Registration
Statement 333-130051 Filed Pursuant
to Rule 433
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Structured
Investments Solution Series
Volume
I:
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Principal Protected
Investments
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Profit from
Potential Market Gains While
Protecting
Your Investment Principal at
Maturity
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PRINCIPAL PROTECTED INVESTMENTS
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Introduction
FOCUSING ON
YOUR FINANCIAL GOALS can be challenging during periods of extreme market
volatility. While your brain may tell you that staying the course is the
smartest strategy, your stomach may lead you to make impulsive investment
decisions. For many investors, finding the optimal balance between risk
and reward - and having the fortitude to maintain that balance over the
long haul - is no easy task.
In recent
years, new Structured Investments have been introduced in the U.S. to help
investors meet their objectives. Generally, Structured Investments can
help you achieve three primary objectives: investment returns with little
or no principal at risk, higher returns in a range-bound market with or
without principal protection, as well as alternatives for generating
higher yields in a low-return environment. They also provide you with an
opportunity to access asset classes, such as commodities and foreign
currencies, which in the past were primarily available to institutional
investors.
You can use
Structured Investments to achieve greater diversification, to gain or
hedge exposure to certain asset classes, or to align your portfolio with a
particular market or economic view. They provide asymmetrical returns,
meaning that returns will be higher or lower than those derived from a
direct investment in a particular asset. Structured Investments usually
combine a debt security with an underlying asset, such as an equity, a
basket of equities, a domestic or international index, a commodity, or
some type of hybrid security.
These
investments have long been popular in Europe and Asia and over the past
several years, they have started to gain acceptance among U.S. investors.
According to the Structured Products Association, nearly $100 billion in
new products were issued in 2007, up from $64 billion in 2006.1
This report
examines the role that Principal Protected Investments can play in your
portfolio and how they can help meet a variety of objectives, including
risk reduction or enhanced upside potential.
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1.
www.structuredproducts.org
The discussion
contained in the following pages is for educational and illustrative
purposes only. The preliminary and final terms of any Principal Protected
Investments issued by JPMorgan Chase & Co. will be different from
those set forth in general terms in this report and any such final terms
will depend on, among other things, market conditions on the applicable
launch and pricing dates for such securities. Any information relating to
performances contained in these materials is illustrative and gives no
assurance that any indicated returns, performance, or results, whether
historical or hypothetical, will be achieved. The information in this
report is subject to change, and JPMorgan undertakes no duty to update
these materials 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.
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 appendix) 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.
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2 |
Autumn
2007
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Principal
Protected Investments
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3
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4
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Autumn
2007
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Principal
Protected Investments
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5
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What is my investment time
horizon?
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How much risk am I
comfortable taking on?
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Am I willing
to sacrifice dividends or guaranteed coupon payments in exchange for
principal protection?
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Do I have a
bullish, bearish, or neutral market outlook?
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Can I do
without a regular stream of income?
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Am I willing
to invest capital for the longer periods of time, up to seven
years?
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IN
BRIEF
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Have a
medium- to long-term horizon (one to seven years) and are saving to meet
specific financial goals, such as retirement or
college.
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Are a
loss-averse investor who typically avoids equities
altogether.
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Tend to
make increasingly aggressive
bets in an effort to break even on poorly performing
stocks.
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Do not
have an overly bullish outlook for the stock
market.
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6
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Autumn
2007
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Certain Risk
Considerations
Principal
Protected Investments
Market
risk. Returns on equity linked PPIs at maturity are generally
linked to the performance of an underlying asset such as an index, and
will depend on whether, and the extent to which, the applicable index
appreciates during the term of the notes. You will receive no more than
the full principal amount of your notes at maturity if the applicable
index is flat or negative during the term of any applicable JPMorgan
equity linked PPI. Returns on PPIs may be limited to a maximum
return.
JPMorgan
equity linked PPIs might not pay more than the principal amount.
You may receive a lower payment at maturity than you would have
received if you had invested in the index, the stocks composing the index,
or contracts related to the index. If the level of the index declines at
the end of the PPI's term, as compared to the beginning of the PPI's term,
your gain may be zero.
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Innovative
Structured Investments that span all of the major asset
classes.
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Competitive
investment minimums.
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Direct
access to Structured Investment specialists who can guide you and your
investment professional.
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A
commitment to education demonstrated through teach-ins, conference calls,
and educational materials.
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Principal
Protected Investments
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7
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