This pricing supplement, which is
not complete and may be changed, relates to an effective Registration Statement under the Securities Act of 1933. This pricing
supplement and the accompanying product supplement, prospectus supplement and prospectus are not an offer to sell these notes in
any country or jurisdiction where such an offer would not be permitted.
SUBJECT TO COMPLETION, DATED October 19, 2020
Preliminary Pricing Supplement - Subject to Completion
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Filed Pursuant to Rule 424(b)(2)
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(To Prospectus dated December 31, 2019,
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Series A Registration Statement No. 333-234425
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Prospectus Supplement dated December 31, 2019 and
Product Supplement EQUITY-1 dated January 3, 2020)
Dated October , 2020
BofA Finance LLC $---- Capped Trigger GEARS
Linked to the Russell 2000® Index Due October 31, 2023
Fully and Unconditionally Guaranteed by Bank of America Corporation
Investment Description
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The Capped Trigger GEARS (the “Notes”) linked to the Russell 2000®
Index (the “Underlying”) due October 31, 2023 are senior unsecured obligations issued by BofA Finance LLC (“BofA
Finance”), a direct, wholly-owned subsidiary of Bank of America Corporation (“BAC” or the
“Guarantor”), which are fully and unconditionally guaranteed by the Guarantor. The return on the Notes is linked to
the performance of the Underlying from its Initial Value to its Final Value. If the Underlying Return is positive, BofA Finance
will repay the Stated Principal Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the
Upside Gearing of 2.00, but no more than the Maximum Gain of between [23.00% and 26.00%] (to be set on the Trade Date). If the
Underlying Return is zero or negative and the Final Value is greater than or equal to the Downside Threshold of 75% of the Initial
Value, BofA Finance will repay the Stated Principal Amount of the Notes at maturity. However, if the Underlying Return is negative
and the Final Value is less than the Downside Threshold, you will be fully exposed to the negative Underlying Return and you will
receive less than the Stated Principal Amount at maturity, resulting in a loss that is proportionate to the decline in the level
of the Underlying. In this case, you will have full downside exposure to the Underlying from the Initial Value to the Final Value,
and could lose all of your initial investment.
Investing in the Notes involves significant risks. You will not receive coupon
payments during the 3-year term of the Notes. You may lose a substantial portion or all of your initial investment. You will not
receive dividends or other distributions paid on any stocks included in the Underlying. The contingent repayment of the Stated
Principal Amount applies only if you hold the Notes to maturity. Any payment on the Notes, including any repayment of the Stated
Principal Amount, is subject to the creditworthiness of BofA Finance and the Guarantor and is not, either directly or indirectly,
an obligation of any third party.
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q
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Enhanced Growth Potential, subject to the Maximum Gain— If the Underlying Return is positive, BofA Finance will
repay the Stated Principal Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the Upside
Gearing, but no more than the Maximum Gain. The Upside Gearing feature will provide leveraged exposure to any positive performance
of the Underlying.
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q
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Downside Exposure with Contingent Repayment of Principal at Maturity— If the Underlying Return is zero or negative
and the Final Value of the Underlying is greater than or equal to the Downside Threshold, you will receive the Stated Principal
Amount at maturity. However, if the Underlying Return is negative and the Final Value of the Underlying is less than the Downside
Threshold, you will receive less than the Stated Principal Amount of your Notes at maturity, resulting in a loss that is proportionate
to the decline in the closing level of the Underlying from the Trade Date to the Valuation Date, up to a 100% loss of your investment.
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Any payment on the Notes is subject to the creditworthiness of BofA
Finance and the Guarantor
Key Dates1
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Trade Date2
Issue Date2
Valuation Date3
Maturity Date
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October 27, 2020
October 30, 2020
October 27, 2023
October 31, 2023
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1
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Subject to change and will be set forth in the final pricing supplement relating to the Notes.
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2
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See “Supplement to the Plan of Distribution; Role of BofAS and Conflicts of Interest” in this pricing supplement
for additional information.
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3
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See page PS-4 for additional details.
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NOTICE TO INVESTORS: The Notes
are significantly riskier than conventional debt INSTRUMENTS. BofA Finance IS NOT NECESSARILY OBLIGATED TO REPAY THE STATED PRINCIPAL
AMOUNT AT MATURITY, AND the Notes CAN have downside MARKET risk SIMILAR TO the UNDERLYING. This MARKET risk is in addition to the
CREDIT risk INHERENT IN PURCHASING A DEBT OBLIGATION OF BOFA FINANCE THAT IS GUARANTEED BY BAC. You should not PURCHASE the
Notes if you do not understand or are not comfortable with the significant risks INVOLVED in INVESTING IN the Notes.
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER “RISK FACTORS’’
BEGINNING ON PAGE PS-5 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 BEFORE PURCHASING ANY NOTES. EVENTS RELATING TO ANY OF THOSE RISKS,
OR OTHER RISKS AND UNCERTAINTIES, COULD ADVERSELY AFFECT THE MARKET VALUE OF, AND THE RETURN ON, YOUR NOTES. YOU MAY LOSE SOME
OR ALL OF YOUR INITIAL INVESTMENT IN THE NOTES. THE NOTES WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE AND MAY HAVE LIMITED OR
NO LIQUIDITY.
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Notes Offering
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We are offering Capped Trigger GEARS linked to the Russell 2000® Index due October 31, 2023. Any payment on the Notes will be based on the performance of the Underlying. The Maximum Gain, Initial Value and Downside Threshold will be determined on the Trade Date. The Notes are our senior unsecured obligations, guaranteed by BAC, and are offered for a minimum investment of 100 Notes (each Note corresponding to $10.00 in Stated Principal Amount) at the Public Offering Price described below.
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Underlying
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Upside Gearing
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Initial Value
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Maximum Gain
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Downside Threshold
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CUSIP / ISIN
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Russell 2000® Index
(Ticker: RTY )
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2.00
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[23.00% to 26.00%]
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,which is 75% of the Initial Value
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05591G363 / US05591G3636
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See “Summary” in this pricing supplement. The Notes will have
the terms specified in the accompanying product supplement, prospectus supplement and prospectus, as supplemented by this pricing
supplement.
None of the Securities and Exchange Commission (the “SEC”), any state
securities commission, or any other regulatory body has approved or disapproved of these Notes or the guarantee, or passed upon
the adequacy or accuracy of this pricing supplement, or the accompanying product supplement, prospectus supplement or prospectus.
Any representation to the contrary is a criminal offense. The Notes and the related guarantee of the Notes by the Guarantor are
unsecured and are not savings accounts, deposits, or other obligations of a bank. The Notes are not guaranteed by Bank of America,
N.A. or any other bank, are not insured by the Federal Deposit Insurance Corporation or any other governmental agency and involve
investment risks.
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Public Offering Price
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Underwriting Discount(1)
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Proceeds (before expenses) to BofA Finance
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Per Note
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$10.00
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$0.25
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$9.75
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Total
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$
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$
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$
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(1) The underwriting
discount is $0.25 per Note. BofA Securities, Inc. (“BofAS”), acting as principal, expects to purchase from BofA Finance,
and BofA Finance expects to sell to BofAS, the aggregate principal amount of the Notes set forth above for $9.75 per Note. UBS
Financial Services Inc. (“UBS”), acting as a selling agent for sales of the Notes, expects to purchase from BofAS,
and BofAS expects to sell to UBS, all of the Notes for $9.75 per Note. UBS will receive an underwriting discount of $0.25 per Note
for each Note it sells in this offering. UBS proposes to offer the Notes to the public at a price of $10.00 per Note. For additional
information on the distribution of the Notes, see “Supplement to the Plan of Distribution; Role of BofAS and Conflicts of
Interest” in this pricing supplement.
The initial estimated value of the Notes will be less than
the public offering price. The initial estimated value of the Notes as of the Trade Date is expected to be between $9.35 and
$9.75 per $10 in Stated Principal Amount. See “Summary” on page PS-4 of this pricing supplement, “Risk Factors”
beginning on page PS-5 of this pricing supplement and “Structuring the Notes” on page PS-15 of this pricing supplement
for additional information. The actual value of your Notes at any time will reflect many factors and cannot be predicted with accuracy.
UBS Financial Services Inc.
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BofA Securities
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Additional Information about BofA Finance LLC, Bank of America Corporation and the Notes
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You should read carefully this entire pricing supplement and the accompanying
product supplement, prospectus supplement and prospectus to understand fully the terms of the Notes, as well as the tax and other
considerations important to you in making a decision about whether to invest in the Notes. In particular, you should review carefully
the section in this pricing supplement entitled “Risk Factors,” which highlights a number of risks of an investment
in the Notes, to determine whether an investment in the Notes is appropriate for you. If information in this pricing supplement
is inconsistent with the product supplement, prospectus supplement or prospectus, this pricing supplement will supersede those
documents. You are urged to consult with your own attorneys and business and tax advisors before making a decision to purchase
any of the Notes.
The information in the “Summary” section is qualified in
its entirety by the more detailed explanation set forth elsewhere in this pricing supplement and the accompanying product supplement,
prospectus supplement and prospectus. You should rely only on the information contained in this pricing supplement and the accompanying
product supplement, prospectus supplement and prospectus. We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely on it. None of us, the Guarantor,
BofAS or UBS is making an offer to sell these Notes in any jurisdiction where the offer or sale is not permitted. You should assume
that the information in this pricing supplement and the accompanying product supplement, prospectus supplement, and prospectus
is accurate only as of the date on their respective front covers.
Certain terms used but not defined in this pricing supplement have the
meanings set forth in the accompanying product supplement, prospectus supplement and prospectus. Unless otherwise indicated or
unless the context requires otherwise, all references in this pricing supplement to “we,” “us,” “our,”
or similar references are to BofA Finance, and not to BAC (or any other affiliate of BofA Finance).
The above-referenced accompanying documents may 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
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¨
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Series A MTN prospectus supplement dated December 31, 2019 and prospectus dated December 31, 2019:
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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.
The Notes may be suitable for you if, among other considerations:
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¨
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You fully understand the risks inherent in an investment in the Notes, including the risk of loss of your entire investment.
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¨
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You do not seek current income from your investment and are willing to forgo dividends or any other distributions paid on the
stocks included in the Underlying.
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¨
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You can tolerate a loss of all or a substantial portion of your investment and are willing to make an investment that will
have the full downside market risk of an investment in the Underlying.
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¨
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You understand and accept the risks associated with the Underlying.
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¨
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You believe that the level of the Underlying will increase over the term of the Notes and the Final Value is likely to close
above the Initial Value, and you are willing to give up any appreciation in excess of the Maximum Gain (the actual Maximum Gain
will be determined on the Trade Date).
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¨
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You understand and accept that your potential return is limited by the Maximum Gain and you would be willing to invest in the
Notes if the Maximum Gain was set equal to the lower end of the range indicated on the cover page of this pricing supplement (the
actual Maximum Gain will be determined on the Trade Date).
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¨
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You can tolerate fluctuations in the value of the Notes prior to maturity that may be similar to or exceed the downside fluctuations
in the level of the Underlying.
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¨
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You are willing and able to hold the Notes to maturity, and accept that there may be little or no secondary market for the
Notes.
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¨
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You are willing to assume the credit risk of BofA Finance and BAC for all payments under the Notes, and understand that if
BofA Finance and BAC default on their obligations, you might not receive any amounts due to you, including any repayment of the
Stated Principal Amount.
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The Notes may not be suitable for you if, among other
considerations:
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¨
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You do not fully understand the risks inherent in an investment in the Notes, including the risk loss of your entire investment.
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¨
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You seek current income from this investment or prefer to receive the dividends and any other distributions paid on the stocks
included in the Underlying.
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¨
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You cannot tolerate the loss of all or a substantial portion of your initial investment, or you are not willing to make an
investment that will have the full downside market risk of an investment in the Underlying.
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¨
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You require an investment designed to guarantee a full return of the Stated Principal Amount at maturity.
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¨
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You do not understand or are not willing to accept the risks associated with the Underlying.
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¨
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You believe that the level of the Underlying will decline during the term of the Notes and the Final Value is likely to close
below the Downside Threshold on the Valuation Date, exposing you to full downside performance of the Underlying, or you believe
the Underlying will appreciate over the term of the Notes by more than the Maximum Gain.
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¨
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You seek an investment that participates in the full appreciation in the level of the Underlying or that has unlimited potential,
or you would be unwilling to invest in the Notes if the Maximum Gain was set equal to the lower end of the range indicated on the
cover page of this pricing supplement (the actual Maximum Gain will be determined on the Trade Date).
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¨
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You cannot tolerate fluctuations in the value of the Notes prior to maturity that may be similar to or exceed the downside
fluctuations in the level of the Underlying.
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¨
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You seek an investment for which there will be an active secondary market.
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¨
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You prefer the lower risk of conventional fixed income investments with comparable maturities and credit ratings.
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¨
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You are not willing to assume the credit risk of BofA Finance and BAC for all payments under the Notes, including any repayment
of the Stated Principal Amount.
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The suitability considerations identified above are not
exhaustive. Whether or not the Notes are a suitable investment for you will depend on your individual circumstances and you should
reach an investment decision only after you and your investment, legal, tax, accounting and other advisors have carefully considered
the suitability of an investment in the Notes in light of your particular circumstances. You should review “The Underlying”
herein for more information on the Underlying. You should also review carefully the “Risk Factors” section herein for
risks related to an investment in the Notes.
Summary
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Issuer
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BofA Finance
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Guarantor
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BAC
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Public Offering Price
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100% of the Stated Principal Amount
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Stated Principal Amount
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$10.00 per Note
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Minimum Investment
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$1,000 (100 Notes)
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Term
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Approximately three years
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Trade Date1,2
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October 27, 2020
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Issue Date1, 2
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October 30, 2020
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Valuation Date1
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October 27, 2023, subject to postponement as set forth in “Description of the Notes—Certain Terms of the Notes—Events Relating to Calculation Days” beginning on page PS-21 of the accompanying product supplement.
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Maturity Date1
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October 31, 2023
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Underlying
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Russell 2000® Index (Ticker: RTY)
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Payment At Maturity (per $10.00 Stated Principal Amount)
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If the Underlying Return is positive, we will repay the Stated Principal
Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the Upside Gearing, but no more than
the Maximum Gain, calculated as follows:
$10.00
× (1 + the lesser of (i) Underlying Return x Upside Gearing and (ii) Maximum Gain)
If the Underlying Return is zero or negative and the Final Value is greater
than or equal to the Downside Threshold, we will repay the Stated Principal Amount of the Notes at maturity.
If the Underlying Return is negative and the Final Value is less than the
Downside Threshold, we will repay less than the Stated Principal Amount of your Notes at maturity, resulting in a loss that
is proportionate to the decline in the closing level of the Underlying from the Trade Date to the Valuation Date, calculated as
follows:
$10.00
× (1 + Underlying Return)
Accordingly, you may lose all or a substantial portion of your
Stated Principal Amount at maturity, depending on how significantly the Underlying declines.
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Underlying Return
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Final Value – Initial Value
Initial Value
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Maximum Gain
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Between [23.00% to 26.00%], which corresponds to a maximum Payment at Maturity of between [$12.30 to $12.60]. The actual Maximum Gain will be determined on the Trade Date.
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Downside Threshold
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75% of the Initial Value, as specified on the cover page of this pricing supplement.
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Upside Gearing
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2.00.
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Initial Value
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The closing level of the Underlying on the Trade Date, as specified on the cover page of this pricing supplement.
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Final Value
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The closing level of the Underlying on the Valuation Date.
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Calculation Agent
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BofAS, an affiliate of BofA Finance.
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Selling Agents
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BofAS and UBS.
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1 Subject
to change and will be set forth in the final pricing supplement relating to the Notes.
2 See
“Supplement to the Plan of Distribution; Role of BofAS and Conflicts of Interest” in this pricing supplement for additional
information.
Events of Default and Acceleration
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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 “—Payment at Maturity” 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.
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Investment Timeline
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Trade Date
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The closing level of the Underlying (its Initial Value) is observed, the Downside Threshold and the Maximum Gain for the Underlying is determined.
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Maturity Date
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If the Underlying Return is positive, we will repay the Stated Principal
Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the Upside Gearing but no more than
the Maximum Gain, calculated as follows:
$10.00
× (1 + the lesser of (i) Underlying Return x Upside Gearing and (ii) Maximum Gain)
If the Underlying Return is zero or negative and the Final Value is greater
than or equal to the Downside Threshold, we will repay the Stated Principal Amount of the Notes at maturity.
If the Underlying Return is negative and the Final Value is less than the
Downside Threshold, we will repay less than the Stated Principal Amount of your Notes at maturity, resulting in a loss that
is proportionate to the decline in the closing level of the Underlying from the Trade Date to the Valuation Date, calculated as
follows:
$10.00
× (1 + Underlying Return)
Accordingly, you may lose all or a substantial portion of your
Stated Principal Amount at maturity, depending on how significantly the Underlying declines.
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INVESTING IN THE NOTES INVOLVES SIGNIFICANT RISKS. YOU MAY LOSE A
SUBSTANTIAL PORTION OR ALL OF YOUR INITIAL INVESTMENT. YOU WILL BE EXPOSED TO THE MARKET RISK OF THE UNDERLYING. THE CONTINGENT
REPAYMENT OF THE STATED PRINCIPAL AMOUNT APPLIES ONLY IF YOU HOLD THE NOTES TO MATURITY. ANY PAYMENT ON THE NOTES IS SUBJECT TO
THE CREDITWORTHINESS OF BOFA FINANCE AND THE GUARANTOR.
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 identified on page PS-2 above.
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¨
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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. If the Final Value is less than the Downside Threshold, at maturity,
you will lose 1% of the Stated Principal Amount for each 1% that the Final Value is less than the Initial Value. In that case,
you will lose a significant portion or all of your investment in the Notes.
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|
¨
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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 Final Value exceeds the Initial Value.
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|
¨
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The return on the Notes will be limited to the Maximum
Gain. The return on the Notes will not exceed the Maximum Gain, regardless of
the performance of the Underlying. Your return on the Notes may be less than the return that you could have realized if you invested
directly in the securities held by the Underlying, and you will not receive the full benefit of any appreciation in the Underlying
beyond that Maximum Gain.
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|
¨
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The limited downside protection provided by the Downside Threshold applies only at maturity.
You should be willing to hold your Notes to maturity. If you are able
to sell your Notes in the secondary market prior to maturity,
you may have to sell them at a loss relative to your
initial investment even if the level
of the Underlying
at that time is equal to or greater than the
Downside Threshold. Any payment on the Notes
is subject to the credit risk of BofA Finance, as issuer, and
BAC, as guarantor.
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|
¨
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The Upside Gearing applies only at maturity. You should be willing to hold your Notes to
maturity. If you are able to sell your Notes in the secondary market prior to maturity, the price you receive will likely not reflect
the full economic value of the Upside Gearing, and the return you realize may be less than the then-current underlying return multiplied
by the Upside Gearing, even if such return is positive. You can receive the full benefit of the Upside Gearing only if you hold
your Notes to maturity. Any payment on the Notes is subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor.
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|
¨
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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.
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|
¨
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Any payment on the Notes is subject to our credit risk and the credit risk of the Guarantor,
and actual or perceived changes in our 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 any payment
on the Notes 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 Final Value as compared to the Downside Threshold or Initial Value, as applicable.
No assurance can be given as to what our financial condition or the financial condition of the Guarantor will be on the Maturity
Date. If we and the Guarantor become unable to meet our respective financial obligations as they become due, you may not receive
the amount payable under the terms of the Notes and you could lose all of your initial investment.
|
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.
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¨
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The Notes are subject to the market risk of the Underlying. The return on the Notes, which
may be negative, is directly linked to the performance of the Underlying and indirectly linked to the value of the securities included
in the Underlying. The level of the Underlying can rise or fall sharply due to factors specific to the Underlying and the securities
included in the Underlying and the issuers of such securities, such as stock price volatility, earnings and financial conditions,
corporate, industry and regulatory developments, management changes and decisions and other events, as well as general market factors,
such as general stock market or commodity market volatility and levels, interest rates and economic and political conditions.
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|
¨
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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.
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|
¨
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The public offering price you pay for the Notes will exceed their initial estimated value.
The range of initial estimated values of the Notes that is provided on the cover page of this preliminary pricing supplement, and
the initial estimated value as of the Trade Date that will be provided in the final pricing supplement, are each estimates 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 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.
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¨
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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.
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|
¨
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The price of the Notes that may be paid by BofAS in any secondary market (if BofAS makes a
market, which it is not required to do), as well as the price which may be reflected on customer account statements, will be higher
than the then-current estimated value of the Notes for a limited time period after the Trade Date. As agreed by BofAS and UBS,
for approximately a nine-month period after the Trade Date, to the extent BofAS offers to buy the Notes in the secondary market,
it will do so at a price that will exceed the estimated value of the Notes at that time. The amount of this excess, which
represents a portion of the hedging-related charges expected to be realized by BofAS and UBS over the term of the Notes, will decline
to zero on a straight line basis over that nine-month period. Accordingly, the estimated value of your Notes during this
initial nine-month period may be lower than the value shown on your customer account statements. Thereafter, if BofAS buys
or sells your Notes, it will do so at prices that reflect the estimated value determined by reference to its pricing models at
that time. Any price at any time after the Trade Date 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 other party 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.
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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.
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The development of a trading market for the Notes
will depend on the Guarantor’s financial performance and other factors, including changes in the level of the Underlying.
The number of potential buyers of your Notes in any secondary market may be limited. We anticipate that BofAS will act as a market-maker
for the Notes, but none of us, the Guarantor or BofAS is required to do so. There is no assurance that any party will be willing
to purchase your Notes at any price in any secondary market. BofAS may discontinue its market-making activities as to the Notes
at any time. To the extent that BofAS engages in any market-making activities, it may bid for or offer the Notes. Any price at
which BofAS may bid for, offer, purchase, or sell any Notes may differ from the values determined by pricing models that it may
use, whether as a result of dealer discounts, mark-ups, or other transaction costs. These bids, offers, or completed transactions
may affect the prices, if any, at which the Notes might otherwise trade in the market. In addition, if at any time BofAS were to
cease acting as a market-maker as to the Notes, it is likely that there would be significantly less liquidity in the secondary
market. In such a case, the price at which the Notes could be sold likely would be lower than if an active market existed.
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Economic and market factors have affected the terms of the Notes and may affect the market
value of the Notes prior to maturity. Because market-linked notes, including the Notes, can be thought of as having a debt
component and a derivative component, factors that influence the values of debt instruments and options and other derivatives will
also affect the terms and features of the Notes at issuance and the market price of the Notes prior to maturity. These factors
include the level of the Underlying and the securities included in the Underlying; the volatility of the Underlying and the securities
included in the Underlying; the dividend rate paid on the securities included in the Underlying, if applicable; the time remaining
to the maturity of the Notes; interest rates in the markets; geopolitical conditions and economic, financial, political, force
majeure and regulatory or judicial events; whether the level of the Underlying is currently or has been less than the Downside
Threshold; the availability of comparable instruments; the creditworthiness of BofA Finance, as issuer, and BAC, as guarantor;
and the then current bid-ask spread for the Notes and the factors discussed under “— Trading and hedging activities
by us, the Guarantor and any of our other affiliates, including BofAS, and UBS and its affiliates, may create conflicts of interest
with you and may affect your return on the Notes and their market value” below. These factors are unpredictable and interrelated
and may offset or magnify each other.
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The Payment at Maturity will not reflect the level of the Underlying other than on the Valuation
Date. The level of the Underlying during the term of the Notes other than on the Valuation Date will not affect payment on
the Notes. Notwithstanding the foregoing, investors should generally be aware of the performance of the Underlying while holding
the Notes, as the performance of the Underlying may influence the market value of the Notes. The calculation agent will calculate
the Payment at Maturity by comparing only the Initial Value or the Downside Threshold, as applicable, to the Final Value for the
Underlying. No other level of the Underlying will be taken into account. As a result, if the Final Value of the Underlying is less
than the Downside Threshold, you will receive less than the Stated Principal Amount at maturity, even if the level of the Underlying
was always above the Downside Threshold prior to the Valuation Date.
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The publisher of the Underlying may adjust the Underlying in a way that affects its level,
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.
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Greater expected volatility generally indicates an increased risk of loss at maturity.
Volatility is a measure of the degree of variation in the level of the Underlying over a period of time. The greater the expected
volatility of the Underlying at the time the terms of the Notes are set, the greater the expectation is at that time that you may
lose a significant portion or all of the Stated Principal Amount at maturity. However, the Underlying's volatility can change significantly
over the term of the Notes, and a relatively lower Downside Threshold may not necessarily indicate that the Notes have a greater
likelihood of a return of principal at maturity. You should be willing to accept the downside market risk of the Underlying and
the potential to lose a significant portion or all of your initial investment.
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Trading and hedging activities by us, the Guarantor and any of our
other affiliates, including BofAS, and UBS and its affiliates, 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, and UBS and
its affiliates, 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. We,
the Guarantor or one or more of our other affiliates, including BofAS, and UBS and its affiliates also may issue or underwrite
other financial instruments with returns based upon the Underlying. We expect to enter into arrangements or adjust or close out
existing transactions to hedge our obligations under the Notes. We, the Guarantor or our other affiliates, including BofAS, and
UBS and its affiliates also may enter into hedging transactions relating to other notes or instruments, some of which may have
returns calculated in a manner related to that of the Notes offered hereby. We or UBS may enter into such hedging arrangements
with one of our or their affiliates. Our affiliates or their affiliates may enter into additional hedging transactions with other
parties relating to the Notes and the Underlying. This hedging activity is expected to result in a profit to those engaging in
the hedging activity, which could be more or less than initially expected, or the hedging activity could also result in a loss.
We and our affiliates and UBS and its affiliates will price these hedging transactions with the intent to realize a profit, regardless
of whether the value of the Notes increases or decreases. Any profit in connection with such hedging activities will be in addition
to any other compensation that we, the Guarantor and our other affiliates, including BofAS, and UBS and its affiliates receive
for the sale of the Notes, which creates an additional incentive to sell the Notes to you. While we, the Guarantor or one or more
of our other affiliates, including BofAS, and UBS and its affiliates may from time to time own securities represented by the Underlying,
except to the extent that BAC’s or UBS Group AG’s common stock may be included in the Underlying, as applicable, we,
the Guarantor and our other affiliates, including BofAS, and UBS and its affiliates 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, and UBS and its affiliates 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. The transactions described above may present a conflict
of interest between your interest in the Notes and the interests we, the Guarantor and our other affiliates, including BofAS, and
UBS and its affiliates 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.
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The transactions
described above 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 Trade Date, any purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on
its behalf, and UBS and its affiliates (including for the purpose of hedging some or all of our anticipated exposure in connection
with the Notes) may affect the value of the Underlying. Consequently, the value of the Underlying may change subsequent to the
Trade Date, which may adversely affect the market value of the Notes. In addition, these activities 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, and UBS and its affiliates 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.
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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.
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The Notes are subject to risks associated with small-size capitalization companies. The
stocks comprising the RTY are issued by companies with small-sized market capitalization. The stock prices of small-size companies
may be more volatile than stock prices of large capitalization companies. Small-size capitalization companies may be less able
to withstand adverse economic, market, trade and competitive conditions relative to larger companies. Small-size capitalization
companies may also be more susceptible to adverse developments related to their products or services.
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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.
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Hypothetical terms only. Actual terms may vary. See
the cover page for actual offering terms.
The examples below illustrate the hypothetical Payment at Maturity for
a $10.00 Stated Principal Amount Note for a hypothetical range of Underlying Returns for the Underlying with the following assumptions*
(the actual terms of the Notes will be determined on the Trade Date; amounts may have been rounded for ease of reference and do
not take into account any tax consequences from investing in the Notes):
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Stated Principal Amount: $10
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Hypothetical Initial Value: 100.00
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Hypothetical Maximum Gain: 23.00% (the lower end of the range for the Maximum Gain)
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Hypothetical Maximum Payment at Maturity: $12.30
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Hypothetical Downside Threshold: 75.00
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*The hypothetical Maximum Gain
and Maximum Payment at Maturity may not represent the actual Maximum Gain and Maximum Payment at Maturity and the hypothetical
Initial Value and Downside Threshold do not represent the actual Initial Value or Downside Threshold, respectively, applicable
to the Underlying. The actual Maximum Gain, Maximum Payment at Maturity, Initial Value and Downside Threshold will be determined
on the Trade Date. Any payment on the Notes is subject to issuer and guarantor credit risk.
Final Value
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Underlying Return
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Payment at Maturity
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Return on the Notes (1)
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160.00
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60.00%
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$12.300
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23.00%
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150.00
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50.00%
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$12.300
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23.00%
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140.00
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40.00%
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$12.300
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23.00%
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130.00
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30.00%
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$12.300
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23.00%
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120.00
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20.00%
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$12.300
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23.00%
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111.50
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11.50%
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$12.300
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23.00%
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110.00
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10.00%
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$12.00
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20.00%
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104.00
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4.00%
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$10.800
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8.00%
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102.00
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2.00%
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$10.400
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4.00%
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100.00(2)
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0.00%
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$10.000
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0.00%
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90.00
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-10.00%
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$10.000
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0.00%
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80.00
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-20.00%
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$10.000
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0.00%
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75.00(3)
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-25.00%
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$10.000
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0.00%
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74.99
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-25.01%
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$7.499
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-25.01%
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60.00
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-40.00%
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$6.000
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-40.00%
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50.00
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-50.00%
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$5.000
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-50.00%
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0.00
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-100.00%
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$0.000
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-100.00%
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(1) The “Return on the Notes” cannot exceed the hypothetical Maximum Gain and is calculated based on the Public Offering Price of $10 per Note.
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(2) The hypothetical Initial Value of 100 used in the table above has been chosen
for illustrative purposes only and does not represent a likely Initial Value for the Underlying.
(3) This is the hypothetical Downside Threshold of the Underlying.
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Example 1 — The Final Value of 120.00 is greater than the Initial
Value of 100.00, resulting in an Underlying Return of 20.00%.
Since the Underlying Return is positive, we will repay the Stated Principal
Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the Upside Gearing, but no more than
the Maximum Gain, calculated as follows:
$10.00 ×
(1 + the lesser of (i) 20.00% × 2.00 and (ii) 23.00%) = $12.300
Example 2 — The Final Value of 102.00 is greater than the Initial
Value of 100.00, resulting in an Underlying Return of 2.00%.
Since the Underlying Return is positive, we will repay the Stated Principal
Amount of the Notes at maturity plus a return equal to the Underlying Return multiplied by the Upside Gearing, but no more than
the Maximum Gain, calculated as follows:
$10.00 ×
(1 + the lesser of (i) 2.00% × 2.00 and (ii) 23.00%) = $10.400
Example 3 — The Final Value of 90.00 is less than the Initial
Value of 100.00 (resulting in an Underlying Return of -10.00%) but greater than the Downside Threshold of 75.00.
Since the Underlying Return is negative and the Final Value is greater
than or equal to the Downside Threshold, we will repay the Stated Principal Amount of the Notes at maturity.
Example 4 — The Final Value of 50.00 is less than the Initial
Value of 100.00 (resulting in an Underlying Return of -50.00%) and less than the Downside Threshold of 75.00.
Since the Underlying Return is negative and the Final Value is less than
the Downside Threshold, we will repay less than the Stated Principal Amount of your Notes at maturity, resulting in a loss that
is proportionate to the decline in the closing level of the Underlying from the Trade Date to the Valuation Date, calculated as
follows:
$10.00 × (1 + -50.00%) = $5.000
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, FTSE Russell, the sponsor
of the RTY. We refer to FTSE Russell 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 either Selling Agent accepts any responsibility for the calculation, maintenance or publication of the Underlying or
any successor index.
None of us, the Guarantor, the Selling Agents or any of our or their respective
affiliates makes any representation to you as to the future performance of the Underlying.
You should make your own investigation into the Underlying.
The Russell 2000® Index
The RTY was developed by Russell Investments (“Russell”) before
FTSE International Limited and Russell combined in 2015 to create FTSE Russell, which is wholly owned by London Stock Exchange
Group. Additional information on the RTY is available at the following website: http://www.ftserussell.com. No information on that
website is deemed to be included or incorporated by reference in this pricing supplement.
Russell began dissemination of the RTY (Bloomberg L.P. index symbol “RTY”)
on January 1, 1984. FTSE Russell calculates and publishes the RTY. The RTY was set to 135 as of the close of business on December
31, 1986. The RTY is designed to track the performance of the small capitalization segment of the U.S. equity market. As a subset
of the Russell 3000® Index, the RTY consists of the smallest 2,000 companies included in the Russell 3000®
Index. The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies, representing approximately
98% of the investable U.S. equity market. The RTY is determined, comprised, and calculated by FTSE Russell without regard to the
Notes.
Selection of Stocks Comprising the RTY
All companies eligible for inclusion in the RTY must be classified as a
U.S. company under FTSE Russell’s country-assignment methodology. If a company is incorporated, has a stated headquarters
location, and trades in the same country (American Depositary Receipts and American Depositary Shares are not eligible), then the
company is assigned to its country of incorporation. If any of the three factors are not the same, FTSE Russell defines three Home
Country Indicators (“HCIs”): country of incorporation, country of headquarters, and country of the most liquid exchange
(as defined by a two-year average daily dollar trading volume) (“ADDTV”) from all exchanges within a country. Using
the HCIs, FTSE Russell compares the primary location of the company’s assets with the three HCIs. If the primary location
of its assets matches any of the HCIs, then the company is assigned to the primary location of its assets. If there is insufficient
information to determine the country in which the company’s assets are primarily located, FTSE Russell will use the country
from which the company’s revenues are primarily derived for the comparison with the three HCIs in a similar manner. FTSE
Russell uses the average of two years of assets or revenues data to reduce potential turnover. If conclusive country details cannot
be derived from assets or revenues data, FTSE Russell will assign the company to the country of its headquarters, which is defined
as the address of the company’s principal executive offices, unless that country is a Benefit Driven Incorporation “BDI”
country, in which case the company will be assigned to the country of its most liquid stock exchange. BDI countries include: Anguilla,
Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Channel Islands, Cook
Islands, Curacao, Faroe Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Marshall Islands, Panama, Saba, Sint Eustatius,
Sint Maarten, and Turks and Caicos Islands. For any companies incorporated or headquartered in a U.S. territory, including Puerto
Rico, Guam, and U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the RTY must trade on a major
U.S. exchange. Stocks must have a closing price at or above $1.00 on their primary exchange on the last trading day in May to be
eligible for inclusion during annual reconstitution. However, in order to reduce unnecessary turnover, if an existing member’s
closing price is less than $1.00 on the last day of May, it will be considered eligible if the average of the daily closing prices
(from its primary exchange) during the month of May is equal to or greater than $1.00. Initial public offerings are added each
quarter and must have a closing price at or above $1.00 on the last day of their eligibility period in order to qualify for index
inclusion. If an existing stock does not trade on the “rank day” (typically the last trading day in May but a confirmed
timetable is announced each spring) but does have a closing price at or above $1.00 on another eligible U.S. exchange, that stock
will be eligible for inclusion.
An important criterion used to determine the list of securities eligible
for the RTY is total market capitalization, which is defined as the market price as of the last trading day in May for those securities
being considered at annual reconstitution times the total number of shares outstanding. Where applicable, common stock, non-restricted
exchangeable shares and partnership units/membership interests are used to determine market capitalization. Any other form of shares
such as preferred stock, convertible preferred stock, redeemable shares, participating preferred stock, warrants and rights, installment
receipts or trust receipts, are excluded from the calculation. If multiple share classes of common stock exist, they are combined.
In cases where the common stock share classes act independently of each other (e.g., tracking stocks), each class is considered
for inclusion separately. If multiple share classes exist, the pricing vehicle will be designated as the share class with the highest
two-year trading volume as of the rank day in May.
Companies with a total market capitalization of less than $30 million are
not eligible for the RTY. Similarly, companies with only 5% or less of their shares available in the marketplace are not eligible
for the RTY. Royalty trusts, limited liability companies, closed-end investment companies (companies that are required to report
Acquired Fund Fees and Expenses, as defined by the SEC, including business development companies), blank
check companies, special purpose acquisition companies, and limited partnerships
are also ineligible for inclusion. Bulletin board, pink sheets, and over-the-counter (“OTC”) traded securities are
not eligible for inclusion. Exchange traded funds and mutual funds are also excluded.
Annual reconstitution is a process by which the RTY is completely rebuilt.
Based on closing levels of the company’s common stock on its primary exchange on the rank day of May of each year, FTSE Russell
reconstitutes the composition of the RTY using the then existing market capitalizations of eligible companies. Reconstitution of
the RTY occurs on the last Friday in June or, when the last Friday in June is the 29th or 30th, reconstitution occurs on the prior
Friday. In addition, FTSE Russell adds initial public offerings to the RTY on a quarterly basis based on total market capitalization
ranking within the market-adjusted capitalization breaks established during the most recent reconstitution. After membership is
determined, a security’s shares are adjusted to include only those shares available to the public. This is often referred
to as “free float.” The purpose of the adjustment is to exclude from market calculations the capitalization that is
not available for purchase and is not part of the investable opportunity set.
Historical Performance of the RTY
The following graph sets forth the daily historical performance of the
RTY in the period from January 1, 2008 through October 16, 2020. 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 RTY’s hypothetical Downside Threshold of 1,231.748 (rounded to three decimal places), which was 75%
of the hypothetical Initial Value of 1,642.331, which was its closing level on October 16, 2020. The actual Initial Value and Downside
Threshold will be determined on the Trade Date.
This historical data on the RTY is not necessarily indicative of the
future performance of the RTY or what the value of the Notes may be. Any historical upward or downward trend in the closing level
of the RTY during any period set forth above is not an indication that the closing level of the RTY 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 closing levels of the RTY.
License Agreement
“Russell 2000®”
and “Russell 3000®” are trademarks of FTSE Russell and have
been licensed for use by our affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”).
The Notes are not sponsored, endorsed, sold, or promoted by FTSE Russell, and FTSE Russell makes no representation regarding the
advisability of investing in the Notes.
FTSE Russell and MLPF&S have entered into a non-exclusive license agreement
providing for the license to MLPF&S and its affiliates, including us, in exchange for a fee, of the right to use indices owned
and published by FTSE Russell in connection with some securities, including the Notes. The license agreement provides that the
following language must be stated in this pricing supplement:
The Notes are not sponsored, endorsed, sold, or promoted by FTSE Russell.
FTSE Russell makes 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 RTY to track general stock
market performance or a segment of the same. FTSE Russell’s publication of the RTY in no way suggests or implies an opinion
by FTSE Russell as to the advisability of investment in any or all of the securities upon which the RTY is based. FTSE Russell’s
only relationship to MLPF&S and to us is the licensing of certain trademarks and trade names of FTSE Russell and of the RTY,
which is determined, composed, and calculated by FTSE Russell without regard to MLPF&S, us, or the Notes. FTSE Russell is not
responsible for and has not reviewed the Notes nor any associated literature or publications and FTSE Russell makes no representation
or warranty express or implied as to their accuracy or completeness, or otherwise. FTSE Russell reserves the right, at any time
and without notice, to alter, amend, terminate, or in any way change the RTY. FTSE Russell has no obligation or liability in connection
with the administration, marketing, or trading of the Notes.
FTSE RUSSELL DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS
OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE RUSSELL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY MLPF&S, US, HOLDERS OF THE NOTES, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED THEREIN. FTSE RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES,
AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RTY OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL FTSE RUSSELL HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Supplement to the Plan of Distribution; Role of BofAS and Conflicts of Interest
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BofAS, an affiliate of BofA Finance and the lead selling agent for the sale
of the Notes, will receive an underwriting discount of $0.25 for any Note sold in this offering. UBS, as selling agent for sales
of the Notes, expects to purchase from BofAS, and BofAS expects to sell to UBS, all of the Notes sold in this offering for $9.75
per Note. UBS proposes to offer the Notes to the public at a price of $10.00 per Note. UBS will receive an underwriting discount
of $0.25 for each Note it sells to the public. The underwriting discount will be received by UBS and its financial advisors collectively.
If all of the Notes are not sold at the initial offering price, BofAS may change the public offering price and other selling terms.
BofAS, a broker-dealer affiliate of ours, is a member of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) and will participate as lead 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.
We will deliver the Notes against payment therefor in New York, New York
on a date that is greater than two business days following the Trade Date. Under Rule 15c6-1 of the Securities Exchange Act of
1934, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade
expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes more than two business days prior to the Issue Date
will be required to specify alternative settlement arrangements to prevent a failed settlement.
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. These broker-dealer affiliates 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.
As agreed by BofAS and UBS, for approximately a nine-month period after
the Trade Date, to the extent BofAS offers to buy the Notes in the secondary market, it will do so at a price that will exceed
the estimated value of the Notes at that time. The amount of this excess will decline on a straight line basis over that period.
Thereafter, if BofAS buys or sells your Notes, it will do so at prices that reflect the estimated value determined by reference
to its pricing models at that time. Any price at any time after the Trade Date 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, UBS or any other party 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.
Sales Outside of the United States
The Notes have not been approved for public sale in any jurisdiction
outside of the United States. There has been no registration or filing as to the Notes with any regulatory, securities, banking,
or local authority outside of the United States and no action has been taken by BofA Finance, BAC, BofAS or any other affiliate
of BAC, or by UBS or any of its affiliates, to offer the Notes in any jurisdiction other than the United States. As such, these
Notes are made available to investors outside of the United States only in jurisdictions where it is lawful to make such offer
or sale and only under circumstances that will result in compliance with applicable laws and regulations, including private placement
requirements.
Further, no offer or sale of the Notes is being made to residents of:
You are urged to carefully review the selling restrictions that may
be applicable to your jurisdiction beginning on page S-68 of the accompanying prospectus supplement.
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 has authorized, nor does it 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 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.
Structuring
the Notes
The Notes are our debt securities, the return on which is linked
to the performance of the Underlying. The related guarantees are BAC’s obligations. Any payments on the Notes depend on the
credit risk of BofA Finance and BAC and on the performance of the Underlying. The economic terms of the Notes reflect our and BAC’s
actual or perceived creditworthiness at the time of pricing and 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
it enters 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 elsewhere in this pricing supplement, will reduce 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 pay to purchase the Notes will be greater than the initial
estimated value of the Notes as of the Trade Date.
On the cover page of this preliminary pricing supplement, we have provided
the initial estimated value range for the Notes. The final pricing supplement will set forth the initial estimated value of the
Notes as of the Trade Date.
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-5 above and “Supplemental Use of Proceeds” on page PS-19 of the accompanying product supplement.
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 the 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 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 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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