Overview

Investors have historically struggled to find diversifying assets to complement equity portfolios.  Assets typically associated

with diversification, such as corporate bonds, international equities, or commodities, often fail to produce diversification

benefits during significant equity market downturns.  In contrast, equity market volatility, which is a measure of the variability

of the equity markets over time, has more consistently demonstrated negative correlation with equity returns, and may

provide investors with diversification benefits when they need it most. 

Exposure to the volatility of the equity market may provide diversification benefits when added to an equity portfolio.  These

benefits may include:

•

Negative correlation to equities

•

Higher risk-adjusted returns

•

Protection against tail risk, the risk of extreme equity market declines

Investable Volatility Index

Month

S&P

500

®

Index

Investable

Volatility

Index™

MSCI

EAFE

Index

DJ-UBS

Commodity

Index

ML US

Investment

Grade

ML US

High

Yield

Jul-07

-3.1%

26.3%

-1.5%

1.6%

0.3%

-3.1%

Nov-07

-4.2%

17.0%

-3.5%

-3.4%

0.9%

-2.0%

Jan-08

-6.0%

4.7%

-9.3%

4.0%

1.2%

-1.4%

Feb-08

-3.2%

6.8%

1.3%

12.1%

0.1%

-1.2%

Jun-08

-8.4%

3.3%

-8.3%

8.9%

-0.4%

-2.7%

Sep-08

-8.9%

16.4%

-14.7%

-11.6%

-7.3%

-8.3%

Oct-08

-16.8%

65.7%

-20.2%

-21.3%

-7.4%

-16.3%

Nov-08

-7.2%

14.3%

-5.7%

-7.0%

3.9%

-8.4%

Jan-09

-8.4%

8.4%

-9.9%

-5.4%

0.3%

5.3%

Feb-09

-10.6%

-1.3%

-10.5%

-4.5%

-1.6%

-3.5%

Jan-10

-3.6%

-5.5%

-4.4%

-7.3%

2.0%

1.5%

May-10

-8.0%

32.7%

-12.1%

-6.9%

-0.6%

-3.5%

Jun-10

-5.2%

10.2%

-1.2%

0.3%

2.1%

1.3%

Avg.

-7.2%

15.3%

-7.7%

-3.1%

-0.5%

-3.3%

Index Description

The

Investable

Volatility

Index™

(the

“Index”)

is

designed to provide a benchmark for investing in equity

market volatility.  The Index was created by Bank of

America Merrill Lynch and is calculated by the CBOE.

The Index is formulated to offer exposure to equity

market volatility that:

•

Responds to changes in volatility

•

Reduces holding costs associated with volatility

On a historical basis, the Index has maintained

consistently

high

negative

correlation

with

the

S&P

500

®

Index and performed best in periods of extreme equity

market dislocation, in sharp contrast with many other

assets.

Index Mechanics

The return on the Index reflects changes in the level of

forward

implied

volatility

of

the

S&P

500

®

Index

as

calculated

using

market

prices

of

listed

S&P

500

®

Index

options. 

The Index measures the forward implied volatility of the

S&P 500

®

Index for a three-month window centered

approximately five months in the future, and the Index

return reflects transaction costs associated with rolling a

hypothetical position to maintain this exposure. 

The Index was designed to achieve the following goals:

•

Efficiency

The longer-dated volatilities on which the Index is

based typically sit on a flatter part of the volatility curve and

have historically exhibited more moderate holding costs (or

the cost of rolling the position to maintain constant exposure

to the target maturity)

•

Responsiveness

The Index is designed to be responsive to

volatility in the equity markets

•

Liquidity

The

Index

is

based

on

the

prices

of

listed

S&P

500

®

Index options, which are the most liquid instruments in the

volatility market

•

Transparency

The Index is calculated by the CBOE

TM

Source:

Merrill

Lynch

Wealth

Management

-

IMG

Investment

Analytics.                                                     

Data:

Jan

2005

-

Jul

2010,

only

in

months

when

the

S&P

500

®

Index

decreased

by

more

than

3%.

Historical

results

may

not

be

indicative

of

future

performance.

Filed Pursuant to Rule 433

Registration No. 333-158663

SM

Monthly

performance

when

the

S&P

500

®

Index

decreases

by

more

than

3%

Source:

Bank

of

America

Merrill

Lynch

Equity

Derivatives.

Data:

12/31/04 –

7/30/10. Weights

are reset monthly and all hypothetical portfolios are set to $100 on 12/31/04.

Index levels

before 3/23/10 represent hypothetical results based on historical inputs. Historical results

may not be indicative of future performance.

Source:

Bank

of

America

Merrill

Lynch

Equity

Derivatives.

Data:

12/31/04 –

7/30/10. Returns

are calculated daily. Index levels before 3/23/10 represent hypothetical results based

on

historical

inputs.

Historical

results

may

not

be

indicative

of future performance.

Investor Applications

Bank

of

America

Merrill

Lynch

has

the

ability

to

deliver

various

products

linked

to

the

Index.

From

registered

structured

notes for individual investors to customized OTC products for institutional and high net worth investors, Bank of America

Merrill Lynch can structure products that offer exposure to the performance of the Index. 

Using the Index to Hedge an Equity

Portfolio

The Index may offer powerful diversification to equity

portfolios.  On a historical basis, even small

hypothetical allocations to the Index significantly

improved performance by reducing risk and

increasing risk-adjusted returns.

Allocation to the Index Has Potential to Shift Return Distribution

Reduced Potential for Large Losses

The Index may help to moderate a portfolio’s return

distribution, thus reducing the occurrence of large

losses.  As the chart on the right shows, a

hypothetical 15% allocation to the Index has

mitigated large losses on a historical basis.

Allocation to the Index Has Potential to Improve Risk-adjusted Returns

2

•

A hypothetical 10% allocation to the Index

outperformed

the

S&P

500

®

Total

Return

Index

(“SPTR”) by approximately 10%, and was

approximately 27% less volatile

•

A hypothetical 20% allocation to the Index

outperformed the SPTR by approximately 19%,

and was approximately 43% less volatile

•

A hypothetical portfolio with a 15% allocation to

the Index had a daily drawdown of 2.5% or more

approximately 1.5% of the time, compared to

approximately 4.1% of the time for the SPTR

$60

$70

$80

$90

$100

$110

$120

$130

$140

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10

  SPTR

  90% SPTR, 10% Investable Volatility Index

  80% SPTR, 20% Investable Volatility Index

0%

5%

10%

15%

20%

25%

-9.50%

-7.00%

-4.75%

-3.00%

-1.25%

0.00%

1.25%

3.00%

4.75%

7.00%

9.50%

12.00%

  SPTR

  85% SPTR, 15% Investable Volatility Index

Allocation to

volatility may

mitigate large

losses

Investable Volatility Index

TM

3

For Additional Information

Please contact a Financial Advisor or find one by calling 1-800-MERRILL

Individuals

Please contact Bank of America Merrill Lynch Equity Derivative Sales by calling 212-449-6756, or

by emailing Investablevolinfo@baml.com

Institutions

Risk Factors

Please note that there are risks arising from an investment linked to the Index, including but not limited to the

following:

You should review the complete offering documents of any instrument linked to the Index for a more complete

description of the risks and terms relating to that investment.

•

The Index methodology includes features, including a deduction for transaction costs, and a multiplier of 1.2, that can reduce

its level.

•

The Index and its components have limited historical information.

•

Changing

levels

of

forward

implied

volatility

of

the

S&P

500

®

Index

may

reduce

the

level

of

the

Index.

•

The policies of the sponsor and calculation agent for the Index could result in changes to the Index which may impact its

levels.

Investable Volatility Index

TM