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4-Year Capital Protected Water Note
Summary Terms:
- Product: 4-Year 100% Capital Protected Water Note
- Minimum Investment Amount: USD 10,000 minimum with multiples of USD 1,000 thereafter for Individuals, USD 25,000 minimum with multiples of USD 1,000 thereafter for Institutions
- Nominal Amount: USD 100 per Note
- Investment Period: 4 years
- Basket Components (*):
- Capital Protection: 100% capital protection from ABN Amro Bank N.V., London branch, if Notes are held until maturity (4 Years), achieved through a Sharia- compliant mechanism
- Valuation: On weekly basis
- Redemption: 1st and 15th of every month, investor request must be received by Dubai Islamic Bank by the cut-off date
- Redemption Trade Date: 4 Business Days after Cut-Off Date
- Redemption on Maturity: Full invested amount
- Business Day: London, UK, and Dubai, UAE
- Redemption fee: AED 250
- Subscription Fee: 1% of the subscription amount
- Note Issuer: ABN Amro Bank N.V., London branch
- Distribution Agent: Dubai Islamic Bank (DIB)
- Sharia Approval:Dubai Islamic Bank Sharia Board
Market Outlook:
- Water is becoming an increasingly valuable commodity
- Since 30th June 2005, the ABN AMRO Water index returned 51.78%
- Water industry generates as much as $450Bln revenue each year
- Increasing investments in water purification technology to provide clean water for growing population which increases the cost of the commodity
- As per United Nations, Saudi Arabia needs to spend $80Bln by 2025 on desalinization plants and sewer facilities
Key Features and Objectives:
- 100% capital protection if Notes are held until maturity (4 Years), achieved through a Sharia-compliant mechanism
- Profit rate paid annually of up to 11% (minimum 2%)
- Investment in growing water industry globally
Description of the Islamic-compliant investment strategy
StrategyThe product implements an innovative Islamic-compliant investment strategy designed to provide regular income to investors and capital protection at maturity.
At inception, investors will take exposure to a basket of Shariah-compliant stocks at prevalent market rates, and at any point in time, 100% of their money will remain invested in these shares. This process ensures complete segregation from the money of the investors and the money of ABN Amro Bank N.V.
Every year a portion of the Shariah-compliant equity portfolio will be sold at a price reflecting the initial cost plus a profit rate determined based on the performance of the underlying Water stocks. The estimated annual profit rate is comprised between a minimum of 2% and a maximum of 11%.
The methodology used to calculate the profit rate is based on the comparison of the annual price of each Water stock relative to its initial value. This means, that even if stocks decline from one year to another, investors will be able to receive a profit distribution above the minimum expected distribution as long as on average, the overall value of the Water basket is above the start value.
Explanation: USD 100 are invested in 10 shares (USD 10 per share). The value of each share is measured at the end of the year. To calculate the value of the basket however, a maximum value of USD 11.10 is taken for each share; so if for example a share has a value of USD 15, it is considered like the value was USD 11.10. The profit return is calculated based on the percentage change of the basket relative to USD 100, subject to a minimum estimated of 2%.
Indicative NAV: