Term sheet |
Term Sheet to
Product Supplement No. 70-II Registration Statement No. 333-130051 Dated June 2, 2008; Rule 433 |
Structured |
JPMorgan
Chase & Co. $ Return Enhanced Notes Linked to Crude Oil due June 7, 2010 |
General
Key Terms
Basket Component: |
The notes are linked to the official settlement price of the first nearby month futures contract for West Texas Intermediate (WTI) crude oil (Crude Oil), (Bloomberg Ticker: CL1 (<Comdty>). |
Upside Leverage Factor: |
At least 1.5*. |
Payment at Maturity: |
If the Crude Oil Closing Level is greater than the Crude Oil Starting Level, you will receive a cash payment that provides you with a return per $1,000 principal amount note equal to the Crude Oil Return multiplied by 1.5*. Accordingly, if the Crude Oil Return is positive, your payment per $1,000 principal amount note will be calculated as follows: |
|
$1,000 +[$1,000 x (Crude Oil Return x 1.5*)] *The actual Upside Leverage Factor on the notes will be set on the pricing date and will not be less than 1.5. |
|
Your investment will be fully exposed to any decline in Crude Oil. If the Crude Oil Closing Level declines from the Crude Oil Starting Level, you will lose 1% of the principal amount of your notes for every 1% that Crude Oil declines beyond the Crude Oil Starting Level. Accordingly, if the Crude Oil Return is negative, your payment per $1,000 principal amount note will be calculated as follows: |
|
$1,000 + ($1,000 x Crude Oil Return) |
|
You will lose some or all of your investment at maturity if the Crude Oil Closing Level declines from the Crude Oil Starting Level. |
Crude Oil Return: |
Crude Oil Closing Level Crude Oil
Starting Level |
Crude Oil Starting Level: |
The official settlement price on the New York Mercantile Exchange (NYMEX) of the first nearby month futures contract for WTI crude oil, stated in U.S. dollars, as made public by the NYMEX, on the pricing date, provided that if such date falls on the last trading day of such futures contract (as pursuant to the rules of the NYMEX), then the second nearby month futures contract (Bloomberg Ticker: CL2 (<Comdty>). |
Crude Oil Closing Level: |
The official settlement price on the NYMEX of the first nearby month futures contract for WTI (crude oil, stated in U.S. dollars, as made public by the NYMEX, on the Observation Date, provided that if such date falls on the last trading day of such futures contract (as pursuant to the rules of the NYMEX), then the second nearby month futures contract (Bloomberg Ticker: CL2 (<Comdty>). |
Observation Date: |
June 2, 2010 |
Maturity Date: |
June 7, 2010 |
CUSIP: |
48123M6E7 |
|
Subject to postponement in the event of a market disruption event and as described under Description of Notes Payment at Maturity in the accompanying product supplement no. 70-II. |
Investing in the Return Enhanced Notes involves a number of risks. See Risk Factors beginning on page PS-9 of the accompanying product supplement no. 70-II and Selected Risk Considerations beginning on page TS-2 of this term sheet.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the accuracy or the adequacy of this term sheet or the accompanying prospectus supplements and prospectus. Any representation to the contrary is a criminal offense.
To the extent the information contained in footnotes (1) and (2) below differs from or conflicts with the disclosure set forth under Use of Proceeds in product supplement no. 70-II, the information in the footnotes (1) and (2) below controls.
|
|||
|
Price to Public (1) |
Fees and Commissions (2) |
Proceeds to Us |
|
|||
Per note |
$ |
$ |
$ |
|
|||
Total |
$ |
$ |
$ |
|
(1) |
The price to the public includes the estimated cost of hedging our obligations under the notes through one or more of our affiliates. |
(2) |
If the notes priced today, J.P. Morgan Securities Inc., which we refer to as JPMSI, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $15.00 per $1,000 principal amount note. The actual commission received by JPMSI may be more or less than $15.00 and will depend on market conditions on the pricing date. This commission will include the projected profits that our affiliates expect to realize in consideration for assuming risks inherent in hedging our obligations under the notes. In no event will that commission exceed $20.00 per $1,000 principal amount note. See Underwriting beginning on page PS-42 of the accompanying product supplement no. 70-II. |
The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.
JPMorgan
June 2, 2008
Additional Terms Specific to the Notes
You should read this term sheet together with the prospectus dated December 1, 2005, as supplemented by the prospectus supplement dated October 12, 2006 relating to our Series E medium-term notes of which these notes are a part, and the more detailed information contained in product supplement no. 70-II dated February 27, 2007. This term sheet, together with the documents listed below, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, fact sheets, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in Risk Factors in the accompanying product supplement no. 70-II, as the notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the notes.
You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
Product supplement no. 70-II dated February 27, 2007:
http://www.sec.gov/Archives/edgar/data/19617/000089109207000664/e26446_424b2.pdf
Prospectus supplement dated October 12, 2006:
http://www.sec.gov/Archives/edgar/data/19617/000089109206003117/e25276_424b2.pdf
Prospectus dated December 1, 2005:
http://www.sec.gov/Archives/edgar/data/19617/000089109205002389/e22923_base.txt
Our Central Index Key, or CIK, on the SEC website is 19617. As used in this term sheet, the Company, we, us or our refers to JPMorgan Chase & Co.
JPMorgan Chase & Co. has filed a registration statement (including a prospectus) with the Securities and Exchange Commission, or SEC, for the offering to which this term sheet relates. Before you invest, you should read the prospectus in that registration statement and the other documents relating to this offering that JPMorgan Chase & Co. has filed with the SEC for more complete information about JPMorgan Chase & Co. and this offering. You may get these documents without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, JPMorgan Chase & Co., any agent or any dealer participating in this offering will arrange to send you the prospectus, each prospectus supplement, product supplement no. 70-II and this term sheet if you so request by calling toll-free 866-535-9248.
You may revoke your offer to purchase the notes at any time prior to the time at which we accept such offer by notifying the applicable agent. We reserve the right to change the terms of, or reject any offer to purchase the notes prior to their issuance. In the event of any changes to the terms of the notes, we will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject such changes in which case we may reject your offer to purchase.
Selected Purchase Considerations
|
|
JPMorgan
Structured Investments |
TS-1 |
Selected Risk Considerations
An investment in the notes involves significant risks. Investing in the notes is not equivalent to investing directly in Crude Oil or futures contracts or other instruments the value of which are derived from Crude Oil. These risks are explained in more detail in the Risk Factors section of the accompanying product supplement no. 70-II dated February 27, 2007.
|
|
JPMorgan
Structured Investments |
TS-2 |
What Is the Total Return on the Notes at Maturity Assuming a Range of Performance for the Price of Crude Oil?
The following table illustrates the hypothetical total return at maturity on the notes. The total return as used in this term sheet is the number, expressed as a percentage, that results from comparing the payment at maturity per $1,000 principal amount note to $1,000. The hypothetical total returns set forth below assume a Crude Oil Starting Level of 127.00 and an Upside Leverage Factor of 1.5. The hypothetical total returns set forth below are for illustrative purposes only and may not be the actual total returns applicable to a purchaser of the notes. The numbers appearing in the following table and examples have been rounded for ease of analysis.
|
||
Crude Oil |
Crude Oil |
Total Return |
|
||
254.00 |
100.00% |
150.00% |
241.30 |
90.00% |
135.00% |
228.60 |
80.00% |
120.00% |
215.90 |
70.00% |
105.00% |
203.20 |
60.00% |
90.00% |
190.50 |
50.00% |
75.00% |
177.80 |
40.00% |
60.00% |
165.10 |
30.00% |
45.00% |
152.40 |
20.00% |
30.00% |
139.70 |
10.00% |
15.00% |
133.35 |
5.00% |
7.50% |
127.00 |
0.00% |
0.00% |
120.65 |
-5.00% |
-5.00% |
114.30 |
-10.00% |
-10.00% |
101.60 |
-20.00% |
-20.00% |
88.90 |
-30.00% |
-30.00% |
76.20 |
-40.00% |
-40.00% |
63.50 |
-50.00% |
-50.00% |
50.80 |
-60.00% |
-60.00% |
38.10 |
-70.00% |
-70.00% |
25.40 |
-80.00% |
-80.00% |
12.70 |
-90.00% |
-90.00% |
0.00 |
-100.00% |
-100.00% |
|
Hypothetical Examples of Amounts Payable at Maturity
The following examples illustrate how the total returns set forth in the table above are calculated.
Example 1: The price of Crude Oil increases from the Crude Oil Starting Level of 127 to a Crude Oil Closing Level of 133.35. Because the Crude Oil Closing Level of 133.35 is greater than the Crude Oil Starting Level of 127, the investor receives a payment at maturity of $1,075 per $1,000 principal amount note, calculated as follows:
$1,000 + [$1,000 x (5% x 1.5)] = $1,075
Example 2: The price of Crude Oil decreases from the Crude Oil Starting Level of 127 to an Crude Oil Closing Level of 101.60. Because the Crude Oil Closing Level of 101.60 is less than the Crude Oil Starting Level of 127, the Crude Oil Return is negative and the investor receives a payment at maturity of $800 per $1,000 principal amount note, calculated as follows:
$1,000 + ($1,000 x -20%) = $800
Example 1: The price of Crude Oil increases from the Crude Oil Starting Level of 127 to a Crude Oil Closing Level of 152.40. Because the Crude Oil Closing Level of 152.40 is greater than the Crude Oil Starting Level of 127, the investor receives a payment at maturity of $1,300 per $1,000 principal amount note, calculated as follows:
$1,000 + [$1,000 x (20% x 1.5)] = $1,300
|
|
JPMorgan
Structured Investments |
TS-3 |
Historical Information
The following graph sets forth the historical performance of the price of Crude Oil based on the weekly settlement price from January 3, 2003 through May 30, 2008. The settlement price of Crude Oil on May 30, 2008 was $127.35. We obtained the settlement prices below from Bloomberg Financial Markets. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.
The historical prices of Crude Oil should not be taken as an indication of future performance, and no assurance can be given as to Crude Oil settlement price on the Observation Date. We cannot give you assurance that the performance of the price of Crude Oil will result in the return of any of your initial investment.
|
|
JPMorgan
Structured Investments |
TS-4 |