IMPORTANT NOTICE

In June 2009 JPMorgan Chase & Co. entered into settlements with the Attorney General of the State of New York and the State of Florida Office of Financial Regulation (on behalf of the North American Securities Administrators Association), as well as other states. The settlements relate to allegations with respect to misrepresentations and omissions in connection with the marketing, sale and distribution of auction rate securities. Without admitting or denying allegations of wrongdoing, JPMorgan Chase & Co. agreed to: repurchase certain auction rate securities sold to eligible investors prior to February 13, 2008; reimburse eligible investors who sold auction rate securities below par; refund certain loan expenses incurred by eligible investors; participate in special arbitration proceedings concerning consequential damages with respect to auction rate securities; refund certain refinancing fees incurred by municipal issuers of auction rate securities; and pay a civil penalty. The settlements are expected to have substantially the same terms. The settlement with the Attorney General of the State of New York is available at https://ag.ny.gov/sites/default/files/press-releases/archived/JP Morgan Assurance of Discontinuance.pdf

J.P. Morgan Securities Inc.
Statement of Material Auction Practices and Procedures

Introduction

Auction rate securities are securities whose interest or dividend rate is reset periodically through a "dutch" auction process governed by a set of auction procedures established by the issuer of the securities and an auction agent. Auction procedures generally provide that investors shall submit auction orders through a broker-dealer. J.P. Morgan Securities Inc. ("JPMorgan" or "the Firm") is appointed to serve as a broker-dealer in auctions of auction rate securities ("Auctions") pursuant to broker-dealer agreements among JPMorgan, the issuer of the securities, and the auction agents that administer the Auctions. Under these agreements, JPMorgan’s responsibilities as broker-dealer generally include soliciting orders for Auctions from its customers who participate in auctions of auction rate securities ("Customers"), communicating those orders to the appropriate auction agent, and distributing the results of Auctions to its Customers.

This statement, which is being provided pursuant to an Order between the SEC and JPMorgan and other broker-dealers involved in the auction rate securities market, sets forth a description of JPMorgan’s current material practices and procedures relating to Auctions where the Firm acts as broker-dealer.

Broker-Dealer Fees

Broker-dealer agreements provide that JPMorgan will receive broker-dealer fees from the issuer of the securities based on the principal amount of the securities placed through it. JPMorgan may also share these fees with other broker-dealers that submit orders through it, if JPMorgan successfully places these orders in Auctions.

"Price Talk"

On the morning of days when Auctions are held, JPMorgan generally makes available to all of its Customers its good faith judgment of the range of likely clearing rates for each Auction based on market and other information. This is known as "Price Talk." Price Talk sets forth the CUSIP number, credit rating, size, tax treatment, and insurance (if applicable) for each series. In determining Price Talk ranges, JPMorgan normally considers a variety of factors, including the winning rate for recent comparable Auctions, the rates of comparable securities, relevant indices, and news bearing on the issuer, the insurer (if any), the industry, or financial markets generally. To provide greater context, this Price Talk may include not only Auctions in which JPMorgan serves as broker-dealer, but also other Auctions in which it does not participate. Price Talk is not a guaranty or an assurance of the final outcome of an Auction, and JPMorgan’s customers are free to use it or ignore it. On a daily basis, it is JPMorgan’s practice to notify its Customers of auction rate securities in its inventory that it is offering for sale at that time.

If JPMorgan provides Price Talk, it will make the Price Talk available through a means reasonably designed to make it available to its Customers in time to act upon it. JPMorgan may occasionally update and change its Price Talk based on changes in issuer credit quality or macroeconomic factors that are likely to result in a change in interest rate levels, such as an announcement by the Federal Reserve Board of a change in the Federal Funds rate or an announcement by the Bureau of Labor Statistics of unemployment numbers. JPMorgan will make such changes available through a means reasonably designed to make it available to all Customers that were given the original Price Talk.

Types of Orders Accepted

JPMorgan accepts three types of Customer orders in Auctions, unless specified otherwise in the relevant official statement or indenture for a particular security:

1- Hold Orders: orders from existing holders who wish to hold the amount of securities specified regardless of the winning rate;

2- Bids: (a) orders from existing holders who wish to hold the amount of securities specified only if the winning rate equals or exceeds a specified rate, or (b) orders from existing or potential holders who wish to buy a specified amount of securities at a specified rate; and

3- Sell Orders: orders from existing holders who wish to sell all or part of their holdings.

When JPMorgan does not receive an order from an existing holder, that customer is "deemed" to have submitted a Hold Order.

JPMorgan does not accept "market" bids (that is, orders to buy a specified amount of securities that do not specify a rate). Nor does JPMorgan accept "all-or-nothing" bids (i.e., bids whereby the bidder proposes to reject an allocation smaller than the entire quantity bid) or any other type of bid that allows the bidder to avoid auction procedures that require the pro rata allocation of securities where there are not sufficient sell orders to fill all bids at the clearing rate.

Communications with Customers

JPMorgan personnel regularly communicate with Customers in connection with Auctions. In these communications, such personnel may not disclose the volume, level, or extent of orders in an Auction; disclose the interest rate levels where orders are being placed (either generally or specifically); disclose a specific probable winning rate or where the winning rate will likely fall within the Price Talk range; disclose any information regarding another Customer’s order; promise, guarantee, or inform a customer that the customer’s order will succeed at a given rate; or make any statement that could be interpreted as having the same effect as any of the foregoing.

Bidding by Issuer/Conduit Borrower

On March 14, 2008, the United States Securities and Exchange Commission issued a letter (the "SEC Letter) setting out its views on some of the circumstances under which: (i) an issuer of municipal auction rate securities (a "Municipal Issuer") may submit a bid in an auction for such securities; (ii) a conduit borrower (a "Conduit Borrower") may submit a bid in an auction for municipal auction rate securities that are payable from amounts due from it; and (iii) a broker-dealer or municipal securities dealer or auction agent may accept and process a bid from a Municipal Issuer or Conduit Borrower. The conditions stated in the SEC Letter include, among others, that the Municipal Issuer or Conduit Borrower must disclose its intention to bid in an auction a meaningful period (such as two business days) prior to such bidding, and disclose the interest rate(s) and amount(s) of municipal auction rate securities that will be bid for. The SEC Letter also requires the disclosure of certain information concerning bidding in the auction immediately preceding the auction in which the Municipal Issuer or Conduit Borrower intends to bid. Bidding by the Issuer or Conduit Borrower is likely to result in a lower interest rate since the interests of the Issuer or Conduit Borrower differ from those of other bidders. The Issuer or Conduit Borrower has an interest in paying a lower interest rate on it municipal auction rate securities, while other bidders seek to obtain a higher interest rate. Certain notices, disclosures and bidding results provided by Municipal Issuers or Conduit Borrowers are available at www.dacbond.com.

Bidding by JPMorgan

JPMorgan is permitted, but not obligated, to submit orders in Auctions for its own account either as a bidder or a seller, and routinely does so in its sole discretion. If JPMorgan does so, it would likely have an advantage over other bidders because it would have knowledge of some or all of the other orders placed through it in that auction and, thus, could determine the rate and size of its order so as to increase the likelihood that its order will be accepted in the auction and that the Auction will clear at a particular rate. For this reason, and because JPMorgan is appointed and paid by the issuer to serve as a broker-dealer in the auction, JPMorgan’s interests in conducting an Auction may differ from those of its Customers who participate in Auctions. JPMorgan would not, however, have knowledge of orders submitted to an auction agent by any other firm that is, or may in the future be, appointed to accept orders pursuant to a broker-dealer agreement.

Where JPMorgan is the only broker-dealer appointed by the issuer to serve as broker-dealer in an Auction, it would be the only broker-dealer that submits orders to the auction agent in that Auction. As a result, in such circumstances, JPMorgan could discern the clearing rate before the orders are submitted to the auction agent and set the clearing rate with its order.

JPMorgan may place one or more bids in an Auction for its own account to acquire securities for its own inventory, to prevent an Auction in which the auction agent does not receive sufficient orders at or below a specified "maximum interest rate" to purchase all the securities being sold (a "Failed Auction") (which would result in the Auction Rate being set at a "Maximum Interest Rate", as defined in each offering disclosure document, typically either a multiple of a specified index or a fixed rate), or to prevent an Auction from clearing at a rate that JPMorgan believes does not reflect the market for the securities. JPMorgan may place such bids even after obtaining knowledge of some or all of the other orders submitted through it. When bidding for its own account, JPMorgan may also bid outside or inside the range of rates that it posts in its Price Talk. JPMorgan may also encourage bidding by others in Auctions, including to prevent a Failed Auction or to prevent an Auction from clearing at a rate that JPMorgan believes does not reflect the market for the securities. JPMorgan may encourage such bids even after obtaining knowledge of some or all of the other orders submitted through it. JPMorgan routinely places such bids and routinely encourages others to bid in Auctions.

Bids by JPMorgan or by those it may encourage to place bids are likely to affect (i) the auction rate for a particular Auction, including preventing that rate from being set at the Maximum Interest Rate for a particular Auction or otherwise causing bidders to receive a higher or lower rate than they might have received had JPMorgan not bid or not encouraged others to bid, and (ii) the allocation of the securities being auctioned, including displacing some bidders who may have their bids rejected or receive fewer securities than they would have received if JPMorgan had not bid or encouraged others to bid. Because of these practices, the fact that an Auction clears successfully does not mean that an investment in the securities involves no significant liquidity or credit risk. JPMorgan is not obligated to continue to place such bids or encourage other bidders to do so in any particular Auction to prevent an Auction from failing or clearing at a rate that JPMorgan believes does not reflect the market for the securities. Customers should not assume that JPMorgan will place bids or encourage others to bid or that Failed Auctions will not occur. Customers should also be aware that bids by JPMorgan or by those it may encourage to place bids may cause lower auction rates to occur.

In any particular Auction, if all outstanding securities are the subject of submitted hold orders, the auction rate for the next succeeding auction period will be the "All Hold Rate," a minimum rate of interest specified in the relevant documents (such a situation is called an "All Hold Auction"). The All Hold Rate will usually be materially below a market rate. When an All Hold Auction is likely, JPMorgan may, but is not obligated to, advise existing holders of the security at issue of that fact, which might facilitate the submission of bids by such holders that would avoid the occurrence of an All Hold Auction. If JPMorgan determines to inform such existing holders of the likelihood of an All Hold Auction, it will make that information available through a means reasonably designed to make it available to all such existing holders in time to act upon it.

If JPMorgan holds any auction rate securities for its own account on an Auction date, it is JPMorgan’s practice to submit a Sell Order into the Auction with respect to such securities, which would prevent that Auction from being an All Hold Auction. JPMorgan may, but is not obligated to, submit bids for its own account in that same Auction, as set forth above.

The statements herein regarding bidding by JPMorgan apply only to JPMorgan’s auction desk and any other business unit of JPMorgan that is not separated from the auction desk by an information barrier designed to limit inappropriate dissemination of bidding information.

JPMorgan or its affiliates (or a third party) may also sell any auction rate securities it has purchased to one or more affiliated investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others in order to reduce its exposure to the auction rate securities. Selling to such investment vehicles or entering into such derivative arrangements may reduce the supply of such auction rate securities that may be subject to a Sell Order in any Auction.

Deadlines

Each particular Auction has a formal time deadline by which all bids must be submitted by JPMorgan to the auction agent. This deadline is called the "Submission Deadline". To provide sufficient time to process and submit Customer orders to the auction agent before the Submission Deadline, JPMorgan imposes an earlier deadline, generally 11:45 a.m., (the "Internal Submission Deadline") by which Customers must submit bids to JPMorgan. The Internal Submission Deadline is subject to change by JPMorgan. JPMorgan may allow for correction of clerical errors after the Internal Submission Deadline and prior to the Submission Deadline. JPMorgan may submit bids for its own account at any time until the Submission Deadline and may change bids it has submitted for its own account at any time until the Submission Deadline. In addition, certain auction agents allow for the correction of clerical errors for a period of time after the Submission Deadline.

Existing Owners’ Ability to Resell Auction Rate Securities May be Limited

Existing owners will be able to sell all of the securities that are the subject of their submitted Sell Orders only if there are bidders willing to purchase all those securities in the Auction. If sufficient clearing bids have not been made, existing owners that have submitted Sell Orders will not be able to sell all, and may not be able to sell any, of the securities subject to such submitted Sell Orders. As discussed above JPMorgan may submit a Bid in an Auction to avoid a Failed Auction, but it is not obligated to do so.  There may not always be enough Bidders to prevent a Failed Auction in the absence of JPMorgan bidding in the Auction for its own account or encouraging others to Bid.  Therefore, Failed Auctions are possible, especially if the issuer’s credit (or that of the bond insurer, if any) were to deteriorate, if a market disruption were to occur or if, for any reason, JPMorgan were unable or unwilling to bid.

Between Auctions, there can be no assurance that a secondary market for the securities will develop or, if it does develop, that it will provide existing owners the ability to resell the securities on the terms or at the times desired by an existing owner. JPMorgan, in its own discretion, may decide to buy or sell the securities in the secondary market for its own account from or to investors at any time and at any price, including at prices equivalent to, below, or above par for the securities. However, JPMorgan is not obligated to make a market in the securities and may discontinue trading in the securities without notice for any reason at any time. Existing owners who resell between Auctions may receive an amount less than par, depending on market conditions.

The ability to resell the securities will depend on various factors affecting the market for the securities, including news relating to the issuer, the bond insurer (if any), the attractiveness of alternative investments, investor demand for short term securities, the perceived risk of owning the securities (whether related to credit, liquidity or any other risk), the tax or accounting treatment accorded the securities (including U.S. generally accepted accounting principles as they apply to the accounting treatment of auction rate securities), reactions of market participants to regulatory actions or press reports, financial reporting cycles and market conditions generally. Demand for the securities may change without warning, and declines in demand may be short-lived or continue for longer periods.

Allocations

After obtaining the results of an auction from the Auction Agent, JPMorgan allocates the securities awarded following the procedures set forth in the relevant Indenture and Broker-Dealer Agreement. JPMorgan will not deviate from these procedures to the extent they call for pro rata distribution of securities to Customers whose bids were at the winning rate. If the bid of a Customer is not filled, JPMorgan may not sell those securities to that Customer at a discount until the following business day. Nor may the Firm agree prior to the conclusion of an Auction to sell securities to a Customer at a discount. Under no circumstances will JPMorgan agree before an Auction to buy securities from or sell securities to a Customer after the Auction. However, the Firm may purchase or sell auction rate securities in the marketplace between Auctions. These transactions may be at a par or at a discount or premium, but must be at a market rate.

No Assurances Regarding Auction Outcomes

JPMorgan provides no assurance as to the outcome of any Auction. JPMorgan also does not provide any assurance that any bid will be successful, in whole or in part, or that the Auction will clear at a rate that a bidder considers acceptable. Bids may be only partially filled, or not filled at all, and the rate on any securities purchased or retained in an Auction may be lower than the market rate for similar investments.

August, 2009

THIS COMMUNICATION IS PROVIDED IN CONNECTION WITH THE MAY 31, 2006 SECURITIES AND EXCHANGE COMMISSION ORDER, ADMINISTRATIVE PROCEEDING FILE NO. 3-12310. IT IS NOT AN OFFER OR SOLICITATION FOR THE PURCHASE OR SALEOF ANY FINANCIAL INSTRUMENT, NOR A SOLICITATION TO PARTICIPATE IN ANY TRADING STRATEGY, NOR AN OFFICIAL CONFIRMATION OF ANY TRANSACTION. NOR IS IT A SUBSTITUTE FOR ANY PROSPECTUS, OFFICIAL STATEMENT OR OTHER OFFERING DOCUMENT, OR ANY DOCUMENT THAT MIGHT BE INCORPORATED INTO ANY OFFERING DOCUMENT. CLIENTS SHOULD REVIEW ANY CURRENT PROSPECTUS, OFFICIAL STATEMENT OR OTHER OFFERING DOCUMENT THAT IS AVAILABLE, CONSULT THEIR OWN ADVISORS REGARDING ANY TAX, ACCOUNTING OR LEGAL ASPECTS OF THIS INFORMATION, AND EXECUTE TRANSACTIONS THROUGH A JPMORGAN ENTITY IN THEIR HOME JURISDICTION UNLESS GOVERNING LAW PERMITS OTHERWISE.