Filed Pursuant to Rule 424(b)(2) Registration Statement No. 333-202354 (To Prospectus dated May 1, 2015, Prospectus Supplement dated January 20, 2016 and Product Supplement STOCK ARN-1 dated March 9, 2016) |
436,360 Units $10 principal amount per unit CUSIP No. 06054B156  | Pricing Date Settlement Date Maturity Date | May 26, 2016 June 3, 2016 July 28, 2017 | |||
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks
| |||||
The notes are being issued by Bank of America Corporation (“BAC”). There are important differences between the notes and a conventional debt security, including different investment risks and certain additional costs. See “Risk Factors” beginning on page TS-6 of this term sheet and beginning on page PS-6 of product supplement STOCK ARN-1.
The initial estimated value of the notes as of the pricing date is $9.64 per unit, which is less than the public offering price listed below. See “Summary” on the following page, “Risk Factors” beginning on page TS-6 of this term sheet and “Structuring the Notes” on page TS-18 of this term sheet for additional information. The actual value of your notes at any time will reflect many factors and cannot be predicted with accuracy.
_________________________
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 (as defined below) is truthful or complete. Any representation to the contrary is a criminal offense.
_________________________
Per Unit | Total | |
Public offering price................................................ | $10.00 | $4,363,600 |
Underwriting discount............................................ | $0.20 | $ 87,272 |
Proceeds, before expenses, to BAC.................... | $9.80 | $4,276,328 |
The notes:
Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value |
Merrill Lynch & Co.
May 26, 2016
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Summary
The Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 (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. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BAC. The notes provide you a leveraged return, subject to a cap, if the Ending Value of the Market Measure, which is the basket of eight common stocks described below (the “Basket”), is greater than its Starting Value. If the Ending Value is less than the Starting Value, you will lose all or a portion of the principal amount of your notes. Payments on the notes, including the amount you receive at maturity, will be calculated based on the $10 principal amount per unit and will depend on the performance of the Basket, subject to our credit risk. See “Terms of the Notes” below.
The Basket is comprised of the common stocks of Anthem, Inc., AT&T Inc., Danaher Corporation, McDonald's Corporation, PepsiCo, Inc., Pfizer Inc., Philip Morris International Inc., and QUALCOMM Incorporated (each, a “Basket Stock”). On the pricing date, each Basket Stock was given an initial weight of 12.50%.
The economic terms of the notes (including the Capped Value) are based on our internal funding rate, which is the rate we would pay to borrow funds through the issuance of market-linked notes and the economic terms of certain related hedging arrangements. Our internal funding rate is typically lower than the rate we would pay when we issue conventional fixed or floating rate debt securities. This difference in funding rate, as well as the underwriting discount and the hedging related charge described below, reduced the economic terms of the notes to you and the initial estimated value of the notes on the pricing date. Due to these factors, the public offering price you pay to purchase the notes is greater than the initial estimated value of the notes.
On the cover page of this term sheet, we have provided the initial estimated value for the notes. This initial estimated value was determined based on our and our affiliates’ pricing models, which take into consideration our internal funding rate and the market prices for the hedging arrangements related to the notes. For more information about the initial estimated value and the structuring of the notes, see “Structuring the Notes” on page TS-18.
Terms of the Notes | Redemption Amount Determination | |
Issuer: | Bank of America Corporation (“BAC”) | On the maturity date, you will receive a cash payment per unit determined as follows:  |
Principal Amount: | $10.00 per unit | |
Term: | Approximately 14 months | |
Market Measure: | An equally weighted basket of eight common stocks comprised of Anthem, Inc. (NYSE symbol: “ANTM”), AT&T Inc. (NYSE symbol: “T”), Danaher Corporation (NYSE symbol: “DHR”), McDonald's Corporation (NYSE symbol: “MCD”), PepsiCo, Inc. (NYSE symbol: “PEP”), Pfizer Inc. (NYSE symbol: “PFE”), Philip Morris International Inc. (NYSE symbol: “PM”), and QUALCOMM Incorporated (NASDAQ symbol: “QCOM”) (each, an “Underlying Company”). | |
Starting Value: | 100.00 | |
Ending Value: | The value of the Basket on the calculation day. The calculation day is subject to postponement in the event of Market Disruption Events, as described beginning on page PS-26 of product supplement STOCK ARN-1. | |
Participation Rate: | 300% | |
Capped Value: | $11.475 per unit of the notes, which represents a return of 14.75% over the principal amount. | |
Calculation Day: | July 21, 2017 | |
Price Multiplier: | 1 for each Basket Stock, subject to adjustment for certain corporate events relating to the Basket Stocks described beginning on page PS-19 of product supplement STOCK ARN-1. | |
Fees and Charges: | The underwriting discount of $0.20 per unit listed on the cover page and the hedging related charge of $0.075 per unit described in “Structuring the Notes” on page TS-18. | |
Calculation Agent: | Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a subsidiary of BAC. | |
Accelerated Return Notes® | TS-2 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
The terms and risks of the notes are contained in this term sheet and in the following:
■ | Product supplement STOCK ARN-1 dated March 9, 2016: http://www.sec.gov/Archives/edgar/data/70858/000119312516498589/d26301d424b5.htm |
■ | Series L MTN prospectus supplement dated January 20, 2016 and prospectus dated May 1, 2015: http://www.sec.gov/Archives/edgar/data/70858/000119312516433708/d122981d424b3.htm |
These documents (together, the “Note Prospectus”) have been filed as part of a registration statement with the SEC, which may, without cost, be accessed on the SEC website as indicated above or obtained from MLPF&S by calling 1-800-294-1322. Before you invest, you should read the Note Prospectus, including this term sheet, for information about us and this offering. Any prior or contemporaneous oral statements and any other written materials you may have received are superseded by the Note Prospectus. Capitalized terms used but not defined in this term sheet have the meanings set forth in product supplement STOCK ARN-1. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “we,” “us,” “our,” or similar references are to BAC.
Investor Considerations
You may wish to consider an investment in the notes if: | The notes may not be an appropriate investment for you if: |
■ You anticipate that the value of the Basket will increase moderately from the Starting Value to the Ending Value. ■ You are willing to risk a loss of principal and return if the value of the Basket decreases from the Starting Value to the Ending Value. ■ You accept that the return on the notes will be capped. ■ You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities. ■ You are willing to forgo dividends or other benefits of owning the Basket Stocks. ■ You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our actual and perceived creditworthiness, our internal funding rate and fees and charges on the notes. ■ You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount. | ■ You believe that the value of the Basket will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return. ■ You seek principal repayment or preservation of capital. ■ You seek an uncapped return on your investment. ■ You seek interest payments or other current income on your investment. ■ You want to receive dividends or other distributions paid on the Basket Stocks. ■ You seek an investment for which there will be a liquid secondary market. ■ You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes. |
We urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
Accelerated Return Notes® | TS-3 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Hypothetical Payout Profile and Examples of
Payments at Maturity
Accelerated Return Notes®  | This graph reflects the returns on the notes, based on the Participation Rate of 300% and the Capped Value of $11.475. The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the Basket Stocks, excluding dividends. This graph has been prepared for purposes of illustration only. |
The following table and examples are for purposes of illustration only. They are based on hypothetical values and show hypothetical returns on the notes. They illustrate the calculation of the Redemption Amount and total rate of return based on the Starting Value of 100, the Participation Rate of 300%, the Capped Value of $11.48 per unit and a range of hypothetical Ending Values. The actual amount you receive and the resulting total rate of return will depend on the actual Ending Value and whether you hold the notes to maturity. The following examples do not take into account any tax consequences from investing in the notes.
For hypothetical historical values of the Basket, see “The Basket” section below. For recent actual prices of the Basket Stocks, see “The Basket Stocks” section below. The Ending Value will not include any income generated by dividends paid on the Basket Stocks, which you would otherwise be entitled to receive if you invested in those stocks directly. In addition, all payments on the notes are subject to issuer credit risk.
Ending Value | Percentage Change from the Starting Value to the Ending Value | Redemption Amount per Unit | Total Rate of Return on the Notes |
0.00 | -100.00% | $0.000 | -100.00% |
50.00 | -50.00% | $5.000 | -50.00% |
80.00 | -20.00% | $8.000 | -20.00% |
90.00 | -10.00% | $9.000 | -10.00% |
94.00 | -6.00% | $9.400 | -6.00% |
97.00 | -3.00% | $9.700 | -3.00% |
100.00(1) | 0.00% | $10.000 | 0.00% |
102.00 | 2.00% | $10.600 | 6.00% |
105.00 | 5.00% | $11.475(2) | 14.75% |
110.00 | 10.00% | $11.475 | 14.75% |
120.00 | 20.00% | $11.475 | 14.75% |
130.00 | 30.00% | $11.475 | 14.75% |
140.00 | 40.00% | $11.475 | 14.75% |
150.00 | 50.00% | $11.475 | 14.75% |
160.00 | 60.00% | $11.475 | 14.75% |
(1) | The Starting Value was set to 100.00 on the pricing date. |
(2) | The Redemption Amount per unit cannot exceed the Capped Value. |
Accelerated Return Notes® | TS-4 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Redemption Amount Calculation Examples
Example 1 | |
The Ending Value is 80.00, or 80.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 80.00 | |
 | = $8.00 Redemption Amount per unit |
Example 2 | |
The Ending Value is 102.00, or 102.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 102.00 | |
 | = $10.60 Redemption Amount per unit |
Example 3 | |
The Ending Value is 130.00, or 130.00% of the Starting Value: | |
Starting Value: 100.00 | |
Ending Value: 130.00 | |
 | = $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $11.475 per unit |
Accelerated Return Notes® | TS-5 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
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. You should carefully review the more detailed explanation of risks relating to the notes in the “Risk Factors” sections beginning on page PS-6 of product supplement STOCK ARN-1, page S-5 of the Series L MTN prospectus supplement, and page 9 of the prospectus identified above. We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
■ | Depending on the performance of the Basket as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal. |
■ | Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity. |
■ | Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If we become insolvent or are unable to pay our obligations, you may lose your entire investment. |
■ | Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the Basket Stocks. |
■ | The initial estimated value of the notes is an estimate only, determined as of a particular point in time by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads, our internal funding rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates and volatility, price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events, which may prove to be incorrect. |
■ | The public offering price you pay for the notes exceeds the initial estimated value. If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for them and lower than the initial estimated value. This is due to, among other things, changes in the value of the Basket, our internal funding rate, and the inclusion in the public offering price of the underwriting discount and the hedging related charge, all as further described in “Structuring the Notes” on page TS-18. These factors, together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways. |
■ | The initial estimated value does not represent a minimum or maximum price at which we, MLPF&S or any of our affiliates would be willing to purchase your notes in any secondary market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot be predicted with accuracy, including the performance of the Basket, our creditworthiness and changes in market conditions. |
■ | A trading market is not expected to develop for the notes. Neither we nor MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your notes at any price in any secondary market. |
■ | Our business activities as a full service financial institution, including our commercial and investment banking activities, our hedging and trading activities (including trades in shares of the Basket Stocks), and any hedging and trading activities we engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you. |
■ | The Underlying Companies will have no obligations relating to the notes, and neither we nor MLPF&S will perform any due diligence procedures with respect to any Underlying Company in connection with this offering. |
■ | Changes in the price of one of the Basket Stocks may be offset by changes in the prices of the other Basket Stocks. |
■ | You will have no rights of a holder of the Basket Stocks, and you will not be entitled to receive shares of the Basket Stocks or dividends or other distributions by the Underlying Companies. |
■ | While we or our affiliates may from time to time own securities of the Underlying Companies, we do not control any Underlying Company, and have not verified any disclosures made by any Underlying Company. |
■ | The payment on the notes will not be adjusted for all corporate events that could affect a Basket Stock. See “Description of ARNs—Anti-Dilution Adjustments” beginning on page PS-19 of product supplement STOCK ARN-1. |
■ | There may be potential conflicts of interest involving the calculation agent, which is an affiliate of ours. We have the right to appoint and remove the calculation agent. |
■ | 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” below and “U.S. Federal Income Tax Summary” beginning on page PS-29 of product supplement STOCK ARN-1. |
Accelerated Return Notes® | TS-6 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
The Basket
The Basket is designed to allow investors to participate in the percentage changes of the Basket from the Starting Value to the Ending Value. The Basket Stocks are described in the section “The Basket Stocks” below. Each Basket Stock was assigned an initial weight on the pricing date, as set forth in the table below.
For more information on the calculation of the value of the Basket, please see the section entitled “Description of ARNs—Basket Market Measures" beginning on page PS-25 of product supplement STOCK ARN-1.
On the pricing date, for each Basket Stock, the Initial Component Weight, the Closing Market Price, the Component Ratio and the initial contribution to the Basket value were as follows:
Basket Stock | Bloomberg Symbol | Initial Component Weight | Closing Market Price(1) | Component Ratio(2) | Initial Basket Value Contribution | |||||
Anthem, Inc. | ANTM | 12.50% | 129.61 | 0.09644318 | 12.50 | |||||
AT&T Inc. | T | 12.50% | 38.84 | 0.32183316 | 12.50 | |||||
Danaher Corporation | DHR | 12.50% | 99.20 | 0.12600806 | 12.50 | |||||
McDonald's Corporation | MCD | 12.50% | 123.79 | 0.10097746 | 12.50 | |||||
PepsiCo, Inc. | PEP | 12.50% | 101.90 | 0.12266928 | 12.50 | |||||
Pfizer Inc. | PFE | 12.50% | 34.43 | 0.36305547 | 12.50 | |||||
Philip Morris International Inc. | PM | 12.50% | 99.01 | 0.12624987 | 12.50 | |||||
QUALCOMM Incorporated | QCOM | 12.50% | 55.74 | 0.22425547 | 12.50 | |||||
Starting Value | 100.00 |
(1) | These were the Closing Market Prices of the Basket Stocks on the pricing date. |
(2) | Each Component Ratio equals the Initial Component Weight of the relevant Basket Stock (as a percentage) multiplied by 100, and then divided by the Closing Market Price of that Basket Stock on the pricing date and rounded to eight decimal places. |
The calculation agent will calculate the Ending Value of the Basket by summing the products of the Closing Market Price for each Basket Stock (multiplied by its Price Multiplier) on the calculation day and the Component Ratio applicable to that Basket Stock. The Price Multiplier for each Basket Stock will initially be 1, and is subject to adjustment as described in the product supplement. If a Market Disruption Event occurs as to any Basket Stock on the scheduled calculation day, the Closing Market Price of that Basket Stock will be determined as more fully described in “Description of ARNs—Basket Market Measures—Ending Value of the Basket" beginning on page PS-26 of product supplement STOCK ARN-1.
Accelerated Return Notes® | TS-7 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
While actual historical information on the Basket did not exist before the pricing date, the following graph sets forth the hypothetical historical daily performance of the Basket from March 18, 2008 through the pricing date. The graph is based upon actual daily historical prices of the Basket Stocks, hypothetical Component Ratios based on the closing prices of the Basket Stocks as of March 17, 2008, the date when the common stock of Philip Morris International Inc. began trading, and a Basket value of 100.00 as of that date. This hypothetical historical data on the Basket is not necessarily indicative of the future performance of the Basket or what the value of the notes may be. Any hypothetical historical upward or downward trend in the value of the Basket during any period set forth below is not an indication that the value of the Basket is more or less likely to increase or decrease at any time over the term of the notes.
Hypothetical Historical Performance of the Basket
Accelerated Return Notes® | TS-8 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
The Basket Stocks
We have derived the following information from publicly available documents. We have not independently verified the accuracy or completeness of the following information.
Because each Basket Stock is registered under the Securities Exchange Act of 1934, the Underlying Companies are required to file periodically certain financial and other information specified by the SEC. Information provided to or filed with the SEC by the Underlying Companies can be located at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549 or through the SEC’s web site at http://www.sec.gov by reference to the applicable CIK number set forth below.
This term sheet relates only to the notes and does not relate to any securities of the Underlying Companies. Neither we nor any of our affiliates have participated or will participate in the preparation of the Underlying Companies’ publicly available documents. Neither we nor any of our affiliates have made any due diligence inquiry with respect to the Underlying Companies 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 Companies 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 Basket Stocks, have been or will be publicly disclosed. Subsequent disclosure of any events or the disclosure of or failure to disclose material future events concerning an Underlying Company could affect the price of its Basket Stock and therefore could affect your return on the notes. The selection of the Basket Stocks is not a recommendation to buy or sell shares of the Basket Stocks.
The tables set forth below show the quarterly high and low Closing Market Prices of the shares of the Basket Stocks on their primary exchange from January 1, 2008 or the date when the relevant Basket Stock began trading, as applicable, through the pricing date. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. These historical trading prices may have been adjusted to reflect certain corporate actions such as stock splits and reverse stock splits.
Accelerated Return Notes® | TS-9 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Anthem, Inc.
Anthem, Inc. is a health benefits company. The company provides health benefits, dental and vision benefits, pharmacy benefits, life insurance, and life and disability insurance benefits. Its operations include Blue Cross and Blue Shield plans. This Basket Stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “ANTM.” The company’s CIK number is 1156039.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 89.28 | 43.23 |
Second Quarter | 56.66 | 45.80 |
Third Quarter | 57.57 | 44.40 |
Fourth Quarter | 47.50 | 29.44 |
2009 | ||
First Quarter | 46.10 | 30.10 |
Second Quarter | 51.45 | 37.96 |
Third Quarter | 55.47 | 47.36 |
Fourth Quarter | 60.36 | 44.72 |
2010 | ||
First Quarter | 68.06 | 58.46 |
Second Quarter | 65.34 | 48.93 |
Third Quarter | 56.69 | 47.43 |
Fourth Quarter | 59.97 | 54.34 |
2011 | ||
First Quarter | 69.79 | 57.95 |
Second Quarter | 81.78 | 68.06 |
Third Quarter | 80.79 | 57.01 |
Fourth Quarter | 70.75 | 62.32 |
2012 | ||
First Quarter | 73.80 | 63.84 |
Second Quarter | 72.95 | 63.79 |
Third Quarter | 63.20 | 52.93 |
Fourth Quarter | 63.03 | 54.33 |
2013 | ||
First Quarter | 66.28 | 58.93 |
Second Quarter | 81.84 | 67.18 |
Third Quarter | 89.26 | 81.09 |
Fourth Quarter | 93.92 | 83.60 |
2014 | ||
First Quarter | 100.97 | 84.25 |
Second Quarter | 108.82 | 92.00 |
Third Quarter | 124.17 | 107.29 |
Fourth Quarter | 129.16 | 111.06 |
2015 | ||
First Quarter | 158.38 | 123.26 |
Second Quarter | 171.04 | 150.93 |
Third Quarter | 165.22 | 136.31 |
Fourth Quarter | 148.81 | 127.86 |
2016 | ||
First Quarter | 144.17 | 117.22 |
Second Quarter (through the pricing date) | 147.52 | 128.48 |
Accelerated Return Notes® | TS-10 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
AT&T Inc.
AT&T Inc. is a communications holding company. The company, through its subsidiaries and affiliates, provides local and long-distance phone service, wireless and data communications, Internet access and messaging, IP-based and satellite television, security services, telecommunications equipment, and directory advertising and publishing. This Basket Stock trades on the NYSE under the symbol “T.” The company’s CIK number is 732717.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 41.43 | 34.36 |
Second Quarter | 40.51 | 32.76 |
Third Quarter | 33.30 | 27.75 |
Fourth Quarter | 29.98 | 22.42 |
2009 | ||
First Quarter | 29.42 | 21.72 |
Second Quarter | 26.83 | 23.67 |
Third Quarter | 27.43 | 23.38 |
Fourth Quarter | 28.34 | 25.31 |
2010 | ||
First Quarter | 28.58 | 24.77 |
Second Quarter | 26.66 | 24.13 |
Third Quarter | 28.92 | 24.29 |
Fourth Quarter | 29.44 | 27.70 |
2011 | ||
First Quarter | 30.71 | 27.33 |
Second Quarter | 31.88 | 30.13 |
Third Quarter | 31.68 | 27.54 |
Fourth Quarter | 30.24 | 27.41 |
2012 | ||
First Quarter | 31.84 | 29.16 |
Second Quarter | 35.71 | 30.13 |
Third Quarter | 38.25 | 34.63 |
Fourth Quarter | 38.34 | 33.14 |
2013 | ||
First Quarter | 36.86 | 33.20 |
Second Quarter | 39.00 | 34.35 |
Third Quarter | 35.96 | 33.32 |
Fourth Quarter | 36.45 | 33.11 |
2014 | ||
First Quarter | 35.07 | 31.86 |
Second Quarter | 36.74 | 34.49 |
Third Quarter | 36.59 | 34.21 |
Fourth Quarter | 35.90 | 32.14 |
2015 | ||
First Quarter | 34.87 | 32.62 |
Second Quarter | 36.18 | 32.51 |
Third Quarter | 35.77 | 31.80 |
Fourth Quarter | 34.93 | 32.31 |
2016 | ||
First Quarter | 39.45 | 33.51 |
Second Quarter (through the pricing date) | 39.55 | 37.86 |
Accelerated Return Notes® | TS-11 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Danaher Corporation
Danaher Corporation designs, manufactures and markets professional, medical, industrial and commercial products and services in the sectors of test and measurement, environmental, life sciences, dental and industrial technologies. This Basket Stock trades on the NYSE under the symbol “DHR.” The company’s CIK number is 313616.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 43.46 | 35.07 |
Second Quarter | 41.28 | 36.93 |
Third Quarter | 42.25 | 34.12 |
Fourth Quarter | 34.27 | 24.74 |
2009 | ||
First Quarter | 29.27 | 24.02 |
Second Quarter | 32.00 | 26.26 |
Third Quarter | 34.31 | 28.88 |
Fourth Quarter | 38.05 | 32.37 |
2010 | ||
First Quarter | 40.44 | 35.08 |
Second Quarter | 43.71 | 37.12 |
Third Quarter | 41.45 | 35.74 |
Fourth Quarter | 47.37 | 39.72 |
2011 | ||
First Quarter | 51.96 | 46.05 |
Second Quarter | 55.77 | 51.14 |
Third Quarter | 55.05 | 40.54 |
Fourth Quarter | 50.86 | 40.42 |
2012 | ||
First Quarter | 56.00 | 48.33 |
Second Quarter | 56.07 | 49.82 |
Third Quarter | 55.66 | 49.53 |
Fourth Quarter | 56.83 | 51.41 |
2013 | ||
First Quarter | 62.65 | 57.48 |
Second Quarter | 64.36 | 58.05 |
Third Quarter | 70.49 | 63.63 |
Fourth Quarter | 77.20 | 67.14 |
2014 | ||
First Quarter | 78.53 | 72.49 |
Second Quarter | 80.68 | 72.56 |
Third Quarter | 79.50 | 73.34 |
Fourth Quarter | 87.06 | 71.70 |
2015 | ||
First Quarter | 87.81 | 82.03 |
Second Quarter | 87.84 | 81.88 |
Third Quarter | 92.26 | 82.40 |
Fourth Quarter | 97.35 | 85.33 |
2016 | ||
First Quarter | 95.29 | 83.59 |
Second Quarter (through the pricing date) | 99.97 | 92.68 |
Accelerated Return Notes® | TS-12 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
McDonald's Corporation
McDonald's Corporation franchises and operates fast-food restaurants in the global restaurant industry. The company's restaurants serve a variety of value-priced menu products. This Basket Stock trades on the NYSE under the symbol “MCD.” The company’s CIK number is 63908.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 58.17 | 50.75 |
Second Quarter | 61.17 | 55.40 |
Third Quarter | 65.95 | 57.19 |
Fourth Quarter | 63.66 | 51.55 |
2009 | ||
First Quarter | 63.75 | 50.86 |
Second Quarter | 60.99 | 52.40 |
Third Quarter | 58.82 | 54.23 |
Fourth Quarter | 64.53 | 56.61 |
2010 | ||
First Quarter | 67.35 | 61.45 |
Second Quarter | 71.52 | 65.87 |
Third Quarter | 76.08 | 66.11 |
Fourth Quarter | 80.34 | 74.92 |
2011 | ||
First Quarter | 76.73 | 72.67 |
Second Quarter | 84.57 | 75.99 |
Third Quarter | 90.79 | 82.11 |
Fourth Quarter | 100.81 | 85.83 |
2012 | ||
First Quarter | 101.74 | 95.55 |
Second Quarter | 99.40 | 86.32 |
Third Quarter | 93.71 | 87.15 |
Fourth Quarter | 94.09 | 84.05 |
2013 | ||
First Quarter | 99.69 | 89.90 |
Second Quarter | 103.59 | 96.42 |
Third Quarter | 101.58 | 94.36 |
Fourth Quarter | 98.92 | 93.27 |
2014 | ||
First Quarter | 98.78 | 93.02 |
Second Quarter | 103.53 | 97.01 |
Third Quarter | 101.07 | 91.09 |
Fourth Quarter | 97.17 | 88.46 |
2015 | ||
First Quarter | 100.25 | 88.78 |
Second Quarter | 100.68 | 94.30 |
Third Quarter | 101.10 | 91.21 |
Fourth Quarter | 120.07 | 98.78 |
2016 | ||
First Quarter | 125.83 | 115.12 |
Second Quarter (through the pricing date) | 131.60 | 122.56 |
Accelerated Return Notes® | TS-13 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
PepsiCo, Inc.
PepsiCo, Inc. operates beverage, snack and food businesses. The company manufactures or uses contract manufacturers, markets and sells a variety of grain-based snacks, carbonated and non-carbonated beverages and foods. This Basket Stock trades on the NYSE under the symbol “PEP.” The company’s CIK number is 77476.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 79.57 | 66.73 |
Second Quarter | 72.13 | 63.59 |
Third Quarter | 73.19 | 64.40 |
Fourth Quarter | 71.64 | 50.29 |
2009 | ||
First Quarter | 55.97 | 45.81 |
Second Quarter | 55.37 | 47.89 |
Third Quarter | 59.86 | 54.68 |
Fourth Quarter | 64.23 | 58.46 |
2010 | ||
First Quarter | 66.86 | 58.96 |
Second Quarter | 66.94 | 60.77 |
Third Quarter | 66.89 | 61.52 |
Fourth Quarter | 68.11 | 63.89 |
2011 | ||
First Quarter | 66.91 | 62.31 |
Second Quarter | 71.78 | 65.09 |
Third Quarter | 70.52 | 59.99 |
Fourth Quarter | 66.57 | 60.29 |
2012 | ||
First Quarter | 66.76 | 62.28 |
Second Quarter | 70.66 | 64.85 |
Third Quarter | 73.58 | 68.79 |
Fourth Quarter | 71.19 | 68.02 |
2013 | ||
First Quarter | 79.11 | 69.33 |
Second Quarter | 84.25 | 78.59 |
Third Quarter | 86.80 | 79.06 |
Fourth Quarter | 86.68 | 78.93 |
2014 | ||
First Quarter | 83.50 | 77.10 |
Second Quarter | 90.10 | 82.59 |
Third Quarter | 93.79 | 88.10 |
Fourth Quarter | 100.39 | 90.79 |
2015 | ||
First Quarter | 100.40 | 93.02 |
Second Quarter | 98.22 | 92.64 |
Third Quarter | 99.86 | 89.64 |
Fourth Quarter | 103.08 | 93.85 |
2016 | ||
First Quarter | 102.69 | 93.77 |
Second Quarter (through the pricing date) | 106.57 | 100.10 |
Accelerated Return Notes® | TS-14 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Pfizer Inc.
Pfizer Inc. is a research-based pharmaceutical company that discovers, develops, manufactures and markets medicines for humans and animals. The company's products include prescription pharmaceuticals, non-prescription self-medications and animal health products, such as anti-infective medicines and vaccines. This Basket Stock trades on the NYSE under the symbol “PFE.” The company’s CIK number is 78003.
High ($) | Low ($) | |
2008 | ||
...............................First Quarter | 24.08 | 20.50 |
Second Quarter | 21.51 | 17.17 |
Third Quarter | 19.97 | 17.17 |
Fourth Quarter | 19.00 | 14.45 |
2009 | ||
First Quarter | 18.27 | 11.66 |
Second Quarter | 15.34 | 13.04 |
Third Quarter | 16.86 | 14.20 |
Fourth Quarter | 18.85 | 16.15 |
2010 | ||
First Quarter | 20.00 | 16.91 |
Second Quarter | 17.29 | 14.26 |
Third Quarter | 17.41 | 14.14 |
Fourth Quarter | 17.79 | 16.29 |
2011 | ||
First Quarter | 20.38 | 17.68 |
Second Quarter | 21.45 | 19.79 |
Third Quarter | 20.78 | 16.66 |
Fourth Quarter | 21.83 | 17.33 |
2012 | ||
First Quarter | 22.66 | 20.95 |
Second Quarter | 23.08 | 21.60 |
Third Quarter | 24.96 | 22.34 |
Fourth Quarter | 26.04 | 23.66 |
2013 | ||
First Quarter | 28.86 | 25.85 |
Second Quarter | 31.08 | 27.23 |
Third Quarter | 29.67 | 27.65 |
Fourth Quarter | 32.20 | 28.24 |
2014 | ||
First Quarter | 32.75 | 29.66 |
Second Quarter | 32.40 | 29.02 |
Third Quarter | 30.96 | 28.04 |
Fourth Quarter | 32.09 | 27.70 |
2015 | ||
First Quarter | 35.05 | 31.16 |
Second Quarter | 35.44 | 33.46 |
Third Quarter | 36.15 | 30.82 |
Fourth Quarter | 35.45 | 31.33 |
2016 | ||
First Quarter | 32.18 | 28.56 |
Second Quarter (through the pricing date) | 34.43 | 30.04 |
Accelerated Return Notes® | TS-15 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Philip Morris International Inc.
Philip Morris International Inc., through its subsidiaries, affiliates and their licensees, produces, sells, distributes and markets a range of branded cigarettes and tobacco products in markets outside of the United States. The company's portfolio comprises both international and local brands. This Basket Stock trades on the NYSE under the symbol “PM.” The company’s CIK number is 1413329.
High ($) | Low ($) | |
2008 | ||
...First Quarter (from March 17, 2008) | 51.75 | 49.15 |
Second Quarter | 53.63 | 48.00 |
Third Quarter | 55.95 | 46.80 |
Fourth Quarter | 50.78 | 36.63 |
2009 | ||
First Quarter | 44.47 | 32.34 |
Second Quarter | 44.60 | 36.09 |
Third Quarter | 49.40 | 42.34 |
Fourth Quarter | 51.55 | 47.36 |
2010 | ||
First Quarter | 52.89 | 45.51 |
Second Quarter | 52.95 | 43.17 |
Third Quarter | 56.32 | 46.45 |
Fourth Quarter | 60.82 | 55.29 |
2011 | ||
First Quarter | 65.70 | 56.02 |
Second Quarter | 71.75 | 64.92 |
Third Quarter | 72.35 | 62.38 |
Fourth Quarter | 79.10 | 61.76 |
2012 | ||
First Quarter | 88.61 | 73.26 |
Second Quarter | 90.31 | 81.91 |
Third Quarter | 93.38 | 86.67 |
Fourth Quarter | 93.74 | 82.39 |
2013 | ||
First Quarter | 93.42 | 85.83 |
Second Quarter | 96.44 | 86.50 |
Third Quarter | 90.54 | 82.95 |
Fourth Quarter | 91.64 | 84.16 |
2014 | ||
First Quarter | 86.02 | 75.39 |
Second Quarter | 91.34 | 82.21 |
Third Quarter | 86.29 | 81.58 |
Fourth Quarter | 89.90 | 81.39 |
2015 | ||
First Quarter | 85.16 | 75.33 |
Second Quarter | 86.79 | 76.07 |
Third Quarter | 85.89 | 77.29 |
Fourth Quarter | 90.15 | 79.46 |
2016 | ||
First Quarter | 98.90 | 85.80 |
Second Quarter (through the pricing date) | 102.18 | 96.42 |
Accelerated Return Notes® | TS-16 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
QUALCOMM Incorporated
QUALCOMM Incorporated manufactures digital wireless communications equipment. The company licenses its code division multiple access (CDMA) and orthogonal frequency division multiplexing access intellectual property to other companies, and produces CDMA-based integrated circuits, and produces equipment and software used to track workers and assets, and software for wireless content enablement. This Basket Stock trades on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “QCOM.” The company’s CIK number is 804328.
High ($) |
Low ($) | |
2008 | ||
First Quarter | 43.79 | 35.97 |
Second Quarter | 50.42 | 41.19 |
Third Quarter | 56.39 | 39.88 |
Fourth Quarter | 42.48 | 29.21 |
2009 | ||
First Quarter | 39.54 | 32.78 |
Second Quarter | 46.34 | 39.36 |
Third Quarter | 48.45 | 43.06 |
Fourth Quarter | 46.86 | 40.68 |
2010 | ||
First Quarter | 49.47 | 35.56 |
Second Quarter | 43.29 | 32.84 |
Third Quarter | 45.12 | 31.96 |
Fourth Quarter | 49.99 | 43.89 |
2011 | ||
First Quarter | 59.58 | 50.21 |
Second Quarter | 58.59 | 52.25 |
Third Quarter | 59.36 | 46.40 |
Fourth Quarter | 57.40 | 47.65 |
2012 | ||
First Quarter | 68.59 | 55.27 |
Second Quarter | 68.32 | 53.55 |
Third Quarter | 65.08 | 53.73 |
Fourth Quarter | 64.35 | 57.43 |
2013 | ||
First Quarter | 67.97 | 63.45 |
Second Quarter | 67.28 | 59.88 |
Third Quarter | 70.09 | 59.39 |
Fourth Quarter | 74.25 | 65.71 |
2014 | ||
First Quarter | 79.28 | 71.12 |
Second Quarter | 81.32 | 77.61 |
Third Quarter | 81.60 | 72.49 |
Fourth Quarter | 78.51 | 69.26 |
2015 | ||
First Quarter | 74.51 | 62.46 |
Second Quarter | 71.06 | 62.62 |
Third Quarter | 65.14 | 52.43 |
Fourth Quarter | 60.87 | 46.83 |
2016 | ||
First Quarter | 53.30 | 42.96 |
Second Quarter (through the pricing date) | 55.98 | 50.03 |
Accelerated Return Notes® | TS-17 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Accelerated Return Notes® | TS-18 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Supplement to the Plan of Distribution; Conflicts of Interest
Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us as principal at the public offering price indicated on the cover of this term sheet, less the indicated underwriting discount.
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 Rule 5121 applicable to FINRA members. MLPF&S may not make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
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.
The notes will not be listed on any securities exchange. In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units. 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.
MLPF&S may repurchase and resell the notes, with repurchases and resales being made at prices related to then-prevailing market prices or at negotiated prices, and these will include MLPF&S’s trading commissions and mark-ups. MLPF&S may act as principal or agent in these market-making transactions; however, it is not obligated to engage in any such transactions. At MLPF&S’s discretion, for a short, undetermined initial period after the issuance of the notes, MLPF&S may offer to buy the notes in the secondary market at a price that may exceed the initial estimated value of the notes. Any price offered by MLPF&S for the notes will be based on then-prevailing market conditions and other considerations, including the performance of the Basket and the remaining term of the notes. However, neither we nor any of our affiliates is obligated to purchase your notes at any price, or at any time, and we cannot assure you that we or any of our affiliates will purchase your notes at a price that equals or exceeds the initial estimated value of the notes.
The value of the notes shown on your account statement will be based on MLPF&S’s estimate of the value of the notes if MLPF&S or another of our affiliates were to make a market in the notes, which it is not obligated to do. That estimate will be based upon the price that MLPF&S may pay for the notes in light of then-prevailing market conditions and other considerations, as mentioned above, and will include transaction costs. At certain times, this price may be higher than or lower than the initial estimated value of the notes.
The notes are our debt securities, the return on which is linked to the performance of the Basket. As is the case for all of our debt securities, including our market-linked notes, the economic terms of the notes reflect our actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in increased operational, funding and liability management costs to us, we typically borrow the funds under these notes at a rate that is more favorable to us than the rate that we might pay for a conventional fixed or floating rate debt security. This rate, which we refer to in this term sheet as our internal funding rate, is typically lower than the rate we would pay when we issue conventional fixed or floating rate debt securities. This generally relatively lower internal funding rate, which is reflected in the economic terms of the notes, along with the fees and charges associated with market-linked notes, resulted in the initial estimated value of the notes on the pricing date being less than their public offering price.
At maturity, we are required to pay the Redemption Amount to holders of the notes, which will be calculated based on the performance of the Basket and the $10 per unit principal amount. In order to meet these payment obligations, at the time we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with MLPF&S or one of its affiliates. The terms of these hedging arrangements are determined by seeking bids from market participants, including MLPF&S and its affiliates, and take into account a number of factors, including our creditworthiness, interest rate movements, the volatility of the Basket Stocks, the tenor of the notes and the tenor of the hedging arrangements. The economic terms of the notes and their initial estimated value depend in part on the terms of these hedging arrangements.
MLPF&S has advised us that the hedging arrangements will include a hedging related charge of approximately $0.075 per unit, reflecting an estimated profit to be credited to MLPF&S from these transactions. Since hedging entails risk and may be influenced by unpredictable market forces, additional profits and losses from these hedging arrangements may be realized by MLPF&S or any third party hedge providers.
For further information, see “Risk Factors—General Risks Relating to ARNs” beginning on page PS-6 and “Use of Proceeds” on page PS-15 of product supplement STOCK ARN-1.
Accelerated Return Notes® | TS-19 |
Accelerated Return Notes® Linked to a Basket of Eight Common Stocks, due July 28, 2017 |  |
Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
■ | There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes. |
■ | 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 single financial contract with respect to the Basket. |
■ | Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning on page 99 of the prospectus) generally will recognize capital gain or loss upon maturity or upon a sale or exchange of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year. |
■ | No assurance can be given that the IRS or any court will agree with this characterization and tax treatment. |
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. You should review carefully the discussion under the section entitled “U.S. Federal Income Tax Summary” beginning on page PS-29 of product supplement STOCK ARN-1.
Validity of the Notes
In the opinion of McGuireWoods LLP, as counsel to BAC, when the trustee has made an appropriate entry on Schedule 1 to the Master Registered Global Senior Note, dated May 1, 2015 (the “Master Note”) identifying the notes offered hereby as supplemental obligations thereunder in accordance with the instructions of BAC and the notes have been delivered against payment therefor as contemplated in this Note Prospectus, all in accordance with the provisions of the indenture governing the notes, such notes will be legal, valid and binding obligations of BAC, subject to the effect of applicable bankruptcy, insolvency (including laws related to preferences, fraudulent transfers and equitable subordination), reorganization, moratorium, and other similar laws affecting creditors’ rights generally, and to general principles of equity. This opinion is given as of the date hereof and is limited to 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 the assumption that the trustee’s certificate of authentication of the Master Note has been manually signed by one of the trustee’s authorized officers and to customary assumptions about the trustee’s authorization, execution and delivery of the indenture governing the notes, the validity, binding nature and enforceability of the indenture governing the notes 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 copies thereof, the authenticity of the originals of such copies and certain factual matters, all as stated in the letter of McGuireWoods LLP dated February 27, 2015, which has been filed as an exhibit to BAC’s Registration Statement relating to the notes filed with the Securities and Exchange Commission on February 27, 2015.
Where You Can Find More Information
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 Note Prospectus, including this term sheet, and the other documents 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 these documents if you so request by calling MLPF&S toll-free at 1-800-294-1322.
Market-Linked Investments Classification
MLPF&S classifies certain market-linked investments (the “Market-Linked Investments”) into categories, each with different investment characteristics. The following description is meant solely for informational purposes and is not intended to represent any particular Enhanced Return Market-Linked Investment or guarantee any performance.
Enhanced Return Market-Linked Investments are short- to medium-term investments that 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 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.
“Accelerated Return Notes®” and “ARNs®” are our registered service marks.
Accelerated Return Notes® | TS-20 |