JPMorgan American Investment Trust plc
Annual General Meeting
13 May 2015
Agenda
Performance Review
Current Economic and Market Data
Current Asset Allocation and Fund Structure
1
2014 Results
NAV return1
20.8%
Ordinary share price2
22.6%
S&P 500 Composite Index (£)
20.4%
NAV relative return
0.4%
Interim Dividend (Net) payment (October 2013)4
1.0p
Dividend (Net) Payment (May 2014) 4
1.7p
Interim Dividend (Net) Payment (October 2014)
1.0p
Final Dividend (Net) Proposed Payment (May 2015)
2.25p
1 Source:
= 20.4% increase
on 2013
J.P. Morgan and based on cum income debt at par. 2 Source: Morningstar.
Source: Morningstar. The Company’s benchmark index is the S&P 500 Index, net of the appropriate withholding tax, expressed in sterling total return terms.
4The October 2013 and May 2014 dividend amounts have been restated due to the sub-division of each existing ordinary share of 25p into five ordinary shares of 5p each on 8th May 2014.
3
2
Performance Attribution – Contributions to Total Returns
JPM American Investment Trust plc
Contributions To Total Returns
Year ended 31st December 2014
Net Asset Value Total Return (In sterling terms)
20.8%
Benchmark Total Return (In sterling terms)
20.4%
Excess Return
0.4%
Contributions To Total Returns
Large Cap Portfolio
1.1%
Allocation Effect
-0.8%
Selection Effect
1.9%
Small Cap Portfolio
Allocation Effect
-0.5%
-0.5%
Cash
-0.2%
Gearing
1.5%
Cost Of Debt
-0.5%
Currency Hedge
-0.5%
Share Issuance
0.2%
Management Fee/Expenses
-0.6%
Performance Fee
-0.1%
Total
0.4%
Source: Wilshire, JPMAM and MorningStar. All figures are on a total return basis. Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark index.
3
JPMorgan American Investment Trust:
2014 performance attribution (USD)
For the twelve month period ending 31 December 2014
Excludes Cash & Gearing (USD)
1
Attribution Summary
Stock:
+1.85%
Sector: -0.75%
Stock attribution (relative to S&P 500)
Ending Weight
Difference
Return
Impact
Negative
contributors
Apple
2.40%
40.60%
0.53%
Southwest Airlines
0.62%
126.30%
Yahoo
1.06%
Hewlett Packard
Amazon*
Positive
contributors
Ending Weight
Difference
Return
Impact
Peabody Energy*
0.00%
-54.04%
-0.44%
0.39%
Terex*
0.00%
-23.55%
-0.29%
44.56%
0.37%
Devon Energy
1.09%
0.37%
-0.28%
1.25%
46.03%
0.34%
General Motors*
-0.26%
-16.46%
-0.28%
-0.65%
-22.18%
0.33%
Intel*
-0.96%
44.27%
-0.24%
Sector attribution (relative to S&P 500)
2.2%
0.7%
Information
Technology
1
Consumer
Staples
0.4%
Industrials
0.3%
Telecom
Services
0.0%
Materials
-0.2%
-0.4%
Energy
Utilities
-0.6%
Consumer
Discretionary
-0.6%
Health Care
-0.6%
Financials
Attribution breakdown equates to the gross performance of the portfolio. *Indicates stock was not held as of 31 December 2014. Source: Wilshire. The portfolio 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. 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 positions on behalf of its clients in any or all of the aforementioned securities.
4
Four Months to April 2015 Results
NAV return1
+2.4%
Ordinary share price2
-4.1%
S&P 500 Composite Index (£)3
NAV relative return
1 Source:
3
5
3.3%
-0.9%
J.P. Morgan and based on cum income with debt at par. 2 Source: Morningstar.
Source: Morningstar. The Company’s benchmark index is the S&P 500 Index, net of the appropriate withholding tax, expressed in sterling total return terms.
Performance in USD
As of 30 April 2015
NAV Performance (USD)
Dec - April
1 Year
3 Years
5 Years
10 Years
1.23%
12.29%
16.10%
12.67%
8.47%
Competitive ranking percentile 1
-
27
16
23
3
Number of Funds 1
-
417
387
351
255
JPMAIT – Net of Fees
Source: J.P. Morgan Asset Management, Morningstar, Bloomberg.
Performance figures of those of the JPM American Investment Trust using month end CAPITAL NAV’s released to the market on 30 April 2015. The figures are on a total return basis in USD.
1 Competitive universe includes all Europe Open ended, US Large Cap Blend Category funds, in the Morningstar Global database.(only the oldest share class of each fund was included)
6
Agenda
Performance Review
Current Economic and Market Data
Current Asset Allocation and Fund Structure
7
Economic Growth and the Composition of GDP
Real GDP
Components of GDP
Year-over-year % chg
10%
4Q14 nominal GDP, trillions USD
Real GDP
8%
$19
4Q14
YoY % chg:
2.4%
QoQ % chg:
2.2%
$17
3.3% Housing
13.4% Investment Ex-housing
$15
6%
18.0% Gov’t Spending
Average:
3.0%
4%
$13
$11
2%
$9
$7
0%
68.5% Consumption
Expansion
Average:
2.3%
-2%
$5
$3
-4%
$1
-6%
'65
'70
'75
'80
'85
'90
'95
'00
'05
'10
'15
-$1
- 3.1% Net Exports
Source: BEA, FactSet, J.P. Morgan Asset Management.
Values may not sum to 100% due to rounding. Quarter over quarter percent changes are at an annualized rate. Average represents the annualized growth rate for the
full period. Expansion average refers to the period starting in the second quarter of 2009.
Guide to the Markets – U.S.Data are as of 31 March 2015
8
We think we have a few years left in an up cycle
Durable goods and fixed investment as % of GDP
% of GDP
30%
28%
26%
12/14
24.1%
LT average: 25.7%
24%
22%
20%
18%
51
56
61
66
71
76
81
86
Source: J.P. Morgan Asset Management and US Bureau of Economic Analysis. Data as of 31 December 2014.
9
91
96
01
06
11
Sector performance in 2015 could depend in part on interest rates
Sector correlations to rates
2-year rolling, 1994-2013
Correlations Between Weekly Stock Returns and Interest Rate Movements
Weekly S&P 500 returns, 10-year Treasury yield, rolling 2-year correlation, May 1963 – Mar. 2015
0.8
0.6
Positive
relationship
between yield
movements
and stock
returns
Correlation Coefficient
0.4
Min
When yields are
below 5%, rising
rates are
generally
associated with
rising stock
prices
Current
Max
Average
Utilities
Less
positively
correlated
with rising
interest
rates
Telecom
Cons. Staples
0.2
Materials
Technology
0
Health Care
-0.2
Energy
Negative
relationship
between yield
movements and
stock returns
-0.4
More
positively
correlated
with rising
interest rates
Cons. Disc.
S&P 500
-0.6
Industrials
Financials
-0.8
0%
2%
4%
6%
8%
10%
12%
14%
16%
10-Year Treasury Yield
Source: Standard & Poor’s, U.S. Treasury, FactSet, J.P. Morgan Asset Management.
Returns are based on price index only and do not include dividends. Markers represent monthly 2-year correlations only.
Guide to the Markets – U.S.
Data are as of 31 March 2015
10
-1.00 -0.50 0.00
0.50
1.00
Annual Returns and Intra-year Declines
S&P 500 Intra-year Declines vs. Calendar Year Returns
Despite average intra-year drops of 14.2%, annual returns positive in 27 of 35 years*
40%
34
31
30%
27
26
26
30
27
26
26
23
20
20
17
20%
15
15
14
12
10%
4
2
11
9
7
1
YTD
13
13
4
3
.4
%
0
-2
-3
-10%
-10
-7
-8
-8
-9
-8
-7
-6
-6
-8
-9
-17 -18 -17
-12
-19
-20
-8
-10
-11
-13
-20%
-4
-5
-13
-7
-8
-6
-7
-10
-10
-14
-16
-17
-19
-23
-30%
-28
-30
-34
-34
-40%
-38
-50%
-49
-60%
'80
'85
'90
'95
'00
'05
'10
Source: Standard & Poor’s, FactSet, J.P. Morgan Asset Management.
Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest market drops from a peak to a trough during
the year. For illustrative purposes only. *Returns shown are calendar year returns from 1980 to 2014 excluding 2015 which is year to date.
Guide to the Markets – U.S. Data are as of 31 March 2015
11
'15
S&P 500 Index at Inflection Points
U.S. Equity: Valuation Measures
Valuation
Measure
Description
P/E
Price to Earnings
CAPE
Shiller's P/E
Div. Yield
Dividend Yield
REY
Real Earnings Yield
P/B
Price to Book
P/CF
Price to Cash Flow
EY Spread
EY Minus Baa Yield
Historical Averages
1-year
5-year
ago
avg.
Latest
16.9x
15.5x
10-year
avg.
25-year
avg.*
13.8x
15.7x
13.6x
27.8
25.9
22.7
22.9
25.4
1.9%
1.9%
2.0%
2.0%
2.1%
3.9%
4.2%
5.0%
4.5%
2.9%
2.8
2.7
2.3
2.4
2.9
11.8
11.1
9.4
9.7
11.3
1.4%
1.7%
2.2%
1.3%
-0.6%
S&P 500 Index: Forward P/E Ratio
S&P 500 Earnings Yield vs. Baa Bond Yield
26x
14%
24x
12%
22x
20x
+1 Std. Dev.: 19.0x
S&P 500 Earnings Yield
(Inverse of fwd. P/E): 5.9%
10%
18x
Current: 16.9x
16x
Average: 15.7x
14x
12x
6%
-1 Std. Dev.: 12.4x
4%
10x
8x
'92
'94
'96
'98
'00
'02
8%
'04
'06
'08
'10
'12
'14
2%
Moody’s Baa Yield: 4.5%
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
Source: Standard & Poor’s, FactSet Robert Shiller, FRB, J.P. Morgan Asset Management. Price to Earnings is price divided by consensus analyst estimates of earnings per share for the next 12
months. Shiller’s P/E uses trailing 10 years of inflation adjusted earnings as reported by companies. Dividend Yield is calculated as the trailing 12-month average dividend divided by price. Real
Earnings Yield is defined as (trailing four quarters of reported earnings/price) - year over year core CPI inflation. Price to Book Ratio is the price divided by book value per share. Price to Cash
Flow is price divided by NTM cash flow. EY Minus Baa Yield is the forward earnings yield (consensus analyst estimates of EPS over the next 12 months divided by price minus the Moody’s Baa
seasoned corporate bond yield. *P/CF is a 20 - year avg. due to cash flow data availability. Data are as at 31 March 2015
12
Corporate Profits and Leverage
S&P 500 Earnings Per Share
Profit Margins
Index quarterly operating earnings
11%
$31
4Q14*: $26.77
S&P 500 Operating EPS % of Sales per Share**
After-Tax, Adj. Corp. Profits, % of GDP
10%
4Q14*:
9.0%
9%
$27
2Q07: $24.06
8%
4Q14:
8.7%
7%
$23
6%
5%
$19
4%
'86
$15
'91
'96
'01
'06
'11
Total Leverage
S&P 500, ratio of total debt to total equity, quarterly
220%
$11
200%
180%
$7
160%
Average: 161%
140%
$3
1Q15:
103%
120%
100%
-$1
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
80%
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
Source: BEA, Standard & Poor’s, Compustat, FactSet, J.P. Morgan Asset Management.
EPS levels are based on operating earnings per share. *Most recently available data is 4Q14, which is a Standard & Poor’s estimate. **S&P 500 Operating EPS % of Sales per Share fell to 0% in
4Q2008 and is adjusted on the chart. Past performance is not indicative of future returns.
Data are as of 31 March 2015
13
Energy: Supply, Demand and Prices
Change in Production and Consumption of Oil
Price of Oil
Production, consumption and inventories, million barrels per day
Brent crude, nominal prices, USD/barrel
$160
2013
2014
2015*
Production
$140
Growth since
2013
$120
$80
U.S.
12.4
14.0
14.9
20.8%
OPEC
36.5
36.5
36.5
-0.1%
Other
42.0
42.6
42.7
1.5%
Global
90.9
93.0
94.1
3.5%
19.0
19.0
19.3
2.0%
$100
$60
$40
Mar. 2015:
$58.17
$20
$0
'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
Consumption
U.S. Natural Gas Production***
U.S.
Trillions of cubic feet, USD
35
Europe
14.3
14.2
14.1
-1.6%
Japan
4.5
4.3
4.2
-7.5%
25
China
10.3
10.7
11.0
6.8%
20
Other
43.2
44.0
44.5
3.2%
15
Global
91.2
92.2
93.1
2.1%
10
Inventory Change
-0.3
0.9
1.0
30
EIA
Forecast**
Gbl. Natural Gas Prices
Japan
Germany
U.S.
$13.37
$9.29
$2.74
Shale Gas
Other****
5
0
'95
'00
'05
'10
'15
'20
'25
Source: EIA, Factset, J.P. Morgan Asset Management. *Forecasts are from EIA Short-Term Energy Outlook and start in 2015. ** Forecasts are from EIA Annual Energy Outlook and start in 2014.
*** Production numbers as of 2015. **** Other includes conventional on and offshore natural gas drilling, tight gas, and coalbed methane. Natural gas prices are $/mmbtu and are of February 2015.
Guide to the Markets – U.S. Data are as of 31 March 2015
14
Return and Valuation Dispersion
S&P 500 Sector P/Es Relative to History
S&P 500 Sector Projected 2015 Annual EPS Growth*
15 year NTMA P/E, standard deviations above/below average
60%
4.2
53.5%
28.4%
40%
4
15.9% 13.3%
9.5%
20%
3
8.2%
4.9%
3.5%
3.1%
3.0%
0%
-20%
-0.7
-40%
-55.7%
Telecom
Telecom
Info Tech
Industrials
Health Care
Cons. Disc.
S&P 500
Materials
Financials
Cons. Staples
-80%
Utilities
-60%
-1
Energy
-0.6
Financials
-0.4
Cons. Staples
0.1
0
Utilities
0.1
S&P 500
0.2
Materials
0.3
Cons. Disc.
0.3
Industrials
0.4
Info Tech
1.2
1
Health Care
2
Energy
Inexpensive Expensive
relative to history relative to history
5
Sector Dispersion
Standard deviation across annual S&P 500 sector returns
14%
13%
VIX (RHS)
Dispersion (LHS)
24
12%
22
11%
20
10%
9%
18
8%
16
7%
14
6%
12
5%
Dec '13
10
Feb '14
Apr '14
Jun '14
Aug '14
Oct '14
Dec '14
Feb '15
Source: Standard & Poor’s, CBOE, Factset, , J.P. Morgan Asset Management. *EPS growth projections are Standard and Poor’s estimates for full year 2015
Data are as of 31 March 2015
15
26
Consumer Finances
Consumer Balance Sheet
Household Debt Service Ratio
4Q14, Trillions of dollars outstanding, not seasonally adjusted
Debt payments as % of disposable personal income, sa
$100
Total Assets: $97.1tn
3Q-‘07 Peak: $82.1tn
1Q-‘09 Low: $67.1tn
14%
4Q07:
13.2%
13%
$90
12%
Homes: 24%
$80
11%
$70
Other Tangible: 6%
1Q15**:
9.9%
10%
Deposits: 9%
9%
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14
$60
$50
1Q80:
10.6%
Household Net Worth
Pension Funds: 21%
Billions USD, not seasonally adjusted
$90,000
$40
$30
$20
Other Financial
Assets: 39%
Other Non-revolving: 1%
Revolving*: 6%
Auto Loans: 7%
Other Liabilities: 9%
Student Debt: 9%
Total Liabilities: $14.2tn
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$10
Mortgages: 68%
$0
1Q15**:
$83,899
2Q07:
$67,866
$20,000
$10,000
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
Source: (Left) FRB, J.P. Morgan Asset Management. Data include households and nonprofit organizations. (Right) BEA, FRB, FactSet , J.P . Morgan Asset Management. SA - seasonally adjusted.
*Revolving includes credit cards. **1Q15 household debt service ratio and 1Q15 household net worth are J.P. Morgan Asset Management estimates. Values may not sum to 100% due to rounding.
Data are as of 31 March 2015
16
The S&P 500 is a well-diversified benchmark
Market Cap Concentration By Regional Index, Top 10 Names As A %
Of Total Market Cap
Regional Index Sector Composition*
Consumer Discretionary
Energy
Health Care
Information Technology
Telecommuncation Services
Consumer Staples
Financials
Industrials
Materials
Utilities
70%
60%
100%
90%
50%
80%
70%
40%
60%
30%
50%
40%
20%
30%
20%
10%
10%
0%
0%
S&P 500
S&P UK
S&P 350
(Europe)
S&P/TOPIX S&P Asia 50
(Japan)
Source: (Both), J.P. Morgan Asset Management. Data are as of 31 March 2015 * GICS Sectors
17
S&P/Topix Index (Japan)
S&P UK Index
S&P 350 (Europe)
S&P 500 (US)
Agenda
Performance Review
Current Economic and Market Data
Current Asset Allocation and Fund Structure
18

Asset Allocation

Sector Weights

Stock Weights
Asset Allocation
31-Mar 15
31-Dec 14
30-Sep 14
30-Jun-14
31-Mar-14
31-Dec-13
30-Sep-13
30-Jun-13
Large Cap Portfolio
94.0%
95.4%
95.7%
94.7%
96.3%
95.6%
90.6%
90.2%
Small Cap Growth Portfolio
4.7%
3.5%
3.4%
3.6%
2.8%
3.2%
6.0%
5.8%
Liquidity
1.4%
1.3%
1.2%
1.5%
0.6%
0.7%
2.8%
4.0%
Unrealized Hedge Value
-0.1%
-0.2%
-0.3%
0.1%
0.1%
0.3%
0.5%
-0.1%
Total*
100%
100%
100%
100%
100%
100%
100%
100%
Actual Gearing
109%
109%
109%
109%
109%
109%
105%
105%
Source: J.P. Morgan Asset Management as at 31 March 2015. 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. *Figures may not add up to 100% due to the removal of the allocation to the US Small & Micro Cap and unquoted portions of the
Investment Trust from prior periods.
19
Financial Metrics: Illinois Tool Works
Source: (Both), J.P. Morgan Asset Management, Company Data
20
Financial Metrics: Apple
Source: (Both), J.P. Morgan Asset Management, Company Data
21
JPM American Investment Trust: Sector allocation
As of 30 April 2015
Absolute
24.8%
Relative
15.3%
14.9%
12.2%
11.4%
9.0%
8.3%
4.8%
2.7%
2.3%
1.1%
0.7%
-1.1%
-1.3%
Information
Technology
Health Care
Financials
For illustrative purposes only.
1Relative to the S&P 500 Index. Source: Wilshire (excludes cash).
22
Consumer
Staples
Consumer
Discretionary
-1.2%
Industrials
-0.2%
0.8%
-0.1%
-1.9%
Energy
Telecom
Services
Utilities
-2.4%
Materials
JPM American Investment Trust: Stock allocation
As of 30 April 2015
Top 10 Holdings
(%)
Top 5 Overweights1
(%)
Apple
6.8
Apple
2.9
Microsoft
4.5
Microsoft
2.3
Wells Fargo
2.3
Northrop
1.7
Gilead Sciences
2.2
Time Warner
1.6
Bank Of America
2.2
CenturyLink
1.5
Top 5 Underweights1
(%)
Pfizer
2.1
Johnson & Johnson*
-1.5
Time Warner
2.0
General Electric*
-1.5
Citigroup
1.9
Berkshire Hathaway*
-1.4
Northrop
1.9
JPMorgan Chase & Co2
-1.3
Cisco
1.8
Procter & Gamble*
-1.2
For illustrative purposes only.
1Relative to the S&P 500 Index. 2The portfolio is unable to hold JPMorgan Chase for regulatory reasons. *Indicates a stock not held as of 30 April 2015.
Source: Wilshire (excludes cash).
23
Conclusions

Valuations are high but not alarming

The US continues its modest growth trajectory

Corporate America continues to prudently manage its capital
24
J.P. Morgan Asset Management
Any forecasts or opinions expressed are J.P. Morgan’s own at the date of this document and may be subject to change. The value of investments and the income
from them may fluctuate and your investment is not guaranteed and investors may not get back the full amount invested. Past performance is not a guide to future
performance. Exchange rates may cause the value of underlying overseas investments to go down or up. Investments in smaller companies may involve a higher
degree of risk as they are usually more sensitive to market movements. Investments in emerging markets may be more volatile than other markets and the risk to
your capital is therefore greater. Also, the economic and political situations may be more volatile than in established economies and these may adversely influence
the value of investments made. Telephone lines are recorded and may be monitored for security and training purposes
25