CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed Offering Price Per Unit |
Proposed Maximum Aggregate Offering Price |
Amount of Fee(1) | ||||
| Strategic Accelerated Redemption Securities® Linked to the Common Stock of JPMorgan Chase & Co., due May 7, 2012 |
2,626,310 | $10.00 | $26,263,100 | $3,049.15 | ||||
| (1) | Calculated in accordance with Rule 457(r) of the Securities Act of 1933. |
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-158663
The notes are being offered by Bank of America Corporation (“BAC”). The notes will have the terms specified in this term sheet as supplemented by the documents indicated below under “Additional Terms” (together, the “Note Prospectus”). Investing in the notes involves a number of risks. There are important differences between the notes and a conventional debt security, including different investment risks. See “Risk Factors” on page TS-6 of this term sheet and “Risk Factors” beginning on page S-9 of product supplement STOCK STR-1. The notes:
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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In connection with this offering, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) is acting in its capacity as principal for your account.
None of the Securities and Exchange Commission (the “SEC”), any state securities commission, or any other regulatory body has approved or disapproved of these securities or determined if this Note Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| Per Unit |
Total |
|||||||||
| Public offering price (1) |
$10.000 | $26,263,100.00 | ||||||||
| Underwriting discount (1) |
$0.125 | $328,288.75 | ||||||||
| Proceeds, before expenses, to Bank of America Corporation |
$9.875 | $25,934,811.25 | ||||||||
| (1) | The public offering price and underwriting discount for any purchase of 500,000 or more units in a single transaction by an individual investor will be $9.975 per unit and $0.10 per unit, respectively. |
| Merrill Lynch & Co.
|
| |||
| April 28, 2011 |
2,626,310 Units
Strategic Accelerated Redemption Securities®
Linked to the Common Stock of JPMorgan Chase & Co.,
due May 7, 2012
$10 principal amount per unit
Term Sheet No. 621
Pricing Date April 28, 2011
Settlement Date May 5, 2011
Maturity Date May 7, 2012
CUSIP No. 06050R486
The notes will be called at an amount equal to the $10 principal amount per unit plus a Call Premium if the Observation Level of the common stock of JPMorgan Chase & Co. (the “Underlying Stock”) on any Observation Date is equal to or greater than 100% of its Starting Value
The Call Premium is 12.57% of the Original Offering Price per annum (equivalent to 6.285% if the notes are called on the first Observation Date, or 9.4275% if the notes are called on the second Observation Date)
1-to-1 downside loss if the notes are not called prior to maturity and the Ending Value of the Underlying Stock decreases below the Threshold Value, with up to 95% of the principal amount at risk
A maturity of approximately one year
Payments on the notes are subject to the credit risk of Bank of America Corporation
No periodic interest payments
No listing on any securities exchange
Strategic Accelerated Redemption Securities®
Market Downside Protection
Market Access
Enhanced Return
Enhanced Return
Enhanced Income
Summary
The Strategic Accelerated Redemption Securities® Linked to the Common Stock of JPMorgan Chase & Co., due May 7, 2012 (the “notes”), are our senior unsecured debt securities. The notes are not guaranteed or insured by the Federal Deposit Insurance Corporation or secured by collateral. The notes will rank equally with all of our other unsecured and unsubordinated debt, and any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BAC.
The notes provide for an automatic call if the Observation Level of the common stock of JPMorgan Chase & Co. (the “Underlying Stock”) on any Observation Date is equal to or greater than the Call Level. If the notes are called on any Observation Date, you will receive on the Call Settlement Date an amount per unit (the “Call Amount”) equal to the Original Offering Price of the notes plus the applicable Call Premium. If your notes are not called, the amount you receive on the maturity date (the “Redemption Amount”) will not be greater than the Original Offering Price per unit and will be based on the direction of and percentage decrease in the price of the Underlying Stock from the Starting Value, as determined on the pricing date, to the Ending Value, as determined on the final Observation Date. Investors must be willing to forgo interest payments on the notes and be willing to accept a repayment that may be less, and potentially significantly less, than the Original Offering Price of the notes. Investors also must be prepared to have us call their notes on any Observation Date. Investors’ gain or loss generally will be long-term capital gain or loss if the notes are held for more than one year, and otherwise will be short-term capital gain or loss. Accordingly, if the notes are called on the first or second Observation Date, any capital gain or loss generally will be short-term capital gain or loss. Any such gain or loss is subject to certain tax implications, set forth under “Summary Tax Consequences” and “Certain U.S. Federal Income Taxation Considerations.”
Capitalized terms used but not defined in this term sheet have the meanings set forth in product supplement STOCK STR-1. Unless otherwise indicated or unless the context requires otherwise, all references in this term sheet to “we,” “us,” “our,” or similar references are to BAC.
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Strategic Accelerated Redemption Securities |
TS-2 |
Hypothetical Payments
Set forth below are five hypothetical examples of payment calculations (with hypothetical Call Amounts and hypothetical Redemption Amounts rounded to three decimal places), based on:
1) the Starting Value of 45.67;
2) the Threshold Value of 43.39, which is 95% of the Starting Value (rounded to two decimal places);
3) the Call Level of 45.67, which is 100% of the Starting Value;
4) the term of the notes from May 5, 2011 to May 7, 2012;
5) the Call Premium of 12.57% of the Original Offering Price per unit per annum; and
6) Observation Dates occurring on October 25, 2011, January 24, 2012, and April 30, 2012.
The Notes Are Called on One of the Observation Dates
The notes have not been previously called and the Observation Level on the relevant Observation Date is equal to or greater than the Call Level. Consequently, the notes will be called at the Call Amount per unit equal to $10.00 plus the applicable Call Premium.
Example 1
If the call is related to the Observation Date that falls on October 25, 2011, the hypothetical Call Amount per unit will be:
$10.000 plus the Call Premium of $0.62850 = $10.62850 per unit.
Example 2
If the call is related to the Observation Date that falls on January 24, 2012, the hypothetical Call Amount per unit will be:
$10.000 plus the Call Premium of $0.94275 = $10.94275 per unit.
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Strategic Accelerated Redemption Securities |
TS-3 |
Example 3
If the call is related to the Observation Date that falls on April 30, 2012, the hypothetical Call Amount per unit will be:
$10.000 plus the Call Premium of $1.25700 = $11.25700 per unit.
The Notes Are Not Called on any of the Observation Dates
Example 4
The notes are not called on any of the Observation Dates and the hypothetical Ending Value of the Underlying Stock on the final Observation Date is not less than 43.39, the Threshold Value. The hypothetical Redemption Amount per unit will therefore be $10.00000.
|
Strategic Accelerated Redemption Securities |
TS-4 |
Example 5
The notes are not called on any of the Observation Dates and the hypothetical Ending Value of the Underlying Stock on the final Observation Date is less than 43.39, the Threshold Value. The hypothetical Redemption Amount will be less, and possibly significantly less, than the Original Offering Price per unit.
If the hypothetical Ending Value is 38.82, or 85% of the Starting Value, the hypothetical Redemption Amount will be:
| $10+ |
[ | $10 × | ( | 38.82 - 43.39 | ) | × 100% | ] | = $9.00000 per unit | ||||||||||
| 45.67 |
These examples have been prepared for purposes of illustration only. Your actual return will depend on the actual Observation Level on the applicable Observation Date, the Ending Value, if applicable, and the term of your investment.
| Summary of the Hypothetical Examples | ||||||
| Notes Are Called on an Observation Date | Observation Date on October 25, 2011 |
Observation Date on January 24, 2012 |
Observation Date on April 30, 2012 | |||
| Starting Value |
45.67 | 45.67 | 45.67 | |||
| Call Level |
45.67 | 45.67 | 45.67 | |||
| Hypothetical Observation Level on the Observation Date |
50.24 | 47.95 | 47.95 | |||
| Hypothetical Total Return of the Underlying Stock (1) |
11.07% | 6.61% | 7.19% | |||
| Hypothetical Return of the Notes |
6.2850% | 9.4275% | 12.5700% | |||
| Hypothetical Call Amount per Unit |
$10.62850 | $10.94275 | $11.25700 | |||
| Notes Are Not Called on Any Observation Date | Hypothetical Ending Value Is Greater than the Threshold Value |
Hypothetical Ending Value Is Less than the Threshold Value | ||||
| Starting Value |
45.67 | 45.67 | ||||
| Hypothetical Ending Value |
44.30 | 38.82 | ||||
| Threshold Value |
43.39 | 43.39 | ||||
| Hypothetical Total Return of the Underlying Stock (1) |
-0.81% | -12.81% | ||||
| Hypothetical Return of the Notes |
0.00% | -10.00% | ||||
| Hypothetical Redemption Amount per Unit |
$10.00000 | $9.00000 | ||||
| (1) | The total return of the Underlying Stock assumes: |
| (a) | a percentage change in the price of the Underlying Stock that equals the percentage change in the price of the Underlying Stock from the Starting Value to the hypothetical Observation Level or Ending Value, as applicable; |
| (b) | a constant dividend yield of 2.18% per annum, the dividend yield as reported by Bloomberg L.P.; and |
| (c) | no transaction fees or expenses. |
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Strategic Accelerated Redemption Securities |
TS-5 |
Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. The following is a list of certain of the risks involved in investing in the notes. You should carefully review the more detailed explanation of risks relating to the notes in the “Risk Factors” sections beginning on page S-9 of product supplement STOCK STR-1 and page S-4 of the MTN prospectus supplement identified below under “Additional Terms.” We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
| § | If the notes are not called prior to maturity, your investment may result in a loss; there is no guaranteed return of principal. |
| § | Your return, if any, is limited to the return represented by the Call Premium. |
| § | Your yield may be less than the yield on a conventional debt security of comparable maturity. |
| § | Your investment return, if any, may be less than the return on a comparable investment directly in the Underlying Stock. |
| § | You must rely on your own evaluation of the merits of an investment linked to the Underlying Stock. |
| § | In seeking to provide you with what we believe to be commercially reasonable terms for the notes while providing MLPF&S with compensation for its services, we have considered the costs of developing, hedging, and distributing the notes. |
| § | A trading market is not expected to develop for the notes. MLPF&S is not obligated to make a market for, or to repurchase, the notes. |
| § | The amount that you receive at maturity or upon a call will not be affected by all developments relating to the Underlying Stock. |
| § | The Underlying Company will have no obligations relating to the notes, and neither we nor the selling agent will perform any due diligence procedures with respect to the Underlying Company in connection with this offering. |
| § | You will have no rights of a holder of the Underlying Stock, and you will not be entitled to receive shares of the Underlying Stock or dividends or other distributions of the Underlying Company. |
| § | While we or our affiliates may from time to time own shares of the Underlying Stock, we do not control the Underlying Company, and are not responsible for any disclosure made by the Underlying Company. |
| § | If you attempt to sell the notes prior to maturity, their market value, if any, will be affected by various factors that interrelate in complex ways, and their market value may be less than their Original Offering Price. |
| § | Payments on the notes are subject to our credit risk, and changes in our credit ratings are expected to affect the value of the notes. |
| § | Purchases and sales by us and our affiliates of shares of the Underlying Stock may affect your return. |
| § | Our trading and hedging activities may create conflicts of interest with you. |
| § | Our hedging activities may affect your return on the notes and their market value. |
| § | Our business activities relating to the Underlying Company may create conflicts of interest with you. |
| § | There may be potential conflicts of interest involving the calculation agent. For example, the calculation may be required to make certain judgments if a corporate event occurs relating to the Underlying Stock, as described below. We have the right to appoint and remove the calculation agent. |
| § | The payments on the notes will not be adjusted for all corporate events that could affect the Underlying Stock. See “Description of the Notes—Anti-Dilution Adjustments” beginning on page S-24 of product supplement STOCK STR-1. |
| § | The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See “Summary Tax Consequences” and “Certain U.S. Federal Income Taxation Considerations” below and “U.S. Federal Income Tax Summary” beginning on page S-35 of product supplement STOCK STR-1. |
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Strategic Accelerated Redemption Securities |
TS-6 |
Investor Considerations
Other Provisions
We will deliver the notes against payment therefor in New York, New York on a date that is greater than three business days following the pricing date. Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes more than three business days prior to the original issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
If you place an order to purchase the notes, you are consenting to MLPF&S acting as a principal in effecting the transaction for your account.
Supplement to the Plan of Distribution; Conflicts of Interest
MLPF&S, a broker-dealer subsidiary of BAC, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent in the distribution of the notes. Accordingly, offerings of the notes will conform to the requirements of FINRA Rule 5121. Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us on the issue date as principal at the purchase price indicated on the cover of this term sheet, less the indicated underwriting discount. In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units.
MLPF&S may use this Note Prospectus for offers and sales in secondary market transactions and market-making transactions in the notes but is not obligated to engage in such secondary market transactions and/or market-making transactions. MLPF&S may act as principal or agent in these transactions, and any such sales will be made at prices related to prevailing market prices at the time of the sale.
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Strategic Accelerated Redemption Securities |
TS-7 |
The Underlying Stock
We have derived the following information from publicly available documents published by the Underlying Company. The Underlying Company provides global financial services and retail banking. In addition, the Underlying Company provides services such as investment banking, treasury and securities services, asset management, private banking, card member services, commercial banking, and home finance.
Because the Underlying Stock is registered under the Securities Exchange Act of 1934, the Underlying Company is required to file periodically certain financial and other information specified by the SEC. Information provided to or filed with the SEC by the Underlying Company can be located at the SEC’s facilities or through the SEC’s web site by reference to SEC CIK number 19617. We make no representation or warranty as to the accuracy or completeness of the Underlying Company’s information or reports.
Although we and our affiliates may hold securities of the Underlying Company from time to time, we do not control the Underlying Company. The Underlying Company will have no obligations with respect to the notes. This term sheet relates only to the notes and does not relate to the Underlying Stock or to any other securities of the Underlying Company. Neither we nor any of our affiliates have participated or will participate in the preparation of the Underlying Company’s publicly available documents. Neither we nor any of our affiliates have made any due diligence inquiry with respect to the Underlying Company in connection with the offering of the notes. Neither we nor any of our affiliates make any representation that the publicly available documents or any other publicly available information regarding the Underlying Company are accurate or complete. Furthermore, there can be no assurance that all events occurring prior to the date of this term sheet, including events that would affect the accuracy or completeness of these publicly available documents that would affect the trading price of the Underlying Stock, have been or will be publicly disclosed. Subsequent disclosure of any events or the disclosure of or failure to disclose material future events concerning the Underlying Company could affect the value of the Underlying Stock and therefore could affect your return on the notes.
The selection of the Underlying Stock is not a recommendation to buy or sell the Underlying Stock. Neither we nor any of our affiliates make any representation to you as to the performance of the Underlying Stock.
The Underlying Stock trades on The New York Stock Exchange under the symbol “JPM”.
Historical Data
The following table sets forth the high and low closing prices of the shares of the Underlying Stock from its primary exchange from the first quarter of 2006 through the pricing date. The closing prices listed below were obtained from publicly available information at Bloomberg Financial Markets, rounded to two decimal places. The historical closing prices of shares of the Underlying Stock should not be taken as an indication of its future performance, and we cannot assure you that the price per share of the Underlying Stock will not decrease to a level that is less than the Threshold Value. In addition, we cannot assure you that the price per share of the Underlying Stock will increase so that the notes will be automatically called.
| High ($) | Low ($) | |||||
| 2006 |
First Quarter |
42.11 | 38.05 | |||
| Second Quarter |
46.65 | 39.95 | ||||
| Third Quarter |
47.22 | 40.71 | ||||
| Fourth Quarter |
48.95 | 46.01 | ||||
| 2007 |
First Quarter |
51.65 | 46.70 | |||
| Second Quarter |
53.20 | 48.24 | ||||
| Third Quarter |
50.05 | 43.00 | ||||
| Fourth Quarter |
47.58 | 40.46 | ||||
| 2008 |
First Quarter |
48.25 | 36.48 | |||
| Second Quarter |
49.25 | 34.31 | ||||
| Third Quarter |
48.24 | 31.02 | ||||
| Fourth Quarter |
49.85 | 22.72 | ||||
| 2009 |
First Quarter |
31.35 | 15.90 | |||
| Second Quarter |
38.94 | 27.25 | ||||
| Third Quarter |
46.47 | 32.27 | ||||
| Fourth Quarter |
47.16 | 40.27 | ||||
| 2010 |
First Quarter |
45.02 | 37.70 | |||
| Second Quarter |
47.81 | 36.61 | ||||
| Third Quarter |
41.64 | 35.63 | ||||
| Fourth Quarter |
42.67 | 36.96 | ||||
| 2011 |
First Quarter |
48.00 | 43.40 | |||
| Second Quarter (through the pricing date) |
47.64 | 43.96 | ||||
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Strategic Accelerated Redemption Securities |
TS-8 |
Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
| • | You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax purposes as a callable single financial contract linked to the Underlying Stock that requires you to pay us at inception an amount equal to the purchase price of the notes and that entitles you to receive at maturity or upon earlier redemption an amount in cash linked to the price of the Underlying Stock. |
| • | Under this characterization and tax treatment of the notes, upon receipt of a cash payment at maturity or upon a sale, exchange, or redemption of the notes prior to maturity, you generally will recognize capital gain or loss. This capital gain or loss generally will be long-term capital gain or loss if you hold the notes for more than one year and otherwise will be short-term capital gain or loss. Accordingly, if the notes are called on the first or second Observation Date, your capital gain or loss generally will be short-term capital gain or loss. |
Certain U.S. Federal Income Taxation Considerations
Set forth below is a summary of certain U.S. federal income tax considerations relating to an investment in the notes. The following summary is not complete and is qualified in its entirety by the discussion under the section entitled “U.S. Federal Income Tax Summary” beginning on page S-35 of product supplement STOCK STR-1, which you should carefully review prior to investing in the notes.
General. Although there is no statutory, judicial, or administrative authority directly addressing the characterization of the notes, we intend to treat the notes for all tax purposes as a callable single financial contract linked to the Underlying Stock that requires you to pay us at inception an amount equal to the purchase price of the notes and that entitles you to receive at maturity or upon earlier redemption an amount in cash linked to the price of the Underlying Stock. Under the terms of the notes, we and every investor in the notes agree, in the absence of an administrative determination or judicial ruling to the contrary, to treat the notes as described in the preceding sentence. This discussion assumes that the notes constitute a callable single financial contract linked to the Underlying Stock for U.S. federal income tax purposes. If the notes did not constitute a callable single financial contract, the tax consequences described below would be materially different.
This characterization of the notes is not binding on the Internal Revenue Service (“IRS”) or the courts. No statutory, judicial, or administrative authority directly addresses the characterization of the notes or any similar instruments for U.S. federal income tax purposes, and no ruling is being requested from the IRS with respect to their proper characterization and treatment. Due to the absence of authorities on point, significant aspects of the U.S. federal income tax consequences of an investment in the notes are not certain, and no assurance can be given that the IRS or any court will agree with the characterization and tax treatment described in product supplement STOCK STR-1. Accordingly, you are urged to consult your tax advisor regarding all aspects of the U.S. federal income tax consequences of an investment in the notes, including possible alternative characterizations. The discussion in this section and in the section entitled “U.S. Federal Income Tax Summary” in product supplement STOCK STR-1 assume that there is a significant possibility of a significant loss of principal on an investment in the notes.
Settlement at Maturity or Sale, Exchange, or Redemption Prior to Maturity. Assuming that the notes are properly characterized and treated as callable single financial contracts linked to the Underlying Stock for U.S. federal income tax purposes, upon receipt of a cash payment at maturity or upon a sale, exchange, or redemption of the notes prior to maturity, a U.S. Holder (as defined on page S-35 of product supplement STOCK STR-1) generally will recognize capital gain or loss equal to the difference between the amount realized and the U.S. Holder’s basis in the notes. This capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder holds the notes for more than one year and otherwise will be short-term capital gain or loss. Accordingly, if the notes are called on the first or second Observation Date, a U.S. Holder’s capital gain or loss generally will be short-term capital gain or loss. The deductibility of capital losses is subject to limitations.
Possible Future Tax Law Changes. From time to time, there may be legislative proposals or interpretive guidance addressing the tax treatment of financial instruments such as the notes. We cannot predict the likelihood of any such legislation or guidance being adopted, or the ultimate impact on the notes. For example, on December 7, 2007, the IRS released Notice 2008-2 (“Notice”) seeking comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.” This Notice addresses instruments such as the notes. According to the Notice, the IRS and Treasury are considering whether a holder of an instrument such as the notes should be required to accrue ordinary income on a current basis, regardless of whether any payments are made prior to maturity. It is not possible to determine what guidance the IRS and Treasury will ultimately issue, if any. Any such future guidance may affect the amount, timing, and character of income, gain, or loss in respect of the notes, possibly with retroactive effect. The IRS and Treasury are also considering additional issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital, whether foreign holders of such instruments should be subject to withholding tax on any deemed income accruals, whether Section 1260 of the Internal Revenue Code of 1986, as amended, concerning certain “constructive ownership transactions,” generally applies or should generally apply to such instruments, and whether any of these determinations depend on the nature of the underlying asset. We urge you to consult your own tax advisors concerning the impact and the significance of the above considerations. We intend to continue treating the notes for U.S. federal income tax purposes in the manner described herein unless and until such time as we determine, or the IRS or Treasury determines, that some other treatment is more appropriate.
You should consult your own tax advisor concerning the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the notes, as well as any tax consequences arising under the laws of any state, local, foreign, or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax laws. See the discussion under the section entitled “U.S. Federal Income Tax Summary” beginning on page S-35 of product supplement STOCK STR-1.
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Strategic Accelerated Redemption Securities |
TS-9 |
Validity of the Notes
In the opinion of McGuireWoods LLP, as counsel to BAC, when the notes offered by this Note Prospectus have been completed and executed by BAC, and authenticated by the trustee in accordance with the provisions of the Senior Indenture, and delivered against payment therefor as contemplated by this Note Prospectus, such notes will be legal, valid and binding obligations of BAC, subject to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws affecting the rights of creditors now or hereafter in effect, and to equitable principles that may limit the right to specific enforcement of remedies, and further subject to 12 U.S.C. §1818(b)(6)(D) (or any successor statute) and any bank regulatory powers now or hereafter in effect and to the application of principles of public policy. This opinion is given as of the date hereof and is limited to the Federal laws of the United States, the laws of the State of New York and the Delaware General Corporation Law (including the statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing). In addition, this opinion is subject to customary assumptions about the trustee’s authorization, execution and delivery of the Senior Indenture, the validity, binding nature and enforceability of the Senior Indenture with respect to the trustee, the legal capacity of natural persons, the genuineness of signatures, the authenticity of all documents submitted to McGuireWoods LLP as originals, the conformity to original documents of all documents submitted to McGuireWoods LLP as photocopies, the authenticity of the originals of such copies and certain factual matters, all as stated in the letter of McGuireWoods LLP dated April 28, 2011, which has been filed as an exhibit to our Current Report on Form 8-K dated April 28, 2011.
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Strategic Accelerated Redemption Securities |
TS-10 |
Additional Terms
You should read this term sheet, together with the documents listed below, which together contain the terms of the notes and supersede all prior or contemporaneous oral statements as well as any other written materials. You should carefully consider, among other things, the matters set forth under “Risk Factors” in the sections indicated on the cover of this term sheet. The notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
You may access the following 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 STOCK STR-1 dated March 24, 2011: |
http://www.sec.gov/Archives/edgar/data/70858/000119312511076419/d424b5.htm
| § | Series L MTN prospectus supplement dated April 21, 2009 and prospectus dated April 20, 2009: |
http://www.sec.gov/Archives/edgar/data/70858/000095014409003387/g18667b5e424b5.htm
Our Central Index Key, or CIK, on the SEC Website is 70858.
We have filed a registration statement (including a product supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which this term sheet relates. Before you invest, you should read the product supplement, the prospectus supplement, and the prospectus in that registration statement, and the other documents relating to this offering that we have filed with the SEC for more complete information about us and this offering. You may get these documents without cost by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, we, any agent or any dealer participating in this offering will arrange to send you the Note Prospectus if you so request by calling MLPF&S toll-free at 1-866-500-5408.
Market-Linked Investments Classification
Market-Linked Investments come in four basic categories, each designed to meet a different set of investor risk profiles, time horizons, income requirements, and market views (bullish, bearish, moderate outlook, etc.). The following descriptions of these categories are meant solely for informational purposes and are not intended to represent any particular Market-Linked Investment or guarantee performance. Certain Market-Linked Investments may have overlapping characteristics.
Market Downside Protection Market-Linked Investments combine some of the capital preservation features of traditional bonds with the growth potential of equities and other asset classes. They offer full or partial market downside protection at maturity, while offering market exposure that may provide better returns than comparable fixed-income securities. It is important to note that the market downside protection feature provides investors with protection only at maturity, subject to issuer credit risk. In addition, in exchange for full or partial protection, you forfeit dividends and full exposure to the linked asset’s upside. In some circumstances, this could result in a lower return than with a direct investment in the asset.
These short- to medium-term market-linked notes offer you a way to enhance your income stream, either through variable or fixed-interest coupons, an added payout at maturity based on the performance of the linked asset, or both. In exchange for receiving current income, you will generally forfeit upside potential on the linked asset. Even so, the prospect of higher interest payments and/or an additional payout may equate to a higher return potential than you may be able to find through other fixed-income securities. Enhanced Income Market-Linked Investments generally do not include market downside protection. The degree to which your principal is repaid at maturity is generally determined by the performance of the linked asset. Although enhanced income streams may help offset potential declines in the asset, you can still lose part or all of your original investment.
Market Access notes may offer exposure to certain market sectors, asset classes and/or strategies that may not even be available through the other three categories of Market-Linked Investments. Subject to certain fees, the returns on Market Access Market-Linked Investments will generally correspond on a one-to-one basis with any increases or decreases in the value of the linked asset, similar to a direct investment. In some instances, they may also provide interim coupon payments. These investments do not include the market downside protection feature and, therefore, your principal remains at risk.
These short- to medium-term investments offer you a way to enhance exposure to a particular market view without taking on a similarly enhanced level of market downside risk. They can be especially effective in a flat to moderately positive market (or, in the case of bearish investments, a flat to moderately negative market). In exchange for the potential to receive better-than market returns on the linked asset, you must generally accept a degree of market downside risk and capped upside potential. As these investments are not market downside protected, and do not assure full repayment of principal at maturity, you need to be prepared for the possibility that you may lose all or part of your investment.
“Strategic Accelerated Redemption Securities®” is our registered service mark.
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Strategic Accelerated Redemption Securities |
TS-11 |