Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-213265
Pricing Supplement Dated October 7, 2019.
|
BofA Finance LLC
$ 988,000
Leveraged Buffered Basket-Linked Notes due April
12, 2022
Fully and Unconditionally Guaranteed by
Bank of America Corporation
|
The notes do not bear interest. The amount that you will be
paid on your notes on the stated maturity date (April 12, 2022) is based on the performance of a weighted basket comprised of the
Russell 2000® Index (50% weighting) and the iShares MSCI EAFE ETF (50% weighting), as measured from the trade date
(October 7, 2019) to and including the determination date (April 7, 2022, subject to adjustment). The initial basket level is 100
and the final basket level will equal the sum of the products, as calculated for each basket underlier, of: (i) the final underlier
value divided by (ii) the initial underlier value multiplied by (iii) the applicable initial weighted value for the basket underlier.
If the final basket level on the determination date is greater than the initial basket level, the return on your notes will be
positive, subject to the maximum settlement amount of $1,283.50 for each $1,000 face amount of your notes. If the final basket
level declines by up to 15.00% from the initial basket level, you will receive the face amount of your notes. If the final basket
level declines by more than 15.00% from the initial basket level, you will be exposed to any decrease in the final basket level
beyond 15.00%. In this case, the return on your notes will be negative. You may lose some or a significant portion of your investment
in the notes.
To determine your payment at maturity, we will calculate the basket
return, which is the percentage increase or decrease in the final basket level from the initial basket level. On the stated maturity
date, for each $1,000 face amount of your notes, you will receive an amount in cash equal to:
|
|
●
|
if the basket return is positive (the final basket level is greater than the initial basket level), the sum
of (i) $1,000 plus (ii) the product of (a) $1,000 times (b) 1.05 times (c) the basket return, subject
to the maximum settlement amount;
|
|
|
●
|
if the basket return is zero or negative but not below -15.00% (the final basket level is equal to the
initial basket level or is less than the initial basket level, but not by more than 15.00%), $1,000; or
|
|
|
●
|
if the basket return is negative and is below -15.00% (the final basket level is less than the initial
basket level by more than 15.00%), the sum of (i) $1,000 plus (ii) the product of (a) the sum of the
basket return plus 15.00% times (b) $1,000. This amount will be less than $1,000.
|
Declines in one basket underlier may offset increases in the other
basket underliers.
The notes will not be listed on any securities exchange. Investment
in the notes involves certain risks, including the credit risk of BofA Finance LLC (“BofA Finance”), as issuer of the
notes, and the credit risk of Bank of America Corporation (“BAC” or the “Guarantor”), as guarantor of the
notes. Potential purchasers of the notes should consider the information in “Risk Factors” beginning on page PS-15
of this pricing supplement, page PS-5 of the accompanying product supplement, page S-4 of the accompanying prospectus supplement,
and page 7 of the accompanying prospectus.
As of the trade date, the initial estimated value of the notes
is $984.70 per $1,000 in face amount. See “Summary Information” beginning on page PS-6 of this pricing supplement,
“Risk Factors” beginning on page PS-15 of this pricing supplement and “Structuring the Notes” on page PS-32 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.
|
Original issue date:
|
October 10, 2019
|
Price to public:
|
100.00% of the face amount
|
|
Underwriting discount(1):
|
0.75% of the face amount
|
Net proceeds to the issuer:
|
99.25% of the face amount
|
(1)
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance, will participate as selling agent in the distribution
of the notes. See “Supplemental Plan of Distribution — Conflicts of Interest” on page PS-30 of this pricing supplement.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this pricing supplement or the
accompanying prospectus, prospectus supplement or product supplement. 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.
BofA Merrill Lynch
Selling Agent
The price to public and net proceeds listed above relate to the notes
we sell initially. We may decide to sell additional notes after the date of this pricing supplement, at prices to public and with
underwriting discounts and net proceeds that differ from the amounts set forth above. The return (whether positive or negative)
on your investment in notes will depend in part on the price to public you pay for such notes.
BofAS and any of our other broker-dealer affiliates may use this
pricing supplement in the initial sale of the notes. In addition, BofAS and any of our other broker-dealer affiliates may use this
pricing supplement in a market-making transaction in a note after its initial sale. Unless BofAS or any of our other broker-dealer
affiliates informs the purchaser otherwise in the confirmation of sale, this pricing supplement is being used in a market-making
transaction.
As a result of the completion of Bank of America’s reorganization
of the U.S. broker-dealer business, references to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”)
in the accompanying product supplement EQUITY-1, prospectus supplement and prospectus, as such references relate to MLPF&S’s
institutional services, should now be read as references to BofAS.
|
About Your Prospectus
The notes are unsecured senior notes issued by BofA Finance, a direct,
wholly-owned subsidiary of BAC. Payments on the notes are fully and unconditionally guaranteed by the Guarantor. This prospectus
includes this pricing supplement and the accompanying documents listed below. This pricing supplement constitutes a supplement
to the documents listed below and should be read in conjunction with those documents:
Product supplement EQUITY-1 dated January 24, 2017:
https://www.sec.gov/Archives/edgar/data/70858/000119312517016445/d331325d424b5.htm
Series A MTN prospectus supplement dated November 4, 2016 and prospectus
dated November 4, 2016:
https://www.sec.gov/Archives/edgar/data/70858/000119312516760144/d266649d424b3.htm
The information in this pricing supplement supersedes any conflicting
information in the documents listed above. In addition, some of the terms or features described in the listed documents may not
apply to your notes.
|
|
Leveraged Buffered Basket-Linked Notes due April 12, 2022
|
|
|
|
|
You should be willing to:
|
|
●
|
forgo gains greater than a Maximum Settlement Amount of 128.35% of the face amount in exchange for (i) 1.05x leveraged upside
participation if the Basket Return is positive and (ii) a buffer against loss of principal in the event of a decline of up to 15.00%
in the Final Basket Level relative to the Initial Basket Level.
|
|
|
●
|
forgo interest payments and accept the risk of losing a substantial portion of your investment in exchange for the potential
to earn 105.00% of any positive Basket Return up to a Maximum Settlement Amount of 128.35% of the face amount.
|
Your maximum return on your notes will not be greater than the return
represented by the Maximum Settlement Amount, which such return is 28.35%. You could lose some or a substantial portion of your
investment if the Basket Return is less than -15.00%.
|
DETERMINING THE CASH SETTLEMENT AMOUNT
|
|
|
At maturity, for each $1,000 face amount, the investor will receive
(in each case as a percentage of the face amount):
|
|
●
|
if the Final Basket Level is greater than 100.00% of the Initial Basket Level, 100.00% plus 105.00% times the Basket
Return, subject to a Maximum Settlement Amount of 128.35%;
|
|
|
●
|
if the Final Basket Level is less than or equal to 100.00% of the Initial Basket Level but greater than or
equal to 85.00% of the Initial Basket Level, 100.00%; or
|
|
|
●
|
if the Final Basket Level is less than 85.00% of the Initial Basket Level, 100.00% minus 1.00% for every 1.00% that
the Final Basket Level has declined below 85.00% of the Initial Basket Level.
|
If the Final Basket Level declines by more than 15.00% from the
Initial Basket Level, the return on the notes will be negative, and the investor could lose a substantial portion of their investment
in the notes.
|
KEY TERMS
|
|
|
|
|
|
Issuer:
|
BofA Finance LLC (“BofA Finance”)
|
|
Guarantor:
|
Bank of America Corporation (“BAC”)
|
|
Basket Underliers:
|
The Russell 2000® Index (Bloomberg symbol, “RTY Index”); and the iShares® MSCI EAFE ETF (Bloomberg ticker, “EFA”).
|
|
Face Amount:
|
$988,000 in the aggregate; each note will have a face amount equal to $1,000
|
|
Trade Date:
|
October 7, 2019
|
|
Settlement Date:
|
October 10, 2019
|
|
Determination Date:
|
April 7, 2022
|
|
Stated Maturity Date:
|
April 12, 2022
|
|
Initial Weighted Value:
|
The Initial Weighted Value for each of the Basket Underliers is equal to the product of the initial weight of that Basket Underlier times the Initial Basket Level. The initial weight and Initial Underlier Value of each Basket Underlier are shown in the table below:
|
|
|
Basket Underlier
|
|
Initial Weight in Basket
|
Initial Underlier Value
|
|
|
Russell 2000® Index
|
|
50.00%
|
1,497.787
|
|
|
iShares® MSCI EAFE ETF
|
|
50.00%
|
$64.09
|
|
|
|
|
Initial Underlier Value:
|
The Initial Underlier Value of each Basket Underlier is shown in
the table above.
|
|
Final Underlier Value:
|
With respect to the Russell 2000® Index, its closing
level on the Determination Date.
|
|
|
With respect to the iShares® MSCI EAFE ETF, its Closing Market Price on the Determination Date multiplied by its Price Multiplier on that day, as determined by the calculation agent.
|
|
Initial Basket Level:
|
100
|
|
Final Basket Level:
|
The sum of the following: (1) the Final Underlier Value of the Russell 2000® Index divided by the Initial Underlier Value of the Russell 2000® Index, multiplied by the Initial Weighted Value of the Russell 2000® Index plus (2) the Final Underlier Value of the iShares® MSCI EAFE ETF divided by the Initial Underlier Value of the iShares® MSCI EAFE ETF, multiplied by the Initial Weighted Value of the iShares® MSCI EAFE ETF.
|
|
Basket Return:
|
The quotient of (i) the Final Basket Level minus the Initial Basket Level divided by (ii) the Initial Basket Level, expressed as a positive or negative percentage.
|
|
Upside Participation Rate:
|
105.00%
|
|
Buffer Level:
|
85.00% of the Initial Basket Level (equal to a -15.00% Basket Return)
|
|
Buffer Amount:
|
15.00%
|
|
Maximum Settlement Amount:
|
$1,283.50 for each $1,000 face amount of your notes.
|
|
Cap Level:
|
127.00% of the Initial Basket Level.
|
|
CUSIP/ISIN:
|
09709TWG2 / US09709TWG20
|
|
HYPOTHETICAL PAYMENT AT MATURITY
|
|
Hypothetical Final Basket Level (as % of Initial Basket Level)
|
Hypothetical Cash Settlement Amount (as % of Face Amount)
|
|
160.000%
|
128.350%
|
|
150.000%
|
128.350%
|
|
140.000%
|
128.350%
|
|
130.000%
|
128.350%
|
|
127.000%
|
128.350%
|
|
120.000%
|
121.000%
|
|
110.000%
|
110.500%
|
|
105.000%
|
105.250%
|
|
104.000%
|
104.200%
|
|
102.000%
|
102.100%
|
|
100.000%
|
100.000%
|
|
96.000%
|
100.000%
|
|
92.000%
|
100.000%
|
|
85.000%
|
100.000%
|
|
80.000%
|
95.000%
|
|
75.000%
|
90.000%
|
|
50.000%
|
65.000%
|
|
25.000%
|
40.000%
|
|
0.000%
|
15.000%
|
Please read the section entitled “Risk Factors” of this
pricing supplement as well as the risks and considerations described in “Risk Factors” beginning on page PS-15 of the
accompanying product supplement, page S-4 of the accompanying prospectus supplement, and page 7 of the accompanying prospectus.
SUMMARY INFORMATION
|
We refer to the notes we are offering by this pricing supplement
as the “offered notes” or the “notes”. Each of the offered notes has the terms described below. Capitalized
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).
This section is meant as a summary and should be read in conjunction
with the accompanying product supplement, prospectus supplement and prospectus. This pricing supplement supersedes any conflicting
provisions of the documents listed above.
|
Key Terms
|
Issuer:
|
BofA Finance LLC (“BofA Finance”)
|
|
Guarantor:
|
Bank of America Corporation (“BAC”)
|
|
Basket Underliers:
|
The Russell 2000® Index (Bloomberg symbol, “RTY
Index”), as published by FTSE Russell (“FTSE”); and the iShares® MSCI EAFE ETF (Bloomberg ticker,
“EFA”), as published by BlackRock Fund Advisors (“BFA”); see “The Basket and the Basket Underliers”
below.
|
|
Specified Currency:
|
U.S. dollars (“$”)
|
|
Face Amount:
|
Each note will have a face amount of $1,000; $988,000 in the aggregate
for all the offered notes; the aggregate face amount of the offered notes may be increased if we, at our sole option, decide to
sell an additional amount of the offered notes on a date subsequent to the date of this pricing supplement.
|
|
Purchase at Amount Other Than the Face Amount:
|
The amount we will pay you at the stated maturity date for your notes
will not be adjusted based on the price to public you pay for your notes, so if you acquire notes at a premium (or discount) to
face amount and hold them to the stated maturity date, it could affect your investment in a number of ways. The return on your
investment in such notes will be lower (or higher) than it would have been had you purchased the notes at face amount. Also, the
stated Buffer Level would not offer the same measure of protection to your investment as would be the case if you had purchased
the notes at face amount. Additionally, the Cap Level would be triggered at a lower (or higher) percentage return than indicated
below, relative to your initial investment. See “Risk Factors — If You Purchase Your Notes at a Premium to Face Amount,
the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain Key Terms
of the Notes Will Be Negatively Affected” on page PS-18 of this pricing supplement.
|
|
Cash Settlement Amount:
|
For each $1,000 face amount of your notes, we will pay you on the
stated maturity date an amount in cash equal to:
|
|
|
●
if the Final Basket Level is greater than or equal to the Cap Level, the Maximum Settlement Amount;
●
if the Final Basket Level is less than the Cap Level but greater than the Initial Basket Level, the sum
of (1) $1,000 plus (2) the product of (i) $1,000 times (ii) the Upside Participation Rate times (iii)
the Basket Return;
●
if the Final Basket Level is equal to or less than the Initial Basket Level but greater than or equal
to the Buffer Level, $1,000; or
●
if the Final Basket Level is less than the Buffer Level, the sum of (1) $1,000 plus (2) the product
of (i) $1,000 times (ii) the sum of the Basket Return plus the Buffer Amount. In this case, the cash settlement
amount will be less than
|
|
|
the face amount of the notes, and you will lose some
or a significant portion of the face amount.
|
|
Upside Participation Rate:
|
105.00%
|
|
Maximum Settlement Amount:
|
$1,283.50 per $1,000 face amount of the notes
|
|
Cap Level:
|
127.00% of the Initial Basket Level
|
|
Buffer Level:
|
85.00% of the Initial Basket Level
|
|
Buffer Amount:
|
15.00%
|
|
Trade Date:
|
October 7, 2019
|
|
Original Issue Date (Settlement Date):
|
October 10, 2019
|
|
Determination Date:
|
April 7, 2022, subject to postponement of up to five scheduled trading
days, as set forth in the section “Description of the Notes—Certain Terms of the Notes—Events Relating to Calculation
Days” of the accompanying product supplement
|
|
Stated Maturity Date:
|
April 12, 2022, subject to postponement as set forth below and in
the section “Description of the Notes—Certain Terms of the Notes—Events Relating to Calculation Days” of
the accompanying product supplement
|
|
Initial Basket Level:
|
100
|
|
Initial Weighted Value:
|
The Initial Weighted Value for each of the Basket Underliers is equal to the product of the initial weight of that Basket Underlier times the Initial Basket Level. The initial weight and the Initial Underlier Value of each Basket Underlier is shown in the table below:
|
|
|
Basket Underlier
|
Initial Weight in Basket
|
Initial Underlier Value
|
|
|
Russell 2000® Index
|
50%
|
1,497.787
|
|
|
iShares® MSCI EAFE ETF
|
50%
|
$64.09
|
|
Price Multiplier:
|
With respect to the iShares® MSCI EAFE ETF, 1, subject
to adjustment for certain events as described in "Description of the Notes — Anti-Dilution and Discontinuance Adjustments
Relating to ETFs" beginning on page PS-23 of product supplement EQUITY-1
|
|
Initial Underlier Value:
|
The Initial Underlier Value of each Basket Underlier is shown in
the table above.
|
|
Final Underlier Value:
|
With respect to the Russell 2000® Index, its closing
level on the Determination Date.
With respect to the iShares® MSCI EAFE ETF, its Closing
Market Price on the Determination Date multiplied by its Price Multiplier on that day, as determined by the calculation agent.
|
|
Final Basket Level:
|
The sum of the following: (1) the Final Underlier Value of the Russell 2000® Index divided by the Initial Underlier Value of the Russell 2000® Index, multiplied by the Initial Weighted Value of the Russell 2000® Index plus (2) the Final Underlier Value of the
|
|
|
iShares® MSCI EAFE ETF divided by the
Initial Underlier Value of the iShares® MSCI EAFE ETF, multiplied by the Initial Weighted Value of the iShares®
MSCI EAFE ETF.
|
|
Basket Return:
|
The quotient of (1) the Final Basket Level minus the
Initial Basket Level divided by (2) the Initial Basket Level, expressed as a positive or negative percentage.
|
|
Business Day:
|
As described under “Description of the Notes—Certain
Terms of the Notes—Business Days” in the accompanying product supplement
|
|
Trading Day:
|
With respect to each Basket Underlier, as described
under “Description of the Notes—Certain Terms of the Notes—Trading Days” in the accompanying product supplement
|
|
No Listing:
|
The notes will not be listed on any securities exchange or interdealer
quotation system
|
|
No Interest:
|
The notes do not bear interest
|
|
No Redemption:
|
The notes will not be subject to any optional redemption right or
price dependent redemption right
|
|
Events of Default:
|
If an Event of Default, as defined in the Senior Indenture and in
the section entitled “Events of Default and Rights of Acceleration” beginning on page 35 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 “—Cash Settlement Amount,”
calculated as though the date of acceleration were the maturity date of the notes and as though the determination date were the
second trading day prior to the date of acceleration. In case of a default in the payment of the notes, the notes will not bear
a default interest rate.
|
|
Calculation Agent:
|
BofAS, an affiliate of BofA Finance.
|
|
Selling Agent:
|
BofAS
|
|
CUSIP/ISIN:
|
09709TWG2 / US09709TWG20
|
|
Initial Estimated Value:
|
The initial estimated value of the notes as of the trade date is
set forth on the cover page of this pricing supplement.
Payments on the notes, including the Maximum Settlement Amount, depend
on the credit risk of BofA Finance and BAC and on the performance of the Basket. The economic terms of the notes are based on BAC’s
internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked notes and the economic
terms of certain related hedging arrangements 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
hedging related charges described below, reduced the economic terms of the notes to you and the initial estimated value of the
notes. Due to these factors, the public offering price you pay to purchase the notes is greater than the initial estimated value
of the notes as of the trade date.
|
|
|
For more information about the initial estimated value and the structuring
of the notes, see “Risk Factors” beginning on page PS-155 and “Structuring the Notes” on page PS-32.
|
Supplemental Terms of the Notes
For purposes of the notes offered by this pricing supplement, all
references to each of the following terms used in the accompanying product supplement will be deemed to refer to the corresponding
term used in this pricing supplement, as set forth in the table below:
|
Product Supplement Term
|
Pricing Supplement Term
|
|
pricing date
|
trade date
|
|
maturity date
|
stated maturity date
|
|
calculation day
|
Determination Date
|
|
principal amount
|
face amount
|
|
Market Measure
|
Basket Underlier
|
|
Index
|
Basket Underlier
|
|
ETF
|
Basket Underlier
|
HYPOTHETICAL EXAMPLES
The following table, examples and chart are provided for purposes
of illustration only. They should not be taken as an indication or prediction of future investment results and merely are intended
to illustrate the impact that the various hypothetical Final Underlier Values on the Determination Date could have on the Cash
Settlement Amount at maturity assuming all other variables remain constant.
The examples below are based on a range of Final Basket Levels and
Final Underlier Values that are entirely hypothetical; the level of the Basket on any day throughout the life of the notes, including
the Final Basket Level on the Determination Date, cannot be predicted. The Basket Underliers have been highly volatile in the past
— meaning that the value of each Basket Underlier has changed considerably in relatively short periods — and their
performances cannot be predicted for any future period.
The information in the following examples reflects hypothetical rates
of return on the offered notes assuming that they are purchased on the original issue date at the face amount and held to the stated
maturity date. If you sell your notes in a secondary market prior to the stated maturity date, your return will depend upon the
market value of your notes at the time of sale, which may be affected by a number of factors that are not reflected in the table
below, such as interest rates, the volatility of the Basket Underliers, the creditworthiness of BofA Finance, as issuer, and the
creditworthiness of BAC, as guarantor. In addition, the initial estimated value of your notes as of the trade date (as determined
by reference to pricing models used by us and our affiliates) is less than the original price to public of your notes. For more
information on the estimated value of your notes, see “Risk Factors — The Public Offering Price You Pay for the Notes
Exceeds Their Initial Estimated Value” on page PS-16 of this pricing supplement. The information in the table also reflects
the key terms and assumptions in the box below.
|
|
Key Terms and Assumptions
|
|
|
|
Face Amount
|
$1,000
|
|
|
|
Upside Participation Rate
|
105.00%
|
|
|
|
Initial Basket Level
|
100
|
|
|
|
Cap Level
|
127.00% of the Initial Basket Level
|
|
|
|
Maximum Settlement Amount
|
$1,283.50 per note
|
|
|
|
Buffer Level
|
85.00% of the Initial Basket Level
|
|
|
|
Buffer Amount
|
15.00%
|
|
|
|
Neither a Market Disruption Event nor a non-trading day occurs on
the originally scheduled Determination Date, and the Basket Underliers are not discontinued on or prior to such date
|
|
|
|
No change in or affecting any of the stocks included in the Basket Underliers (the “Basket Underlier Stocks”) or the method by which the Basket Underlier Sponsors calculate the Basket Underliers
|
|
|
|
Notes purchased on original issue date at the face amount and held
to the stated maturity date
|
|
For these reasons, the actual performance of the Basket over the
life of your notes, as well as the amount payable at maturity, if any, may bear little relation to the hypothetical examples shown
below or to the historical values of the Basket Underliers shown elsewhere in this pricing supplement. For information about the
historical values of the Basket Underliers during recent periods, see “The Basket and the Basket Underliers” below.
Before investing in the offered notes, you should consult publicly available information to determine the values of the Basket
Underliers between the date of this pricing supplement and the date of your purchase of the offered notes.
Also, the hypothetical examples shown below do not take into account
the effects of applicable taxes. Because of the U.S. tax treatment applicable to your notes, tax liabilities could affect the after-tax
rate of return on your notes to a comparatively greater extent than the after-tax return on the Basket Underlier Stocks.
The levels in the left column of the table below represent hypothetical
Final Basket Levels and are expressed as percentages of the Initial Basket Level. The amounts in the right column represent the
hypothetical Cash Settlement Amounts, based on the corresponding hypothetical Final Basket Level, and are expressed as percentages
of the face amount of a note (rounded to the nearest one-thousandth of a percent). Thus, a hypothetical Cash Settlement Amount
of 100.000% means that the value of the cash payment that we would deliver
for each $1,000 of the outstanding face amount of the offered notes
on the stated maturity date would equal 100.000% of the face amount of a note, based on the corresponding hypothetical Final Basket
Level and the assumptions noted above.
|
Hypothetical Final Basket Level
(as Percentage of Initial Basket Level)
|
Hypothetical Cash Settlement Amount
(as Percentage of Face Amount)
|
|
160.000%
|
128.350%
|
|
150.000%
|
128.350%
|
|
140.000%
|
128.350%
|
|
130.000%
|
128.350%
|
|
127.000%
|
128.350%
|
|
120.000%
|
121.000%
|
|
110.000%
|
110.500%
|
|
105.000%
|
105.250%
|
|
104.000%
|
104.200%
|
|
102.000%
|
102.100%
|
|
100.000%
|
100.000%
|
|
95.000%
|
100.000%
|
|
92.000%
|
100.000%
|
|
85.000%
|
100.000%
|
|
80.000%
|
95.000%
|
|
75.000%
|
90.000%
|
|
50.000%
|
65.000%
|
|
25.000%
|
40.000%
|
|
0.000%
|
15.000%
|
If, for example, the Final Basket Level were determined to be 25.000%
of the Initial Basket Level, the Cash Settlement Amount that we would deliver on your notes at maturity would be 40.000% of the
face amount of your notes (which would be equal to a Cash Settlement Amount of $400.00), as shown in the table above. As a result,
if you purchased your notes on the original issue date at the face amount and held them to the stated maturity date, you would
lose 60.000% of your investment (if you purchased your notes at a premium to face amount you would lose a correspondingly higher
percentage of your investment). If the Final Basket Level were determined to be 0.000% of the Initial Basket Level, you would lose
85% of your investment in the notes. In addition, if the Final Basket Level were determined to be 140.000% of the Initial Basket
Level, the Cash Settlement Amount that we would deliver on your notes at maturity would be capped at the Maximum Settlement Amount
of $1,283.50, or 128.35% of each $1,000 face amount of your notes, as shown in the table above. As a result, if you held your notes
to the stated maturity date, you would not benefit from any increase in the Final Basket Level of greater than 127.00% of the Initial
Basket Level.
The following chart shows a graphical illustration of the hypothetical
Cash Settlement Amounts that we would pay on your notes on the stated maturity date, if the Final Basket Level were any of the
hypothetical levels shown on the horizontal axis. The hypothetical Cash Settlement Amounts in the chart are expressed as percentages
of the face amount of your notes and the hypothetical Final Basket Levels are expressed as percentages of the Initial Basket Level.
The chart shows that any hypothetical Final Basket Level of less than 85.000% (the section left of the 85.000% marker on the horizontal
axis) would result in a hypothetical Cash Settlement Amount of less than 100.000% of the face amount of your notes (the section
below the 100.000% marker on the vertical axis) and, accordingly, in a loss of principal to the holder of the notes. The chart
also shows that any hypothetical Final Basket Level of greater than or equal to 127.00% of the Initial Basket Level (the section
right of the 127.00% marker on the horizontal axis) would result in a capped return on your investment.
The examples on the following pages illustrate the hypothetical Cash
Settlement Amount at maturity based on
hypothetical Final Underlier Values of each Basket Underlier, calculated
based on the key terms and assumptions above. The hypothetical Initial Underlier Value for each Basket Underlier of 100.00 has
been chosen for illustrative purposes only and does not represent the actual Initial Underlier Value for that Basket Underlier.
For historical data regarding the actual closing levels or Closing Market Prices, as applicable, of the Basket Underliers, please
see the historical information set forth below under “The Basket and the Basket Underliers.”
The levels in Column A represent the hypothetical Initial Underlier
Values for each Basket Underlier, and the levels in Column B represent the hypothetical Final Underlier Values for each Basket
Underlier. The percentages in Column C represent the hypothetical Final Underlier Values in Column B expressed as percentages of
the corresponding hypothetical Initial Underlier Values in Column A. The amounts in Column D represent the applicable Initial Weighted
Value for each Basket Underlier, and the amounts in Column E represent the products of the percentages in Column C times
the corresponding amounts in Column D. The Final Basket Level for each example is shown beneath each example, and will equal
the sum of the two products shown in Column E. The Basket Return for each example is shown beneath the Final Basket Level
for such example, and will equal the quotient of (i) the Final Basket Level for such example minus the Initial Basket
Level divided by (ii) the Initial Basket Level, expressed as a percentage. The numbers shown below may have been rounded
for ease of analysis.
Example 1: The Final Basket Level is greater than the Cap Level.
The Cash Settlement Amount equals the Maximum Settlement Amount.
|
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|
Basket Underlier
|
Hypothetical Initial Underlier Value
|
Hypothetical Final Underlier Value
|
Column B / Column A
|
Initial Weighted Value
|
Column C x Column D
|
|
Russell 2000® Index
|
100.00
|
150.00
|
150.00%
|
50.00
|
75.00
|
|
iShares® MSCI EAFE ETF
|
100.00
|
180.00
|
180.00%
|
50.00
|
90.00
|
|
|
|
|
Final Basket Level
|
165.00
|
|
|
|
|
Basket Return
|
65.00%
|
In this example, all of the hypothetical Final Underlier Values for
the Basket Underliers are greater than the applicable hypothetical Initial Underlier Values, which results in the hypothetical
Final Basket Level being greater than the Initial Basket Level of 100.00. Since the hypothetical Final Basket Level is greater
than the Cap Level, the hypothetical Cash Settlement Amount that we would deliver on your notes at maturity would be capped at
the
Maximum Settlement Amount of $1,283.50 for each $1,000 face amount
of your notes (i.e., 128.35% of each $1,000 face amount of your notes).
Example 2: The Final Basket Level is greater than the Initial
Basket Level but less than the Cap Level.
|
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|
Basket Underlier
|
Hypothetical Initial Underlier Value
|
Hypothetical Final Underlier Value
|
Column B / Column A
|
Initial Weighted Value
|
Column C x Column D
|
|
Russell 2000® Index
|
100.00
|
101.00
|
101.00%
|
50.00
|
50.50
|
|
iShares® MSCI EAFE ETF
|
100.00
|
150.00
|
150.00%
|
50.00
|
75.00
|
|
|
|
|
Final Basket Level
|
125.50
|
|
|
|
|
Basket Return
|
25.50%
|
In this example, all of the hypothetical Final Underlier Values for
the Basket Underliers are greater than the applicable hypothetical Initial Underlier Values, which results in the hypothetical
Final Basket Level being greater than the Initial Basket Level of 100.00. Since the hypothetical Final Basket Level is less than
the Cap Level, the hypothetical Cash Settlement Amount for each $1,000 face amount of your notes will equal:
Cash Settlement Amount = $1,000 + ($1,000 × 105.00% ×
25.50%) = $1,267.75
Example 3: The Final Basket Level is less than the Initial Basket
Level but greater than the Buffer Level. The Cash Settlement Amount equals the $1,000 face amount.
|
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|
Basket Underlier
|
Hypothetical Initial Underlier Value
|
Hypothetical Final Underlier Value
|
Column B / Column A
|
Initial Weighted Value
|
Column C x Column D
|
|
Russell 2000® Index
|
100.00
|
95.00
|
95.00%
|
50.00
|
47.50
|
|
iShares® MSCI EAFE ETF
|
100.00
|
95.00
|
95.00%
|
50.00
|
47.50
|
|
|
|
|
Final Basket Level
|
95.00
|
|
|
|
|
Basket Return
|
-5.00%
|
In this example, all of the hypothetical Final Underlier Values for
the Basket Underliers are less than the applicable Initial Underlier Values, which results in the hypothetical Final Basket Level
being less than the Initial Basket Level of 100.00. Since the hypothetical Final Basket Level of 95.00 is greater than the Buffer
Level of 85.00% of the Initial Basket Level but less than the Initial Basket Level of 100.00, the hypothetical Cash Settlement
Amount for each $1,000 face amount of your notes will equal the face amount of the note, or $1,000.
Example 4: The Final Basket Level is less than the Buffer Level.
The Cash Settlement Amount is less than the $1,000 face amount.
|
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
|
Basket Underlier
|
Hypothetical Initial Underlier Value
|
Hypothetical Final Underlier Value
|
Column B / Column A
|
Initial Weighted Value
|
Column C x Column D
|
|
Russell 2000® Index
|
100.00
|
50.00
|
50.00%
|
50.00
|
25.00
|
|
iShares® MSCI EAFE ETF
|
100.00
|
60.00
|
60.00%
|
50.00
|
30.00
|
|
|
|
|
Basket Return
|
-45.00%
|
|
|
|
|
Final Basket Level
|
55.00
|
In this example, the hypothetical Final Underlier Values for all
of the Basket Underliers are less than the applicable hypothetical Initial Underlier Values, which results in the hypothetical
Final Basket Level being less than the Initial
Basket Level of 100.00. Since the hypothetical Final Basket Level
of 55.00 is less than the Buffer Level of 85.00% of the Initial Basket Level, the hypothetical Cash Settlement Amount for each
$1,000 face amount of your notes will equal:
Cash Settlement Amount = $1,000 + ($1,000 × (-45.00% + 15.00%))
= $700.00
The Cash Settlement Amounts shown above are entirely hypothetical;
they are based on values of the Basket Underliers that may not be achieved on the Determination Date and on assumptions that may
prove to be erroneous. The actual market value of your notes on the stated maturity date or at any other time, including any time
you may wish to sell your notes, may bear little relation to the hypothetical Cash Settlement Amounts shown above, and these amounts
should not be viewed as an indication of the financial return on an investment in the offered notes. The hypothetical Cash Settlement
Amounts on notes held to the stated maturity date in the examples above assume you purchased your notes at their face amount and
have not been adjusted to reflect the actual price to public you pay for your notes. The return on your investment (whether positive
or negative) in your notes will be affected by the amount you pay for your notes. If you purchase your notes for a price other
than the face amount, the return on your investment will differ from, and may be significantly lower than, the hypothetical returns
suggested by the above examples. Please read “Risk Factors — If You Purchase Your Notes at a Premium to Face Amount,
the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of Certain Key Terms
of the Notes Will Be Negatively Affected” below.
Payments on the notes are economically equivalent to the amounts
that would be paid on a combination of other instruments. For example, payments on the notes are economically equivalent to a combination
of an interest-bearing bond bought by the holder and one or more options entered into between the holder and us (with one or more
implicit option premiums paid over time). The discussion in this paragraph does not modify or affect the terms of the notes or
the U.S. federal income tax treatment of the notes, as described elsewhere in this pricing supplement.
|
We cannot predict the actual Final Basket Level or what the market value of your notes will be on any particular trading day, nor can we predict the relationship between the value of each Basket Underlier and the market value of your notes at any time prior to the stated maturity date. The actual amount that you will receive at maturity and the rate of return on the offered notes will depend on the actual Basket Return determined by the calculation agent as described above. Moreover, the assumptions on which the hypothetical returns are based may turn out to be inaccurate. Consequently, the amount of cash to be paid in respect of your notes, if any, on the stated maturity date may be very different from the information reflected in the examples and chart above.
|
RISK FACTORS
|
An investment in your notes is subject to the risks described below, as well as the risks and considerations described in the accompanying prospectus, prospectus supplement and product supplement. You should carefully review these risks and considerations as well as the terms of the notes described herein and in the accompanying prospectus, prospectus supplement and product supplement. Your notes are a riskier investment than ordinary debt securities. Also, your notes are not equivalent to investing directly in the Basket Underlier Stocks, i.e., with respect to a Basket Underlier to which your stocks are linked, the stocks comprising such Basket Underlier. You should carefully consider whether the offered notes are suited to your particular circumstances.
|
You May Lose a Significant Portion of
Your Investment in the Notes
You can lose a significant portion of your investment in the notes.
The cash payment on your notes, if any, on the stated maturity date will be based on the performance of the Basket as measured
from the Initial Basket Level to the Final Basket Level on the Determination Date. If the Final Basket Level is less than
the Buffer Level, you will have a loss for each $1,000 of the face amount of your notes equal to the product of (i) the
sum of the Basket Return plus the Buffer Amount times (ii) $1,000. Thus, you will be exposed to any decrease
in the Final Basket Level beyond the Buffer Amount, and the return on your investment will be negative. You may lose a significant
portion of your investment in the notes, which would include any premium to face amount you paid when you purchased the notes.
Also, the market price of your notes prior to the stated maturity
date may be significantly lower than the purchase price you pay for your notes. Consequently, if you sell your notes before the
stated maturity date, you may receive far less than the amount of your investment in the notes.
The Return on Your Notes Will Be Limited
to the Maximum Settlement Amount
Your ability to participate in any appreciation in the level of the
Basket over the life of your notes will be limited because of the Cap Level. The Maximum Settlement Amount will limit the Cash
Settlement Amount you may receive for each of your notes at maturity, no matter how much the level of the Basket increases beyond
the Cap Level over the life of your notes. Accordingly, the amount payable for each of your notes may be significantly less than
it would have been had you invested directly in the Basket Underliers or the Basket Underlier Stocks.
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 the Cash Settlement Amount at maturity will be dependent upon our ability and the ability
of the Guarantor to repay our obligations under the notes on the stated maturity date, regardless of the level of the Basket. No
assurance can be given as to what our financial condition or the financial condition of the Guarantor will be on the stated maturity
date. If we and the Guarantor become unable to meet our respective financial obligations as they become due, you may not receive
the amounts payable under the terms of the notes.
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 stated maturity date 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
level of the Basket, an improvement in our or the Guarantor’s credit ratings will not reduce the other investment risks related
to the notes.
We Are a Finance Subsidiary and, as
Such, Will Have Limited Assets and Operations
We are a finance subsidiary of BAC and will have no assets, operations
or revenues other than those related to the issuance, administration and repayment of our debt securities that are guaranteed by
the Guarantor. As a finance subsidiary, to meet our obligations under the notes, we are dependent upon payment or contribution
of funds and/or repayment of outstanding loans from the Guarantor and/or its other subsidiaries. Therefore, our ability to make
payments on the notes may be limited. In addition, we will have no independent assets available for distributions to holders of
the notes if they make claims in respect of the notes in a bankruptcy, resolution or similar proceeding. Accordingly, any recoveries
by such holders may be limited to those available under the related
guarantee by the Guarantor, and that guarantee will rank equally
with all other unsecured senior obligations of the Guarantor.
The Public Offering Price You Pay for the Notes Exceeds Their Initial Estimated Value
The initial estimated value of the notes that is provided in this
pricing supplement is an estimate only, determined as of the trade date by reference to our and our affiliates’ pricing models.
These pricing models consider certain assumptions and variables, including our credit spreads and those of the Guarantor, the Guarantor’s
internal funding rate, mid-market terms on hedging transactions, expectations on interest rates, dividends and volatility, price-sensitivity
analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events, which
may prove to be incorrect.
The initial estimated value does not represent a minimum or maximum
price at which we, the Guarantor, BofAS or any other entities 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 the date of this pricing supplement will vary based on many
factors that cannot be predicted with accuracy, including our and the Guarantor’s creditworthiness and changes in market
conditions.
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 values of the Basket Underliers, the Guarantor’s internal funding rate, and the inclusion in the public offering
price of the hedging related charges, all as further described in “Structuring the Notes” below. These factors, together
with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may
be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways.
The Price of the Notes That May Be Paid
by BofAS (and Which May Be Reflected on Customer Account Statements) May 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 the distribution participants, for approximately
a three-month period after the trade date, BofAS expects to offer to buy the notes in the secondary market 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 the distribution participants over the term of the notes, will decline to zero on
a straight line basis over that three-month period. Accordingly, the estimated value of your notes during this initial three-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 performances
of the Basket Underliers 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.
We Cannot Assure You that a Trading
Market for Your Notes Will Ever Develop or Be Maintained
We will not list the notes on any securities exchange. We cannot
predict how the notes will trade in any secondary market or whether that market will be liquid or illiquid.
The development of a trading market for the notes will depend on
the Guarantor’s financial performance and other factors, including changes in the values of the Basket Underliers. 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.
The Amount Payable on Your Notes Is
Not Linked to the Value of Each Basket Underlier at Any Time Other than the Determination Date
The Final Basket Level will be based on the closing level or Closing
Market Price, as applicable, of each Basket Underlier on the Determination Date (subject to adjustment as described elsewhere in
this pricing supplement). Therefore, if the closing level or Closing Market Price, as applicable, of the Basket Underliers decreased
significantly on the Determination Date, the Cash Settlement Amount for your notes may be significantly less than it would have
been had the Cash Settlement Amount been linked to the closing level or Closing Market Price, as applicable, of the Basket Underliers
prior to such decrease in the values of the Basket Underliers. Although the actual values of the Basket Underliers on the stated
maturity date or at other times during the life of your notes may be higher than the closing level or Closing Market Price, as
applicable, of the Basket Underliers on the Determination Date, you will not benefit from the values of the Basket Underliers at
any time other than on the Determination Date.
Your Notes Will Not Bear Interest
You will not receive any interest payments on your notes. As a result,
even if the Cash Settlement Amount payable for your notes on the stated maturity date exceeds the face amount of your notes, the
overall return you earn on your notes may be less than you would have earned by investing in a non-indexed debt security of comparable
maturity that bears interest at a prevailing market rate.
The Probability that the Final Basket
Level Will Be Less Than the Buffer Level Will Depend in Part on the Volatility of the Basket Underliers
“Volatility” refers to the frequency and magnitude of
changes in the values of the Basket Underliers. The greater the expected volatility with respect to the Basket Underliers on the
trade date, the higher the expectation as of the trade date that the Final Basket Level could be less than the Buffer Level, indicating
a higher expected risk of loss on the notes. The terms of the notes are set, in part, based on expectations about the volatility
of the Basket Underliers as of the trade date. The volatility of the Basket Underliers can change significantly over the term of
the notes. The level of the Basket could fall sharply, which could result in a significant loss of principal. You should be willing
to accept the downside market risk of the Basket and the potential to lose a significant amount of your principal at maturity.
You Have No Shareholder Rights or Rights
to Receive Any Basket Underlier or Basket Underlier Stock
Investing in your notes will not make you a holder of any Basket
Underlier or any of the Basket Underlier Stocks. Neither you nor any other holder or owner of your notes will have any rights with
respect to the Basket Underliers or the Basket Underlier Stocks, including voting rights, any right to receive dividends or other
distributions, any rights to make a claim against the Basket Underlier or the Basket Underlier Stocks or any other rights of a
holder of the Basket Underlier or Basket Underlier Stocks. Your notes will be paid in cash and you will have no right to receive
delivery of any Basket Underlier or Basket Underlier Stocks.
The Publisher or Investment Advisor
of a Basket Underlier May Adjust such Basket Underlier in a Way that Affects Its Levels, and Has No Obligation to Consider Your
Interests
The publisher or investment advisor of a Basket Underlier can add,
delete, or substitute the components included in that Basket Underlier or make other methodological changes that could change its
value. A new security included in a Basket Underlier may perform significantly better or worse than the replaced security, and
the performance will impact the value of that Basket Underlier. Additionally, the publisher or investment advisor of a Basket Underlier
may alter, discontinue, or suspend calculation or dissemination of that Basket Underlier. Any of these actions could adversely
affect the value of your notes. The publisher or investment advisor of a Basket Underlier will have no obligation to consider your
interests in calculating or revising that Basket Underlier.
The Lower Performance of One Basket
Underlier May Offset an Increase in the Other Basket Underlier
Changes in the value of a Basket Underlier may be offset by changes
in the value of the other Basket Underlier. As a result, any return on the Basket – and thus on your notes – may be
reduced or eliminated, which will have the effect of reducing the amount payable in respect of your notes at maturity.
We May Sell Additional Notes at a Different
Issue Price
At our sole option, we may decide to sell an additional aggregate
face amount of the notes subsequent to the date of this pricing supplement. The price to public of the notes in the subsequent
sale may differ substantially (higher or lower) from the original price to public you paid as provided on the cover of this pricing
supplement.
If You Purchase Your Notes at a Premium
to Face Amount, the Return on Your Investment Will Be Lower Than the Return on Notes Purchased at Face Amount and the Impact of
Certain Key Terms of the Notes Will Be Negatively Affected
The Cash Settlement Amount will not be adjusted based on the price
to public you pay for the notes. If you purchase notes at a price that differs from the face amount of the notes, then the return
on your investment in such notes held to the stated maturity date will differ from, and may be substantially less than, the return
on notes purchased at face amount. If you purchase your notes at a premium to face amount and hold them to the stated maturity
date, the return on your investment in the notes will be lower than it would have been had you purchased the notes at face amount
or a discount to face amount. In addition, the impact of the Buffer Level and the Cap Level on the return on your investment will
depend upon the price you pay for your notes relative to face amount. For example, if you purchase your notes at a premium to face
amount, the Cap Level will only permit a lower positive return in your investment in the notes than would have been the case for
notes purchased at face amount or a discount to face amount. Similarly, the Buffer Level, while still providing some protection
for the return on the notes, will allow a greater percentage decrease in your investment in the notes than would have been the
case for notes purchased at face amount or a discount to face amount.
If the Values of the Basket Underliers
Change, the Market Value of Your Notes May Not Change in the Same Manner
Your notes may trade quite differently from the performances of the
Basket Underliers. Changes in the values of the Basket Underliers may not result in a comparable change in the market value of
your notes. We discuss some of the reasons for this disparity under “ — The Market Value of the Notes Will Be Affected
by Various Factors That Interrelate in Complex Ways, and Their Market Value May Be Less Than the Face Amount” below.
Trading and Hedging Activities by Us,
the Guarantor and Any of Our Other Affiliates May Affect Your Return on the Notes and Their Market Value
We, the Guarantor and our other affiliates, including BofAS, and
any other distributors of the notes may buy or sell the Basket Underliers or the securities represented by the Basket Underliers,
or futures or options contracts on the Basket Underliers or those securities, or other listed or over-the-counter derivative instruments
linked to the Basket Underliers or the Basket Underlier Stocks. We, the Guarantor and any of our other affiliates, including BofAS,
and any other distributors of the notes may execute such purchases or sales for our own or their own accounts, for business reasons,
or in connection with hedging our obligations under the notes. These transactions could affect the value of these securities and,
in turn, the value of the Basket Underliers 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 other entities (including for the purpose of hedging anticipated exposures)
may have affected the value of the Basket Underliers or the Basket Underlier Stocks. Consequently, the values of the Basket Underliers
or the prices of the Basket Underlier Stocks may change subsequent to the trade date of an issue of the notes, adversely affecting
the market value of the notes.
We, the Guarantor or one or more of our other affiliates, including
BofAS, and any other distributors of the notes may also have engaged in hedging activities that could have affected the value of
the Basket Underliers on the trade date. 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 any other distributors of the notes 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
they engage. We cannot assure you that these activities will not adversely affect the values of the Basket Underliers, the market
value of your notes prior to maturity or the amounts payable on the notes.
Our Trading, Hedging and Other Business
Activities May Create Conflicts of Interest With You
We, the Guarantor or one or more of our other affiliates, including
BofAS, and any other distributors of the notes may engage in trading activities related to the Basket Underliers and to the Basket
Underlier Stocks that are not for your account or on your behalf. We, the Guarantor or one or more of our other affiliates, including
BofAS, and any other distributors of the notes also may issue or underwrite other financial instruments with returns based upon
the Basket Underliers. These trading and other business activities 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 any other distributors of the notes
may have in our proprietary accounts, in facilitating transactions, including block trades, for our or their other customers, and
in accounts under our or their management. These trading and other business activities, if they influence the values of the Basket
Underliers or secondary trading in your notes, could be adverse to your interests as a beneficial owner of the notes.
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 any other
distributors of the notes also may enter into hedging transactions relating to other notes or instruments, some of which may have
returns calculated in a manner related to the notes. We may enter into such hedging arrangements with one of our affiliates. Our
affiliates or such other distributors may enter into additional hedging transactions with other parties relating to the notes and
the Basket Underliers. 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 these other entities
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 or other
parties receive for the sale of the notes, which creates an additional incentive to sell the notes to you.
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
BofAS 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. These conflicts could occur, for instance, in connection with the calculation agent’s determination as to whether
a Market Disruption Event has occurred, or in connection with judgments that it would be required to make if certain corporate
events occur as to the EFA. The calculation agent will be required to carry out its duties in good faith and use its reasonable
judgment. However, because we expect that the Guarantor will control the calculation agent, potential conflicts of interest could
arise.
The Market Value of the Notes Will Be
Affected by Various Factors That Interrelate in Complex Ways, and Their Market Value May Be Less Than the Face Amount
If you wish to liquidate your investment in the notes prior to maturity,
your only option would be to sell them in the secondary market. At that time, there may be an illiquid market for your notes or
no market at all. Even if you were able to sell your notes, there are many factors outside of our control that may affect their
market value, such as the value and the volatility of the Basket Underliers, economic and other conditions generally, interest
rates, dividend yields on the securities represented by the Basket Underliers, exchange rate movements and volatility, our and
the Guarantor’s financial condition and creditworthiness, time to maturity. The impact of any one factor may be offset or
magnified by the effect of another factor. See “Risk Factors—General Risks Relating to the Notes—The notes are
not designed to be short-term trading instruments and if you attempt to sell the notes prior to maturity, their market value, if
any, will be affected by various factors that interrelate in complex ways, and their market value may be less than the principal
amount” beginning on page PS-6 of product supplement EQUITY-1.
The Anti-Dilution
Adjustments Will Be Limited.
The calculation agent may adjust the Price Multiplier and other
terms of the notes to reflect certain corporate actions by the EFA, as described in the section “Description of the Notes—Anti-Dilution
and Discontinuance Adjustments Relating to ETFs” in the accompanying product supplement. The calculation agent will not be
required to make an adjustment for every event that may affect the EFA and will have broad discretion to determine whether and
to what extent an adjustment is required.
The Performance
of the EFA may not correlate With the Performance of its Underlying Index (the “Underlying Index”) as well as the Net
Asset Value Per Share of the EFA, Especially during Periods of Market Volatility.
The performance of the EFA and that of its Underlying Index
generally will vary due to, for example, transaction costs, management fees, certain corporate actions, and timing variances. Moreover,
it is also possible that the performance of the EFA may not fully replicate or may, in certain circumstances, diverge significantly
from the performance of its Underlying Index. This could be due to, for example, the EFA not holding all or substantially all of
the underlying assets included in the Underlying Index and/or holding assets that are not included in the Underlying Index, the
temporary unavailability of certain securities in the secondary market, the performance of any derivative instruments held by the
EFA, differences in trading hours between the EFA (or the underlying assets held by the EFA) and its Underlying Index, or due to
other circumstances. This variation in performance is called the “tracking error,” and, at times, the tracking error
may be significant. In addition, because the shares of the EFA are traded on a securities exchange and are subject to market supply
and investor demand, the market price of one share of the EFA may differ from its net asset value per share; shares of the EFA
may trade at, above, or below its net asset value per share. During periods of market volatility, securities held by the EFA may
be unavailable in the secondary market, market participants may be unable to calculate accurately the net asset value per share
of the EFA and the
liquidity of the EFA may be adversely affected. Market volatility
may also disrupt the ability of market participants to trade shares of the EFA. Further, market volatility may adversely affect,
sometimes materially, the prices at which market participants are willing to buy and sell shares of the EFA. As a result, under
these circumstances, the market value of shares of the EFA may vary substantially from the net asset value per share of the EFA.
For the foregoing reasons, the performance of the EFA may not
match the performance of its Underlying Index or the net asset value per share of the EFA over the same period. Because of this
variance, the return on the notes to the extent dependent on the performance of the EFA may not be the same as an investment directly
in the securities, commodities or other assets included in the Underlying Index or the same as a debt security with a return linked
to the performance of the Underlying Index.
An Investment in the Notes Is Subject
to Risks Associated With Foreign Securities Markets
The EFA tracks the value of certain foreign equity securities.
You should be aware that investments in securities linked to the value of foreign equity securities involve particular risks. The
foreign securities markets comprising the EFA may have less liquidity and may be more volatile than U.S. or other securities markets
and market developments may affect foreign markets differently from U.S. or other securities markets. Direct or indirect government
intervention to stabilize these foreign securities markets, as well as cross-shareholdings in foreign companies, may affect trading
prices and volumes in these markets. Also, there is generally less publicly available information about foreign companies than
about those U.S. companies that are subject to the reporting requirements of the Securities and Exchange Commission, and foreign
companies are subject to accounting, auditing and financial reporting standards and requirements that differ from those applicable
to U.S. reporting companies.
Prices of securities in foreign countries are
subject to political, economic, financial and social factors that apply in those geographical regions. These factors, which could
negatively affect those securities markets, include the possibility of recent or future changes in a foreign government’s
economic and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable
to foreign companies or investments in foreign equity securities and the possibility of fluctuations in the rate of exchange between
currencies, the possibility of outbreaks of hostility and political instability and the possibility of natural disaster or adverse
public health developments in the region. Any one of these factors, or the combination of more than one of these factors, could
negatively affect such foreign securities markets and the prices of securities therein. Further, geographical regions may react
to global factors in different ways, which may cause the prices of securities in a foreign securities market to fluctuate in a
way that differs from those of securities in the U.S. securities market or other foreign securities markets. Foreign economies
may differ favorably or unfavorably from the U.S. economy in important respects such as growth of gross national product, rate
of inflation, capital reinvestment, resources and self-sufficiency.
The Notes are Subject to Foreign Currency
Exchange Rate Risk.
The EFA holds securities traded outside of the United States. Its
share price will fluctuate based upon its net asset value, which will in turn depend in part upon changes in the value of the currencies
in which the securities held by the EFA are traded. Accordingly, investors in the notes will be exposed to currency exchange rate
risk with respect to each of the currencies in which the securities held by the EFA are traded. An investor’s net exposure
will depend on the extent to which these currencies strengthen or weaken against the U.S. dollar. If the dollar strengthens against
these currencies, the net asset value of the EFA will be adversely affected and the price of the EFA may decrease.
The Notes Are Subject to Risks Associated
With Small-Size Capitalization Companies
The stocks composing 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.
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
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.
THE BASKET AND THE BASKET UNDERLIERS
The Basket is comprised of two Basket Underliers with the following
initial weights within the basket: the Russell 2000® Index (50.00% weighting) and the iShares® MSCI
EAFE ETF (50.00% weighting).
All disclosures contained in this pricing supplement regarding the
Basket Underliers, including, without limitation, their make-up, method of calculation, and changes in their components, have been
derived from publicly available sources. The information reflects the policies of, and is subject to change by, each of FTSE and
BFA (collectively known as “Basket Underlier Sponsors”). The Basket Underlier Sponsors, who license the copyright and
all other rights to the Basket Underliers, have no obligation to continue to publish, and may discontinue publication of, the Basket
Underliers. The consequences of the Basket Underlier Sponsors discontinuing publication of the applicable Basket Underlier are
discussed in “Description of the Notes—Discontinuance of an Index” and “Description of the Notes—Anti-Dilution
and Discontinuance Adjustments Relating to ETFs” in the accompanying product supplement. None of us, the Guarantor,
the calculation agent, or BofAS accepts any responsibility for the calculation, maintenance or publication of the Basket Underliers
or any successor underlier.
None of us, the Guarantor, BofAS or any of our other affiliates makes
any representation to you as to the future performance of the Basket Underliers.
You should make your own investigation into the Basket Underliers.
The Russell 2000® Index
The Underlier 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 Underlier 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 Underlier
is determined, comprised, and calculated by FTSE Russell without regard to the notes.
Additional information about the Underlier is available on
the following website: ftse.com/analytics/factsheets/Home/Search#. We are not incorporating by reference the website or any material
it includes in this document.
According to the FTSE Russell website, as of August 31, 2019,
the five largest sectors represented by the Underlier were: financial services, health care, producer durables, consumer discretionary
and technology. (Sector designations are determined by the Basket Underlier Sponsor using criteria it has selected or developed.
Index sponsors may use very different standards for determining sector designations. In addition, many companies operate in a number
of sectors, but are listed in only one sector and the basis on which that sector is selected may also differ. As a result, sector
comparisons between indices with different index sponsors may reflect differences in methodology as well as actual differences
in the sector composition of the indices.)
Selection of Stocks Comprising the Underlier
All companies eligible for inclusion in the Underlier 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 primary 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, Aruba, 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 countries such as Puerto Rico, Guam, and U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the Underlier 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 Underlier 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 Underlier. Similarly, companies with only 5% or less of their shares available in the marketplace
are not eligible for the Underlier. 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 Underlier 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 Underlier using the then existing market capitalizations of eligible
companies. Reconstitution of the Underlier 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 Underlier 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.
Underlier Calculation and Capitalization Adjustments
As a capitalization-weighted index, the Underlier reflects
changes in the capitalization, or market value, of the underlier stocks relative to the capitalization on a base date. The current
Russell 2000® Index value is the compounded result of the cumulative daily (or monthly) return percentages, where
the starting value of the Underlier is equal to the base value (100) and base date (December 31, 1978). Returns between any two
dates can then be derived by dividing the ending period index value (IV1) by the beginning period (IV0) index value, so that the
return equals [(IV1 / IV0) -1]*100.
Constituent stocks of the Underlier are weighted in the Underlier
by their free-float market capitalization, which is calculated by multiplying the primary closing price by the number of free-float
shares. Free-float shares are shares that are available to the public for purchase as determined by FTSE Russell. Adjustments to
shares are reviewed quarterly (including at reconstitution) and for major corporate actions such as mergers.
Certain shares are excluded from free float, including shares
directly owned by state, regional, municipal and local governments (excluding shares held by independently managed pension schemes
for governments); shares held by directors, senior executives and managers of the company, and by their family and direct relations,
and by companies with which they are affiliated; shares held within employee share plans; shares held by public companies or by
non-listed subsidiaries of public companies; shares where the holder is subject to a lock-in clause (for the duration of that clause);
shares that are held by Sovereign Wealth Funds or shares held by founders, promoters, former directors, founding venture capital
and private equity firms, private companies and individuals (including employees) and shares held by several holders acting in
concert where the holding is 10% or greater of the total number of shares in issue; shares held by an investor, investment company
or an investment fund that is actively participating in the management of a company or is holding shares for publicly announced
strategic reasons, or has successfully placed a current member to the board of directors of a company; and shares that are subject
to ongoing contractual agreements (such as swaps) where they would ordinarily be treated as restricted.
Corporate Actions Affecting the Underlier
FTSE Russell adjusts the Underlier on a daily basis in response
to certain corporate actions and events including mergers and acquisitions, rights offerings, spin-offs, initial public offerings,
tender offers, delisted and suspended stocks, bankruptcy and voluntary liquidations, stock distributions and distributions in specie
and special cash dividends. Therefore, a company’s membership in the Underlier and its weight in the Underlier can be impacted
by these corporate actions. The adjustment is applied based on sources of public information, including press releases and Securities
and Exchange Commission filings.
“No Replacement” Rule - Securities that
are deleted from the Underlier between reconstitution dates, for any reason (e.g., mergers, acquisitions or other similar corporate
activity) are not replaced. Thus, the number of securities in the Underlier over the past year will fluctuate according to corporate
activity.
Updates to Shares Outstanding and Free Float - FTSE Russell
reviews the Underlier quarterly for updates to shares outstanding and to free floats used in calculating the Underlier. Outside
of the quarterly update cycle, outstanding shares and free float will be updated with at least two days’ notice if prompted
by primary or secondary offerings if (i) there is a USD $1 billion investable market capitalization change related to a primary/secondary
offering or (ii) there is a resultant 5% change in Underlier shares related to a primary or secondary offering and a USD $250 million
investable market capitalization change.
License Agreement
“Russell 2000®” and “Russell
3000®” are trademarks of FTSE Russell and have been licensed for use by our affiliate, 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 document:
“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
Underlier to track general stock market performance or a segment of the same. FTSE Russell’s publication of the Underlier
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 Underlier 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 Underlier, 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
Underlier. 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 UNDERLIER 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 UNDERLIER 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 UNDERLIER 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.
The iShares® MSCI EAFE ETF
The EFA seeks investment results that correspond generally to
the price and yield performance, before fees and expenses, of the MSCI EAFE Index, its Underlying Index. The EFA typically earns
income dividends from securities included in the Underlier. These amounts, net of expenses and taxes (if applicable), are passed
along to the EFA’s shareholders as “ordinary income.” In addition, the EFA realizes capital gains or losses whenever
it sells securities. Net long-term capital gains are distributed to shareholders as “capital gain distributions.” However,
because the notes are linked only to the share price of the EFA, you will not be entitled to receive income, dividend, or capital
gain distributions from the EFA or any equivalent payments. The shares of the iShares® MSCI EAFE ETF trade on the
NYSE Arca under the symbol “EFA”.
The shares of the EFA are registered under the Exchange Act.
Accordingly, information filed with the SEC relating to the EFA, including its periodic financial reports, may be found on the
SEC website.
The Underlying Index
The Underlying Index is intended to measure equity market performance
in developed market countries, excluding the U.S. and Canada. The Underlying Index is a free float-adjusted market capitalization
equity index with a base date of December 31, 1969 and an initial value of 100. The Underlying Index is calculated daily in U.S.
dollars and published in real time every 60 seconds during market trading hours.
The Underlying Index is part of the MSCI Regional Equity Indices
series and is an MSCI Global Investable Market Index, which is a family within the MSCI International Equity Indices.
As of the close of business on September 21, 2018, MSCI and S&P
Dow Jones Indices LLC updated the Global Industry Classification Sector (“GICS”) structure. Among other things, the
update broadened the Telecommunications Services sector and renamed it the Communication Services sector. The renamed sector includes
the previously existing Telecommunication Services Industry group, as well as the Media Industry group, which was moved from the
Consumer Discretionary sector and renamed the Media & Entertainment Industry group. The Media & Entertainment Industry
group contains three industries: Media, Entertainment and Interactive Media & Services. The Media industry continues to consist
of the Advertising, Broadcasting, Cable & Satellite and Publishing sub-industries. The Entertainment industry contains the
Movies & Entertainment sub-industry (which includes online entertainment streaming companies in addition to companies previously
classified in such industry prior to September 21, 2018) and the Interactive Home Entertainment sub-industry (which includes companies
previously classified in the Home Entertainment Software sub-industry prior to September 21, 2018 (when the Home Entertainment
Software sub-industry was a sub-industry in the Information Technology sector)), as well as producers of interactive gaming products,
including mobile gaming applications). The Interactive Media & Services industry and sub-industry includes companies engaged
in content and information creation or distribution through proprietary platforms, where revenues are derived primarily through
pay-per-click advertisements, and includes search engines, social media and networking platforms, online classifieds and online
review companies. The GICS structure changes were effective for the Underlying Index as of the open of business on December 3,
2018 to coincide with the November 2018 semi-annual index review.
The Country Indices
Each country’s index included in an MSCI Index is referred
to as a “Country Index.” Under the MSCI methodology, each Country Index is an “MSCI Global Standard Index.”
The components of each Country Index used to be selected by the index sponsor from among the universe of securities eligible for
inclusion in the relevant Country Index so as to target an 85% free float-adjusted market representation level within each of a
number of industry groups, subject to adjustments to (i) provide for sufficient liquidity, (ii) reflect foreign investment restrictions
(only those securities that can be held by non-residents of the country corresponding to the relevant Country Index are included)
and (iii) meet certain other investibility criteria. Following a change in the index sponsor’s methodology implemented in
May 2008, the 85% target is now measured at the level of the country universe of eligible securities rather than the industry group
level—so each Country Index will seek to include the securities that represent 85% of the free float-adjusted market capitalization
of all securities eligible for inclusion—but will still be subject to liquidity, foreign investment restrictions and other
investibility adjustments. The index sponsor defines “free float” as total shares excluding shares held by strategic
investors such as governments, corporations, controlling shareholders and management, and shares subject to foreign ownership restrictions.
Calculation of the Country Indices
Each Country Index is a free float-adjusted market capitalization
index that is designed to measure the market performance, including price performance, of the equity securities in that country.
Each Country Index is calculated in the relevant local currency as well as in U.S. dollars, with price, gross and net returns.
Each component is included in the relevant Country Index at a
weight that reflects the ratio of its free float-adjusted market capitalization (i.e., free public float multiplied by price) to
the free float-adjusted market capitalization of all the components in that Country Index. The index sponsor defines the free float
of a security as the proportion of
shares outstanding that is deemed to be available for purchase
in the public equity markets by international investors.
Calculation of the MSCI Indices
The performance of an MSCI Index on any given day represents
the weighted performance of all of the components included in all of the Country Indices. Each component in an MSCI Index is included
at a weight that reflects the ratio of its free float-adjusted market capitalization (i.e., free public float multiplied by price)
to the free float-adjusted market capitalization of all the components included in all of the Country Indices.
Maintenance of and Changes to the MSCI Indices
The index sponsor maintains the MSCI Indices with the objective
of reflecting, on a timely basis, the evolution of the underlying equity markets and segments. In maintaining the indices, emphasis
is also placed on continuity, continuous investibility of the constituents, replicability, index stability and low turnover in
the indices.
As part of the changes to the index sponsor’s methodology
which became effective in May 2008, maintenance of the indices falls into three broad categories:
·
semi-annual reviews, which will occur each May and November and will involve a comprehensive reevaluation of the market,
the universe of eligible securities and other factors involved in composing the indices;
·
quarterly reviews, which will occur each February, May, August and November and will focus on significant changes in the
market since the last semi-annual review and on including significant new eligible securities (such as IPOs, which were not eligible
for earlier inclusion in the indices); and
·
ongoing event-related changes, which will generally be reflected in the indices at the time of the event and will include
changes resulting from mergers, acquisitions, spin-offs, bankruptcies, reorganizations and other similar corporate events.
Based on these reviews, additional components may be added, and
current components may be removed, at any time. The index sponsor generally announces all changes resulting from semi-annual reviews,
quarterly reviews and ongoing events in advance of their implementation, although in exceptional cases they may be announced during
market hours for same or next day implementation.
Neither we nor any of our affiliates, including BofAS or MLPF&S,
accepts any responsibility for the calculation, maintenance, or publication of, or for any error, omission, or disruption in, the
MSCI Indices. The index sponsor does not guarantee the accuracy or the completeness of the MSCI Indices or any data included in
the MSCI Indices. The index sponsor assumes no liability for any errors, omissions, or disruption in the calculation and dissemination
of the MSCI Indices. The index sponsor disclaims all responsibility for any errors or omissions in the calculation and dissemination
of the MSCI Indices or the manner in which the MSCI Indices is applied in determining the amount payable on the notes at maturity.
Prices and Exchange Rates
Prices
The prices used to calculate the MSCI Indices are the official
exchange closing prices or those figures accepted as such. The index sponsor reserves the right to use an alternative pricing source
on any given day.
Exchange Rates
The index sponsor uses the closing spot rates published by WM
/ Reuters at 4:00 p.m., London time. The index sponsor uses WM / Reuters rates for all countries for which it provides indices.
In case WM/Reuters does not provide rates for specific markets
on given days (for example Christmas Day and New Year’s Day), the previous business day’s rates are normally used.
The index sponsor independently monitors the exchange rates on all its indices and may, under exceptional circumstances, elect
to use an alternative exchange rate if the WM / Reuters rates are not available, or if the index sponsor determines that the WM
/ Reuters rates are not reflective of market circumstances for a given currency on a particular day. In such circumstances, an
announcement would be sent to clients with the related information. If appropriate, the index sponsor may conduct a consultation
with the investment community to gather feedback on the most relevant exchange rate.Historical Performance of the Underlying
Historical Closing Levels and Closing
Market Prices
The respective closing levels and Closing Market Prices, as applicable,
of the Basket Underliers have fluctuated in the past and may, in the future, experience significant fluctuations. Any historical
upward or downward trend in the closing levels and Closing Market Prices, as applicable, of the Basket Underliers during the period
shown below is not an indication that the Basket Underliers are more or less likely to increase or decrease at any time during
the life of your notes.
You should not take the historical values of the Basket or the
Basket Underliers as an indication of their respective future performance. We cannot give you any assurance that the future
performance of the Basket, the Basket Underliers or the Basket Underlier Stocks will result in your receiving an amount greater
than the outstanding face amount of your notes on the stated maturity date.
Neither we nor any of our affiliates make any representation to you
as to the performance of the Basket Underliers. Before investing in the offered notes, you should consult publicly available information
to determine the values of the Basket Underliers between the date of this pricing supplement and the date of your purchase of the
offered notes. The actual performance of the Basket Underliers over the life of the offered notes, as well as the Cash Settlement
Amount, may bear little relation to the historical closing levels shown below.
The following graphs show the daily historical closing level of the
RTY and the Closing Market Price of the EFA from January 1, 2008 through October 7, 2019. The graphs are for illustrative purposes
only. We obtained the closing values of the Basket Underliers in the graphs below from Bloomberg Financial Services, without independent
verification.
Historical Performance of the Russell 2000®
Index
Historical Performance of the iShares®
MSCI EAFE ETF
Historical Performance of the Basket
The following graph is based on the Basket value for the period from
January 1, 2008 through October 7, 2019, assuming that the Basket value was 100 on January 1, 2008. We derived the Basket values
based on the method to calculate the Basket value as described in this pricing supplement and on actual closing levels or Closing
Market Prices, as applicable, of the relevant Basket Underliers on the relevant dates. The Basket value has been normalized such
that its hypothetical level on January 1, 2008 was 100. As noted in this pricing supplement, the Initial Basket Level was set at
100 on the trade date. The Basket value can increase or decrease due to changes in the values of the Basket Underliers.
SUPPLEMENTAL PLAN OF DISTRIBUTION—CONFLICTS
OF INTEREST
BofA Finance has agreed to sell to BofAS, and BofAS has agreed to
purchase from BofA Finance, the aggregate face amount of the offered notes specified on the front cover of this pricing supplement.
BofAS will offer the notes to the public at the price to public set forth on the cover page of this pricing supplement.
We expect to deliver the notes against payment therefor in New York,
New York on October 10, 2019, which is the third scheduled business day 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 on any date prior to two business
days before delivery will be required, by virtue of the fact that the notes are initially expected to settle in three business
days (T + 3), to specify alternative settlement arrangements to prevent a failed settlement.
BofAS, a broker-dealer affiliate of ours, is a member of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent in the distribution of the notes.
Accordingly, the offering of the notes will conform to the requirements of FINRA Rule 5121. BofAS may not make sales in this offering
to any of its discretionary accounts without the prior written approval of the account holder.
BofAS and any of our other broker-dealer affiliates, may use this
pricing supplement, and the accompanying product supplement, prospectus supplement and prospectus for offers and sales in secondary
market transactions and market-making transactions in the notes. However, they are not obligated to engage in such secondary market
transactions and/or market-making transactions. The selling agent may act as principal or agent in these transactions, and any
such sales will be made at prices related to prevailing market conditions at the time of the sale.
As agreed by BofAS and the distribution participants, for approximately
a three-month period after the trade date, BofAS expects to offer to buy the notes in the secondary market 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 performances of the Basket Underliers 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.
Any price that BofAS may pay to repurchase the notes will depend
upon then prevailing market conditions, the creditworthiness of us and the Guarantor, and transaction costs. At certain times,
this price may be higher than or lower than the initial estimated value of the notes.
European Economic Area
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”) which has implemented the Prospectus Regulation (each, a “Relevant Member 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 Member State of notes which are the subject of the
offering contemplated in this pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying
prospectus supplement may only do so with respect to Qualified Investors. Neither BofA Finance nor BAC have authorized, nor do
they authorize, the making of any offer of notes other than to Qualified Investors. The expression “Prospectus Regulation”
means Regulation (EU) 2017/1129.
PROHIBITION OF SALES TO EEA 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. 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), as amended or superseded, 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 has been prepared and therefore offering
or selling the notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
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 performances of the Basket Underliers. The related guarantees are BAC’s obligations. As is the case for all of our
and BAC’s respective debt securities, including our market-linked notes, the economic terms of the notes reflect our and
BAC’s actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in increased
operational, funding and liability management costs to us and BAC, BAC typically borrows the funds under these types of notes at
a rate, which we refer to in this pricing supplement as BAC’s internal funding rate, that is more favorable to BAC than the
rate that it might pay for a conventional fixed or floating rate debt security. This generally relatively lower internal funding
rate, which is reflected in the economic terms of the notes, along with the fees and charges associated with market-linked notes,
resulted in the initial estimated value of the notes on the trade date being less than their public offering price.
In order to meet our payment obligations on the notes, at the time
we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other
derivatives) with BofAS or one of our other affiliates. The terms of these hedging arrangements are determined based upon terms
provided by BofAS its affiliates, and take into account a number of factors, including our and BAC’s creditworthiness, interest
rate movements, the volatility of the Basket Underliers, 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-155 above and “Supplemental Use of Proceeds” on page PS-16 of product supplement EQUITY-1.
VALIDITY OF THE NOTES
In the opinion of McGuireWoods LLP, as counsel to BofA Finance and
BAC, when the trustee has made an appropriate entry on Schedule 1 to the Master Registered Global Note dated November 4, 2016 that
represents the notes (the “Master Note”) identifying the notes offered hereby as supplemental obligations thereunder
in accordance with the instructions of BofA Finance, and the notes have been delivered against payment therefor as contemplated
in this pricing supplement and the related prospectus, prospectus supplement and product supplement, all in accordance with the
provisions of the indenture governing the notes and the related guarantee, such notes will be legal, valid and binding obligations
of BofA Finance, and the related guarantee will be the legal, valid and binding obligations of BAC, subject, in each case, to the
effects of applicable bankruptcy, insolvency (including laws relating to preferences, fraudulent transfers and equitable subordination),
reorganization, moratorium and other similar laws affecting creditors’ rights generally, and to general principles of equity.
This opinion is given as of the date of this pricing supplement and is limited to the laws of the State of New York and the Delaware
Limited Liability Company Act and the Delaware General Corporation Law (including the statutory provisions, all applicable provisions
of the Delaware Constitution and reported judicial decisions interpreting the foregoing) as in effect on the date hereof. In addition,
this opinion is subject to customary assumptions about the trustee’s authorization, execution and delivery of the indenture
governing the notes and due authentication of the Master Note, the validity, binding nature and enforceability of the indenture
governing the notes and the related guarantee with respect to the trustee, the legal capacity of individuals, the genuineness of
signatures, the authenticity of all documents submitted to McGuireWoods LLP as originals, the conformity to original documents
of all documents submitted to McGuireWoods LLP as copies thereof, the authenticity of the originals of such copies and certain
factual matters, all as stated in the letter of McGuireWoods LLP dated August 23, 2016, which has been filed as an exhibit to the
Registration Statement of BofA Finance and BAC relating to the notes and the related guarantees initially filed with the Securities
and Exchange Commission on August 23, 2016.
Sidley Austin LLP, New York, New York, is acting as counsel to BofAS
and as special tax counsel to BofA Finance and BAC.
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. In
addition, any reference to “Morrison & Foerster LLP” in the aforementioned tax discussions in the accompanying
prospectus and prospectus supplement should be read as a reference to “Sidley Austin LLP.” 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 Basket Underliers
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 Basket Underliers 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 any Basket
Underlier or any component stocks included in any Basket Underlier that is an index 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 any Basket
Underlier or any component stocks included in any Basket Underlier that is an index 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 any Basket Underlier or any component stocks included in any Basket Underlier that is an index and consult your tax
advisor regarding the possible consequences to you, if any, if any issuer any Basket Underlier or any component stocks included
in any Basket Underlier that is an index 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. Subject to the discussion below concerning the possible application of the “constructive
ownership” rules of Section 1260 of the Code, 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.
Possible Application of Section 1260 of the Code. Since one of the
Basket Underlier is the type of financial asset described under Section 1260 of the Code (including, among others, any equity interest
in pass-through entities such as exchange traded funds, regulated investment companies, real estate investment trusts, partnerships,
and passive foreign investment companies, each a “Section 1260 Financial Asset”), while the matter is not entirely
clear, there may exist a risk that an investment in the notes will be treated, in whole or in part, as a “constructive ownership
transaction” to which Section 1260 of the Code applies. If Section 1260 of the Code applies, all or a portion of any long-term
capital gain recognized by a U.S. Holder in respect of the notes will be recharacterized as ordinary income (the “Excess
Gain”). In addition, an interest charge will also apply to any deemed underpayment of tax in respect of any Excess Gain to
the extent such gain would have resulted in gross income inclusion for the U.S. Holder in taxable years prior to the taxable year
of the sale, exchange, or settlement (assuming such income accrued at a constant rate equal to the applicable federal rate as of
the date of sale, exchange, or settlement.
If an investment in the notes is treated as a constructive ownership
transaction, it is not clear to what extent any long-term capital gain of a U.S. Holder in respect of the notes will be recharacterized
as ordinary income. It is possible, for example, that the amount of the Excess Gain (if any) that would be recharacterized as ordinary
income in respect of the notes will equal the excess of (i) any long-term capital gain recognized by the U.S. Holder in respect
of the notes and attributable to Section 1260 Financial Assets, over (ii) the “net underlying long-term capital gain”
(as defined in Section 1260 of the Code) such U.S. Holder would have had if such U.S. Holder had acquired an amount of the corresponding
Section 1260 Financial Assets at fair market value on the original issue date for an amount equal to the portion of the issue price
of the notes attributable to the corresponding Section 1260 Financial Assets and sold such amount of Section 1260 Financial Assets
at maturity or upon sale or exchange of the notes at fair market value. Unless otherwise established by clear and convincing evidence,
the net underlying long-term capital gain is treated as zero and therefore it is possible that all long-term capital gain recognized
by a U.S. Holder in respect of the notes will be recharacterized as ordinary income if Section 1260 of the Code applies to an investment
in the notes. U.S. Holders should consult their tax advisors regarding the potential application of Section 1260 of the Code to
an investment in the notes.
As described below, the IRS, as indicated in Notice 2008-2 (the “Notice”),
is considering whether Section 1260 of the Code generally applies or should apply to the notes, including in situations where the
Basket Underlier is not the type of financial asset described under Section 1260 of the Code.
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 Notice 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 one Basket Underlier 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, 2021. 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 Basket
Underliers 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 Basket Underliers 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.
Foreign Account Tax
Compliance Act (“FATCA”)
The discussion in the
accompanying prospectus under “U.S. Federal Income Tax Considerations – Foreign Account Tax Compliance Act” is
hereby modified to reflect regulations proposed by Treasury indicating its intent to eliminate the requirements under FATCA of
withholding on gross proceeds from the sale, exchange, settlement at maturity or other disposition of relevant financial instruments.
Treasury has indicated that taxpayers may rely on these proposed regulations pending their finalization.
TABLE OF CONTENTS
Pricing Supplement
Page
|
Summary Information
|
PS-6
|
|
Hypothetical Examples
|
PS-10
|
|
Risk Factors
|
PS-15
|
|
The Basket and the Basket Underliers
|
PS-22
|
|
Supplemental Plan of Distribution-Conflicts of Interest
|
PS-30
|
|
Structuring the Notes
|
PS-32
|
|
Validity of the Notes
|
PS-32
|
|
U.S. Federal Income Tax Summary
|
PS-33
|
Product Supplement EQUITY-1 dated January 24,
2017
|
Summary
|
PS-3
|
|
Risk Factors
|
PS-5
|
|
Supplemental Use of Proceeds
|
PS-16
|
|
Description of the Notes
|
PS-17
|
|
Supplemental Plan of Distribution; Conflicts of Interest
|
PS-28
|
|
U.S. Federal Income Tax Considerations
|
PS-29
|
Prospectus Supplement dated November 4, 2016
|
About this Prospectus Supplement
|
S-3
|
|
Risk Factors
|
S-4
|
|
Description of the Notes
|
S-7
|
|
U.S. Federal Income Tax Considerations
|
S-15
|
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
S-15
|
|
Legal Matters
|
S-26
|
Prospectus dated November 4, 2016
|
About this Prospectus
|
3
|
|
Prospectus Summary
|
4
|
|
Risk Factors
|
7
|
|
Bank of America Corporation
|
13
|
|
BofA Finance LLC
|
13
|
|
Use of Proceeds
|
13
|
|
Description of Debt Securities
|
14
|
|
Registration and Settlement
|
42
|
|
U.S. Federal Income Tax Considerations
|
50
|
|
EU Directive on the Taxation of Savings Income
|
68
|
|
Plan of Distribution (Conflicts of Interest)
|
69
|
|
ERISA Considerations
|
73
|
|
Where You Can Find More Information
|
74
|
|
Forward-Looking Statements
|
76
|
|
Legal Matters
|
76
|
|
Experts
|
77
|
We have not authorized anyone to provide any
information or to make any representations other than those contained or incorporated by reference in this pricing supplement,
the accompanying product supplement, the accompanying prospectus supplement or the accompanying prospectus. We take no responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. These documents are
an offer to sell only the notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
The information contained in each such document is current only as of its respective date.
$988,000
BofA Finance LLC
Leveraged Buffered Basket-Linked Notes due
April 12, 2022
Fully and Unconditionally Guaranteed by
Bank of America Corporation
BofA Merrill Lynch
Bank of America Corp. Prfd L (NYSE:BMLPL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Bank of America Corp. Prfd L (NYSE:BMLPL)
Historical Stock Chart
From Apr 2023 to Apr 2024
