BNP Paribas Islamic Fund -Equity Optimiser (a sub-fund of BNP Paribas Islamic fund)

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BNP Paribas Islamic Fund -Equity Optimiser(a
sub-fund of BNP Paribas Islamic fund)
March 2007
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Table of contents

• Product Highlights 3
• Investment Process 7
• Performance 13
• Appendices 17
• Sharia Supervisory Committee
• BNP PAM Structured Indexed Investments

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PRODUCT HIGHLIGHTS
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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
• 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 well-known 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 worlds largest global companies.

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Access to the most liquid Islamic stocks.

• A positive environment for global equity markets
  
• Low inflation, relatively low valuations and
  robust MA 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
No. of companies by sector within the optimised
basket (30 stocks)
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
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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

DJ Islamic Market
Selection of
DJ Global

• 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)

Titans 100
30 stocks
Titans 50
Average Dividen Yield
2.99
1.74
2.16
Max Dividen Yield
5.09
5.09
5.09
Min Dividen Yield
1.59
0
0
Source Bloomberg
Selection of 30 stocks within the DJM Titans 100
index
Access to the global equity market, optimising
performance, all within the Islamic principles
Please refer to page 9 for the dividend yield
calculation method
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INVESTMENT PROCESS
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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

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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.

• 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)

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Composition of the basket as of the end of
December 2006
Source Dow Jones
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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
• Whenever one stock represents more than 9 of the
  funds net assets.
• Whenever the total value of stocks exceeding 5
  of the funds 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.

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Key Features

• Codes
• Dividend policy Capitalisation
• Subscription Daily
• NAV calculation date Daily
• Initial, minimum subscription unit and management
  fee
• Subscription fee maximum 5, not acquired by the
  fund
• Redemption fee no charge

ISIN BLOOMBERG
Classic LU0245286777 BNPIEOC LX
Privilege LU0245286934 BNPIEOP LX
Institutions LU0245287403 Not available
Category 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
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.
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PERFORMANCE
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BNP Paribas Islamic Fund An excellent start

• BNP Paribas Islamic Fund vs. DJ Islamic Market
  Titans 100
• 5th April 2006 31st January 2007

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.
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The result of the back test

• Historically outperforming the DJ Islamic Market
  Titans 100 Index (from 30/09/1996 to 05/04/2006)

(Net of 2 p.a. fee, gross of withholding taxes)
Better performance with less volatility over the
entire back testing period

• 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.
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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
• 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).

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Appendices - Double expertise
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Sharia Supervisory Committee BNP PAM Structured
Indexed Investments
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The Funds Sharia supervisory committee3
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.
• A high and steady increase of the AUM since 2000
• 186 Structured Indexed funds managed
• 19.5 bn of AUM (as of June 2006)
• In 2005, 2/3 of structured funds
  launched fornon-resident investors (mainly in
  Asia)

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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.