IONs: Risk Considerations
Investors should carefully consider the risks of the Index Out-performance
Notes and whether the notes are suited to their particular circumstances
before deciding to purchase them. It is important that prior to
investing in any notes investors read the prospectus related to
such notes to understand the actual terms of and the risks associated
with the notes. In addition, we urge investors to consult with
their investment, legal, accounting, tax and other advisors with
respect to any investment in the notes.
The notes 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 notes.
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.
IONs are not ordinary debt securities: they do not pay interest
and are not principal protected. In addition, investors in IONs
will be fully exposed to any decline in the level of the underlying
index. Accordingly, investors may lose some or all of their
initial investment in the notes.
The out-performance amount is subject to a predetermined cap.
This means that investors will not benefit from any appreciation
in the underlying index above a certain predetermined level.
Accordingly, investors will never receive at maturity an amount
greater than a predetermined amount per note, regardless of
how high the value of the underlying index is during the term
of the notes or on the determination date. Because of the predetermined
cap, the return on the IONs may be significantly less than the
return on a direct investment in the underlying index during
the term of the IONs.
ABN AMRO does not intend to list the notes on any securities
exchange. Accordingly, there may be little or no secondary market
for the notes and information regarding independent market pricing
of the notes may be limited. The value of the notes 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 IONs, and investors may not
receive the full value of the notes if the notes are sold prior
to maturity. Such factors include, but are not limited to, time
to maturity, the value of the underlying index, volatility and
In addition, the price, if any, at which we or another party
are willing to purchase notes 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
notes, as well as the cost of hedging our obligations under
There is no direct legal authority as to the proper U.S. federal
income tax characterization of the notes. No assurance can be
given that the Internal Revenue Service will accept, or that
a court will uphold, the following tax treatment of the notes.
U.S. taxable investors should not be required to recognize taxable
income over the term of the notes prior to maturity, other than
pursuant to a sale or exchange. Upon receipt of cash at maturity,
U.S. taxable investors should generally recognize long-term
capital gain or loss equal to the difference between the amount
of cash received and their tax basis in the notes, which is
the amount paid to acquire the notes.
This disclosure is limited to the federal tax issues addressed
herein. al isss may exist that are not addressed in this disclosure
and that could affect the federal tax treatment of the transaction.
This tax disclosure was written in connection with the promotion
or marketing by ABN AMRO Bank N.V. and the placement agent of
the IONs, 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
Dow Jones Disclaimer
Dow Jones and Dow Jones Global Titans IndexSM are service marks
of Dow Jones & Company, Inc. and have been licensed for use
for certain purposes by ABN AMRO Bank N.V. ABN AMRO Bank N.V.'s
Index Outperformance Notes (IONs)SM based on the Dow Jones Global
Titans IndexSM, are not sponsored, endorsed, sold or promoted
by Dow Jones, and Dow Jones makes no representation regarding
the advisability of investing in such product.
Standard & Poors®, S&P®, S&P 500®, Standard
& Poor's 500, and 500 are trademarks of The McGraw-Hill Companies,
Inc. and have been licensed for use by ABN AMRO Bank N.V. The
Index Out-performance Notes (IONs)SM are not sponsored, endorsed,
sold or promoted by Standard & Poor’s and Standard &
Poor’s makes no representation regarding the advisability
of investing in the IONs.
The Nasdaq Biotechnology®, Nasdaq Biotechnology Index®,
and Nasdaq® are trade or service marks of The Nasdaq Stock
Market, Inc. (which with its affi liates are the Corporations)
and are licensed for use by ABN AMRO Bank N.V. The Index Out-performance
Notes (IONs)SM have not been passed on by the Corporations as
to their legality or suitability. The IONs are not issued, endorsed,
sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE IONs.
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 fi led with the SEC
for more complete information about ABN AMRO and the offering
of the notes.
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)