J.P. Morgan Asset Management
JPMorgan European Investment Trust (Income)
15th May 2014
Alexander Fitzalan Howard, Portfolio Manager, European Equity
Group
The value of investments and the income from them is not guaranteed and you may not get back the full amount invested.
Past performance is not a guarantee of future performance.
Fund overview: JPMorgan European Investment Trust – Income
Shares
Management team
Trust highlights
Michael
Alexander
Stephen MacklowBarakos
Fitzalan Howard
Smith
CIO & Portfolio
Portfolio Manager
Portfolio Manager
Manager

Part of a team of 44 European equity investment professionals

Objective: growing income together with long term
capital growth

Conversion between share classes (income & growth):
– 15th March
– 15th September

Yield*: 3.8%

Dividend payments:
– April & October

Discount: Current 5.0%

Gearing:
– Range: 90-120%
– Actual: 111%

Ongoing charges apply**
Portfolio Characteristics

Benchmark:

Fund size

Current number of holdings:

Typical tracking error:
MSCI Europe ex UK
£96.2m
197
4% p.a.
There is no guarantee that the above targets will be achieved. Yield, gearing and discount as at 7 May 2014, all other fund data as at 31 March 2014. * Yield is Trust Income share
class yield (net). ** For further information, including information on Trust fees and charges please visit our website at www.jpmeuropean.co.uk. J.P. Morgan Asset Management
Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.
2
Why should high yielding stocks be considered?
Decomposition of nominal equity returns, 1970 – 2013
Dividend Yield
Performance of high yield versus the market since 1988
Return
20%
Dividend growth
100%
High Yield
80%
Market
15%
60%
10%
40%
20%
5%
0%
Dividend Yield
UK
4.2
Dividend growth 6.9
Change of
0.1
Valuation
Total return (p.a.) 11.4
US
3.1
France
3.5
Germany
2.8
Japan
1.6
5.4
6.4
5.0
2.8
1.3
0.0
0.1
1.8
10.1
10.1
8.0
6.3
0%
-5%
Global
Source: Société Générale Cross Asset Research team. The chart shows what
percentage of nominal returns, in the broad country market, come from the change in
valuation, dividend growth and dividend yield, as at December 2013. Yields are not
guaranteed and may fluctuate. Past performance is not a guide to the future.
US
Europe ex
UK
UK
Japan
Asia ex
Japan
Source: Société Générale Cross Asset Management. High yield is defined as the
highest yielding 20% of the market. Market is based on FT World Universe, as at
December 2013. Yields are not guaranteed and may fluctuate. Past performance is not
a guide to the future. The value of investments and the income from them is not
guaranteed and you may not get back the full amount invested.
… dividend yields drive equity returns
3
Returns to a Dividend strategy
Compound return for dividend yield
stocks*
Returns % p.a.
Highest
Lowest
Quintiles
… excess returns from dividend investing
Source: J.P. Morgan Asset Management; figures are for pan-Europe. Universe is the Citigroup Broad Market Index Europe. Data from January 1990 to December 2013. Calculations
are based on 12 month returns. *Returns based on dividend yield ratio. Past performance is not a guide to the future.
4
European equity valuations are compelling
Current yields versus 10 year average
Yields across asset classes (%)
Europe
Equity
Gov
Bonds
Yields across equities (%)
Money
markets
Source: Bloomberg, Thomson Reuters Datastream. Left hand chart shows yields across asset classes. Right hand chart shows yields for MSCI indices in each region, as at 31 March
2014. Past performance is not a guide to the future. Yields are not guaranteed and may fluctuate.
5
European equities are attractively valued and high yielding stocks
trade at a discount to the broad market
Cyclically adjusted dividend yield (Shiller)
European equities – median price to earnings
4.5%
P/E ratio (X)
4.0%
Shiller D/Y Europe
Average
+ 2 STDEV
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
- 2 STDEV
0.5%
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Source: Deutsche Bank AG/London, IBES. Information based on the median forward price
to earnings. High Dividend Yield is defined as stocks yielding more than 4%. As at 31
March 2014.
Source: UBS, Data as at 7 April 2014. Grey lines represent average. Dotted line
represents +/- 2 standard deviations from time series average.
6
Dividends have historically been less volatile than earnings
Historic EPS and DPS movements for MSCI Europe ex financials since 1973
EPS: -9%
DPS: -8%
EPS: -45%
DPS: -7%
EPS: -34%
DPS: -3%
EPS: -42%
DPS: -9%
EPS: -42%
DPS: -12%
EPS: -39%
DPS: -11%
… dividends have historically fallen just 9% on average in recessions vs. earnings down 41%
Source: Morgan Stanley. Data as at 31 December 2013. DPS = dividend per share, EPS = earnings per share. Past performance is not a guide to the future.
7
Dividends are supported by corporate financial strength
European net debt/equity
% of companies with net cash on their balance sheet
Source: UBS, Based on UBS European Universe ex-Financials. Data as at 31 March
2014. Past performance is not a guide to the future. There is no guarantee that
forecasts will come to pass.
Source: MSCI, Worldscope, IBES, Morgan Stanley Research. Data ex-Financials. Data
as at 31 March 2014. Past performance is not a guide to the future.
8
Disciplined approach to dividend investing
Stock universe (1200 stocks)

Don’t like it, don’t own it

All stocks given equally weighted positive
active positions

Large number of stocks

Industry positions max. +10% vs. benchmark

Monthly program trades
Identify highest yielding stocks
Confirm sustainability of
yield and momentum
characteristics
Dividend Fund
… selecting high yielding stocks that are fundamentally sound
9
Identifying yield opportunities and avoiding yield traps
16%
Banco Santander – Dividend yield
8.3%
14%
STOCK NOT HELD – we have concerns
over sustainability of dividend
Dividend yield
12%
10%

Daimler – Dividend yield 3.7%
STOCK HELD – Attractive dividend yield,
which we view as safe and sustainable
8%
6%
Amadeus – Dividend yield 2.0%
4%
Potential
holdings
2%
0%
0%
10%
20%
30%
40%
Insufficient
yield
50%
60%
70%
STOCK NOT HELD – the dividend yield
is not sufficient to be considered for
inclusion in the portfolio
80%
90%


100%
Proportion of stocks in the pan European investment universe (c.1800 stocks in
universe)
...we analyse our universe to systematically avoid low yielding stocks
Source: J.P. Morgan Asset Management, FactSet. Dividend yield is an average of historic and forward yields. As at 30 April 2014, the cut-off point would be c.3.0% historic and c.3.5%
forward. The opinions and views expressed here are those held by the author at the time of publication, which are subject to change and not to be taken or construed as investment
advice. The companies above are shown for illustrative purposes only. The inclusion of the stocks/companies should not be interpreted as a recommendation to buy or sell.
10
JPM European Investment Trust – Income Shares - portfolio
Key style
characteristics
Low
Portfolio
Benchmark
Sustainability / momentum
1200 stocks
Dividend yield (historic)
4.2%
3.1%
Dividend yield (forward)
4.6%
3.5%
Dividend cover
1.6x
1.7x
JETI
150 - 300
stocks
High
High
Low
Income
Source: J.P. Morgan Asset Management, FactSet, as at 6 May 2014. Abbreviations used: dividend yield (forward) = 12 month forward yield based on forecast dividends over next 4
consecutive quarters, which are not guaranteed. Dividend yield (historic) = 12 month historic yield based on trailing 4 quarters, dividend cover = dividend cover calculated using
earnings. Benchmark is MSCI Europe ex UK Index.
11
The fund consistently maintains a superior yield to the index
10%
100%
Portfolio Yield Premium (RHS)
90%
JPMorgan European Investment Trust dividend yield
(LHS)
Trailing Dividend Yield (%)
8%
80%
7%
70%
6%
60%
5%
50%
4%
40%
3%
30%
2%
20%
1%
10%
0%
Dividend Yield Spread (%)
9%
0%
2006
2007
2008
2009
2010
2011
2012
2013
… a significant yield premium to the market
Source: J.P. Morgan Asset Management, FactSet, based on trailing gross portfolio dividend yield. Data from 31 December 2007– 31 March 2014, for illustrative purposes only. The
effect of charges will reduce the yields shown. Past performance is not a guide to the future.
12
Current positioning and yield
JPMorgan European Investment Trust – Income - as at 30 April 2014
Top / bottom active sector positions
Forward Dividend Yield
Index
Fund
Holdings (DY Fwd)
5.1%
5.1%
Swiss Re (6.5%)
4.6%
4.8%
Fortum (6.4%)
3.4%
4.6%
Bolsas y Mercados (5.5%)
3.1%
4.4%
Bpost (7.0%)
3.7%
4.6%
RTL (6.5%)
2.3%
--
--
3.1%
3.7%
Daimler (3.7%)
2.1%
2.3%
Pandora (2.3%)
2.8%
3.6%
Tikkurila (4.7%)
4.2%
4.8%
Swedbank (6.6%)
Source: J.P. Morgan Asset Management, FactSet. Allocations are made at the managers discretion and can be changed without notice. The companies above are shown for illustrative
purposes only. The inclusion of the stocks/companies should not be interpreted as a recommendation to buy or sell. The yields shown above are not guaranteed and may fluctuate.
13
JPMorgan European Investment Trust - Income Shares
Performance to 31 March 2014 – 12 month rolling returns
JPMorgan European Investment Trust – Income 5 year performance
31/3/13 –
31/3/14
31/3/12 –
31/3/13
31/3/11 –
31/3/12
31/3/10 –
31/3/11
31/3/09 –
31/3/10
Share price return
+28.8
+21.2
-6.3
+7.7
+64.2
Net Asset Value return
+26.6
+19.1
-7.4
+7.6
+60.0
MSCI Europe ex UK Net Index
+17.0
+16.0
-7.2
+6.6
+47.5
(%)
…a strong five year track record
Source: J.P. Morgan Asset Management. Returns as at 31 March 2014, in GBP. NAV returns are net of fees and applicable charges, income reinvested. Benchmark indices do not
include fees or operating expenses and are not available for actual investment. Benchmark prior to 27 March 2013 was MSCI Europe Net Index (Total Return). Some of the manager’s
annual charge for the Fund is taken from capital and income, which may reduce the yield and potential for capital growth. Past performance is not an indication of future
performance.
14
JPMorgan European Investment Trust - Income Shares
Performance to 31 March 2014
Annualised excess returns versus MSCI Europe ex UK
Index
Fund NAV (net of fees)
26.6
11.3
18.7
Share Price (mid)
28.8
13.5
20.9
Benchmark
17.0
8.0
14.6
Source: J.P. Morgan Asset Management. Returns as at 31 March 2014, in GBP. NAV returns are net of fees and applicable charges, income reinvested, relative returns calculated
geometrically. Benchmark indices do not include fees or operating expenses and are not available for actual investment. Benchmark prior to 27 March 2013 was MSCI Europe Net
Index (Total Return). Some of the manager’s annual charge for the Fund is taken from capital and income, which may reduce the yield and potential for capital growth. Past
performance is not an indication of future performance.
15
Fund overview: JPMorgan European Investment Trust – Income
Shares
Management team
Trust highlights
Michael
Alexander
Stephen MacklowBarakos
Fitzalan Howard
Smith
CIO & Portfolio
Portfolio Manager
Portfolio Manager
Manager

Part of a team of 44 European equity investment professionals

Objective: growing income together with long term
capital growth

Conversion between share classes (income & growth):
– 15th March
– 15th September

Yield*: 3.8%

Dividend payments:
– April & October

Discount: Current 5.0%

Gearing:
– Range: 90-120%
– Actual: 111%

Ongoing charges apply**
Portfolio Characteristics

Benchmark:

Fund size

Current number of holdings:

Typical tracking error:
MSCI Europe ex UK
£96.2m
197
4% p.a.
There is no guarantee that the above targets will be achieved. Yield, gearing and discount as at 7 May 2014, all other fund data as at 31 March 2014. * Yield is Trust Income share
class yield (net). ** For further information, including information on Trust fees and charges please visit our website at www.jpmeuropean.co.uk. J.P. Morgan Asset Management
Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.
16
J.P. Morgan Asset Management
Fund Specific Risks
The value of investments and the income from them can go down as well as up and you may not get back the full amount you invested. Changes in exchange rates may have an
adverse effect on the value, price or income of the product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance.
There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment product(s), there can be no
assurance that those objectives will be met. Please also be aware that investment trusts may use gearing techniques (borrowing) which will exaggerate market movements both down
and up which could mean sudden and large falls in market value. Some or all of the Manager’s annual charge for the Fund is taken from capital and/or income. Whilst this increases
yield, it reduces the potential for capital growth.
Important Information
This promotional presentation is for information and educational purposes only and as such the views contained herein are not to be taken as an advice or recommendation to buy or
sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have
been acted upon by J.P. Morgan Asset Management for its own purpose. The result of such research are being made available as additional information and do not necessarily reflect
the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless
otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and
are not guaranteed as to accuracy. They may be subject to change without reference or notification to you.
J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates worldwide. You should note that if you contact J.P.
Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data
from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through
the following website http://www.jpmorgan.com/pages/privacy.
Investment is subject to documentation (Investment Trust Profiles, Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset
Management Marketing Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered
in England No: 288553. Registered address: 25 Bank St, Canary Wharf, London E14 5JP.
17