAN GLOBAL BOND FUND 5
JPMorgan Global Bond Fund fitting into different investor portfolios At the heart of their portfolio, investors would typically need certain investment in high quality bonds with the potential to provide regular income and diversification. By targeting mainly our highest conviction investment grade bonds, the Fund can fit into the portfolios of a wide range of investors, either as a core or a satellite holding, depending on the risk/return profile of each investor. WHO MIGHT CONSIDER INVESTING IN THIS FUND? Investors seeking: Diversified exposure to global investment grade bonds Flexible country and sector allocation to lower volatility An alternative avenue for their RMB assets Investors should seek professional advice regarding the suitability of any investment products. Investors should note that different asset classes have varying risk/return profiles. QUICK FUND FACTS: Investment Objective Benchmark Fund Managers To aim to achieve a return in excess of global bond markets by investing primarily in global investment grade debt securities. Barclays Global Aggregate ex Securitised Index (USD hedged) Iain Stealey / Linda Raggi / Stephen Chang Current Charges Initial: 3.0% of NAV Redemption: 0% Management Fee: 0.8% p.a. Available Classes USD (san) Class AUD Hedged USD CAD Hedged HKD NZD Hedged RMB Hedged (acc) Class RMB Hedged Dealing and Valuation Daily Financial Year End 30 September For more information, please call us or visit our Investment Centre: 7 th Floor, Chater House, 8 Connaught Road Central, Hong Kong 2265 1188 The RMB Hedged is not available in the J.P. Morgan Asset Management Investment Centre. The AUD/CAD/NZD/RMB Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. The information contained in this document does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service. Informational sources are considered reliable but you should conduct your own verification of information contained herein. The (mth) classes aim at monthly distribution, while the (san) class aims at semi-annual distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3 Investment involves risk. Past performance is not indicative of future performance. Please refer to the offering document(s) for details, including risk factors before investing. This document has not been reviewed by the SFC. Issued by JPMorgan Funds (Asia) Limited. If, at any time, you do not wish to receive marketing materials from us, please write to GPO Box 11448, Hong Kong and we will cease to send you marketing materials without charge. MKT150495-D JPMORGAN GLOBAL BOND FUND 6