 |
Filed pursuant to Rule 433 | Registration Statement Nos. 333-162219,
333-162219-01, 333-162193 and 333-162193-01
RBS Exchange Traded Notes
Frequently Asked Questions
What are RBS Exchange Traded Notes?
RBS Exchange Traded Notes (ETNs) are unsecured and senior obligations of the
relevant issuing RBS entity (the Issuer), which is either The Royal Bank of
Scotland N.V. (RBS N.V.) or The Royal Bank of Scotland plc (RBS plc). RBS ETNs
issued by RBS N.V. and RBS plc are fully and unconditionally guaranteed by RBS
Holdings N.V. (RBS Holdings) and The Royal Bank of Scotland Group plc (RBS
Group), respectively. Any payments on the RBS ETNs when they become due at
maturity or upon early repurchase or redemption are dependent on the ability of
the relevant Issuer and guarantor to pay. The returns on the RBS ETNs track the
performance of an underlying market measure(s). RBS ETNs are registered with
the Securities and Exchange Commission (SEC) under the Securities Act of 1933,
and are listed on a U.S. securities exchange.
How do ETNs differ from ETFs and Mutual Funds?
ETNs, ETFs and mutual funds are all SEC-registered securities. However, there
are key differences between ETNs, ETFs and mutual funds.
RBS ETNs ETFs Mutual Funds
--------------- -------------------------------------- ------------------------------------ --------------------------------
Type of The securities are unsecured and Equity securities of the issuer. Equity securities of the issuer.
Security senior obligations of the relevant Securities are registered under the Securities are registered under
Issuer. Securities are registered Securities Act of 1933 and issuer the Securities Act of 1933 and
under the Securities Act of 1933. is registered under the Investment issuer is registered under the
Company Act of 1940. Investment Company Act of
1940.
--------------- -------------------------------------- ------------------------------------ --------------------------------
Legal Unsecured and senior obligations Equity ownership in the investment Equity ownership in the
Structure and of the relevant Issuer with no rights company. Not FDIC insured. investment company. Not FDIC
Ownership to any speci[]ed pool of assets. Not insured.
FDIC insured.
--------------- -------------------------------------- ------------------------------------ --------------------------------
Investor Fees Annual investor fees apply. Fee Investors bear management Investors bear management
amount depends on the ETN fees and operating expenses, fees and operating expenses,
and will be disclosed in the which will vary by ETF. Brokerage which will vary by mutual fund.
applicable pricing supplement commissions will apply when ETF Investors may also pay or
and prospectus []led with the SEC. shares are bought or sold. bear sales loads (front-end or
Brokerage commissions will apply deferred), redemption fees,
when ETNs are bought or sold. account fees, purchase fees
and/or distribution and service
fees.
--------------- -------------------------------------- ------------------------------------ --------------------------------
Primary Risk Issuer credit risk and market risk. Tracking error and market risk. Market risk and, in the case of
index mutual funds, tracking
error.
--------------- -------------------------------------- ------------------------------------ --------------------------------
Liquidity -- Securities may be sold on an Securities may be sold on an No exchange liquidity.
Exchange exchange intraday at market price. exchange intraday at market price.
--------------- -------------------------------------- ------------------------------------ --------------------------------
Liquidity -- ETNs are repurchasable daily Retail investors may not redeem. Redeemable daily at the
Repurchase/ via broker-dealers at a speci[]ed Only broker-dealers that agree to net asset value (NAV) of the
Redemption repurchase price, subject to act as "authorized participants" mutual fund calculated as of
minimum size requirements. We (APs) of the ETF may redeem. the close of business. Certain
may charge a repurchase fee in ETF shares are redeemable daily investor fees may be payable
connection with certain ETNs. by APs at the net asset value upon redemption.
(NAV), calculated as of the close
of business, subject to minimum
size requirements. APs must pay
transaction fees in order to redeem.
Table continues on page 2
RBS Investor Products | ETN FAQ | page 1
-1-
|
 |
RBS ETNs ETFs Mutual Funds
------------- ---------------------------------- ------------------------------------ -------------------------------
Distributions Most ETNs do not pay periodic Yes (dividends/distributions by Yes (dividends/distributions by
distributions. We may make underlying portfolio securities held underlying portfolio securities
periodic distributions on certain by the ETF). held by the mutual fund).
ETNs and some ETNs may track
indices which index levels re[]ect
reinvestment of dividends, if any,
distributed by the underlying
companies.
------------- ---------------------------------- ------------------------------------ -------------------------------
Maturity Typically 10-30 years. Unlimited. Unlimited.
------------- ---------------------------------- ------------------------------------ -------------------------------
Short Sales Available subject to SEC rules. Available subject to SEC rules. No.
------------- ---------------------------------- ------------------------------------ -------------------------------
Voting Rights No, except for changes to the Yes. Yes.
terms of the ETN.
------------- ---------------------------------- ------------------------------------ -------------------------------
Tax Depends on the underlying market Depends on the assets held by the Depends on the assets held by
measure(s), coupon payments, ETF, distributions by the ETF and the mutual funds, distributions
if any, and when the ETN is sold, when the ETF shares are sold or by the mutual fund and when
redeemed or matures, among redeemed, among other factors. the mutual fund shares are
other factors. sold or redeemed, among
other factors.
------------- ---------------------------------- ------------------------------------ -------------------------------
What are some of the market measures to which an RBS ETN can be linked?
The return on RBS ETNs may track underlying market measures across various
asset classes, such as equity or commodity indices, bond futures indices, and
currencies. The underlying market measure(s) to which your ETN is linked will
be described in the pricing supplement and prospectus applicable to your RBS
ETN.
How do I buy or sell an RBS ETN?
RBS ETNs are listed and traded on a U.S. securities exchange, and can be bought
and sold during trading hours. You can buy RBS ETNs through your broker, your
[]nancial advisor or an online trading platform. If an active secondary market
develops, we expect that most purchases and sales of RBS ETNs will occur in the
secondary market during trading hours, in the same way as you would buy or sell
stocks.
What happens if I buy and hold an RBS ETN to its maturity?
If you own an RBS ETN on its maturity date, the relevant Issuer will pay you an
amount in cash equal to the redemption value of your ETN. The redemption value
of an ETN will depend on the performance of the underlying market measure(s) to
which the ETN is linked, less the applicable investor fees. Any payment at
maturity of the ETNs is subject to the ability of the relevant Issuer and, in
the case of the guarantee, the applicable guarantor, to satisfy their
obligations when due.
Can I offer my RBS ETNs for repurchase by the relevant Issuer before their
maturity date?
If you own a minimum amount of a speci[]c RBS ETN, you can offer to have your
ETNs repurchased by the relevant Issuer at the redemption value through your
broker, provided that your broker offers at least a minimum amount for
repurchase. This minimum amount, and the procedures that your broker will have
to follow in order to have ETNs repurchased by the relevant Issuer, will be
stated in the pricing supplement and prospectus related to your ETNs.
What is the redemption value of an RBS ETN?
The redemption value of an RBS ETN means the amount that would be payable by
the relevant Issuer to the investor if the ETN were to be repurchased or
redeemed by such Issuer either prior to or on the maturity date. The redemption
value for an RBS ETN on any given day will depend on the performance of the
underlying
RBS Investor Products | ETN FAQ | page 2
-2-
|
 |
market measure(s) which the ETN tracks, less the applicable investor fee and
repurchase fee. The applicable pricing supplement and prospectus describe how
this amount is determined for the relevant RBS ETNs. The daily redemption value
for each outstanding RBS ETN will be published on www.rbs.com/etnUS.
Information contained on that website is not incorporated by reference in, and
should not be considered a part of, this document.
What is the difference between the market price of an RBS ETN and its
redemption value?
The market price of an RBS ETN is the bid or ask price for that ETN as quoted
on the relevant U.S. securities exchange on which the ETN is listed. As with
stocks, the market price of an ETN will depend on the supply and demand for
that ETN, as well various other factors, including market conditions and the
issuer's actual or perceived creditworthiness. The redemption value of an RBS
ETN, however, is calculated by RBS Securities Inc., as calculation agent, based
on the performance of the underlying market measure(s), reduced by the
applicable investor fee, in accordance with a pre-determined formula. The
redemption value will not []uctuate based on the supply or demand for the RBS
ETNs as traded on the U.S. securities exchange, nor will it []uctuate in
response to any changes in the issuer's credit ratings. However, because the
redemption value depends on the performance of the underlying market
measure(s), which can []uctuate based on market conditions, changes in market
conditions may have an impact on the redemption values of the RBS ETNs.
Can an RBS ETN trade at a premium or discount to its redemption value?
Yes. The market price for an RBS ETN may, at any time, be higher or lower than
its redemption value for various reasons. For example, market or other factors
could potentially prevent the relevant Issuer from issuing additional
securities of existing RBS ETNs, which may result in increased demand for those
ETNs, causing those ETNs to trade at a premium in the secondary market.
Conversely, events such as an issuer credit rating downgrade may adversely
impact the market price of RBS ETNs, causing it to trade at a discount to their
redemption value. The daily repurchase feature described above is intended to
induce arbitrageurs to counteract any trading of the RBS ETNs at a discount to
their indicative value. However, we cannot assure you that arbitrageurs will
use the repurchase feature in this manner.
What is the tax treatment of an investment in an RBS ETN?
You should review carefully the section in the applicable pricing supplement
entitled "U.S. Federal Income Tax Consequences."
What are some of the key risks to investing in RBS ETNs?
The applicable pricing supplement and prospectus for your RBS ETNs will
describe material risks related to an investment in RBS ETNs. These risks
include the following:
O Credit risk of the issuer. All payments on RBS ETNs will depend on the
ability of the relevant Issuer to pay its obligations when due. RBS ETNs
issued by RBS N. V. and RBS plc are also fully and unconditionally
guaranteed by RBS Holdings and RBS Group, respectively. As such, if the
relevant Issuer fails to make any required payments on the ETNs, your
receipt of such payments will depend on the ability of the applicable
guarantor to pay its obligations. RBS ETNs do not guarantee any return to
you of the principal invested. RBS ETNs are not FDIC insured.
O Market risk. The return on an RBS ETN will depend on the performance of the
underlying market measure(s) which it tracks. The underlying market
measure(s) may perform poorly, resulting in a negative impact on the RBS ETN
and may result in a loss to the investor.
O Investor fee. The amount payable at maturity or upon early repurchase or
redemption of your ETNs is reduced by the aggregate investor fee applicable
to your ETNs. As a result, the level of the underlying market measure(s) to
which your ETNs are linked must increase by an amount suf[]cient to offset
such
RBS Investor Products | ETN FAQ | page 3
-3-
|
 |
reduction in order for you to receive at least the face amount of your
investment at maturity or upon early repurchase or redemption. If the level of
the underlying market measure(s) decreases or does not increase suf[]ciently,
you will receive less, and possibly signi[]cantly less, than the face amount of
your investment at maturity or upon early repurchase or redemption.
O Liquidity risk. Even though RBS ETNs are expected to be listed on a U. S.
securities exchange, there is no guarantee that the listing will be
maintained or that a secondary market will develop. The relevant Issuer is
not required to maintain any listing of RBS ETNs on any securities exchange.
O Restrictions on your ability to offer RBS ETNs for repurchase by the issuer.
Through your broker, you may offer RBS ETNs for repurchase by the relevant
Issuer only if minimum amounts are offered and certain procedures described
in the applicable pricing supplement are followed.
O Call risk. The relevant Issuer also has the right to redeem your ETNs at its
option. If the relevant Issuer elects to repurchase your ETNs at its option,
you may not be able to reinvest the proceeds that you receive in another
investment comparable to the RBS ETNs.
O Uncertain tax treatment. Signi[]cant aspects of the U. S. federal income tax
treatment of the ETNs are uncertain, and the Internal Revenue Service or a
court might not agree with the tax consequences described in the applicable
pricing supplement.
WHAT ELSE SHOULD I CONSIDER?
RBS ETNs are not suitable for all investors. Before buying an RBS ETN, you
should carefully read the applicable pricing supplement and prospectus, which
contains a description of the material terms of the RBS ETNs, including risks
that you should consider. You should not buy any RBS ETNs if you are not
willing to risk losing some or all of your investment, if you want an income
stream, or if you are unwilling to be exposed to []uctuations in the market
price of your ETNs and the performance of the underlying market measure which
your ETN tracks.
WWW.RBS.COM/ETNUS
RBS N.V., RBS Holdings, RBS plc and RBS Group (collectively, the RBS Entities)
have each []led a registration statement (including a prospectus) with the U.S.
Securities and Exchange Commission (SEC) for the offering of RBS ETNs to which
this communication may relate. Before you invest in any RBS ETNs, you should
read the relevant prospectus in the registration statement and other documents
that have been []led with the SEC for more complete information about the
relevant RBS Entities and offering. You may get these documents for free by
visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the relevant
Issuer, RBS Securities Inc. or any dealer participating in the offering will
arrange to send you the relevant prospectus and pricing supplement at no charge
if you request by calling 1-855-RBS-ETPS (toll free).
Copyright [C] 2011 RBS Securities Inc. All rights reserved. RBS Securities
Inc., a U.S. registered broker-dealer, member of FINRA and SIPC, is an indirect
wholly-owned subsidiary of The Royal Bank of Scotland plc and an af[]liate of
RBS N.V.
Dated September 13, 2011
RBS Investor Products | ETN FAQ | page 4
|