July 2007 Presented by: Michael M. Barry

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July 2007 Presented by: Michael M. Barry

  1. 1. July 2007 Presented by: Michael M. Barry Vice President [email_address] (313) 225-1249 Attachment D
  2. 2. Agenda <ul><li>What sets JPMorgan apart </li></ul><ul><li>Why JPMorgan Intrepid </li></ul><ul><li>Appendix </li></ul><ul><ul><li>Disclosures </li></ul></ul>
  3. 3. What sets JPMorgan Asset Management apart
  4. 4. Skillfully managing the assets of institutional investors for more than a century <ul><li>A legacy of trusted client relationships built on a promise to put client interests ahead of our own </li></ul><ul><li>Our insight and intellectual capital drive strategies that span U.S., international and global opportunities </li></ul><ul><ul><li>equity </li></ul></ul><ul><ul><li>fixed income </li></ul></ul><ul><ul><li>real estate </li></ul></ul><ul><ul><li>private equity </li></ul></ul><ul><li>New thinking on investment themes </li></ul><ul><ul><li>Consistent sources of uncorrelated alpha </li></ul></ul><ul><ul><li>Liability driven investing </li></ul></ul><ul><ul><li>Total return investing </li></ul></ul><ul><ul><li>Risk management </li></ul></ul><ul><ul><li>Core/satellite approaches </li></ul></ul><ul><li>$1,053.3 billion in assets under management as of March 31, 2007 </li></ul><ul><ul><li>$496.4 billion in fixed income </li></ul></ul><ul><ul><li>$362.1 billion in equity </li></ul></ul><ul><ul><li>$91.8 billion in asset allocation </li></ul></ul><ul><ul><li>$103.0 billion in real estate and alternatives </li></ul></ul><ul><ul><li>hedge funds </li></ul></ul><ul><ul><li>currency </li></ul></ul><ul><ul><li>infrastructure </li></ul></ul><ul><ul><li>asset allocation </li></ul></ul>
  5. 5. Why JPMorgan Intrepid
  6. 6. Why JPMorgan Intrepid <ul><li>People: JPMorgan pioneered behavioral finance products in Europe over 14 years ago. We currently have over 50 behavioral finance professionals globally and in excess of 95 billion dollars under management. </li></ul><ul><li>Performance: All of our large cap products are ranked in the top decile of managers within their Lipper peer group: while our Multicap product has generated more than 625 bps of excess return annually, since its inception. </li></ul><ul><li>Process: We utilize a disciplined and dispassionate process that seeks to marry “ cheap stocks ” with stocks that exhibit “ good momentum ” and have “ positive newsflow ”. </li></ul>
  7. 7. Philosophy <ul><li>On average, cheap stocks with improving earnings and good newsflow outperform expensive stocks with weak earnings and poor newsflow </li></ul><ul><li>An intuitively correct statement which can be implemented </li></ul><ul><li>Statement works “on average” </li></ul><ul><li>Suggests market anomalies in value, momentum and newsflow </li></ul>… transparent, common sense approach
  8. 8. The underlying cause of the anomalies – behavioral finance <ul><li>1. Overconfidence </li></ul><ul><ul><li>Believing your prediction is the best one </li></ul></ul><ul><ul><li>Leads to valuation anomalies </li></ul></ul><ul><li>2. Loss aversion (regret aversion, cognitive dissonance) </li></ul><ul><ul><li>Reluctance to crystallize a loss/greater tendency to sell “winners” </li></ul></ul><ul><ul><li>Leads to anomalies in momentum investing </li></ul></ul><ul><li>3. Anchoring </li></ul><ul><ul><li>Brokers’ tendency to anchor and extrapolate </li></ul></ul><ul><ul><li>Leads to anomalies in estimate revisions </li></ul></ul>… human behavior will not change, so market anomalies will not disappear
  9. 9. Price Time Fundamental manager sells Intrepid manager sells Intrepid manager buys Fundamental manager buys The above chart is for illustrative purposes only. <ul><li>Typical fundamental manager </li></ul><ul><ul><li>Buy when a stock is cheap </li></ul></ul><ul><ul><li>Sell when a stock is perceived to be expensive </li></ul></ul><ul><li>Intrepid manager </li></ul><ul><ul><li>Buy inexpensive stocks when a trend is in place </li></ul></ul><ul><ul><li>Sell after a trend is exhausted </li></ul></ul>How do the Intrepid managers differ from your typical portfolio manager?
  10. 10. JPMorgan Asset Management This document is intended solely to report on various investment views held by JPMorgan Asset Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. These views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Russell 1000 Growth and Russell 100 Value returns are total return. Indices are unmanaged. One can not invest directly in an index. The Russell 1000 Growth Index measures large cap growth stock performance. The Russell 1000 Value Index measures the performance of large cap value stocks. Indices do not include fees or operating expenses and are not available for actual investment. Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges or redemption fees. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees for certain periods since the inception date. If fees had not been waived, performance would have been less favorable. Some of the data contained in this presentation may have been obtained from Standard & Poor’s (&quot;S&P&quot;) ©2005. The McGraw-Hill Companies, Inc., S&P is a division of the McGraw-Hill Companies, Inc. All rights reserved. JPMorgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., JPMorgan Investment Advisors Inc., JPMorgan High Yield Partners LLC, Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. Issued by: JPMorgan Asset Management 245 Park Avenue New York, NY 10036 © 2006 JPMorgan Chase & Co. JPMorgan Funds are distributed by JPMorgan Distribution Services, Inc., which is an affiliate of JPMorgan Chase & Co. Affiliates of JPMorgan Chase & Co. receive fees for providing various services to the funds. Investment accounts and insurance products are Not a Bank Deposit · Not FDIC Insured · No Bank Guarantee · May Lose Value · Not Insured by any Federal Government Agency Contact JPMorgan Funds Distribution Services at 1-800-338-4345 for a fund prospectus. You can also visit us at  www.jpmorganfunds.com. Investors should carefully consider the investment objectives and risk as well as charges and expenses of the mutual fund before investing. The prospectus contains this and other information about the mutual fund. Read the prospectus carefully before investing FOR FINANCIAL PROFESSIONAL USE ONLY/NOT FOR PUBLIC DISTRIBUTION
  11. 11. JPMorgan Asset Management This document is intended solely to report on various investment views held by JPMorgan Asset Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. The views and strategies described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Indices do not include fees or operating expenses and are not available for actual investment. The information contained herein employs proprietary projections of expected returns as well as estimates of their future volatility. The relative relationships and forecasts contained herein are based upon proprietary research and are developed through analysis of historical data and capital markets theory. These estimates have certain inherent limitations, and unlike an actual performance record, they do not reflect actual trading, liquidity constraints, fees or other costs. References to future net returns are not promises or even estimates of actual returns a client portfolio may achieve. The forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The value of investments and the income from them may fluctuate and your investment is not guaranteed. Past performance is no guarantee of future results. Please note current performance may be higher or lower than the performance data shown. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Exchange rates may cause the value of underlying overseas investments to go down or up. Investments in emerging markets may be more volatile than other markets and the risk to your capital is therefore greater. Also, the economic and political situations may be more volatile than in established economies and these may adversely influence the value of investments made. Performance results are gross of investment management fees. The deduction of an advisory fee reduces an investor’s return. Actual account performance will vary depending on individual portfolio security selection and the applicable fee schedule. Fees are available upon request. The following is an example of the effect of compounded advisory fees over a period of time on the value of a client’s portfolio: A portfolio with a beginning value of $100 million, gaining an annual return of 10% per annum would grow to $259 million after 10 years, assuming no fees have been paid out. Conversely, a portfolio with a beginning value of $100 million, gaining an annual return of 10% per annum, but paying a fee of 1% per annum, would only grow to $235 million after 10 years. The annualized returns over the 10 year time period are 10.00% (gross of fees) and 8.91% (net of fees). If the fee in the above example was 0.25% per annum, the portfolio would grow to $253 million after 10 years and return 9.73% net of fees. The fees were calculated on a monthly basis, which shows the maximum effect of compounding. Illustration showing impact of investment management fees: An investment of USD $1,000,000 under the management of JPMFAM achieves a 10% compounded gross annual return for 10 years. If a management fee of 0.75% of average assets under management were charged per year for the 10-year period, the annual return would be 9.25% and the value of assets would be USD $2,422,225 net of fees, compared with USD $2,593,742 gross of fees. Therefore, the investment management fee, and any other expenses incurred in the management of the portfolio, will reduce the client’s return. The securities mentioned throughout the presentation are shown for illustrative purposes only and should not be interpreted as recommendations to buy or sell. A full list of firm recommendations for the past year are available upon request. JPMorgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co and its affiliates worldwide. Copyright 2005 JPMorgan Chase & Co.

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