Linked to the S&P 500® Index
|
•
|
Maturity
of approximately 15 months.
|
|
•
|
1.5-to-1
upside exposure to increases in the Underlying, subject to the Max Return of 14.35%.
|
|
•
|
1-to-1
downside exposure to decreases in the level of the Underlying beyond a 10% decline, with up to 90% of the principal at risk.
|
|
•
|
All
payments on the Notes are subject to the credit risk of BofA Finance LLC (“BofA Finance”) and Bank of America Corporation
(“BAC” or the “Guarantor”).
|
|
•
|
No
periodic interest payments.
|
|
•
|
The
Starting Value of the SPX is 3,145.32, which was its closing level on July 7, 2020 (the “Strike Date”). The Starting
Value is lower than the closing level of the Underlying on the pricing date.
|
|
•
|
The
Buffered Enhanced Return Notes linked to the S&P 500® Index (the “Notes”) priced on July 8, 2020, will issue
on July 10, 2020 and will mature on October 7, 2021.
|
|
•
|
The
Notes will not be listed on any securities exchange.
|
The initial estimated value
of the Notes as of the pricing date is $991.00 per $1,000 in principal amount of Notes, which is less than the public offering
price listed below. The actual value of your Notes at any time will reflect many factors and cannot be predicted with accuracy.
See “Risk Factors” beginning on page PS-7 of this pricing supplement and “Structuring the Notes” on page
PS-15 of this pricing supplement for additional information.
Potential purchasers of
the Notes should consider the information in “Risk Factors” beginning on page PS-7 of this pricing supplement, page
PS-5 of the accompanying product supplement, page S-5 of the accompanying prospectus supplement, and page 7 of the accompanying
prospectus.
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 on page PS-19) is truthful or complete. Any representation to
the contrary is a criminal offense.
|
Public offering price(1)
|
Underwriting discount(1)
|
Proceeds, before expenses, to BofA Finance
|
Per Note
|
$1,000.00
|
$1.00
|
$999.00
|
Total
|
$4,200,000.00
|
$4,200.00
|
$4,195,800.00
|
|
(1)
|
Certain dealers who purchase the Notes for sale to
certain fee-based advisory accounts may forgo some or all of their selling concessions, fees or commissions. The public offering
price for investors purchasing the Notes in these fee-based advisory accounts may be as low as $999.00 per $1,000 in principal
amount of the Notes.
|
The Notes and the related
guarantee:
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
BofA Securities
Selling Agent
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Terms of the Notes
The Notes provide you a leveraged
return, subject to the Max Return, if the Ending Value of the Underlying, which is the S&P 500® Index, is greater than
the Starting Value. If the Ending Value is equal to or less than the Starting Value but greater than or equal to the Threshold
Value, at maturity, you will receive the principal amount. If the Ending Value is less than the Threshold Value, there is full
exposure to declines in the Underlying beyond the Threshold Value, and you will lose some or a significant portion of your investment
in the Notes. Any payments on the Notes will be calculated based on $1,000 in principal amount of Notes and will depend on the
performance of the Underlying, subject to our and BAC’s credit risk.
Issuer:
|
BofA Finance
|
Guarantor:
|
BAC
|
Denominations:
|
The Notes will be issued in minimum denominations of $1,000 and whole multiples of $1,000 in excess thereof.
|
Term:
|
Approximately 15 months.
|
Underlying:
|
The S&P 500® Index (Bloomberg symbol: “SPX”), a price return index.
|
Strike Date:
|
July 7, 2020
|
Pricing Date:
|
July 8, 2020
|
Issue Date:
|
July 10, 2020
|
Valuation Date:
|
October 5, 2021, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Calculation Days” of the accompanying product supplement.
|
Maturity Date:
|
October 7, 2021
|
Starting Value:
|
SPX: 3,145.32, which was the closing level of the SPX on the Strike Date (the Starting Value is lower than the closing level on the pricing date).
|
Ending Value:
|
The closing level of the Underlying on the Valuation Date, as determined by the calculation agent.
|
Upside Participation Rate:
|
150%.
|
Max Return:
|
$1,143.50 per $1,000 in principal amount of the Notes, which represents a return of 14.35% over the principal amount.
|
Threshold Value
|
SPX: 2,830.79, which is 90% of its Starting Value (rounded to two decimal places).
|
Redemption Amount:
|
At maturity, the Redemption Amount
per $1,000 in principal amount of Notes will be:
a) If
the Ending Value of the Underlying is greater than the Starting Value:
,
subject to the Max Return
b) If
the Ending Value of the Underlying is equal to or less than the Starting Value but greater than or equal to the Threshold
Value:
$1,000
c) If
the Ending Value of the Underlying is less than the Threshold Value:
In this case,
the Redemption Amount will be less than the principal amount and you could lose up to 90% of your principal amount.
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS.
|
CUSIP:
|
09709TJ44
|
|
BUFFERED ENHANCED RETURN NOTES | PS-2
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Underlying Return:
|
|
Events of Default and Acceleration:
|
If an Event of Default, as defined in the senior indenture and in the section entitled “Description of Debt Securities—Events of Default and Rights of Acceleration” beginning on page 22 of the accompanying prospectus, with respect to the Notes occurs and is continuing, the amount payable to a holder of the Notes upon any acceleration permitted under the senior indenture will be equal to the amount described under the caption “Redemption Amount” above, calculated as though the date of acceleration were the Maturity Date of the Notes and as though the Valuation Date were the third trading day prior to the date of acceleration. In case of a default in the payment of the Notes, whether at their maturity or upon acceleration, the Notes will not bear a default interest rate.
|
|
Any payments on the Notes
depend on the credit risk of BofA Finance, as Issuer, and BAC, as Guarantor, and on the performance of the Underlying. The economic
terms of the Notes are based on BAC’s internal funding rate, which is the rate it would pay to borrow funds through the issuance
of market-linked notes, and the economic terms of certain related hedging arrangements BAC’s affiliates enter into. BAC’s
internal funding rate is typically lower than the rate it would pay when it issues conventional fixed or floating rate debt securities.
This difference in funding rate, as well as the underwriting discount and the hedging related charges described below (see “Risk
Factors” beginning on page PS-7), reduced the economic terms of the Notes to you and the initial estimated value of the Notes.
Due to these factors, the public offering price you are paying to purchase the Notes is greater than the initial estimated value
of the Notes as of the pricing date.
The initial estimated value
of the Notes as of the pricing date is set forth on the cover page of this pricing supplement. For more information about the initial
estimated value and the structuring of the Notes, see “Risk Factors” beginning on page PS-7 and “Structuring
the Notes” on page PS-15.
|
BUFFERED ENHANCED RETURN NOTES | PS-3
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Redemption Amount Determination
On the Maturity Date, you
will receive a cash payment per $1,000 in principal amount of Notes determined as follows:
All payments described above are subject to Issuer
and Guarantor credit risk.
|
BUFFERED ENHANCED RETURN NOTES | PS-4
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Hypothetical Payout Profile and Examples
of Payments at Maturity
Buffered Enhanced Return Notes
Table
The following table and Redemption
Amount Calculation 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 return based on a hypothetical Starting
Value of 100, a hypothetical Threshold Value of 90, the Participation Rate of 150%, the Max Return of $1,143.50 per $1,000 in principal
amount of the Notes and a range of hypothetical Ending Values. The actual amount you receive and the resulting return will depend
on the actual Starting Value, Threshold Value and 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 recent actual levels of the
Underlying, see “The Underlying” section below. The Underlying is a price return index and as such the Ending Value
will not include any income generated by dividends paid on the stocks included in the Underlying, 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 and
Guarantor credit risk.
Ending
Value
|
Percentage
Change from the Starting Value to the Ending Value
|
Redemption
Amount per Note
|
Return
on the Notes
|
160.00
|
60.00%
|
$1,143.50
|
14.35%
|
150.00
|
50.00%
|
$1,143.50
|
14.35%
|
140.00
|
40.00%
|
$1,143.50
|
14.35%
|
130.00
|
30.00%
|
$1,143.50
|
14.35%
|
120.00
|
20.00%
|
$1,143.50
|
14.35%
|
109.57
|
9.57%
|
$1,143.50(1)
|
14.35%
|
105.00
|
5.00%
|
$1,075.00
|
7.50%
|
102.00
|
2.00%
|
$1,030.00
|
3.00%
|
100.00(2)
|
0.00%
|
$1,000.00
|
0.00%
|
95.00
|
-5.00%
|
$1,000.00
|
0.00%
|
90.00
(3)
|
-10.00%
|
$1,000.00
|
0.00%
|
89.99
|
-10.01%
|
$999.90
|
-0.01%
|
80.00
|
-20.00%
|
$900.00
|
-10.00%
|
50.00
|
-50.00%
|
$600.00
|
-40.00%
|
0.00
|
-100.00%
|
$100.00
|
-90.00%
|
|
(1)
|
The Redemption Amount
per $1,000 in principal amount of the Notes cannot exceed the Max Return.
|
|
(2)
|
The hypothetical Starting
Value of 100 used in these examples has been chosen for illustrative purposes only. The actual Starting Value is set forth on page
PS-2 above.
|
|
(3)
|
This is the hypothetical
Threshold Value.
|
|
BUFFERED ENHANCED RETURN NOTES | PS-5
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Hypothetical Payout Profile and Examples
of Payments at Maturity
Redemption Amount Calculation
Examples
Example 1
The Ending Value is 130.00,
or 130.00% of the Starting Value:
Starting Value: 100.00
Ending Value: 130.00
= $1,450.00, however because the Redemption Amount for the Notes cannot exceed the Max Return, the Redemption Amount will be $1,143.50
per $1,000 in principal amount of the Notes.
Example 2
The Ending Value is 102.00,
or 102.00% of the Starting Value:
Starting Value: 100.00
Ending Value: 102.00
= $1,030.00 Redemption Amount per $1,000 in principal amount of the Notes.
Example 3
The Ending Value is 95.00, or
95.00% of the Starting Value:
Starting Value: 100.00
Threshold Value: 90.00
Ending Value: 95.00
$1,000.00 Redemption Amount per $1,000
in principal amount of the Notes, since the Ending Value is less than the Starting Value but greater than or equal to the Threshold
Value.
Example 4
The Ending Value is 50.00, or
50.00% of the Starting Value:
Starting Value: 100.00
Threshold Value: 90.00
Ending Value: 50.00
= $600.00 Redemption Amount per $1,000 in principal amount of the Notes.
|
BUFFERED ENHANCED RETURN NOTES | PS-6
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
Risk Factors
Your investment in the Notes entails significant risks,
many of which differ from those of a conventional debt security. Your decision to purchase the Notes should be made only after
carefully considering the risks of an investment in the Notes, including those discussed below, with your advisors in light of
your particular circumstances. The Notes are not an appropriate investment for you if you are not knowledgeable about significant
elements of the Notes or financial matters in general. You should carefully review the more detailed explanation of risks relating
to the Notes in the “Risk Factors” sections beginning on page PS-5 of the accompanying product supplement, page S-5
of the accompanying prospectus supplement and page 7 of the accompanying prospectus, each as identified on page PS-19 below.
|
•
|
Your investment may result in a loss; there is
no guaranteed return of principal. There is no fixed principal repayment amount on the Notes at maturity. The return on the
Notes will be based on the performance of the Underlying. If the Ending Value is less than the Threshold Value, at maturity you
will lose 1% of the principal amount for each 1% that the Ending Value is less than the Threshold Value. In that case, you will
lose some or a significant portion of your principal amount in the Notes.
|
|
•
|
The return on the
Notes will be limited to the Max Return. The return on the Notes will not exceed the Max Return, regardless of the performance
of the Underlying.
|
|
•
|
The Notes do not
bear interest. Unlike a conventional debt security, no interest payments will be paid over the term of the Notes, regardless
of the extent to which the Ending Value of the Underlying exceeds the Starting Value or Threshold Value.
|
|
•
|
Your return on the
Notes may be less than the yield on a conventional debt security of comparable maturity. Any return that you receive on the
Notes may be less than the return you would earn if you purchased a conventional debt security with the same Maturity Date. As
a result, your investment in the Notes may not reflect the full opportunity cost to you when you consider factors, such as inflation,
that affect the time value of money.
|
|
•
|
Any payment on the
Notes is subject to the credit risk of BofA Finance and the Guarantor, and actual or perceived changes in BofA Finance or the Guarantor’s
creditworthiness are expected to affect the value of the Notes. The Notes are our senior unsecured debt securities. Any payment
on the Notes will be fully and unconditionally guaranteed by the Guarantor. The Notes are not guaranteed by any entity other than
the Guarantor. As a result, your receipt of the Redemption Amount at maturity will be dependent upon our ability and the ability
of the Guarantor to repay our respective obligations under the Notes on the Maturity Date, regardless of the Ending Value of the
Underlying as compared to the Starting Value.
|
In addition, our credit ratings
and the credit ratings of the Guarantor are assessments by ratings agencies of our respective abilities to pay our obligations.
Consequently, our or the Guarantor’s perceived creditworthiness and actual or anticipated decreases in our or the Guarantor’s
credit ratings or increases in the spread between the yield on our respective securities and the yield on U.S. Treasury securities
(the “credit spread”) prior to the Maturity Date of your Notes may adversely affect the market value of the Notes.
However, because your return on the Notes depends upon factors in addition to our ability and the ability of the Guarantor to pay
our respective obligations, such as the value of the Underlying, an improvement in our or the Guarantor’s credit ratings
will not reduce the other investment risks related to the Notes.
|
•
|
We are a finance
subsidiary and, as such, have no independent assets, operations or revenues. We are a finance subsidiary of BAC, have no operations
other than those related to the issuance, administration and repayment of our debt securities that are guaranteed by the Guarantor,
and are dependent upon the Guarantor and/or its other subsidiaries to meet our obligations under the Notes in the ordinary course.
Therefore, our ability to make payments on the Notes may be limited.
|
|
•
|
The public offering
price you are paying for the Notes exceeds their initial estimated value. The initial estimated value of the Notes that is
provided on the cover page of this pricing supplement is an estimate only, determined as of the pricing date by reference to our
and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit
spreads and those of the Guarantor, the Guarantor’s internal funding rate, mid-market terms on hedging transactions, expectations
on interest rates, dividends 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. 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 their initial estimated value. This
is due to, among other things, changes in the level of the Underlying, changes in the Guarantor’s internal funding rate,
and the inclusion in the public offering price of the underwriting discount and the hedging related charges, all as further described
in "Structuring the Notes" below. 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, BAC, BofAS or any of our other 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 Underlying,
our and BAC’s creditworthiness and changes in market conditions.
|
|
•
|
We cannot assure
you that a trading market for your Notes will ever develop or be maintained. We will not list the Notes on any securities exchange.
We cannot predict how the Notes will trade in any secondary market or whether that market will be liquid or illiquid.
|
|
•
|
The Redemption Amount
will not reflect changes in the level of the Underlying other than on the Valuation Date. Changes in the level of the Underlying
during the term of the Notes other than on the Valuation Date will not be reflected in the calculation of the Redemption Amount.
|
|
BUFFERED ENHANCED RETURN NOTES | PS-7
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
No other levels of the Underlying
will be taken into account.
|
•
|
The publisher of
the Underlying may adjust the Underlying in a way that affects its levels, and the publisher has no obligation to consider your
interests. The publisher of the Underlying can add, delete, or substitute the components included in the Underlying or
make other methodological changes that could change its level. Any of these actions could adversely affect the value of your Notes.
|
|
•
|
Trading and hedging
activities by us, the Guarantor and any of our other affiliates, including BofAS, may create conflicts of interest with you and
may affect your return on the Notes and their market value. We, the Guarantor or one or more of our other affiliates, including
BofAS, may buy or sell the securities held by or included in the Underlying, or futures or options contracts on the Underlying
or those securities, or other listed or over-the-counter derivative instruments linked to the Underlying or those securities. While
we, the Guarantor or one or more of our other affiliates, including BofAS, may from time to time own securities represented by
the Underlying, except to the extent that BAC’s common stock may be included in the Underlying, we, the Guarantor and our
other affiliates, including BofAS, do not control any company included in the Underlying, and have not verified any disclosure
made by any other company. We, the Guarantor or one or more of our other affiliates, including BofAS, may execute such purchases
or sales for our own or their own accounts, for business reasons, or in connection with hedging our obligations under the Notes.
These transactions may present a conflict of interest between your interest in the Notes and the interests we, the Guarantor and
our other affiliates, including BofAS, may have in our or their proprietary accounts, in facilitating transactions, including block
trades, for our or their other customers, and in accounts under our or their management. These transactions may adversely affect
the value of the Underlying in a manner that could be adverse to your investment in the Notes. On or before the Strike Date, any
purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on its behalf (including for the purpose
of hedging some or all of our anticipated exposure in connection with the Notes), may have affected the value of the Underlying.
Consequently, the value of the Underlying may change subsequent to the Strike Date, which may adversely affect the market value
of the Notes.
|
We, the Guarantor or one or
more of our other affiliates, including BofAS, may have engaged in hedging activities that could have affected the value of the
Underlying on the Strike Date. In addition, these hedging activities, including the unwinding of a hedge, may decrease the market
value of your Notes prior to maturity, and may affect the amounts to be paid on the Notes. We, the Guarantor or one or more of
our other affiliates, including BofAS, may purchase or otherwise acquire a long or short position in the Notes and may hold or
resell the Notes. For example, BofAS may enter into these transactions in connection with any market making activities in which
it engages. We cannot assure you that these activities will not adversely affect the value of the Underlying, the market value
of your Notes prior to maturity or the amounts payable on the Notes.
|
•
|
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. One of
our affiliates will be the calculation agent for the Notes and, as such, will make a variety of determinations relating to the
Notes, including the amounts that will be paid on the Notes. Under some circumstances, these duties could result in a conflict
of interest between its status as our affiliate and its responsibilities as calculation agent.
|
|
•
|
The U.S. federal
income tax consequences of an investment in the Notes are uncertain, and may be adverse to a holder of the Notes. No statutory,
judicial, or administrative authority directly addresses the characterization of the Notes or securities similar to the Notes for
U.S. federal income tax purposes. As a result, significant aspects of the U.S. federal income tax consequences of an investment
in the Notes are not certain. Under the terms of the Notes, you will have agreed with us to treat the Notes as single financial
contracts, as described below under “U.S. Federal Income Tax Summary—General.” If the Internal Revenue Service
(the “IRS”) were successful in asserting an alternative characterization for the Notes, the timing and character of
gain or loss with respect to the Notes may differ. No ruling will be requested from the IRS with respect to the Notes and no assurance
can be given that the IRS will agree with the statements made in the section entitled “U.S. Federal Income Tax Summary.”
You are urged to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing
in the Notes.
|
|
BUFFERED ENHANCED RETURN NOTES | PS-8
|
Buffered Enhanced Return Notes Linked to the S&P 500® Index
The Underlying
All
disclosures contained in this pricing supplement regarding the Underlying, including, without limitation, its make-up, method of
calculation, and changes in its components, have been derived from publicly available sources. The information reflects the policies
of, and is subject to change by, S&P Dow Jones Indices LLC (“SPDJI”), the sponsor of the Underlying. We refer to
SPDJI as the “Underlying Sponsor.” The Underlying Sponsor, which licenses the copyright and all other rights to the
Underlying, has no obligation to continue to publish, and may discontinue publication of, the Underlying. The consequences of the
Underlying Sponsor discontinuing publication of the Underlying are discussed in “Description of the Notes—Discontinuance
of an Index” in the accompanying product supplement. None of us, the Guarantor, the calculation agent, or BofAS accepts any
responsibility for the calculation, maintenance or publication of the Underlying or any successor index. None of us, the Guarantor,
BofAS or any of our other affiliates makes any representation to you as to the future performance of the Underlying. You should
make your own investigation into the Underlying.
The S&P 500®
Index
The
SPX includes a representative sample of 500 companies in leading industries of the U.S. economy. The SPX is intended to provide
an indication of the pattern of common stock price movement. The calculation of the level of the SPX is based on the relative value
of the aggregate market value of the common stocks of 500 companies as of a particular time compared to the aggregate average market
value of the common stocks of 500 similar companies during the base period of the years 1941 through 1943.
The
SPX includes companies from eleven main groups: Communication Services; Consumer Discretionary; Consumer Staples; Energy; Financials;
Health Care; Industrials; Information Technology; Real Estate; Materials; and Utilities. The Underlying Sponsor may from time to
time, in its sole discretion, add companies to, or delete companies from, the SPX to achieve the objectives stated above.
Company
additions to the SPX must have an unadjusted company market capitalization of $8.2 billion or more (an increase from the previous
requirement of an unadjusted company market capitalization of $6.1 billion or more).
SPDJI
calculates the SPX by reference to the prices of the constituent stocks of the SPX without taking account of the value of dividends
paid on those stocks. As a result, the return on the Notes will not reflect the return you would realize if you actually owned
the SPX constituent stocks and received the dividends paid on those stocks.
Computation of the SPX
While
SPDJI currently employs the following methodology to calculate the SPX, no assurance can be given that SPDJI will not modify or
change this methodology in a manner that may affect the Redemption Amount.
Historically,
the market value of any component stock of the SPX was calculated as the product of the market price per share and the number of
then outstanding shares of such component stock. In March 2005, SPDJI began shifting the SPX halfway from a market capitalization
weighted formula to a float-adjusted formula, before moving the SPX to full float adjustment on September 16, 2005. SPDJI’s
criteria for selecting stocks for the SPX did not change with the shift to float adjustment. However, the adjustment affects each
company’s weight in the SPX.
Under
float adjustment, the share counts used in calculating the SPX reflect only those shares that are available to investors, not all
of a company’s outstanding shares. Float adjustment excludes shares that are closely held by control groups, other publicly
traded companies or government agencies.
In
September 2012, all shareholdings representing more than 5% of a stock’s outstanding shares, other than holdings by “block
owners,” were removed from the float for purposes of calculating the SPX. Generally, these “control holders”
will include officers and directors, private equity, venture capital and special equity firms, other publicly traded companies
that hold shares for control, strategic partners, holders of restricted shares, ESOPs, employee and family trusts, foundations
associated with the company, holders of unlisted share classes of stock, government entities at all levels (other than government
retirement/pension funds) and any individual person who controls a 5% or greater stake in a company as reported in regulatory filings.
However, holdings by block owners, such as depositary banks, pension funds, mutual funds and ETF providers, 401(k) plans of the
company, government retirement/pension funds, investment funds of insurance companies, asset managers and investment funds, independent
foundations and savings and investment plans, will ordinarily be considered part of the float.
Treasury
stock, stock options, restricted shares, equity participation units, warrants, preferred stock, convertible stock, and rights are
not part of the float. Shares held in a trust to allow investors in countries outside the country of domicile, such as depositary
shares and Canadian exchangeable shares are normally part of the float unless those shares form a control block. If a company has
multiple classes of stock outstanding, shares in an unlisted or non-traded class are treated as a control block.
For
each stock, an investable weight factor (“IWF”) is calculated by dividing the available float shares by the total shares
outstanding. Available float shares are defined as the total shares outstanding less shares held by control holders. This calculation
is subject to a 5% minimum threshold for control blocks. For example, if a company’s officers and directors hold 3% of the
company’s shares, and no other control group holds 5% of the company’s shares, SPDJI would assign that company an IWF
of 1.00, as no control group meets the 5% threshold. However, if a company’s officers and directors hold 3% of the company’s
shares and another control group holds 20% of the company’s shares, SPDJI would assign an IWF of 0.77, reflecting the fact
that 23% of the company’s outstanding shares are considered to be held for control. As of July 31, 2017, companies with multiple
share class lines are no longer eligible for inclusion in the SPX. Constituents of the SPX prior to July 31, 2017 with multiple
share class lines will be grandfathered in and continue to be included in the SPX. If a constituent company of the SPX reorganizes
into a multiple share class line structure, that company will remain in the SPX at the discretion of the S&P Index Committee
in order to minimize turnover.
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BUFFERED ENHANCED RETURN NOTES | PS-9
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
The
SPX is calculated using a base-weighted aggregate methodology. The level of the SPX reflects the total market value of all component
stocks relative to the base period of the years 1941 through 1943. An indexed number is used to represent the results of this calculation
in order to make the level easier to work with and track over time. The actual total market value of the component stocks during
the base period of the years 1941 through 1943 has been set to an indexed level of 10. This is often indicated by the notation
1941- 43 = 10. In practice, the daily calculation of the SPX is computed by dividing the total market value of the component stocks
by the “index divisor.” By itself, the index divisor is an arbitrary number. However, in the context of the calculation
of the SPX, it serves as a link to the original base period level of the SPX. The index divisor keeps the SPX comparable over time
and is the manipulation point for all adjustments to the SPX, which is index maintenance.
Index Maintenance
Index
maintenance includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits,
stock dividends, and stock price adjustments due to company restructuring or spinoffs. Some corporate actions, such as stock splits
and stock dividends, require changes in the common shares outstanding and the stock prices of the companies in the SPX, and do
not require index divisor adjustments.
To
prevent the level of the SPX from changing due to corporate actions, corporate actions which affect the total market value of the
SPX require an index divisor adjustment. By adjusting the index divisor for the change in market value, the level of the SPX remains
constant and does not reflect the corporate actions of individual companies in the SPX. Index divisor adjustments are made after
the close of trading and after the calculation of the SPX closing level.
Changes
in a company’s shares outstanding of 5.00% or more due to mergers, acquisitions, public offerings, tender offers, Dutch auctions,
or exchange offers are made as soon as reasonably possible. Share changes due to mergers or acquisitions of publicly held companies
that trade
on
a major exchange are implemented when the transaction occurs, even if both of the companies are not in the same headline index,
and regardless of the size of the change. All other changes of 5.00% or more (due to, for example, company stock repurchases, private
placements, redemptions, exercise of options, warrants, conversion of preferred stock, Notes, debt, equity participation units,
at-the-market offerings, or other recapitalizations) are made weekly and are announced on Fridays for implementation after the
close of trading on the following Friday.
Changes
of less than 5.00% are accumulated and made quarterly on the third Friday of March, June, September, and December, and are usually
announced two to five days prior.
If
a change in a company’s shares outstanding of 5.00% or more causes a company’s IWF to change by five percentage points
or more, the IWF is updated at the same time as the share change. IWF changes resulting from partial tender offers are considered
on a case by case basis.
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BUFFERED ENHANCED RETURN NOTES | PS-10
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Historical Performance of the SPX
The following
graph sets forth the daily historical performance of the SPX in the period from January 1, 2008 through the Strike 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. The horizontal line in the graph represents the SPX’s Threshold Value of 2,830.79 (rounded to two decimal
places), which is 90% of the SPX’s Starting Value of 3,145.32,
which was its closing level on the Strike Date.
This historical data on the SPX is
not necessarily indicative of the future performance of the SPX or what the value of the Notes may be. Any historical upward or
downward trend in the level of the SPX during any period set forth above is not an indication that the level of the SPX is more
or less likely to increase or decrease at any time over the term of the Notes.
Before investing in the Notes, you
should consult publicly available sources for the levels of the SPX.
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BUFFERED ENHANCED RETURN NOTES | PS-11
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
License Agreement
S&P® is a registered
trademark of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks have been licensed for use by S&P
Dow Jones Indices LLC. “Standard & Poor’s®,” “S&P 500®” and
“S&P®” are trademarks of S&P. These trademarks have been sublicensed for certain purposes by
our affiliate, Merrill Lynch, Pierce, Fenner and Smith Incorporated (“MLPF&S”). The SPX is a product of S&P
Dow Jones Indices LLC and/or its affiliates and has been licensed for use by MLPF&S.
The Notes are not sponsored, endorsed,
sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or any of their respective affiliates (collectively, “S&P
Dow Jones Indices”). S&P Dow Jones Indices make no representation or warranty, express or implied, to the holders of
the Notes or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly
or the ability of the SPX to track general market performance. S&P Dow Jones Indices’ only relationship to MLPF&S
with respect to the SPX is the licensing of the SPX and certain trademarks, service marks and/or trade names of S&P Dow Jones
Indices and/or its third party licensors. The SPX is determined, composed and calculated by S&P Dow Jones Indices without regard
to us, MLPF&S, or the Notes. S&P Dow Jones Indices have no obligation to take our needs, BAC’s needs or the needs
of MLPF&S or holders of the Notes into consideration in determining, composing or calculating the SPX. S&P Dow Jones Indices
are not responsible for and have not participated in the determination of the prices, and amount of the Notes or the timing of
the issuance or sale of the Notes or in the determination or calculation of the equation by which the Notes are to be converted
into cash. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading
of the Notes. There is no assurance that investment products based on the SPX will accurately track index performance or provide
positive investment returns. S&P Dow Jones Indices LLC and its subsidiaries are not investment advisors. Inclusion of a security
or futures contract within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security or
futures contract, nor is it considered to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates
may independently issue and/or sponsor financial products unrelated to the Notes currently being issued by us, but which may be
similar to and competitive with the Notes. In addition, CME Group Inc. and its affiliates may trade financial products which are
linked to the performance of the SPX. It is possible that this trading activity will affect the value of the Notes.
S&P
DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE SPX OR ANY DATA RELATED THERETO
OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT
THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN.
S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY US, BAC, MLPF&S, HOLDERS OF THE NOTES, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE SPX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES
INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS
OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND MLPF&S, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
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BUFFERED ENHANCED RETURN NOTES | PS-12
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Supplement to the Plan of Distribution; Role
of BofAS and Conflicts of Interest
BofAS, a broker-dealer affiliate of
ours, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent
in the distribution of the Notes. Accordingly, the offering of the Notes will conform to the requirements of FINRA Rule 5121. BofAS
may not make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
Under our distribution agreement
with BofAS, BofAS will purchase the Notes from us as principal at the public offering price indicated on the cover of this pricing
supplement, less the indicated underwriting discount. BofAS will sell the Notes to other broker-dealers that will participate in
the offering and that are not affiliated with us, at an agreed discount to the principal amount. Each of those broker-dealers may
sell the Notes to one or more additional broker-dealers. BofAS has informed us that these discounts may vary from dealer to dealer
and that not all dealers will purchase or repurchase the Notes at the same discount. Certain dealers who purchase the Notes for
sale to certain fee-based advisory accounts may forgo some or all of their selling concessions, fees or commissions. The public
offering price for investors purchasing the Notes in these fee-based advisory accounts may be as low as $999.00 per $1,000 in principal
amount of the Notes.
BofAS and any of our other broker-dealer
affiliates may use this pricing supplement and the accompanying product supplement, prospectus supplement and prospectus for offers
and sales in secondary market transactions and market-making transactions in the Notes. However, they are not obligated to engage
in such secondary market transactions and/or market-making transactions. The selling agent may act as principal or agent in these
transactions, and any such sales will be made at prices related to prevailing market conditions at the time of the sale.
At BofAS’s discretion, for a
short, undetermined initial period after the issuance of the Notes, BofAS 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 BofAS for the Notes will be based on then-prevailing
market conditions and other considerations, including the performance of the Underlying and the remaining term of the Notes. However,
none of us, the Guarantor, BofAS or any of our other affiliates is obligated to purchase your Notes at any price or at any time,
and we cannot assure you that any party will purchase your Notes at a price that equals or exceeds the initial estimated value
of the Notes.
Any price that BofAS may pay to
repurchase the Notes will depend upon then prevailing market conditions, the creditworthiness of us and the Guarantor, and transaction
costs. At certain times, this price may be higher than or lower than the initial estimated value of the Notes.
European Economic Area and United Kingdom
None of this pricing supplement,
the accompanying product supplement, the accompanying prospectus or the accompanying prospectus supplement is a prospectus for
the purposes of the Prospectus Regulation (as defined below). This pricing supplement, the accompanying product supplement, the
accompanying prospectus and the accompanying prospectus supplement have been prepared on the basis that any offer of Notes in any
Member State of the European Economic Area (the “EEA”) or in the United Kingdom (each, a “Relevant State”)
will only be made to a legal entity which is a qualified investor under the Prospectus Regulation (“Qualified Investors”).
Accordingly any person making or intending to make an offer in that Relevant State of Notes which are the subject of the offering
contemplated in this pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying
prospectus supplement may only do so with respect to Qualified Investors. Neither BofA Finance nor BAC have authorized, nor do
they authorize, the making of any offer of Notes other than to Qualified Investors. The expression “Prospectus Regulation”
means Regulation (EU) 2017/1129.
PROHIBITION OF SALES
TO EEA AND UNITED KINGDOM RETAIL INVESTORS – The Notes are not intended to be offered, sold
or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA or
in the United Kingdom. For these purposes: (a) a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); or (ii) a customer within the
meaning of Directive (EU) 2016/97 (the Insurance Distribution Directive), where that customer would not qualify as a professional
client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation;
and (b) the expression “offer” includes the communication in any form and by any means of sufficient information on
the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.
Consequently no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”)
for offering or selling the Notes or otherwise making them available to retail investors in the EEA or in the United Kingdom has
been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA
or in the United Kingdom may be unlawful under the PRIIPs Regulation.
United Kingdom
The communication of
this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement, the accompanying prospectus
and any other document or materials relating to the issue of the Notes offered hereby is not being made, and such documents and/or
materials have not been approved, by an authorized person for the purposes of section 21 of the United Kingdom’s Financial
Services and Markets Act 2000, as amended (the “FSMA”). Accordingly, such documents and/or materials are not being
distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or
materials as a financial promotion is only being made to those persons in the United Kingdom who have professional experience in
matters relating to investments and who fall within the definition of investment professionals (as defined in Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)),
or who fall within Article 49(2)(a) to (d) of the Financial Promotion Order, or who are any other
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BUFFERED ENHANCED RETURN NOTES | PS-13
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
persons to whom it
may otherwise lawfully be made under the Financial Promotion Order (all such persons together being referred to as “relevant
persons”). In the United Kingdom, the Notes offered hereby are only available to, and any investment or investment activity
to which this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement and the accompanying
prospectus relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person
should not act or rely on this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement
or the accompanying prospectus or any of their contents.
Any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the Notes
may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the
Issuer or the Guarantor.
All applicable provisions
of the FSMA must be complied with in respect to anything done by any person in relation to the Notes in, from or otherwise involving
the United Kingdom.
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BUFFERED ENHANCED RETURN NOTES | PS-14
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
Structuring the Notes
The Notes are our
debt securities, the return on which is linked to the performance of the Underlying. The related guarantee is BAC’s obligation.
As is the case for all of our and BAC’s respective debt securities, including our market-linked notes, the economic terms
of the Notes reflect our and BAC’s 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 and BAC, BAC typically borrows the funds under
these types of notes at a rate, which we refer to in this pricing supplement as BAC’s internal funding rate, that is more
favorable to BAC than the rate that it might pay for a conventional fixed or floating rate debt security. 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.
In order to meet our payment obligations
on the Notes, 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 BofAS or one of our other affiliates. The terms of these hedging arrangements are
determined based upon terms provided by BofAS and its affiliates, and take into account a number of factors, including our and
BAC’s creditworthiness, interest rate movements, the volatility of the Underlying, the tenor of the Notes and the hedging
arrangements. The economic terms of the Notes and their initial estimated value depend in part on the terms of these hedging arrangements.
BofAS has advised
us that the hedging arrangements will include hedging related charges, reflecting the costs associated with, and our affiliates’
profit earned from, these hedging arrangements. Since hedging entails risk and may be influenced by unpredictable market forces,
actual profits or losses from these hedging transactions may be more or less than any expected amounts.
For further information,
see “Risk Factors” beginning on page PS-7 above and “Supplemental Use of Proceeds” on page PS-19 of the
accompanying product supplement.
Validity of the Notes
In the opinion
of McGuireWoods LLP, as counsel to BofA Finance and BAC, when the trustee has made the appropriate entries or notations on the
applicable schedule to the master global note that represents the Notes (the “master note”) identifying the Notes offered
hereby as supplemental obligations thereunder in accordance with the instructions of BofA Finance and the provisions of the indenture
governing the Notes and the related guarantee, and the Notes have been delivered against payment therefor as contemplated in this
pricing supplement and the related prospectus, prospectus supplement and product supplement, such Notes will be the legal, valid
and binding obligations of BofA Finance, and the related guarantee will be the legal, valid and binding obligation of BAC, subject,
in each case, to the effects of applicable bankruptcy, insolvency (including laws relating 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 of this pricing supplement and is limited to the laws of
the State of New York and the Delaware Limited Liability Company Act and the Delaware General Corporation Law (including the statutory
provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing)
as in effect on the date hereof. In addition, this opinion is subject to customary assumptions about the trustee’s authorization,
execution and delivery of the indenture governing the Notes and due authentication of the master note, the validity, binding nature
and enforceability of the indenture governing the Notes and the related guarantee with respect to the trustee, the legal capacity
of individuals, 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 December 30, 2019, which has
been filed as an exhibit to Pre-Effective Amendment No. 1 to the Registration Statement (File No. 333-234425) of BofA Finance and
BAC, filed with the Securities and Exchange Commission on December 30, 2019.
Sidley Austin LLP,
New York, New York, is acting as counsel to BofAS and as special tax counsel to BofA Finance and BAC.
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BUFFERED ENHANCED RETURN NOTES | PS-15
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
U.S. Federal Income Tax Summary
The following summary of the material
U.S. federal income tax considerations of the acquisition, ownership, and disposition of the Notes supplements, and to the extent
inconsistent supersedes, the discussions under “U.S. Federal Income Tax Considerations” in the accompanying prospectus
and under “U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement and is not exhaustive
of all possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”),
regulations promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary
regulations), rulings, current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all
as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect.
No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax
consequences described below. This summary does not include any description of the tax laws of any state or local governments,
or of any foreign government, that may be applicable to a particular holder.
Although the Notes are issued by us,
they will be treated as if they were issued by BAC for U.S. federal income tax purposes. Accordingly throughout this tax discussion,
references to “we,” “our” or “us” are generally to BAC unless the context requires otherwise.
This summary is directed solely to U.S. Holders and Non-U.S. Holders that, except as otherwise specifically noted, will purchase
the Notes upon original issuance and will hold the Notes as capital assets within the meaning of Section 1221 of the Code, which
generally means property held for investment, and that are not excluded from the discussion under “U.S. Federal Income Tax
Considerations” in the accompanying prospectus.
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.
General
Although there is no statutory, judicial, or administrative authority directly addressing the characterization of the Notes, in
the opinion of our counsel, Sidley Austin LLP, and based on certain factual representations received from us, the Notes should
be treated as single financial contracts with respect to the Underlying and 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 in
accordance with such characterization. This discussion assumes that the Notes constitute single financial contracts with respect
to the Underlying for U.S. federal income tax purposes. If the Notes did not constitute single financial contracts, the tax consequences
described below would be materially different.
This characterization of the Notes is not binding on the 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 this pricing
supplement. 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.
Unless otherwise stated, the following
discussion is based on the characterization described above. The discussion in this section assumes that there is a significant
possibility of a significant loss of principal on an investment in the Notes.
We will not attempt to ascertain whether
any issuer of a component stock included in the Underlying would be treated as a “passive foreign investment company”
(“PFIC”), within the meaning of Section 1297 of the Code, or a United States real property holding corporation, within
the meaning of Section 897(c) of the Code. If the issuer of one or more stocks included in the Underlying were so treated, certain
adverse U.S. federal income tax consequences could possibly apply to a holder of the Notes. You should refer to information filed
with the SEC by the issuers of the component stocks included in the Underlying and consult your tax advisor regarding the possible
consequences to you, if any, if any issuer of a component stock included in the Underlying is or becomes a PFIC or is or becomes
a United States real property holding corporation.
U.S. Holders
Upon receipt of a cash payment at maturity
or upon a sale or exchange of the Notes prior to maturity, a U.S. Holder generally will recognize capital gain or loss equal to
the difference between the amount realized and the U.S. Holder’s tax basis in the Notes. A U.S. Holder’s tax basis
in the Notes will equal the amount paid by that holder to acquire them. This capital gain or loss generally will be long-term capital
gain or loss if the U.S. Holder held the Notes for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments. Due
to the absence of authorities that directly address the proper tax treatment of the Notes, prospective investors are urged to consult
their tax advisors regarding all possible alternative tax treatments of an investment in the Notes. In particular, the IRS could
seek to subject the Notes to the Treasury regulations governing contingent payment debt instruments. If the IRS were successful
in that regard, the timing and character of income on the Notes would be affected significantly. Among other things, a U.S. Holder
would be required to accrue original issue discount every year at a “comparable yield” determined at the time of issuance.
In addition, any gain realized by a U.S. Holder at maturity or upon a sale or exchange of the Notes generally would be treated
as ordinary income, and any loss realized at maturity or upon a sale or exchange of the
Notes generally would be treated as ordinary
loss to the extent of the U.S. Holder’s prior accruals of original issue discount, and as capital loss
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
thereafter.
The IRS released Notice 2008-2 (the “Notice”),
which sought 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 Code, 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.
In addition, proposed Treasury regulations
require the accrual of income on a current basis for contingent payments made under certain notional principal contracts. The preamble
to the regulations states that the “wait and see” method of accounting does not properly reflect the economic accrual
of income on those contracts, and requires current accrual of income for some contracts already in existence. While the proposed
regulations do not apply to prepaid forward contracts, the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the IRS or Treasury publishes future guidance requiring current
economic accrual for contingent payments on prepaid forward contracts, it is possible that you could be required to accrue income
over the term of the Notes.
Because of the absence of authority regarding
the appropriate tax characterization of the Notes, it is also possible that the IRS could seek to characterize the Notes in a manner
that results in tax consequences that are different from those described above. For example, the IRS could possibly assert that
any gain or loss that a holder may recognize at maturity or upon the sale or exchange of the Notes should be treated as ordinary
gain or loss.
Because the Underlying is an index that
periodically rebalances, it is possible that the Notes could be treated as a series of single financial contracts, each of which
matures on the next rebalancing date. If the Notes were properly characterized in such a manner, a U.S. Holder would be treated
as disposing of the Notes on each rebalancing date in return for new Notes that mature on the next rebalancing date, and a U.S.
Holder would accordingly likely recognize capital gain or loss on each rebalancing date equal to the difference between the holder’s
tax basis in the Notes (which would be adjusted to take into account any prior recognition of gain or loss) and the fair market
value of the Notes on such date.
Non-U.S. Holders
Except as discussed below, a Non-U.S.
Holder generally will not be subject to U.S. federal income or withholding tax for amounts paid in respect of the Notes provided
that the Non-U.S. Holder complies with applicable certification requirements and that the payment is not effectively connected
with the conduct by the Non-U.S. Holder of a U.S. trade or business. Notwithstanding the foregoing, gain from the sale or exchange
of the Notes or their settlement at maturity may be subject to U.S. federal income tax if that Non-U.S. Holder is a non-resident
alien individual and is present in the U.S. for 183 days or more during the taxable year of the sale, exchange, or settlement and
certain other conditions are satisfied.
If a Non-U.S. Holder of the Notes is
engaged in the conduct of a trade or business within the U.S. and if gain realized on the settlement at maturity, or upon sale
or exchange of the Notes, is effectively connected with the conduct of such trade or business (and, if certain tax treaties apply,
is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.), the Non-U.S. Holder, although exempt
from U.S. federal withholding tax, generally will be subject to U.S. federal income tax on such gain on a net income basis in the
same manner as if it were a U.S. Holder. Such Non-U.S. Holders should read the material under the heading “—U.S. Holders,”
for a description of the U.S. federal income tax consequences of acquiring, owning, and disposing of the Notes. In addition, if
such Non-U.S. Holder is a foreign corporation, it may also be subject to a branch profits tax equal to 30% (or such lower rate
provided by any applicable tax treaty) of a portion of its earnings and profits for the taxable year that are effectively connected
with its conduct of a trade or business in the U.S., subject to certain adjustments.
A “dividend equivalent” payment
is treated as a dividend from sources within the United States and such payments generally would be subject to a 30% U.S. withholding
tax if paid to a Non-U.S. Holder. Under Treasury regulations, payments (including deemed payments) with respect to equity-linked
instruments (“ELIs”) that are “specified ELIs” may be treated as dividend equivalents if such specified
ELIs reference an interest in an “underlying security,” which is generally any interest in an entity taxable as a corporation
for U.S. federal income tax purposes if a payment with respect to such interest could give rise to a U.S. source dividend. However,
IRS guidance provides that withholding on dividend equivalent payments will not apply to specified ELIs that are not delta-one
instruments and that are issued before January 1, 2023. Based on our determination that the Notes are not delta-one instruments,
Non-U.S. Holders should not be subject to withholding on dividend equivalent payments, if any, under the Notes. However, it is
possible that the Notes could be treated as deemed reissued for U.S. federal income tax purposes upon the occurrence of certain
events affecting the Underlying or the Notes, and following such occurrence the Notes could be treated as subject to withholding
on dividend equivalent payments. Non-U.S. Holders that enter, or have entered, into other transactions in respect of the Underlying
or the Notes should consult their tax advisors as to the application of the dividend equivalent withholding tax in the context
of the Notes and their other transactions. If any payments are treated as dividend equivalents subject to withholding, we (or the
applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect
to amounts so withheld.
As discussed above, alternative characterizations
of the Notes for U.S. federal income tax purposes are possible. Should an alternative characterization, by reason of change or
clarification of the law, by regulation or otherwise, cause payments as to the Notes to become subject to withholding tax, tax
will be withheld at the applicable statutory rate. As discussed above, the IRS has indicated in the Notice that it is considering
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BUFFERED ENHANCED RETURN NOTES | PS-17
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
whether income in respect of instruments
such as the Notes should be subject to withholding tax. Prospective Non-U.S. Holders should consult their own tax advisors regarding
the tax consequences of such alternative characterizations.
U.S. Federal Estate Tax. Under
current law, while the matter is not entirely clear, individual Non-U.S. Holders, and entities whose property is potentially includible
in those individuals’ gross estates for U.S. federal estate tax purposes (for example, a trust funded by such an individual
and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty
benefit, a Note is likely to be treated as U.S. situs property, subject to U.S. federal estate tax. These individuals and entities
should consult their own tax advisors regarding the U.S. federal estate tax consequences of investing in a Note.
Backup Withholding and Information
Reporting
Please see the discussion under “U.S.
Federal Income Tax Considerations — Taxation of Debt Securities — Backup Withholding and Information Reporting”
in the accompanying prospectus for a description of the applicability of the backup withholding and information reporting rules
to payments made on the Notes.
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BUFFERED ENHANCED RETURN NOTES | PS-18
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Buffered Enhanced Return Notes Linked to the S&P 500® Index
Where You Can Find More Information
The terms and risks of the Notes are
contained in this pricing supplement and in the following related product supplement, prospectus supplement and prospectus, which
can be accessed at the following links:
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•
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Product
Supplement EQUITY-1 dated January
3, 2020:
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https://www.sec.gov/Archives/edgar/data/70858/000119312520001483/d836196d424b5.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 at www.sec.gov or obtained from BofAS by calling 1-800-294-1322. Before you invest, you should read the Note
Prospectus, including this pricing supplement, for information about us, BAC and this offering. Any prior or contemporaneous oral
statements and any other written materials you may have received are superseded by the Note Prospectus. Certain terms used but
not defined in this pricing supplement have the meanings set forth in the accompanying product supplement or prospectus supplement.
Unless otherwise indicated or unless the context requires otherwise, all references in this document to “we,” “us,”
“our,” or similar references are to BofA Finance, and not to BAC.
The Notes are our senior
debt securities. Any payments on the Notes are fully and unconditionally guaranteed by BAC. The Notes and the related
guarantee are not insured by the Federal Deposit Insurance Corporation or secured by collateral. The Notes will rank
equally in right of payment with all of our other unsecured and unsubordinated obligations, and the related guarantee will rank
equally in right of payment with all of BAC’s other unsecured and unsubordinated obligations, in each case, except obligations
that are subject to any priorities or preferences by law. Any payments due on the Notes, including any repayment of the principal
amount, will be subject to the credit risk of BofA Finance, as Issuer, and BAC, as Guarantor.
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BUFFERED ENHANCED RETURN NOTES | PS-19
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