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JPM Natural Resources Fund

Ian Henderson, Fund Manager October 2007. JPM Natural Resources Fund . For professional advisers only. What have we done? Has it worked? Will it work in the future?. 1. Our building blocks. Understand the clients’ needs A professionally managed fund A portfolio that beats the market

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JPM Natural Resources Fund

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  1. Ian Henderson, Fund Manager October 2007 JPM Natural Resources Fund For professional advisers only.

  2. What have we done? Has it worked? Will it work in the future? 1

  3. Our building blocks Understand the clients’ needs • A professionally managed fund • A portfolio that beats the market • Trustworthy investment professionals Ability to deliver • Understand our strengths and our weaknesses • Knowledgeable in our specialist subject Expertise • Be able to identify companies with strong growth profiles and reliable management

  4. Flexible asset allocation captures the best of the sector JPM Natural Resources Fund - as at 30 September 2007 JPM Natural Resources Fund - as at 31 December 2002 … and can offer intrinsic natural diversification benefits

  5. Produces and exports high grade iron ore to the Chinese market Stock price advanced on achieving financial support Bulk Commodities: Converting a good story into a potential best seller! Fortescue Metals: Iron Ore producer 10,700% increase! Began building up position in Fortescue Metals Source: Bloomberg, AUD, 30 September 2007

  6. Oil shares can rise without help from oil price Prices rebased Source: Datastream, USD, 30 September 2007

  7. A revolutionary new combustion process discovered in 1993 Is continually advanced through numerous repeatable physical model laboratory runs and successful field scale numerical simulation models Potential for higher resource recover, lower costs, and lower environmental impact Being stock selective can fuel spectacular returns Petrobank - Technological advances are key features of successful companies THAITM Process Source: Petrobank

  8. Invest in companies from discovery to reserve definition… … and ultimately to production Invest in pre-production stage companies A nurturing portfolio with a long-term view Small to mid-cap bias – offers superior performance Example holdings % Oilexco 1.8 Lynas Corp 0.7 Platinum Group Metals 0.4 Mintails 0.6 Berkeley Resources 0.3 Source: JPMorgan Asset Management, as at 30 September 2007 … striving to maximise returns with a focus on the undiscovered

  9. Small-mid cap price performance Oilexco Petrobank Initial investment Initial investment First Quantum Lynas Initial investment Initial investment Source: Datastream, 30 September 2007

  10. Diversifying political risk Assessment of location of assets is essential Low correlation to emerging markets Only 3% of the portfolio in MSCI Emerging markets Index Diversified geographical exposure dilutes geopolitical risks By region (%) Source: JPMorgan Asset Management, as at 30 September 2007

  11. Performance versus other Natural Resources Funds In € 3 mth 1 year 3 years 5 years JPM Global Natural Resources Fund 3.4% 51.1% N/A N/A JPM Natural Resources Fund 2.1% 49.9% 167.1% 433.0% First State Global Resources 13.1% 59.6% 162.0% N/A M&G Global Basics Fund -2.4% 21.5% 102.1% 196.9% Merrill Lynch World Gold 21.1% 30.5% 93.0% 147.8% Merrill Lynch World Mining 15.5% 72.1% 209.1% 410.0% Merrill Lynch World Energy 5.8% 27.2% 101.6% 176.8% Carmignac Commodities 10.6% 53.9% 158.0% N/A Source: Micropal, as at 30 September 2007. Past performance is not a guide to the future. … consistently delivering from across the Natural Resources sector

  12. Commodity Prices are holding up Prices rebased Source: Datastream, USD, 30 September 2007.

  13. Mining and Oil shares absolute P/E Multiples undemanding Source: Datastream, USD, 30 September 2007

  14. Analysts continue to be conservative about commodity prices Metals and mining price forecasts Expected Actual Expected Actual Expected Spot Forecast ’05 ’05 ’06 ’06 ’07 Price*** 2010**** Aluminum* 0.81 0.85 0.96 1.17 1.21 1.00 0.87 Copper* 1.23 1.63 1.72 3.03 3.09 3.64 1.33 Nickel* 5.90 6.76 5.82 10.66 18.60 13.83 6.10 Zinc* 0.53 0.62 0.79 1.48 1.62 1.38 0.67 Gold* 432 438 532 606 668 738 531 Platinum* 798 888 970 1143 1273 1371 983 Coking Coal** 80 125 80 115 101 140 70 Thermal Coal** 45 52 45 52 55 68 43 Iron Ore** +30% +71.5% +10% +19% +9.5% +40% N/A *Reuters Poll Estimates. **Goldman Sachs JBWere Estimates ***Bloomberg as at 30 September 2007 ****Average Broker Estimates Note: Expected prices were made in July. Actual prices are average prices. All in US$.

  15. Minor metals attractive Tantalite Molybdenum Vanadium Ferro Manganese Source: Datastream, USD, 30 September 2007.

  16. Uranium story not over Source: Datastream, USD/LB, 30 September 2007.

  17. Stripping out inflation, oil price is below prior peak Prices rebased Source: Datastream, USD, 31 August 2007

  18. Gold can offer its own attractions… Source: Datastream, USD, 31 August 2007 … stripping out inflation, the gold price is far below peak level

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