LIQUIDITY

INSIGHTS

A primer on how to read

a funds Market-Based NAV

We are committed to helping clients fully understand how money

market funds work. On 19 February 2013, each of the JPMorgan
Liquidity Funds - US Dollar Liquidity Fund, the JPMorgan Liquidity
Funds - US Dollar Government Liquidity Fund and the JPMorgan
Liquidity Funds - US Dollar Treasury Liquidity Fund (the Funds)
will begin to disclose their market-based net asset value (NAV) per
share (Market-Based NAV) each business day. The Funds MarketBased NAV will be calculated using available market quotations (or an
appropriate substitute that reflects current market conditions) to value
their NAV per share to four decimal places. Market-Based NAVs (also
known as shadow NAVs) will be disclosed each business day for the
prior business day on our website.
For investors, the daily disclosure of Market-Based NAVs provides transparency
into our money market funds, which we expect will inspire confidence. It
will be reported on a daily basis on the Funds website for easy access by
investors. Investors will see how the Market-Based NAV fluctuates from day
to day, including during times of market stress. More information regarding
the range in which the Market-Based NAVs of money market funds deviates
from the amortized cost accounting stable NAV should help investors develop
a better understanding of the impact of market movements or events on the
Funds values. This will allow investors to better understand the nature of
money market fund risks and make more informed decisions regarding their
investments in money market funds. There will be absolutely no change to the
operation of the Funds.

No change to the operation of the Funds

By disclosing Market-Based NAVs on a daily basis to the public, J.P. Morgan
Asset Management is looking to provide better investor education and fund
transparency. The Funds will continue to transact as they have in the past
with the NAV calculated using amortized cost accounting. The stable NAV has
been a defining feature of money market funds, providing convenience and
simplicity for taxes, recordkeeping, accounting and operations. The steps that
we are taking will not impact the operation of the Funds. Clients can continue
to use the Funds as they currently do for short-term liquidity and investment
diversification, while receiving this additional layer of disclosure.

LIQUIDITY
INSIGHTS

A primer on how to read a funds Market-Based NAV

Stable NAV vs. Market-Based NAV: whats the difference?
How does the stable NAV differ from the Market-Based NAV? While both seek
to reflect the value of the Funds portfolios, they represent different accounting
calculations. The stable NAV is calculated using the amortized cost method of
accounting. Under the amortized cost method of accounting, portfolio securities
generally are valued at cost plus any amortization of premium or accretion of
discount. By increasing the value at a predictable rate each day, the fund is able
to maintain a stable NAV. Further, because money market funds hold very shortterm, high-quality securities, the amortized cost method usually provides a close
approximation of the funds Market-Based NAV. However, it may also result in
periods during which the amortized cost value of a portfolio security is different
than the price the Fund would receive if it sold the investment.
The Market-Based NAV is based on the current market values of the funds portfolio
securities and seeks to represent the actual prices at which those securities could
be sold on any given day. The difference between amortized cost value and the
Market-Based NAV value is typically very small, fluctuating within a very narrow
band. Although the Market-Based NAV seeks to reflect the price at which a funds
securities could be bought or sold, the actual price could be more or less.

Reading and understanding a funds Market-Based NAV

We encourage investors to review the daily Market-Based NAVs published on our
J.P. Morgan Global Liquidity website with the understanding that different money
market funds Market-Based NAVs will naturally differ from one another, and are
expected to deviate slightly from their amortized cost. We expect that investors
will see that fluctuations in the Market-Based NAV, above or below $1.00, are
quite common and typically small.

Market-Based NAVs fluctuate for a variety of reasons

It is typical for money market funds to exhibit daily changes in their MarketBased NAV as an expected occurrence. These fluctuations can occur as the result
of changes in market interest rates, the weighted average maturity of a funds
portfolio, inflows and outflows of money, and ratings downgrades or defaults on
securities held in the portfolio. All can affect a funds Market-Based NAV.
An important point to remember, although past performance is not necessarily
an indication of future results, is that, even with the market events and changes
mentioned above and the daily deviations in market prices, Fund shares have
generally maintained values very near $1.00. This is because money market
funds hold very short-term, high quality securities, and also because of
J.P. Morgans rigorous focus on risk management and credit analysis.
J.P. Morgan Asset Management believes investors will benefit from having
more detailed knowledge about how money market funds are valued. We invite
investors to take advantage of the greater transparency we are providing. To see
our daily Market-Based NAVs, visit www.jpmgloballiquidity.com.

LIQUIDITY
INSIGHTS

A primer on how to read a funds Market-Based NAV

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JPM5731 02/13