Term
sheet
To
prospectus dated December 1, 2005,
prospectus supplement dated December 1, 2005 and product supplement no. 18-I dated March 16, 2006 |
Term
Sheet to
Product
Supplement No. 18-I
Registration
Statement No. 333-130051
Dated April 21, 2008; Rule 433 |
Structured
Investments |
JPMorgan
Chase & Co.
$ Return
Enhanced Notes Linked to the S&P 500® Index due
May 1, 2009
|
· |
The
notes are
designed for investors who seek a return of three times the appreciation
of the S&P 500® Index
up to a
maximum total return on the notes of 19.35%* at maturity. Investors
should
be willing to forgo interest and dividend payments and, if the
Index
declines, be willing to lose some or all of their
principal.
|
· |
Senior
unsecured obligations of JPMorgan Chase & Co. maturing May 1,
2009†.
|
· |
Minimum
denominations of $20,000 and integral multiples of $1,000 in
excess
thereof.
|
· |
The
notes are
expected to price on or about April 21, 2008 and are expected
to settle on
or about April 24,
2008.
|
Index:
|
The
S&P 500®
Index
(the
“Index”)
|
|
Upside
Leverage Factor:
|
3
|
|
Payment
at
Maturity:
|
If
the Ending
Index Level is greater than the Initial Index Level, you will
receive a
cash payment that provides you with a return per $1,000 principal
amount
note equal to the Index Return multiplied by three, subject to
a Maximum
Total Return on the notes of 19.35%*. For example, if the Index
Return is
more than 6.45%, you will receive the Maximum Total Return on
the notes of
19.35%*, which entitles you to a maximum payment at maturity
of $1,193.50
for every $1,000 principal amount note that you hold. Accordingly,
if the
Index Return is positive, your payment per $1,000 principal amount
note
will be calculated as follows, subject to the Maximum Total
Return:
|
|
$1,000
+[$1,000 x (Index Return x 3)]
*The
actual
Maximum Total Return on the notes will be set on the pricing
date and will
not be less than 19.35%.
|
||
Your
investment will be fully exposed to any decline in the
Index.
If the
Ending Index Level declines from the Initial Index Level, you
will lose 1%
of the principal amount of your notes for every 1% that the Index
declines
beyond the Initial Index Level. Accordingly, if the Index Return
is
negative, your payment per $1,000 principal amount note will
be calculated
as follows:
|
||
$1,000
+
($1,000 x Index Return)
|
||
You
will
lose some or all of your investment at maturity if the Ending
Index Level
declines from the Initial Index Level.
|
||
Index
Return:
|
The
performance of the Index from the Initial Index Level to the
Ending Index
Level, calculated as follows:
|
|
Ending
Index Level - Initial Index Level
Initial
Index
Level
|
||
Initial
Index
Level:
|
The
Index
closing level on the pricing date.
|
|
Ending
Index
Level:
|
The
arithmetic average of the Index closing levels on each of the
five
Averaging Dates.
|
|
Averaging
Dates†:
|
April
22,
2009, April 23, 2009, April 24, 2009, April 27, 2009 and April
28,
2009
|
|
Maturity
Date†:
|
May
1,
2009
|
|
CUSIP:
|
†
|
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. 18-I.
|
Price
to Public
|
Fees
and Commissions (1)
|
Proceeds
to Us
|
|
Per
note
|
$
|
$
|
$
|
Total
|
$
|
$
|
$
|
(1) |
Please
see
“Supplemental Underwriting Information” in this term sheet for information
about fees and
commissions.
|
· |
Product
supplement no. 18-I dated March 16,
2006:
|
· |
Prospectus
supplement dated December 1, 2005:
|
· |
Prospectus
dated December 1, 2005:
|
Ending
Index Level
|
Index
Return
|
Total
Return
|
2520.00
|
80.00%
|
19.35%
|
2310.00
|
65.00%
|
19.35%
|
2100.00
|
50.00%
|
19.35%
|
1960.00
|
40.00%
|
19.35%
|
1820.00
|
30.00%
|
19.35%
|
1610.00
|
15.00%
|
19.35%
|
1540.00
|
10.00%
|
19.35%
|
1490.30
|
6.45%
|
19.35%
|
1470.00
|
5.00%
|
15.00%
|
1435.00
|
2.50%
|
7.50%
|
1414.00
|
1.00%
|
3.00%
|
1400.00
|
0.00%
|
0.00%
|
1386.00
|
-1.00%
|
-1.00%
|
1330.00
|
-5.00%
|
-5.00%
|
1260.00
|
-10.00%
|
-10.00%
|
1120.00
|
-20.00%
|
-20.00%
|
980.00
|
-30.00%
|
-30.00%
|
840.00
|
-40.00%
|
-40.00%
|
700.00
|
-50.00%
|
-50.00%
|
560.00
|
-60.00%
|
-60.00%
|
420.00
|
-70.00%
|
-70.00%
|
280.00
|
-80.00%
|
-80.00%
|
140.00
|
-90.00%
|
-90.00%
|
0.00
|
-100.00%
|
-100.00%
|
· |
APPRECIATION
POTENTIAL —
The
notes
provide the opportunity to enhance equity returns by multiplying
a
positive Index Return by three, up to the Maximum Total Return
on the
notes of 19.35%, or $1,193.50 for every $1,000 principal amount
note. The
actual Maximum Total Return on the notes will be set on the
pricing date
and will not be less than 19.35%. Because the notes are our
senior
unsecured obligations, payment of any amount at maturity is
subject to our
ability to pay our obligations as they become due.
|
· |
DIVERSIFICATION
OF THE S&P 500®
INDEX —
The return on the notes is linked to the S&P 500®
Index. The S&P 500®
Index consists of 500 component stocks selected to provide
a performance
benchmark for the U.S. equity markets. For additional information
about
the Index, see the information set forth under “The S&P
500®
Index” in the accompanying product supplement no.
18-I.
|
· |
CAPITAL
GAINS TAX TREATMENT —
You
should review carefully the section entitled “Certain U.S. Federal Income
Tax Consequences” in the accompanying product supplement no. 18-I. Subject
to the limitations described therein, and based on certain
factual
representations received from us, in the opinion of our special
tax
counsel, Davis Polk & Wardwell, it is reasonable to treat your
purchase and ownership of the notes as an “open transaction” for U.S.
federal income tax purposes. Assuming this characterization
is respected,
your gain or loss on the notes should be treated as long-term
capital gain
or loss if you hold the notes for more than a year, whether
or not you are
an initial purchaser of notes at the issue price. However,
the Internal
Revenue Service (the “IRS”) or a court may not respect this
characterization or treatment of the notes, in which case the
timing and
character of any income or loss on the notes could be significantly
and
adversely affected. In addition, on December 7, 2007, Treasury
and the IRS
released a notice requesting comments on the U.S. federal income
tax
treatment of “prepaid forward contracts” and similar instruments, such as
the notes. The notice focuses in particular on whether to require
holders
of these instruments to accrue income over the term of their
investment.
It also asks for comments on a number of related topics, including
the
character of income or loss with respect to these instruments;
the
relevance of factors such as the nature of the underlying property
to
which the instruments are linked; the degree, if any, to which
income
(including any mandated accruals) realized by Non-U.S. Holders
should be
subject to withholding tax; and whether these instruments are
or should be
subject to the “constructive ownership” regime, which very generally can
operate to recharacterize certain long-term capital gain as
ordinary
income that is subject to an interest charge. While the notice
requests
comments on appropriate transition rules and effective dates,
any Treasury
regulations or other guidance promulgated after consideration
of these
issues could materially and adversely affect the tax consequences
of an
investment in the notes, possibly with retroactive effect.
Both U.S. and
Non-U.S. Holders should consult their tax advisers regarding
the U.S.
federal income tax consequences of an investment in the notes,
including
possible alternative treatments and the issues presented by
this
notice.
|
· |
YOUR
INVESTMENT IN THE NOTES MAY RESULT IN A LOSS —
The
notes
do not guarantee any return of principal. The return on the
notes at
maturity is linked to the performance of the Index and will
depend on
whether, and the extent to which, the Index Return is positive
or
negative. Your investment will be fully exposed to any decline
in the
Ending Index Level as compared to the Initial Index Level.
|
· |
YOUR
MAXIMUM GAIN ON THE NOTES IS LIMITED TO THE MAXIMUM TOTAL
RETURN —
If
the
Ending Index Level is greater than the Initial Index Level,
for each
$1,000 principal amount note, you will receive at maturity
$1,000 plus an
additional amount that will not exceed a predetermined percentage
of the
principal amount, regardless of the appreciation in the Index,
which may
be significant. We refer to this percentage as the Maximum
Total Return,
which will be set on the pricing date and will not be less
than
19.35%.
|
· |
CERTAIN
BUILT-IN COSTS ARE LIKELY TO ADVERSELY AFFECT THE VALUE OF
THE NOTES PRIOR
TO MATURITY —
While
the
payment at maturity described in this term sheet is based
on the full
principal amount of your notes, the original issue price
of the notes
includes the agent’s commission and the cost of hedging our obligations
under the notes through one or more of our affiliates. As
a result, the
price, if any, at which J.P. Morgan Securities Inc., which
we refer to as
JPMSI, will be willing to purchase notes 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. The notes are not designed to be
short-term
trading instruments. Accordingly, you should be able and
willing to hold
your notes to maturity.
|
· |
NO
INTEREST OR DIVIDEND PAYMENTS OR VOTING RIGHTS —
As
a holder
of the notes, you will not receive interest payments, and
you will not
have voting rights or rights to receive cash dividends or
other
distributions or other rights that holders of securities
composing the
Index would have.
|
· |
LACK
OF LIQUIDITY —
The
notes
will not be listed on any securities exchange. JPMSI intends
to offer to
purchase the notes in the secondary market but is not required
to do so.
Even if there is a secondary market, it may not provide enough
liquidity
to allow you to trade or sell the notes easily. Because other
dealers are
not likely to make a secondary market for the notes, the
price at which
you may be able to trade your notes is likely to depend on
the price, if
any, at which JPMSI is willing to buy the notes.
|
· |
WE
ARE CURRENTLY ONE OF THE COMPANIES THAT MAKE UP THE INDEX
—
We
are
currently one of the companies that make up the Index. On
March 16, 2008,
and March 24, 2008, we issued press releases (which are included
in our
Current Reports on Form 8-K filed with the Securities and
Exchange
Commission on March 18, 2008, and March 24, 2008, respectively)
announcing
our potential acquisition of The Bear Stearns Companies,
Inc., which is
also currently included in the Index. To our knowledge, we
are not
currently affiliated with any other issuers the equity securities
of which
are included in the Index. We will not have any obligation
to consider
your interests as a holder of the notes in taking any corporate
action
that might affect the value of the Index and the
notes.
|
· |
POTENTIAL
CONFLICTS —
We
and our
affiliates play a variety of roles in connection with the
issuance of the
notes, including acting as calculation agent and hedging
our obligations
under the notes. In performing these duties, the economic
interests of the
calculation agent and other affiliates of ours are potentially
adverse to
your interests as an investor in the
notes.
|
· |
MANY
ECONOMIC AND MARKET FACTORS WILL IMPACT THE VALUE OF THE
NOTES —
In
addition
to the level of the Index on any day, the value of the notes
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 Index;
|
·
|
the
time to
maturity of the notes;
|
·
|
the
dividend
rate on the common stocks underlying the
Index;
|
·
|
interest
and
yield rates in the market
generally;
|
·
|
a
variety of
economic, financial, political, regulatory or judicial events;
and
|
·
|
our
creditworthiness, including actual or anticipated downgrades
in our credit
ratings.
|