This pricing supplement, which is not complete and may be changed, relates to an effective Registration Statement under the Securities Act of 1933. This pricing supplement and the accompanying product supplement, prospectus supplement and prospectus are not an offer to sell these securities in any country or jurisdiction where such an offer would not be permitted.
Opportunities in U.S. and International Equities
The securities do not guarantee the repayment of principal and do not provide
for the regular payment of interest. Instead, the securities will pay a contingent quarterly coupon but only if the index closing
value of each of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
on each index business day during the applicable quarterly observation period is at or above 65% of its respective
initial index value, which we refer to as the respective coupon barrier level. If the index closing value of any underlying index
is less than the coupon barrier level for such index on any index business day during an observation period, we will pay no
contingent quarterly coupon for the related quarterly period. In addition, beginning on October 12, 2023, we will have the right to
redeem the securities at our discretion on any quarterly redemption date for a redemption payment equal to the sum of the stated principal
amount plus any contingent quarterly coupon otherwise due with respect to the related observation period. An early redemption of the securities
will not automatically occur based on the performance of the underlying indices. At maturity, if the securities have not previously been
redeemed and the final index value of each underlying index is greater than or equal to 65% of the respective initial index value,
which we refer to as the downside threshold level, the payment at maturity will be the stated principal amount and, if payable, the contingent
quarterly coupon otherwise due with respect to the final observation period. If, however, the final index value of any underlying
index is less than its downside threshold level, investors will be exposed to the decline in the worst performing underlying index on
a 1-to-1 basis and will receive a payment at maturity that is less than 65% of the stated principal amount of the securities and could
be zero. Accordingly, investors in the securities must be willing to accept the risk of losing their entire initial investment based
on the performance of any underlying index and also the risk of not receiving any quarterly coupons during the entire 2-year term of the
securities. Because payments on the securities are based on the worst performing of the underlying indices, a decline beyond the respective
coupon barrier level on any index business day during an observation period and/or beyond the respective downside threshold level on the
final observation date, as applicable, of any underlying index will result in the forfeiture of contingent quarterly coupons and/or
a significant loss of your investment, as applicable, even if the other underlying indices have appreciated or have not declined as much.
Investors will not participate in any appreciation in any underlying index. The securities are for investors who are willing to risk their
principal and seek an opportunity to earn contingent quarterly coupon payments at a potentially above-market rate in exchange for the
risk of receiving no contingent quarterly coupon payments if any underlying index closes below the coupon barrier level for such
index on any index business day during the related observation period, and the risk of an early redemption of the securities at our discretion.
The securities are our senior debt securities. Any payments on the securities are fully and unconditionally guaranteed by Bank of America
Corporation (“BAC”). The securities are issued as part of BofA Finance LLC’s (“BofA Finance”) “Medium-Term
Notes, Series A” program.
| SUMMARY TERMS |
| Issuer: |
BofA Finance |
| Guarantor: |
BAC |
| Underlying indices: |
The S&P 500® Index (Bloomberg symbol: “SPX”), the Russell 2000® Index (Bloomberg symbol: “RTY”) and the NASDAQ-100® Index (Bloomberg symbol “NDX”) |
| Aggregate principal amount: |
$ |
| Stated principal amount: |
$1,000 per security |
| Issue price: |
$1,000 per security (see “Commissions and issue price” below) |
| Pricing date: |
July 7, 2023 |
| Original issue date: |
July 12, 2023 (3 business days after the pricing date) |
| Maturity date: |
July 10, 2025 |
| Call feature: |
Beginning on October 12, 2023, on any quarterly redemption date, we have the right to redeem all (but not less than all) of the securities for a redemption payment equal to the stated principal amount plus any contingent quarterly coupon otherwise due with respect to the relevant observation period. We will give notice to the trustee at least five business days but not more than 60 calendar days before the applicable redemption date. No further payments will be made on the securities once they have been redeemed. |
| Contingent quarterly coupon: |
If, on each index business day during an observation period, the
index closing value of each underlying index is greater than or equal to its respective coupon barrier level, we will pay
a contingent quarterly coupon of at least $22.25 per security (equal to a rate of at least 2.225% per quarter or at least 8.90% per annum)
on the related coupon payment date. The actual contingent quarterly coupon will be determined on the pricing date.
If, on any index business day during an observation period, the
index closing value of any underlying index is less than the coupon barrier level for such index, no contingent quarterly
coupon will be paid with respect to that observation period. It is possible that one or more underlying indices will close below the
respective coupon barrier level(s) on any index business day during most or all of the observation periods throughout the entire term
of the securities so that you will receive few or no contingent quarterly coupons. |
| Payment at maturity: |
If the securities have not previously been redeemed, investors will receive
on the maturity date a payment at maturity determined as follows:
If the final index value of each underlying index is greater
than or equal to its respective downside threshold level: the stated principal amount and, if payable, the contingent quarterly coupon
otherwise due with respect to the final observation period.
If the final index value of any underlying index is less than
its respective downside threshold level: (i) the stated principal amount multiplied by (ii) the index performance factor of
the worst performing underlying index. Under these circumstances, the payment at maturity will be less than 65% of the stated principal
amount of the securities and could be zero. |
| |
Terms continued on the following page |
| Agent: |
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance |
| Estimated value on the pricing date: |
Between $920.00 and $970.00 per $1,000 in principal amount of securities, which is less than the price to public listed below. The actual value of your securities at any time will reflect many factors and cannot be predicted with accuracy. See “Structuring the securities” in this pricing supplement. |
| Commissions and issue price: |
Price to public |
Agent’s commissions and fees |
Proceeds to BofA Finance |
|
Per
security |
$1,000.00 |
$15.00(1) |
|
|
|
$5.00(2) |
$980.00 |
|
Total |
$ |
$ |
$ |
(1) Morgan Stanley Wealth Management and its financial advisors
will collectively receive from the agent, BofAS, a fixed sales commission of $15.00 for each security they sell. See “Supplement
to the plan of distribution; role of BofAS and conflicts of interest” in this pricing supplement.
(2) Reflects a structuring fee payable to Morgan Stanley Wealth
Management by the agent or its affiliates of $5.00 for each security.
There are important differences between the securities and
a conventional debt security. Potential purchasers of the securities should consider the information in “Risk Factors” beginning
on page 11 of this pricing supplement, page PS-5 of the accompanying product supplement, page S-6 of the accompanying prospectus supplement,
and page 7 of the accompanying prospectus.
None of the Securities and Exchange Commission (the “SEC”),
any state securities commission, or any other regulatory body has approved or disapproved of these securities or determined if this pricing
supplement and the accompanying product supplement, prospectus supplement and prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The securities are not deposits or savings accounts and are
not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor are they obligations
of, or guaranteed by, a bank.
Before you invest, you should read this pricing supplement
and the accompanying product supplement, prospectus supplement and prospectus for information about us, BAC and this offering, each of
which can be accessed via the hyperlinks below. Please also see “Additional Terms of the Securities” and “Additional
Information About the Securities” in this pricing supplement.
Unless otherwise indicated or unless the context requires otherwise,
all references in this document to “we,” “us,” “our,” or similar references are to BofA Finance, and
not to BAC.
Series A MTN prospectus supplement dated
December 30, 2022 and prospectus dated December 30, 2022 and Product Supplement EQUITY-1 dated December 30, 2022
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
| Terms continued from previous page: |
| Redemption payment: |
The redemption payment will be an amount equal to (i) the stated principal amount plus (ii) any contingent quarterly coupon otherwise due with respect to the related observation period. |
| Redemption dates: |
Quarterly. See “Observation Period End-Dates, Coupon Payment Dates and Redemption Dates” below. |
| Initial index value: |
With respect to the SPX: , which is the index closing value of such index
on the pricing date
With respect to the RTY: , which is the index closing value of such index
on the pricing date
With respect to the NDX: , which is the index closing value of such index
on the pricing date |
| Final index value: |
With respect to each underlying index, the respective index closing value on the final observation date |
|
Worst performing
underlying index: |
The underlying index with the largest percentage decrease from the respective initial index value to the respective final index value |
| Index performance factor: |
With respect to each underlying index, final index value divided by the initial index value |
| Coupon barrier level: |
With respect to the SPX: , which is 65% of the initial index value for such
index
With respect to the RTY: , which is 65% of the initial index value for such
index
With respect to the NDX: , which is 65% of the initial index value for such
index |
| Downside threshold level: |
With respect to the SPX: , which is 65% of the initial index value for such
index
With respect to the RTY: , which is 65% of the initial index value for such
index
With respect to the NDX: , which is 65% of the initial index value for such
index |
| Coupon payment dates: |
Quarterly, as set forth under “Observation Period End-Dates, Coupon Payment Dates and Redemption Dates” below. |
| Final observation date: |
July 7, 2025, subject to postponement as set forth in “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” beginning on page PS-23 of the accompanying product supplement. |
| Observation period end-dates: |
Quarterly, as set forth under “Observation Period End-Dates, Coupon Payment Dates and Redemption Dates” below, subject to postponement as set forth in “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” beginning on page PS-23 of the accompanying product supplement, with references therein to “Observation Date” to be read as references to “Observation Period End-Date.” |
| Observation period: |
Each observation period will consist of each index business day from but excluding an observation period end-date to and including the following observation period end-date, excluding any date or dates that the calculation agent determines is not an index business day with respect to any underlying index; provided that the first observation period will consist of each index business day from but excluding the pricing date to and including the first observation period end-date. |
| CUSIP / ISIN: |
09711AAK4 / US09711AAK43 |
| Listing: |
The securities will not be listed on any securities exchange. |
Observation Period End-Dates,
Coupon Payment Dates and Redemption Dates
| |
|
| Observation Period End-Dates |
Coupon Payment Dates / Redemption Dates |
| October 9, 2023 |
October 12, 2023 |
| January 8, 2024 |
January 11, 2024 |
| April 8, 2024 |
April 11, 2024 |
| July 8, 2024 |
July 11, 2024 |
| October 7, 2024 |
October 10, 2024 |
| January 7, 2025 |
January 10, 2025 |
| April 7, 2025 |
April 10, 2025 |
| July 7, 2025 (final observation date) |
July 10, 2025* (maturity date) |
*Denotes that such date is not a “Redemption Date”
The pricing date, issue date and other dates set forth above are subject
to change, and will be set forth in the final pricing supplement relating to the securities.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Investment Overview
Callable Contingent Income Securities
Principal at Risk Securities
Callable Contingent Income Securities due July 10, 2025 Payments
on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the
NASDAQ-100® Index (the “securities”) do not guarantee the repayment of principal and do not provide for the
regular payment of interest. Instead, the securities will pay a contingent quarterly coupon but only if the index closing value
of each of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index on
each index business day during the applicable quarterly observation period is at or above 65% of its respective
initial index value, which we refer to as the respective coupon barrier level. If the index closing value of any underlying index
is less than the coupon barrier level for such index on any index business day during an observation period, we will pay no
contingent quarterly coupon for the related quarterly period. In addition, beginning on October 12, 2023, we will have the right to
redeem the securities at our discretion on any quarterly redemption date for a redemption payment equal to the sum of the stated principal
amount plus any contingent quarterly coupon otherwise due with respect to the related observation period. An early redemption of the securities
will not automatically occur based on the performance of the underlying indices. At maturity, if the securities have not previously been
redeemed and the final index value of each underlying index is greater than or equal to 65% of the respective initial index value,
which we refer to as the downside threshold level, the payment at maturity will be the stated principal amount and, if payable, the contingent
quarterly coupon otherwise due with respect to the final observation period. If, however, the final index value of any underlying
index is less than its downside threshold level, investors will be exposed to the decline in the worst performing underlying index on
a 1-to-1 basis and will receive a payment at maturity that is less than 65% of the stated principal amount of the securities and could
be zero. Accordingly, investors in the securities must be willing to accept the risk of losing their entire initial investment based
on the performance of any underlying index and also the risk of not receiving any quarterly coupons throughout the entire term of the
securities.
| |
|
| Maturity: |
Approximately 2 years, unless redeemed earlier at our discretion. |
| Contingent quarterly coupon: |
If, on each index business day during an observation
period, the index closing value of each underlying index is greater than or equal to its respective coupon barrier level,
we will pay a contingent quarterly coupon of at least $22.25 per security (equal to a rate of at least 2.225% per quarter or at least
8.90% per annum) on the related coupon payment date. The actual contingent quarterly coupon will be determined on the pricing date.
If, on any index business day during an observation
period, the index closing value of any underlying index is less than the coupon barrier level for such index, no contingent
quarterly coupon will be paid with respect to that observation period. It is possible that one or more underlying indices will close
below the respective coupon barrier level(s) on any index business day during most or all of the observation periods throughout the entire
term of the securities so that you will receive few or no contingent quarterly coupons. |
| Early redemption: |
Beginning on October 12, 2023, on any quarterly redemption date, we have the right to redeem all (but not less than all) of the securities for a redemption payment equal to the stated principal amount plus any contingent quarterly coupon otherwise due with respect to the relevant observation period. An early redemption of the securities will not automatically occur based on the performance of the underlying indices. We will give notice to the trustee at least five business days but not more than 60 calendar days before the applicable redemption date. No further payments will be made on the securities once they have been redeemed. |
| Payment at maturity: |
If the securities have not previously been redeemed, investors will
receive on the maturity date a payment at maturity determined as follows:
If the final index value of each underlying index is greater
than or equal to its respective downside threshold level: the stated principal amount and, if payable, the contingent quarterly coupon
otherwise due with respect to the final observation period.
If the final index value of any underlying index is less than
its respective downside threshold level: (i) the stated principal amount multiplied by (ii) the index performance factor of
the worst performing underlying index. Under these circumstances, the payment at maturity will be less than 65% of the stated principal
amount of the securities and could be zero. |
Any payments on the securities depend on the credit risk of BofA Finance,
as issuer, and BAC, as guarantor, and on the performance of the underlying indices. The economic terms of the securities are based on
BAC’s internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked notes, and the
economic terms of certain related hedging arrangements BAC’s affiliates enter into. BAC’s internal funding rate is typically
lower than the rate it would pay when it issues conventional fixed or floating rate debt securities. This difference in funding rate,
as well as the agent's commissions and fees, if any, and the hedging related charges described below (see “Risk Factors” beginning
on page 11), will reduce the economic terms of the securities to you and the initial estimated
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
value of the securities. Due to these factors, the public
offering price you pay to purchase the securities will be greater than the initial estimated value of the securities as of the pricing
date.
The initial estimated value range of the securities is set forth on
the cover page of this pricing supplement. The final pricing supplement will set forth the initial estimated value of the securities as
of the pricing date. For more information about the initial estimated value and the structuring of the securities, see “Risk Factors”
beginning on page 11 and “Structuring the securities” on page 24.
The securities are our senior debt securities. Any payments on the securities
are fully and unconditionally guaranteed by BAC. The securities and the related guarantee are not insured by the Federal Deposit Insurance
Corporation or secured by collateral. The securities will rank equally in right of payment with all of our other unsecured and unsubordinated
obligations, except obligations that are subject to any priorities or preferences by law. The related guarantee will rank equally in right
of payment with all of BAC’s other unsecured and unsubordinated obligations, except obligations that are subject to any priorities
or preferences by law, and senior to its subordinated obligations. Any payments due on the securities, including any repayment of the
principal amount, will be subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Key Investment Rationale
The securities do not provide for the regular payment of interest
and instead will pay a contingent quarterly coupon but only if the index closing value of each underlying index is at
or above 65% of its initial index value, which we refer to as the respective coupon barrier level, on each index business day
during the related observation period. These securities are for investors who are willing to risk their principal and seek an opportunity
to earn contingent quarterly coupon payments at a potentially above-market rate in exchange for the risk of receiving no contingent quarterly
coupon payments if any underlying index closes below the coupon barrier level for such index on any index business day during
the related observation period, and the risk of an early redemption of the securities at our discretion. The following scenarios are for
illustration purposes only to demonstrate how the payment at maturity and contingent quarterly coupon (if the securities have not previously
been redeemed) are determined, and do not attempt to demonstrate every situation that may occur. Accordingly, the securities may or may
not be redeemed by us at our discretion, the contingent quarterly coupon may be payable with respect to none of, or some but not all of,
the quarterly periods, and the payment at maturity may be less than 65% of the stated principal amount and could be zero. Investors will
not participate in any appreciation in any underlying index.
| |
|
| Scenario 1: The securities are redeemed prior to maturity. |
This scenario assumes that we redeem the securities at our discretion prior to the maturity date on one of the quarterly redemption dates, starting on October 12, 2023, for a redemption payment equal to the stated principal amount plus any contingent quarterly coupon otherwise due with respect to the relevant observation period. Prior to the early redemption, each underlying index closes at or above its respective coupon barrier level on each index business day during some or all of the quarterly observation periods. In this scenario, investors receive the contingent quarterly coupon with respect to each such observation period, but not for the quarterly periods for which one or more underlying indices close below the respective coupon barrier level on any index business day during such observation period. No further payments will be made on the securities once they have been redeemed. |
| Scenario 2: The securities are not redeemed prior to maturity, and investors receive principal back at maturity. |
This scenario assumes that we do not redeem the securities on any of the quarterly redemption dates, and, as a result, investors hold the securities to maturity. During the term of the securities, each underlying index closes at or above its respective coupon barrier level on each index business day during some but not all quarterly observation periods. Investors will receive the contingent quarterly coupon for the quarterly periods for which the index closing value of each underlying index is at or above its respective coupon barrier level on each index business day during such observation period, but not for the quarterly periods for which one or more underlying indices close below the respective coupon barrier level(s) on any index business day during such observation period. On the final observation date, each underlying index closes at or above its downside threshold level. At maturity, investors receive the stated principal amount and, if payable, the contingent quarterly coupon with respect to the final observation period. |
| Scenario 3: The securities are not redeemed prior to maturity, and investors suffer a substantial loss of principal at maturity. |
This scenario assumes that we do not redeem the securities on any of the quarterly redemption dates, and, as a result, investors hold the securities to maturity. During the term of the securities, one or more underlying indices close below the respective coupon barrier level(s) on at least one index business day during each quarterly observation period. Since one or more underlying indices close below the respective coupon barrier level(s) on at least one index business day during every quarterly observation period, investors do not receive any contingent quarterly coupons. On the final observation date, one or more underlying indices close below the respective downside threshold level(s). At maturity, investors will receive an amount equal to the stated principal amount multiplied by the index performance factor of the worst performing underlying index. Under these circumstances, the payment at maturity will be less than 65% of the stated principal amount and could be zero. |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Underlying Indices Summary
All disclosures contained in this pricing supplement regarding the underlying
indices, 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, the sponsor of the SPX, the sponsor
of the RTY and the sponsor of the NDX (collectively, the “underlying index sponsors”). The underlying index sponsors, which
license the copyright and all other rights to the underlying indices, have no obligation to continue to publish, and may discontinue publication
of, the underlying indices. The consequences of any underlying index sponsor discontinuing publication of the applicable underlying index
are discussed in “Description of the Notes — Discontinuance of an Index” in the accompanying product supplement. None
of us, the guarantor, the calculation agent, or BofAS accepts any responsibility for the calculation, maintenance or publication of any
underlying index or any successor index. None of us, the guarantor, BofAS or any of our other affiliates makes any representation to you
as to the future performance of the underlying indices. You should make your own investigation into the underlying indices.
S&P 500® Index
The SPX includes a representative sample of 500 companies in leading industries
of the U.S. economy. The SPX is intended to provide an indication of the pattern of common stock price movement. The calculation of the
level of the SPX is based on the relative value of the aggregate market value of the common stocks of 500 companies as of a particular
time compared to the aggregate average market value of the common stocks of 500 similar companies during the base period of the years
1941 through 1943.
Information as of market close on June 28, 2023:
| |
|
| Bloomberg Ticker Symbol: |
SPX |
| Current Index Value: |
4,376.86 |
| 52 Weeks Ago: |
3,821.55 |
| 52 Week High (on June 15, 2023): |
4,425.84 |
| 52 Week Low (on October 12, 2022): |
3,577.03 |
For additional historical information, see “S&P 500®
Index Historical Performance” below. For additional information about the S&P 500® Index, see the information
set forth in “Annex A—The S&P 500® Index” below.
Russell 2000® Index
The RTY is designed to track the performance of the small capitalization
segment of the U.S. equity market. As a subset of the Russell 3000® Index, the RTY consists of the smallest 2,000 companies
included in the Russell 3000® Index. The Russell 3000® Index measures the performance of the largest 3,000
U.S. companies, representing approximately 98% of the investable U.S. equity market. The RTY is determined, comprised, and calculated
by FTSE Russell without regard to the securities.
Information as of market close on June 28, 2023:
| |
|
| Bloomberg Ticker Symbol: |
RTY |
| Current Index Value: |
1,858.709 |
| 52 Weeks Ago: |
1,738.841 |
| 52 Week High (on August 15, 2022): |
2,021.346 |
| 52 Week Low (on September 26, 2022): |
1,655.882 |
For additional historical information, see “Russell 2000®
Index Historical Performance” below. For additional information about the Russell 2000® Index, see the information
set forth in “Annex B—The Russell 2000® Index” below.
NASDAQ-100® Index
The NASDAQ-100® Index, which is calculated, maintained
and published by Nasdaq, Inc., is a modified capitalization-weighted index of 100 of the largest and most actively traded equity securities
of non-financial companies listed on The NASDAQ Stock Market LLC. The NASDAQ-100® Index includes companies across a variety
of major industry groups. At any moment in time, the value of the NASDAQ-100® Index equals the aggregate value of the then-current
NASDAQ-100® Index share weights of each of the NASDAQ-100® Index component securities, which are based on
the total shares outstanding of each such NASDAQ-100® Index component security, multiplied by each such security’s
respective last sale price on NASDAQ (which may be the official closing price published by NASDAQ), and divided by a scaling factor, which
becomes the basis for the reported NASDAQ-100® Index value.
Information as of market close on June 28, 2023:
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
| |
|
| Bloomberg Ticker Symbol: |
NDX |
| Current Index Value: |
14,964.58 |
| 52 Weeks Ago: |
11,637.77 |
| 52 Week High (on June 15, 2023): |
15,185.48 |
| 52 Week Low (on December 28, 2022): |
10,679.34 |
For additional historical information, see “NASDAQ-100®
Index Historical Performance” below. For additional information about the NASDAQ-100® Index, see the information
set forth in “Annex C—The NASDAQ-100® Index” below.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Hypothetical Examples
The following hypothetical examples illustrate how to determine whether
a contingent quarterly coupon is paid with respect to an observation period and how to calculate the payment at maturity. The following
examples are for illustrative purposes only. Whether you receive a contingent quarterly coupon will be determined by reference to the
index closing value of each underlying index on each index business day during an observation period, and the amount you will receive
at maturity, if any, will be determined by reference to the final index value of each underlying index on the final observation date.
Any early redemption of the securities will be at our discretion. The actual initial index value, coupon barrier level, and downside threshold
level for each underlying index will be determined on the pricing date. All payments on the securities are subject to issuer and guarantor
credit risk. The below examples are based on the following terms:
| |
|
| Contingent Quarterly Coupon: |
If, on each index business day during an observation period, the
index closing value of each underlying index is greater than or equal to its respective coupon barrier level, we will pay
a contingent quarterly coupon of at least $22.25 per security (equal to a rate of at least 2.225% per quarter or at least 8.90% per annum)
on the related coupon payment date. The actual contingent quarterly coupon will be determined on the pricing date.
If, on any index business day during an observation period,
the index closing value of any underlying index is less than the coupon barrier level for such index, no contingent quarterly
coupon will be paid with respect to that observation period. It is possible that one or more underlying indices will close below the
respective coupon barrier level(s) on any index business day during most or all of the observation periods throughout the entire term
of the securities so that you will receive few or no contingent quarterly coupons. |
| Call Feature: |
Beginning on October 12, 2023, on any quarterly redemption date, we have the right to redeem all (but not less than all) of the securities for a redemption payment equal to the stated principal amount plus any contingent quarterly coupon otherwise due with respect to the relevant observation period. We will give notice to the trustee at least five business days but not more than 60 calendar days before the applicable redemption date. No further payments will be made on the securities once they have been redeemed. |
| Payment at Maturity (if the securities have not been redeemed early): |
If the final index value of each underlying index is greater than
or equal to its respective downside threshold level: the stated principal amount and, if payable, the contingent quarterly coupon
otherwise due with respect to the final observation period.
If the final index value of any underlying index is less
than its respective downside threshold level: (i) the stated principal amount multiplied by (ii) the index performance factor
of the worst performing underlying index. Under these circumstances, the payment at maturity will be less than 65% of the stated principal
amount of the securities and could be zero. |
| Stated Principal Amount: |
$1,000 |
| Hypothetical Initial Index Value: |
With respect to the SPX: 4,000
With respect to the RTY: 2,000
With respect to the NDX: 12,000 |
| Hypothetical Coupon Barrier Level: |
With respect to the SPX: 2,600, which is 65% of the hypothetical
initial index value for such index
With respect to the RTY: 1,300, which is 65% of the hypothetical
initial index value for such index
With respect to the NDX: 7,800, which is 65% of the hypothetical
initial index value for such index |
| Hypothetical Downside Threshold Level: |
With respect to the SPX: 2,600, which is 65% of the hypothetical
initial index value for such index
With respect to the RTY: 1,300, which is 65% of the hypothetical
initial index value for such index
With respect to the NDX: 7,800, which is 65% of the hypothetical
initial index value for such index |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
How to determine whether a contingent quarterly coupon
is payable with respect to an observation period (if the securities have not been previously redeemed):
| |
|
|
|
|
| |
Lowest Index Closing Value During Observation Period |
Contingent Quarterly Coupon |
| |
SPX |
RTY |
NDX |
| Example 1 |
3,700 (at or above coupon barrier level on each index business day during the related observation period) |
1,950 (at or above coupon barrier level on each index business day during the related observation period) |
11,400 (at or above coupon barrier level on each index business day during the related observation period) |
$22.25 |
| Example 2 |
3,700 (at or above coupon barrier level on each index business day during the related observation period) |
1,600 (at or above coupon barrier level on each index business day during the related observation period) |
7,000 (below coupon barrier level on at least one index business day during the related observation period) |
$0 |
| Example 3 |
2,100 (below coupon barrier level on at least one index business day during the related observation period) |
900 (below coupon barrier level on at least one index business day during the related observation period) |
9,600 (at or above coupon barrier level on each index business day during the related observation period) |
$0 |
| Example 4 |
2,000 (below coupon barrier level on at least one index business day during the related observation period) |
700 (below coupon barrier level on at least one index business day during the related observation period) |
7,100 (below coupon barrier level on at least one index business day during the related observation period) |
$0 |
In example 1, the SPX, the RTY and the NDX all close at or above
their respective coupon barrier levels on each index business day during the related observation period. Therefore a contingent quarterly
coupon of $22.25 per security is paid on the relevant coupon payment date.
In each of the examples 2 and 3, one or more underlying indices close
below their respective coupon barrier levels on at least one index business day during the related observation period. Therefore, no contingent
quarterly coupon is paid on the relevant coupon payment date.
In example 4, each underlying index closes below its respective coupon
barrier level on at least one index business day during the related observation period and accordingly no contingent quarterly coupon
is paid on the relevant coupon payment date.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
How to calculate the payment at maturity (if the securities
have not been redeemed early at our option):
| |
|
|
|
|
| |
Final Index Value |
Payment at Maturity |
| |
SPX |
RTY |
NDX |
| Example 1: |
4,500 (at or above the downside threshold level) |
2,200 (at or above the downside threshold level) |
12,200 (at or above the downside threshold level) |
$1,000 and, if payable, the contingent quarterly
coupon with respect to the final observation period
|
| Example 2: |
3,650 (at or above the downside threshold level) |
1,700 (at or above the downside threshold level) |
4,800 (below the downside threshold level) |
$1,000 x index performance factor of the worst performing underlying index = $1,000 x (4,800 / 12,000) = $400 |
| Example 3: |
2,000 (below the downside threshold level) |
800 (below the downside threshold level) |
9,600 (at or above the downside threshold level) |
$1,000 x (800 / 2,000) = $400 |
| Example 4: |
1,800 (below the downside threshold level) |
600 (below the downside threshold level) |
4,800 (below the downside threshold level) |
$1,000 x (600 / 2,000) = $300 |
| Example 5: |
1,200 (below the downside threshold level) |
800 (below the downside threshold level) |
6,000 (below the downside threshold level) |
$1,000 x (1,200 / 4,000) = $300 |
In example 1, the final index values of the SPX, RTY and NDX are
at or above their respective downside threshold levels. Therefore, investors receive at maturity the stated principal amount of the securities
and, if payable, the contingent quarterly coupon with respect to the final observation period. Investors do not participate in the appreciation
of any underlying index.
In examples 2 and 3, the final index value(s) of one or two of the
underlying indices are at or above the respective downside threshold level(s) but the final index value(s) of one or both of the other
underlying indices are below their respective downside level(s). Therefore, investors are exposed to the downside performance of the worst
performing underlying index at maturity and receive at maturity an amount equal to the stated principal amount times the index
performance factor of the worst performing underlying index.
Similarly, in examples 4 and 5, the final index value of each underlying
index is below its respective downside threshold level, and investors receive at maturity an amount equal to the stated principal amount
times the index performance factor of the worst performing underlying index. In example 4, the SPX has declined 55% from its initial
index value to its final index value, the RTY has declined 70% from its initial index value to its final index value and the NDX has declined
60% from its initial index value to its final index value. Therefore, the payment at maturity equals the stated principal amount times
the index performance factor of the RTY, which is the worst performing underlying index in this example. In example 5, the SPX has declined
70% from its initial index value to its final index value, the RTY has declined 60% from its initial index value and the NDX has declined
50% from its initial index value to its final index value. Therefore the payment at maturity equals the stated principal amount times
the index performance factor of the SPX, which is the worst performing underlying index in this example.
If the securities have not been redeemed prior to maturity and
the final index value of ANY underlying index is below its respective downside threshold level, you will be exposed to the downside performance
of the worst performing underlying index at maturity, and your payment at maturity will be less than $650 per security and could be zero.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Additional Information About the Securities
| Tax considerations: |
The following summary of the material U.S. federal income and estate
tax considerations of the acquisition, ownership, and disposition of the securities supplements, and to the extent inconsistent supersedes,
the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus and is not exhaustive of all
possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations
promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary regulations), rulings,
current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all as currently in effect and
all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the
IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. This summary
does not include any description of the tax laws of any state or local governments, or of any foreign government, that may be applicable
to a particular holder.
Although the securities 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 securities upon original issuance and will hold the securities 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 securities, 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 securities, we intend to treat the securities for all tax purposes as contingent income-bearing
single financial contracts with respect to the underlying indices and under the terms of the securities, we and every investor in the
securities agree, in the absence of an administrative determination or judicial ruling to the contrary, to treat the securities in accordance
with such characterization. In the opinion of our counsel, Sidley Austin LLP, it is reasonable to treat the securities as contingent income-bearing
single financial contracts with respect to the underlying indices. However, Sidley Austin LLP has advised us that it is unable to conclude
that it is more likely than not that this treatment will be upheld. This discussion assumes that the securities constitute contingent
income-bearing single financial contracts with respect to the underlying indices for U.S. federal income tax purposes. If the securities
did not constitute contingent income-bearing single financial contracts, the tax consequences described below would be materially different.
This characterization of the securities is not binding on the IRS
or the courts. No statutory, judicial, or administrative authority directly addresses the characterization of the securities 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 securities 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 securities, 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 securities.
We will not attempt to ascertain whether any issuer of a component stock
included in an underlying 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 an underlying index were so treated, certain adverse U.S. federal income tax consequences
could possibly apply to a holder of the securities. You should refer to information filed with the SEC by the issuers of the component
stocks included in each underlying index and consult your tax advisor |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
|
regarding the possible consequences to you, if any, if any issuer
of a component stock included in an underlying index is or becomes a PFIC or is or becomes a United States real property holding corporation.
U.S. Holders
Although the U.S. federal income tax treatment of any contingent quarterly
coupon on the securities is uncertain, we intend to take the position, and the following discussion assumes, that any contingent quarterly
coupon constitutes taxable ordinary income to a U.S. Holder at the time received or accrued in accordance with the U.S. Holder’s
regular method of accounting. By purchasing the securities you agree, in the absence of an administrative determination or judicial ruling
to the contrary, to treat any contingent quarterly coupon as described in the preceding sentence.
Upon receipt of a cash payment at maturity or upon a sale, exchange,
or redemption of the securities prior to maturity, a U.S. Holder generally will recognize capital gain or loss equal to the difference
between the amount realized (other than amounts representing any contingent quarterly coupon, which would be taxed as described above)
and the U.S. Holder’s tax basis in the securities. A U.S. Holder’s tax basis in the securities will equal the amount paid
by that holder to acquire them. This capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder held the
securities for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments. Due to the absence of authorities
that directly address the proper tax treatment of the securities, prospective investors are urged to consult their tax advisors regarding
all possible alternative tax treatments of an investment in the securities. In particular, the IRS could seek to subject the securities
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 securities 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, exchange, or redemption of the securities generally would be treated as ordinary income, and any loss realized
at maturity or upon a sale, exchange, or redemption of the securities 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.
In addition, it is possible that the securities could be treated as
a unit consisting of a deposit and a put option written by the security holder, in which case the timing and character of income on the
securities would be affected significantly.
The IRS released Notice 2008-2 (the “Notice”), which sought
comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.” This Notice
addresses instruments such as the securities. According to the Notice, the IRS and Treasury are considering whether a holder of an instrument
such as the securities 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 securities, 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 securities.
Because of the absence of authority regarding the appropriate tax characterization
of the securities, it is also possible that the IRS could seek to characterize the securities 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, exchange, or redemption of the securities should be treated as ordinary gain or loss.
|
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
|
Because each underlying index is an index that periodically rebalances,
it is possible that the securities could be treated as a series of contingent income-bearing single financial contracts, each of which
matures on the next rebalancing date. If the securities were properly characterized in such a manner, a U.S. Holder would be treated as
disposing of the securities on each rebalancing date in return for new securities 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 securities (which would be adjusted to take into account any prior recognition of gain or loss) and the fair market value
of the securities on such date.
Non-U.S. Holders
Because the U.S. federal income tax treatment of the securities (including
any contingent quarterly coupon) is uncertain, we (or the applicable paying agent) will withhold U.S. federal income tax at a 30% rate
(or at a lower rate under an applicable income tax treaty) on the entire amount of any contingent quarterly coupon made unless such payments
are effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the U.S. (in which case, to avoid withholding,
the Non-U.S. Holder will be required to provide a Form W-8ECI). We (or the applicable paying agent) will not pay any additional amounts
in respect of such withholding. To claim benefits under an income tax treaty, a Non-U.S. Holder must obtain a taxpayer identification
number and certify as to its eligibility under the appropriate treaty’s limitations on benefits article, if applicable. In addition,
special rules may apply to claims for treaty benefits made by Non-U.S. Holders that are entities rather than individuals. The availability
of a lower rate of withholding under an applicable income tax treaty will depend on whether such rate applies to the characterization
of the payments under U.S. federal income tax laws. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding
tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with
the IRS.
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 securities (not including, for the avoidance of doubt, amounts
representing any contingent quarterly coupon which would be subject to the rules discussed in the previous paragraph) upon the sale, exchange,
or redemption of the securities or their settlement at maturity, 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, exchange, or redemption of the securities 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, redemption, or settlement and certain other conditions are satisfied.
If a Non-U.S. Holder of the securities is engaged in the conduct of
a trade or business within the U.S. and if any contingent quarterly coupon and gain realized on the settlement at maturity, or upon sale,
exchange, or redemption of the securities, 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 contingent quarterly coupon and 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 securities. 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, 2025. Based on our
determination that the securities are not delta-one instruments, Non-U.S. Holders should not be subject to withholding on dividend equivalent
payments, if any, under the securities. However, it is possible that the securities could be treated as deemed reissued for U.S. federal
income tax purposes upon the occurrence of certain events affecting the underlying indices or the securities, and following such occurrence
the securities could be treated as subject to withholding on dividend equivalent payments. Non-U.S. Holders that enter, or have entered,
into other transactions in respect of the underlying indices or the securities should consult their tax advisors as to the application
of the dividend equivalent withholding tax in the context of the securities and their other
|
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
|
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 securities
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 securities to become subject to withholding tax in addition to the withholding
tax described above, tax will be withheld at the applicable statutory rate. 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 security 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 security.
Backup Withholding and Information Reporting
Please see the discussion under “U.S. Federal Income Tax Considerations
— General — 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 securities. |
| Structuring the securities: |
The securities are our debt securities, the return on which is
linked to the performance of the underlying indices. The related guarantee is BAC’s obligation. As is the case for all of our and
BAC’s respective debt securities, including our market-linked notes, the economic terms of the securities 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 securities, along with the fees and charges associated with market-linked notes, typically results in the initial
estimated value of the securities on the pricing date being less than their price to public.
The initial estimated value range of the securities is set forth
on the cover page of this pricing supplement. The final pricing supplement will set forth the initial estimated value of the securities
as of the pricing date.
In order to meet our payment obligations on the securities, at
the time we issue the securities, we may choose to enter into certain hedging arrangements (which may include call options, put options
or other derivatives) with BofAS or one of our other affiliates. The terms of these hedging arrangements are determined based upon terms
provided by BofAS and its affiliates, and take into account a number of factors, including our and BAC’s creditworthiness, interest
rate movements, the volatility of the underlying indices, the tenor of the securities and the hedging arrangements. The economic terms
of the securities 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 11 above and “Supplemental Use of Proceeds” on page PS-20 of the accompanying product supplement. |
| Supplement to the plan of distribution; role of BofAS and conflicts of interest: |
BofAS, a broker-dealer affiliate of ours, is a member of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) and will participate as agent in the distribution of the securities. Accordingly,
the offering of the securities will conform to the requirements of FINRA Rule 5121. BofAS may not make sales in this offering to any of
its discretionary accounts without the prior written approval of the account holder.
We expect to deliver the securities against payment therefor in
New York, New York on a date that is greater than two business days following the pricing date. Under Rule 15c6-1 of the Securities Exchange
Act of 1934, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade
expressly agree otherwise. Accordingly, if the initial settlement of the securities occurs more than two business days from the pricing
date, purchasers who wish to trade the securities more than two business days prior to the original issue date will be required to specify
alternative settlement arrangements to prevent a failed settlement.
Under our distribution agreement with BofAS, BofAS will purchase
the securities from us as principal at the public offering price indicated on the cover of this pricing supplement, less the indicated
agent's commission and fees, if any. BofAS will sell the securities to other broker-dealers that will participate in the offering and
that are not affiliated with us, at an agreed discount to the principal amount. Each of those broker-dealers may sell the securities to
one or more additional broker-dealers. BofAS has informed us that these discounts may vary from dealer to dealer and that not all dealers
will purchase or repurchase the securities at the same discount. Morgan Stanley Smith Barney LLC (“Morgan Stanley Wealth Management”)
and its financial advisors will collectively receive from the agent, BofAS, a fixed sales commission for each security they sell, and
Morgan Stanley Wealth Management will receive a structuring fee for each security, in each |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
|
case as specified on the cover page of this
document. The costs included in the original issue price of the securities will include a fee paid by BofAS to LFT Securities, LLC, an
entity in which an affiliate of Morgan Stanley Wealth Management has an ownership interest, for providing certain electronic platform
services with respect to this offering.
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 securities. However, they are not obligated to engage in such secondary market transactions
and/or market-making transactions. These broker-dealer affiliates may act as principal or agent in these transactions, and any such sales
will be made at prices related to prevailing market conditions at the time of the sale.
At BofAS’s discretion, for a short, undetermined initial
period after the issuance of the securities, BofAS may offer to buy the securities in the secondary market at a price that may exceed
the initial estimated value of the securities. Any price offered by BofAS for the securities will be based on then-prevailing market conditions
and other considerations, including the performance of the underlying indices and the remaining term of the securities. However, none
of us, the guarantor, BofAS or any of our other affiliates is obligated to purchase your securities at any price or at any time, and we
cannot assure you that any party will purchase your securities at a price that equals or exceeds the initial estimated value of the securities.
Any price that BofAS may pay to repurchase the securities 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 securities.
Sales Outside of the United States
The securities have not been approved for public sale in any jurisdiction
outside of the United States. There has been no registration or filing as to the securities with any regulatory, securities, banking,
or local authority outside of the United States and no action has been taken by BofA Finance, BAC, BofAS or any other affiliate of BAC,
to offer the securities in any jurisdiction other than the United States. As such, these securities are made available to investors outside
of the United States only in jurisdictions where it is lawful to make such offer or sale and only under circumstances that will result
in compliance with applicable laws and regulations, including private placement requirements.
Further, no offer or sale of the securities is being made to residents
of:
·
Australia
·
Barbados
·
Belgium
·
Crimea
·
Cuba
·
Curacao Sint Maarten
·
Gibraltar
·
Indonesia
·
Iran
·
Italy
·
Kazakhstan
·
Malaysia
·
New Zealand
·
North Korea
·
Norway
·
Russia
·
Saudi Arabia
·
Syria
You are urged to carefully review the selling restrictions that
may be applicable to your jurisdiction beginning on page S-56 of the accompanying prospectus supplement.
European Economic Area and United Kingdom
None of this pricing supplement, the accompanying product supplement,
the accompanying prospectus or the accompanying prospectus supplement is a prospectus for the purposes of the Prospectus Regulation (as
defined below). This pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying prospectus
supplement have been prepared on the basis that any offer of securities in any Member State of the European Economic Area (the “EEA”)
or in the United Kingdom (each, a “Relevant
|
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
|
State”) will only be made to a legal entity which is a qualified investor under
the Prospectus Regulation (“Qualified Investors”). Accordingly any person making or intending to make an offer in that Relevant
State of securities which are the subject of the offering contemplated in this pricing supplement, the accompanying product supplement,
the accompanying prospectus and the accompanying prospectus supplement may only do so with respect to Qualified Investors. Neither BofA
Finance nor BAC has authorized, nor does it authorize, the making of any offer of securities other than to Qualified Investors. The expression
“Prospectus Regulation” means Regulation (EU) 2017/1129.
PROHIBITION OF SALES TO EEA AND UNITED KINGDOM RETAIL INVESTORS
– The securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the EEA or in the United Kingdom. For these purposes: (a) a retail investor means a person who
is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”);
or (ii) a customer within the meaning of Directive (EU) 2016/97 (the Insurance Distribution Directive) where that customer would not qualify
as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus
Regulation; and (b) the expression “offer” includes the communication in any form and by any means of sufficient information
on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities.
Consequently no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”) for
offering or selling the securities or otherwise making them available to retail investors in the EEA or in the United Kingdom has been
prepared and therefore offering or selling the securities or otherwise making them available to any retail investor in the EEA or in the
United Kingdom may be unlawful under the PRIIPs Regulation.
United Kingdom
The communication of this pricing supplement, the accompanying
product supplement, the accompanying prospectus supplement, the accompanying prospectus and any other document or materials relating to
the issue of the securities 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 securities 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 securities may only be communicated or caused
to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to BofA Finance, as issuer, or BAC, as guarantor.
All applicable provisions of the FSMA must be complied with
in respect to anything done by any person in relation to the securities in, from or otherwise involving the United Kingdom. |
| Where you can find more information: |
This pricing supplement and the accompanying product supplement,
prospectus supplement and prospectus have been filed as part of a registration statement with the SEC, which may, without cost, be accessed
on the SEC website at www.sec.gov or obtained from BofAS by calling 1-800-294-1322. Before you invest, you should read this pricing supplement
and the accompanying product supplement, prospectus supplement and prospectus for information about us, BAC and this offering. Any prior
or contemporaneous oral statements and any other written materials you may have received are superseded by this pricing supplement and
the accompanying product supplement, prospectus supplement and prospectus. Certain terms used but not defined in this pricing supplement
have the meanings set forth in the accompanying product supplement or prospectus supplement.
The terms and risks of the securities are contained in this pricing
supplement and in the following related product supplement, prospectus supplement and prospectus, which can be accessed at the following
links:
●
Product Supplement EQUITY-1 dated December 30, 2022:
https://www.sec.gov/Archives/edgar/data/1682472/000119312522315473/d429684d424b2.htm
●
Series A MTN prospectus supplement dated
December 30, 2022 and prospectus dated December 30, 2022:
https://www.sec.gov/Archives/edgar/data/1682472/000119312522315195/d409418d424b3.htm
Please note that, for purposes of this pricing supplement, references
in the accompanying product supplement EQUITY-1 to “closing level”, “Trading Day”, “Underlying”, “Index
Publisher” and “Index” shall be deemed to refer to “index closing value”, “index business day”,
“underlying index”, “underlying index sponsor” and “underlying index”, respectively. |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Annex A—The S&P 500®
Index
The SPX includes a representative sample of 500 companies in
leading industries of the U.S. economy. The SPX is intended to provide an indication of the pattern of common stock price movement. The
calculation of the level of the SPX is based on the relative value of the aggregate market value of the common stocks of 500 companies
as of a particular time compared to the aggregate average market value of the common stocks of 500 similar companies during the base period
of the years 1941 through 1943.
The SPX includes companies from eleven main groups: Communication
Services; Consumer Discretionary; Consumer Staples; Energy; Financials; Health Care; Industrials; Information Technology; Real Estate;
Materials; and Utilities. S&P Dow Jones Indices LLC (“SPDJI”), the sponsor of the SPX, may from time to time, in its sole
discretion, add companies to, or delete companies from, the SPX to achieve the objectives stated above.
Company additions to the SPX must have an unadjusted company
market capitalization of $14.6 billion or more (an increase from the previous requirement of an unadjusted company market capitalization
of $13.1 billion or more).
SPDJI calculates the SPX by reference to the prices of the constituent
stocks of the SPX without taking account of the value of dividends paid on those stocks. As a result, the return on the securities will
not reflect the return you would realize if you actually owned the SPX constituent stocks and received the dividends paid on those stocks.
Computation of the SPX
While SPDJI currently employs the following methodology to calculate
the SPX, no assurance can be given that SPDJI will not modify or change this methodology in a manner that may affect payments on the securities.
Historically, the market value of any component stock of the
SPX was calculated as the product of the market price per share and the number of then outstanding shares of such component stock. In
March 2005, SPDJI began shifting the SPX halfway from a market capitalization weighted formula to a float-adjusted formula, before moving
the SPX to full float adjustment on September 16, 2005. SPDJI’s criteria for selecting stocks for the SPX did not change with the
shift to float adjustment. However, the adjustment affects each company’s weight in the SPX.
Under float adjustment, the share counts used in calculating
the SPX reflect only those shares that are available to investors, not all of a company’s outstanding shares. Float adjustment excludes
shares that are closely held by control groups, other publicly traded companies or government agencies.
In September 2012, all shareholdings representing more than 5%
of a stock’s outstanding shares, other than holdings by “block owners,” were removed from the float for purposes of
calculating the SPX. Generally, these “control holders” will include officers and directors, private equity, venture capital
and special equity firms, other publicly traded companies that hold shares for control, strategic partners, holders of restricted shares,
ESOPs, employee and family trusts, foundations associated with the company, holders of unlisted share classes of stock, government entities
at all levels (other than government retirement/pension funds) and any individual person who controls a 5% or greater stake in a company
as reported in regulatory filings. However, holdings by block owners, such as depositary banks, pension funds, mutual funds and ETF providers,
401(k) plans of the company, government retirement/pension funds, investment funds of insurance companies, asset managers and investment
funds, independent foundations and savings and investment plans, will ordinarily be considered part of the float.
Treasury stock, stock options, restricted shares, equity participation
units, warrants, preferred stock, convertible stock, and rights are not part of the float. Shares held in a trust to allow investors in
countries outside the country of domicile, such as depositary shares and Canadian exchangeable shares, are normally part of the float
unless those shares form a control block. If a company has multiple classes of stock outstanding, shares in an unlisted or non-traded
class are treated as a control block.
For each stock, an investable weight factor (“IWF”)
is calculated by dividing the available float shares by the total shares outstanding. Available float shares are defined as the total
shares outstanding less shares held by control holders. This calculation is subject to a 5% minimum threshold for control blocks. For
example, if a company’s officers and directors hold 3% of the company’s shares, and no other control group holds 5% of the
company’s shares, SPDJI would assign that company an IWF of 1.00, as no control group meets the 5% threshold. However, if a company’s
officers and directors hold 3% of the company’s shares and another control group holds 20% of the company’s shares, SPDJI
would assign an IWF of 0.77, reflecting the fact that 23% of the company’s outstanding shares are considered to be held for control.
As of July 31, 2017, companies with multiple share class lines are no longer eligible for inclusion in the SPX. Constituents of the SPX
prior to July 31, 2017 with multiple share class lines will be grandfathered in and continue to be included in the SPX. If a constituent
company of the SPX reorganizes into a multiple share class line structure, that company will remain in the SPX at the discretion of the
S&P Index Committee in order to minimize turnover.
The SPX is calculated using a base-weighted aggregate methodology.
The level of the SPX reflects the total market value of all component stocks relative to the base period of the years 1941 through 1943.
An indexed number is used to represent the results of this calculation in order to make the level easier to work with and track over time.
The actual total market value of the component stocks during the base period of the years 1941 through 1943 has been set to an indexed
level of 10. This is often indicated by the notation 1941- 43 = 10. In practice, the daily calculation of the SPX is computed by dividing
the total market value of the component stocks by the “index divisor.” By itself, the index divisor is an arbitrary number.
However, in the context of the calculation of the SPX, it serves as a link to the original base period level of the SPX. The index divisor
keeps the SPX comparable over time and is the manipulation point for all adjustments to the SPX, which is index maintenance.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Index Maintenance
Index maintenance includes monitoring and completing the adjustments
for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to company restructuring
or spinoffs. Some corporate actions, such as stock splits and stock dividends, require changes in the common shares outstanding and the
stock prices of the companies in the SPX, and do not require index divisor adjustments.
To prevent the level of the SPX from changing due to corporate
actions, corporate actions which affect the total market value of the SPX require an index divisor adjustment. By adjusting the index
divisor for the change in market value, the level of the SPX remains constant and does not reflect the corporate actions of individual
companies in the SPX. Index divisor adjustments are made after the close of trading and after the calculation of the SPX closing value.
Changes in a company’s shares outstanding of 5.00% or more
due to mergers, acquisitions, public offerings, tender offers, Dutch auctions, or exchange offers are made as soon as reasonably possible.
Share changes due to mergers or acquisitions of publicly held companies that trade on a major exchange are implemented when the transaction
occurs, even if both of the companies are not in the same headline index, and regardless of the size of the change. All other changes
of 5.00% or more (due to, for example, company stock repurchases, private placements, redemptions, exercise of options, warrants, conversion
of preferred stock, notes, debt, equity participation units, at-the-market offerings, or other recapitalizations) are made weekly and
are announced on Fridays for implementation after the close of trading on the following Friday. Changes of less than 5.00% are accumulated
and made quarterly on the third Friday of March, June, September, and December, and are usually announced two to five days prior.
If a change in a company’s shares outstanding of 5.00%
or more causes a company’s IWF to change by five percentage points or more, the IWF is updated at the same time as the share change.
IWF changes resulting from partial tender offers are considered on a case by case basis.
License Agreement
S&P® is a registered trademark of Standard
& Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones
Trademark Holdings LLC (“Dow Jones”). These trademarks have been licensed for use by S&P Dow Jones Indices LLC. “Standard
& Poor’s®,” “S&P 500®” and “S&P®” are trademarks
of S&P. These trademarks have been sublicensed for certain purposes by our affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The SPX is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Merrill Lynch, Pierce, Fenner
& Smith Incorporated.
The securities are not sponsored, endorsed, sold or promoted
by S&P Dow Jones Indices LLC, Dow Jones, S&P or any of their respective affiliates (collectively, “S&P Dow Jones Indices”).
S&P Dow Jones Indices make no representation or warranty, express or implied, to the holders of the securities or any member of the
public regarding the advisability of investing in securities generally or in the securities particularly or the ability of the SPX to
track general market performance. S&P Dow Jones Indices’ only relationship to Merrill Lynch, Pierce, Fenner & Smith Incorporated
with respect to the SPX is the licensing of the SPX and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices
and/or its third party licensors. The SPX is determined, composed and calculated by S&P Dow Jones Indices without regard to us, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, or the securities. S&P Dow Jones Indices have no obligation to take our needs, BAC’s
needs or the needs of Merrill Lynch, Pierce, Fenner & Smith Incorporated or holders of the securities into consideration in determining,
composing or calculating the SPX. S&P Dow Jones Indices are not responsible for and have not participated in the determination of
the prices and amount of the securities or the timing of the issuance or sale of the securities or in the determination or calculation
of the equation by which the securities are to be converted into cash. S&P Dow Jones Indices have no obligation or liability in connection
with the administration, marketing or trading of the securities. There is no assurance that investment products based on the SPX will
accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC and its subsidiaries are not
investment advisors. Inclusion of a security or futures contract within an index is not a recommendation by S&P Dow Jones Indices
to buy, sell, or hold such security or futures contract, nor is it considered to be investment advice. Notwithstanding the foregoing,
CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to the securities currently being
issued by us, but which may be similar to and competitive with the securities. In addition, CME Group Inc. and its affiliates may trade
financial products which are linked to the performance of the SPX. It is possible that this trading activity will affect the value of
the securities.
S&P DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY,
TIMELINESS AND/OR THE COMPLETENESS OF THE SPX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR
WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY
DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY US,
BAC, BOFAS, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, HOLDERS OF THE SECURITIES, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE SPX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P
DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS
OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT,
TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES
INDICES AND MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Annex B—The Russell 2000® Index
The RTY was developed by Russell Investments (“Russell”)
before FTSE International Limited and Russell combined in 2015 to create FTSE Russell, which is wholly owned by London Stock Exchange
Group. Additional information on the RTY is available at the following website: http://www.ftserussell.com. No information on that website
is deemed to be included or incorporated by reference in this pricing supplement.
Russell began
dissemination of the RTY (Bloomberg L.P. index symbol “RTY”) on January 1, 1984. FTSE Russell calculates and publishes the
RTY. The RTY was set to 135 as of the close of business on December 31, 1986. The RTY is designed to track the performance of the small
capitalization segment of the U.S. equity market. As a subset of the Russell 3000® Index,
the RTY consists of the smallest 2,000 companies included in the Russell 3000® Index.
The Russell 3000® Index measures the performance of the
largest 3,000 U.S. companies, representing approximately 98% of the investable U.S. equity market. The RTY is determined, comprised, and
calculated by FTSE Russell without regard to the securities.
Selection of Stocks Comprising the RTY
Each company eligible for inclusion in the RTY must be classified as
a U.S. company under FTSE Russell’s country-assignment methodology. If a company is incorporated, has a stated headquarters location,
and trades in the same country (American Depositary Receipts and American Depositary Shares are not eligible), then the company is assigned
to its country of incorporation. If any of the three factors are not the same, FTSE Russell defines three Home Country Indicators (“HCIs”):
country of incorporation, country of headquarters, and country of the most liquid exchange (as defined by a two-year average daily dollar
trading volume) from all exchanges within a country. Using the HCIs, FTSE Russell compares the primary location of the company’s
assets with the three HCIs. If the primary location of its assets matches any of the HCIs, then the company is assigned to the primary
location of its assets. If there is insufficient information to determine the country in which the company’s assets are primarily
located, FTSE Russell will use the country from which the company’s revenues are primarily derived for the comparison with the three
HCIs in a similar manner. FTSE Russell uses the average of two years of assets or revenues data to reduce potential turnover. If conclusive
country details cannot be derived from assets or revenues data, FTSE Russell will assign the company to the country of its headquarters,
which is defined as the address of the company’s principal executive offices, unless that country is a Benefit Driven Incorporation
(“BDI”) country, in which case the company will be assigned to the country of its most liquid stock exchange. BDI countries
include: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Channel Islands,
Cook Islands, Curacao, Faroe Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Marshall Islands, Panama, Saba, Sint Eustatius,
Sint Maarten, and Turks and Caicos Islands. For any companies incorporated or headquartered in a U.S. territory, including Puerto Rico,
Guam, and U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the RTY must trade on a major
U.S. exchange. Stocks must have a closing price at or above $1.00 on their primary exchange on the last trading day in May to be eligible
for inclusion during annual reconstitution. However, in order to reduce unnecessary turnover, if an existing member’s closing price
is less than $1.00 on the last day of May, it will be considered eligible if the average of the daily closing prices (from its primary
exchange) during the month of May is equal to or greater than $1.00. Initial public offerings are added each quarter and must have a closing
price at or above $1.00 on the last day of their eligibility period in order to qualify for index inclusion. If an existing stock does
not trade on the “rank day” (typically the last trading day in May but a confirmed timetable is announced each spring) but
does have a closing price at or above $1.00 on another eligible U.S. exchange, that stock will be eligible for inclusion.
An important criterion used to determine the list of securities eligible
for the RTY is total market capitalization, which is defined as the market price as of the last trading day in May for those securities
being considered at annual reconstitution times the total number of shares outstanding. Where applicable, common stock, non-restricted
exchangeable shares and partnership units/membership interests are used to determine market capitalization. Any other form of shares such
as preferred stock, convertible preferred stock, redeemable shares, participating preferred stock, warrants and rights, installment receipts
or trust receipts, are excluded from the calculation. If multiple share classes of common stock exist, they are combined. In cases where
the common stock share classes act independently of each other (e.g., tracking stocks), each class is considered for inclusion separately.
If multiple share classes exist, the pricing vehicle will be designated as the share class with the highest two-year trading volume as
of the rank day in May.
Companies with a total market capitalization of less than $30 million
are not eligible for the RTY. Similarly, companies with only 5% or less of their shares available in the marketplace are not eligible
for the RTY. Royalty trusts, limited liability companies, closed-end investment companies (companies that are required to report Acquired
Fund Fees and Expenses, as defined by the SEC, including business development companies), blank check companies, special purpose acquisition
companies, and limited partnerships are also ineligible for inclusion. Bulletin board, pink sheets, and over-the-counter traded securities
are not eligible for inclusion. Exchange traded funds and mutual funds are also excluded.
Annual reconstitution is a process by which the RTY is completely rebuilt.
Based on closing levels of the company’s common stock on its primary exchange on the rank day of May of each year, FTSE Russell
reconstitutes the composition of the RTY using the then existing market capitalizations of eligible companies. Reconstitution of the RTY
occurs on the last Friday in June or, when the last Friday in June is the 29th or 30th, reconstitution occurs on the prior Friday. In
addition, FTSE Russell adds initial public offerings to the RTY on a quarterly basis based on total market capitalization ranking within
the market-adjusted capitalization
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
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.
License Agreement
“Russell 2000®” and “Russell 3000®”
are trademarks of FTSE Russell and have been licensed for use by our affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The securities are not sponsored, endorsed, sold, or promoted by FTSE Russell, and FTSE Russell makes no representation regarding the
advisability of investing in the securities.
FTSE Russell and Merrill Lynch, Pierce, Fenner & Smith Incorporated
have entered into a non-exclusive license agreement providing for the license to Merrill Lynch, Pierce, Fenner & Smith Incorporated
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 securities. The license agreement provides that the following language must be stated in this pricing
supplement:
The securities 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 securities or any member of the public
regarding the advisability of investing in securities generally or in the securities particularly or the ability of the RTY to track general
stock market performance or a segment of the same. FTSE Russell’s publication of the RTY in no way suggests or implies an opinion
by FTSE Russell as to the advisability of investment in any or all of the securities upon which the RTY is based. FTSE Russell’s
only relationship to Merrill Lynch, Pierce, Fenner & Smith Incorporated and to us is the licensing of certain trademarks and trade
names of FTSE Russell and of the RTY, which is determined, composed, and calculated by FTSE Russell without regard to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, us, or the securities. FTSE Russell is not responsible for and has not reviewed the securities nor any
associated literature or publications and FTSE Russell makes no representation or warranty express or implied as to their accuracy or
completeness, or otherwise. FTSE Russell reserves the right, at any time and without notice, to alter, amend, terminate, or in any way
change the RTY. FTSE Russell has no obligation or liability in connection with the administration, marketing, or trading of the securities.
FTSE RUSSELL DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS
OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE RUSSELL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
US, BAC, BOFAS, HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED THEREIN. FTSE RUSSELL
MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE RTY OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL FTSE RUSSELL HAVE
ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
Annex C—The NASDAQ-100® Index
The NDX is intended to measure the performance of the
100 largest domestic and international non-financial securities listed on The Nasdaq Stock Market ("NASDAQ") based on market
capitalization. The NDX reflects companies across major industry groups including computer hardware and software, telecommunications,
retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies.
The NDX began trading on January 31, 1985 at a base
value of 125.00. The NDX is calculated and published by Nasdaq, Inc. In administering the NDX, Nasdaq, Inc. will exercise reasonable discretion
as it deems appropriate.
Underlying Stock Eligibility Criteria
NDX eligibility is limited to specific security types
only. The security types eligible for the NDX include foreign or domestic common stocks, ordinary shares, ADRs and tracking stocks. Security
types not included in the NDX are closed-end funds, convertible debt securities, exchange traded funds, limited liability companies, limited
partnership interests, preferred stocks, rights, shares or units of beneficial interest, warrants, units, and other derivative securities.
The NDX does not contain securities of investment companies. For purposes of the NDX eligibility criteria, if the security is a depositary
receipt representing a security of a non-U.S. issuer, then references to the “issuer” are references to the issuer of the
underlying security.
Initial Eligibility Criteria
To be eligible for initial inclusion in the NDX, a security
must be listed on NASDAQ and meet the following criteria:
| ● | the security’s U.S. listing
must be exclusively on the Nasdaq Global Select Market or the Nasdaq Global Market (unless the security was dually listed on another U.S.
market prior to January 1, 2004 and has continuously maintained such listing); |
| ● | the security must be of a non-financial
company; |
| ● | the security may not be issued
by an issuer currently in bankruptcy proceedings; |
| ● | the security must have a minimum
three-month average daily trading volume of at least 200,000 shares; |
| ● | if the issuer of the security
is organized under the laws of a jurisdiction outside the U.S., then such security must have listed options on a recognized options market
in the U.S. or be eligible for listed-options trading on a recognized options market in the U.S.; |
| ● | the issuer of the security may
not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being eligible for
inclusion in the NDX; |
| ● | the issuer of the security may
not have annual financial statements with an audit opinion that is currently withdrawn; and |
| ● | the issuer of the security must
have “seasoned” on NASDAQ, the New York Stock Exchange or NYSE Amex. Generally, a company is considered to be seasoned if
it has been listed on a market for at least three full months (excluding the first month of initial listing). |
Continued Eligibility Criteria
In addition, to be eligible for continued inclusion
in the NDX, the following criteria apply:
| ● | the security’s U.S. listing
must be exclusively on the Nasdaq Global Select Market or the Nasdaq Global Market; |
| ● | the security must be of a non-financial
company; |
| ● | the security may not be issued
by an issuer currently in bankruptcy proceedings; |
| ● | the security must have a minimum
three-month average daily trading volume of at least 200,000 shares; |
| ● | if the issuer of the security
is organized under the laws of a jurisdiction outside the U.S., then such security must have listed options on a recognized options market
in the U.S. or be eligible for listed-options trading on a recognized options market in the U.S. (measured annually during the ranking
review process); |
| ● | the security must have an adjusted
market capitalization equal to or exceeding 0.10% of the aggregate adjusted market capitalization of the NDX at each month-end. In the
event a company does not meet this criterion for two consecutive month-ends, it will be removed from the NDX effective after the close
of trading on the third Friday of the following month; and |
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
| ● | the issuer of the security may
not have annual financial statements with an audit opinion that is currently withdrawn. |
Computation of the NDX
The value of the NDX equals the aggregate value of the
NDX share weights (the “NDX Shares”) of each of the NDX securities multiplied by each such security’s last sale price
(last sale price refers to the last sale price on NASDAQ), and divided by the divisor of the NDX. If trading in an NDX security is halted
while the market is open, the last traded price for that security is used for all NDX computations until trading resumes. If trading is
halted before the market is open, the previous day’s last sale price is used. The formula for determining the NDX value is as follows:
The NDX is ordinarily calculated without regard to cash
dividends on NDX securities. The NDX is calculated during the trading day and is disseminated once per second from 09:30:01 to 17:16:00
ET. The closing level of the NDX may change up until 17:15:00 ET due to corrections to the last sale price of the NDX securities. The
official closing value of the NDX is ordinarily disseminated at 17:16:00 ET.
NDX Maintenance
Changes to NDX Constituents
Changes to the NDX constituents may be made during the
annual ranking review. In addition, if at any time during the year other than the annual review, it is determined that an NDX security
issuer no longer meets the criteria for continued inclusion in the NDX, or is otherwise determined to have become ineligible for continued
inclusion in the NDX, it is replaced with the largest market capitalization issuer not currently in the NDX that meets the applicable
eligibility criteria for initial inclusion in the NDX.
Ordinarily, a security will be removed from the NDX
at its last sale price. However, if at the time of its removal the NDX security is halted from trading on its primary listing market and
an official closing price cannot readily be determined, the NDX security may, in Nasdaq, Inc.’s discretion, be removed at a price
of $0.00000001 (“zero price”). This zero price will be applied to the NDX security after the close of the market but prior
to the time the official closing value of the NDX is disseminated.
Divisor Adjustments
The divisor is adjusted to ensure that changes in the
NDX constituents either by corporate actions (that adjust either the price or shares of an NDX security) or NDX participation outside
of trading hours do not affect the value of the NDX. All divisor changes occur after the close of the applicable index security markets.
Quarterly NDX Rebalancing
The NDX will be rebalanced on a quarterly basis if it
is determined that (1) the current weight of the single NDX security with the largest market capitalization is greater than 24.0% of the
NDX or (2) the collective weight of those securities whose individual current weights are in excess of 4.5% exceeds 48.0% of the NDX.
In addition, a “special rebalancing” of the NDX may be conducted at any time if Nasdaq, Inc. determines it necessary to maintain
the integrity and continuity of the NDX. If either one or both of the above weight distribution conditions are met upon quarterly review,
or Nasdaq, Inc. determines that a special rebalancing is necessary, a weight rebalancing will be performed.
If the first weight distribution condition is met and
the current weight of the single NDX security with the largest market capitalization is greater than 24.0%, then the weights of all securities
with current weights greater than 1.0% (“large securities”) will be scaled down proportionately toward 1.0% until the adjusted
weight of the single largest NDX security reaches 20.0%.
If the second weight distribution condition is met and
the collective weight of those securities whose individual current weights are in excess of 4.5% (or adjusted weights in accordance with
the previous step, if applicable) exceeds 48.0% of the NDX, then the weights of all such large securities in that group will be scaled
down proportionately toward 1.0% until their collective weight, so adjusted, is equal to 40.0%.
The aggregate weight reduction among the large securities
resulting from either or both of the rebalancing steps above will then be redistributed to those securities with weightings of less than
1.0% (“small securities”) in the following manner. In the first iteration, the weight of the largest small security will be
scaled upwards by a factor which sets it equal to the average NDX weight of 1.0%. The weights of each of the smaller remaining small securities
will be scaled up by the same factor reduced in relation to each security’s relative ranking among the small securities such that
the smaller the NDX security in the ranking, the less its weight will be scaled upward. This is intended to reduce the market impact of
the weight rebalancing on the smallest component securities in the NDX.
BofA Finance LLC
Callable Contingent Income Securities due July 10, 2025
Payments on the Securities Based on the Worst Performing of the S&P 500® Index, the Russell 2000® Index and the NASDAQ-100® Index
Principal at Risk Securities
In the second iteration of the small security rebalancing,
the weight of the second largest small security, already adjusted in the first iteration, will be scaled upwards by a factor which sets
it equal to the average NDX weight of 1.0%. The weights of each of the smaller remaining small securities will be scaled up by this same
factor reduced in relation to each security’s relative ranking among the small securities such that, once again, the smaller the
security in the ranking, the less its weight will be scaled upward. Additional iterations will be performed until the accumulated increase
in weight among the small securities equals the aggregate weight reduction among the large securities that resulted from the rebalancing
in accordance with the two weight distribution conditions discussed above.
Finally, to complete the rebalancing process, once the
final weighting percentages for each NDX security have been set, the NDX Shares will be determined anew based upon the last sale prices
and aggregate capitalization of the NDX at the close of trading on the last calendar day in February, May, August and November. Changes
to the NDX Shares will be made effective after the close of trading on the third Friday in March, June, September and December, and an
adjustment to the divisor is made to ensure continuity of the NDX. Ordinarily, new rebalanced NDX Shares will be determined by applying
the above procedures to the current NDX Shares. However, Nasdaq, Inc. may, from time to time, determine rebalanced weights, if necessary,
by applying the above procedure to the actual current market capitalization of the NDX components. In such instances, Nasdaq, Inc. would
announce the different basis for rebalancing prior to its implementation.
During the quarterly rebalancing, data is cutoff as
of the previous month end and no changes are made to the NDX from that cutoff until the quarterly index share change effective date, except
in the case of changes due to corporate actions with an ex-date.
Adjustments for Corporate Actions
Changes in the price and/or NDX Shares driven by corporate
events such as stock dividends, splits, and certain spin-offs and rights issuances will be adjusted on the ex-date. If the change in total
shares outstanding arising from other corporate actions is greater than or equal to 10.0%, the change will be made as soon as practicable.
Otherwise, if the change in total shares outstanding is less than 10.0%, then all such changes are accumulated and made effective at one
time on a quarterly basis after the close of trading on the third Friday in each of March, June, September, and December. The NDX Shares
are derived from the security’s total shares outstanding. The NDX Shares are adjusted by the same percentage amount by which the
total shares outstanding have changed.
License Agreement
The securities
are not sponsored, endorsed, sold or promoted by Nasdaq, Inc. or its affiliates (Nasdaq, Inc., with its affiliates, are referred
to as the “Corporations”). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy
of descriptions and disclosures relating to, the securities. The Corporations make no representation or warranty, express or implied,
to the owners of the securities or any member of the public regarding the advisability of investing in securities generally or in the
securities particularly, or the ability of the NDX to track general stock market performance. The Corporations’ only relationship
to our affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Licensee”) is in the licensing of the NASDAQ®,
OMX®, NASDAQ OMX®, and
NDX registered trademarks, and certain trade names of the Corporations or their licensor and the use of the NDX which is determined, composed
and calculated by Nasdaq, Inc. without regard to Licensee or the securities. Nasdaq, Inc. has no obligation to take the needs of the Licensee
or the owners of the securities into consideration in determining, composing or calculating the NDX. The Corporations are not responsible
for and have not participated in the determination of the timing of, prices at, or quantities of the securities to be issued or in the
determination or calculation of the equation by which the securities are to be converted into cash. The Corporations have no liability
in connection with the administration, marketing or trading of the securities.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR
UNINTERRUPTED CALCULATION OF THE NDX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY LICENSEE, OWNERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NDX OR ANY DATA INCLUDED THEREIN. THE
CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE NDX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS
HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.