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FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION June 2016 JPMorgan European Smaller Companies Trust plc Annual General Meeting

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Page 1: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

June 2016

JPMorgan European Smaller Companies Trust plc

Annual General Meeting

Page 2: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

1 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

European smaller companies

Source: J.P. Morgan Asset Management, Thomson Reuters Datastream. All series are rebased to 100 as at 31 December 1994 to 31 May 2016. All indices in GBP and include reinvested dividends. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance.

… European small caps have produced long term equity returns amongst the best in the world

Cumulative returns

0

100

200

300

400

500

600

700

800

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Euromoney Smaller European Companies (ex UK) Index S&P 500 Index

FTSE All Share Index MSCI Asia (ex Japan) Index

MSCI Emerging Markets Index MSCI Europe (ex UK) Index

Topix Index

A compelling long asset class

Page 3: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

2 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

JPMorgan European Smaller Companies Trust

... a proven track record through market cycles Source: Thomson Datastream, as at 31 May 2016. Chart shows Euromoney Europe Smaller Companies Index (light blue) and JPM Europe Smaller Companies Investment Trust NAV (dark blue) from 1994, rebased as of 31 December 1994. For illustrative purposes only. There can be no assurance that the professionals currently employed by J.P. Morgan Asset Management will continue to be employed by J.P. Morgan Asset Management or that the past performance or success of any such professional serves as an indicator of such professional’s future performance or success. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not necessarily a reliable indicator for current and future performance.

Jim Campbell 21 years at JPMAM, 28 years industry experience

Francesco Conte 18 years at JPMAM, 28 years industry experience

One of the longest track records in European small cap investing

Investment process focused on capturing change in operating momentum

Gearing provides opportunities to add value

Largest European smaller companies investment trust

Page 4: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

3 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

JPMorgan European Smaller Companies Trust

Source: J.P. Morgan Asset Management. As at 29 June 2016. The Investment Manager (Portfolio Manager) seeks to achieve the stated targets/objectives. There can be no guarantee the objectives/targets will be met. The Benchmark is a point of reference against which the performance of the Investment Trust may be measured. The Investment Trust may bear little resemblance to its benchmark.

Objective

– The Company aims to provide capital growth from a diversified portfolio of smaller European companies (excluding the United Kingdom). As the emphasis is on capital growth rather than income, shareholders should expect the dividend to vary from year to year. The company has the ability to use borrowing to gear the portfolio within the range of 20% net cash to 20% geared in normal market conditions

Policy

– To invest in a diversified portfolio of companies the majority of which, at the time of purchase, fall within the market capitalisation range of the benchmark index

Benchmark

– Euromoney Smaller European Companies (ex UK) Index (Total Return Net)

Net assets

– £495m

Gearing

– Current: 4.5% cash

Key characteristics

Page 5: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

4 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

14.4 15.6

8.8 9.4

12.6

5.6

10.3

5.9 6.5

9.1

-3.7

4.9 4.8 5.6

7.3

1 year 3 years (pa) 5 years (pa) 10 years (pa) 20 years (pa)

JPM European Smaller Companies Trust NAV (net of fees)Euromoney Smaller European Companies (ex UK) IndexMSCI Europe (ex UK) Index

JPMorgan European Smaller Companies Trust

Annualised returns 31 May 2016 (%)

Source: J.P. Morgan Asset Management. Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. All indices in sterling and include reinvested dividends. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not necessarily a reliable indicator for current and future performance.

...asset class offers opportunity for significant alpha generation

Long term returns

Page 6: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

5 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Our investment philosophy

Attractively valued, high quality stocks with positive momentum outperform the market

Quality

Stocks that are attractively valued and are fundamentally sound Value

Profitable companies with sustainable earnings and disciplined capital management Quality

Stocks that are supported by positive earnings momentum and positive price momentum Momentum

The above are shown for illustrative purpose only and are subject to change without notice. The Investment Manager (Portfolio Manager) seeks to achieve the stated targets/objectives. There can be no guarantee the objectives/targets will be met.

Page 7: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

6 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: J.P. Morgan Asset Management 8 June 2016. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not necessarily a reliable indicator for current and future performance.

VALUE QUALITY MOMENTUM

Attractively valued, high quality stocks with positive momentum outperform the market

Themes:

- Cyclical recovery

- High yielding stocks in a low interest rate environment

- Out of favour stocks with catalysts

Themes:

- Market leaders

- Cash generative businesses

- Focus on capital allocation

- Shareholder returns

Themes:

- Domestic consumption

- Disruptive technology

- Secular growth

- Acquisition roll-up strategy

Stock examples:

- CIE Auto

- Intrum Justitia

- Ipsos

- YIT

Stock examples:

- Amplifon

- Brembo

- Royal Unibrew

- Salmar

Stock examples:

- Fastighets Balder

- Huhtamaki

- NetEnt

- Sartorius

Rigorously identifying stocks with specific style characteristics

Page 8: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

7 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Buy discipline Focus on market leaders

Sustainability of earnings momentum

Identify catalysts

Avoid value traps

Sanity check

Conviction and liquidity drive sizing

Sell discipline Run winners

Fundamental change in business prospects

Market cap significantly exceeds maximum in benchmark

Raising cash for a better idea

Fundamental analysis

Source: J.P. Morgan Asset Management 31 May 2016. The targets and aims provided above are the Investment Manager’s targets and aims only and are not necessarily part of the Fund’s investment objectives and policies as stated in prospectus. There is no guarantee that these will be achieved.

... capturing change in operating momentum

Ongoing engagement with corporate management

Page 9: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

8 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Sector active exposure over time & current positioning

JPMorgan European Smaller Companies Trust

Source: J.P. Morgan Asset Management as at 30 April 2011 to 31 May 2016 using monthly data. The Trust is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. Past performance is not an indication of current and future performance.

A dynamic approach to finding attractive investment opportunities

-10.0

-5.0

0.0

5.0

10.0

15.0

Aero

spac

e &

Def

ense

Auto

mob

iles

& P

arts

Bank

s

Beve

rage

s

Che

mic

als

Con

stru

ctio

n &

Mat

eria

ls

Elec

trici

ty

Elec

troni

c &

Ele

ctric

al E

quip

men

t

Equi

ty In

vest

men

t Ins

trum

ents

Fina

ncia

l Ser

vice

s

Fixe

d Li

ne T

elec

omm

unic

atio

ns

Food

& D

rug

Ret

aile

rs

Food

Pro

duce

rs

Fore

stry

& P

aper

Gas

, Wat

er &

Mul

tiutil

ities

Gen

eral

Indu

stria

ls

Gen

eral

Ret

aile

rs

Hea

lth C

are

Equ

ipm

ent &

Ser

vice

s

Hou

seho

ld G

oods

& H

ome

Con

stru

ctio

n

Indu

stria

l Eng

inee

ring

Indu

stria

l Met

als

& M

inin

g

Indu

stria

l Tra

nspo

rtatio

n

Leis

ure

Goo

ds

Life

Insu

ranc

e

Med

ia

Min

ing

Mob

ile T

elec

omm

unic

atio

ns

Non

life

Insu

ranc

e

Oil

& G

as P

rodu

cers

Oil

Equi

pmen

t, Se

rvic

es &

Dis

tribu

tion

Pers

onal

Goo

ds

Phar

mac

eutic

als

& B

iote

chno

logy

Rea

l Est

ate

Inve

stm

ent &

Ser

vice

s

Rea

l Est

ate

Inve

stm

ent T

rust

s

Softw

are

& C

ompu

ter S

ervi

ces

Supp

ort S

ervi

ces

Tech

nolo

gy H

ardw

are

& Eq

uipm

ent

Toba

cco

Trav

el &

Lei

sure

Max underweight Max overweight CurrentActive exposure (%)

Page 10: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

9 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Building an unconstrained small cap portfolio

Source: J.P. Morgan Asset Management, FactSet, as of 28 June 2016. Figures reported are weighted medians. Figures shown are Value = Free Cash Flow Yield, Quality = return on equity (ROE), Momentum = 3 month historic earnings per share revisions. Index relates to the Investment Trust benchmark which is Euromoney Smaller European Companies ex UK Index (Net).

Consider a broad

investment universe

JPMorgan European Smaller Companies Trust

Fund Index Value eg FCF Yield 4.9% 4.3%

Quality eg ROE 16.8% 12.0%

Momentum eg EPS mom. 2.6% 0.0%

One or more desirable style characteristics:

Attractive value

High quality

Positive momentum

Identify stocks

Invest in our best ideas to maximise

exposure to the styles we seek.

Portfolio constraints

Stocks None Sectors Max. 35% Countries None

Construct

portfolio

… attractively valued, with high quality and positive momentum

Page 11: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

10 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: FactSet. The Investment Trust is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not necessarily a reliable indicator for current and future performance.

Attribution: Major stock and sector contributors to returns – 12 months to 31 May 2016

JPMorgan European Smaller Companies Trust

Key sectors Key stock contributors

Faiveley Transport (o), Sartorius (o)

Netent (o), Paddy Power Betfair Plc (o)

Saipem (u), Seadrill (u)

Ubisoft Entertainment (o)

Trigano (o)

Key stock detractors

Melexis (o)

Flow Traders Nv (o)

Fingerprint Cards (u), Saft Groupe (o)

Elis (o)

Sartorius Stedim Biotech (u)

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0%

Health Care Equip. & Serv. (u)

Support Services (o)

Electronic & Elec. Equip. (o)

Financial Services (o)

Tech. Hardware & Equip. (u)

Autos. & Parts (o)

Leisure Goods (o)

Oil Equip., Serv. & Distn. (u)

Travel & Leisure (o)

Industrial Engineering (o)

Stock selection

Asset allocation

Page 12: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

11 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Recent additions

Leader in premium writing pads Develop global distribution platform High single digit organic growth

Moleskine

Share price (EUR) EPS (EUR)

Source: Datastream, J.P. Morgan Asset Management. Data as at 16 June 2016. The companies/securities above shown are for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance. J.P. Morgan Asset Management may or may not have positions on behalf of its clients in any or all of the aforementioned securities. EPS denotes Earnings per share.

0.08

0.09

0.10

0.11

0.12

0.13

0.14

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

Dec-2013 Dec-2014 Dec-2015

Price (LHS)12m forward EPS (RHS)

Leading market research provider Restructuring product offering Considered very cheap following disappointing few years

Ipsos MORI

Share price (EUR) EPS (EUR)

2.30

2.40

2.50

2.60

2.70

2.80

2.90

15.017.019.021.023.025.027.029.031.033.035.0

Dec-13 Jun-14 Dec-14 Jun-15 Dec-15

Price (LHS)12m forward EPS (RHS)

Page 13: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

12 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Recent additions

Source: Datastream, J.P. Morgan Asset Management. Data as at 16 June 2016. The companies/securities above shown are for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance. J.P. Morgan Asset Management may or may not have positions on behalf of its clients in any or all of the aforementioned securities. EPS denotes Earnings per share.

Share price (EUR) EPS (EUR) Share price (EUR) EPS (EUR)

World leader in premium brakes We consider the company to have very high quality growth Developing rapidly in US

World leader in vehicle glass repair New management restructuring We consider the company to be very cheap

Brembo D’Ieteren

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

15

20

25

30

35

40

45

50

55

Dec-2013 Dec-2014 Dec-2015

Price (LHS)12m forward EPS (RHS)

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

25

27

29

31

33

35

37

39

41

43

45

Dec-2013 Dec-2014 Dec-2015

Price (LHS)12m forward EPS (RHS)

Page 14: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

13 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: J.P. Morgan Asset Management. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not positions on behalf of its clients in any or all of the aforementioned securities.

JPMorgan European Smaller Companies Trust Top 10 holdings as of 31 May 2016

Company Sector Weight (%)

Sopra Steria Digital transformation 3.0

OVS Fashion retailer 2.9

Aalberts Industries Industrial products 2.5

Intrum Justitia Credit management services 2.5

Intertrust Trust and corporate services 2.5

IMCD Specialty chemical distributor 2.4

Ipsos Advertising and marketing 2.0

Alten Technology consulting and engineering 2.0

Plastic Omnium Plastic manufacturing 1.9

NetEnt Online gaming software 1.9

Top twenty weighting 45%

Total number of holdings 63

Page 15: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

14 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: FactSet. The above portfolio characteristics are shown for illustrative purposes only and are subject to change without notice. The Investment Trust is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.

JPMorgan European Smaller Companies Trust

-10.0% -5.0% 0.0% 5.0% 10.0%

Real Estate

Banks

Pharma. & Biotech.

Electricity

Financial Services

Personal Goods

Industrial Engineering

Support Services

Autos. & Parts

Software & Comp. Serv.

Top / bottom active sector positions Top / bottom active country positions

-10.0% -5.0% 0.0% 5.0% 10.0%

Spain

Germany

Switzerland

Austria

Denmark

Sweden

Italy

Finland

Netherlands

France

Portfolio positioning as of 31 May 2016

Page 16: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

15 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: Thomson Reuters Datastream, J.P. Morgan Asset Management as at 31 March 2016. Index rebased to 100 at start of data series. * Index is Euromoney Smaller European Companies (ex UK) Index.

...active management of gearing a source of consistent value added

Since 2009 (quarterly)

50

100

150

200

250

300

80%

85%

90%

95%

100%

105%

110%

115%

120%

125%

Mar

09

Jun

09

Sep

09

Dec

09

Mar

10

Jun

10

Sep

10

Dec

10

Mar

11

Jun

11

Sep

11

Dec

11

Mar

12

Jun

12

Sep

12

Dec

12

Mar

13

Jun

13

Sep

13

Dec

13

Mar

14

Jun

14

Sep

14

Dec

14

Mar

15

Jun

15

Sep

15

Dec

15

Mar

16

JPMorgan European Smaller Companies Trust gearing (LHS)Euromoney Smaller European Companies (ex UK) Index (RHS)

Gearing versus the index as of 31 May 2016

JPMorgan European Smaller Companies Trust

Gearing (%) Gearing (%)

Page 17: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

16 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

European smaller companies

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Asian financial crisis

Russian financial crisis

.com bubble bursting

Global financial crisis

Eurozone sovereign debt crisis

Calendar year excess returns Euromoney Smaller European Companies (ex UK) Index vs. MSCI Europe (ex UK) Index

Source: J.P. Morgan Asset Management, Thomson Reuters Datastream, data from 31 December 1992 to 31 December 2015. All indices in EUR and include reinvested dividends. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not necessarily a reliable indicator for current and future performance.

Mexican financial crisis

Generally outperform in up markets

Page 18: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

17 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Global Purchasing Managers’ Index – manufacturing and services

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

US services

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

China services

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

Eurozone manufacturing

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

US manufacturing

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

China manufacturing

30

50

70

2000 2002 2004 2006 2008 2010 2012 2014 2016

Eurozone services

Source: J.P. Morgan Asset Management, Bloomberg. Data as at 31 May 2016. PMI denotes Purchasing Managers’ Index. Data for China available from January 2014.

PMI

PMI PMI

PMI PMI

PMI

Page 19: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

18 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Eurozone M1 money supply

Share price (DKK) EPS (DKK) Money supply vs GDP expectations Money supply vs equities Money supply vs small cap rel perf(1)

-4%

-2%

0%

2%

4%

0%

4%

8%

12%

16%

2000 2004 2008 2012 2016

ECB M1 yoy %; advanced 6 mths (LHS)

Eurozone forecast 1 yr ahead GDP yoy % (RHS)

-60%

-30%

0%

30%

60%

0%

4%

8%

12%

16%

2000 2004 2008 2012 2016

ECB M1 yoy %; advanced 6 mths (LHS)

Stoxx 600 ex UK yoy % (RHS)

Money supply has historically been one of the most consistent leading indicators in Europe

Source: J.P. Morgan Asset Management, Bloomberg, MSCI. Data as at 31 May 2016. (1) Yoy change in the relative total return (net) performance of the MSCI Europe ex UK small-cap index vs MSCI Europe ex UK large-cap index. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not necessarily a reliable indicator for current and future performance.

-30%

-15%

0%

15%

30%

0%

4%

8%

12%

16%

2000 2004 2008 2012 2016

ECB M1 yoy %; advanced 6 mths (LHS)

MSCI Europe ex UK small vs large yoy change (RHS)

Page 20: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

19 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Brexit implications

Italian 2 year bond yield

%

Source: Bloomberg, as of 28 June 2016. Past performance is not necessarily a reliable indicator for current and future performance.

EUR/USD

EUR/USD

No contagion to periphery at present

1

1.05

1.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

1.5

-1

0

1

2

3

4

5

6

7

8

Page 21: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

20 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

European smaller company valuations

… valuations attractive v. large companies Source: European Quantitative Research, Citigroup Investment Research. Data as at 31 May 2016. Past performance is not necessarily a reliable indicator for current and future performance. *Price-To-Book is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest Quarter’s book value per share.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1996 1999 2002 2005 2008 2011 2014

Relative valuations – price/book* Absolute valuations – price/book*

Avg.

-1 Stdev

+1 Stdev

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

1996 1999 2002 2005 2008 2011 2014

Small Cap/Large Cap

+1 Stdev

-1 Stdev

Avg.

Cheap

Expensive Absolute price/book Relative price/book

Page 22: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

21 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Summary

Source: J.P. Morgan Asset Management as 29 June 2016.

Exceptional alpha

generation in a world leading asset class

A common-sense investment philosophy,

rigorously applied

A team of 49 specialists,

backed by J.P. Morgan’s global

resources

Long-term outperformance

Page 23: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

22 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Appendix

Page 24: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

23 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Small cap investing rationale

Seeking strong absolute returns

Seeking strong risk adjusted returns

Seeking long term outperformance vs.

large caps

High Active Share

Large investment universe IPOs / M&A

Limited analyst coverage

Stock picking opportunities

Entrepreneurial management

Strong earnings growth

The targets and aims provided above are the Investment Manager’s targets and aims only and are not necessarily part of the Fund’s investment objectives and policies as stated in the prospectus. There is no guarantee that these will be achieved.

Page 25: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

24 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

JPMorgan European Smaller Companies Trust

Source: J.P. Morgan Asset Management. Performance is gross of fees, data calculated NAV to NAV, in GBP. Gross fund returns are calculated from net returns by applying the ongoing charges, including operating & administrative expenses (O&A). The O&A fees are accrued at the maximum rate, according to what is stated in the fund prospectus. Where the O&A fees incurred are actually lower than the accrual, this would lead to a minor overstatement of gross returns. Net returns are not impacted. Past performance is not necessarily a reliable indicator for current and future performance.

Strong and consistent returns – quarterly excess returns to 31 March 2016

4.7 4.4

7.3

-1.3

2.6

0.4 0.7

3.3

0.5 1.8

-2.6

-0.6

2.6

5.4

-0.5

8.1

3.2

-10.9

0.2 1.3 0.6

2.2 1.2

4.8

-0.1

1.3

3.6

-1.4

-5.1

-1.8

2.7

0.5 2.1

-0.9

4.9 4.2

-0.5

-5.1

-3.0

6.9

3.1

0.5

6.1 4.7

-1.2

-15%

-10%

-5%

0%

5%

10%

Q1

2005

Q2

2005

Q3

2005

Q4

2005

Q1

2006

Q2

2006

Q3

2006

Q4

2006

Q1

2007

Q2

2007

Q3

2007

Q4

2007

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Q1

2014

Q2

2014

Q3

2014

Q4

2014

Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

2016

Excess returns versus Euromoney Smaller European Companies (ex UK) Net Index

Page 26: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

25 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Equity trading – order flow management

Source: J.P. Morgan Asset Management as of 15 March 2016. *Based on number of fills by categorised venue in 2015. For illustrative purposes only.

Order

Automation 0 – 10% ADV

Quant driven rules engine, utilises custom built broker algorithms

Auto Routing Based on size and profile

MTFs Dark Pools Exchanges Central Risk

Books Primary Markets

Block Liquidity

The Market

Liquidity Trading Team 10 – 25% ADV

Specialise in programs, derivatives and orders too large to automate

Specialist Trading Team > 25% ADV

5 specialist traders, Mid/Small cap focus, liquidity driven

Access to over 120 brokers across 200+ fix destinations Trade across 217 venues Trade approximately 40% on primary, 35% on MTFs and 25% in dark pools*

... focus on minimising transaction costs and preserving alpha

Page 27: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

26 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

Source: Euromoney; as at 31 March 2016.

Euromoney Smaller European Companies (ex UK) Index Key characteristics

1,000 stocks across 15 markets

Market capitalisation range of £60m – £4.0bn

Back history from December 1985

Monthly geographic and sector analysis

Daily pricing on Bloomberg - JCSCEXPT Index

Page 28: JPMorgan European Smaller Companies Trust plc Annual ... · recommendation to buy or sell. Past performance is not necessarily a reliable indicator for current and future performance

27 | FOR PROFESSIONAL CLIENTS ONLY | NOT FOR RETAIL USE OR DISTRIBUTION

J.P. Morgan Asset Management

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