U.S. equity: Opportunities in a recovering market FOR INSTITUTIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION

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1 U.S. equity: Opportunities in a recovering market

2 U.S. equity market overview 1

3 Despite sluggish economic growth, profits are very strong S&P 500 earnings per share Operating basis, quarterly $26 $23 2Q07: $24.06 Most recent: $23.73 Adjusted after-tax corporate profits (% of GDP) Includes inventory and capital consumption adjustments 11% 10% 4Q11: 10.3% $20 9% $17 8% $14 $11 $8 7% 6% 50-year avg.: 6.2% $5 5% $2 4% -$1 '01 '03 '05 '07 '09 '11 3% '65 '70 '75 '80 '85 '90 '95 '00 '05 '10. Source: (Left) Standard & Poor s, J.P. Morgan Asset Management. EPS levels are based on operating earnings per share. Most recently available is a 4Q11 99% complete estimate. (Right) BEA, FactSet, J.P. Morgan Asset Management. Data reflect most recently available as of 3/31/12. Shown for illustrative purposes only. Please see disclosure page for index definitions. 2

4 We see increasing signs of recovery in cyclical sectors Light vehicle sales Millions, seasonally adjusted annual rate ,400 Average: 15.1 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 Housing starts Thousands, seasonally adjusted annual rate Feb. 2012: 15.0 Manufacturing and trade inventories Days of sales, seasonally adjusted Jan. 2012: '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 Real capital goods orders Non-defense capital goods orders ex. aircraft, $ bn, seasonally adjusted 75 2, Feb. 2012: ,600 1,200 Average: 1, Average: Feb. 2012: '75 '80 '85 '90 '95 '00 '05 ' '98 '00 '02 '04 '06 '08 '10 '12 Source: (Top left) BEA, FactSet, J.P. Morgan Asset Management. (Top right) Census Bureau, FactSet, J.P. Morgan Asset Management. (Bottom left) Census Bureau, FactSet, J.P. Morgan Asset Management. (Bottom right) Census Bureau, FactSet, J.P. Morgan Asset Management. Capital goods orders deflated using the producer price index for capital goods. Data reflect most recently available as of 3/31/12. Shown for illustrative purposes only. 3

5 Recent economic news has been better than expected Economic surprise index 150 US G Source: Bloomberg; as of 3/31/12. Shown for illustrative purposes only. Based on the Citigroup Economic Surprise Index, which is comprised of objective and quantitative measures of economic news. A positive reading of the index suggests that economic data releases have exceeded consensus expectations. A negative reading suggests that economic data releases have fallen short of consensus expectations. 4

6 Valuation: U.S. equities look attractive relative to other asset classes Price-to-earnings ratio JPM normalized earnings Peak P/E: 26.2 Normalized P/E as of March 31, 2012: 12.1 Equity risk premiums vs. corporate bonds 5% ERP (BAA Corporates) Average 4% 3% 2% Average normalized P/E: 16.4 Trough P/E: 8.4 1% 0% -1% % Source: J.P. Morgan Asset Management, Bloomberg; as of 3/31/12. Shown for illustrative purposes only. Equity risk premium is equal to J.P. Morgan Asset Management dividend discount rate (DDR) on S&P 500 stocks, less current yield to maturity on 10-year U.S. Treasury bonds and BAA corporate bonds. A DDR is the discount rate that equates the present value of the estimated stream of future dividends to the current market price. The J.P. Morgan S&P 500 DDR is a bottom-up, sectorneutral and capitalization-weighted average of DDRs on large-capitalization stocks as estimated by J.P. Morgan Asset Management equity research analysts. A DDR does not represent a stock's expected actual return in any given time period. Based on the bottom-up earnings projections of S&P 500 companies for the normalized year (2012) by J.P. Morgan large-cap analysts. 5

7 Both growth stocks and income stocks look attractive Growth: While growth stocks have outperformed core/value since the peak in 2007, growth still looks cheap based on historical data Growth stocks have seen increased earnings growth as a result of innovation Growthier sectors, such as technology and consumer discretionary, appear cheap relative to history Income: The best-performing stocks over the last 20 years have been those with aboveaverage yields and below-average payouts Historically, dividend yields have been an important component of total market returns: Dividend-paying stocks have outperformed non-dividend paying stocks for 9 of the last 12 calendar years* * Source: Empirical Research; as of 12/31/11. There is no assurance or guarantee that companies that issue dividends will declare, continue to pay or increase higher dividends. 6

8 U.S. equity research: Career analysts drive our investment process Helge Skibeli Director of Research Industry: 26 yrs Firm: 22 yrs James Brown (C) Basic Materials Industry: 28 yrs Firm: 25 yrs Nishesh Kumar (C) Energy Industry: 15 yrs Firm: 14 yrs Leslie Rich (C) Utilities Industry: 19yrs Firm: 2 yrs Industrials David Maccarrone (C) Infrastructure Industry: 17 yrs Firm: 1 yr Steven Lee (C) Autos & Transport Industry: 19 yrs Firm: 7 yrs David Pasquale (C) Industrial Cyclicals Industry: 15 yrs Firm: 6 yrs Kay Herr * Associate Director of Research Industry: 17 yrs Firm: 13 yrs Tim Woods (G) Energy, Industrials, & Materials Industry: 25 yrs Firm: 4 yrs Felise Agranoff (S) Energy /Industrials Industry: 8 yrs Firm: 8 yrs Lerone Vincent (C/V) Basic Materials Industry: 14 yrs Firm: 14 yrs Andrew Miller (C/V) Autos & Transport Industry: 7 yrs Firm: 7 yrs Patrick Parr (V) Industrial Cyclicals Industry: 15 yrs Firm: 6 yrs Don San Jose (S) Generalist/ Industrials Industry: 15 yrs Firm: 11 yrs (C) Core; (G) Growth; (V) Value; (S) Small cap As of 3/31/12. * Kay Herr is also a co-portfolio manager for the REIT strategies. Urmas Wompa (C) Regional Banks Industry: 28 yrs Firm: 25 yrs Steven Wharton (C) Capital Markets Industry: 16 yrs Firm: 6 yrs David Small (C) Insurance Industry: 12 yrs Firm: 7 yrs Finance Dan Percella (S) Generalist/ Banking & Finance Industry: 10 yrs Firm: 4 yrs Technology Luke Szymczak (C) Network/Telecom Industry: 25 yrs Firm: 12 yrs Nitin Bhambhani (C) Software/Services Industry: 18 yrs Firm: 16 yrs Robert Bowman (C) Semi/Hardware Industry: 19 yrs Firm: 19 yrs Ryan Vineyard (C) Telecom Industry: 7 yrs Firm: <1 yr Jason Ko (C) REITs Industry: 10 yrs Firm: 10 yrs Julie Ho (C) REITs Industry: 7 yrs Firm: 7 yrs Andrew Brandon (C/V) Financials Industry:14 yrs Firm: 12 yrs Larry Lee (G) Business Services Industry: 19 yrs Firm: 6 yrs Shilpee Raina (V) Generalist/ Financial Services Industry: 7 yrs Firm: 7 yrs Greg Tuorto (S) Technology Industry: 19 yrs Firm: 4 yrs Laura Huang (C) IT Services Industry: 7 yrs Firm: 7 yrs Jon Brachle (S) Generalist/ Technology Industry: 5 yrs Firm: 5 yrs Kathleen Stack (C) Consumer Stable Industry: 34 yrs Firm: 31 yrs Scott Davis (C) Media Industry:15 yrs Firm: 6 yrs Greg Fowlkes (C) Retail Industry: 12 yrs Firm: 7 yrs Massimo Marolo (C) Retail Industry: 10 yrs Firm: 6 yrs Consumer Lisa S. Sadioglu (C) Consumer Cyclicals Industry: 12 yrs Firm: 12 yrs Healthcare Dr. Scott Braunstein (C) Pharma/ Biotech Industry: 21 yrs Firm: 10 yrs Laurence McGrath (C) Health Svcs/Medtech Industry:15 yrs Firm: 1 yr Tim Gamache (C/V) Consumer Industry: 7 yrs Firm: 7 yrs Anthony Attardo (S) Consumer Discretionary Industry: 13 yrs Firm: 13 yrs Nancy Hoch (G) Consumer Industry: 18 yrs Firm: 10 yrs Justin Howell (S) Generalist/ Consumer Industry: 10 yrs Firm: 9 yrs Matt Perry (C) Healthcare Industry: 11 yrs Firm: 1 yr Dr. Matt Cohen (S) Health Care Industry: 12 yrs Firm: 7 yrs 7

9 J.P. Morgan Asset Management s global equity research presence creates an information advantage for our clients Local investing informed by globalization Global reach: Over 200 equity research analysts* based in 11 cities Biral Devani Semiconductors Europe Paul Chan Semiconductors Asia Pacific J.P. Morgan equity research An annual global research expenditure of over $150mm Dedicated large-, mid- and small-cap research teams Rob Bowman Semiconductors U.S. Kentaro Sasaki Semiconductors Asia On-the-ground research and one-on-one company visits totaling over 5,000 company visits each year Over one-third of the earnings of S&P 500 companies now come from outside the U.S. having our own feet on the street around the globe is a powerful competitive advantage *As of March 31, Includes dedicated analysts and combined portfolio managers/analysts. 8

10 Growth 9

11 Percent Multiple Growth is being driven by sectors with more exposure to innovation Growth and value benchmarks have very different sector weightings Growthier sectors remain discounted relative to historical averages 30% 28% Growth 28% Value 35 Forward P/E Ratio 15-yr avg P/E 25% 20% 15% 10% 5% 6% 8% 17% 10% % Financials Technology Consumer Discretionary 0 Financials Technology Consumer Discretionary Source: Russell Investment Group, FactSet, Standard & Poor s; as of 3/31/12. Shown for illustrative purposes only. Growth is represented by the Russell 1000 Growth Index. Value is represented by the Russell 1000 Value Index. P/E multiples are based on the S&P 500 Index and reflect consensus estimates. Please see disclosure page for index definitions. 10

12 12/29/ /31/ /31/ /31/ /31/ /30/ /29/ /31/ /31/ /31/ /31/ /31/2011 3/31/2012 Earnings growth for U.S. stocks is being fueled by global demand U.S. growth companies are deriving more sales than ever from overseas % of foreign sales in the Russell 1000 Growth Index U.S. growth companies are growing faster than those in emerging markets Month Forward P/E 12-Month Forward Growth Rate 10.3 S&P 500 Index Russell 1000 Growth Index MSCI Emerging Markets Source: FactSet, using weighted averages; as of 3/31/12. Shown for illustrative purposes only. Please see disclosure page for index definitions. 11

13 The U.S. is the global leader in technology and healthcare Top 10 drugs based on sales in 2010 $ Billion Lipitor (Pfizer) Plavix (Bristol Myers Squibb) Humira (Abbott Labs) Avastin (RHHBY/DNA) Rituxan (RHHBY/DNA) Diovan (Novartis) Crestor (AstraZeneca) Atripla/Truvada (Gilead Sciences) Seroquel (AstraZeneca) Herceptin (RHHBY/DNA) Top 10 holdings in MSCI World Index Based on market cap Apple Microsoft IBM Oracle Google Intel Samsung Electronics Cisco QUALCOMM Hewlett-Packard 0 100, , ,000 (left) Source: Empirical Research Partners Analysis. * Based on developed markets. Largest 1,500 stocks for U.S. Large and Mid-Cap stocks for other regions. (right) Source: J.P. Morgan Asset Management. Shown for illustrative purposes only. Past performance is no guarantee of future results. 12

14 Smartphone penetration by region, (% of total mobile handsets) 60% 50% North America Asia-Pacific (ex-japan) Mid East & Africa West Europe Central & Eastern Europe Latin America 40% 30% 20% 10% 0% E 2012E 2013E 2014E Source: J.P. Morgan, Cisco Systems, Cisco Visual Networking Index (VNI): Global Mobile Data Traffic Forecast Update, with Informa Telecoms & Media, In-Stat and Gartner. Shown for illustrative purposes only. 13

15 Data center re-architecture: Enterprises are changing the way they store and access data Virtualization Public cloud Private cloud Cloud spending to grow from $25bn in 2011 to $159bn in 2020 $180 Infrastructure as a service $160 Platform as a service $140 Software as a service Business process as a service $120 $100 $80 $60 $40 $20 $ Source: Forrester Research, ZD Net. Shown for illustrative purposes only. 14

16 Large Cap Growth Fund philosophy: A bottom-up, fundamental strategy with the goal of providing consistent outperformance while remaining style pure The three risks we seek to manage are: Don t miss the truly outstanding stocks; it is difficult to outperform if you don t own them Avoid or mitigate the impact of the big underperforming stocks Take greater active risk when finding a diversified group of stocks that meet our investment criteria; however, take less active risk when we are having a more challenging time finding stocks that meet our investment criteria 15

17 A three-legged stool approach to finding great growth stocks We believe great growth stocks through time have possessed three key characteristics: A large addressable market undergoing meaningful change The company has a sustainable competitive advantage and is executing well Good price momentum The manager seeks to achieve the stated objectives. There can be no guarantee the objectives will be met. 16

18 We are positioned for secular growth across multiple sectors The lines between the technology, media and consumer sectors are blurring Apple, Amazon.com Companies are creating dynamic business models through the power of the Internet Salesforce.com, Priceline.com, Cognizant Technology Growth in developing countries and the emergence of a larger middle class is creating opportunities BorgWarner, Starbucks, MasterCard Healthcare companies that are delivering innovative solutions are being rewarded Alexion Pharmaceuticals, Intuitive Surgical, Biogen As of March 31, The securities highlighted above were selected based on significance and are shown for illustrative purposes only. It is not a recommendation. 17

19 The active risk profile of the portfolio fluctuates based on the conviction and diversification of our ideas from the bottom up Active share 80% 75% 73% 74% 73% 76% 75% 74% 73% 75% 74% 74% 70% 65% 61% 68% 68% 66% 62% 61% 67% 65% 65% 66% 69% 66% 67% 66% 64% 65% 60% 58% 55% 50% Source: J.P. Morgan Asset Management, Frank Russell Company; as of 3/31/12. Active share relative to the Russell 1000 Growth Index. Active Share is a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index; Active Share 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. Please see disclosure page for index definitions. 18

20 JPMorgan Large Cap Growth Fund performance As of March 31, 2012 Performance at NAV (%) YTD (%) 1 year (%) 3 years (%) 5 years(%) Since PM Inc.(%)* 10 years(%) JPM Large Cap Growth (Select Shares) Russell 1000 Growth Index Excess Returns vs. Index Excess Return Morningstar Ranking Information Ratio Information Ratio Morningstar Ranking The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call *The Large Cap Growth Fund was launched February 28, Effective July 31, 2004, the current portfolio management team assumed responsibility of the portfolio and effective July 31, 2005, Giri Devulapally became lead portfolio manager. Performance is shown from July 31, As of 3/31/12, the Large Cap Growth Fund (Select Shares) was ranked in the Morningstar Large Cap Growth Category for the following time periods: 592 out of 1,729 for the trailing year-to-date period, 106 out of 1,661 funds for the trailing one-year period, 108 out of 1,459 funds for the three-year period, 58 out of 1,266 funds for the five-year period, 99 out of 1,442 for the since PM inception period, 167 out of 816 funds for the 10-year period. For information ratio, the Large Cap Growth Fund (Select Shares) was ranked in the Morningstar Large Cap Growth Category for the following time periods: 47 out of 1,698 funds for the trailing one-year period, 123 out of 1,614 funds for the three-year period, 51 out of 1,535 funds for the five-year period, 49 out of 1,442 for the since PM inception period, and 258 out of 1,698 funds for the 10-year period. The rating is for Select Shares only. Past performance is no guarantee of future results. Different share classes may have different rankings. Source: J.P. Morgan Asset Management; Frank Russell Company. Please see disclosure page for index definitions. 19

21 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 Morningstar % Rank Excess return (%) The JPMorgan Large Cap Growth Fund has displayed consistent performance over time Morningstar % Rank 3-Year Excess Return vs. Russell 1000 Growth Index Consistent performance in both up and down markets As of March 31, years Up Capture/Morningstar Up Capture % Ranking 106%/24 Down Capture/Morningstar Down Capture % Ranking 97%/14 Source: J.P. Morgan Asset Management, Morningstar. Past performance is no guarantee of future results. Note: Performance is stated net of fees, Morningstar Large Cap Growth Universe. Giri Devulapally became co-portfolio manager on the fund in July 2004 and became the lead portfolio manager effective August Please see disclosure page for index definitions. 20

22 Income 21

23 's 1940's 1950's 1960's 1970's 1980's 1990's 2000's 2010's 1926 to 2011 Historically, dividend yields have been an important component of total market returns S&P 500 returns by decade: Dividends vs. Capital appreciation 20% Dividends Capital appreciation 15% 10% 5% 0% -5% 13.9% 13.6% 3.0% 4.7% 5.4% 6.0% 5.1% -5.3% 12.6% 15.3% 4.4% 1.6% 6.2% 3.3% 4.2% 4.4% 2.5% 1.8% 2.1% -2.7% 5.5% 4.1% -10% Source: Standard & Poor s, Ibbotson, J.P. Morgan Asset Management; as of 12/31/11. Past performance does not guarantee future results. Shown for illustrative purposes only. Please see disclosure page for index definitions. 22

24 Dividends are important, but so is the ability to pay the dividend quality matters The best-performing stocks over the past 20 years have been those with above-average dividend yields and below-average payout ratios Focus on payout ratio not just the company s dividend yield Low payout ratio indicates a disciplined use of capital by management Companies still have ample cash to reinvest for future business growth A company s earnings stream should: Support the current yield even in difficult markets Equal-weighted performance from December 31, 1990 to March 31, % 350% 300% 250% 200% 150% 100% 50% 0% High dividend yield, Low payout ratio Low dividend yield, Low payout ratio No dividend High dividend yield, High payout ratio S&P 500 Source: Credit Suisse Quantitative Equity Research. Past performance does not guarantee future results. There is no assurance or guarantee that companies that issue dividends will declare, continue to pay or increase higher dividends. Chart is shown for illustrative purposes only. U.S. equities returned 6% on average since However, without dividends the annual gain drops to 1.7%; Treasury bonds returned 2.1% during the same period. According to inflationadjusted data compiled by the London Business School and Credit Suisse Group AG. 23

25 Equity Income Fund employs a three-step investment approach Our bottom-up fundamental philosophy targets high-quality U.S. companies with attractive valuations and healthy dividend yields We focus on QUALITY first We target companies with durable franchises, consistent patterns of earnings, high return on invested capital (ROIC), conservative financials and strong management teams Valuation is critical to our entry and exit points Dividends enhance total return We focus on companies with attractive dividend yields and low payout ratios Our approach leads to a portfolio that has historically shown less volatility than the market with less exposure to the downside The manager seeks to achieve the stated objectives. There can be no guarantee the objectives will be met. There is no assurance or guarantee that companies that issue dividends will declare, continue to pay or increase higher dividends. 24

26 We re focused on companies with durable franchises and steady patterns of earnings Broad emphasis on companies with steady state business models and growth opportunities drives attractive up/down capture ratio (2011 = 93.88%/63.44%) McDonald s and Tupperware Consumer names with strong brands, product loyalty and competitive advantages are being rewarded Emphasis on affordable luxury Hershey s and VF Corp. Attractive entry points on names that will benefit from an eventual housing recovery Home Depot As of March 31, The securities highlighted above were selected based on significance and are shown for illustrative purposes only. It is not a recommendation. 25

27 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Investment thesis: T. Rowe Price Group, Inc. Quality attributes Durable franchise Dominant mutual fund franchise with strong performance Ability to garner assets and take market share Steady pattern of earnings Organic growth rate amongst the highest in the industry Diversified business model with international expansion Strong cash flow generation and balance sheet Business model not predicated on spread lending or availability of capital Disciplined use of capital management Solid capital position providing flexibility going forward Clare Hart anticipates management will remain opportunistic buyers of the shares Valuation Trading at a discounted P/E multiple Net cash/investments on balance sheet TROW stock price (5 years) $70 $60 $50 $40 $30 $20 $10 Attractive dividend characteristics $0 Dividend yield: 2.1% 1-year dividend growth rate: 13% Payout ratio (as a % of trailing EPS): 47% Source: Bloomberg, FactSet, J.P. Morgan Asset Management; as of 3/31/12. Past performance does not guarantee future results. The security highlighted above was selected based on significance and are shown for illustrative purposes only. It is not a recommendation. There is no assurance or guarantee that companies that issue dividends will declare, continue to pay or increase higher dividends. 26

28 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Investment thesis: Cinemark Quality attributes Underappreciated franchise Third-largest theatre exhibitor in the U.S. U.S. box office trends have been remarkably resilient through economic cycles Material and growing Latin American footprint represents a hidden gem within portfolio Steady pattern of earnings Consistently outperforms industry with superior attendance and concession trends Geographically diversified portfolio drives attractive earnings growth profile Strong cash flow generation and balance sheet Attractive theater profit margins enables significant cash generation Ability to balance shareholder return of capital through dividends while investing in Latin America Valuation On an EV/EBITDA basis, it is trading at a discount to historic levels and peers despite better ROIC CNK Stock Price (since 4/23/07 IPO) $25 $20 $15 $10 $5 Attractive dividend characteristics Dividend yield: 3.8% 1-year dividend growth rate: 8% Payout ratio (in terms of operating cash flow): 24% $0 Source: Bloomberg, FactSet, J.P. Morgan Asset Management; as of 3/31/12. The security highlighted above was selected based on significance and are shown for illustrative purposes only. It is not a recommendation. There is no assurance or guarantee that companies that issue dividends will declare, continue to pay or increase higher dividends. 27

29 JPMorgan Equity Income Fund performance As of March 31, 2012 Trailing returns 1 year 3 years 5 years Since PM inception 10 years PM Inception date JPMorgan Equity Income Fund Sel % 23.67% 2.98% 5.86% 5.13% December 31, 2004 Russell 1000 Value Index 4.79% 22.82% -0.81% 3.38% 4.58% Excess vs. benchmark 6.22% 0.85% 3.79% 2.48% 0.55% Morningstar ranking Information ratio Morningstar ranking Sharpe ratio Morningstar ranking Calendar year returns JPMorgan Equity Income Fund Sel. 7.6% 18.9% 17.5% -29.7% 1.6% 21.0% 6.1% Russell 1000 Value Index 0.4% 15.5% 19.7% -36.9% -0.2% 22.2% 7.1% Excess vs. benchmark 7.2% 3.4% -2.2% 7.2% 1.8% -1.2% -1.0% The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call As of March 31, 2012, in terms of excess returns, the Equity Income Fund was ranked in the Morningstar Large Value Category for the following time periods: 39 out of 1,284 funds for the one-year period, 196 out of 1,224 funds for the three-year period, 81 out of 1,158 funds for the five-year period, 77 out of 1,093 funds since PM inception period, and 175 out of 920 funds for the 10-year period. As of March 31, 2012, in terms of information ratio, the Equity Income Fund was ranked in the Morningstar Large Value Category for the following time periods: 64 out of 1,284 funds for the one-year period, 24 out of 1,224 funds for the three-year period, 92 out of 1,158 funds for the five-year period, 66 out of 1,093 funds since PM inception period, and 147 out of 920 funds for the 10-year period. As of March 31, 2012, in terms of Sharpe ratio, the Equity Income Fund was ranked in the Morningstar Large Value Category for the following time periods: 64 out of 1,284 funds for the one year period, 24 out of 1,224 funds for the three-year period, 92 out of 1,158 funds for the five-year period, 66 out of 1,093 funds since PM inception period, and 147 out of 920 funds for the 10-year period. 28

30 Historically, our approach is challenged in high-beta markets, as it was in : Low-quality, high-beta stocks drove market returns beginning March 9, 2009 Calendar year returns JPM Equity Income Fund (Select Shares) 7.6% 18.9% 17.5% -29.7% 1.6% Russell 1000 Value Index 0.4% 15.5% 19.7% -36.9% -0.2% Excess Return vs. Russell 1000 Value Index 7.2% 3.4% -2.2% 7.2% 1.8% The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call Source: J.P. Morgan Asset Management; Frank Russell Company 29

31 Equity Income has top-quintile performance coupled with bottom-quintile volatility JPMorgan Equity Income Fund has top-decile performance coupled with bottom-decile volatility Risk over trailing five years* 25% 20% 16.38% 19.72% 20.25% Key takeaways: 15% 10% 5% Offers less volatility than both its peers and the benchmark Lower volatility: 9 th percentile standard deviation for trailing 5 years* 0% 100% 80% 60% 40% 20% JPMorgan Equity Income Fund Morningstar LCV Average Russell 1000 Value Index Down capture over trailing five years** 94.13% 72.76% In down markets, the Fund has declined only 72.76% as much as the declining overall market, indicating relative outperformance Better downside capture: 7 th percentile downside capture for trailing 5 years** Consistent performance: 1 st percentile batting average for trailing 5 years*** 0% 100% 80% 60% 40% 20% 0% JPMorgan Equity Income Fund Consistency over trailing five years*** 65% JPMorgan Equity Income Fund Morningstar LCV Average 50% Morningstar LCV Average Demonstrates the Fund s ability to meet or beat the market on a consistent basis Source: J.P. Morgan Asset Management, Morningstar; as of 3/31/12. Past performance is no guarantee of future returns. Performance is annualized, net of fee for Select Shares in the Morningstar Large Value Category. For the trailing five-year period, 1,170 total funds are measured. For the since inception period, 1,073 total funds are measured. * Risk is measured by standard deviation, which is a gauge of the variance of a manager's return over its average or mean. Statistically, it is the square root of the variance. ** Down capture measures performance of the manager relative to the index in down markets. *** Consistency is measured by batting average, which is calculated by dividing the number of quarters (or months) in which the manager beats or matches the index by the total number of quarters (or months) in the period. **** PM inception is August

32 Results: Excess returns As of March 31, 2012 JPM Equity Income Fund (Select: HLIEX) Morningstar Overall Rating Value 1 yr 3 yrs 5 yrs 10 yrs SI* Select Russell 1000 Value Index Excess JPM U.S. Equity Fund (Select: JUESX) Morningstar Overall Rating Core JPM Large Cap Growth Fund (Select: SEEGX) Morningstar Overall Rating Growth JPM Mid Cap Value (Select: JMVSX) Morningstar Overall Rating Mid Value Select S&P 500 Index Excess Select Russell 1000 Growth Index Excess Select Russell Mid Cap Value Index Excess JPM Value Advantage Select (Select: JVASX) Russell 3000 Value Index Morningstar Overall Rating Excess Mid Value The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call Source: Morningstar. Morningstar Ratings as March 31, 2012, for funds with greater than three-year track record. Past performance is no guarantee of future results. Different share classes may have different ratings. JPMorgan Equity Income Fund: 5 star Overall Rating (Select Shares); Large Value Category; 1,098 funds.three-year period, 5 stars; 1,098 funds. Five-year period, 5 stars; 973 funds. Ten-year period, 4 stars; 570 funds. JPMorgan U.S. Equity Fund: 4 star Overall Rating (Select Shares); Large Blend Category; 1,578 funds. Three-year period, 3 stars; 1,578 funds. Five-year period, 5 stars; 1,387 funds. Ten-year period, 4 stars; 843 funds. JPMorgan Large Cap Growth Fund: 5 star Overall Rating (Select Shares); Large Growth Category; 1,459 funds. Three-year period, 5 stars; 1,459 funds. Five-year period, 5 stars; 1,266 funds. 10-year period, 4 stars; 816 funds. JPMorgan Mid Cap Value Fund: 5 star Overall Rating (Select Shares); Mid-Cap Value Category; 353 funds. Three-year period, 4 stars; 353 funds. Five-year period, 4 stars; 309 funds. 10-year period, 5 stars; 153 funds. JPMorgan Value Advantage Fund: 4 star Overall Rating (Select Shares); Mid-Cap Value Category; 1,459 funds. Three-year period, 5 stars; 353 funds. Five-year period, 4 stars; 309 funds. 10-year period for all share classes is not yet rated. Ratings reflect risk-adjusted performance. Please see disclosure page for index definitions. 31

33 Next steps We believe equities offer attractive opportunities The market environment should favor fundamental research and active management Bottom line We want to be a critical component of your equity allocation and We want to be your most important asset manager and advisor 32

34 J.P. Morgan Asset Management Contact JPMorgan Distribution Services 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. This document is intended solely to report on various investment views held by J.P. Morgan Asset Management. 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 but should not be assumed to be accurate or complete. The 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. RISKS ASSOCIATED WITH INVESTING IN THE FUND JPMorgan Equity Income Fund The price of equity securities may rise or fall because of changes in the broad market or changes in a company s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries selected for the Fund s portfolio or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to stock market risk, meaning that stock prices in general (or in particular, the prices of the types of securities in which a fund invests) may decline over short or extended periods of time. When the value of a fund s securities goes down, an investment in a fund decreases in value. The Fund may invest in derivatives, which 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 Fund s original investment. Many derivatives create leverage, thereby causing the Fund to be more volatile than it would be if it had not used derivatives. RISKS ASSOCIATED WITH INVESTING IN THE FUND JPMorgan Large Cap Growth Fund The price of equity securities may rise or fall because of changes in the broad market or changes in a company s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries selected for the Fund s portfolio or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to stock market risk, meaning that stock prices in general (or in particular, the prices of the types of securities in which a fund invests) may decline over short or extended periods of time. When the value of a fund s securities goes down, an investment in a fund decreases in value. RISKS ASSOCIATED WITH INVESTING IN THE FUND JPMorgan Mid Cap Value Fund Mid-cap funds typically carry more risk than stock funds investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock. 33

35 J.P. Morgan Asset Management RISKS ASSOCIATED WITH INVESTING IN THE FUND JPMorgan U.S. Equity Fund The Fund may invest a portion of its securities in small-cap stocks. Small-capitalization funds typically carry more risk than stock funds investing in well-established "blue-chip" companies since smaller companies generally have a higher risk of failure. Historically, smaller companies' stock has experienced a greater degree of market volatility than the average stock. Mid-cap funds typically carry more risk than stock funds investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock. RISKS ASSOCIATED WITH INVESTING IN THE FUND JPMorgan Value Advantage Fund Mid-cap funds typically carry more risk than stock funds investing in well-established "blue-chip" companies. Historically, mid-cap companies' stock has experienced a greater degree of market volatility than the average stock. The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call , Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damage or losses arising from any use of this information. For each fund with a three-year history, Morningstar calculates a Morningstar Rating metric each month by subtracting the return on a 90- day U.S. Treasury bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk. The top 10% of funds in each broad asset class receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics. Past performance is no guarantee of future results. Different share classes may have different ratings. The Russell 1000 Index is an unmanaged index that measures the performance of the 1,000 largest companies (on the basis of capitalization) in the Russell 3000 Index. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index is an unmanaged index that measures the performance of the 2,000 smallest stocks (on the basis of capitalization) in the Russell 3000 Index. The S&P 500 Index is a capitalization-weighted index that measures the performance of 500 large-capitalization domestic stocks representing all major industries. All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. 34

36 J.P. Morgan Asset Management Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges, where applicable. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees for certain periods since the inception date. If fees had not been waived, performance would have been less favorable. There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management will continue to be employed by J.P. Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional's future performance or success. 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. is a member of 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. JPMorgan Chase & Co.,