Term sheet
To prospectus dated November 7, 2014,
prospectus supplement dated November 7, 2014 and product supplement
no. 1a-I dated November 7, 2014 |
|
Term sheet to
Product Supplement No. 1a-I
Registration Statement No. 333-199966
Dated September 2, 2015; Rule 433 |
|
Callable Step-Up Fixed Rate Notes due September
22, 2025
$ |
General
| · | The notes are unsecured and unsubordinated obligations of JPMorgan Chase & Co. Any payment on the notes is subject to
the credit risk of JPMorgan Chase & Co. |
| · | These notes are designed for an investor who seeks a fixed income investment, where the interest rate increases over time as
described under "Interest Rate" below, but is also willing to accept the risk that the notes will be called prior to
the Maturity Date. |
| · | Unless general interest rates rise significantly, you should not expect to earn the highest scheduled Interest Rate set forth
below because the notes are likely to be called prior to maturity if interest rates remain the same or fall during the term of
your notes. Additionally, the Interest Rate on the notes does not step up significantly until later in the term of the notes. See
"Selected Risk Considerations" in this term sheet. |
| · | These notes have a long maturity relative to other fixed income products. Longer dated notes may be more risky than shorter
dated notes. See "Selected Risk Considerations" in this term sheet. |
| · | At our option, we may redeem the notes, in whole but not in part, on any of the Redemption Dates specified below. |
| · | The notes may be purchased in minimum denominations of $1,000 and in integral multiples of $1,000 thereafter. |
| · | The notes are expected to price on or about September 17, 2015 and are expected to settle on or about September 22, 2015. |
Key Terms
Payment at Maturity: |
On the Maturity Date, we will pay you the principal amount of your notes plus any accrued and unpaid interest; provided that your notes are outstanding and have not previously been called on any Redemption Date. |
Call Feature: |
On March 22nd and September 22nd of each year, beginning on September 22, 2020 and ending on the Maturity Date (each, a “Redemption Date”), we may redeem your notes, in whole but not in part, at a price equal to the principal amount being redeemed plus any accrued and unpaid interest, subject to the Business Day Convention and the Interest Accrual Convention described below and in the accompanying product supplement. |
Interest: |
Subject to the Interest Accrual Convention, with respect to
each Interest Period, for each $1,000 principal amount note, we will pay you interest in arrears on each Interest Payment Date
in accordance with the following formula:
$1,000 x Interest Rate x Day Count Fraction. |
Interest Period: |
The period beginning on and including the Original Issue Date of the notes and ending on but excluding the first Interest Payment Date, and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date, subject to the Interest Accrual Convention described below and in the accompanying product supplement. |
Interest Payment Date: |
Interest on the notes will be payable in arrears on March 22nd and September 22nd of each year, beginning on March 22, 2016 to and including the Maturity Date, subject to the Business Day Convention and Interest Accrual Convention described below and in the accompanying product supplement. |
Interest Rate: |
For the applicable Interest Period, the Interest Rate on your notes will be equal to: |
|
From (and including) |
To (but excluding) |
Interest Rate |
|
September 22, 2015 |
September 22, 2021 |
3.00% per annum |
|
September 22, 2021 |
September 22, 2023 |
4.00% per annum |
|
September 22, 2023 |
September 22, 2024 |
5.00% per annum |
|
September 22, 2024 |
September 22, 2025 |
6.00% per annum |
|
The dates above refer to originally scheduled Interest Payment Dates. |
Pricing Date: |
On or about September 17, 2015, subject to the Business Day Convention. |
Original Issue Date
(settlement date): |
On or about September 22, 2015, subject to the Business Day Convention. |
Maturity Date: |
September 22, 2025, subject to the Business Day Convention. |
Business Day Convention: |
Following |
Interest Accrual Convention: |
Unadjusted |
Day Count Fraction: |
30/360 |
CUSIP: |
48125UY63 |
Investing in the notes involves a number of risks. See
“Risk Factors” beginning on page PS-18 of the accompanying product supplement and “Selected Risk Considerations”
beginning on page TS-3 of this term sheet.
Neither the U.S. 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,
the accompanying product supplement or the accompanying prospectus supplement and prospectus. Any representation to the contrary
is a criminal offense.
|
Price to Public(1)(2) |
Fees and Commissions(1)(2) |
Proceeds to Issuer |
Per note |
$1,000 |
$ |
$ |
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) J.P. Morgan Securities LLC, which we refer to as JPMS,
acting as agent for JPMorgan Chase & Co., will pay all of the selling commissions it receives from us to other affiliated or
unaffiliated dealers. If the notes priced today, the selling commissions would be approximately $14.00 per $1,000 principal amount
note and in no event will these selling commissions exceed $25.00 per $1,000 principal amount note. See “Plan of Distribution
(Conflicts of Interest)” beginning on page PS-60 of the accompanying product supplement no. 1a-I.
The notes are not bank deposits, are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency, and are not the obligations of, or guaranteed by,
a bank.
September , 2015
Additional Terms Specific to the Notes
JPMorgan Chase & Co. has filed a registration statement
(including a prospectus) with the U.S. Securities and Exchange Commission (“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, the prospectus
supplement, product supplement no.1a-I 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.
You should read this term sheet together with the prospectus
dated November 7, 2014, as supplemented by the prospectus supplement dated November 7, 2014 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. 1a-I dated November
7, 2014. 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, 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):
| · | Prospectus supplement and prospectus, each dated November 7, 2014: |
http://www.sec.gov/Archives/edgar/data/19617/000089109214008397/e61348_424b2.pdf
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.
Selected Purchase Considerations
| · | PRESERVATION OF CAPITAL AT MATURITY OR UPON REDEMPTION — We will pay you at least the principal amount of your
notes if you hold the notes to maturity or to the Redemption Date, if any, on which we elect to call the notes. Because the notes
are our unsecured and unsubordinated obligations, payment of any amount at maturity or upon early redemption is subject to our
ability to pay our obligations as they become due. |
| · | PERIODIC INTEREST PAYMENTS — The notes offer periodic interest payments on each Interest Payment Date at
the applicable Interest Rate. Interest, if any, will be paid in arrears on each Interest Payment Date, to the holders of record
at the close of business on the Business Day immediately preceding the applicable Interest Payment Date. The interest payments
will be based on the Interest Rate listed on the cover of this term sheet. The yield on the notes may be less than the overall
return you would receive from a conventional debt security that you could purchase today with the same maturity as the notes. |
| · | POTENTIAL PERIODIC REDEMPTION BY US AT OUR OPTION — At our option, we may redeem the notes, in whole but
not in part, on any of the Redemption Dates set forth on the cover of this term sheet, at a price equal to the principal amount
being redeemed plus any accrued and unpaid interest, subject to the Business Day Convention and the Interest Accrual Convention
described on the cover of this term sheet and in the accompanying product supplement. Any accrued and unpaid interest on the notes
redeemed will be paid to the person who is the holder of record of such notes at the close of business on the Business Day immediately
preceding the applicable Redemption Date. |
| · | TREATED AS FIXED RATE DEBT INSTRUMENTS — You should review carefully the section entitled “Material U.S.
Federal Income Tax Consequences” in the accompanying product supplement for a detailed discussion of the U.S. federal income
tax consequences of the acquisition, ownership and disposition of a note and consult your tax adviser concerning your particular
circumstances. Subject to the limitations described therein, the notes will be treated for U.S. federal income tax purposes as
“fixed rate debt instruments.” Accordingly, interest paid on the notes will generally be taxable to you as ordinary
interest income at the time it accrues or is received in accordance with your method of accounting for U.S. federal income tax
purposes. In general, gain or loss realized on the sale, exchange or other disposition of the notes will be capital gain or loss.
As discussed in the section entitled “Material U.S. Federal Income Tax Consequences – Tax Treatment of Indebtedness
– Original Issue Discount” we will be deemed to redeem the notes on each Call Date, in a manner that minimizes their
yield. Prospective purchasers are urged to consult their own tax advisers regarding the U.S. federal income tax consequences of
an investment in the notes. Purchasers who are not initial purchasers of notes at their issue price on the Issue Date should consult
their |
Callable Step-Up Fixed Rate Notes | TS-2 |
tax advisers with respect to the tax
consequences of an investment in the notes, and the potential application of special rules. As discussed in the section entitled
“Material U.S. Federal Income Tax Consequences,” you cannot use the tax summaries herein for the purpose of avoiding
penalties that may be asserted against you under the Internal Revenue Code.
Non-U.S. Holders should note that final Treasury regulations were released on legislation that imposes a withholding tax of 30%
on payments to certain foreign entities unless information reporting and diligence requirements are met, as described in “Material
U.S. Federal Income Tax Consequences-Tax Consequences to Non-U.S. Holders” in the accompanying product supplement. Pursuant
to the final regulations, such withholding tax will generally apply to obligations that are issued on or after July 1, 2014; therefore,
the notes will generally be subject to this withholding tax. The withholding tax described above will not apply to payments of
gross proceeds from the sale, exchange or other disposition of the notes made before January 1, 2017.
Selected Risk
Considerations
An investment in the notes involves significant risks. These
risks are explained in more detail in the “Risk Factors” section of the accompanying product supplement.
| · | WE MAY CALL YOUR NOTES PRIOR TO THEIR SCHEDULED MATURITY DATE — We may choose to call the notes early or choose
not to call the notes early on any Redemption Date in our sole discretion. If the notes are called early, you will receive the
principal amount of your notes plus any accrued and unpaid interest to, but not including, the Redemption Date. The aggregate amount
that you will receive through and including the Redemption Date will be less than the aggregate amount that you would have received
had the notes not been called early. If we call the notes early, your overall return may be less than the yield which the notes
would have earned if you held your notes to maturity and you may not be able to reinvest your funds at the same rate as the original
notes. We may choose to call the notes early, for example, if U.S. interest rates decrease significantly or if volatility of U.S.
interest rates decreases significantly. |
| · | STEP-UP NOTES PRESENT DIFFERENT INVESTMENT CONSIDERATIONS THAN FIXED RATE NOTES — The rate of interest paid by
us on the notes will increase upward from the initial stated rate of interest of the notes. The notes are callable by us, in whole
but not in part, prior to maturity and, therefore, contain the call risk described above. If we do not call the notes, the interest
rate will step up as described on the cover of this term sheet. Unless general interest rates rise significantly, you should not
expect to earn the highest scheduled Interest Rate set forth on the cover of this term sheet because the notes are likely to be
called prior to maturity if interest rates remain the same or fall during the term of your notes. When determining whether to invest
in a stepped-up rate note, you should not focus on the highest stated Interest Rate, which usually is the final stepped-up rate
of interest. You should instead focus on, among other things, the overall annual percentage rate of interest to maturity or call
as compared to other equivalent investment alternatives. |
| · | THE INTEREST RATE OF THE NOTES DOES NOT STEP UP SIGNIFICANTLY UNTIL LATER IN THE TERM OF THE NOTES — Unless general
interest rates rise significantly, you should not expect to earn the highest scheduled Interest Rate set forth on the cover of
this term sheet because the notes are likely to be called prior to maturity if interest rates remain the same or fall during the
term of your notes. Additionally, the interest rate on the notes does not step up significantly until later in the term of the
notes. If interest rates rise faster than the incremental increases in the interest rates of the notes, the notes may have an interest
rate that is significantly lower than the interest rates at that time and the secondary market value of the notes may be significantly
lower than other instruments with a similar term but higher interest rates. In other words, you should only purchase the notes
if you are comfortable receiving the stated interest rates set forth on the cover of this term sheet for the entire term of the
notes. |
| · | LONGER DATED NOTES MAY BE MORE RISKY THAN SHORTER DATED NOTES — By purchasing a note with a longer tenor,
you are more exposed to fluctuations in interest rates than if you purchased a note with a shorter tenor. The present value of
a longer-dated note tends to be more sensitive to rising interest rates than the present value of a shorter-dated note. If interest
rates rise, the present value of a longer-dated note will fall faster than the present value of a shorter-dated note. You should
only purchase these notes if you are comfortable with owning a note with a longer tenor. |
| · | CREDIT RISK OF JPMORGAN CHASE & CO. — The notes are subject to the credit risk of JPMorgan Chase & Co.,
and our credit ratings and credit spreads may adversely affect the market value of the notes. Investors are dependent on JPMorgan
Chase & Co.’s ability to pay all amounts due on the notes, and therefore investors are subject to our credit risk and
to changes in the market’s view of our creditworthiness. Any decline in our credit ratings or increase in the credit spreads
charged by the market for taking our credit risk is likely to adversely affect the value of the notes. If we were to default on
our payment obligations, you may not receive any amounts owed to you under the notes and you could lose your entire investment. |
| · | 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, our economic
interests and the economic interests of the Calculation Agent and other affiliates of ours are potentially adverse to your interests
as an investor in the notes. In addition, our business activities, including hedging and trading activities for our own accounts
or on behalf of customers, could cause our economic interests to be adverse to yours and could adversely affect any payments on
the notes and the value of the notes. It is possible that hedging or trading activities of ours or our affiliates could result
in substantial returns for us or our affiliates while the value of the notes declines. Please refer to “Risk Factors —
Risks Relating to the Notes Generally” in the accompanying product supplement for additional information about these risks. |
Callable Step-Up Fixed Rate Notes | TS-3 |
| · | JPMS AND ITS AFFILIATES MAY HAVE PUBLISHED RESEARCH, EXPRESSED OPINIONS OR PROVIDED RECOMMENDATIONS THAT ARE INCONSISTENT
WITH INVESTING IN OR HOLDING THE NOTES, AND MAY DO SO IN THE FUTURE. ANY SUCH RESEARCH, OPINIONS OR RECOMMENDATIONS COULD AFFECT
THE MARKET VALUE OF THE NOTES — JPMS and its affiliates publish research from time to time on financial markets
and other matters that may influence the value of the notes, or express opinions or provide recommendations that are inconsistent
with purchasing or holding the notes. JPMS and its affiliates may have published research or other opinions that call into question
the investment view implicit in an investment in the notes. Any research, opinions or recommendations expressed by JPMS or its
affiliates may not be consistent with each other and may be modified from time to time without notice. Investors should undertake
their own independent investigation of the merits of investing in the notes. |
| · | 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 estimated cost of hedging our obligations under the notes through one
or more of our affiliates. As a result, the price, if any, at which JPMS 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 could result in a substantial loss to you. |
| · | REINVESTMENT RISK — If we redeem the notes, the term of the notes may be reduced and you will not receive
interest payments after the applicable Redemption Date. There is no guarantee that you would be able to reinvest the proceeds from
an investment in the notes at a comparable return and/or with a comparable interest rate for a similar level of risk in the event
the notes are redeemed prior to the Maturity Date. |
| · | LACK OF LIQUIDITY — The notes will not be listed on an organized securities exchange. JPMS and its affiliates
may offer to purchase the notes upon terms and conditions acceptable to them, but are 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 JPMS is willing to buy the notes. |
| · | MANY ECONOMIC AND MARKET FACTORS WILL IMPACT THE VALUE OF THE NOTES — The notes will be affected by a number
of economic and market factors that may either offset or magnify each other, including but not limited to: |
| · | the time to maturity of the notes; |
| · | interest and yield rates in the market generally, as well as the volatility of those rates; |
| · | the likelihood, or expectation, that the notes will be redeemed by us, based on prevailing market interest rates or otherwise;
and |
| · | our creditworthiness, including actual or anticipated downgrades in our credit ratings. |
| · | TAX DISCLOSURE — The information under “Treated As Fixed Rate Debt Instruments” in this term
sheet remains subject to confirmation by our tax counsel. We will notify you of any revisions to the information under “Treated
As Fixed Rate Debt Instruments” in a supplement to this term sheet on or before the Business Day immediately preceding the
Original Issue Date, or if the information cannot be confirmed by our tax counsel, we may terminate this offering of Notes. |
Callable Step-Up Fixed Rate Notes | TS-4 |
Hypothetical Examples of Calculation of
the Interest Rate on the Notes for an Interest Period
The following examples illustrate how the hypothetical Interest
Rates for an Interest Period are calculated if we choose to call the notes early or choose not to call the notes early on any Redemption
Date in our sole discretion, assuming that the number of calendar days in the applicable Interest Period is 180. The hypothetical
Interest Rates in the following examples are for illustrative purposes only and may not correspond to the actual Interest Rates
for any Interest Period applicable to a purchaser of the notes. The numbers appearing in the following examples have been rounded
for ease of analysis.
Example 1: If we choose to call the notes early on a Redemption
Date and the Redemption Date is September 22, 2020, we will pay you $1,000 for each $1,000 principal amount note plus any accrued
and unpaid interest at an Interest Rate equal to 3.00% per annum. Therefore, the interest payment per $1,000 principal amount note
on the Redemption Date will be calculated as follows:
$1,000 × 3.00% × (180 / 360)
= $15.00
We will pay you a principal payment of $1,000 for each $1,000
principal amount note on such Redemption Date. Therefore, you will receive $1,015.00 for each $1,000 principal amount note ($1,000
of principal plus $15.00 of interest) on such Redemption Date, but you will not receive any further interest or principal payments
from us.
Example 2: If we choose not to call the notes early
on a Redemption Date and the Interest Payment Date is September 22, 2020, we will pay you any accrued and unpaid interest on
the applicable Interest Payment Date at an Interest Rate equal to 3.00% per annum. Therefore, the interest payment per $1,000 principal
amount note will be calculated as follows:
$1,000 × 3.00% × (180 / 360)
= $15.00
We will pay you an interest payment of $15.00 for each $1,000
principal amount note on such Interest Payment Date. Because the notes have not been called, you will be entitled to receive additional
interest payments and a payment of principal at maturity or on the applicable Redemption Date, if any.
Example 3: If we choose not to call the notes prior
to the Maturity Date and today is the Maturity Date, we will pay you $1,000 for each $1,000 principal amount note plus any
accrued and unpaid interest on the Maturity Date at an Interest Rate equal to 6.00% per annum. Therefore, the interest payment
per $1,000 principal amount note on the Maturity Date will be calculated as follows:
$1,000 × 6.00% × (180 / 360)
= $30.00
We will pay you a principal payment of $1,000 for each $1,000
principal amount note on the Maturity Date. Therefore, you will receive $1,030.00 for each $1,000 principal amount note ($1,000
of principal plus $30.00 of interest) on the Maturity Date, and you will not receive any further interest or principal payments
from us.
Callable Step-Up Fixed Rate Notes | TS-5 |
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