2. About
Barry Mendelson, CFP®
Investment management and personal finance guru. More than 15 years experience working
for leading financial services companies including Charles Schwab, AXA Rosenberg, Neuberger
for leading financial services companies including Charles Schwab AXA Rosenberg Neuberger
Berman, and Franklin Templeton. Prior to joining Just Plans Etc. in 2010, was a Vice President in
Charles Schwab & Co’s $200 billion investment management division. Certified Financial
Planner™ certificate holder since 2008. B.A. in Business Economics & Accounting from U.C.
Santa Barbara in 1995.
Santa Barbara in 1995
Just Plans Etc.
Founded in 1982 and based in Walnut Creek, California ‐ Just Plants Etc. is a fee‐only wealth
management firm and SEC registered investment advisor. Just Plans provides investment
management and financial planning services to more than 100 individual, families, and
companies. As a fiduciary, the firm puts the interests of the client above all else.
companies As a fiduciary the firm puts the interests of the client above all else
2
5. Returns by Style
Charts reflect index levels (price change only). All returns and annotations reflect total return, including dividends.
2Q 2010 YTD 2010
S&P 500 Index
Value Blend Growth Value Blend Growth
1,250
ge
ge
Larg
Larg
1,200 -11.1 -11.4 -11.7 -5.1 -6.7 -7.6
2Q10:
1,150
-11.4%
Mid
Mid
1,100 -9.6 -9.9 -10.2 -0.9 -2.1 -3.3
1,050
1 050
2010: -6.7%
Small
Small
1,000 -10.6 -9.9 -9.2 -1.6 -2.0 -2.3
Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10
Since Market Peak (October 2007) Since Market Low (March 2009)
S&P 500 Index
Value Blend Growth Value Blend Growth
1,600
1 600
Large
Large
1,400
Since 10/9/07 Peak: -34.2 -29.9 -24.6 64.1 56.6 53.8
-29.9%
1,200
Mid
Mid
1,000
-25.2 -24.7 -25.0 90.9 81.8 73.3
800
Small
Small
Since 3/9/09 Low: +56.6% -25.2 -25.0 -25.1 85.0 80.9 76.8
600
Jan-07 Jan-08 Jan-09 Jan-10
Source: Russell Investment Group, Standard & Poor’s, FactSet, J.P. Morgan Asset Management.
All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represe nts period 10/9/07
– 6/30/10 illustrating market returns since the most recent S&P 500 Index high on 10/9/07 Since Market Low represents period
6/30/10, 10/9/07. 3/9/09 –
6/30/10, illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. F or all time
periods, total return is based on Russell -style indexes with the exception of the large blend category, which is reflected by th e S&P 500 Index.
Past performance is not indicative of future returns.
5
6. Equity Returns
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 YTD
Large Mid Small Small Mid Small Mid Mid Small Large Small Mid Small Mid
Growth Growth Value Value Value Growth Value Value Value Growth Value Growth Growth Value
38.7% 51.3% 22.8% 14.0% -9.6% 48.5% 23.7% 12.7% 23.5% 11.8% . -28.9% 46.3% -9.2% -0.9%
Mid Small Mid Mid Small Small Small Mid Large Mid Large Large Mid Small
Growth Growth Value Value Value Value Value Growth Value Growth Value Growth Value Value
17.9% 43.1% 19.2% 2.3% -11.4% 46.0% 22.3% 12.1% 22.2% 11.4% -36.9% 37.2% -9.6% -1.6%
Equities
Large Large Large Large Large Mid Large Large Mid Small Large Small Mid Small
Value Growth Value Value Value Growth Value Value Value Growth Growth Growth Growth Growth
15.6% 33.2% 7.0% -5.6% -15.5% 42.7% 16.5% 7.1% 20.2% 7.0% -38.4% 34.5% -10.2% -2.3%
Mid Large Mid Small Mid Mid Mid Large Small Large Mid Mid Small Mid
Value Value Growth Growth Growth Value Growth Growth Growth Value Value Value Value Growth
5.1% 7.4% -11.8% -9.2% -27.4% 38.1% 15.5% 5.3% 13.3% -0.2% -38.4% 34.2% -10.6% -3.3%
Small Mid Large Mid Large Large Small Small Mid Mid Small Small Large Large
Growth Value Growth Growth Growth Value Growth Value Growth Value Growth Value Value Value
1.2% -0.1% -22.4% -20.2% -27.9% 30.0% 14.3% 4.7% 10.7% -1.4% -38.5% . 20.6% -11.1% -5.1%
Small Small Small Large Small Large Large Small Large Small Mid Large Large Large
Value Value Growth Growth Growth Growth Growth Growth Growth Value Growth Value Growth Growth
-6.5%
6.5% -1.5%
1.5% -22.4% -20.4% -30.3% 29.8%
22.4% 20.4% 30.3% 6.3% 4.2% 9.1% -9.8%
9.8% -44.3%
44.3% 19.7% -11.7%
11.7% -7.6%
7.6%
Source: FactSet, Russell Investment Group, J.P. Morgan Asset Management.
All data are based on Russell Indexes and represent total return for stated period. Small company stocks may be subject to a hig her degree of market risk than
the securities of more established companies because they tend to be more volatile and less liquid. Each style is representat ive of corresponding Russell style
index. Past performance is not indicative of future returns. Please see disclosure page at end for index definitions. Data ar e as of 6/30/10.
Large Value = Russell 1000 Value Index Large Growth = Russell 1000 Growth Index
Mid Value = Russell Mid Cap Value Index Mid Growth = Russell Mid Cap Growth Index
Small Value = Russell 2000 Value Index Small Growth = Russell 2000 Growth Index
For illustrative purposes only.
6
7. Deploying Corporate Cash
Corporate Cash as % of Current Assets Theoretical Drag on Earnings from Retained Cash
S&P 500 companies – cash and cash equivalents, quarterly Cost of capital vs. return on cash
12%
26
10%
10%
24
8%
22
6%
20
4%
18
2% 1%
16
0%
14
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 Cost of Capital Cash Return
Acquisition Growth vs. Organic Growth S&P 500 Dividends per Share
Monthly deal volume and nonfarm nonfinancial capex Next twelve months dividends per share, USD
1,600 360 $32
Capital expenditures M&A activity
1,400 330
$28
1,200
300
1,000
270 $24
800
240
600 $20
210
400
180 $16
200
0 150
$12
1998 2000 2002 2004 2006 2008 2010 '96 '98 '00 '02 '04 '06 '08 '10
Source: Standard & Poor’s FRB Bloomberg, FactSet J P Morgan Securities J P Morgan Asset Management
Poor s, FRB, Bloomberg FactSet, J.P. Securities, J.P. Management.
(Top right) for illustrative purposes only, not based on actual data. (Bottom left) M&A activity is monthly number of deals o f any value and capital
expenditures are for nonfarm nonfinancial corporate business. (Bottom right) Next twelve months dividends are estimates provi ded by Standard
& Poor’s. Data are most recent as of 6/30/10.
7
8. Fixed Income Sector Returns
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10
Q YTD
Treas. EMD EMD Corp. TIPS High Yield EMD EMD High Yield TIPS Treas. High Yield Treas. Treas.
10.0% 23.1% 13.7% 10.3% 16.7% 29.0% 11.9% 12.3% 11.8% 11.6% 13.7% 58.2% 4.7% 5.9%
Barclays Barclays Asset
High Yield Treas. EMD EMD High Yield EMD Treas. MBS EMD TIPS Corp.
Agg Agg Alloc.
8.7% 2.4% 13.5% 8.4% 12.2% 26.9% 11.1% 3.6% 10.0% 9.0% 8.3% 34.2% 3.8% 5.8%
Barclays Barclays Barclays
Corp. TIPS TIPS MBS Treas. TIPS TIPS Muni MBS Corp. EMD
Agg Agg Agg
8.6% 2.4% 13.2% 8.2% 11.8% 10.6% 6.3% 3.5% 5.2% 7.0% 5.2% 18.7% 3.5% 5.7%
Barclays Asset Asset Asset Asset Asset Barclays
MBS MBS Muni TIPS TIPS MBS Corp.
Agg Alloc. Alloc. Alloc. Alloc. Alloc. Agg
7.0% 1.9% 11.7% 7.9% 10.3% 10.0% 6.0% 2.8% 5.1% 6.9% -1.4% 15.8% 3.4% 5.3%
Asset Barclays
y Asset Asset Asset Asset
Muni Corp.
Corp Corp.
Corp Corp.
Corp Treas.
Treas Muni TIPS Muni
Alloc. Agg Alloc. Alloc. Alloc. Alloc.
6.5% 1.6% 11.6% 6.8% 10.1% 8.2% 5.4% 2.8% 4.8% 6.2% -2.4% 12.9% 2.9% 5.0%
Asset Barclays Asset Barclays
MBS Treas. Muni MBS High Yield EMD Muni TIPS MBS High Yield
Alloc. Agg Alloc. Agg
5.3% -0.8% 11.2% 6.7% 10.0% 5.3% 4.7% 2.7% 4.3% 5.2% -2.5% 11.4% 2.9% 4.5%
Asset Barclays Barclays
TIPS Corp. High Yield Muni Muni MBS Corp. Corp. Corp. Muni MBS
Alloc.
Alloc Agg Agg
3.9% -2.0% 10.2% 5.3% 9.6% 4.1% 4.5% 2.6% 4.3% 4.6% -4.9% 5.9% 2.0% 4.5%
Barclays Barclays
High Yield Muni Corp. Muni MBS MBS Treas. Muni EMD MBS EMD TIPS
Agg Agg
1.9% -2.1% 9.1% 5.1% 8.7% 3.1% 4.3% 2.4% 3.1% 3.4% -14.7% 5.9% 1.0% 4.4%
EMD Treas. High Yield EMD High Yield Treas. Treas. Corp. TIPS High Yield High Yield Treas. High Yield Muni
-11.6% -2.6% -5.9% 1.5% -1.4% 2.2% 3.5% 1.7% 0.4% 1.9% -26.2% -3.6% -0.1% 3.3%
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 and a re represented by: Barclays Capital U.S. Aggregate
Index; MBS: Fixed Rate MBS Index; Corporate: U.S. Corporates; Municipals: Muni Bond Index; Emerging Debt: Emerging Markets In dex; High Yield: Corporate High Yield Index;
Treasuries: Barclays Capital U.S. Treasury; TIPS: Barclays Capital Real TIPS.
The “Asset Allocation” portfolio assumes the following weights: 10% in MBS, 20% in Corporate, 15% in Municipals, 10% in Emerg ing Debt,
10% in High Yield, 25% in Treasuries, 10% in TIPS. Balanced portfolio assumes annual rebalancing.
g , , p g
Data are as of 6/30/10.
8
9. Gold Gold
Gold Prices World Gold Production
$ / oz
Year Troy Ounces Total Value
1,400
Gold 2000 83.3 mm $23.2 bn
Most recent:
Gold, CPI adjusted $1,244
1,200
2001 83.6
83 6 mm $22.7 bn
$22 7 b
1,000 2002 82.0 mm $25.4 bn
Jan. 1980:
$850
2003 81.7 mm $29.7 bn
800
2004 77.8 mm $31.9 bn
600
2005 79.4 mm $35.3 bn
400 2006 76.2 mm $46.0 bn
Jan. 1980:
$326 Most recent:
2007 75.9 mm $52.9 bn
$210
200
2008 72.7
72 7 mm $63.3
$63 3 bn
0
'70 '75 '80 '85 '90 '95 '00 '05 '10 2009 75.6 mm $73.5 bn
Source: (left) EcoWin, BLS, U.S. Department of Energy, FactSet, J.P. Morgan Asset Management. (right) U.S. Geological Survey, J.P. Morgan Asset
Management. CPI adjusted gold values are calculated using month averages of gold spot prices divided by the CPI value for th at month. CPI is
rebased to 100 at the start of the chart. Total value of world gold production is calculated as troy ounces multiplied by th e average gold spot price for
the respective year.
Data reflect most recently available as of 6/30/10.
9
11. Economic Expansions and Recessions
Length of Economic Expansions and Recessions The Great Depression and Post-War Recessions
Length and severity of recession
125 5 yrs
Average Length (months):
Expansions: 43 months
p Great Depression:
26.7% decline in real GDP
100 Recessions: 15 months 4 yrs
Length of Recession in Years
-26.7%
75 3 yrs
Most Recent Recession:
3.8% decline in real GDP
50 2 yrs -3.8%
-3.2% -2.9%
-2.6%-1.6%
25 1 yrs -0.6%
* -1.7% -0.3%
* -1.4%
-3.7%
-2.2%
0 0 yrs
1900 1912 1921 1933 1949 1961 1980 2001 1910 1930 1950 1970 1990 2010
Source: NBER, J.P. Morgan Asset Management. Source: NBER, BEA, J.P. Morgan Asset Management.
Data for length of economic expansions and recessions obtained from the National Bubble size reflects the severity of the recession, which is calculated as the decline in real
GDP from the peak quarter to the trough quarter except in the case of the Great
Bureau of Economic Research (NBER). This data can be found at www.nber.org/cycles/ Depression, where it is calculated from the peak year (1929) to the trough year (1933),
and reflects information through June 2010. *Assumes recession started December 2007 due to a lack of available quarterly data. Data are as of 6/30/10.
and ended June 2009. Assumes most recent expansion extended through June 2010.
For illustrative purposes only.
11
12. Economic Growth & Composition of GDP
Real GDP Components of GDP
% chg at annual rate Billions, USD
10% 20-yr avg. Latest
$16,000
Real GDP: 2.6% 2.7% 2.4% Housing / Construction
8%
$14,000 9.7% Investment ex-housing
6%
$12,000 20.4%
Gov’t Spending
4%
$10,000
2%
$8,000
0%
$6,000 71.0%
-2%
2% Consumption
$4,000
-4%
$2,000
-6%
$0
-8%
- 3.5% Net Exports
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 -$2,000
Source: BEA, J.P. Morgan Asset Management.
Data reflect most recently available as of 6/30/10. GDP values shown in legend are % change vs. prior quarter annualized and reflect revised 1Q10 GDP.
12
13. Consumer Finances
Consumer Balance Sheet Personal Savings Rate
Trillions of dollars outstanding, not seasonally adjusted Annual, % of disposable income
12%
$70 Total Assets: $69 tn
10%
YTD 2010:
8% 3.6%
$60 Homes: 27% 6%
4%
$50
2%
Other tangible: 7%
0%
Deposits: 11% '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10
$40
Household Debt Service Ratio
Debt payments as % of disposable personal income, seasonally adjusted
$30 Pension funds: 18% 15%
3Q07:
Revolving (e.g.: credit cards): 6%
g( g ) 14.0%
14 0%
Non-revolving: 12% 14%
Other Liabilities: 9%
$20
13%
Other financial Total Liabilities: $14 tn
assets: 37% 12% 1Q80: 1Q10:
$10 11.2% 12.5%
11%
Mortgages: 73%
$0 10%
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Source: (Left chart) FRB, J.P. Morgan Asset Management. Data includes households and nonprofit organizations. (Right charts) BEA, FRB,
J.P. Morgan Asset Management.
Personal savings rate is calculated as personal savings (after -tax income – personal outlays) divided by after -tax income and reflects data through
February. Employer and employee contributions to retirement funds are included in after -tax income but not in personal outlays, and thus are
implicitly included in personal savings.
Savings rate data are as of May 2010. All other data are as of 1Q10.
13
14. Federal Finances
Federal Budget Surplus/Deficit U.S. Proposed Federal Budget Outlays - 2010
% of GDP, 1940 – 2020*
5%
-5%
5%
-15% Other
*Administration’s proposed 18%
Entitlements:
2011 budget
-25% Social Security
Medicare
Medicaid
M di id
-35%
39%
1940 1950 1960 1970 1980 1990 2000 2010 2020
Non-Defense
Federal Debt (Accumulated Deficits) (Discretionary)
% of GDP, 1940 – 2020* 15%
Defense
125%
5%
(Discretionary)
*Administration’s proposed 23%
100% 2011 budget
75%
50%
25%
Total Projected 2010 Budget Receipts: $2,165 billion
Total Projected 2010 Budget Outlays: $3,721 billion
0%
1940 1950 1960 1970 1980 1990 2000 2010 2020 Projected Surplus / Deficit: - $1,556 billion
Source: St. Louis Fed, BEA, OMB, J.P. Morgan Asset Management.
, , , g g Source: OMB, J.P. Morgan Asset Management.
Data reflect most recently available as of 6/30/10.
Note: Years shown are fiscal years (Oct. 1 through Sep. 30). Bottom left chart displays
federal debt in the hands of the public.
14
15. Consumer Price Index
CPI and Core CPI CPI Weight in 12-month
% chg vs. prior year 50-yr. Avg. Latest Components CPI Change
15% Headline CPI: 4.1% 2.0% Food & Bev. 14.8% 0.7%
Core CPI: 4.1% 0.9%
Housing 42.0% -0.5%
12% Apparel 3.7% -0.6%
Transportation 16.7% 10.7%
9% Medical Care 6.5% 3.4%
Recreation 6.4%
6 4% -0 5%
0.5%
6% Educ. & Comm. 6.4% 2.2%
Other 3.5% 2.7%
3%
Headline
H dli CPI 100.0%
100 0% 2.0%
2 0%
Less:
0% Energy 8.6% 14.7%
Food 13.7% 0.7%
-3%
'60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 Core CPI 77.7% 0.9%
Source: BLS, J.P. Morgan Asset Management.
Data reflect most recently available as of 6/30/10. CPI values shown are % change vs. 1 year ago and reflect May
2010 CPI data. CPI component weights are as of Dec. 2009 and 12 -month change reflects data through May 2010.
Core CPI is defined as CPI excluding food and energy prices.
15
16. The Federal Reserve
Fed Funds Target Rate and 10-Year Treasury Yields
12
Grey bars represent
Fed tightening cycles
g g y
10
8
6
10-year Treasuries:
2.97%
4
2
Fed Funds Target:
0.0% to 0.25%
0
'86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Source: Federal Reserve, FactSet, J.P. Morgan Asset Management.
Data are as of 6/30/10.
16
17. Employment
Civilian Unemployment Rate Employment - Total Non-farm Payroll
Seasonally adjusted Total job gain/loss (thousands)
12% 600
11% 400
Jun. 2010:
10% -125K
200
Most recent: 9.5%
9%
0
8%
-200
7%
-400
6%
-600
5%
50-yr. avg.: 6.0%
4% -800
Jan. 2009
J 2009:
-779K
3% -1,000
'60 '70 '80 '90 '00 '10 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Source: BLS, J.P. Morgan Asset Management. Source: BLS, J.P. Morgan Asset Management.
Data reflect most recently available as of 7/2/10. Data reflect most recently available as of 7/2/10.
17
20. Stocks vs. the Risk‐Free Rate
January 1926–December 2009
April 1999 Daily Returns
Total Month of April Return: 3.9%
S&P 500
‐2.24% $2,048
1 15 30
During this month, the S&P 500
had 10 days of negative returns out
h d 10 d f i
of 21 trading days.
1999 Monthly Returns
Total Annual Return: 21%
21.04%
‐0.49%
‐3.11% ‐2.36% ‐3.12% ‐2.74%
J F M A M J J A S O N D
During this year, the S&P 500 had
5 out of 12 months with negative
5 out of 12 months with negative
returns.
• Even during periods of positive stock returns, investors may experience substantial volatility.
• Short‐term volatility is a typical characteristic of stock market investing.
• Long‐term returns are the sum of short‐term volatility.
The S&P data are provided by Standard & Poor's Index Services Group. Indexes are not available for direct investment. Index performance does not
reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Not to be 20
construed as investment advice.
22. The Stock Market’s Reaction
As Measured by the Dow Jones Industrial Average
First Trading Session Response Subsequent Market Behavior
Prior Percent One Six One
Date Event Day Close Close Change Change Month Months Year
September 11, 2001 World Trade Center towers destroyed 9,605.51 8,920.70 -684.81 -7.13% -3.66% 11.12% -8.71%
January 16, 1991 US launches bombing attack on Iraq 2,508.91 2,623.51 114.60 4.57% 16.97% 18.93% 29.52%
August 2, 1990 Iraq invades Kuwait 2,899.26 2,864.60 -34.66 -1.20% -8.74% -4.67% 4.95%
March 30 1981
30, President Reagan shot by John Hinckley Jr
b Hinckle Jr. 994.78
994 78 992.16
992 16 -2.62
2 62 -0.26%
0 26% 1.95% 14 33%
1 95% -14.33% -16.90%
16 90%
August 9, 1974 President Nixon resigns 784.89 777.30 -7.59 -0.97% -14.71% -8.87% 5.98%
November 22, 1963 President Kennedy assassinated in Dallas 732.64 711.48 -21.16 -2.89% 6.57% 15.37% 24.99%
October 22, 1962 Cuban missile crisis 568.60 558.06 -10.54 -1.85% 15.55% 27.41% 33.89%
September 24, 1955 President Eisenhower heart attack 487.44 455.55 -31.89
31.89 -6.54%
6.54% 0.04% 12.48% 5.72%
June 25, 1950 North Korea invades South Korea 224.30 213.90 -10.40 -4.64% -4.49% 7.34% 15.13%
December 7, 1941 Japan attacks Pearl Harbor, Hawaii 115.90 112.52 -3.38 -2.92% -0.86% -6.19% 2.88%
Dow Jones data provided by Dow Jones Indexes.
Past performance is not a guarantee of future results. Values change frequently and past performance may not be repeated. 22
There is always the risk that an investor may lose money.
24. Bull and Bear Markets
S&P 500 Index (USD)
Daily Returns: January 1 1926 March 31, 2010
1, 1926-March 31
Average Duration Average Return
Bull Market: 413 Days Bull Market: 58%
Bear Market: 220 Days Bear Market: ‐21% 303%
220%
156%
119% 121%
113%
100% 99% 96%
88% 91%
83%
78% 73%
69%
59% 56%
53% 50% 50%
27% 48%
44% 40% 44%
23% 38% 38% 26% 37%
27% 26% 26% 26% 23%
22% 22% 21% 21% 3/31/2010
19% 18% 16%
20% 25% 15% 13%
1%
‐20%
‐13% ‐16% ‐13% ‐11% ‐11% ‐11% ‐13% ‐11% ‐10% ‐12% ‐13% ‐15% ‐10% ‐11% ‐10% ‐11% ‐12%
‐13% ‐21% ‐14%
‐21% ‐20% ‐19% ‐19%
‐13% ‐26% ‐16% ‐27% ‐13% ‐13%
‐33% ‐11% ‐32% ‐16% ‐33% ‐11%
‐39%
‐14% ‐27% ‐45%
‐15% ‐47%
‐53% ‐25% ‐55%
‐10%
‐11%
‐85% 03/09/2009
‐55%
1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.
The S&P data are provided by CRSP (January 1, 1926‐August 31, 2008) and Bloomberg (September 1, 2008‐March 31, 2010). Returns include reinvested dividends.
The S&P data are provided by CRSP (January 1 1926‐August 31 2008) and Bloomberg (September 1 2008‐March 31 2010) Returns include reinvested dividends
Bull and bear markets are defined in hindsight using cumulative daily returns. A bear market (1) begins with a negative daily return, (2) must achieve a cumulative return less than or equal to ‐10%, and (3)
ends at the most negative cumulative return prior to achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market. Performance
data represents past performance and does not predict future performance.
24
25. Recessionary Periods
Mid 1970s and Early 1980s
Recession
17 months
Unemployment
Recession Begins Peaks at 9.0%
November 1973
November 1973 May 1975
Recession Ends
March 1975
Unemployment
Recession Peaks at 10.8%
17 months Nov/Dec 1982
Recession Begins Recession End Announced
July 1981 July 8, 1983
Recession Ends
November 1982
Recession Announced
January 6, 1982
Prior to 1979, there were no formal announcements of business cycle turning points.
Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual
portfolio. For illustrative purposes only. Past performance is not a guarantee of future results and there is always the risk that an investor will lose
money. Source: National Bureau of Economic Research (NBER) for economic expansions and recessions data; the S&P data are provided by 25
Standard & Poor’s Index Services Group; US Bureau of Labor Statistics for unemployment data.
26. Recessionary Periods
Early 1990s and Early 2000s
Unemployment
Recession Peaks at 7.8%
9 months Recession Announced June 1992
April 25, 1991
Recession Begins Recession End Announced
July 1990
y December 22, 1992
,
Recession Ends
March 1991
Recession
R i
9 months
Unemployment
Recession Begins Peaks at 6.3%
March 2001 Recession Announced June 2003
November 26, 2001
Recession Ends
Recession End Announced
November 2001
July 17, 2003
Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual
portfolio. For illustrative purposes only. Past performance is not a guarantee of future results and there is always the risk that an investor will lose
money. Source: National Bureau of Economic Research (NBER) for economic expansions and recessions data; the S&P data are provided by 26
Standard & Poor’s Index Services Group; US Bureau of Labor Statistics for unemployment data.
27. Historical returns by holding period
Range of Stock, Bond, Blended, and Cash Total Returns
Stock Bond Blended
Annual total returns, 1950 -2009*
Annual Avg.
60%
Total Return
Stocks 10.8%
50% 51%
Bonds 6.2%
50/50 Portfolio 9.0%
40% 43%
Cash (T -Bills) 2.1%
30% 32%
28%
20% 23%
21%
19%
17% 18%
16%
14% 14%
10% 12%
11%
9%
6% 7%
5%
0% -2% -2% 1% 1% 2%
0.1% 1% 0.5% 1% 0.3%
-1%
-8%
-10%
-15%
Stocks
-20% Bonds
50/50 Portfolio
-30% Cash (T -Bills)
-37%
-40%
1-yr.
1 5-yr. rolling
5 lli 10 -yr. rolling
lli 20 -yr. rolling
lli
Sources: Factset, Robert Shiller, Strategas/Ibbotson, Federal Reserve, J.P. Morgan Asset Management.
Asset 20 -yr. cash (T
*The -Bill) returns were calculated using 20 -yr. annualized returns from 1953 -2009.
27
28. World Market Capitalization
$28.6 Trillion as of December 31, 2009
SCALE
Ten Billion
One Trillion
MSCI Index Developed Markets Frontier Markets
Affiliation Emerging Markets
In US dollars. Map reflects countries in the MSCI All Country World IMI Index and MSCI Frontier Markets Index.
Market cap data is free‐float adjusted. MSCI data copyright MSCI 2009, all rights reserved. Vietnam data provided by MFMI. Many small nations
not displayed. Totals may not equal 100% due to rounding. For educational purposes; should not be construed as investment advice. 1. An example 28
large cap stock provided for comparison.
29. The economic growth differential
World GDP Growth vs U S GDP Growth
vs. U.S.
9% World GDP Growth
U.S. GDP Growth
6% Difference
3%
0%
-3%
1970 1975 1980 1985 1990 1995 2000 2005 2010
Emerging and Developed GDP Growth Emerging Economies
12%
Developed Economies
5%
-2%
-9%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: J.P. Morgan Global Economics Research, IMF, J.P. Morgan Asset Management.
Data are as of Apr. 2010 and are provided by the International Monetary Fund. 2010 and 2011 data are estimates as provided by th e IMF
Apr Fund IMF.
Emerging and Developed Economy GDP growth rates represent quarterly annualized growth and are as of 4Q09.
29
30. Mutual fund flows
Fund Flows
Billions, USD AUM YTD 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Domestic Equity 3,624 (11) (40) (151) (48) 11 31 111 130 (25) 54 260
World Equity 1,183 25 31 (82) 139 148 105 67 23 (3) (22) 50
Taxable Bond 1,921
1 921 118 306 20 98 45 26 3 39 124 76 (36)
Tax-exempt Bond 488 17 69 8 11 15 5 (14) (7) 16 12 (14)
Hybrid 648 13 23 (19) 23 7 25 43 32 8 10 (31)
Money Market 2,837 (485) (539) 637 654 245 64 (157) (258) (46) 375 159
Net fund flows (monthly) Difference between net flows into stock and bond funds
Billions, USD, U.S. and international funds Billions, USD, U.S. and international funds
$60 $20
Equity flows
$40 Fixed income flows
$0
$20
-$20
$0
-$20
-$40
-$40
$40
-$60
-$60 Bond flows exceeded equity
flows by $39 billion in May ’10
-$80 -$80
May '07 Nov '07 May '08 Nov '08 May '09 Nov '09 May '10 May '07 Nov '07 May '08 Nov '08 May '09 Nov '09 May '10
Asset Investment Company Institute,, J.P. Morgan Asset Management.
Source: p y g g
Data include flows through May 2010 and exclude ETFs. International equity flows are inclusive of emerging market, global equ ity
and regional equity flows. Hybrid flows include asset allocation, balanced fund, flexible portfolio and mixed income flows.
30
