Free Writing Prospectus - Filing under Securities Act Rules 163/433
Registration Statement
333-130051
Filed Pursuant to Rule
433
Equity Structured Investments Investment products: Not FDIC insured or guaranteed - No bank guarantee - May lose value Please read important disclosures at the end of the presentation. |
|
The discussion contained in the following pages is for educational and
illustrative purposes only. The final terms of securities offered by JPMorgan
Chase & Co. may be different from those set forth in any illustrative
investment ideas contained herein and any such final terms will depend on,
among other things, market conditions on the applicable pricing date for such
securities. Any information relating to performance contained in these
materials is illustrative and no assurance is given that any indicated returns,
performance or results, whether historical or hypothetical, will be achieved.
Investment ideas are subject to change, and JPMorgan undertakes no duty to
update these materials, including any investment ideas, or to supply
corrections. This material shall be amended, superseded and replaced in its
entirety by a subsequent preliminary or final term sheet and/or pricing
supplement, and the documents referred to therein, which will be filed with the
Securities and Exchange Commission, or SEC. In the event of any inconsistency
between the materials presented in the following pages and any such preliminary
or final term sheet or pricing supplement, such preliminary or final term sheet
or pricing supplement shall govern.
In the event that JPMorgan Chase & Co. were to offer structured products and
you were to purchase any such securities, JPMorgan Chase & Co. and each of its
affiliates participating in such distribution, if any, will not act as a
financial advisor or a fiduciary to, or an agent of, you or any other person
with respect to any offering of such securities (including in connection with
determining the terms of the offering) . Additionally, neither JPMorgan Chase &
Co. nor any of its affiliates will act as adviser to you or any other person as
to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. In connection with any offering of structured products by
JPMorgan Chase & Co., you shall consult with your own advisors concerning such
matters and shall be responsible for making your own independent investigation
and appraisal of any such transactions, and JPMorgan Chase & Co. and its
affiliates shall have no responsibility or liability to you with respect
thereto.
IRS Circular 230 Disclosure : JPMorgan Chase & Co. and its affiliates do not
provide tax advice. Accordingly, any discussion of U.S. tax matters contained
herein (including any attachments) is not intended or written to be used, and
cannot be used, in connection with the promotion, marketing or recommendation
by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters address
herein or for the purpose of avoiding U.S. tax-related penalties.
SEC Legend : JPMorgan Chase & Co. has filed a registration statement (including
a prospectus) with the SEC for any offerings to which these materials relate.
Before you invest in any offering of securities by JPMorgan Chase & Co., you
should read the prospectus in that registration statement, each prospectus
supplement, as well as the particular product supplement, index supplement,
term sheet and any other documents that JPMorgan Chase & Co. has filed with the
SEC for more complete information about JPMorgan Chase & Co. and the offering
of any securities. You may get these documents without cost by visiting EDGAR
on the SEC Web site at www.sec.gov. Alternatively, JPMorgan Chase & Co., any
agent or any dealer participating in the particular offering will arrange to
send you the prospectus and each prospectus supplement as well as any product
supplement, index supplement and term sheet if you so request by calling
toll-free 866-535-9248.
Copyright in these materials is owned by JPMorgan Chase & Co. ([C] JPMorgan
Chase & Co. 2008 (all rights reserved)) . These materials, or any part thereof,
may not be reproduced, distributed or transmitted to any other person or
incorporated in any way into another document without the prior written consent
of JPMorgan Chase & Co.
1
|
|
Agenda
- How does J. P. Morgan approach Equity investing?
- What is a Structured Equity Investment and how do we use it in portfolios?
- Implementing Structures in Portfolios
2
|
|
For nearly a century U.S. Equities have provided an annual return of
approximately 10%(1)
Historical S&P 500 returns from January 1926 -- October 2008
(1) Represents the actual annualized return of the S&P 500 since January 1926.
This graph is for illustrative purposes and does not reflect investment in any
particular vehicle. It is not possible to invest directly in an index.
Past performance is no guarantee of future results.
4
|
|
However, on a decade by decade basis, S&P 500 returns have varied
1950's: annual return of 19.4%
1960's: annual return of 7.8%
1970's: annual return of 5.9%
1980's: annual return of 17.6%
1990's: annual return of 18.2%
2000- 2008: annual return of -1.8%
J.P.Morgan seeks to construct portfolios that manage risk and return in order
to amplify positive market returns or provide downside protection during
periods of market uncertainty
Source: Ibbotson
This is a hypothetical example used for illustrative purposes and does not
reflect investment in any particular vehicle.
Past performance is no guarantee of future results. It is not possible to
invest directly in an index.
5
|
|
Agenda
- How does J. P. Morgan approach Equity investing?
- What is a Structured Equity Investment and how do we use it in portfolios?
- Implementing Structures in Portfolios
6
|
|
Equity Structures are tailored to articulate a market view
A hypothetical example of how J.P.Morgan thinks about building a structure:
What is our Equity View?
- Moderately bullish
- Concerned about downside risk
How can a structure implement that view?
- Enhance returns that we think are likely to occur and/or;
- Cap returns unlikely to occur and/or;
- Protect against sell-offs
How do we put it together?
J.P.Morgan can tailor structures to fit our expectations for a particular
investment view, which can potentially enhance market returns for our clients
The views and strategies described herein may not be suitable for all
investors. This information is being provided merely to illustrate a particular
investment strategy.
8
|
|
We use Equity Structures to enhance returns and manage risk in portfolios
Principal At Risk
A Spectrum of Risk Taking & Market Views:
Risk Profile (Principal at Risk Strategies):
Key Characteristics (1):
o Full downside participation; 100% principal at risk
o Enhanced positive returns up to a predetermined cap level
o Maximum return is the cap multiplied by the leverage factor
o Partial downside buffer; full principal at risk below the buffer zone
o Enhanced positive returns up to a predetermined cap level
o Maximum return is the cap multiplied by the leverage factor
o Partial downside buffer; full principal at risk below the buffer zone at
maturity
o Fixed coupon payment at maturity if market stays above strike level
o Offers 3 opportunities to receive fixed coupon
(1) See page 11 of this presentation for a discussion of key risk factors
associated with Equity Structures.
For illustrative purposes only. The illustrated product may not be suitable for
all investors and more complete information is available which discusses risks,
liquidity, and other matters of interest. Daily unwinds may be provided at
JPMorgan discretion. However, the proceeds of an unwind may fall short of the
expected payout at maturity given the same underlying value. The proceeds will
depend on many variables. This material is distributed with the understanding
that it is not rendering accounting, legal or tax advice. Consult your legal or
tax advisor concerning such matters. For a complete discussion of risks
associated with any investment, please review the applicable offering documents
for a particular investment and speak with your JPMorgan advisor. Past
performance is no guarantee of future results.
9
|
|
J.P.Morgan uses structures with Buffers to mitigate risk in portfolios (1)
In market sell-offs, J.P.Morgan structured investments have lost less value
than the underlying in 3 of the largest market selloffs in the last 18 months
Source: J.P. Morgan Securities Inc. This chart reflects the dollar weighted
average change in market value of all outstanding S&P 500-linked Buffered
Return Enhanced Notes broadly marketed by the JPMorgan Private Bank that were
outstanding during the sell-off periods.
Structures with limited downside buffer can allow investors to stay invested in
volatile markets
(1) Not all Structures have Buffers or Principal Protection. "BREN" stands for
"Buffered Return Enhanced Note." Analysis excludes structures traded for
specific clients on a reverse -inquiry basis. For illustrative purposes only.
Not all investments are suitable for all investors. Investors should analyze
products based on their individual circumstances and taking into account such
factors as their investment objectives, tolerance for risk and liquidity needs.
Past performance is no guarantee of future returns.
Market indices cannot be invested in directly.
10
|
|
Key risk factors for using Equity Structures
Principal at Risk
-- Unless denoted as "principal protected," Structures do not do not guarantee
any return of your investment.
-- Your investment will be fully exposed to any decline in the underlying
index after any applicable buffer amount, sometimes on a leverage basis, at
maturity.
Credit Risk of Issuer
-- Structures are subject to the credit risk of JPMorgan Chase & Co. and its
credit ratings and credit spreads may adversely affect the market value of
the Structures.
-- Investors are dependent on JPMorgan Chase & Co.'s ability to pay all
amounts due on the Structures at maturity or upon automatic call, if
applicable, and therefore investors are subject to JPMorgan Chase & Co.'s
credit risk and to changes in the market's view of its creditworthiness.
-- Any decline in JPMorgan Chase & Co.'s credit ratings or increase in the
credit spreads charged by the market for taking its credit risk is likely
to adversely affect the value of the Structures.
Capped Returns
-- Your return on an Structures may be limited by a specified maximum return,
coupon or knock-out level.
-- For example, for a Return Enhanced Note linked to an index, if the index
return is positive, your return at maturity will be limited to the
specified maximum return even if the index return multiplied by the upside
leverage factor is greater than the specified maximum return.
Many Economic and Market Factors Will Impact the Value of the Structures
-- In addition to the level of the underlying index on any day, the value of
the Structures will be affected by a number of economic and market factors
that may either offset or magnify each other, including the expected
volatility of the underlying index, the time to maturity of the Structures,
dividend rates, interest and yield rates in the market generally, a variety
of economic, financial, political, regulatory or judicial events, and
JPMorgan Chase & Co.'s creditworthiness, including actual or anticipated
downgrades in its credit ratings.
Liquidity Risk
-- Structures will not be listed on any securities exchange.
-- There may be no secondary market for the Structures, and J.P. Morgan
Securities Inc. (JPMSI) will not be required to purchase notes in the
secondary market.
-- Even if there is a secondary market, it may not provide enough liquidity to
allow you to trade or sell any Structures easily.
-- Because other dealers are not likely to make a secondary market for such
Structures, prices for the Structures in any secondary market are likely to
depend on the price, if any, at which JPMSI is willing to buy such
Structures.
Built-In Cost Likely to Affect Secondary Market Prices
-- The original issue price of any Structures includes an agent's commission
and the cost of hedging JPMorgan Chase & Co.'s obligations under such
Structures through one or more of its affiliates.
-- The price, if any, at which JPMSI will be willing to purchase such
Structures from you in secondary market transactions, if at all, will
likely be lower than the original issue price and any sale prior to the
maturity date could result in a substantial loss to you.
Potential Conflicts
-- JPMorgan Chase & Co. and its affiliates play a variety of roles in
connection with any potential issuance of the Structures, including acting
as calculation agent and hedging its obligations under such Structures. In
performing these duties, the economic interests of the calculation agent
and other affiliates of JPMorgan Chase & Co. would be potentially adverse
to your interests as an investor in such Structures.
Not Short -Term Trading Instruments
-- Structures are not designed to be short-term trading instruments. YOU
SHOULD BE WILLING TO HOLD ANY STRUCTURES TO MATURITY.
Forfeit dividends and voting rights
Tax considerations - Investors should consult their tax advisers regarding the
U.S. federal income tax consequences of an investment in Structures.
11
|
|
Agenda
- How does J. P. Morgan approach Equity investing?
- What is a Structured Equity Investment and how do we use it in portfolios?
- Implementing Structures in Portfolios
12
|
|
Important information
IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not
provide tax advice. Accordingly, any discussion of U.S. tax matters contained
herein (including any attachments) is not intended or written to be used, and
cannot be used, in connection with the promotion, marketing or recommendation
by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters
addressed herein or for the purpose of avoiding U.S. tax-related penalties.
Each recipient of this presentation, and each agent thereof, may disclose to
any person, without limitation, the U.S. income and franchise tax treatment and
tax structure of the transactions described herein and may disclose all
materials of any kind (including opinions or other tax analyses) provided to
each recipient insofar as the materials relate to a U.S. income or franchise
tax strategy provided to such recipient by JPMorgan Chase & Co. and its
subsidiaries.
"JPMorgan Private Bank" is a marketing name for private banking business
conducted by JPMorgan Chase & Co. and its subsidiaries worldwide. Bank products
and services are offered by JPMorgan Chase Bank, N.A. and its affiliates.
Securities products and services are offered by J.P. Morgan Securities Inc.,
member NYSE, FINRA and SIPC.
J.P. Morgan Securities Inc. or its brokerage affiliates may hold a position or
act as market maker in the financial instruments of any issuer discussed herein
or act as an underwriter, placement agent, advisor or lender to such issuer.
The views and strategies described herein may not be suitable for all
investors.
This material is distributed with the understanding that we are not rendering
accounting, legal or tax advice. Estate planning requires legal assistance. You
should consult with your independent advisors concerning such matters.
We believe the information contained in this material to be reliable but do not
warrant its accuracy or completeness. Opinions, estimates, and investment
strategies and views expressed in this document constitute our judgment based
on current market conditions and are subject to change without notice. This
material should not be regarded as research or a JPMorgan research report.
Opinions expressed herein may differ from the opinions expressed by other areas
of JPMorgan, including research. The investment strategies and views stated
here may differ from those expressed for other purposes or in other contexts by
other JPMorgan market strategists.
J.P. Morgan Securities Inc. may act as a market maker in markets relevant to
structured products or option products and may engage in hedging or other
operations in such markets relevant to its structured products or options
exposures. Structured products and options are not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other governmental agency. In discussion of options and other strategies,
results and risks are based solely on hypothetical examples cited; actual
results and risks will vary depending on specific circumstances. Investors are
urged to consider carefully whether option or option-related products in
general, as well as the products or strategies discussed herein are suitable to
their needs.
The S&P 500 is a capitalization -weighted index of 500 stocks from a broad
range of industries. "S&P 500" is a trademark of Standard and Poor's
Corporation.
Past performance is no guarantee of future results.
Additional information is available upon request.
[C] 2008 JPMorgan Chase & Co.
27
|
|