4Q | 20131Q | 20154Q | 2013As of September 30, 2013

1Q | 2015As of December 31, 2014

Guide to the MarketsGuide to the MarketsGuide to the MarketsGuide to the Markets

1

Global Market Insights Strategy Team

Americas Europe Asia

Dr. David P. Kelly, CFANew York

Stephanie H. FlandersLondon

Tai HuiHong Kong

Andrew D. GoldbergNew York

Maria Paola ToschiMilan

Geoff LewisHong Kong

Anastasia V. Amoroso, CFAHouston

Vincent JuvynsLuxembourg

Yoshinori ShigemiTokyo

James C Liu CFA Manuel Arroyo Ozores CFA Grace Tam CFAJames C. Liu, CFAChicago

Manuel Arroyo Ozores, CFAMadrid

Grace Tam, CFAHong Kong

Julio C. CallegariSo Paulo

Tilmann Galler, CFAFrankfurt

Ian HuiHong Kong

David M. Lebovitzk

David Stubbs, PhDd

Ben LukNew York London Hong Kong

Gabriela D. SantosNew York

Lucia GutierrezMadrid

Ainsley E. WoolridgeNew York

Kerry Craig, CFALondon

Hannah J. AndersonNew York

Alexander W. DrydenLondon

Abigail B. DwyerNew York

Nandini RamakrishnanLondon

2Past performance is no guarantee of comparable future results. For China and Australia distribution, please note this communication is for intended recipients only and is for wholesale clients only in Australia. For details, please refer to the full disclaimer at the end. Unless otherwise stated, all data is as of December 31, 2014 or most recently available.

Page Reference

4. S&P 500 Index at Inflection Points5. Returns and Valuations by Style6. Returns and Valuations by Sector

36. Fixed Income Yields and Returns37. Global Fixed Income38. Municipal Finance39. High Yield Bonds40. Emerging Market Debt

Equities Page 4

7. Stock Valuation Measures: S&P 500 Index8. Corporate Profits and Leverage9. Sources of Earnings per Share Growth10. Equity Performance in Bull Markets11. Interest Rates and Equities12. Deploying Corporate Cash13. Annual Returns and Intra-year Declines

41. Fixed Income Sector Returns

42. Global Equity Markets43. International Equity Earnings and Valuations44. Global Economic Growth45. Manufacturing Momentum

International Page 42

y14. Equity Correlations and Volatility15. Stock Market Since 1900

16. Economic Growth and the Composition of GDP17. Consumer Finances18. Credit Conditions

g46. Sovereign Debt Stresses47. Europe: Cyclical Headwinds and Tailwinds48. Europe: Unemployment, Inflation, and Credit Markets49. Japan: Economic Snapshot50. China: Economic and Credit Growth51. Demographics and Development52. Emerging Market Currencies

Economy Page 16

18. Credit Conditions19. Cyclical Sectors20. Residential Real Estate21. Long-term Drivers of Economic Growth22. Federal Finances23. Unemployment and Wages24. Labor Market Perspectives25 Employment and Income by Educational Attainment

52. Emerging Market Currencies53. Emerging Market Equities54. Global Equity Valuations: Developed Markets55. Global Equity Valuations: Emerging Markets

56. Asset Class Returns57 Correlations and Volatility

Asset Class Page 56

25. Employment and Income by Educational Attainment26. Inflation27. Trade and the U.S. Dollar28. Energy: Supply, Demand and Prices29. Energy Price Impacts30. Consumer Confidence and the Stock Market

57. Correlations and Volatility58. Alternative Asset Class Returns59. Fund Flows60. Yield Alternatives: Domestic and Global61. Global Real Assets62. Global Commodities63. Life Expectancy and Pension Shortfall64 Historical Returns by Holding PeriodFixed Income Page 31

3

31. Interest Rates and Inflation32. The Fed and Interest Rates33. Shape of the Yield Curve34. Global Monetary Policy35. Sources of Bond Returns

64. Historical Returns by Holding Period65. Diversification and the Average Investor66. Cash Accounts67. Corporate DB Plans and Endowments

g

S&P 500 Index at Inflection Points

2,200Index level 1,527 1,565 2,059P/E ratio (fwd ) 25 6x 15 2x 16 2x

S&P 500 Index

Dec. 31, 2014 P/E (fwd.) = 16.2x

2 059

Characteristic Mar-2000 Oct-2007 Dec-2014

E

q

u

i

t

i

e

s

1,800

2,000

P/E ratio (fwd.) 25.6x 15.2x 16.2xDividend yield 1.1% 1.8% 1.9% 10-yr. Treasury 6.2% 4.7% 2.2%

E

q

u

i

t

i

e

s

Mar 24 2000

2,059

Oct. 9, 2007 P/E (fwd ) = 15 2x

1,400

1,600

Mar. 24, 2000 P/E (fwd.) = 25.6x

1,527

+101%

P/E (fwd.) = 15.2x 1,565

+204%+106%

1,000

1,200

-49%

-57%+106%

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14600

800 Oct. 9, 2002 P/E (fwd.) = 14.1x

777

Dec. 31, 1996 P/E (fwd.) = 16.0x

741 Mar. 9, 2009

P/E (fwd.) = 10.3x 677

4

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14Source: Standard & Poors, First Call, Compustat, FactSet, J.P. Morgan Asset Management.Dividend yield is calculated as the annualized dividend rate divided by price, as provided by Compustat. Forward Price to Earnings Ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next 12 months (NTM), and is provided by FactSet Market Aggregates. Returns are cumulative and based on S&P 500 Index price movement only, and do not include the reinvestment of dividends. Past performance is not indicative of future returns.Guide to the Markets U.S. Data are as of 12/31/14.

Returns and Valuations by Style

Value Blend Growth Value Blend Growth

4Q14 2014 Current P/E vs. 20-year avg. P/E

15.5 16.2 18.7

Value Blend Growth

e

L

a

r

g

e

5.0% 4.9% 4.8%

L

a

r

g

e

13.5% 13.7% 13.0%

M

i

d 6.1% 5.9% 5.8%

M

i

d 14.7% 13.2% 11.9%Eq

u

i

t

i

e

s

15.5 16.2 18.7

14.0 16.1 21.0

16.4 18.6 20.0

14.2 16.5 21.9

L

a

r

g

M

i

d

S

m

a

l

l

9.4% 9.7% 10.1%S

m

a

l

l

4.2% 4.9% 5.6%

Since Market Low (March 2009)Since Market Peak (October 2007)Current P/E as % of 20-year avg. P/E

E.g.: Large Cap Blend stocks are fairly

16.4 18.1 20.0

14.5 17.3 21.5Sm

a

l

l

Value Blend Growth Value Blend Growth

L

a

r

g

e

42.1% 54.0% 70.1%

L

a

r

g

e

254.4% 244.2% 246.9%

d 68 5% 70 0% 69 6% d 330 1% 310 3% 292 0%

valued compared to historical average.Value Blend Growth

L

a

r

g

e

110.1% 100.6% 89.0%

M

i

d 68.5% 70.0% 69.6%

M

i

d 330.1% 310.3% 292.0%

S

m

a

l

l

48.1% 57.6% 66.7%

S

m

a

l

l

266.2% 279.9% 293.3%

M

i

d 118.1% 112.7% 94.5%

S

m

a

l

l

113.1% 104.4% 93.3%

5

Source: Russell Investment Group, Standard & Poors, FactSet, J.P. Morgan Asset Management.All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represents period 10/9/07 12/31/14, illustrating market returns since the S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 12/31/14, illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. For all time periods, total return is based on Russell-style indexes with the exception of the large blend category, which is reflected by the S&P 500 Index. Past performance is not indicative of future returns. P/E ratios reflectlatest available data. Earnings estimates are as of November for Russell Indexes and as of December for Standard & Poors.Guide to the Markets U.S. Data are as of 12/31/14.

Returns and Valuations by Sector

Finan

cials

Tech

nolog

yHe

alth C

areInd

ustri

als

Energ

y

Cons

. Disc

r.Co

ns. S

taples

Telec

om

Utilit

ies

Mater

ials

S&P 5

00 In

dex

E

q

u

i

t

i

e

s

F T H In E C C T U M S

S&P Weight 16.6% 19.7% 14.2% 10.4% 8.4% 12.1% 9.8% 2.3% 3.2% 3.2% 100.0%Russell Growth Weight 5.3% 28.3% 14.2% 12.2% 4.5% 18.7% 10.5% 2.1% 0.1% 4.0% 100.0%

Russell Value Weight 29.9% 9.5% 13.7% 10.1% 11.3% 6.6% 7.4% 2.1% 6.4% 3.0% 100.0%

2014 15.2 20.1 25.3 9.8 -7.8 9.7 16.0 3.0 29.0 6.9 13.7

4Q14 7.2 5.2 7.5 6.8 -10.7 8.7 8.2 -4.2 13.2 -1.8 4.9

W

e

i

g

h

t

%

)

Since Market Peak (October 2007)

-19.6 78.6 118.7 52.4 16.9 115.8 112.3 22.5 54.0 33.5 54.0

Since Market Low (March 2009)

338.7 274.2 252.6 318.9 114.1 399.5 197.7 133.9 169.5 217.9 244.2

Beta to S&P 500 1.44 1.10 0.70 1.20 0.99 1.13 0.57 0.63 0.50 1.27 1.00

C l T Yi ld 0 20 0 03 0 16 0 17 0 29 0 06 0 19 0 21 0 50 0 12 0 04

R

e

t

u

r

n

(

Correl to Treas. Yields 0.20 0.03 -0.16 0.17 0.29 0.06 -0.19 -0.21 -0.50 0.12 0.04

Forward P/E Ratio 13.6x 15.9x 17.2x 16.3x 16.5x 18.4x 19.1x 13.5x 17.4x 16.1x 16.2x15-yr avg. 12.7x 20.6x 17.3x 17.0x 13.6x 18.5x 18.4x 16.9x 14.0x 16.0x 16.1x

Trailing P/E Ratio 16.8x 19.3x 24.4x 17.9x 12.8x 21.0x 22.5x 10.9x 19.9x 19.1x 18.6x20-yr avg. 16.5x 26.0x 24.1x 20.3x 17.1x 19.3x 21.3x 19.8x 15.0x 19.5x 19.5x

Dividend Yield 1.8% 1.5% 1.4% 2.1% 2.9% 1.4% 2.5% 4.7% 3.5% 2.1% 1.9%

P

/

E

v

Source: Standard & Poors, Russell Investment Group, FactSet, J.P. Morgan Asset Management.All calculations are cumulative total return, not annualized, including dividends for the stated period. Since Market Peak represents period 10/9/07 12/31/14. Since Market Low represents period 3/9/09 12/31/14. Correlation to Treasury Yields are trailing 2-year monthly correlations between S&P 500 sector price returns and 10-year Treasury yield movements. Forward P/E Ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next 12 months (NTM), and is provided by FactSet Market Aggregates. Trailing P/E ratios are bottom-up values defined as month-end price divided by the last 12 months of available reported earnings. Historical data can change as new information becomes available. Note that P/E ratios for the S&P 500 may differ from estimates elsewhere in this book due to the use of a bottom-up calculation of constituent earnings (as

Dividend Yield 1.8% 1.5% 1.4% 2.1% 2.9% 1.4% 2.5% 4.7% 3.5% 2.1% 1.9%20-yr avg. 2.1% 0.7% 1.4% 1.7% 1.7% 0.9% 2.1% 4.2% 4.3% 2.1% 1.7% D

i

v

6

Note that P/E ratios for the S&P 500 may differ from estimates elsewhere in this book due to the use of a bottom up calculation of constituent earnings (as described) rather than a top-down calculation. This methodology is used to allow proper comparison of sector level data to broad index level data. Dividend yields are bottom-up values defined as the annualized value of the most recent cash dividend as a percent of month-end price. Beta calculations are based on 10 years of monthly price returns for the S&P 500 and its sub-indices. Betas are calculated on a monthly frequency over the past 10-years.Past performance is not indicative of future returns.

Guide to the Markets U.S.Data are as of 12/31/14.

Stock Valuation Measures: S&P 500 Index

U.S. Equity: Valuation Measures Historical AveragesValuation Measure Description

Latest 1-year ago5-year

avg10-year

avg25-year

avg *Measure Description ago avg. avg. avg.P/E Price to Earnings 16.2x 15.4x 13.5x 13.8x 15.6xCAPE Shiller's P/E 27.3 25.5 22.5 22.9 25.3Div. Yield Dividend Yield 1.9% 1.9% 2.0% 2.0% 2.1%REY Real Earnings Yield 3.7% 3.7% 4.3% 3.3% 2.3%P/B P i t B k 2 9 2 7 2 3 2 4 2 9

E

q

u

i

t

i

e

s

P/B Price to Book 2.9 2.7 2.3 2.4 2.9P/CF Price to Cash Flow 11.4 10.8 9.3 9.7 11.3EY Spread EY Minus Baa Yield 1.5% 1.6% 2.2% 1.3% -0.7%

S&P 500 Earnings Yield vs. Baa Bond YieldS&P 500 Index: Forward P/E Ratio

18x

20x

22x

24x

26x

8%

10%

12%

14%

S&P 500 Earnings Yield (Inverse of fwd. P/E): 6.2%

Current: 16.2x

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '148x

10x

12x

14x

16x

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '142%

4%

6%

8%

Moodys Baa Yield: 4.7%

Average: 15.6x

7

90 92 94 96 98 00 02 04 06 08 10 12 14 90 92 94 96 98 00 02 04 06 08 10 12 14Source: Standard & Poors, FactSet, Robert Shiller Data, 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. Shillers 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 Moodys Baa seasoned corporate bond yield. *P/CF is a 20-year avg. due to cash flow data availability.Guide to the Markets U.S. Data are as of 12/31/14.

Corporate Profits and Leverage

$31

S&P 500 Earnings Per Share and PerformanceIndex level and quarterly operating earnings

Profit Margins

4Q14*: $30.50 10%

11%

S&P 500 Operating EPS % of Sales per Share**After-Tax Adj Corp Profits % of GDP

3Q14*:10.1%

$23

$27

E

q

u

i

t

i

e

s

2Q07: $24.06

6%

7%

8%

9%

3Q14:8.8%

After-Tax, Adj. Corp. Profits, % of GDP

$15

$19

Total LeverageS&P 500 ratio of total debt to total equity quarterly

4%

5%

'60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10

$7

$11

160%

180%

200%

220%S&P 500, ratio of total debt to total equity, quarterly

A 162%

-$1

$3

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14'96 '98 '00 '02 '04 '06 '08 '10 '12 '14

80%

100%

120%

140%4Q14: 100%

Average: 162%

8

Source: BEA, Standard & Poors, Compustat, J.P. Morgan Asset Management.EPS levels are based on operating earnings per share. *Most recently available data is 3Q14 as 4Q14 is a Standard & Poors preliminary 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. Guide to the Markets U.S.Data are as of 12/31/14.

96 98 00 02 04 06 08 10 12 14

Sources of Earnings per Share Growth

50%

S&P 500 Year-Over-Year EPS GrowthGrowth broken into revenue, changes in profit margin & changes in share count

Share of EPS Growth 3Q14*

20%

30%

40%

E

q

u

i

t

i

e

s

QMargin 3.6%Revenue 6.3%Share count 0.1%

0%

10%

20%

-30%

-20%

-10%

-50%

-40%

3Q143Q123Q103Q083Q063Q043Q023Q003Q983Q963Q94

9

Source: Standard & Poors, Compustat, J.P. Morgan Asset Management.EPS levels are based on operating earnings per share. *Most recently available data is 3Q14. Past performance is not indicative of future returns. 4Q2008, 1Q2010 and 2Q2010 reflect -101%, 92% and 51% growth in operating earnings, and are adjusted on the chart. Guide to the Markets U.S.Data are as of 12/31/14.

Equity Performance in Bull Markets

300%

83% 84%90%% of days during bull markets the S&P 500 is at and near record highs

S&P 500 Performance and Average Valuation S&P 500 Levels Near Market HighsPrice returns to peak after crossing average real earnings yield

Returns to peak price after average valuation

0%

240%

83% 84%

78%

70%

80%

E

q

u

i

t

i

e

s

1991-2000

2002-20072009-Today

p p gReturns before markets pass average valuation

*

Average valuation is defined as the average real earnings yield of the S&P

49%

83%180%

36%

42%40%

50%

60%500 from 1963 until today

16%

30%4%

0%

60%

120%

13%

33%

11%

36%

17%20%

30%

29% 49% 73% 121% 59% 180% 101% 204%

15%

0%'66 '70 '74 '82 '87 '90 '02 '09

13% 11%

0%

10%

New High Within 1% Within 5%

Start of Bull MarketPercent of days during a Bull Market

spent at record highs or within a 1% or 5% range of the record high

10

Source: Standard & Poors, J.P. Morgan Asset Management. Valuations are based on real earnings yield for the S&P 500 which is defined as (trailing four quarters of reported earnings/price) - year over year core CPI inflation. Period after average valuation defined by 15-day moving average passing below average real earnings yield. *As depicted on the left hand chart, the return to peak price for the current bull market is 0% as the S&P 500 has yet to cross its long run average real earnings yield. The S&P 500 would need to appreciate over 22% to reach its long-term average real earnings yield of 2.5%.Guide to the Markets U.S. Data are as of 12/31/14

Start of Bull Market spent at record highs, or within a 1% or 5% range of the record high

Interest Rates and Equities

0.8

Correlations Between Weekly Stock Returns and Interest Rate Movements Weekly S&P 500 returns, 10-year Treasury yield, rolling 2-year correlation, May 1963 Dec. 2014

When yields are below 5% rising

0.4

0.6

E

q

u

i

t

i

e

s

Positive relationship between yield movements and stock

below 5%, rising rates are generally associated with rising stock prices

Last 12 Months1963 12 Months Ago

Graph Key

0

0.2

and stock returns

e

l

a

t

i

o

n

C

o

e

f

f

i

c

i

e

n

t

-0.4

-0.2

Negative relationship between yield

t d

C

o

r

r

e

-0.8

-0.6

0% 2% 4% 6% 8% 10% 12% 14% 16%

movements and stock returns

10-Year Treasury Yield

11

Source: Standard & Poors, 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 12/31/14.

10 Year Treasury Yield

Deploying Corporate Cash

$1,600

$1,800

$1,700

$1,800

30%

32%

Corporate Cash as a % of Current AssetsS&P 500 companies cash and cash equivalents, quarterly

Corporate Growth

Capital Expenditures M&A Activity $bn, nonfarm nonfinancial capex, quarterly value of deals completed

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

E

q

u

i

t

i

e

s

20%

22%

24%

26%

28%

30%

$0

$200

$400

$900

$1,000

$1,100

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '1414%

16%

18%

Dividend Payout RatioS&P 500 companies LTM

Cash Returned to Shareholders$bn S&P 500 companies rolling 4 quarter averages

$100

$120

$140

$160

$27

$30

$33

$36

$39

40%

50%

60%S&P 500 companies, LTM $bn, S&P 500 companies, rolling 4-quarter averages

Dividends per Share

$20

$40

$60

$80

$15

$18

$21

$24

$27

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '1420%

30%

40%

Share Buybacks

12

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14Source: Standard & Poors, FRB, Bloomberg, FactSet, J.P. Morgan Securities, J.P. Morgan Asset Management. (Top left) Standard & Poors, FactSet, J.P. Morgan Asset Management. (Top right) M&A activity is the quarterly value of officially agreed transactions and capital expenditures are for nonfarm nonfinancial corporate business. (Bottom left) Standard & Poors, FactSet, J.P. Morgan Asset Management. (Bottom right) Standard & Poors, Compustat, FactSet, J.P. Morgan Asset Management.

Guide to the Markets U.S. Data are as of 12/31/14.

Annual Returns and Intra-year Declines

3440%

S&P 500 Intra-year Declines vs. Calendar Year ReturnsDespite average intra-year drops of 14.2%, annual returns positive in 27 of 35 years*

2014

26

1517

26

1512

27 26

34

20

31

27

20

26

9

14

23

13 13

30

11

20%

30%

E

q

u

i

t

i

e

s

-10

1 2

-7

47

-2

-10

9

3 4

0

-7 -8 -9-8 -8

-6 -6 -5-9

-3

-811

-8 -7 -8-10 -10

-6 -7-10%

%

10%

-13

-23

-17 -18-17

-13

-34

-20

-11

-19

-12

-17

-30-34

-14

-28

-16-19

40%

-30%

-20%

-38

-49

-60%

-50%

-40%

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

13

Source: Standard & Poors, 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.Guide to the Markets U.S.Data are as of 12/31/14.

Equity Correlations and Volatility

60%

70%

Large Cap StocksCorrelations Among Stocks

Sovereign Debt Crisis

Lehman B k t1987 Crash

Great Depression /World War II

20%

30%

40%

50%

60%

E

q

u

i

t

i

e

s

Bankruptcy

Tech Bust & 9/11

1987 CrashWorld War II

OPEC Oil Crisis

Cuban Missile Crisis

0%

10%

20%

'26 '32 '38 '44 '50 '56 '62 '68 '74 '80 '86 '92 '98 '04 '10

Volatility Measure 08 Peak Average Latest Daily Volatility of DJIA

Average: 27.0Dec. 2014: 37.4%

2.0%

2.5%

3.0%

3.5%

45

60

75

90y g

DJIA (Left) 3.30% 0.71% 0.58%VIX (Right) 80.9 20.0 19.2

DJIA vol. shownin 3-month

moving average

'30 '35 '40 '45 '50 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '100.0%

0.5%

1.0%

1.5%

0

15

30

14

30 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05 10Source: (Top) Empirical Research Partners LLC, Standard & Poors, J.P. Morgan Asset Management. Capitalization weighted correlation of top 750 stocks by market capitalization, daily returns, 1926 Sep. 1, 2014. (Bottom) CBOE, Dow Jones, J.P. Morgan Asset Management. DJIA volatility are represented as three-month moving averages of the daily absolute percentage change in the Dow Jones Industrial Average.Charts shown for illustrative purposes only. Guide to the Markets U.S. Data are as of 12/31/14.

Stock Market Since 1900

S&P Composite Index

Log Scale

2000 present

1,000

300

2000 present

E

q

u

i

t

i

e

s

100

40

1966 1974

40

101900 1924

1937 1948

'00 '10 '20 '30 '40 '50 '60 '70 '80 '90 '00 '10

15

Source: Robert Shiller, FactSet, J.P. Morgan Asset Management. Data shown in log scale to best illustrate long-term index patterns. Past performance is not indicative of future returns. Chart is for illustrative purposes only.

Guide to the Markets U.S.

Data are as of 12/31/14.

Economic Growth and the Composition of GDP

$1810%

Real GDP Year-over-year % chg

3Q14

Components of GDP3Q14 nominal GDP, trillions USD

3.2% HousingReal GDP

m

y

$14

$16

$18

6%

8%

3Q14YoY % chg: 2.7% 13.3% Investment Ex-housing

18.2% Govt SpendingAverage:

QoQ % chg: 5.0%

Real GDP

E

c

o

n

o

m

$8

$10

$12

2%

4%

68 2% Consumption

Average: 3.0%

$4

$6

-2%

0%

68.2% Consumption

Expansion Average:

2.3%

-$2

$0

$2

'65 '70 '75 '80 '85 '90 '95 '00 '05 '10-6%

-4%

- 2.9% Net Exports

16

65 70 75 80 85 90 95 00 05 10Source: 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 12/31/14.

Consumer Finances

$100 14%

Household Debt Service RatioDebt payments as % of disposable personal income, seasonally adjusted

4Q07:13 2%

Consumer Balance Sheet3Q14, Trillions of dollars outstanding, not seasonally adjusted

Total Assets: $95.4tn 3Q-07 Peak: $82.1tnQ $

$80

$90

11%

12%

13%

m

y

1Q80: 10.6%

4Q14**:9.9%

13.2%$

Homes: 24%

1Q-09 Low: $67.0tn

$50

$60

$70

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '149%

10%

E

c

o

n

o

m

9.9%

Household Net WorthBillions USD not seasonally adjusted 4Q14**:

Deposits: 9%

Pension Funds: 21%

Other Tangible: 6%

$30

$40

$50 000

$60,000

$70,000

$80,000

$90,000

Billions USD, not seasonally adjusted Q$82,9072Q07:

$67,874

%

Other Non-revolving: 1%Revolving*: 6%

Auto Loans: 7%Other Liabilities: 9%

Student Debt: 9%

$0

$10

$20

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14$10,000

$20,000

$30,000

$40,000

$50,000

Total Liabilities: $14.1tnOther Financial

Assets: 39%

Mortgages: 68%

17

Source: (Left) FRB, J.P. Morgan Asset Management. Data include households and nonprofit organizations. (Right) BEA, FRB, J.P. Morgan Asset Management. *Revolving includes credit cards. **4Q14 household debt service ratio and 4Q14 household net worth are J.P. Morgan Asset Management estimates. Values may not sum to 100% due to rounding.Guide to the Markets U.S.Data are as of 12/31/14.

90 92 94 96 98 00 02 04 06 08 10 12 14

Credit Conditions

14%

Common Equity as a % of Total Assets

2013:

All FDIC insured institutions, 1934 2013 12%

Residential Mortgages

Delinquency RatesAll banks, seasonally adjusted

8%

10%

12%

m

y

11.1%

Average: 7.7%4%

6%

8%

10%Consumer LoansResidential Mortgages

Commercial and Industrial Loans

7.0%

2 2%

4%

6%

'34 '40 '46 '52 '58 '64 '70 '76 '82 '88 '94 '00 '06 '12

E

c

o

n

o

m

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '140%

2%

0.8%

2.2%

Loan GrowthG th i l t t di t i l b k Y Y ll dj t d

Lending Standards for Approved Mortgage LoansAverage FICO score based on origination date

720

740

760

10%

20%

30%Real Estate Loans Nov. 2014:

12.8%

Growth in loans outstanding at commercial banks, YoY, seasonally adjusted Nov. 2014: 744

Average FICO score based on origination date

660

680

700

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14-30%

-20%

-10%

0%

Commercial and Industrial Loans

Nov. 2014:2.7%

18

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14Source: (Top left) FDIC, J.P. Morgan Asset Management. (Top right) Federal Reserve, FactSet, J.P. Morgan Asset Management. (Bottom left): Federal Reserve, FactSet, J.P. Morgan Asset Management. (Bottom Right) McDash, J.P. Morgan Securitized Product Research, J.P. Morgan Asset Management.

All data reflect most recently available releases.

Guide to the Markets U.S. Data are as of 12/31/14.

Cyclical Sectors

22

24Millions, seasonally adjusted annual rateLight Vehicle Sales

46

47

Manufacturing and Trade InventoriesDays of sales, seasonally adjusted

m

y

14

16

18

20

22

Average: 15.3

Dec. 2014:16.8

40

4142

4344

4546

Oct. 2014: 39.5

E

c

o

n

o

m

'96 '98 '00 '02 '04 '06 '08 '10 '12 '148

10

12

Housing StartsTh d ll dj t d l t

Real Capital Goods OrdersN d f it l d d i ft $ b ll dj t d

'96 '98 '00 '02 '04 '06 '08 '10 '12 '143738

3940

1 200

1,600

2,000

2,400Thousands, seasonally adjusted annual rate

A 1 348$60

$65

$70

$75Non-defense capital goods orders ex. aircraft, $ bn, seasonally adjusted

Nov. 2014:61.0

'96 '98 '00 '02 '04 '06 '08 '10 '12 '140

400

800

1,200

Nov. 2014:1,028

Average: 1,348

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14$40

$45

$50

$55

Average: 56.8

19

96 98 00 02 04 06 08 10 12 14Source: (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 with a base year of 2004.Guide to the Markets U.S.Data are as of 12/31/14.

Residential Real Estate

3 %

40%125

Indexed to 100, seasonally adjustedHome Prices Housing Affordability Index

Avg. mortgage payment as a % of household income

20%

25%

30%

35%

m

y

115

120Case Shiller 20-cityFHFA Purchase OnlyAverage Existing Home Nov. 2014:

12.1%

Average: 20.3%

10%

15%

'75 '78 '81 '84 '87 '90 '93 '96 '99 '02 '05 '08 '11 '14Ec

o

n

o

m

100

105

110Average: 20.3%

Home InventoriesMillions annual rate seasonally adjusted

90

95

3

3.5

4

4.5Millions, annual rate, seasonally adjusted

Nov. 2014: 2.4

'05 '06 '07 '08 '09 '10 '11 '12 '13 '1475

80

85

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '141.5

2

2.5

3

20

05 06 07 08 09 10 11 12 13 14 94 96 98 00 02 04 06 08 10 12 14Sources: (Left) National Association of Realtors, Standard & Poors, FHFA, FactSet, J.P. Morgan Asset Management. (Top right) Census Bureau, J.P. Morgan Asset Management. Monthly mortgage payment assumes the prevailing 30-year fixed-rate mortgage rates and average new home prices excluding a 20% down payment. (Bottom right) Census Bureau, National Association of Realtors, J.P. Morgan Asset Management.

Guide to the Markets U.S.

Data are as of 12/31/14.

Long-term Drivers of Economic Growth

Private nonresidential fixed investment, % of GDP16%

Gross Investment and DepreciationDepreciationGross investment spending

5%

Five year moving average of year-over-year % changeGrowth in Employment and Real Output Per Worker*

A th

8%

12%

m

y

p g

4%

Average growth50 yr. 10 yr. 5 yr.

Employment 1.5% 0.5% 1.1%

Real Output Per Worker 1.5% 1.1% 1.3%

GDP 3.0% 1.6% 2.4%

'90 '95 '00 '05 '100%

4%

E

c

o

n

o

m

Real Capital Stock GrowthNonresidential fixed assets year over year % chg

2%

3%

Real Output Per Worker

3%

4%

5%

2013: 1.6%

Nonresidential fixed assets, year-over-year % chg

1%

Employment Growth

0%

1%

2%

1990 1995 2000 2005 2010 '70 '80 '90 '00 '10-1%

0%

21

1990 1995 2000 2005 2010Source: BEA, BLS, FactSet, J.P. Morgan Asset Management.*Labor Force includes the population age 16+ working or looking for work, Real Output Per Worker is calculated as real GDP growth minus civilian employment growth. Averages are calculated as the annualized growth rate.

Guide to the Markets U.S.

Data are as of 12/31/14.

Federal Finances

$4.0

The 2015 Federal BudgetCBO Baseline forecast, trillions USD

T t l S di $3 8t

-12%

10%

Federal Budget Surplus/Deficit% of GDP, 1990 2024, 2014 CBO Baseline

Forecast

$3.0

$3.5

m

y

Total Spending: $3.8tn

Other$550bn (15%)

Net Int.: $251bn (7%)

Borrowing:$469bn (13%)

Other: $302bn (8%)

-10%

-8%

-6%

-4%

-2%

2015: -2.6%

$2.0

$2.5

E

c

o

n

o

m

Defense:$608bn (16%)

Non-defense Disc.:$506bn (13%) Social Insurance:

$1,065bn (28%)'90 '95 '00 '05 '10 '15 '20 '25

0%

2%

4%

Federal Net Debt (Accumulated Deficits)% of GDP 1940 2024 2014 CBO Baseline end of fiscal year

$1.0

$1.5 Social Security:$887bn (24%)

Income:$1 526bn (41%)

Corp.: $389bn (10%)

80%

100%

120%% of GDP, 1940 2024, 2014 CBO Baseline, end of fiscal year

2024: 77.2%2015: 74.0%

Forecast

$0.0

$0.5

Total Government Spending Sources of Financing

Medicare & Medicaid:$948bn (25%)

$1,526bn (41%)

20%

40%

60%

'40 '48 '56 '64 '72 '80 '88 '96 '04 '12 '20

22

Total Government Spending Sources of Financing 40 48 56 64 72 80 88 96 04 12 20Source: U.S. Treasury, BEA, CBO, St. Louis Fed, J.P. Morgan Asset Management.2015 Federal Budget is based on the CBOs August 2014 Baseline Budget Forecast. Other spending includes, but is not limited to, health insurance subsidies, income security, and federal civilian and military retirement. Note: Years shown are fiscal years (Oct. 1 through Sep. 30). 2015 numbers are CBO estimates as of August 2014.Guide to the Markets U.S. Data are as of 12/31/14.

Unemployment and Wages

Civilian Unemployment Rate and Year-over-Year Growth in Wages of Production and Non-Supervisory Workers

12%Seasonally adjusted, percent

m

y

10%

12%

Oct. 2009: 10.0%

E

c

o

n

o

m

6%

8%

50-yr. Average: 6.1%

Unemployment

4% 49-yr. Average: 4.3%

Nov. 2014: 5.8%

Nov. 2014: 2.2%

'70 '80 '90 '00 '100%

2% Wage Growth

23

70 80 90 00 10Source: BLS, FactSet, J.P. Morgan Asset Management.

Guide to the Markets U.S.

Data are as of 12/31/14.

Labor Market Perspectives

Employment Total Private Payroll Total job gain/loss (thousands)

6008.8mm 67%

68%Labor Force Participation Rate

m

y -400

-200

0

200

400 jobs lost

10.9 mm jobs 64%

65%

66%

67%

E

c

o

n

o

m

Net Job Creation Since Feb. 2010 Millions of Jobs

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14-1,000

-800

-600 gained

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '1462%

63%

Nov. 2014: 62.8%

Ratio of Unemployed to Job Openings

4

5

6

7

3.22.9

2.1 1.91 mm

2 mm

3 mm

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '141

2

3

4

Oct. 2014: 1.9

0.9

-0.5

-1 mm

0 mm

Info. Fin & Bus. Svcs.

Mfg. Trade & Trans.

Leisure, Hospt. &

Other Svcs.

Edu. & Health Svcs.

Mining & Construct.

Gov't

24

Source: BLS, FactSet, J.P. Morgan Asset Management.

Guide to the Markets U.S.

Data are as of 12/31/14.

Employment and Income by Educational Attainment

18%

Unemployment Rate by Education Level

Less than High School Degree$84,852

$90,000

Average Annual Earnings by Highest Degree EarnedFull-time workers aged 18 and older, 2012, USD

14%

16%

m

y

Nov 2014:

Less than High School DegreeHigh School No CollegeSome CollegeCollege or Greater

$70,000

$80,000

+28K

8%

10%

12%

E

c

o

n

o

m

Nov. 2014:5.6%

Nov. 2014:8.5% $56,665

$50,000

$60,000

+26K

4%

6%

8%

Nov. 2014:4.9%

$30,627

$20,000

$30,000

$40,000

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '140%

2%Nov. 2014:

3.2%

$0

$10,000

,

High School Graduate Bachelor'sDegree Advanced Degree

25

High School Graduate Bachelors Degree Advanced Degree

Source: BLS, Census Bureau, FactSet, J.P. Morgan Asset Management.

Unemployment rates shown are for civilians aged 25 and older.

Guide to the Markets U.S.

Data are as of 12/31/14.

Inflation

15%

CPI and Core CPI% change vs. prior year, seasonally adjusted

50 A N 2014

CPI Components

Weight in CPI 12-month Change

F d & B 14 1% 3 2%

m

y

12%

50-yr. Avg. Nov. 2014Headline CPI 4.2% 1.3%Core CPI 4.1% 1.7%Headline PCE 3.6% 1.2%Core PCE 3.5% 1.4%

Food & Bev. 14.1% 3.2%

Housing 32.3% 3.0%

Apparel 3.5% -0.3%

Transportation 5.6% 1.8%

E

c

o

n

o

m

6%

9%

p

Medical Care 5.8% 2.3%

Recreation 2.0% -2.8%

Edu. & Comm. 0.6% -4.0%

3%

Other 1.6% 1.5%

Headline CPI 100.0% 1.3%

Less:

'65 '70 '75 '80 '85 '90 '95 '00 '05 '10-3%

0%Energy 8.9% -4.8%

Food 14.1% 3.2%

Core CPI 77.1% 1.7%

26

Source: BLS, FactSet, J.P. Morgan Asset Management.CPI used is CPI-U and values shown are % change vs. one year ago and reflect November 2014 CPI data. CPI component weights are as of November 2014. Core CPI is defined as CPI excluding food and energy prices. The Personal Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed weight basket used in CPI calculations. Guide to the Markets U.S. Data are as of 12/31/14.

Trade and the U.S. Dollar

-7%

Current Account Balance and Oil Imports, % of GDP

4Q05:115

U.S. Dollar IndexMonthly average of nominal trade-weighted exchange index: major currencies

F *

-6%

-5%

m

y

4Q05:-6.2%

100

105

110Forecast*

-4%

E

c

o

n

o

m

C t A t B l90

95

100

Mar 2009 Dec 2014**:-3%

-2%

3Q14:-2.3%

Current Account Balance

2Q08 75

80

85

Mar. 2009: 84.0

Dec. 2014 : 84.3

-1%

0%'99 '01 '03 '05 '07 '09 '11 '13 '15

Net Oil Imports

2Q08:-3.1%

3Q14:-1.0%

'96 '98 '00 '02 '04 '06 '08 '10 '12 '1465

70

75

Mar. 2008: 70.3

27

99 01 03 05 07 09 11 13 15Source: BEA, EIA, Federal Reserve, FactSet, J.P. Morgan Asset Management.

*Oil imports as a percent of GDP is an EIA forecast. **December U.S. Dollar index value is a J.P. Morgan Asset Management estimate.

Guide to the Markets U.S.

Data are as of 12/31/14.

Energy: Supply, Demand and Prices

$140

$160

Change in Production and Consumption of Oil

2013 2014* 2015* Growth since

Production, consumption and inventories, million barrels per dayPrice of OilBrent crude, nominal prices , USD/bbl

$60

$80

$100

$120

$140

m

y

2013 2014 2015 Growth since 2013Production

U.S. 12.3 13.9 14.9 20.7%

OPEC 36.0 36.0 35.9 -0.3%

'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14$0

$20

$40

E

c

o

n

o

m

Other 41.8 42.1 41.9 0.4%

Global 90.2 92.0 92.8 2.9%

Consumption

Dec. 2014: $57.33

U.S. Natural Gas Production**Trillions of cubic feet USD EIA

20

25

30

35U.S. 19.0 19.0 19.1 0.7%

Europe 13.6 13.5 13.4 -1.9%

Japan 4.5 4.4 4.2 -6.4%

China 10.6 11.0 11.3 6.9%

Gbl. Natural Gas PricesJapan $13.86Germany $10.16U.S. $3.65

Trillions of cubic feet, USD

Shale Gas

Forecast

'95 '00 '05 '10 '15 '20 '250

5

10

15Other 42.8 43.6 44.3 3.6%

Global 90.5 91.4 92.3 2.0%

Inventory Change -0.3 0.5 0.4

Other***

28

95 00 05 10 15 20 25Source: EIA, FactSet, J.P. Morgan Asset Management. *Forecasts are from EIA Annual Energy Outlook and start in 2013. **Production numbers as of 2013. ***Other includes conventional on and offshore natural gas drilling, tight gas, and coalbed methane. Natural gas prices are $/mmbtu and are as of December 2014.

Guide to the Markets U.S.

Data are as of 12/31/14.

Energy Price Impacts

12%

14%

8% 6% 4% 2% 0% 2% 4% 6%

Imports as a % of GDP

Percent of Income Spent on Gasoline and Motor Oil Before-tax income quintile, percent of spending, 2013

Oil Importers and ExportersNet imports as a percent of GDP, 2013

-14%

4%

6%

8%

10%

12%

-3.6%

0.9%

1.6%

-8% -6% -4% -2% 0% 2% 4% 6%

Canada

U.K.

U.S.

p

e

d

m

y

-14%

0%

2%

4%

Lowest Second Third Fourth Highest

2.2%

2.4%

2.4%

Italy

France

GermanyGasoline PricesUnited States all city average USD per gallon

D

e

v

e

l

o

p

E

c

o

n

o

m

3.6%

-13.6%

0.7%

Japan

Russia*

Brazil

United States all city average, USD per gallon

$3.00

$4.00

$5.00 Dec. 2014: $2.61

n

g

2.4%

4.8%

5.3%

China

South Africa

India'80 '90 '00 '10

$0.00

$1.00

$2.00D

e

v

e

l

o

p

i

n

29

80 90 00 10Source: (Top left) BEA, (Bottom Left) Department of Labor, FactSet, (Right) EIA, IMF, J.P. Morgan Asset Management.

*Russia imports as a percent of GDP was -13.6% in 2013 and is adjusted on the chart.

Guide to the Markets U.S.

Data are as of 12/31/14.

Consumer Confidence and the Stock Market

130Consumer Sentiment Index University of Michigan

0 8 t10% i i li iImpact on Consumer Sentiment from a

m

y

110

120

Mar. 1984

Jan. 2000-2.0%

Jan. 2004+4.4%

Aug 1972

-0.8 pts+1.9+2.8-5.2

10% y-o-y rise in gasoline prices10% y-o-y rise in home prices10% y-o-y rise in the S&P 5001% y-o-y rise in the unemployment rate

Dec 2014:

E

c

o

n

o

m

80

90

100

Average: 84.8

+13.5%May 1977

+1.2%

Aug. 1972-6.2%

Jan. 2007-4.2%

Dec. 2014:93.6

60

70

80

Oct. 1990+29 1%

Mar. 2003+32.8% Oct. 2005

+14.2%

'72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '1440

50

Feb. 1975+22.2%

May 1980+19.2%

+29.1%

Nov. 2008+22.3%

Aug. 2011+15.4%Sentiment Cycle Low and

subsequent 12-month S&P 500 Index return

30

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14Source: University of Michigan, FactSet, J.P. Morgan Asset Management.

Peak is defined as the highest index value before a series of lower lows, while a trough is defined as the lowest index value before a series of higher highs. Subsequent 12-month S&P 500 returns are price returns only, which excludes dividends. Impact on consumer sentiment is based on a multivariate monthly regression between 1/31/2000 5/31/2014.

Guide to the Markets U.S. Data are as of 12/31/14.

Interest Rates and Inflation

20%Nominal and Real 10-year Treasury Yields

Sep 30 1981:Average

(1958 2014) 12/31/14

15%

Sep. 30, 1981: 15.84%

(1958 2014) 12/31/14Nominal Yields 6.30% 2.17%Real Yields 2.50% 0.46%Inflation 3.80% 1.71%

10%

n

c

o

m

e

Dec 31 2014: 2 17%

Nominal 10-year Treasury Yield

0%

5%

F

i

x

e

d

I

n

Dec. 31, 2014: 2.17%

Real 10-year Treasury Yield

'60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15-5%

0%

Dec. 31, 2014: 0.46%Rising Rate Corp. Bonds S&P 500 1958-1981 3.0% 8.6% Ann. Inflation 5.0% 5.0% Ann. Real Return -2.0% 3.5%

Falling Rate Corp. Bonds S&P 500 1982-2014 9.6% 11.7% Ann. Inflation 3.0% 3.0% Ann. Real Return 6.6% 8.6%

31

Source: Federal Reserve, BLS, J.P. Morgan Asset Management.Real 10-year Treasury yields are calculated as the daily Treasury yield less year-over-year core CPI inflation for that month except for December 2014, where real yields are calculated by subtracting out November 2014 year-over-year core inflation. All returns above reflect annualized total returns, which include reinvestment of dividends. Corporate bond returns are based on a composite index of investment grade bond performance. Guide to the Markets U.S.Data are as of 12/31/14.

The Fed and Interest Rates

6%

7%

Feds Balance Sheet: Assets$ trillions

Other

Federal Funds Rate ExpectationsFOMC and market expectations for the Fed Funds rate

$4.0

$4.5Federal Funds Rate

O C

2%

3%

4%

5%

6%U.S. TreasuriesAgency MBS

$1.5

$2.0

$2.5

$3.0

$3.5

$

FOMC Long Run Projection

FOMC Year-End EstimatesMarket Expectations

0%

1%

2%

'99 '01 '03 '05 '07 '09 '11 '13 '15 '17

n

c

o

m

e

Feds Balance Sheet: Liabilities$ trillions

Federal Reserve Summary of Economic Projections

$0.0

$0.5

$1.0

'04 '06 '07 '08 '09 '10 '11 '12 '13 '14

F

i

x

e

d

I

n

$2.5$3.0$3.5$4.0$4.5$ trillions

Excess Reserves

Required Reserves

Other Liabilities

FOMC December 2014 Forecasts* Percent

2014 2015 2016 2017 Long Run

Change in real GDP, Q4 to Q4 2.4 2.8 2.8 2.4 2.2

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14$0.0$0.5$1.0$1.5$2.0

Unemployment Rate, Q4 5.8 5.3 5.1 5.1 5.4

PCE Inflation, Q4 to Q4 1.3 1.3 1.9 1.9 2.0

Federal Funds Rate, end of year 0.13 1.13 2.50 3.63 3.75

32

Source: Federal Reserve, FactSet, J.P. Morgan Asset Management.Monetary base is defined as the total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. Other liabilities of the Federal Reserve primarily consist of currency outstanding. Market expectations are the federal funds rates priced into the fed futures market. *Forecasts of 17 Federal Open Market Committee (FOMC) participants, midpoints of central tendency except for federal funds rate which is a median estimate.

Guide to the Markets U.S. Data are as of 12/31/14.

Shape of the Yield Curve

4 0%

4.5%

Yield CurveU.S. Treasury Yield Curve

4.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0% Dec. 31, 2013

Dec. 31, 2014

1.1%1 7%

2.0% 2.2%

2.8%

3.0%

2.5%

1.8%

0.1%

0.0%

0.5%

1.0%

0 8% 3 2%Nominal 2 Year and 10 Year U.S. Treasury Yields Treasuries Outstanding 3Q14

By holder end of period not seasonally adjusted

n

c

o

m

e 3m 1y 2y 3y 7y 10y 30y5y

0.3%0.7% 1.7%

0.8%0.4%

0.5%

0.6%

0.7%

0.8%

2.6%

2.8%

3.0%

3.2% By holder, end of period, not seasonally adjusted

F

i

x

e

d

I

n

Foreign officialState and local

gov'ts

Financial institutions

7%

Households6%

Other1%

Jan '14 Apr '14 Jul '14 Oct '14 Jan '150.2%

0.3%

0.4%

2.0%

2.2%

2.4%

10Y UST (RHS)2Y UST (LHS)

g32%

Federal Reserve

19%Foreign private

15%

Mutual funds9%

g7%

33

Source: Federal Reserve, FactSet, J.P. Morgan Asset Management.Guide to the Markets U.S.Data are as of 12/31/14.

Jan 14 Apr 14 Jul 14 Oct 14 Jan 15

Global Monetary Policy

80%

Central Bank Assets Percent of Nominal GDPJPMAM

Forecast* 1

Correlation of Government Bonds6-month rolling correlation of weekly change in USTs and German Bund yields

60%

70%

0.2

0.4

0.6

0.8

10-yr. Bonds

40%

50%

n

c

o

m

e

8%Real Policy Rates Monthly

-0.2

0

'10 '11 '12 '13 '14

2-yr. Bonds

20%

30%

F

i

x

e

d

I

n

2%3%4%5%6%7%8%

E C t l B k

Bank of Japan

Emerging Markets

0%

10%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15-3%-2%-1%0%1%2%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

European Central Bank

U.S. Federal Reserve Developed Markets

34

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14Source: J.P. Morgan Global Economics Research, FactSet, J.P. Morgan Asset Management.Real policy rates represent GDP weighted aggregates estimated by J.P. Morgan Global Economics Research. Real policy rates are short-term target interest rates set by central banks minus year-over-year inflation. *Central bank assets as percent of nominal GDP is forecasted through 2015 using J.P. Morgan Global Economics Research nominal GDP forecasts and assumptions for central bank balance sheet size based on statements released by each respective central bank and its governors. Guide to the Markets U.S.Data are as of 12/31/14.

Sources of Bond Returns

Coupon Return2014 C

Total Return2014 A + B + C

Treasury Base Rate Return2014 A

Spread to Treasury Return2014 B

20141 3%5-yr. 1 6% 2 9% 5-yr.

20131.3%

8.2%

26.0%

10-yr.

30-yr.

1.6%

2.6%

3.4%

2.9%

10.7%

29.4%

10-yr.

30-yr.

n

c

o

m

e

4.4%

-3.3%

10-yr. Muni

U.S. HY

EM (USD)

-1.1%

4.3%

6.8%

8.7%

2.5%

10-yr. Muni

U.S. HY

EM (USD)

F

i

x

e

d

I

n 0.3%

3.7%

2.0%

EM (USD)

IG Corp.

U.S. MBS

-1.2%

-0.5%

0.4%

5.6%

4.2%

3.7%

4.8%

7.5%

6.1%

EM (USD)

IG Corp.

U.S. MBS

2.7%

-1.4%

20% 10% 0% 10% 20%

U.S. Agg.

FRN (BBB)

0.1%

0.1%

20% 10% 0% 10%

3.2%

1.3%

20% 10% 0% 10%

6.0%

0.1%

20% 10% 0% 10% 20% 30%

U.S. Agg.

FRN (BBB)

35

Source: Federal Reserve, Barclays, J.P. Morgan Asset Management.All returns reflect year to date returns. Treasury base, spread, and coupon returns based on Barclays and J.P. Morgan Asset Management estimates. The sum of charts A and B equate to price return for each sector. Indices used include Barclays US Treasury Bellwethers (10Y), Barclays US Aggregate, Barclays US Aggregate Credit Corporate Investment Grade, Barclays US Aggregate Credit Corporate High Yield, Barclays Muni 10-year Index, Barclays US MBS Index, Barclays Floating Rate Index, and Barclays Emerging Markets USD. Guide to the Markets U.S. Data are as of 12/31/14.

-20%-10% 0% 10% 20% -20% -10% 0% 10% -20% -10% 0% 10% -20%-10% 0% 10% 20% 30%

Fixed Income Yields and Returns

Price Impact of a 1% Rise/Fall in Interest Rates*

-2.0%5 0%

0.9%2y USTU.S. Treasuries # of issuesCorrelation to

10-yearAvg.

Maturity 12/31/2014 9/30/2014 4Q14 2014

Yield Return

-17.8%

-8.6%

-5.7%

-4.7%

23.2%

9.5%

6.7%

5.0%

30y UST

10y UST

TIPS

5y UST 2-Year 95 0.63 2 years 0.67% 0.58% 0.17% 0.66%

5-Year 97 0.90 5 1.65% 1.78% 1.14% 2.89%

10-Year 17 1.00 10 2.17% 2.52% 3.57% 10.74%

30-Year 20 0.92 30 2.75% 3.21% 10.06% 29.38%

n

c

o

m

e

-3.9%

-3.2%

-0.1%

3.9%

3.6%

0.1%

ABS

Convertibles

Floating Rate

TIPS 35 0.58 10 0.49% 0.55% -0.03% 3.64%

Sector

Broad Market 9,054 0.85 7.7 years 2.25% 2.36% 1.79% 5.97%

MBS 410 0.80 6.5 2.60% 2.88% 1.79% 6.08%

F

i

x

e

d

I

n

-5 7%

-5.6%

-5.5%

-4.3%

5.5%

5.5%

3.4%

4.2%

Munis

US Aggregate

MBS

US HY Municipals 9,080 0.45 10.0 2.04% 2.13% 1.38% 8.72%

Corporates 5,212 0.45 10.7 3.11% 3.10% 1.77% 7.46%

High Yield 2,253 -0.24 6.5 6.61% 6.13% -1.00% 2.45%

Floating Rate 49 -0.21 2.7 1.61% 0.98% -1.43% 0.08%

Source: U.S. Treasury, Barclays Capital, FactSet, J.P. Morgan Asset Management. Fixed income sectors shown above are provided by Barclays Capital and are represented by Broad Market: Barclays U.S. Aggregate; MBS: U.S. Aggregate Securitized - MBS Index; Corporate: U.S. Corporates; Municipals: Muni Bond 10-year Index; High Yield: Corporate High Yield Index; TIPS: Treasury Inflation Protection Securities (TIPS) Floating Rate: Barclays FRN (BBB); Convertibles: Barclays U S Convertibles Composite; ABS: Barclays ABS +

-6.7%

-5.7%7.7%

-30% -10% 10% 30%

IG Corps Convertibles 518 -0.29 -- 1.11% 1.14% 1.06% 8.17%

ABS 1,727 -0.04 4.4 2.15% 2.18% 1.27% 3.44%

36

Yield Index; TIPS: Treasury Inflation Protection Securities (TIPS). Floating Rate: Barclays FRN (BBB); Convertibles: Barclays U.S. Convertibles Composite; ABS: Barclays ABS + CMBS. Treasury securities data for # of issues based on U.S. Treasury benchmarks from Barclays Capital. Yield and return information based on bellwethers for Treasury securities. Sector yields reflect yield to worst, while Treasury yields are yield to maturity. Correlations are based on 10-years of monthly returns for all sectors. Change in bond price is calculated using both duration and convexity according to the following formula: New Price = (Price + (Price * -Duration * Change in Interest Rates))+(0.5 * Price * Convexity * (Change in Interest Rates)^2). *Calculation assumes 2-year Treasury interest rate falls 0.67% to 0.00%, as interest rates can only fall to 0.00%. Chart is for illustrative purposes only. Past performance is not indicative of future results. Guide to the Markets U.S. Data are as of 12/31/14.

Global Fixed Income

$100

Global Bond MarketUSD, trillions

12/31/89 6/30/14 EM: $14tn

Yield

Aggregates Correl to 10-year Duration 12/31/2014 9/30/2014 4Q14 2014

Return

$70

$80

$90U.S. 60.7% 36.1%Dev. ex U.S. 38.2% 49.5%EM 1.1% 14.4%

10-year

U.S. 0.83 5.6 Yrs 2.25% 2.36% 1.79% 5.97%

Gbl. ex. U.S. 0.37 7.1 1.29% 1.46% -2.61% -2.21%

Japan 0.49 8.3 0.36% 0.52% -6.38% -8.35%

$50

$60

$70

Developed ex U.S.: $50tn

n

c

o

m

e

Germany 0.25 6.0 0.58% 0.76% -1.87% -3.70%

U.K. 0.17 9.4 1.94% 2.36% 1.57% 5.82%

Italy 0.07 6.6 1.50% 1.67% -1.80% 0.84%

Spain 0 10 5 8 1 17% 1 32% 1 87% 0 67%

$20

$30

$40

U.S.: $35tn

F

i

x

e

d

I

n

Spain 0.10 5.8 1.17% 1.32% -1.87% 0.67%

Sector

Euro Corp. 0.11 4.8 1.04% 1.20% -2.73% -4.82%

Euro HY. -0.39 3.9 4.65% 4.58% -3.27% -6.02%

$0

$10

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

EMD ($) 0.20 6.7 5.62% 5.39% -0.55% 7.43%

EMD (LCL) 0.08 4.9 6.50% 6.74% -5.71% -5.72%

EM Corp. -0.26 5.6 5.56% 5.28% 0.31% 6.74%

37

Source: Barclays Capital, BIS, FactSet, J.P. Morgan Asset Management. All returns are in USD. Fixed income sectors shown above are provided by Barclays Capital and are represented by the global aggregate for each country except where noted. EMD sectors are represented by the J.P. Morgan EMBIG Diversified Index (USD), the J.P. Morgan GBI EM Global Diversified Index (LCL), and the J.P. Morgan CEMBI Broad Diversified Index (Corp). European Corporates are represented by the Barclays Euro Aggregate Corporate Index and the Barclays Pan-European High Yield index. Sector yields reflect yield to worst. Duration is modified duration. Correlations are based on 7-years of monthly returns for the all sectors. Past performance is not indicative of future results. Guide to the Markets U.S. Data are as of 12/31/14.

Municipal Finance

12%

9%

10%% of current expenditures

10-Year Muni Taxable Equivalent Yield

3Q14: 7.9%

Taxable equivalent Muni and Treasury yieldsState & Local Government Debt Service

10%

5%

6%

7%

8%

9%Taxable Equivalent 10-yr. Muni Yield

6%

8%

3%

4%

5%

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

Municipal Bond Issuance*Billions USD revenue and GO issues

n

c

o

m

e

4%

Billions USD, revenue and GO issues

10-yr. Treasury Yield

F

i

x

e

d

I

n

$300

$400

$500

0%

2%

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

Spread

$0

$100

$200

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14

38

Source (Left chart): Barclays Capital, U.S. Treasury, FactSet, J.P. Morgan Asset Management. (Top right) BEA, J.P. Morgan Asset Management. (Bottom right) SIFMA, J.P. Morgan Asset Management.Taxable equivalent yields are calculated for the highest federal marginal tax bracket. 2014 tax rate includes the net investment income tax of 3.8%. *Excludes maturities of 13 months or less and private placements. Interest payments include interest accrued on defined benefit liabilities. 2014 issuance data is as of November 2014.Guide to the Markets U.S. Data are as of 12/31/14.

High Yield Bonds

15%

20% Average Latest HY Spreads 5.9% 5.7%HY Defaults Rates 4.0% 3.0%

U.S. High Yield Spreads and Defaults

HY D f lt R tHY Spreads

5%

10%

15% HY Default Rates

0%'88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

n

c

o

m

e

Global High Yield SpreadsSpread over Treasuries

Sector WeightsOther 7%

Other 5%100%

7%

9%

F

i

x

e

d

I

n

p

Euro HY

EM HY T l 10%

Telecom 18% Telecom 21%Industrial 20%

Industrial 29% Industrial 24%Energy 17%

Energy 2% Energy 11%Other 17%Other 7%

40%

60%

80%

3%

5%

'12 '13 '14

EM HYU.S. HY

Consumer 28% Consumer 31%Consumer 17%

Financial 7%Financial 13%

Financial 22%

Telecom 10%

0%

20%

40%

U.S. HY Euro HY EM HY

39

Source: U.S. Treasury, J.P. Morgan, Strategic Insight, J.P. Morgan Asset Management. Default rates are defined as the par value percentage of the total market trading at or below 50% of par value and include any Chapter 11 filing, prepackaged filing or missed interest payments. Spreads indicated are benchmark yield to worst less comparable maturity Treasury yields. Yield to worst is defined as the lowest potential yield that can be received on a bond without the issuer actually defaulting and reflects the possibility of the bond being called at an unfavorable time for the holder. J.P. Morgan Domestic HY, J.P. Morgan Euro HY, and J.P. Morgan CEMBI Non-IG indexes were used for Spreads and Industry Weights. Past performance is not indicative of comparable future results. Guide to the Markets U.S. Data are as of 12/31/14.

Emerging Market Debt

1,317Russia

Local denominated debt, 5 years, spread to Treasuries, basis pointsEMD Indices by Region EMD Sovereign Spreads

Brazil 27% Latin America 35%

Latin America 30%80%

100%

1,089Brazil

India

TurkeyS. Africa 9%Turkey 10%

Poland 11%

Mexico 20%

Asia 21%

Asia 39%

Europe 31%

Europe 13%

35% 30%

40%

60%

80%

592

Turkey

Indonesia

ColombiaEMD Indices by Credit Ratings

n

c

o

m

e

Other 23% Middle East & Africa 13%

Middle East & Africa 18%

Asia 21%

0%

20%

Local Sovereign USD Sovereign USD Corporate

Mexico

China

Philippines

5 year average

F

i

x

e

d

I

n

Current spread

Graph Key

Investment Grade 85%

Investment Grade 65%

Investment Grade 69%60%

80%

100%

146

49

0 200 400 600 800 1,000 1,200 1,400

Hungary

PolandNon Investment

Grade 15%

Non Investment Grade 35%

Non Investment Grade 31%

0%

20%

40%

Local Sovereign USD Sovereign USD Corporate

40

Source: J.P. Morgan Global Economic Research, FactSet, J.P. Morgan Asset Management. Spreads measure the credit risk premium over comparable maturity U.S. Treasury bonds. The J.P. Morgan EMBI Global (EMBIG) Index is a USD-denominated external debt index tracking bonds issued by sovereigns and quasi-sovereigns in developing nations. The J.P. Morgan Corporate Emerging Bond Index Broad (CEMBI) is a USD-denominated external debt index tracking bonds issued by corporations in developing nations. The J.P. Morgan Government Bond Index EM (GBI-EM) is a local currency denominated index tracking bonds issued by emerging market sovereigns. Past performance is not indicative ofComparable future results. Index breakdown may not equate to 100% due to rounding.Guide to the Markets U.S. Data are as of 12/31/14.

g g p

633

626288

428

348

181

168

Fixed Income Sector Returns

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 4Q14 Cum. Ann.

EMD USD EMD LCL. EMD LCL. Treas. Gbl. HY EMD LCL. TIPS Gbl. HY Gbl. HY Muni Treas. Gbl. HY Gbl. HY

10.2% 15.2% 18.1% 13.7% 59.4% 15.7% 13.6% 19.6% 7.3% 8.7% 1.9% 115.3% 8.0%Barclays

10-yrs. '05 - '14

EMD LCL. Gbl. HY TIPS Gbl. Sov. EMD USD Gbl. HY Muni EMD USD Gbl. Corp. EMD USD Barclays Agg EMD USD EMD USD

6.3% 13.7% 11.6% 9.4% 29.8% 14.8% 12.3% 17.4% 1.8% 7.4% 1.8% 111.5% 7.8%

Gbl. HY EMD USD Gbl. Sov. MBS Gbl. Corp. EMD USD Treas. EMD LCL. Asset Alloc. MBS MBS EMD LCL. EMD LCL.

3.6% 9.9% 10.9% 8.3% 23.7% 12.2% 9.8% 16.8% -1.3% 6.1% 1.8% 90.4% 6.7%

TIPS Gbl. Corp. Treas. Barclays Agg EMD LCL. Asset Alloc.Barclays

Agg Gbl. Corp. MBSBarclays

Agg Muni Asset Alloc. Asset Alloc.

2 8% 8 3% 9 0% 5 2% 22 0% 7 5% 7 8% 12 5% 1 4% 6 0% 1 4% 67 4% 5 3%2.8% 8.3% 9.0% 5.2% 22.0% 7.5% 7.8% 12.5% -1.4% 6.0% 1.4% 67.4% 5.3%

Treas. Gbl. Sov. Asset Alloc. Muni Asset Alloc. Gbl. Corp. EMD USD Asset Alloc. Barclays Agg Treas. Asset Alloc. Muni Muni

2.8% 7.3% 7.2% 1.5% 16.2% 7.0% 7.3% 8.3% -2.0% 5.1% 0.1% 64.4% 5.1%

Muni Asset Alloc. Barclays Agg Asset Alloc. TIPSBarclays

Agg Asset Alloc. TIPS Muni Asset Alloc. TIPS Gbl. Corp. Gbl. Corp.

2.7% 6.9% 7.0% -1.5% 11.4% 6.5% 6.9% 7.0% -2.2% 3.9% 0.0% 60.5% 4.8%

MBS MBS MBS TIPS M i TIPS MBS M i T TIPS Gbl C MBS MBS

n

c

o

m

e

MBS MBS MBS TIPS Muni TIPS MBS Muni Treas. TIPS Gbl. Corp. MBS MBS

2.6% 5.2% 6.9% -2.4% 9.9% 6.3% 6.2% 5.7% -2.7% 3.6% -0.3% 59.0% 4.7%Barclays

Agg Muni EMD USD EMD LCL.Barclays

Agg Gbl. Sov. Gbl. Sov.Barclays

Agg Gbl. Sov. Gbl. Corp. EMD USDBarclays

AggBarclays

Agg2.4% 4.7% 6.2% -5.2% 5.9% 6.1% 5.2% 4.2% -4.9% 2.5% -0.6% 58.4% 4.7%

Asset Alloc. Barclays Agg

Gbl. Corp. Gbl. Corp. MBS Treas. Gbl. Corp. MBS EMD USD Gbl. HY Gbl. HY Treas. Treas.

1 7% 4 3% 6 1% 11 2% 5 9% 5 9% 4 0% 2 6% 5 3% 0 0% 2 5% 53 5% 4 4%

F

i

x

e

d

I

n

1.7% 4.3% 6.1% -11.2% 5.9% 5.9% 4.0% 2.6% -5.3% 0.0% -2.5% 53.5% 4.4%

Gbl. Corp. Treas. Muni EMD USD Gbl. Sov. MBS Gbl. HY Treas. TIPS Gbl. Sov. Gbl. Sov. TIPS TIPS

-2.7% 3.1% 4.3% -12.0% 4.3% 5.4% 3.1% 2.0% -8.6% -2.8% -3.1% 53.4% 4.4%

Gbl. Sov. TIPS Gbl. HY Gbl. HY Treas. Muni EMD LCL. Gbl. Sov. EMD LCL. EMD LCL. EMD LCL. Gbl. Sov. Gbl. Sov.

-8.8% 0.4% 3.2% -26.9% -3.6% 4.0% -1.8% 1.8% -9.0% -5.7% -5.7% 30.3% 2.7%Source: Barclays Capital FactSet J P Morgan Asset Management Past performance is not indicative of future returns Fixed income sectors shown above are provided by Barclays

41

Source: Barclays Capital, FactSet, J.P. Morgan Asset Management. Past performance is not indicative of future returns. Fixed income sectors shown above are provided by Barclays Capital unless otherwise noted and are represented by Broad Market: Barclays Capital U.S. Aggregate Index; MBS: Fixed Rate MBS Index; Corporate: Gbl. Corporates; Municipals: Muni Bond 10-Year Index; Emerging Debt USD: J.P. Morgan EMBIG Diversified Index; Emerging Debt LCL: J.P. Morgan EM Global Index; Gbl. High Yield: Global Corporate High Yield Index; Treasuries: Barclays Capital; U.S. Treasury; TIPS: Barclays Capital TIPS; Gbl. Sovereigns: Global Treasury ex U.S.. The Asset Allocation portfolioassumes the following weights: 20% in MBS, 20% in Gbl. Corporate,15% in Municipals, 5% in Emerging Debt USD, 5% in Emerging Debt LCL, 10% in Gbl. High Yield, 15% in Treasuries, 5% in TIPS, 5% in Gbl. Sovereigns. Asset allocation portfolio assumes annual rebalancing. Guide to the Markets U.S. Data are as of 12/31/14.

Global Equity Markets

Weights in MSCI All Country World Index% global market capitalization, float adjusted

Country / Region

4Q14 2014

Local USD Local USD

United States51%

Europe ex-U.K.16%

U.K. 7%EmergingMarkets

%

y g

Regions / Broad IndexesU.S. (S&P 500) - 4.9 - 13.7

EAFE 1.8 -3.5 6.4 -4.5

Europe ex-U K 0 2 -4 3 7 4 -5 811%

Japan7%

C

a

n

a

d

a

4

%

Global Equity Market CorrelationsRolling 1 year correlations 30 countries

Europe ex-U.K. 0.2 -4.3 7.4 -5.8

Pacif ic ex-Japan 3.1 -1.5 5.8 -0.3

Emerging Markets 0.1 -4.4 5.6 -1.8

MSCI: Selected Countries

0.50

0.60

0.70

0.80

0.90Rolling 1-year correlations, 30 countries

o

n

a

l

United Kingdom -0.4 -4.2 0.5 -5.4

France -1.7 -5.8 3.6 -9.0

Germany 4.0 -0.4 2.8 -9.8

Japan 6.7 -2.4 9.8 -3.7

0.00

0.10

0.20

0.30

0.40

'95 '97 '99 '01 '03 '05 '07 '09 '11 '13

Dec. 2014: 0.44

I

n

t

e

r

n

a

t

i

o China 7.0 7.2 8.3 8.3

India 1.5 -0.7 26.4 23.9

Brazil -7.5 -14.8 -2.8 -13.7

Russia -5.9 -32.8 -12.1 -45.9

42

95 97 99 01 03 05 07 09 11 13Source: Standard & Poors, MSCI, FactSet, J.P. Morgan Asset Management.All return values are MSCI Gross Index (official) data. Chart is for illustrative purposes only. Past performance is not indicative of future results. Please see disclosure page for index definitions. Countries included in global correlations include Argentina, South Africa, Japan, UK, Canada, France, Germany, Italy, Australia, Austria, Brazil, China, Colombia, Denmark, Finland, Hong Kong, India, Malaysia, Mexico, Netherlands, New Zealand, Peru, Philippines, Portugal, Korea, Spain, Taiwan, Thailand, Turkey, United States.Guide to the Markets U.S. Data as of 12/31/14.

International Equity Earnings and Valuations

18x

Forward Price to EarningsEarnings per Share

26007/08 Peak Current % Change

EPS for next 12-month consensus, local currency, rebased to 100 P/E ratios for next 12-month consensus EPSAverage Current

16x

220

240

gMSCI EM 217 167 -23%S&P 500 150 179 19%MSCI Europe 161 123 -24%

MSCI EM 11.3x 11.0xS&P 500 13.8x 16.2xMSCI Europe 12.0x 14.1x

12x

14x

180

200

10x

o

n

a

l

120

140

160

6x

8x

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

I

n

t

e

r

n

a

t

i

o

'05 '06 '07 '08 '09 '10 '11 '12 '13 '1480

100

43

04 05 06 07 08 09 10 11 12 13 14Source: MSCI, FactSet, J.P. Morgan Asset Management. Forward Price to Earnings Ratio is based on each index price, divided by consensus estimates for earnings per share (EPS) in the next 12 months (NTM), and is provided by FactSet Market Aggregates. Past performance is not indicative of future returns.

Guide to the Markets U.S.

Data are as of 12/31/14.

05 06 07 08 09 10 11 12 13 14

Global Economic Growth

Year-over-year % chg. forecasts from JPMSIEmerging Market Country Real GDP Growth

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Historical

3Q15

JPMSI Forecast

8%

10%

0%

2%

4%

6%

8%

Year over year % chg forecasts from JPMSIDeveloped Market Country Real GDP Growth

Hi t i l JPMSI F t

-4%

-2%

0%

Emerging Markets China India Korea Mexico South Africa Russia Brazil

o

n

a

l

Year-over-year % chg. forecasts from JPMSI

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Historical

3Q15

JPMSI Forecast

4%

6%

8%

10%

I

n

t

e

r

n

a

t

i

o

-4%

-2%

0%

2%

Developed Countries U S U K Canada Germany France Italy Japan

44

Source: J.P. Morgan Global Economic Research, J.P. Morgan Asset Management.

Forecast and aggregate data come from J.P. Morgan Global Economic Research. Historical growth data collected from FactSet Economics.

Guide to the Markets U.S.

Data are as of 12/31/14.

Developed Countries U.S. U.K. Canada Germany France Italy Japan

Manufacturing Momentum

Global Purchasing Managers Index for Manufacturing

a

n

'

1

3

e

b

'

1

3

a

r

'

1

3

A

p

r

'

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Global 51.4 50.8 51.0 50.1 50.4 50.4 50.6 51.5 51.7 51.9 52.9 52.9 53.0 53.2 52.4 51.9 52.2 52.6 52.4 52.6 52.2 52.2 51.8 51.6U.S. 55.8 54.3 54.6 52.1 52.3 51.9 53.7 53.1 52.8 51.8 54.7 55.0 53.7 57.1 55.5 55.4 56.4 57.3 55.8 57.9 57.5 55.9 54.8 53.9Canada 50.5 51.7 49.3 50.1 53.2 52.4 52.0 52.1 54.2 55.6 55.3 53.5 51.7 52.9 53.3 52.9 52.2 53.5 54.3 54.8 53.5 55.3 55.3 53.9U.K. 51.0 48.2 50.1 50.4 51.9 52.5 54.5 58.0 57.0 56.4 57.9 57.0 56.5 56.5 55.5 57.0 56.4 56.7 54.9 52.6 51.6 53.3 53.3 52.5Euro Area 47.9 47.9 46.8 46.7 48.3 48.8 50.3 51.4 51.1 51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.8Euro Area 47.9 47.9 46.8 46.7 48.3 48.8 50.3 51.4 51.1 51.3 51.6 52.7 54.0 53.2 53.0 53.4 52.2 51.8 51.8 50.7 50.3 50.6 50.1 50.8Germany 49.8 50.3 49.0 48.1 49.4 48.6 50.7 51.8 51.1 51.7 52.7 54.3 56.5 54.8 53.7 54.1 52.3 52.0 52.4 51.4 49.9 51.4 49.5 51.2France 42.9 43.9 44.0 44.4 46.4 48.4 49.7 49.7 49.8 49.1 48.4 47.0 49.3 49.7 52.1 51.2 49.6 48.2 47.8 46.9 48.8 48.5 48.4 47.5Italy 47.8 45.8 44.5 45.5 47.3 49.1 50.4 51.3 50.8 50.7 51.4 53.3 53.1 52.3 52.4 54.0 53.2 52.6 51.9 49.8 50.7 49.0 49.0 48.4Spain 46.1 46.8 44.2 44.7 48.1 50.0 49.8 51.1 50.7 50.9 48.6 50.8 52.2 52.5 52.8 52.7 52.9 54.6 53.9 52.8 52.6 52.6 54.7 53.8Greece 41.7 43.0 42.1 45.0 45.3 45.4 47.0 48.7 47.5 47.3 49.2 49.6 51.2 51.3 49.7 51.1 51.0 49.4 48.7 50.1 48.4 48.8 49.1 49.4I l d 50 3 51 5 48 6 48 0 49 7 50 3 51 0 52 0 52 7 54 9 52 4 53 5 52 8 52 9 55 5 56 1 55 0 55 3 55 4 57 3 55 7 56 6 56 2 56 9

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Ireland 50.3 51.5 48.6 48.0 49.7 50.3 51.0 52.0 52.7 54.9 52.4 53.5 52.8 52.9 55.5 56.1 55.0 55.3 55.4 57.3 55.7 56.6 56.2 56.9Australia 40.2 45.6 44.4 36.7 43.8 49.6 42.0 46.4 51.7 53.2 47.7 47.6 46.7 48.6 47.9 44.8 49.2 48.9 50.7 47.3 46.5 49.4 50.1 46.9Japan 47.7 48.5 50.4 51.1 51.5 52.3 50.7 52.2 52.5 54.2 55.1 55.2 56.6 55.5 53.9 49.4 49.9 51.5 50.5 52.2 51.7 52.4 52.0 52.0China 52.3 50.4 51.6 50.4 49.2 48.2 47.7 50.1 50.2 50.9 50.8 50.5 49.5 48.5 48.0 48.1 49.4 50.7 51.7 50.2 50.2 50.4 50.0 49.6Indonesia 49.7 50.5 51.3 51.7 51.6 51.0 50.7 48.5 50.2 50.9 50.3 50.9 51.0 50.5 50.1 51.1 52.4 52.7 52.7 49.5 50.7 49.2 48.0 47.6Korea 49.9 50.9 52.0 52.6 51.1 49.4 47.2 47.5 49.7 50.2 50.4 50.8 50.9 49.8 50.4 50.2 49.5 48.4 49.3 50.3 48.8 48.7 49.0 49.9

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Taiwan 51.5 50.2 51.2 50.7 47.1 49.5 48.6 50.0 52.0 53.0 53.4 55.2 55.5 54.7 52.7 52.3 52.4 54.0 55.8 56.1 53.3 52.0 51.4 50.0India 53.2 54.2 52.0 51.0 50.1 50.3 50.1 48.5 49.6 49.6 51.3 50.7 51.4 52.5 51.3 51.3 51.4 51.5 53.0 52.4 51.0 51.6 53.3 54.5Brazil 53.2 52.5 51.8 50.8 50.4 50.4 48.5 49.4 49.9 50.2 49.7 50.5 50.8 50.4 50.6 49.3 48.8 48.7 49.1 50.2 49.3 49.1 48.7 50.2Mexico 55.0 53.4 52.2 51.7 51.8 51.3 49.7 50.8 50.0 50.2 51.9 52.6 54.0 52.0 51.7 51.8 51.9 51.8 51.5 52.1 52.6 53.3 54.3 55.3Russia 52.0 52.0 50.8 50.6 50.4 51.7 49.2 49.4 49.4 51.8 49.4 48.8 48.0 48.5 48.3 48.5 48.9 49.1 51.0 51.0 50.4 50.3 51.7 48.9

45

Source: Markit, J.P. Morgan Asset Management.

Heatmap colors are based on PMI relative to the 50 level, which indicates acceleration or deceleration of the sector, for the time period shown.

Guide to the Markets U.S.

Data are as of 12/31/14.

Sovereign Debt Stresses

China

10%Bubble size = 10-year

government bond yield

GDP Growth, Gross Debt to GDP and Borrowing Costs

Turkey

China

India

IndonesiaMalaysia

10%

5%

4%

6%

8%

2

0

1

4

F

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BrazilSouth Africa

Mexico

U.S.

y

Korea

France

GermanyJapanRussia

Singapore

P t l

EU

Australia

U.K.

0%

2%

4%

G

r

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(

2

0

1

2

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Greece

ItalySpain

Portugal

-4%

-2%

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G

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-8%

-6%

0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200%

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Gross Debt-to-GDP Ratios (2013)245%

Developed MarketsEmerging Markets

46

G oss ebt to G at os ( 0 3)Source: IMF, FactSet, Bloomberg, J.P. Morgan Economics, Barclays, J.P. Morgan Asset Management.Growth and debt data are based on the October 2014 World Economic Outlook.Borrowing costs based on local currency debt. EU overall borrowing cost based on Barclays Capital Euro-Aggregate 7-10 year treasury. South Africasborrowing cost is based on 7-year government bond yield due to data availability.Guide to the Markets U.S. Data are as of 12/31/14.

Europe: Cyclical Headwinds and Tailwinds

13.9%14%35%12/31/14

Government Fiscal DragEuropean Sovereign Funding Costs10-year benchmark bond yield % of potential GDP, reduction in structural deficits from one period to the next

10%

12%

25%

30%

Greece 9.42%Portugal 2.67%Italy 1.86%Spain 1.61%Ireland 1.24%Germany 0.53%

2010-2013

2013-2016

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'08 '09 '10 '11 '12 '130%

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47

08 09 10 11 12 13Source: Tullett Prebon, FactSet, IMF, J.P. Morgan Asset Management. Data are based on the October 2014 World Economic Outlook. Government deficits are calculated by the IMF as the general government structural balance. The structural balance excludes the normal impact of the business cycle, providing a clearer measure of the independent impact of changes in government spending and taxation on demand in the economy.*Eurozone includes a J.P. Morgan Asset Management estimate for the 2016 structural deficit as a % of GDP. Guide to the Markets U.S. Data are as of 12/31/14.

Europe: Unemployment, Inflation and Credit Markets

20%

10%

12%

Euro Area

Oct. 2014: 11.5%Unemployment Rates Euro Area Credit Growth

Nonfinancial Corporations

% year-over-year loan growth

5%

10%

15%

4%

6%

8%

10%

U.S.

Nov. 2014: 5.8%

Nonfinancial Corporations

Nov. 2014: -1.6%Households Nov. 2014: -0.4%

-5%

%

'06 '07 '08 '09 '10 '11 '12 '13 '14'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '140%

2%

Europe Inflation

U.S.

Euro Area Asset-Backed Securities OutstandingYear over year % change billions

o

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CoreEuro AreaPeriphery

Year-over-year % change billions

2%

3%

4%

5%

2 000

2,500

3,000

I

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n

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'05 '06 '07 '08 '09 '10 '11 '12 '13 '14-1%

0%

1%

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1,000

1,500

2,000

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

48

Source: Eurostat, BLS, SIFMA, ECBC, FactSet, IMF, J.P. Morgan Asset Management.(Top left) Unemployment rate levels for the U.S. and Euro Area are not directly comparable due to calculation differences. (Bottom right) Euro Area securitization outstanding includes Covered Bonds, Asset-Backed Securities, Residential Mortgage-Backed Securities, Commercial Real Estate Mortgage-Backed Securities, and Small and Medium-Sized Enterprise Asset-Backed Securities.Guide to the Markets U.S.Data are as of 12/31/14.

03 04 05 06 07 08 09 10 11 12 13

Japan: Economic Snapshot

120

130

18,000

20,000Inflation and Japanese Government Bond Yields Year-over-year % change for inflation Japanese Yen per U.S. Dollar Nikkei 225

Japanese Yen and the Stock Market

6%

8%

90

100

110

120

10,000

12,000

14,000

16,000Owners of Japanese Gov. BondsOther Domestic 74%Bank of Japan 21%Foreign 4%

4%'05 '06 '07 '08 '09 '10 '11 '12 '13 '14

70

80

6,000

8,000

10,000

Government Fiscal Balance% of GDP IMF

0%

2%

o

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Nominal 10-year Yield % of GDP-12%-10%

-8%

-6%

-4%

IMFforecast

'88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14

-2%

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Core CPI

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

-2%

0%

2%

4%

49

88 90 92 94 96 98 00 02 04 06 08 10 12 14

Source: (Left) Bank of Japan, OECD, IMF, FactSet, J.P. Morgan Asset Management. (Right) FactSet, J.P. Morgan Asset Management.

Core CPI is defined as CPI excluding fresh food. Other Domestic includes banks, insurance and pensions, public pensions, and households. Values may not sum to 100% due to rounding. Government bond data is calculated from the Bank of Japans December 2014 flow of funds.

Guide to the Markets U.S. Data are as of 12/31/14.

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20

China: Economic and Credit Growth

16% 40%

China Real GDP ContributionYear-over-year % change Year-over-year % change, 3-month moving average for credit

Credit* vs. GDP Growth

12%30%

35%InvestmentConsumptionNet Exports

9.6%

9.2%

10.4%9.3%

Credit

Real GDP

GDP Deflator

4.5%

8.1%

5.5% 4.5%

3.9% 4.2%

8%

15%

20%

25%7.7% 7.7%

0.9% 0 4%

4.2%4.6% 4.5% 5.2% 4.1% 3.8%

0%

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5%

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-3.5%

0.4%

-0.4% -0.2% -0.3%

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0%

2008 2009 2010 2011 2012 2013-5%

0%

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

I

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50

03 04 05 06 07 08 09 10 11 12 13 14Source: National Bureau of Statistics of China, The Peoples Bank of China, EM Advisors Group, FactSet, CEIC, J.P. Morgan Asset Management.Values may not sum to 100% due to rounding. *As defined by Total Social Financing: RMB bank loans, bankers acceptance bills, trust loans, entrusted loans, corporate bond financing, foreign currency loans, and non-financial equity financing. TSF data uses an assumption of outstanding credit in Dec. 2001.Guide to the Markets U.S. Data are as of 12/31/14.

Demographics and Development

$60,000

The Impact of UrbanizationUrbanization ratios and GDP per capita (current USD), 1961 2013

Demographic Snapshot

Investment(% of GDP)

GDP Per Capita

Population % of Pop. under 20

$50,000 Japan

U.S.2013: $53,142 Developed

U.S. $53,101 316 mm 26% 20%

Canada 51,990 35 22 24

U.K. 39,567 64 24 14

( )

$30,000

$40,000

D

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a

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i

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South

Germany 44,999 81 18 17

France 43,000 64 24 19

Japan 38,491 127 18 21

Italy 34,715 60 19 17

$10,000

$20,000

G

China

South Korea

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y ,

Emerging

Korea 24,329 50 22 26

India 1,505 1,243 38 35

Brazil 11,311 198 33 18

$-

,

15% 25% 35% 45% 55% 65% 75% 85% 95%

Urbanization Ratio

India

I

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,

Mexico 10,630 118 38 22

Russia 14,819 143 21 24

China 6,747 1,361 20 48

51

Urbanization RatioSource: FactSet, World Bank, United Nations, J.P. Morgan Global Economics Research, OECD, Bureau of Statistics of China, Ministry of Statistics & Programme Implementation of India, J.P. Morgan Asset Management.

GDP per capita and Investment as % of GDP in the Demographic Snapshot table are IMF estimates for 2014.

Guide to the Markets U.S.

Data are as of 12/31/14.

Emerging Market Currencies

Russia

25%

2014 Currency PerformancePerformance of foreign currency versus USD

s

Commodity Exposure and External Vulnerability

ChileIndonesia

Russia

Colombia Depreciation (-0% to -10%)

17%

m

m

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y

E

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p

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s

2014Currency Performance

-13.4%

-18.7%

-45.2%

Chile

Colombia

Russia

Brazil MexicoSouth Africa

( )

Depreciation (over -10%)

1%

9%

-8% -6% -4% -2% 0% 2% 4% 6% 8%

N

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-9.5%

-11.1%

-11.2%

South Africa

Mexico

Brazil

ChinaIndia

Turkey-7%

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I

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s

-2.4%

-4.0%

-8.1%

China

Korea

Turkey

Korea

-23%

-15%

I

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Current Account SurplusCurrent Account Deficit

-1.7%

-2.0%

-50% -40% -30% -20% -10% 0% 10% 20%

Indonesia

India

52

Current Account SurplusCurrent Account DeficitSource: IMF, U.N. Commodity Trade Statistics Database, FactSet, J.P. Morgan Asset Management.Commodities defined by SITC codes 0-4. Net commodity exporters/importers plotted as a % of GDP. Current accounts as a percentage of GDP are IMF estimates for 2014.Guide to the Markets U.S. Data are as of 12/31/14.

Emerging Market Equities

350

400

EM Earnings by RegionMSCI EM Index by RegionEPS for next 12-month consensus, local currency, rebased to 100

EuropeAfrica/Mideast

8%Latin America

ex Brazil7%

Brazil12%

150

200

250