The two-year structured notes offer a conditional 13.80% annual coupon but expose investors to full downside risk if any of three benchmarks falls more than 30%.

April 06, 2026

The Toronto-Dominion Bank has issued $1,017,000 in callable contingent interest barrier notes tied to the performance of three major U.S. equity indexes: the Nasdaq-100, the Russell 2000, and the S&P 500. Priced on April 2, 2026, and maturing on April 6, 2028, the notes represent a structured product designed to deliver above-market income in exchange for significant principal risk.

How the Coupon Works

The notes pay a conditional coupon at an annual rate of 13.80%, distributed monthly, but only when the closing value of every one of the three reference indexes remains at or above 70% of its initial value on each monthly observation date. If any single index falls below that threshold on a given observation date, no interest payment is made for that period. The contingent nature of the coupon is central to the product’s risk profile — investors could receive no income at all over the full two-year term if market conditions deteriorate.

Issuer Call Feature

TD retains the right to call the notes in full, but not in part, on any monthly payment date beginning with the sixth, upon at least three business days of prior written notice. An issuer call would return the full principal amount to investors along with any contingent interest payment due on the call date. No further payments would be owed after an early redemption. The bank is under no obligation to call the notes, and the decision rests entirely within its discretion.

Barrier Levels and Maturity Payoff

The initial index values were set on the pricing date at 24,045.53 for the Nasdaq-100, 2,530.042 for the Russell 2000, and 6,582.69 for the S&P 500. The barrier and contingent interest barrier levels are identical for all three indexes, set at 70% of their respective initial values — approximately 16,831.87 for the Nasdaq-100, 1,771.03 for the Russell 2000, and 4,607.88 for the S&P 500.

At maturity, if TD has not called the notes early, the principal repayment depends entirely on whether all three indexes close at or above their barrier values on the final valuation date. If they do, investors receive their full $1,000 principal. If any one index closes below its barrier, investors absorb a loss equal to the percentage decline of the worst-performing index from its initial value. In a severe downturn scenario, investors could lose their entire principal.

Hypothetical Scenarios

The pricing supplement includes three hypothetical examples illustrating possible outcomes. In one scenario, TD calls the notes after six months when all prior observation dates triggered coupon payments, resulting in a 5.75% total return. In a second scenario, at least one index breaches its barrier on every observation date prior to the final one, but all three recover by maturity — yielding only a 1.15% total return. In a worst-case example, one index ends at 60% below its starting value and below the barrier, resulting in investors receiving just $400 per $1,000 note — a 60% loss with no coupon payments along the way.

Distribution and Estimated Value

The notes were distributed through TD Securities (USA) LLC, an affiliate of the bank, which received a commission of $2.50 per note and passed that amount to other dealers as selling concessions. TD will also pay a separate marketing fee to an unaffiliated dealer. The estimated value of each note on the pricing date was $982.30, below the $1,000 public offering price — a gap the bank attributes to structuring costs, hedging expenses, and expected dealer profits. The notes will not be listed on any exchange, and secondary market liquidity is not guaranteed.

Key Risks

The risk factors section is extensive, reflecting the complex and layered nature of the product. Among the key warnings: the notes do not guarantee principal repayment; the conditional coupon may never be paid; investors bear the full downside of the worst-performing index; and the callable feature introduces reinvestment risk, as TD is most likely to call the notes when doing so is economically favorable to the bank rather than the investor. Because the notes are linked to the least-performing of three indexes rather than a basket, risk is amplified rather than diversified — poor performance by any single index can drive losses regardless of how the other two perform.

An additional layer of risk comes from the inclusion of the Russell 2000, which tracks small-capitalization companies. The supplement warns that small-cap stocks tend to be more volatile, less liquid, and more vulnerable to adverse business developments than large-cap equities, which may increase the likelihood of a barrier breach.

Tax Treatment

From a tax perspective, TD and the investor agree to treat the notes as prepaid derivative contracts for U.S. federal income tax purposes. Under this treatment, any contingent interest payments received would be classified as ordinary income. Gains or losses realized upon disposition or maturity would generally be treated as capital gains or losses, with long-term treatment applying if the notes are held for more than one year. However, no IRS ruling has been sought and alternative tax characterizations remain possible.

On the Canadian tax side, interest payments to qualifying non-resident holders would generally not be subject to Canadian withholding tax, provided such payments do not constitute participating debt interest as defined under the Canadian Tax Act.

Legal Opinions

Legal opinions supporting the validity of the notes were provided by Fried, Frank, Harris, Shriver and Jacobson LLP under New York law, and by McCarthy Tétrault LLP under Ontario and Canadian federal law.

The issuance adds to a broader trend of structured note offerings from major banks seeking to attract yield-hungry investors in a volatile equity environment. While the 13.80% conditional coupon is attention-grabbing, the product’s risk architecture means that returns are far from assured and principal is squarely at risk.