AVAILABLE FOR PUBLIC CIRCULATION NEW JPMorgan Europe Strategic Dividend Fund Asset Management Company of the Year, Asia + Important information 1. The Fund invests at least 70% in equity securities of companies which are based in, listed on stock exchange of or operate principally in Europe and are expected to pay dividends. The Fund will have limited RMB denominated underlying investments. 2. The Fund is therefore exposed to a range of investment related risks which includes equity, dividend-paying equity risk (no guarantee that the companies that the Fund invests in and which have historically paid dividends will continue to pay dividends or to pay dividends at the current rates in the future), diversification, liquidity, currency, distribution (no assurance on distribution, distribution rate or dividend yield) risks. For currency hedged classes, risks associated with the hedging and class currency. For RMB hedged class, risks associated with the RMB currency and currency hedged classes risks. RMB is currently not freely convertible and RMB convertibility from offshore RMB (CNH) to onshore RMB (CNY) is a managed currency process subject to foreign exchange control policies of and restrictions imposed by the Chinese government. There can be no assurance that RMB will not be subject to devaluation at some point. The Manager may, under extreme market conditions when there is not sufficient RMB for currency conversion and with the approval of the Trustee, pay redemption monies and / or distributions in fund s base currency. 3. Where the income generated by the Fund is insufficient to pay a distribution as the Fund declares, the Manager may at its discretion determine such distributions may be paid from capital including realised and unrealised capital gains. Investors should note that the payment of distributions out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to that original investment. Any payments of distributions by the Fund may result in an immediate decrease in the net asset value per unit. 4. Investors may be subject to substantial losses. 5. Investors should not solely rely on this document to make any investment decision. Feel the Power of European Dividend Investing! Focus on quality European dividend opportunities Diversifying risk within the dividend universe Multiple currency classes available with monthly distribution* (*Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3 ) Special initial charge offer # + Issued by The Asset, 2015 award, reflecting performance of previous calendar year. # Valid until 31.05.2016. Special offers are only applicable to Investment Centre s and J.P. Morgan etrading s clients. www.jpmorganam.com.hk
Why Europe for dividend investing? 1. Europe supportive policy fueling recovery The case for Europe has been sound despite headlines that have caused concern among investors. The European Central Bank (ECB) is committed to boosting the Eurozone economy, which provides strong support for the market. Over the past few years, the ECB has been aggressively loosening monetary policy, with its balance sheet seeing rapid expansion. The asset purchase scheme and further cuts to the deposit rate can help to maintain low financing costs, boost credit demand and keep a lid on the value of the euro all of which are positive for the European economy. ECB BALANCE SHEET EUR trillions 5 Forecast 4 3 2 1 0 '05 '07 '09 '11 '13 '15 '17 Source: ECB, FactSet, J.P. Morgan Asset Management. Guide to the Markets Asia 1Q 2016. Data reflect most recently available as of 29.02.2016. Fiscal tightening has weighed on Eurozone growth over the last five years. But austerity started to give way to a more neutral policy in many countries in 2015. This trend is expected to continue in 2016, delivering a modest amount of fiscal easing across Europe as a whole. EUROZONE UNEMPLOYMENT AND CONSUMER CONFIDENCE 13% 12% 11% 10% 9% 8% 7% 6% '00 Eurozone unemployment rate Eurozone consumer confidence '02 '04 '06 '08 '10 '12 '14 '16 5 0-5 -10-15 -20-25 -30-35 -40 Source: Eurostat, FactSet, J.P. Morgan Asset Management. Guide to the Markets Europe 1Q 2016. Data reflect most recently available as of 29.02.2016. JPMORGAN EUROPE STRATEGIC DIVIDEND FUND 2
2. Hunt for yield set to continue in a low rate environment With some major central banks starting to pursue a negative interest rate policy, the US Federal Reserve is also expected to lower the pace of its rate hikes. Real and nominal yields remain at low levels. In Asia, the real deposit rate is low across markets and investors have been eager to put their money to work in higher-yielding assets. AVERAGE ANNUAL REAL DEPOSIT RATE Based on respective country s deposit rate less year-over-year inflation 6% 2000 2007 2008 2016 YTD 3% 0% 2.5% 2.5% 3.3% 1.8% 0.9% 1.0% 1.6% 0.3% 0.6% 0.6% 0.1% 0.0% 1.0% -0.1% -0.3% -0.5% 0.0% -1.4% 0.3% 2.6% -3% -6% India Korea Australia Taiwan Japan China Thailand US Malaysia Singapore Hong Kong -2.4% -3.8% Source: Bloomberg, FactSet, J.P. Morgan Asset Management. Guide to the Markets Asia 1Q 2016. Data reflect most recently available as of 29.02.2016. The ongoing search for income has been a major theme for investors, and with interest rates still at an all-time low, this theme will likely become even more important going forward. For income investors, Europe offers an attractive set of opportunities in the equity space. 3. Europe as the place to go for dividend investors When it comes to equity dividends, Europe sits in an enviable place among other regions, with higher quality in corporate governance as well as higher dividend yields compared with other developed markets such as the US and Japan. DIVIDEND PAYOUT RATIO AND YIELD^ 80% 60% 12-month trailing dividend yield (RHS) Dividend payout ratio (LHS) 6% 5% 4% 40% 3% 20% 2% 1% 0% Australia Brazil South Africa Malaysia Singapore Taiwan Mexico Thailand Hong Kong Indonesia Russia China Japan US Europe 0% Source: FactSet, MSCI, Standard & Poor s, J.P. Morgan Asset Management. Guide to the Markets Asia 1Q 2016. Data reflect most recently available as of 29.02.2016. ^ Dividend yield and dividend payout ratio are trailing (past 12 months). Both yields and payout ratio are from respective MSCI indices, except the US, for which the S&P 500 is used. JPMORGAN EUROPE STRATEGIC DIVIDEND FUND 3
Why invest in the JPMorgan Europe Strategic Dividend Fund? Focus on the top 30% of the highest-yielding stocks in the European equity universe Dynamic management to seek best dividend yield plays while avoiding traps Focus on quality European dividend opportunities With an aim to provide income and long term capital growth, the JPMorgan Europe Strategic Dividend Fund invests at least 70% of its non-cash assets in equity securities of companies which are based in, listed on stock exchange of or operate principally in Europe and are expected to pay dividends. PROPORTION OF COMPANIES BY DIVIDEND YIELD IN THE PAN-EUROPEAN INVESTMENT UNIVERSE High Dividend yield Potential holdings Insufficient yield 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ~1,800 stocks Source: J.P. Morgan Asset Management, as of 29.02.2016. Dividend yield is an average of historic and forward yields. The above is shown for illustrative purposes only. The fund managers identify high dividends by focusing on the top 30% of the highest-yielding stocks in the universe, with rigorous qualitative and quantitative fundamental analysis to avoid stocks that are considered to have unstainable yields or weak momentum. The portfolio is managed dynamically with a view to seeking fundamentally sound yield opportunities within the high dividend space. JPMORGAN EUROPE STRATEGIC DIVIDEND FUND 4
Target number of holdings in the initial portfolio ~290 Source: J.P. Morgan Asset Management, as of 29.02.2016. The above number of holdings is the Investment Manager s targets only and is subject to change depending on market conditions. There is no guarantee that these will be achieved. Diversifying risk In constructing a portfolio that seeks to maximise dividend exposure, the fund managers assign an equal active weight to stocks that are included in the portfolio, while owning none of the stocks they do not favour from a yield perspective. There is no constraint on active country allocation within Europe, which contributes to the building of a portfolio that enhances risk diversification. The target number of holdings in the initial portfolio is around 290 stocks. INITIAL PORTFOLIO TARGET ALLOCATION COUNTRY BREAKDOWN Cash 5.5% Others 4.1% Italy 3.2% Norway 3.8% Switzerland 3.9% Finland 4.4% Netherlands 4.8% 5.7% Sweden 6.0% 9.4% Spain Germany 10.3% France 38.9% United Kingdom Source: J.P. Morgan Asset Management, as of 29.02.2016. The above allocation is the Investment Manager s targets only and is subject to change depending on market conditions. There is no guarantee that these will be achieved. INITIAL PORTFOLIO TARGET ALLOCATION SECTOR BREAKDOWN Cash 5.5% Information Technology 1.5% Health Care 2.8% Materials 3.0% Energy 5.1% Utilities 7.2% 30.5% Financials Telecommunication Services 7.8% Consumer Staples 10.6% 11.9% 14.1% Consumer Discretionary Industrials Source: J.P. Morgan Asset Management, as of 29.02.2016. The above allocation is the Investment Manager s targets only and is subject to change depending on market conditions. There is no guarantee that these will be achieved. Multiple currency share classes To help meet investors need for different currencies, the Fund is available in USD Hedged, HKD Hedged, EUR, AUD Hedged and RMB Hedged classes, with a monthly distribution* feature. * Aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from Refer to important information 3 capital. JPMORGAN EUROPE STRATEGIC DIVIDEND FUND 5
Who might consider investing in the JPMorgan Europe Strategic Dividend Fund? Investors seeking: Equity dividend opportunities in Europe Active management of diversified investments Multiple currency choices Investors should seek professional advice regarding the suitability of any investment products. QUICK FUND FACTS: Investment Objective Fund Managers To aim to provide income and long term capital growth by investing at least 70% of its non-cash assets in equity securities of companies which are based in, listed on stock exchange of or operate principally in Europe and are expected to pay dividends. Michael Barakos / Thomas Buckingham Current Charges Initial: 5.0% of NAV Redemption: 0% Management Fee: 1.5% p.a. Available Classes USD Hedged (mth) Class HKD Hedged (mth) Class EUR (mth) Class AUD Hedged (mth) Class RMB Hedged (mth) Class Dealing and Valuation Financial Year End Daily 30 September For more information, please call us or visit our Investment Centre: 7 th Floor, Chater House, 8 Connaught Road Central, Hong Kong 2265 1188 The RMB Hedged (mth) Class is not available in the J.P. Morgan Asset Management Investment Centre. The AUD / RMB Hedged Classes are not recommended for investors whose base currency of investment is not in the aforesaid currencies. The information contained in this document does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service. Informational sources are considered reliable but you should conduct your own verification of information contained herein. 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 forecast, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated. The (mth) classes aim at monthly distribution. Dividend rate is not guaranteed. Distributions may be paid from capital. Refer to important information 3 Investment involves risk. Past performance is not indicative of future performance. Please refer to the offering document(s) for details, including risk factors before investing. This document has not been reviewed by the SFC. Issued by JPMorgan Funds (Asia) Limited. If, at any time, you do not wish to receive marketing materials from us, please write to GPO Box 11448, Hong Kong and we will cease to send you marketing materials without charge. MKT160070-D JPMORGAN EUROPE STRATEGIC DIVIDEND FUND 6