BNP Paribas Islamic Fund Equity Optimiser
(a sub-fund of BNP Paribas Islamic fund)
March 2007
Table of contents
1. Product Highlights
3
2. Investment Process
7
3. Performance
13
4. Appendices
17
•
•
2
Sharia Supervisory Committee
BNP PAM Structured & Indexed Investments
1
PRODUCT HIGHLIGHTS
BNP Paribas Islamic Fund
>
BNP Paribas Asset Management launches a thematic umbrella fund which is
Sharia compliant
• One of the first Sharia compliant Luxembourg Fund UCITS III, part I
• A fund open to all investors
>
>
4
The activities of the fund shall at all times be compliant with Islamic principles
controlled by a Sharia Supervisory Committee. This committee is composed of wellknown and highly commended scholars (refer to Appendices slide 18) and provides
validation of the set-up «Fatwa», continuous supervision and adjudication of the fund.
BNP Paribas Asset Management presents its first sub-fund “BNP Paribas Islamic Equity Optimiser”, an open-ended equity fund optimising a major Islamic index (Dow
Jones Islamic Market Titans 100 Index) retaining only high-dividend-paying stocks
among the world’s largest global companies.
Access to the most liquid Islamic stocks….
>
A positive environment for global equity markets:
• Low inflation, relatively low valuations and robust M&A activity are all positive factors.
Furthermore, the economic activity is slowly becoming more balanced across the major regions.
>
A reliable investment universe: The Dow Jones Islamic Market Titans 100 Index
• This DJ Islamic Market Titans 100 index consists in the 100 largest international companies (50
from USA, 25 from Europe and 25 from Asia Pacific) in terms of float-adjusted US market
capitalisation, which are all Sharia compliant. As such, the index is designed to benefit from the
potential growth of the global economy.
No. of companies by sector
within DJ Islamic Market Titans 100 Index
Basic
Telecoms 3 Materials 12
Technology 23
Oil & Gas 12
Industrials 13
5
Consumer
Goods 12
Consumer
Services 7
Health Care 18
No. of companies by sector within
the optimised basket (30 stocks)
Technology 2
Industrial 3
Energy 7
Telecoms 3
Basic Materials
5
Consumer,
Cyclical 1
Consumer, Noncyclical 9
Due to the criteria based upon the Islamic principles and the market capitalisation, the sectors that represent the index are currently
limited.
Source: Dow Jones. Composition as of the end of September 2006
…delivering the highest dividend yield
>
A new investment concept: “high dividend stocks” chosen among 100 blue-chip
stocks of the Index
• Companies with high dividend distribution policy have experienced an interesting increase of their stock
price over the last few years
• Thanks to high dividends, those stocks tend to be better supported even in a bearish market
environment
• Generating strong cash flows is a factor for quality companies
 A suitable investment for investors looking for capital gains over medium to long term
• Index composition as of the end of December 2006
Average Dividen Yield
Max Dividen Yield
Min Dividen Yield
DJ Islamic Market
Titans 100
2.99%
5.09%
1.59%
Selection of
30 stocks*
1.74%
5.09%
0%
*Selection of 30 stocks within the DJM Titans 100 index

DJ Global
Titans 50
2.16%
5.09%
0%
Source: Bloomberg
The Dividend Yields from the selection of 30 stocks are
relatively high, compared to:
• the DJIM Titans 100 index (1.84%)
• the non-Islamic Index such as DJ Global Titans 50 (2.15%)
A highly disciplined and transparent investment process
• Stocks are objectively and systematically selected from the base index components then carefully
supervised by experienced fund managers.
Access to the global equity market, optimising performance,
all within the Islamic principles
6
* Please refer to page 9 for the dividend yield calculation method
2
INVESTMENT PROCESS
What are sharia guidelines in a mutual fund?
> Particular investment guidelines compliant with UCITS III
•
•
•
The fund cannot pay or receive any interest
The fund will neither invest in fixed income assets nor money markets
instruments
The fund will not invest in equity securities which relate to any of the following
sectors:
 Conventional banking / life insurance
 Alcohol / tobacco
 Gaming / leisure
 Gambling
 Biotechnology companies involved in human / animal genetic engineering
 Arms manufacturing
 Pork production
8
A transparent annual selection process

From the universe of the Dow Jones Islamic Market Titans 100 Index, we select at
the end of September every year, 30 stocks that have distributed the dividend
having the highest yield over the previous year.
DJ Islamic Market Titans 100 Index
100 large cap companies whose activities
comply with Sharia guidelines
Basket: 30 companies with
the highest
dividend yield
The dividend of each stock will be
reinvested.


9
Each stock is equally weighted within the stock basket on the annual adjustment
day (the last business day in September of each year)
The selected 30 stocks compose the basket for the year to come, until the next
annual adjustment day. If one stock is no longer included in the DJ Islamic Market
Titans 100 Index, the basket is rebalanced (please see on page 11)
Composition of the basket as of the end of December 2006
Com pany Nam e
Industry
1 VODAFONE GROUP PLC
Communications
2 ENI SPA
Energy
3 BRISTOL-MYERS SQUIBB CO
Consumer, Non-cyclical
4 WOODSIDE PETROLEUM LTD
Energy
5 TAIWAN SEMICONDUCTOR MANUFAC Technology
6 BP PLC
Energy
7 MERCK & CO. INC.
Consumer, Non-cyclical
8 DOW CHEMICAL
Basic Materials
9 RINKER GROUP LTD
Industrial
10 DU PONT (E.I.) DE NEMOURS
Basic Materials
11 GLAXOSMITHKLINE PLC
Consumer, Non-cyclical
12 POSCO
Basic Materials
13 TOTAL SA
Energy
14 PFIZER INC
Consumer, Non-cyclical
15 BASF AG
Basic Materials
16 HENNES & MAURITZ AB-B SHS
Consumer, Cyclical
17 CHEVRON CORP
Energy
18 KIMBERLY-CLARK CORP
Consumer, Non-cyclical
19 ELI LILLY & CO
Consumer, Non-cyclical
20 REPSOL YPF SA
Energy
21 COCA-COLA CO/THE
Consumer, Non-cyclical
22 SCHNEIDER ELECTRIC SA
Industrial
23 NOKIA OYJ
Communications
24 3M CO
Industrial
25 CONOCOPHILLIPS
Energy
26 ABBOTT LABORATORIES
Consumer, Non-cyclical
27 CHINA MOBILE LTD
Communications
28 UNITED MICROELECTRONICS CORP
Technology
29 RIO TINTO LTD
Basic Materials
30 SANOFI-AVENTIS
Consumer, Non-cyclical
Source: Dow Jones
10
Exceptional rebalancing rules
 Whenever one stock is no longer included in the DJ Islamic Market
Titans 100 Index
•
The relevant stock will be sold and its proceeds will be invested in the 31st stock
that was defined at the time of the annual adjustment process.
 In order to comply with the investment restrictions of Luxembourg fund,
we will adjust the equity basket, whenever these investment rules are
broken:
•
•
•
11
Whenever one stock represents more than 9% of the fund’s net assets.
Whenever the total value of stocks exceeding 5% of the fund’s net assets globally
represents more than 39% of the fund net assets
In such a case, a part of the most valuable stock will be sold and its proceeds will
be invested in the least valuable stock within the basket.
Key Features





Codes :
ISIN
12
Classic
LU0245286777
BNPIEOC LX
Privilege
LU0245286934
BNPIEOP LX
Institutions
LU0245287403
Not available
Dividend policy:
Capitalisation
Subscription :
Daily
NAV calculation date :
Daily
Initial, minimum subscription unit and management fee:
Category


BLOOMBERG
First initial price
Minimum
Subscription
Maximum Management
fee (p.a)
Classic
USD 1,000
1 unit
1.5%
Privilege
USD 10,000
USD 1 million*
1.0%
Institutions
USD 100,000
USD 3 million*
0.6%
Subscription fee:
maximum 5%, not acquired by the fund
Redemption fee:
no charge
* In the current prospectus, the minimun holdings for Privilege and Institutions categories are EUR 1 million and EUR 3
millions respectively; they will be corrected in the next version of the prospectus.
3
PERFORMANCE
BNP Paribas Islamic Fund: An excellent start
BNP Paribas Islamic Fund vs. DJ Islamic Market Titans 100
5th April 2006 – 31st January 2007
14
Performances stated are net of fees. Past performance is not a guide to future performance and the value of investments in the fund may go
down as well as up. Investors may not get back the amount they originally invested.
The result of the back test
Historically outperforming the DJ Islamic Market Titans 100 Index (from 30/09/1996 to 05/04/2006)
400
Islamic Optimiser (DR Net) -2% fees
350
DJ Islamic Titan 100 DR
DJ Global Titan 50 DR
300
250
200
150
100
50
30-Sep-96 30-Sep-97 30-Sep-98 30-Sep-99 30-Sep-00 30-Sep-01 30-Sep-02 30-Sep-03 30-Sep-04 30-Sep-05
(Net of 2% p.a. fee, gross of withholding taxes)
Better performance with less volatility over the entire back testing period
30 Sept 96 to 30 Sept 98
30 Sept 98 to 30 Sept 00
30 Sept 00 to 30 Sept 02
30 Sept 02 to 30 Sept 04
30 Sept 04 to 5th Apr 06
1st Jan 06 to 5th Apr 06
15
BNPP Islamic Equity Optimiser (30)
Perf annualised
Volatility
Sharpe Ratio
24,1%
13,8%
1,40
11,4%
14,5%
0,46
-0,8%
14,8%
- 0,38
21,7%
13,3%
1,27
15,3%
9,3%
1,13
Performance 3 Months
9,0%
DJ Islamic Market Titans 100 Index
Perf annualised
Volatility Sharpe Ratio
25,6%
15,2%
1,37
24,7%
17,1%
1,16
-26,7%
20,5%
- 1,53
16,3%
13,8%
0,84
15,0%
8,6%
1,20
Volatility Sharpe 3 Months Performance 3 Months Volatility Sharpe 3 Months
9,1%
0,47
6,3%
9,3%
0,17
 Except the bullish period between 1998-2000,
the selection of 30 stocks has clearly
outperformed the DJIM Titans 100 index.
 The Sharpe Ratio: The higher the Sharpe Ratio,
the better the fund's historical risk-adjusted
performance.
Source: Bloomberg
Past performance is not a guide to future performance and the value of investments in the fund may go down as well as up. Investors may
not get back the amount they originally invested. Hypothetical results have certain inherent limitations (e.g. they are designed with the
benefit of hindsight). Hypothetical returns are not indicative of actual results that would have been achieved over the same period for the
investment strategy or that will be achieved in the future.
The method of the back-test

The back-test was conducted:
• From September 1996 to the fund launch date to compare with DJ Islamic Market Titans 100
Index.

The comparison between the optimised basket and the DJIM Titans 100 index over the
same period is based on the following parameters:
• The basket performance with Net Dividend Reinvested
• For the DJIM Titans 100 Index, we incorporated a hypothetical dividend yield of 2%
reinvested



16
The stock basket is based on the Index composition as of 31 January 2006, applied for
the whole period of back-tests, i.e. the basket was rebalanced annually to select 30
biggest dividend payers for each corresponding year.
The back-test did not take into account minor exceptional rebalancing that might have
taken place, nor the withholding tax on the dividends of the holding stocks imposed by
Luxembourg regulation.
The results are net of the 2.0% fee per annual (the maximum Total Expense Ratio).
4
Appendices - Double expertise
Sharia Supervisory Committee
BNP PAM Structured & Indexed Investments
The Fund’s Sharia supervisory committee
3 recognised scholars and their biographies

Dr. Nizam Yaquby - Bahrain – Independent Sharia Consultant, Manama, Bahrain
Dr. Yaquby is a prominent Islamic scholar educated at McGill University in Canada and the University of
Wales. He has studied under the guidance of some of the world's pre-eminent Islamic scholars. He has over
two decades of experience in teaching Islamic business subjects and has authored several research papers
on Islamic banking. He serves as a Sharia advisor to a number of international financial institutions and
insurance including, The Dow Jones Islamic Index.

Dr. Abdul Sattar Abu Ghuddah – Syria (based in Saudi Arabia)
Dr. Abu Ghuddah is an Islamic scholar educated in Damascus and Al Azhar University, Cairo. He sits on the
Sharia Board of several financial institutions around the world, including that of the Dow Jones Islamic Index.
Dr. Abu Ghuddah has researched and published numerous papers on Islamic banking. He is a member of the
International Islamic Fiqh Academy as well as the Islamic Accounting & Auditing Standards Board.

Dr. Mohamed Daud Bakar – Malaysia
Dr. Daud Bakar is an Islamic scholar educated at the University of Kuwait and at the University of St. Andrews
in Scotland. Dr. Daud Bakar is the Deputy Rector and an Associate Professor in Islamic Law, at the
International Islamic University in Malaysia. He has published a considerable number of research papers and
has participated in numerous seminars and conferences on Islamic banking and finance. Dr. Daud Bakar is
also, a Sharia consultant and advisor for several financial institutions around the world including, Bank Negara
Malaysia and the International Islamic Financial Market in Bahrain.
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BNP Paribas Islamic Equity Optimiser
Managed by the Structured & Indexed Investment Team of BNP PAM in Paris
BNP PAM Structured & Indexed Investments: a significant track record
>
A dedicated organisation:
• 16 years experience in structured & indexed investments.
• A team of 33 specialists dedicated to structured & Indexed investments
•
•
(4 located in Hong-Kong), which is supported by the legal and risk control
department.
An open architecture which allows access to our long experience and
services for our clients.
Validated BNP PAM Asset Manager rating of AM2+ by Fitch Ratings.
Quantitative
Analysis
>
A high and steady increase of the AUM since 2000:
Structuring
33
Professionals
Management
• 186 Structured & Indexed funds managed
Business
Business
Solutions
solutions
• € 19.5 bn of AUM (as of June 2006)
• In 2005, 2/3 of structured funds launched for
Marketing and
Client Support
non-resident investors (mainly in Asia)
19
Legal
Department
London
Paris
Luxembourg
Risk
Department
Paris
Disclaimer
Marketing:
This document has been produced for informational purposes only and does not constitute, is not part of and must not be considered
as an offer to sell or subscribe, or as a solicitation of any kind to buy or subscribe for unit of BNP Paribas Islamic Fund (the « Fund »);
nor shall it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever, nor be taken as investment
advice.
The Fund has been authorised as an undertaking for collective investment in transferable securities (UCITS) in Luxembourg. Its
marketing is authorised, at present, in Luxembourg and its units may be offered and sold in all of that country. Steps have been or will
be taken to allow the public offering of the units in Bahrain, Kuwait, Qatar, Saudi Arabia, Libyan, Singapore, Malaysia, Switzerland,
Netherlands, France, Germany, Cyprus, Turkey, Spain and Portugal. No action has been taken which would permit the public offering
of the shares in any other jurisdiction where such action would be required, in particular, in the United States, to US persons and in the
United Kingdom. Prior to any subscription in a country in which BNP Paribas Islamic Fund is registered, investors should verify which
compartments and which classes of shares are authorised for public sale there, as well as any legal constraints or restrictions there
may be in connection with their subscription, purchase, possession or sale of the units of the Fund.
Investors considering subscribing for units should read carefully the most recent prospectus. Applications may only be made on the
terms and conditions contained in the prospectus. The prospectus is available from BNP PARIBAS, local correspondents if any, or
from the entities marketing the Fund. Investors should consult their own legal and tax advisors prior to investing in the Fund.
Given the economic and market risks, there can be no assurance that the Fund will achieve its investment objectives. The value of the
units may go down as well as up. Performance figures are shown gross of subscription, redemption and conversion fees as well as
taxes. Past performance is not a guarantee of future results.
For further information or to subscribe, contact an authorised distributor of the Fund. The list of authorised distributors is available from
its registered office: BNP Paribas Islamic Fund, rue de Gasperich, 5826 Howald - Hesperange, Luxembourg.
Tax:
The Fund is not subject to any tax other than an annual registration tax in Luxembourg (0.01% to 0.05% of its average quarterly net
assets, depending upon the compartment) and any taxes on income received on investments, which may be withheld by the
depositary according to their tax situation in their country of origin.
Subscribers must make and submit their own declarations in their country of tax residence. The attention of unitholders fiscally
domiciled in France is drawn to their obligation to make a declaration of income in France which, resulting from switching between
compartments of the Fund or converting into another class of shares in the same compartment, is subject to French capital gains tax
on transferable securities.
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