Higher Yield Notes




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REX: Risk Considerations

Investors should carefully consider the risks of the Reverse Exchangeable Securities and whether the securities are suited to their particular circumstances before deciding to purchase them. It is important that prior to investing in any securities investors read the prospectus related to such securities to understand the actual terms of and the risks associated with the securities. In addition, we urge investors to consult with their 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’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 defaults on its obligations under the securities. Any obligations or securities sold, offered, or recommended are not deposits on 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

Reverse Exchangeable Securities are not ordinary debt securities: they are not principal protected. In addition, investors in REXs will be exposed to any decline in the price of the underlying stock below the closing price of the underlying stock on the date the securities were priced. Accordingly, investors may lose some or all of their initial investment in the securities.

Limited Return

The amount payable under the securities will never exceed the original principal amount of the securities plus the aggregate fi xed coupon payment investors earn during the term of the securities. This means that investors will not benefi t from any price appreciation in the underlying stock nor will they receive dividends paid on the underlying stock, if any. Accordingly, investors will never receive at maturity an amount greater than a predetermined amount per security, regardless of how much the price of the underlying stock increases during the term of the securities or on the determination date. The return of the securities may be significantly less than the return of a direct investment in the underlying stock during the term of the security.

Liquidity Risk

ABN AMRO 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 Reverse Exchangeable Securities, and investors may not receive their full principal 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 stock, 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 markups paid with respect to the securities, as well as the cost of hedging our obligations under the securities.

Tax Risk

Pursuant to the terms of the Reverse Exchangeable Securities, we and every investor agree to characterize the securities as consisting of a Put Option and a Deposit of cash with the issuer. Under this characterization, a portion of the stated interest payments on each security is treated as interest on the Deposit, and the remainder is treated as attributable to a sale by the investor of the Put Option to ABN AMRO (referred to as Put Premium). Receipt of the Put Premium will not be taxable upon receipt. If the Put Option expires unexercised (i.e., a cash payment of the principal amount of the securities is made to the investor at maturity), the investor will recognize short-term capital gain equal to the total Put Premium received. If the Put Option is exercised (i.e., the final payment on the securities is paid in underlying shares), the investor will not recognize any gain or loss in respect of the Put Option, but the investor’s tax basis in the shares received will be reduced by the Put Premium received. Signifi cant aspects of the U.S. federal income tax treatment of the securities are uncertain, and no assurance can be given that the Internal Revenue Service will accept, or a court will uphold, the tax treatment described above. This summary is limited to the federal tax issues addressed herein. Additional issues may exist that are not addressed in this summary and that could affect the federal tax treatment of the transaction. This tax summary was written in connection with the promotion or marketing by ABN AMRO Bank N.V. and the placement agent of the Reverse Exchangeable Securities, and it cannot be used by any investor for the purpose of avoiding penalties that may be asserted against the investor under the Internal Revenue Code. Investors should seek their own advice based on their particular circumstances from an independent tax advisor.


SEC Legend

ABN AMRO has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus 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 if you request it by calling toll free (888) 644-2048.