Following the recent decision by the European Central Bank to cut interest rates and the subsequent decrease in European bond yields, it is becoming more difficult to maintain a positive net investment income and to stabilize the net asset value of the (dist.) share classes at the initial subscription price per share, as described in the Prospectus.
The Board has therefore decided, due to the changing economic situation relating to the Sub-Funds to close the existing (dist.) share classes and to update the investment objectives and policies of the Sub-Funds to reflect the changing market conditions. Alternative share classes will be offered to electing shareholders, as further detailed below. Please carefully review the information contained in this notice.
1. Notification of the closure of the (dist.) share classes
Due to the changing economic situation relating to the Sub-Funds, the Board has decided to close the (dist.) share classes of the Sub-Funds with effect from the close of business on 19 November 2012 (the "Closure Date").
The Management Company will proceed to the closure of the (dist.) share classes of the Sub-Funds in accordance with Luxembourg laws and regulations.
The costs and expenses of the closure (excluding any transaction costs) will be borne by the Management Company.
After the closure, any proceeds that could not be distributed to shareholders will be deposited on their behalf with the Caisse de Consignation in Luxembourg.
We recommend that you seek advice from your usual tax adviser on the tax implications of the closure or of switching into an alternative share class as described below.
Your alternative choices
Until the Closure Date, shareholders in the (dist.) share classes may, free of charge:
(i) switch into the new (flex dist.) share class described in item 2. b below;
(ii) switch into the accumulating share classes of the Sub-Fund; or
(iii) redeem your shares.
Shareholders should note that switching into an (acc) Share Class or into the new (flex dist.) share class will not prevent, in a negative yield environment, the value of their holding decreasing and they may get back less than they originally invested.
Should you decide to switch into the new (flex dist.) share classes or the (acc.) share classes, the switch will be processed no later than the Closure Date (the "Switch Date"). Following the Switch Date, the Management Company will send you a contract note confirming the details of the switch.
Any dividends that have been accrued as at the Switch Date will be paid to you via bank transfer on the Switch Date, using the standard settlement instructions that we have on file for your account(s).
Any instruction to switch or to redeem must be received by the Management Company in writing by the relevant dealing cut-off time (11.00 a.m. and 2.30 p.m. Luxembourg time for the JPMorgan Liquidity Funds – Euro Government Liquidity Fund and the JPMorgan Euro Liquidity Fund respectively) on the 18 November 2012. If you wish to switch to one of the new (flex dist.) share classes, simply mark your preference in the switch instruction form, which is available on the website www.jpmorganassetmanagement.com/extra, return a signed copy via fax to the J. P. Morgan Asset Management Global Liquidity Client Services team on +352 3410 8855, and we will implement your switch free of charge. To request switches free of charge into other share classes or to effect a redemption of your holding, please contact the J. P. Morgan Asset Management Global Liquidity Client Services team on +352 3410 3636. All other switch and redemption conditions or restrictions as detailed in the Prospectus still apply.
Important: You must tell us what you want to do with your investment in the (dist.) classes of the Sub-Funds. If you have not taken advantage of the alternatives offered prior to the relevant dealing cut-off time on 18 November 2012, you will be paid the redemption proceeds as soon as possible after the closure.
2. Changes to the Prospectus
a. Change of investment objective and policy of the Sub-Funds
In response to the changing market environment, the Board has decided to update the investment objectives of the Sub-Funds. The new investment objectives of the Sub-Funds are as follows:
"The Sub-Fund seeks to achieve a return in the Reference Currency in line with prevailing money market rates whilst aiming to preserve capital consistent with such rates and to maintain a high degree of liquidity."
The investment policies of the Sub-Funds are amended to clarify that the Sub-Funds may have exposure to investments with zero or negative yields in adverse market conditions.
The risk profiles of the Sub-Funds are amended accordingly and also provide that, in adverse market conditions, the Sub-Funds' objective may not be achieved and shareholders may get back less than they invested. The risk ratings specified in the Sub-Funds' Key Investor Information Documents remain unchanged.
b. New (flex dist.) share class:
The Board has launched a new type of distributing share class for the Sub-Funds – the "(flex dist.) share class". In a positive yield environment, this share class would have similar characteristics to the existing (dist.) share class. However, in a negative yield environment, a specific mechanism would apply in order to stabilise and maintain the net asset value per share at the initial subscription price per distributing share. In this mechanism, an amount representing any shortfall due to the portfolio's low or negative yield as well as the annual total expenses would be calculated daily and deducted from your holding by redeeming an appropriate number of your shares in the relevant class, with the aim that the net asset value of the share class can remain stabilised at the initial subscription price per share.
Although the aim is for the net asset value to remain stable even in a negative yield environment, in such circumstances the number of Shares held, and hence the value of your holding, will decrease and you will receive reduced distributions in future. At the time you redeem, you may get back less than you originally invested.
These share classes are only available for shareholders who have expressly given their consent to the redemption of shares as described above.
Key Investor Information Documents for the new (flex dist.) share classes will be available on the website www.jpmorganassetmanagement.lu.
c. General Prospectus amendments:
The Board would like to draw your attention to changes resulting from the entry into force of the Law of 17 December 2010 (the "2010 Law") which adopts the provisions of the revised EU Directive 2009/65/EC on collective investment undertakings ("UCITS IV Directive").
Pursuant to the 2010 Law, the Simplified Prospectus produced for each Sub-Fund has been replaced by a Key Investor Information Document ("KIID") since 1 July 2012. One of the requirements of the KIID is that Sub-Funds are described in plain and simple language. In order to meet this requirement in the KIID, complex terms and statements have been reworded and the Sub-Fund descriptions have been revised for consistency.
In order to provide greater clarity for investors, the Board has also decided to reflect some of these revisions in the Prospectus.
These revisions are for clarification only and do not constitute any changes in the way the Sub-Funds are managed. Please be advised that the updated Prospectus will be available free of charge upon request from the Registered Office of the Fund or from the Fund's local representatives, as applicable.
If you have any questions concerning the above or any other aspect of the Sub-Funds, please contact your J.P. Morgan Asset Management representative or the Global Liquidity Client Services team on +352 3410 3636.
JPMorgan Liquidity Funds
Société d'Investissement à Capital Variable
Registered Office: European Bank and Business Centre, 6 route de Trèves,
L-2633 Senningerberg, Grand Duchy of Luxembourg
R.C.S. Luxembourg B 25 148