EFTA01148989.pdf

J.P. Morgan Thematic Advisory Program (TAP) TAP U.S. Energy & Industrial Renaissance • Unique solution capturing investment opportunities across the entire U.S. energy value chain, by providing access to customized strategies originally created for TAP Energy • Focused approach opportunistically targeting companies across the market cap spectrum most directly benefiting from the rapidly changing U.S. energy landscape • Transformational growth theme still in the early stages as an investment opportunity, with hundreds of billions of dollars slated for deployment in this game-changing theme' Technological innovation has spurred a dramatic reversal in U.S. energy production and OBJECTIVE rapidly reduced dependency on foreign energy Petroleum & Natural Gas—millions of barrels/day (12-month moving average) Deliver long-term returns in excess 23 of broad U.S. equity markets (Russell 3000 Index) by investing in companies that we expect to benefit from their involvement with North American energy production or affordable energy prices within 21 19 17 15 U.S. Energy Production V i 13 the United States. 11 U.S. Net Imports 9 Shale Oil & Gas Development 7 IMPLEMENTATION 5 The majority of assets are expected 1937 1991 1995 1999 2003 2007 2011 2012 to be invested in portfolios that were Sources: U.S. Energy information Administration (CIA). Cornerstone Macro. data as of December 31.2012. custom-created for the TAP Energy Strategy, and will be implemented via individual equity securities, including Unconventional sources of supply are projected to drive continued production growth American Depositary Receipts (ADRs). U.S. Natural Gas production by source in a separate account. The strategy 2030 may also make use of mutual funds, 35 48% EIA forecast exchange traded funds (ETFs) and _ k 30 2010 exchange traded notes (ETNs) as 2000 23% appropriate. Energy and industrial 25 1% SHALE GAS companies are expected to constitute 20 the majority of the opportunity set. 15 OTHER UNCONVENTIONAL GAS to 5 ALL OTHER SOURCES 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 Sources: VA. I.P. Morgan Asset Management. forecasts are from the CIA Annual Energy Outlook 2013. Imports are mostly crude oil. petroleum and natural gas. Projections or forecasts are not reliable indicators of future performance and may not materialize. Assumptions used in their calculation are based upon historic data and market conditions. which are subject to change. ' Source: Tortoise Caput Ad'ASCfs. Data as of April 2013. Past performance is no guarantee of future results. The material above is intended as a general market commentary. Opinions expressed herein are those of J.P. Morgan Private Bank and may differ from those of other I.P. Morgan employees and affiliates. This information in noway constitutes I.P. Morgan research J.P.Morgan and should not be treated assuch. Further. the viewsexpressed herein may dine" from that comaned in J.P. Morgan research reports. The above summary/ Aces/Quotes/statistics have teen obtained from sources deemed to be reliable. but we do not guarantee their accuracy or completeness: any yield referenced is mdicaine and subject to change. Irneuots cannot invest directly man index. Please see index and key term definitions. and other important information at the end of this paper. INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE EFTA01148989 2 J.P. Morgan Thematic Advisory Program (TAP) U.S. Energy & Industrial Renaissance SUBSTANTIAL INFRASTRUCTURE NEEDED TO LINK NEW SUPPLY SOURCES WITH HIGH DEMAND REGIONS More than $100 Billion in pipeline Directional Pipeline Flows buildout is projected over next three years2 Western Canada Bakken Continued investment in infrastructure +750 kb/d +500 kb/d needs to be made to link the new sources of supply with traditional sources of demand Limited pipeline connectivity to • Flow of pipelines is being reversed to West coast Rockies reflect the change in energy supply +250 kb/d Limited pipeline dynamics connectivity to Mid-Continent +200 kb/d East Coast • Liquefied natural gas (LNG) import Permian Basin terminals are being retooled to +500 kb/d export LNG Source Tortoise Capital Advisors. data as of April 2013. Eagle Ford +800 kb/d Deepwater GOM +400 kb/d Sources: I.P. Morgan Asset Management. Plains All American Pipeline. kbitl • 1.000 barrels per day. CHEAP, ABUNDANT DOMESTIC GAS SHOULD SUPPORT MANUFACTURING, CHEMICAL & REFINING PROFITS IN THE U.S. Natural gas prices—U.S. dollars per million Btu 2012 YEAR•END PRICE 20 united States (Henry Hub I 1 18.8 Is Japan(cif) Germany (import price Union OW 16.8 16 UK(Heren NBP 1ndex)• 14 occocouniries (cif) 12 11.0 10 9.5 a 6 U.S. natural gas end users are 2 2.8 experiencing a significant cost 0 advantage 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: BP Statistical Review of Nbrld Energy lune 2013. • Sources: I9B0-1990German Federal statistical ciffice.1991-2012 German Federal Office of Economics and Damn Control (BAFA). I Source: Heren Energy Ltd. Note: Btu • British thermal units: cif • cost.insurance.frcight (average prices). OECD • Organaation for Economic Cooperation and Development. which is an organization of 30 countries seeking to stimulate economic progress and world trade. Past performance is no guarantee of future results. The material above is intended as a general market commentary. Opinions expressed herein are those of I.P. Morgan Prreate Bank and may differ from those of other I.P. Morgan employees and affiliates. This information in no way constitutes I.P. Morgan research and should not be treated as such. Further. the views expressed herein may differ from that contained In I.P. Morgan research reports. The above summary/prices/quotes/statistics have been obtained from sources deemed to be reliable. but we do not guarantee their accuracy or completeness: any yield referenced is indicative and subject to change. Investors cannot invest directly in an index. Please see index and key term definitions. and other important information at the end of this paper. EFTA01148990  I 3 TODAY'S ENERGY RENAISSANCE HAS CREATED GROWTH OPPORTUNITIES FOR COMPANIES ACROSS THE ENERGY VALUE CHAIN END USERS Exploration & Production Transport & Logistics Refining & Petrochemicals Exploiting unconventional oil and Pipelines. railroads and trucking, Benefiting from cheap, stable and shale gas plays in new geographies bringing energy to regional markets plentiful sources of raw materials, -100 COMPANIES faster. cheaper and safer driving higher margins -100 MIPS I -50 COMPANIES -50 COMPANIES Oil Services & Drilling Utilizing new technologies like Water & Environmental Industrials & Manufacturing directional drilling and hydraulic Providing the necessary well fluids Achieving new levels of profitability fracturing to unlock new resources and environmental safeguards to a and competitiveness due to lower -60 COMPANIES burgeoning client base fuel costs -50 COMPANIES -200 COMPANIES Sources: Factset. Impax Asset Management. data as of October. 2013. WHY THE TAP ENERGY & INDUSTRIAL RENAISSANCE STRATEGY? 1 Source INVEST HOLISTICALLY TARGET & CUSTOMIZE 2 Select 3 CONTINUALLY EVOLVE managers through rigorous money managers with Adjust portfolio as investment due diligence with -40 experienced stock selection expertise in targeted landscape shifts and new areas investment professionals. globally. sectors, and partner to create of growth emerge. specialized by asset class. customized sleeves. Track record of managing thematic Capture investment opportunities Build portfolios with complementary portfolios, with $11.6 billion assets across the entire U.S. energy value investments, seeking to enhance under management., chain (energy. industrials, materials, risk adjusted returns and express utilities and pipelines). Energy Renaissance theme. ' Data as of October 22.2013. Includes TAP strategies available to U.S. onshore investors. tacks:ling Absolute Return Ftxed Income (ARFI). Dynamic Yield Strategy (DVS). Emergirg Markets GraMh & Income (EMGO. and Multi-Asset Real Return Strategy (MARRS). Source: J.P. Morgan. Past performance is no guarantee of future results. The material above is intended as a general market commentary. Opinions expressed herein are those of I.P. Morgan Private Bank and may differ from those of other J.P. Morgan employees and affiliates. This information in no way constitutes J.P. Morgan research and should not be treated as such. Further. the views expressed herein may differ from that contained In I.P. Morgan research reports. The above summary/prices/quotes/statistics have been obtained from sources deemed to be reliable. but we do not guarantee their accuracy or completeness: any yield referenced is indicative and subject to change. Investors cannot invest directly in an index. Please see index and key term definitions. and other important information at the end of this paper. EFTA01148991 4 I J.P. Morgan Thematic Advisory Program (TAP) U.S. Energy & Industrial Renaissance TERMS PRODUCT FEES TAP Energy (the Tor [folio') is a discretionary account managed by 1.P. Morgan Product Fees (Effective January 2014) Chase Bank. N.A. (JPMCB). In addition to the fees listed below. the securities and In addition to the Portfolio Advisory Fees set forth above. your Account other products used to implement the Portfolio may have various intemal fees. will also bear its proportionate share of the fees and expenses incurred by such as management fees and other expenses. which are ultimately paid by the certain investments, as briefly discussed below. The prospectus. descriptive client. Brokerage fees and costs for executing securities transactions and other brochure. offering memorandum or similar documents describe the internal out•of-pocket expenses incurred on behalf of the account will also be passed product fees and expenses in detail. through to the account at cost. Please see the 1.P. Morgan Advisory Account Agreement and applicable TAP Portfolio Schedule for more information. Mutual funds. exchange-traded funds and exchange-traded notes: Fees are included within expense ratios as outlined in the prospectus. Portfolio Advisory Fees, as outlined in the schedule below. are based on the total market value of managed assets held as part of your client relationship. A Model Portfolio Providers: The Bank will engage one or more third•party client relationship consists of one or more permitted accounts formally grouped investment advisors or separate J.P. Morgan business units to provide model together for billing purposes. as determined by JPMCB in its sole discretion and portfolios, which may be used in the construction of the Portfolio. Each as may be acceptable under applicable law. Certain accounts. including certain model portfolio provider will charge a Model Portfolio Fee. set forth below, types of managed accounts. may not be eligible for aggregating in a client on the portion of your Account allocated to the provider's model portfolio. relationship with other account types. Advisor: Model Portfolio Fee (Annualized) IMPAX OAS% Account /Portfolio Minimum: $100,000 J.P. Morgan Chase Bank. N. A. 0A5% Fees: Client Relationship Portfolio SouthernSun 0.55% Market Value <$1 Million* Advisory Fee The Mitchell Group OAS% First $250,000 Note: Your total Model Portfolio Fee will be based on the proportions of your Next $250.000 Account allocated to each model portfolio: these proportions will fluctuate over Next $250.000 time due to. among other factors, the relative performance of the assets in each model portfolio. Additionally. the Bank may add. remove or modify model portfolio providers and may change the proportions of the Portfolio allocated to any model portfolio. As a result. your Model Portfolio Fees will vary from period Account /Portfolio Minimum: $100,000 to period. and may increase in the future: your actual Model Portfolio Fee may Fees: Client Relationship Portfolio be found on your monthly statement. Market Value 2 $1 Million* Advisory Fee The Bank may add or replace an existing model portfolio provider with one or First $1 Million 1.00% more model portfolio providers that charge an annualized Model Portfolio Fee up to 1.00%; as such, your total Model Portfolio Fee may. at any given Next $4 Million 0.70% time. be as high as 1.00%. but will not exceed that level. The Bank will notify Next $5 Million 0.50% you of any additions. removals or other material changes to the model Over $10 Million 0.25% portfolio providers. Liquidity? Daily Subscriptions: Daily Benchmark Russell 3000 Please see the applicable TAP Portfolio Schedule for certain conditions applicable to relationships that fluctuate above and below the $1 million threshold. ' Daily liquidity means that JPMCB will process redemption requests during normal business hours and will make redemption proceeds available upon settlement. However. liquidity may be affected by market conditions, applicable law. and the actions and policies of issuers used to implement a Portfolio. EFTA01148992 INDIVIDUAL RETIREMENT ACCOUNTS (IRAs) DEFINITIONS The market value of IRA assets invested in open-end mutual funds Note: Indices are for illustrative purposes only. are not investment products, and ('JPMorgan Funds") managed by JPMorgan Chase & Co. affiliates (collectively. may not be considered for direct investment. The information provided herein 1.P. Morgan") will be included in the total market value of the Portfolio for does not accurately reflect the performance of any individual fund or the effects purposes of fee calculation. but the Portfolio Advisory Fee will be offset via of relevant fees and charges. Indices are an inherently weak predicative or a credit to the account in an amount equal to the IRA's pro rata share of the comparative tool. advisory fees paid to J.P. Morgan by such mutual 1PMorgan Funds. The market value of other funds, including any alternative investment fund managed by S&P 500 a capitalization weighted index of 500 stocks from a broad range of J.P. Morgan. also will be included in the total market value of the Portfolio for industries. The component stocks are weighted according to the total market purposes of fee calculation. but the Portfolio Advisory Fee will be offset via value of their outstanding shares. The impact of a component's price change is a credit to the account in an amount equal to all fees payable to 1.P. Morgan proportional to the issue's total market value. which is the share price times the affiliates in connection with the provision of services to such fund. to the number of shares outstanding. Russell 3000 is a capitalization weighted index extent required by applicable law. that measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The market value of assets invested in equity or fixed income strategies separately managed by 1.P. Morgan or with respect to which l.P. Morgan is a model portfolio provider. or any single line bonds or equities (not following a IMPORTANT INFORMATION focused strategy), will be included in the total market value of the portfolio 'I.P. Morgan Private Sank' is a marketing name for private banking business for purposes of calculating the Portfolio Advisory Fee, but will not be subject conducted by 1PMorgan Chase & Co. and its subsidiaries worldwide. Bank to an additional J.P. Morgan product fee. products and services are offered by JPMorgan Chase Bank. and its affiliates. Securities are offered by J.P. Morgan Securities LIE. member NYSE. FINRA. Further. the Portfolio is designed to hold specific securities. JPMCB may in the SIPC, and other affiliates globally as local legislation permits. This material future determine to implement the Portfolio using a lPMorgan Fund or Funds is not intended as an offer or solicitation for the purchase or sale of any with respect to which you or any other client investing through his or her IRA has financial instrument. 1.P. Morgan Securities LLC or its brokerage affiliates not given his or her consent. In that situation.WMCB may decide to substitute a may hold a position or act as market maker in the financial instruments of different security (typically an open-end mutual fund issued by a party that is not any issuer discussed herein or act as an underwriter, placement agent. advisor affiliated with 1PMCB) for such 1PMorgan Fund or Funds in your Portfolio, in which or lender to such issuer. The views and strategies described herein may not case the performance of your Portfolio will be different from that of such other be suitable for all investors. The discussion of loans or other extensions of Portfolios of clients who are invested. 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 RISK CONSIDERATIONS the understanding that we are not rendering accounting. legal or tax advice. You should consult with your independent advisors concerning such matters. Strategy investments are subject to the Asks associated with investments in equity securities including American depository receipts (ADRs). and will not necessarily A composite is an aggregation of a number of portfolios into a single group be profitable. JPMCB does not guarantee the future performance of any strategy. that is representative of a particular investment strategy. style or objective. The guarantee any specific level of performance or guarantee that 1PKICIrs investment composite returns are the asset-weighted average of the gross portfolio returns. decisions. strategies or overall management will be successful or that the client's investment objectives will be met. The investment decisions JPMCB will make with Material contained herein is intended as a general market commentary. respect to Portfolios and for clients are subject to various market. currency. Opinions expressed herein are those of J.P. Morgan Private Bank and may differ economic. political and business risks. and will not necessarily be profitable. from those of other 1.P. Morgan employees and affiliates. This information in no way constitutes J.P. Morgan research and should not be treated as such. Further, As the Strategy is to invest in a concentrated portfolio of equity securities including the views expressed herein may differ from that contained in LP. Morgan research ADRs. investors in the Strategy should have a higher tolerance for risk of loss of reports. The summary/prices/quotes/statistics contained herein have been income and/or capital. In addition to those risks. investors in the Strategy should obtained from sources deemed to be reliable. but we do not guarantee their be prepared to accept higher volatility and greater concentration in the Strategy accuracy or completeness: any yield referenced is indicative and subject to compared to investing in a more diversified portfolio. The investment objectives change. Additional information is available upon request. stated herein involve some risk of loss of income and capital. ADRs are depositary receipts for foreign securities denominated in U.S. dollars and traded on U.S. securities markets. ADRs are subject to the same currency. political and economic risks as the underlying shares of the foreign issuer. ADRs may be subject to foreign-tax withholding. Exchange-traded note (ETN) is designed to deliver the total return on a broad index or individual commodity. ETNs pose risks that are very different from risks associated with exchange traded funds (ETFs) or mutual funds that might invest in the same index or commodity. An ETF or mutual fund holding is a share in a portfolio of assets that is held separately from the assets of the portfolio's manager. ETNs are unsecured bonds or notes of the issuer. which is obligated to deliver the return of the index or commodity tracked by the ETN in accordance with the terms of the specific ETN. ETN investors have no ownership interest in the underlying index or commodity. and are wholly dependent on the issuer's ability to pay. If the issuer becomes insolvent. ETN holders may lose their entire investment. The investment objectives stated herein involve some risk of loss of capital. J.P.Morgan 02013 JPMorgan Chase & Co. All rights reserved. 09B-0892-03 EFTA01148993 J.P.Morgan EFTA01148994