ABN
AMRO has filed a registration statement (including a Prospectus and Prospectus
Supplement) with the SEC for the offerings to which this communication relates.
Before you invest, you should read the Prospectus and Prospectus Supplement in
that registration statement and other documents ABN AMRO has filed with the SEC
and the related Pricing Supplement for more complete information about ABN AMRO
and the offerings of the Securities.
You
may get these documents for free by visiting EDGAR on the SEC website at
www.sec.gov or by visiting ABN AMRO Holding N.V. on the SEC website
at <http://www.sec.gov/cgi-bin/browseedgar?company=&CIK=abn&filenum=&State=&SIC=&owner=include&action=get
company>. Alternatively, ABN AMRO, any underwriter or any dealer
participating in the offering will arrange to send you the Prospectus and
Prospectus Supplement if you request it by calling toll free (888)
644-2048.
These
Securities may not be offered or sold (i) to any person/entity listed on
sanctions lists of the European Union, United States or any other applicable
local competent authority; (ii) within the territory of Cuba, Sudan, Iran and
Myanmar; (iii) to residents in Cuba, Sudan, Iran or Myanmar; or (iv) to Cuban
Nationals, wherever located.
Summary
The
following summary does not contain all the information that may be important to
you. You should read this summary together with the more detailed information
that is contained in the related Pricing Supplement and
in its accompanying Prospectus and Prospectus Supplement. You should carefully
consider, among other things, the matters set forth in “Risk Factors” in the
related Pricing Supplement, which are summarized on page 4 of this document. In
addition, we urge you to consult with your investment, legal, accounting, tax
and other advisors with respect to any investment in the
Securities.
What
are the Securities?
The Securities are
senior notes issued by us, ABN AMRO Bank N.V., and are fully and unconditionally
guaranteed by our parent company, ABN AMRO Holding N.V. The Securities are
linked to the performance of the SPDR Trust, Series 1 which we refer to as the
Underlying Fund. The Securities have a maturity of three years. The payment at
maturity of the Securities is determined based on the performance of the
Underlying Fund, as described below. Unlike ordinary debt securities, the
Securities do not pay interest. The payment at maturity is exposed to any
decline in the value of the Underlying Fund on the Determination Date, subject
to a minimum return of $900 per $1,000 principal amount of Securities. Therefore
a portion of your principal is at risk and you could lose up to 10% of your
initial principal investment if the price of the Underlying Fund
declines. The maximum return on the Securities is capped at a maximum
of 30%, so you will never receive more than $1,300 per Security at maturity
regardless of how much the price of the Underlying Fund may
appreciate.
What
will I receive at maturity of the Securities?
For each
$1,000 principal amount of the Securities, at maturity you will receive a cash
payment calculated as follows:
• If the Fund Return
is positive, the lesser of (i) sum of $1,000 and the Supplemental Redemption
Amount and (ii) the Maximum Amount.
• If the
Fund Return is zero or negative, the greater of (i) $1,000 and the Fund Return,
or (ii) $900.
Consequently,
a decline in the price of the Underlying Fund will always reduce your cash
payment at maturity below the principal amount of your Securities and you could
lose up to 10% of your initial principal investment. Conversely, an
increase in the price of the Underlying Fund will increase your cash payment at
maturity above the principal amount of your Securities up to the Maximum Amount
of $1,300 per Security. You will never receive more than $1,300 per
Security at maturity regardless of how much the price of the Underlying Fund may
increase.
What
is the Fund Return?
The Fund Return will
be equal to the percentage change in the share price of the Underlying Fund on
the Determination Date multiplied by $1,000, which is calculated
as:
$1,000 ×
Final Price - Initial
Price
Initial
Price;
How
is the Supplemental Redemption Amount calculated?
The Supplemental
Redemption Amount is a cash amount determined only when the Fund Return is
positive. The Supplemental Redemption Amount for each $1,000 principal amount of
the Securities is equal to the product of (i) the Participation Rate times (ii)
the Fund Return.
The Participation
Rate will be 1.00 (or 100%).
Will
I receive interest payments on the Securities?
No. You
will not receive any interest payments on the Securities.
Will
I get my principal back at maturity?
The Securities are
not fully principal protected. Subject to the credit of ABN AMRO Bank, N.V. as
the issuer of the Securities and ABN AMRO Holding N.V. as the guarantor of the
issuer’s obligations under the Securities, you will receive at maturity at least
$900 per $1,000 principal amount of Securities, regardless of the closing price
of the Underlying Fund on the Determination Date. However, if you sell the
Securities prior to maturity, you will receive the market price for the
Securities, which may or may not include the return of $900 for each $1,000
principal amount of Securities. There may be little or no secondary market for
the Securities. Accordingly, you should be willing to hold your
Securities until maturity.
Can
you give me examples of the payment I will receive at maturity depending on the
percentage change in the price of the Underlying Fund?
Example 1: If, for
example, the Initial Price is $100 and the Final Price is $50, the Fund Return
would be calculated as follows:
$1,000
× 50 – 100 =
$-500
100
Because the Fund
Return is negative, at maturity you would receive an amount in cash per Security
equal to the greater of (i) the sum of $1,000 and the Fund Return, or $1,000 -
$500 = $500, and (ii) $900. Consequently, at maturity, you would
receive $900 for each $1,000 principal amount of your Securities. In this
hypothetical case, the Underlying Fund decreased by 50% over the life of the
Security and you would have lost 10% of your initial principal
investment.
Example 2: If, for
example, the Initial Price is $100 and the Final Price is 95, the Fund Return
would be calculated as follows:
$1,000
× 95 – 100 = $
-50
100
Because the Fund
Return is equal to $ -50, at maturity you would receive an amount in cash per
Security equal to the greater of (i) the sum of $1,000 and the Fund Return, or
$1,000 - $50 = $950, and (ii) $900. Consequently, at maturity, you
would receive $950 for each $1,000 principal amount of your Securities. In this
hypothetical case, the Underlying Fund decreased by 5% and you would have lost
5% of your initial principal investment.
Example
3: If, for example, the Initial Price is $100, the Final Price
is $150 and the Participation Rate is 1.00 (or 100%), the
Fund Return would be calculated as follows:
$1,000
× 150 – 100 =
$500
100
Because the Fund
Return is positive, at maturity you would receive an amount in cash per Security
equal to the lesser of (i) the sum of $1,000 and the Supplemental Redemption
Amount and (ii) the Maximum Amount. The Supplemental Redemption Amount is
calculated by multiplying the Fund Return, in this example $500, by the
Participation Rate, in this example 1.00, or $500 x 1.00 = $500. Consequently,
at maturity, you would receive $1,300 for each $1,000 principal amount of your
Securities. In this hypothetical case, the Underlying Fund increased
by 50% over the life of the Security and you would have received a 30% return on
your initial principal investment.
These
examples are for illustrative purposes only. It is not possible to
predict the closing price of the Underlying Fund on the Determination Date. You
may lose up to 10% of your initial principal investment.
Do
I benefit from any appreciation in the Underlying Fund over the life of the
Securities?
Yes, but only up to
a maximum return of 30%. If the Final Price is greater than the Initial Price,
you will receive in cash the lesser of (i) the sum of $1,000 and the
Supplemental Redemption Amount and (ii) the Maximum Amount at maturity. The
Supplemental Redemption Amount represents the product of (i) the Participation
Rate times (ii) the Fund Return. The Maximum Amount is $1,300. Accordingly, you will never receive
more than $1,300 per Security at maturity regardless of how much the price of
the Underlying Fund may increase.
What
is the Underlying Fund?
The SPDR Trust,
Series 1, which we refer to as the Underlying Fund is a unit investment trust
that issues securities called ‘‘Standard & Poor’s Depositary Receipts’’ or
‘‘SPDRs.’’ The Underlying Fund is called an exchange traded fund
because its ownership interests or SPDRs trade on the American Stock Exchange
like other equity securities. The Underlying Fund intends to provide
investment results that, before expenses, generally correspond to the price and
yield performance of the S&P 500 Index®. The
price quotation from market information services for the ticker symbol "SPY" is
the price of one SPDR or one share of the Underlying Fund. The
Underlying Fund is an investment company registered under the Investment Company
Act of 1940. SPDRs represent an undivided ownership interest in a portfolio of
all of the common stocks of the Standard & Poor’s 500 Composite Stock Price
Index ("S&P 500 Index®"). You
should read “Description of the Underlying Fund” and “Public Information
Regarding the Underlying Fund” in the accompanying Pricing Supplement for
additional information regarding the Underlying Fund and the S&P 500 Index
and to learn how to obtain public information regarding the Underlying Fund and
other important information.
What
if I have more questions?
You
should read “Description of Securities” in the related Pricing Supplement for a
detailed description of the terms of the Securities. ABN AMRO has filed a
registration statement (including a Prospectus and Prospectus Supplement) with
the SEC for the offering to which this communication relates. Before
you invest, you should read the Prospectus and Prospectus Supplement in that
registration statement and other documents ABN AMRO has filed with the SEC for
more complete information about ABN AMRO and the offering of the Securities. You
may get these documents for free by visiting EDGAR on the SEC web site at
www.sec.gov. Alternatively, ABN AMRO, any underwriter or any dealer
participating in the offering will arrange to send you the Prospectus and
Prospectus Supplement if you request it by calling toll free (888)
644-2048.
RISK
FACTORS
You
should carefully consider the risks of the Securities to which this
communication relates and whether these Securities are suited to your particular
circumstances before deciding to purchase them. It is important that prior to
investing in these Securities you read the Pricing Supplement related to such
Securities and the accompanying Prospectus and Prospectus Supplement to
understand the actual terms of and the risks associated with the
Securities. In addition, we urge you to consult with your investment,
legal, accounting, tax and other advisors with respect to any investment in the
Securities.
Credit
Risk
The Securities are
issued by ABN AMRO Bank N.V. and guaranteed by ABN AMRO Holding N.V., ABN AMRO
Bank N.V.’s parent. As a result, investors assume the credit risk of ABN AMRO
Bank N.V. and that of ABN AMRO Holding N.V. in the event that ABN AMRO Bank N.V.
defaults on its obligations under the Securities. Any obligations or Securities
sold, offered, or recommended are not deposits of ABN AMRO Bank N.V. and are not
endorsed or guaranteed by any bank or thrift, nor are they insured by the FDIC
or any governmental agency.
Principal
Risk
Return of principal
on the Securities is only guaranteed up to 90%, subject to our credit and the
credit of Holding. If the closing price of the Underlying Fund decreases during
the term of the Securities, the amount of cash paid to you at maturity will be
less than the principal amount of the Securities and you could lose up to 10% of
your initial principal investment. Many factors that affect the stock markets
generally, including, without limitation, economic, financial, political and
regulatory or judicial events may cause the price of the Underlying Fund to
change unpredictably.
Limited
Return
The
amount payable under the Securities will never exceed the maximum amount of
$1,300 per Security, regardless of how much the price of the Underlying Fund may
increase. Accordingly, you will never receive at maturity an amount
greater than a predetermined amount per Security, regardless of how much the
price of the Underlying Fund may increase during the term of the Securities or
on the Determination Date. The return on a Security may be significantly less
than the return on a direct investment in the shares of the Underlying Fund to
which the Security is linked during the term of the Security.
Liquidity
Risk
ABN
AMRO Bank N.V. does not intend to list the Securities on any securities
exchange. Accordingly, there may be little or no secondary market for the
Securities and information regarding independent market pricing of the
Securities may be limited. The value of the Securities in the secondary market,
if any, will be subject to many unpredictable factors, including then prevailing
market conditions.
It
is important to note that many factors will contribute to the secondary market
value of the Securities, and investors may receive less than $900 per $1,000
principal amount of Securities back if the Securities are sold prior to
maturity. Such factors include, but are not limited to, time to maturity,
the price of the Underlying Fund, volatility and interest
rates.
In
addition, the price, if any, at which we or another party are willing to
purchase Securities in secondary market transactions will likely be lower than
the issue price, since the issue price included, and secondary market prices are
likely to exclude, commissions, discounts or mark-ups paid with respect to the
Securities, as well as the cost of hedging our obligations under the
Securities.
Tax
Risk
Although the U.S.
federal income tax treatment of the Securities is unclear, we intend to treat
the Securities as "contingent payment debt instruments" for U.S. federal income
tax purposes. Assuming this characterization, U.S. taxable investors,
regardless of their method of accounting, will generally be required to accrue
as ordinary income amounts based on the “comparable yield” of the Securities, as
determined by us, even though they will receive no payment on the Securities
until maturity. In addition, any gain recognized upon a sale,
exchange or retirement of the Securities will generally be treated as ordinary
interest income for U.S. federal income tax purposes.
You
should review the “Taxation” section in the related pricing
supplement. You should also review the section entitled “United
States Federal Taxation” and in particular the sub-section entitled “United
States Federal Taxation—Contingent Payment Debt Instruments” in the accompanying
Prospectus Supplement. Additionally, you are urged to consult your tax advisor
regarding the tax treatment of the Securities and whether a purchase of the
Securities is advisable in light of the tax treatment
and your particular situation.
This
tax summary was written in connection with the promotion or marketing by ABN
AMRO Bank N.V.
and the placement agent of the Securities, and cannot be used by any person for
the purpose of avoiding penalties that may be asserted under the Internal
Revenue Code. You should seek your own advice based on your particular
circumstances from an independent tax advisor.
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