JPMorgan Elect plc Annual General Meeting. 22 November 2016

Transcription

1 JPMorgan Elect plc Annual General Meeting 22 November 2016

2 Managed Growth 1

3 Features of Managed Growth Objective Long term capital growth from investing in a range of investment trusts and open-ended funds managed principally by J.P. Morgan Asset Management Benchmark A composite benchmark comprising 50% FTSE All Share Index and 50% FTSE World ex UK Index Total assets of 232.2m* Part of JPMorgan Elect - a unique investment trust structure with three investment options and a tax-free switching facility Source: J.P. Morgan Asset Management, as at 31 October The Investment Manager seeks to achieve the stated objectives. There is no guarantee that these will be achieved. 2

4 Investment philosophy Investment ideas are generated from three main sources: Fund selection We look for fund managers that are able to consistently outperform their own benchmarks over the long term Regional asset allocation Choosing the right regions of the world in which to invest, i.e. identifying those equity markets that are going to outperform over the medium to long term within the particular investment guidelines/constraints Discount movements We look to take advantage of the discounts that are available in the investment trust universe, i.e. buying investment trusts on wider discounts and selling them as discounts tighten The Investment Manager seeks to achieve the stated objectives. There is no guarantee the objectives will be met. 3

5 Investment process Top down views on a regional, thematic basis Driven by our quantitative and qualitative insights Translated as appropriate for Elect Ongoing monitoring of the investment trust universe Historical performance analysis Discount analysis Regular fund manager meetings Qualitative process for positioning based on conviction level Building a diversified portfolio within the Elect guidelines Quantitative monitoring of contribution to risk Verification through fundamental analysis, due diligence and constant review and approval 4

6 Agenda 2016 performance review Portfolio positioning Market outlook 5

7 Financial year results 12 months to 31 August 2016 JPMorgan Elect plc Managed Growth Return to shareholders: +11.5% Return on net assets: +11.0% Benchmark return: +19.1% Share price: 648.8p Dividend: 8.70p Source: J.P. Morgan Asset Management, as at 31 August Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Share price Mid, NAV calculated on Offer Net Of Fees. The benchmark is a composite comprising 50% FTSE All-Share Index and 50% FTSE World Index (ex-uk). Past performance is not an indication of future performance. 6

8 Financial year performance 12 months to 31 August 2016 JPMorgan Elect plc Managed Growth Fund returns vs. Benchmark (total returns) - to 31 August % 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% Excess return NAV (%)* NAV Benchmark Share Price consistent positive returns Source: J.P. Morgan Asset Management as at 31 August Excess return based on NAV, net of fees, including ongoing charges and any applicable fees, with any income reinvested, in GBP Excess return calculated arithmetically. Share price return is shareholder total return, cum income. The benchmark is a composite comprising 50% FTSE All-Share Index and 50% FTSE World Index (ex-uk). Past performance is not an indication of future performance. 7

9 Performance JPMorgan Elect plc Managed Growth as of 31 August 2016 Managed Growth Long Term Performance Performance summary 6 months 1 Year 2 Year 3 Year 5 Year 10 Year Total Return to Shareholders (%) Total Return on Net Assets (%) Benchmark Total Return (%) Year ended 31 st August Total Return to Shareholders (%) Total Return on Net Assets (%) Benchmark Total Return (%) Source: Morningstar, J.P. Morgan Asset Management.The Benchmark is a composite comprising 50% FTSE All-Share Index and 50% FTSE World Index (ex-uk). Prior to 31 August 2007 the benchmark was a composite comprising 65% FTSE All Share Index and 35% FTSE World Index (ex UK). Performance over one year are annualised. Past performance is not an indication of future performance. Performance for periods greater than 12 months is annualised. 8

10 Underlying fund performance of top 10 holdings JPMorgan Elect plc Managed Growth as of 31 August 2016 Fund Description Weight Performance 31 August year (%) Excess return (%) JPM UK Dynamic 10.6% JPM US Equity All Cap 9.9% JPMorgan Claverhouse 8.9% JPMorgan American 8.9% JPM US Select Equity 7.9% Finsbury Growth & Income 6.6% JPMorgan European Growth 4.4% JPMorgan Japanese 3.8% Schroder UK Growth 3.2% JPMorgan European Smaller Companies 2.5% Source: J.P. Morgan Asset Management. Performance shown for class (net of fees), excess returns are calculated geometrically. All data is shown in underlying fund base currency. Performance is calculated NAV to NAV and includes income reinvested. Past performance is not an indication of future performance. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice 9

11 Contributions to total return 12 months to 31 August 2016 JPMorgan Elect plc Managed Growth Regional asset allocation Asset allocation at the regional level were mixed Positive contributions were made from our overweight to the US and Europe Underweight positioning in Emerging Markets weighed on performance Fund selection Performance in underlying funds was been weak over the period with a particularly difficult time around Brexit Within the UK strategies, the domestically focussed stock such as the homebuilders and banks suffered Amongst our largest holdings, Finsbury Growth & Income Trust and JPM European Smaller Companies outperformed their respective benchmarks Trusts that underperformed their own benchmark were challenged by the reversal from growth and momentum factors in the market Discount movements Headwind from widening discounts Weighted average discount of the underlying holding moved out by over 2% to approximately 6% at the end of the period Underperformance of the discount movement were seen in the broader investment trust universe Source: J.P. Morgan Asset Management 10

12 Agenda 2015 performance review Portfolio positioning Market outlook 11

13 Portfolio positioning JPMorgan Elect plc Managed Growth as of 31 August 2016 Third Party Investment Trusts JPM Investment Trusts Finsbury Growth & Income 6.6% Schroder UK Growth 3.2% Cash and futures 5.8% JPMorgan Claverhouse 8.9% JPMorgan American 8.9% Allianz Technology 2.3% JPMorgan European 4.4% Fidelity European Values 2.2% Edinburgh Investment 1.7% Fidelity Special Values 1.6% Third Party Investment Trusts 24.2% JPM Investment Trusts 41.5% JPMorgan Japanese 3.8% JPM European Smaller Cos 2.5% The Mercantile 2.3% Impax Environmental Markets 1.5% JPMorgan Asia 2.1% Perptual Income & Growth 1.1% JPMorgan Smaller Cos 2.0% Jupiter European Opportunities 0.8% Blackrock Frontier 0.6% JPM Open Ended Funds 28.6% JPMorgan US Smaller Cos 1.9% JPMorgan Emerging Markets 1.6% Biotech Growth 0.6% JPMorgan Income & Growth 1.0% City Of London 0.5% JPMorgan Japan Smaller 0.8% Murray Income Trust 0.5% Worldwide Healthcare 0.5% Blackrock Smaller Cos 0.2% JPM Open Ended Funds JPM UK Dynamic 10.6% JPM US Equity All Cap 9.9% JPM US Select Equity 7.9% JPMorgan Indian 0.7% JPM Chinese 0.2% Source: J.P. Morgan Asset Management, 31 August The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. *Includes property and absolute return 12

14 Portfolio positioning JPMorgan Elect plc Managed Growth as of 31 August 2016 Asset allocation Allocation relative to benchmark Asia Pacifc ex Japan 4% Japan 4% Emerging Markets 1% UK equity -5.2% Europe ex UK 10% North America equity 4.4% UK 45% Europe ex UK equity Asia Pacific ex Japan equity 1.3% 0.2% Japan equity -1.0% North America 36% Emerging market equity -0.3% -6.0% -3.0% 0.0% 3.0% 6.0% Source: J.P. Morgan Asset Management, 31 August The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. *Includes property and absolute return 13

15 Performance update JPMorgan Elect plc Managed Growth as of 31 October 2016 Performance summary Financial year to date Total Return to Shareholders (%) 3.6 Total Return on Net Assets (%) 4.0 Benchmark Total Return (%) 4.3 Source: Morningstar, J.P. Morgan Asset Management.The Benchmark is a composite comprising 50% FTSE All-Share Index and 50% FTSE World Index (ex-uk). Prior to 31 August 2007 the benchmark was a composite comprising 65% FTSE All Share Index and 35% FTSE World Index (ex UK). Performance over one year are annualised. Past performance is not an indication of future performance. Performance for periods greater than 12 months is annualised. 14

16 Discount history Investment Trust total market average % discount (ex 3i) from August 2008 % discount (-) / premium (+) Wide discounts present opportunities for buying attractive asset classes and managers at more reasonable valuations Source: J.P. Morgan Asset Management, as of 30 September Data Stream shows UK Investment Trusts total market discount. The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. 15

17 Agenda 2015 performance review Portfolio positioning Market outlook 16

18 This cycle s gains constrain next cycle s returns Current expansion is long by historical standards, but is shallow compared to the last 50 years Asset appreciation relative to economic growth in this cycle far exceeds historical patterns GDP growth, S&P 500 price return, and corporate bond total return in expansions of the last 50 years 250% 200% Nominal GDP growth in NBER defined expansion S&P 500 price return in associated bull market BAML US Corp Master total return index 150% 100% 50% 0% current Source: J.P. Morgan Asset Management, Datastream, Bloomberg Data are as of 15 June

19 Equity earnings are beginning to turn higher after a meaningful slowdown Equity markets appear to be discounting greater scope for a fiscal boost to earnings since the Trump election However, the earnings rebound was already underway after hitting lows in mid-16 Likely winners from any U.S. fiscal boost are domestic sectors and small caps, while EM and Europe might lag Earnings momentum on an uptrend across markets 3m Earnings Upgrades/ Downgrades ratio 2.5 US UK Japan Euro Area EM Source: Datastream, J.P. Morgan Asset Management: data as of 9 November

20 U.S. growth already at trend, and now there is scope for pro-cyclical fiscal stimulus The U.S. economy is expanding at its recent trend of roughly 2%, as easy policy, sound household balance sheets, and a supportive housing cycle balance out a trade drag and sluggish capex 2017(est.) average growth: GDP 2.0, domestic final sales 2.2 some upside risk from fiscal stimulus U.S. real GDP and estimates of potential (1990 = 100, sa) Actual CBO potential Trend-line potential (2.25% pre-recession, 2.0% after) 1.5% trend from recession onward U.S. contributions to real GDP growth (p.p.) % 6 5 X Inv DFS Q1 15Q1 16Q1 17Q1 Source: Bloomberg, J.P. Morgan Asset Management; data as at 9 November

21 A new market regime? Recent bond market moves show a reflationary theme Bond market moves after the U.S. election were driven by changes in breakevens unlike previous selloffs Markets have focused on the congressional clean sweep, which increases scope for fiscal stimulus But inflation expectations around the globe were already starting to bottom out in most regions this year Change in US bond yields since Trump victory (bps) Inflation expectations are on the rise Nominal yields Breakeven inflation 2y 5y 10y 30y Jan-11 May-12 Sep-13 Feb-15 Jun-16 Japan Europe US UK Source: Bloomberg, J.P. Morgan Asset Management:; data as of 17 November

22 The outlook in emerging economies is improving, from a low base Emerging economies have nearly closed the gap in growth momentum with developed economies which is a key factor in allowing EM-related asset classes to perform better Aggregate composite PMIs for emerging and developed economies Diffusion index; 50 = neutral Developed Emerging Source Markit/JPMorgan/HSBC; data as of 18 October

23 Summary outlook The current economic expansion has been long but modest Global economic growth looks better with scope for a fiscal boost from the US Downside risks may come from: Uncertain outlook for trade Monetary policy in the face of normalising inflation Political risks in Europe Positive outlook for equity returns Discounts remain more supportive as a valuation metric than they did 12 months ago The opinions and views expressed here are those held by the author at the date of publication which are subject to change and are not to be taken as or construed as investment advice. 22

24 Managed Cash 23

25 Features of Managed Cash Objective Preservation of capital with a yield based on short term interest rates by investing in a range of liquidity funds and short dated AAA-rated UK government securities/g7 government securities hedged into sterling No benchmark Total assets of 3.8m* Source: J.P. Morgan Asset Management, as at 31 August

26 Financial year results 12 months to 31 August 2016 JPMorgan Elect plc Managed Cash Return to shareholders: +0.6% Return on net assets: +0.5% Dividend: 0.35p Source: J.P. Morgan Asset Management, as at 31 August Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Share price, NAV calculated on Offer Net Of Fees. Past performance is not an indication of future performance. 25

27 Performance review 12 months to 31 August 2016 JPMorgan Elect plc Managed Cash Given the near zero inflationary environment, it was again a period of low returns for the Managed Cash portfolio Following the Brexit referendum economic data for the UK has been much more robust. The UK s composite PMI for August 2016 rebounded sharply to 53.6, having fallen to a recessionary level of 47.6 in July In August the Bank of England announced a package of measures which featured five key policy elements: 1. Halved the Bank Rate from 0.50% to 0.25% 2. Provided guidance that rates could fall further 3. Restarted UK Gilt-buying programme, to the tune of GBP 60 billion 4. Support lending to UK companies via new Term Funding Scheme 5. Commitment to purchased up to GBP 10 billion of UK corporate bonds UK second-quarter economic growth was 0.6% and unemployment in the three months to June remained at 4.9% while CPI inflation edged higher to 0.6% in July Forecasts, projections and other forward looking statements are based upon current beliefs and expectations. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecasts, projections and other forward statements, actual events, results or performance may differ materially from those reflected or contemplated. 26

28 Portfolio positioning JPMorgan Elect plc Managed Cash as at 31 August 2016 Fund Description Rating Weight Historical 12 month yield Aberdeen Sterling Liquidity Fund AAA 16.7% 0.5 BlackRock ICS Institutional Sterling Liquidity Fund AAA 16.7% 0.5 Deutsche Global Liquidity Series Managed Fund AAA 16.6% 0.4 Fidelity Institutional Sterling Liquidity Fund AAA 16.6% 0.4 Insight Sterling Liquidity Fund AAA 16.6% 0.5 JPMorgan Sterling Liquidity Fund AAA 16.6% 0.4 Cash 0.1% n/a Source: JPMorgan Asset Management The securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not an indication of future performance. 27

29 UK interest rate outlook Bank of England s (BoE) monetary policy is likely to look through any rise in headline CPI post-brexit and is expected to keep rates on hold at the next meeting The neutral-to-dovish minutes of the BoE s September meeting revealed the Monetary Policy Committee s economic outlook has not significantly changed despite a revision to near-term forecasts and a recent resilience in economic data The committee expect a material slowdown in the second half of 2016 and if the outlook remains broadly consistent in the next inflation report the majority of the committee support a further cut to the Bank Rate to an effective lower bound of close to, but above, zero. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecasts, projections and other forward statements, actual events, results or performance may differ materially from those reflected or contemplated. 28

30 J.P. Morgan Asset Management This is a promotional document 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 results 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. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount 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. 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 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: Registered address: 25 Bank St, Canary Wharf, London E14 5JP. 51d6b1f0-aff2-11e6-b c8a 29

31 Managed Income 30

32 Features of the company Objective Growth of income with the potential for long-term capital growth Benchmark A composite benchmark comprising 85% FTSE All Share Index and 15% Barclays Capital Global Corporate Bond Index Investment Policy To invest in a diversified portfolio of UK equities (including investment companies) and fixed interest securities Total assets of 53.3m* Source: J.P. Morgan Asset Management. *As of 15 November The Investment Manager seeks to achieve the stated targets/objectives. There can be no guarantee the objectives/targets will be met. 31

33 Agenda 2016 performance review Current portfolio positioning Market outlook 32

34 Financial year results 12 months to 31 August 2016 JPMorgan Elect plc Managed Income Return to shareholders: +6.4% Return on net assets: +5.9% Benchmark return: +11.3% Dividend: 3.9p another year of positive absolute returns and dividend growth for shareholders, although disappointing relative to benchmark Source: J.P. Morgan Asset Management. Returns are NAV to NAV, net of fees, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Share price return is shareholder total return, cum income. The composite benchmark is 85% FTSE All Share Index, 15% Barclays Capital Global Corporate Bond Index (sterling terms). Trust financial year end is 31 August Past performance is not an indication of current or future performance. 33

35 Rolling financial year performance JPMorgan Elect plc Managed Income Fund returns vs. Benchmark (total returns) 25% 20% 15% 10% 5% NAV Benchmark Share Price 21.2% 16.1% 10.6% 10.2% 9.5% 21.0% 13.9% 10.1% 14.5% 2.8% 2.3% 5.9% 11.3% 6.4% 0% -5% 2011/ / / / / % Excess return* (NAV) +0.4% +5.1% +3.8% +4.8% -4.9% consistent positive returns Source: J.P. Morgan Asset Management as of 31 August Returns are NAV to NAV, net of fees, including ongoing charges and any applicable fees, with any income reinvested, in GBP Excess return calculated arithmetically. Share price return is shareholder total return, cum income. The composite benchmark is 85% FTSE All Share Index, 15% Barclays Capital Global Corporate Bond Index (sterling terms). Past performance is not an indication of current or future performance. 34

36 Performance attribution JPMorgan Elect plc Managed Income Major contributors to returns 12 months to 31 August 2016 Lloyds (u) BT (u) Royal Bank of Scotland (u) British American Tobacco (o) DCC (o) British Land (o) ITV (o) Glencore (u) Berkeley (o) Next (o) -0.9% -0.7% -0.5% -0.3% -0.1% 0.1% 0.3% 0.5% 0.7% Source: J.P. Morgan Asset Management, FactSet. Figures exclude cash. The companies/securities above are shown for illustrative purposes only, (o) indicates overweight position, (u) indicates underweight. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not an indication of current or future performance. 35

37 Dividends 2015/ / / / /12 Dividend per share 3.90p 3.80p 3.65p 3.55p 3.40p We focus on generating income growth from the portfolio Total dividend per share of 3.9p this financial year, inflation beating growth of 2.6%* A positive year for overall UK corporate dividend growth, boosted by currency tailwinds Special dividends by some of our favoured stocks* Jupiter Fund Management Booker Next Taylor Wimpey Source: J.P. Morgan Asset Management as of 31 August *Growth of 2.6% since last financial year. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is no guarantee of future performance. Dividend per share figures are for the financial years starting 1 September and ending 31 August. Past performance is not an indication of current or future performance. 36

38 Agenda 2016 performance review Current portfolio positioning Market outlook 37

39 Portfolio allocation 31 Aug Aug 2015 Asset class Fund (%) Benchmark (%) Fund (%) Benchmark (%) UK equities Investment companies Fixed income Net current assets Total assets a steady asset allocation favouring equities during the financial year Source: J.P. Morgan Asset Management. The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. Past performance is not an indication of current and future performance. 38

40 Portfolio construction Driven by value & momentum, with an income growth focus Not benchmark constrained Focused portfolio of UK equities Diversification: Understand different areas of risk Portfolio yield premium aiming to generate income and long term capital growth Source: J.P. Morgan Asset Management as of 15 November

41 Stock example: Imperial Brands Relative share price vs. FTSE 350 Index Relative share price One of the world s five biggest tobacco companies Solid revenue and profit growth Strong cash flow supporting dividend growth of 10% Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun high dividend yield and strong capital growth potential Source: J.P. Morgan Asset Management. Rebased to 100 as of 31 December 2013, data to 31 October Returns are in GBP. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of the above company logos is in no way an endorsement for J.P. Morgan Asset Management investment management services. The figures and information refer to estimated performance and that such forecasts are not a reliable indicator of actual future results, yield and performance. Past performance is not an indication of current or future performance. 40

42 Stock example: Fever-Tree Relative share price vs. FTSE 350 Index Relative share price Produces premium soft drinks and mixers International spread of sales Consistently surpasses earnings expectations Forecast dividend growth of 18% Nov-14 May-15 Nov-15 May strong capital and dividend growth for shareholders Source: J.P. Morgan Asset Management, Bloomberg. Rebased to 100 as of 07 November 2014 (listing date of stock), data to 31 October Returns are in GBP. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of the above company logos is in no way an endorsement for J.P. Morgan Asset Management investment management services. The figures and information refer to estimated performance and that such forecasts are not a reliable indicator of actual future results, yield and performance. Past performance is not an indication of current or future performance. 41

43 JPMorgan Elect plc Managed Income Top 10 active UK equity holdings as of 31 October 2016 Stock Sector Active weight % Dividend yield % Imperial Brands Tobacco Beazley Non Life Insurance British American Tobacco Tobacco BAE Systems Aerospace & Defense Direct Line Insurance Non Life Insurance GlaxoSmithKline Pharmaceuticals & Biotechnology Booker Group Food & Drug Retailers Kcom Group Fixed Line Telecommunications Novae Group Food & Drug Retailers National Grid Gas, Water & Multiutilities favoured stocks that have attractive dividend yields and growth potential Source: J.P. Morgan Asset Management, FactSet as of 31 October The inclusion of the securities mentioned above is not to be interpreted as recommendations to buy or sell. Dividend yield is Bloomberg consensus 12 month forward as of 31 October The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. Past performance is not an indication of current and future performance. 42

44 Performance update Financial year-to-date 2 months to 31 October 2016 % Financial year-to-date Share price +1.5 Net asset value +1.7 Benchmark +1.7 an encouraging start to our new financial year Source: J.P. Morgan Asset Management, as of 31 October Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. The composite benchmark is 85% FTSE All Share Index, 15% Barclays Capital Global Corporate Bond Index (sterling terms)please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of current or future performance. 43

45 Agenda 2016 performance review Current portfolio positioning Market outlook 44

46 UK equities offer premium income yields Dividend yield and ex-energy dividend yield % yield Dividend yield and 10-year bond yield % yield UK Dividend yield Eurozone MSCI World 30 Sep 2016: 4.0% MSCI EM Japan US Dividend yield Dividend yield ex-energy year Gilt yield 30 Sep 2016: 0.8% UK equities offer premium income yields Source : (Left) J.P. Morgan Economic Research, J.P. Morgan Asset Management. Japan is Nikkei 225, Eurozone is Euro Stoxx 50, US is S&P 500. Guide to the Markets - Europe page 43. Data as of 30 September (Right) FactSet, FTSE, J.P. Morgan Asset Management. Guide to the Markets UK page 45. Data as of 30 September Past performance is not an indication of current and future performance. 45

47 Outlook Elevated economic uncertainty in advance of Brexit Economic indicators post-referendum show better than expected resilience in the short-term UK equity yields attractive relative to other equity markets and bonds Source: J.P. Morgan Asset Management as at 15 November The opinions and views expressed here are those held by the author as at date of this document, which are subject to change and are not to be taken as or construed as investment advice. 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. 46

48 Conclusion Strong performance in four of the last five financial years A persistent focus on delivering income growth and long term capital gains Positive outlook for UK equities Source: J.P. Morgan Asset Management as of 15 November The opinions and views expressed here are those held by the author as at date of this document, which are subject to change and are not to be taken as or construed as investment advice. Past performance is not an indication of current and future performance. 47

49 JPMorgan Elect plc Managed Income Capital Structure and Conversion between share classes JPMorgan Elect plc adopted its present structure as a result of the combination of JPMorgan Fleming Managed Growth plc and JPMorgan Fleming Managed Income plc and the subsequent capital reorganisation. The Company s name reflects the capital structure and the investment flexibility it offers to shareholders. There are three share classes, each with distinct investment policies, objectives and underlying investment portfolios. Each share class is listed separately and traded on the London Stock Exchange. This capital structure means that shareholders may benefit from greater investment flexibility in a tax-efficientmanner. Key risks The key risks facing the Company and the mechanisms in place to monitor and measure these risks are set out in the Company s annual report, a copy of which is available from its website, Risks in connection with leverage The Company may employ leverage, that is to seek to enhance returns to shareholders by borrowing funds for investment or entering into derivative transactions (see below). Where the Company is levered, its net asset value and price performance would be expected to represent an amplification of any upward or downward movement in the value of the portfolio as a result of price changes of the investments contained therein. Shareholders should be aware that, whilst the use of leverage should enhance the returns to shareholders where the value of the Company s underlying assets is rising, it will have the opposite effect where the underlying asset value is falling. A fall in the value of the Company s investments may cause the Company to sell investments in order to reduce leverage, which in turn may give rise to a significant loss of value compared to the book value of the investments, as well as a reduction in income from investments.uk or G7 government securities hedged into sterling. Specific risks: The trust may invest in smaller company shares, which can be more unpredictable and less liquid than shares of larger companies. This trust may invest in non investment grade bonds, which could increase capital risk and have an adverse effect on the performance of funds that invest in them. Where permitted, a trust may invest in other investment trusts that utilise gearing (borrowing), which will exaggerate market movements both up and down. Dividend income payments are not guaranteed and may fluctuate. Exchange rate changes may cause the value of underlying overseas investments to go down as well as up. Investing in high yielding stocks may involve a higher degree of risk as high yields are not guaranteed and will fluctuate. This fund may use derivatives for investment purposes or for efficient portfolio management. External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds could decline at the same time. This trust may also invest in smaller companies which may increase its risk profile. Source: J.P. Morgan Asset Management as of 15 November

50 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. This is a promotional document 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 results 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. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount 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. 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 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: Registered address: 25 Bank St, Canary Wharf, London E14 5JP. 4d03c02a