EFTA00292162.pdf

Alternative Investments Pipeline 2013 Presentation An investment in alternative investment strategies involves substantial risks, and potential investors should clearly understand the risks involved. Investing in alternative investment strategies is speculative, not suitable for all clients, and intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: loss of all or a substantial portion of the investment due to leveraging, short-selling or other speculative investment practices; lack of liquidity in that there may be no secondary market for the fund and none expected to develop; volatility of returns; restrictions on transferring interests in the fund; absence of information regarding valuations and pricing; delays in tax reporting; less regulation and higher fees than mutual funds; and advisor risk. Investment Products: - Not FDIC Insured - No Bank Guarantee - May Lose Value Please read Important disclosures at the end of the presentation. EFTA00292162 J.P. Morgan — a world leading manager of alternative assets Our global reach, immense infrastructure and industry partnerships — combined with the depth and breadth of our research — allow us to build comprehensive alternatives portfolios that we believe are essential in today's increasingly complex markets J.P. Morgan alternative investments • $118 billion in alternative assets under management' • Extensive global network from which to source new managers early and exclusively • Valuable industry insight from Highbridge multi-strategy hedge fund platform3 • Dedicated team of over 100 professionals based in New York, Hong Kong, London and Geneva focused on manager selection, ongoing due diligence, fund communication for private clients, tax and legal support, and fund administration 2011 Rank Largest Hedge Fund Firms2 Hedge Fund AUM (Sbn) 1 Bridgewater Associates 76.10 2 J.P. Morgan Asset Management3 53.60 3 Man Group° 36.50 4 Brevan Howard Asset Management 34.20 5 Winton Capital Management 29.96 6 Och Ziff Capital Management 28.80 7 BlackRock 28.76 8 BlueCrest Capital Management 28.60 9 Baupost Group 25.20 10 AQR Capital Management 23.20 11 Paulson & Co. 22.64 12 Angelo, Gordon & Co. 22.07 ' Approximate figure. as ol September 30. 2012. Source: JPIAorgan Chase & Co. Earnings Release Financial Supplement. Third Quarter 2012. Includes hedge funds. airrency. real estate and private equity. Based upon assets under management (AUM) as of January 2012. Source: Institutional Investor magazine. May 2011. 3 Highbridge is 100% coned by J.P. Morgan Asset Management Hollings LLC.. which is a subsidiary of J.P. Morgan Chase & Co. and an aff &ate of J.P. Morgan Securities LLC Highbridge is also an affiliate of J.P. Morgan Chase & Co.: On Oaober27. 2010, Highbridge Capital Management purchased a majority interest in Gawm Investimentos. Man Group completed the acquisition of GLG Partners on October 14. 2010. J.P. Morgan 1 EFTA00292163 The Alternative Investments platform: experience, access and client focus Alternative Investments platform organized around serving client needs Due diligence / Manager selection Portfolio construction Risk management / Monitoring Accounting / Control Investor relations • Access to leading 3rd -party and J.P. Morgan opportunities (e.g. funds, fund of funds, secondary investments', directs2, co-investments;) • $57 billion of client capital invested across hedge funds, private equity and real asset opportunities4 • $28 billion in single and multi-manager hedge funds4 - multi-strategy and sector-specific exposure - leveraging Highbridge Capital Management's 521 billion multi-strategy hedge fund platform4 • $29 billion in private equity and real assets4 - diversification across vintage year, sectors and geography • Portfolio construction process that: - delivers alternatives in the context of a client's broader investment portfolio - integrates our firm's strategic assumptions and manager selection more closely • Dedicated team of over 50 professionals based in New York, Hong Kong, London and Geneva focused on manager selection, ongoing due diligence and fund communication for private clients - continuous review and adjustment of hedge fund manager platform - leverages J.P. Morgan's footprint to access a wide manager universe acts as a client advocate throughout ongoing manager relationships • Tax and legal structuring capability leveraged to benefit global client base • Investor relations support via dedicated marketing communications team ne private equity secondary mance' revers to me pu cnase aria sale or preexisting investor commaments to private equity tunas and me purcnase and sale or affect investments m me unoe rying Nom companies neo oy private equity funds. Secondaryprivate equity investors seek to analyze the underlying assets in existing portfolios and adjust their valuation and fiskadjusted return expectations accordngPi. 8y acquiring significantly funded interests with the potential for near term liquidity events. secondary investors seek to mitigate the risk associated with the long capital drawdown period of primary private equity investing. =Directs refers to investments made directly into a private equity fund. 3Co.Investrnent refen to an investment made by an investor alongside a private equity fund. 'Estimated as of October 1, 2012. Source: J.P. Morgan. Hight:ridge al). Morgan JPMorgan Chase 8 Co. and its affiliates do not provide tax advice. 2 EFTA00292164 Current key themes in the hedge fund space Event Driven Equities • High levels of cash on corporate balance sheets and free cash flow are drivers for the opportunity set • Cash has greater potential to benefit equity holders through share buybacks, higher dividends, merger activity, asset purchases, spin-offs, and investment in capital expenditures • Activists seemingly are gaining more institutional investor support in affecting change amongst management teams in underperforming companies the free cash flow yield of U.S. stocks is close to a 12 - year high... Free cash flow to assets ratio of U.S. large cap growth stocks, percent 12% 10% 8% 6% 4% • „ , „ , , o o N N M Cel yy yy U1 1^- CO CO 01 01 0 0 o 9 o o 9 o 9 o o o o 0 0 0 o 9 o 9 c, - - .1, CC — 6. .5 6 ma t, .aJj -, CU 3 al Ca 0 IV al 3 la 2, a, a, u-<2m<z2O-- u_ LA 2O <Zia g Source:Corporate reports. Empirical Research Penner& As of Jily 2012. ... while forward P/E ratios are close to a 12-year low 26 24 22 20 18 16 14 12 Forward PIE ratio of the S&P 500 10 0 0 o 0 0 0 I 9 N I o N c Cu 8 . 6 5 , .7( 2 45.9 < O mm 0. 9 Ul 9 Ul o o 0 S., U C C -5 W Co cu r , CO CO al al 0 r 0 9 0 9 0 0 0 pr cc -S S 6 CCCn.6 aci nso = ram cio Source: FaciSet. As of August 2012. The information contained herein is not intended as a solicitation for any product or service offered by J.P. Morgan a any of its affiliates. Past pert ormance Is no guarantee of future results and Investors may get back less than the amount Invested. Indices are not investment products. Its not pos te to invest directly in an index. Please see -Definitions of Indices for additional information. J.P.Morgan 3 EFTA00292165 Current key themes in the hedge fund space (cont.) Relative Value / Distressed • Refinancing opportunities should continue to be profitable due to the benign rate environment and increasingly cooperative capital markets • Premium for "on-the-run" versus "off-the-run" high yield bonds and leveraged loans are leading to lower dollar prices and higher yields for "off-the-run" assets, • In the leveraged loan market specifically, unrated loans are trading at yield concessions because collateralized loan obligations ("CLO's") have limited capacity to hold unrated paper • Mature part of the liquidation / litigation cycle where there is more clarity on the amount of claims versus assets; these "process-driven" positions tend to have low correlation to the market Liquid securities only represent 18% of the high yield bond market... $700 $600 g $500 Z- $400 $300 $200 $100 $0 > $1.0 B $0.4 B to $1.06 < 3400mm Average Average Yield Price to Worst ML US HY Bond Index $104.53 6.47% Overlapping US Fund Investments 893.82 12.57% ML Euro HY Bond Index €97.81 7.79% Overlapping Euro Fund Investments €90.88 13.15% ... and 32% of the leveraged loan market $350 $300 t". $250 $200 $150 - $100 - $50 - $0 > $1.0bn $0.4bn - $1.0bn < 5400mm Average Average Yield Price to Wont CS US Lev Loans Index $96.93 5.24% Overlapping US Fund Investments 894.95 73.40% CS Euro Lev Loans Index €86.84 4.42% Overlapping Euro Fund Investments €83.31 14.74% Source: PB Platform Credit Manager. The information contained herein is not intended as a solicitation for any product or service offered by J.P. Morgan or any of its athletes. Past pedormance Is no guarantee of future results and Investors may get back less than the amount Invested. Indices are not investment products. Its not pos§ble to invest dimity in an index. Please see 'Definitions of Indices" for additional information. High Yield bonds are speculative non-investment grade bonds that have higher risk of default or other adverse °fell events which are appropriate for high risk investors orgy. '1241.the-run' refers to the most recently issued securities of a security that is periodically issued. Older issues are referred to as 'off.the.run*. 4 J.P. Morgan EFTA00292166 Current key themes in the hedge fund space (cont.) Long / Short Equity • Potential for a sustained recovery in cyclicals as North American dominance in unconventional drilling coincides with a housing recovery • The technology sector may continue to benefit from network upgrades, mobile computing, data protection and storage, while also providing a great source of potential short opportunities from aging business models and technologies • P/E ratios for emerging markets are lagging developed markets and there is room for greater convergence and multiple expansion, given low price-to-book ratios and valuations at the lower end of historical ranges Cyclicals have never been this cheap versus Defensives 190% - 170% - 150% 130% 110% • 90% 70% • 50% M ill N cn r— M in t Cl en IA Ni CTr en IA Ni 01 r N. N. N. N. IS 00 00 00 00 en en en CI Cl 0 0 0 0 0 r al al al of to to to to to of of of al of 0 0 0 0 0 0 IN IN Source:J.P. Morgan, Dalaslream. As of October 2012. Innovation within technology provides attractive opportunities Wavle, Winners Winners Miners IBM Mimosa Cato Google Uniwee Compaq Lucent Amazon NCR 0th Nortel Ray Gonad Data Wel Nokia YS.00 Honeywel Galewity Ericsson Baidutcra NAN Equinnefil Hewlett Packard Sim Microsyslems Xerox Wing /1\ IAAINFRNAES 1960-1980 NETWORKING 19E0-2000 INTERNET 2000.? MOEULM' 2009-7 PERSCNALCOMPUTING 190)-2000 Lotst-r, Mat P.>-fl ,, Mr•laCIptitrf: 0-.±1 Lk+. C't.rd", ve" lcvn: r•.,i1C161 f•.01Cli-t Winners APPn? Gins? HTC? Ouatomm? Oracle? CLOUD COMPUTING 2010-? O.,17.C1,1 Source: Coatue The information contained herein is not intended as a solicitation br any Adductor service offered by J.P. Morgan or any of its affiliates. Past performance's no guarantee of I Inure results and Investors may gel back less than the amount Invested. J.P.Morgan 5 EFTA00292167 Current key themes in the hedge fund space (cont.) Structured Credit • There are more "buy and hold" investors (such as insurance companies) willing to hold positions coupled with a finite and declining supply of non-agency RMBS • Certain structured credit instruments are exhibiting seemingly mispriced default rates and higher loss adjusted yields relative to other fixed income asset classes • CLOs in the U.S. and Europe may present attractive yields to maturity with a significant margin of safety for older deals along with well-structured new issues which have revived interest in the asset class The am ou nt of outstanding non-agency RNIBS has declined recently Outstanding Non-Agency RMBS (in $B) $2,500 - $2,000 - $1,500 - $1,000 - $500 - $0 $2,184 $1,873 $1,554 $1,282 1 $1,092 $1,048 1 1 2007 2008 2009 2010 2011 Q12012 Source: BlackRock. New York Federal Reserve. Certain fixed income instruments have attractive yield characteristics Sample yields on fixed income instruments 12% i l II 111111111 •SecuritizedProducIs !I YOI 2L CO -2 .4.• -42 ii 'a g '11 131 3 8 a 4 a. 8 E x '5 2 ce 2 t. V el - 09- '' < _, 0. 0 „. 2 er t.) vI ca cc . tzt --. 2 0 < 0 m 1 d .± i 3 a ECn A 2 -ijj t.) m .: 5: "E' tiij O co co su a., .c ro 2 2 J..) Iri .E ,E ,ca V CC ILI O. .. ,.. 1 r 121 2 cc 10% 8% 6% 4% 2% 0% Source: Bloomberg as of Sept. 2012. 'Tax Equivalent Yield assuming federal tax rate of 35% The information contained herein is not intended as a solicitation for any product or service offered by J.P. lAorgan or any of its affiliates. Past performance Is no guarantee of future results and Investors may get back less than the amount Invested. J.P. Morgan 6 EFTA00292168 Anticipated pipeline Hedge Funds: current funds & pipeline Closed Diversified Relative Value/ vent Driven/ Distressed Global Macro/ Opportunistic Multi- FoF/ Strategy Diversified RV Low RV Beta/Net Credit Event Event Equity Credit Highbridge Capital Corbin Capital Partners Highbridge Statistical Opportunities GoldenTree Partners (master fund) Pershing Square JPM-Blackrock Opportunistic RMBS Och Ziff IPM Multi- Strategy Funds Gracie Credit Opportunities GoldenTree Credit Opportunities Third Point York Credit Opportunities Blackstone Partners BlueBay Emerging Market Fund Paulson Enhanced Trian Apollo SVF Avenue York European Opportunities Two Sigma Global Access HF Strategies Portfolio Highbridge Credit Opportunities Thematic [ IPM Access Multi- Strategy Fund BlueMountain US Credit GoldenTree CLO fund Event Low Bear/et Halcyon JPMAAM UCITs FoF J.P. Morgan Leveraged Loans DoubleLine Leveraged Fund Perry Southpaw Mariner PSAM World Arb Highbridge Leveraged Loans II deart:nary Bridgewater Gavea Brevan Howard EM Local FR Fund Global Access Macro Strategies Portfolio Systematic Winton Futures Fund Highbridge Quantitative Commodities Winton DOTS Fund Cantab Broad-Based US Sector Specific US K2 Fund of Funds Highbridge long/short TPG.Axon Manikay Brahman Explorer Hedge Fund Strategies Maverick Equity Low Bete/Net 4, Balyasny Standard Pacific tte<hrio Caduceus (healthcare) Malta (financials) Impala Diversified (cyclicals) Van Eck Hard Assets 2% Geography Sped& US Marshall Wace (Europe) Och-Ziff Asia Asia Hedge Fund Strategies GLG European US As of November 2012 Note: Indvidual offemgs are subject to capacity. These characteristics represent the characteristics typical of these types of alternative investment funds. There can be no assurance that any specific fund will possess these typical characteristcs. This materials intended to inform you of products and services offered by the Private Bankat J.P. Morgan. This document is not intended as an offer or soliclabon for the purchase or sale of any finance, instrument. J.P. Morgan 7 EFTA00292169 2012 private equity and real asset pipeline Vintage 2012 Highbridge Men II Blackstone Real Estate Fund VII Riverstone V Fund categories: 650 Capital Solutions II p JPM Secondaries Fund II Silver Lake IV Private Lending Energy Tech/Growth Equity Real Estate Emerging Markets Diversified buyout KKR Asian II Colony Single Family Residential Jan Feb Mar Apr May Jun Jul Aug Sep Oct As ol November 20I2(subJect to change) Nov Dec ► J.P.Morgan 8 EFTA00292170 2013 themes in private equity and real estate investing Private Lending ■ ■ ■ Debt market volatility and scarcity of financing creates an opportunity for private credit providers to deploy capital at substantial premiums to public high yield Dislocation in the commercial real estate credit markets provides attractive opportunities for private real estate lending Private capital solutions to middle market companies with diminished access to debt capital ■ Ongoing capital markets dislocation as leveraged credit issuance remains at 25% of peak ■ Private equity investments becoming more attractive as the EU stabilizes and valuations Europe trough ■ Prolonged dislocation in the European banking market creates both private equity and credit investment opportunities ■ Capitalize on secular increase in middle class consumer spending driven by urbanization, strong demographics and rising incomes Emerging • Partner with, and professionalize, family-owned businesses in Asia Markets • Focus on growing sectors such as branded consumer products, retail, healthcare, specialty manufacturing, financial services, etc ■ Continued stress on the balance sheets of owners as well as on underlying properties creates large number of motivated sellers Real Estate ■ Opportunities exist to buy attractive assets at a discount to replacement cost ■ Improving fundamentals may produce a sustained recovery in commercial real estate prices and transaction volume ■ High free cash flow yields, attractive public market valuations and low cost of debt provide a constructive backdrop for private equity investing Diversified • Focus on industry-leading businesses where private owners can improve margins and private increase cash flow through operational expertise equity • Ability to allocate to distressed and distressed-for-control transactions in a low growth environment As of November 2012 (subiea to change). Expected Implementation ■ Commercial Real Estate Debt Fund (Q1 2013) ■ Sector Specific Private Credit Fund (Q3 2013) Expected Implementation ■ Global Buyout Fund with European Expertise (Q1 2073) ■ European Private Lending Fund (Q3 2013) Expected Implementation ■ Asian Consumer Growth Equity Fund (Q2 2073) ■ Broad-based Pan-Asia Buyout Fund (Q4 2073) Expected Implementation ■ Opportunistic Real Estate (Q4 2013) Expected Implementation ■ U.S. Middle Market Buyout Fund (Q2 2013) ■ Global Buyout Fund with Distressed Investing Expertise (Q4 2013) J.P.Morgan 9 EFTA00292171 2013 private equity and real asset pipeline Vintage 2013 CONFIDENTIAL . Global buyout with . European expertise(E) . Late stage technology venture (C) Asia consumer growth equity (A) Commercial real estate debt(0) • U.S. middle market . buy-out(E) European private lending (B) Sector specific credit (B) Fund categories: Growth Equity and Emerging Markets(A) Credit (B) Sector Specific (C) in Real Estate (D) Nis Buyout (E) r Global buyout with 1 " distressed investing ' expertise(E) I ,— • • .ri Broad-based Pan-Asia buyout (A) Opportunistic real estate (D) 1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct As of December 2012 (subject to change) J.P. Morgan Nov Dec 10 EFTA00292172 The private equity pipeline offers broad diversification across geographies, market caps and vintage years Strategy 1992-1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201 Mega-cap KKR 2006 Large-cap Apollo V Apollo VI CDESt VII KKR Euro II /WAX EurOVII Apollo VII KKR Euro III OMR VIII Blackstone VI KKR North America MIScap WM CF I 1PM Partners IPM CF II Di amond Castle IV CCMP II IPM CF III small-cap Mid Ocean Micro-cap Eastport OrbiMed OrbiMed IV OrbiMed Israel 1PM Digital Venture capital; Growth equity IPM VC I, TI. I, nil, n III, OdtIlded Partners /H Whitney III IPM VCR, TL V, 2000 II Credit IFI Whitney Men Highbridge Men i Sankaty DIP Opp. Apollo El* GS0 Capital Solutions Providence TMT Debt Avenue ESSF II Apollo EPF II Emerging markets 1PMP Asia Opportunit Y PM J P Latin AMerlai Carlyle Asia II KKR Asia Carlyle Asia III I. Capital Asia Graved IV 1PM China PE KR Asian II In dustry specific Corsair II Widen; Advent BCOM Anderson Kayne 11 Kayne And IIIerson I.C. Flowers II Lion Capital Silver Lake RIvenlone J.C. Flowers III Q nergy V Uantum E Providence Equity VII River stone Global V Silver L ake IV Hybrid CPEPS I CPEPS II 1PM Secondary 1PM Secondary It Total M. 13 7 a 2 1 1 3 • 10 6 5 5 7 6 Target funds are anticipated opportunities. %Mich are subject to change.and may noi be suitable For al investors. Please note that individual offerings are subject to capaaty. This material is intendedto inform you of products and senrices offered by the Private 8ankat J.P. Morgan. This document is not intended as an offer or se/Saigon for the purchase or sale of any financial instrument J.P. Morgan 11 EFTA00292173 The real asset platform taps increasing global opportunities and alternative exposures Strategy Corselus 2002 IPM Real Estate Income Si Growth 2003 2000 Guggenheim Real 2005 2006 JPM Alternative Property 2007 Jpm Infrastructure Investments 2008 2009 2010 JPM Estate Income Id Growth? 2011 2012' Value-Add JPM European Property Opportunistic JPM Urban Renaissance Blackstone RE CMBS Stanvood Global Opportunity Fund VIII Blackstone Commercial Real Estate Debt Stanwood Distressed Opportunity Fund IX — kstone Real ate Debt Fund VII ony Single Family idential Emerging market JPM India Property JPM Greater China Property JPM Asian Infrastructure Total 1: 1 0 1 1 1 0 1 1 leaks denotes open ended hinds. Bold denotes hinds in pipeline ' Target kinds are anticipated cpponunilies.which are subject to change. and may not be suitable for all nvestors. 2 2010 relaunch of fund. Please note that individual offerings are subject to capacity. This material is intended to inform you of products and services offered by the Private Bank at J.P. Morgan. This document is not intended as an offer or solicitation for the purchase or sale of any financial instrument. 0 7_ 0 J. P. Morgan 12 EFTA00292174 Definitions of terms and indices Buyout: An investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquirer thereby 'buys out' control of the target company. A buyout can take the form of a leveraged buyout, a venture capital buyout or a management buyout. Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various [ranches. A CLO is a type of collateralized debt obligation. The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the USD-denominated leveraged loan market The index inception is January 1992. Leveraged loans are loans to non-investment grade companies. Purposes include: refinancing, leveraged buy-out, leveraged re-capitalization, corporate acquisition, stock buyback and working capital. M&A and refinancing usually the biggest categories, although recently LBOs picked up to around 1/3. The Merrill Lynch High-Yield Master II Index is a market value-weighted index of all domestic and Yankee high-yield bonds (dollar-denominated bonds issued in the U.S. by foreign banks and corporations), including deferred-interest bonds and payment in-kind securities. Issues included in the index have maturities of one year or more, and have a credit rating lower than BBB-/Baa3, but are not in default. The index is not subject to any of the fees or expenses to which the portfolio would be subject. It is not possible to invest in this index. The index is used for comparison purposes only. It should not be assumed that the portfolio will invest in any specific bonds that comprise the index. It is not possible to invest directly in an index. RMBS: Residential Mortgage-Backed Security; a security whose payments are derived from payments on residential mortgages. The S&P 500 Index ("S&P 500") consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value. All returns include reinvested dividends except where indicated otherwise. The S&P Total Return Index also includes dividends reinvested. CONFIDENTIAL J.P.Morgan 13 EFTA00292175 Key risks of investing in alternatives General/Loss of capital. An investment in alternative investment funds involves a high degree of risk. There can be no assurance that the alternative investment fund's return objectives will be realized and investors in the alternative investment fund could lose up to the full amount of their invested capital. The alternative investment fund's fees and expenses may offset the alternative investment fund's trading profits. Lack of information. The industry is largely unregistered and loosely regulated with little or no public market coverage. Investors are reliant on the manager for the availability, quality and quantity of information. Information regarding investment strategies and performance may not be readily available to investors. Limited liquidity. Interests are not publicly listed or traded on an exchange or automated quotation system. There is not a secondary market for interests, and as a result, invested capital is less accessible than that of traditional asset classes. Also, withdrawals and transfers are generally restricted. Dependence on Trading Manager. Performance is more dependent on manager-specific skills, rather than broad exposure to a particular market. Event risk. Given their niche specialization, market dislocations can affect some strategies more adversely than others. Speculation. Alternative investments often employ leverage, sometimes at significant levels, to enhance potential returns. Investment techniques may include the use of derivative instruments such as futures, options and short sales, which amplify the possibilities for both profits and losses and may add volatility to the alternative investment fund's performance. Potential conflicts of Interest The payment of a performance based fee to the Trading Manager may create an incentive for the Trading Manager to cause the alternative investment fund to make riskier or more speculative investments than it would in the absence of such incentive. Valuation. Because of overall size or concentration in particular markets of positions held by the alternative investment fund or other reasons, the value at which its investments can be liquidated may differ, sometimes significantly, from the interim valuations arrived at by the alternative investment fund. Leverage. The capital structures of many financial services companies typically include substantial leverage. In addition, investments may be consummated through the use of significant leverage. Leveraged capital structures and the use of leverage in financing investments increase the exposure of a company to adverse economic factors such as rising interest rates, downturns in the economy or deteriorations in the condition of the company or its industry and make the company more sensitive to declines in revenues and to increases in expenses. Currency risks and Non-United States investments. Investments may be denominated in non-U.S. currencies. Accordingly, changes in currency exchange rates, costs of conversion and exchange control regulations may adversely affect the dollar value of investments. Financial services industry risk factors. Financial services institutions have asset and liability structures that are essentially monetary in nature and are directly affected by many factors, including domestic and international economic and political conditions, broad trends in business and finance, legislation and regulation affecting the national and international business and financial communities, monetary and fiscal policies, interest rates, inflation, currency values, market conditions, the availability and cost of short-term or long-term funding and capital, the credit capacity or perceived creditworthiness of customers and counterparties, and the volatility of trading markets. Financial services institutions operate in a highly regulated environment and are subject to extensive legal and regulatory restrictions and limitations and to supervision, examination and enforcement by regulatory authorities. Failure to comply with, any of these laws, rules or regulations, some of which are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties, fines, suspension or expulsion, and termination of deposit insurance, which may have material adverse effects. Risks associated with infrastructure investments generally. An infrastructure investment is subject to certain risks associated with the ownership of infrastructure and infrastructure-related assets in general, including: the burdens of ownership of infrastructure assets; local, national and international economic conditions; the supply and demand for services from and access to infrastructure; the financial condition of users and suppliers of infrastructure assets; changes in interest rates and the availability of funds which may render the purchase, sale or refinancing of infrastructure assets difficult or impracticable; changes in environmental laws and regulations, and planning, laws and other governmental rules; environmental claims arising in respect of infrastructure assets acquired with undisclosed or unknown environmental problems or as to which inadequate reserves have been established; changes in the price of energy, raw materials and labor; changes in fiscal and monetary policies; negative developments in the economy that depress travel; uninsured casualties; Force majeure acts, terrorist events, under-insured or uninsurable losses; sovereign and sub-sovereign risks; contract counterparty default risk. Additional risks: There may be additional risks inherent in the underlying investments within funds. CONFIDENTIAL J.P.Morgan 14 EFTA00292176 Important information CONFIDENTIAL IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. Each recipient of this presentation, and each agent thereof, may disclose to any person, without limitation, the U.S. income and franchise tax treatment and tax structure of the transactions described herein and may disclose all materials of any kind (including opinions or other tax analyses) provided to each recipient insofar as the materials relate to a U.S. income or franchise tax strategy provided to such recipient by JPMorgan Chase & Co. and its subsidiaries. Bank products and services are offered by JPMorgan Chase Bank, N.A. and its affiliates. Securities products and services are offered by J.P. Morgan Securities LLC., member NYSE, FINRA and SIPC. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P. Morgan Securities LLC. or its brokerage affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer. The views and strategies described herein may not be suitable for all investors. The discussion of loans or other extensions of credit in this material is for illustrative purposes only. No commitment to lend by J.P. Morgan should be construed or implied. This material is distributed with the understanding that we are not rendering accounting, legal or tax advice. Estate planning requires legal assistance. You should consult with your independent advisors concerning such matters. We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice. This material should not be regarded as research or a J.P. Morgan research report. Opinions expressed herein may differ from the opinions expressed by other areas of J.P. Morgan, including research. The investment strategies and views stated here may differ from those expressed for other purposes or in other contexts by other J.P. Morgan market strategists. J.P.Morgan J.P. Morgan Securities LLC. may act as a market maker in markets relevant to structured products or option products and may engage in hedging or other operations in such markets relevant to its structured products or options exposures. Structured products and options are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other governmental agency. In discussion of options and other strategies, results and risks are based solely on hypothetical examples cited; actual results and risks will vary depending on specific circumstances. Investors are urged to consider carefully whether option or option• related products in general, as well as the products or strategies discussed herein are suitable to their needs. In actual transactions, the client's counterparty for OTC derivatives applications is JPMorgan Chase Bank, N.A., London branch. For a copy of the "Characteristics and Risks of Standardized Options" booklet, please contact your J.P. Morgan Advisor. Real estate, hedge funds, and other private investments may not be suitable for all individual investors, may present significant risks, and may be sold or redeemed at more or less than the original amount invested. Private investments are offered only by offering memoranda, which more fully describe the possible risks. There are no assurances that the stated investment objectives of any investment product will be met. Hedge funds (or funds of hedge funds): often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; are not required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. Further, any number of conflicts of interest may exist in the context of the management and/or operation of any hedge fund. JPMorgan 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. Call JPMorgan Distribution Services at 1.800.480.4111 or visit www.jpmorganfunds.com for the prospectus. Investors should carefully consider the investment objectives, risks, charges and expenses of the mutual funds before investing. The prospectus contains this and other information about the mutual fund and should be read carefully before investing. As applicable, portions of mutual fund performance information may be provided by Upper, a Reuters company, subject to the following: C 2010 Reuters. All rights reserved. Any copying, republication or redistribution of Upper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Upper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Past performance Is no guarantee of future results. Additional information is available upon request. O 2012 JPMorgan Chase & Co. 15 EFTA00292177