european opportunities certificate

8/11/2019 European Opportunities Certificate

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European Opportunities Note

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Preliminary Offering Memorandum

www.dib.ae


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OFFERING TERMS SUMMARY

Certificate Form Islamic Note backed by Sharia-compliant transactions

Issuer of the NoteJ.P. Morgan Structured Products B.V. (JPM) Guaranteed by J.P. Morgan Chase

Bank N.A (Senior Long Term Debt Rating: S&P: A+, Fitch: A+, Moodys: Aa3)

Sole Distributor Dubai Islamic Bank

Issue Price AED 10,000

Minimum Investment Amount AED 100,000

Note Underlying An equity basket with the following Share constituents

Reference Assets Bloomberg Code

GLAXOSMITHKLINE PLC GSK LN Equity

INDITEX ITX SM Equity

PORSCHE AUTOMOBIL HLDG PAH3 GY Equity

ROYAL DUTCH SHELL PLC A RDSA NA Equity

SYNGENTA AG REG SYNN VX Equity

SANOFI SAN FP Equity

Term 3 Years

Distributions per Note First Distribution:

3 Business Days from issuance of the Note. 90% of the initial investment amount

Profit Distributions:

At the end of each year, if all stocks in the basket are above the Barrier Level,

investors receive a coupon of 7%.

The Barrier has a step down future making it more likely to get coupons, i.e.

Annual Profit 1 = 7.00% if all stocks are above 100% of their initial level on the

annual observation date 1.

Annual Profit 2 = 7.00% if all stocks are above 95% of their initial level on the

annual observation on date 2.

Annual Profit 3= 7.00% if all stocks are above 90% of their initial level on theannual observation on date 3.Early Redemption Fee

Early Redemption Twice Monthly

Cut-off dates to receive redemption applications are the 10th and 25th (of the

same month). If the cut-off date is not a Business Day, the immediately following

Business Day will apply.

The relevant respective redemption pricing dates (in the same month) if the cut-

off dates are met, will be the 15th and the last Business Day of the month. If such

day i) is not a Business Day; ii) is not a Trading Day or is a Disrupted Day for any

of the constituent Shares, or iii) is less than 2 Business Days after the cut-off date;

the following day which is both a Business Day and a Trading Day for all Share

constituents will apply.

Early Redemptions can take place according to Secondary Market conditions set

out below.

Early Redemption Fee 1% of the redemption amount

Business Day A regular day when Banks are open for business in Dubai, UAE and London, UK

Agency Fee 1.25% of the subscription amount

Secondary Market While J.P. Morgan Structured products B.V (Issuer) or J.P. Morgan Securities plc.

(Dealer) intends to repurchase Notes offered to it and maintain an indicative bid

offer spread of 1%, it is not required to do so and may cease making repurchases

at any time and for any reason. Any such repurchases will be on such terms as

the Issuer or the Dealer (as appropriate) deems reasonable, based on market

conditions at the time and on such other factors as the Issuer or the Dealer (as

appropriate) may determine in its sole discretion.

Sharia Advisor Dar Al Sharia

Sharia Board Fatwa and Sharia Supervisory Board of Dubai Islamic Bank Group


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This note has been prepared by Sales & Marke ng team and is not a product of a JPMorgan Research Area

1 Asia Development Outlook 2013: Asias Energy Challenge, 9 April 2013, Asian Development Bank,http://www.adb.org/news/media/infographic/asian development outlook 2013 asias energy challenge

2 World Energy Outlook 2012, Energy Access Projec ons to 2030, Interna onal Energy Agency,http://www.worldenergyoutlook.org/resources/energydevelopment/energyaccessprojec onsto2030/

3 UPI.com, Asia needs $944 billion Investment for energy efficiencyhttp://www.upi.com/Business_News/Energy Resources/2013/06/26/Asia needs 944 billion investment for energy efficiency/UPI 81771372265781/

OverviewThe note aims to provide an annual profit payment linked to the performance of 6 European equities. The note

provides capital protection by returning 90% of the initial invested amount 3 Business Days after issue date.

Underlying Basket

Reference Assets (i) Bloomberg Code

GLAXOSMITHKLINE PLC GSK LN Equity

INDITEX ITX SM Equity

PORSCHE AUTOMOBIL HLDG

PRFPAH3 GY Equity

ROYAL DUTCH SHELL PLC A

SHSRDSA NA Equity

SYNGENTA AG REG SYNN VX Equity

SANOFI SAN FP Equity

Mechanism

Profit Distributions:

At the end of each year, if all stocks in the basket are above the Barrier Level, investors receive a coupon of 7%.

The Barrier has a step down future making it more likely to get coupons , i.e. Annual Profit 1 = 7.00% if all stocks

are above 100% of their initial level on the annual observation date 1.

Annual Profit 2 = 7.00% if all stocks are above 95% of their initial level on the annual observa on date 2.

Annual Profit 3= 7.00% if all stocks are above 90% of their initial level on the annual observa on date 3.

Payments of Profit:

In respect of any Instruments which include Profit Payment Dates or Contingent Profit Payment Date on or before

each Profit Payment Date or Contingent Profit Payment Date (as the case may be), JPMSL will pursuant to the

Purchase Undertaking Deed purchase the relevant Sharia Assets held by the Custodian on behalf of the Issuer on

such date. The consideration provided by JPMSL in respect of the purchase of the Sharia Assets will consist of

either a payment of cash or a combination of cash (in an amount equal to the Profit Amount or the Contingent

Profit Amount (as the case may be) payable on the relevant Profit Payment Date or Contingent Profit Payment

Date (as the case may be)) and Sharia compliant assets. The Issuer will pay the Profit Amount or the Contingent

Profit Amount (as the case may be) due to Holders on the Profit Payment Date or Contingent Profit Payment

Date (as the case may be). To the extent that the consideration is a combination of cash and Sharia compliant

assets, the remaining consideration will be delivered to the Custodian and will be subject to the Trust Deed.

Payment of redemption Amount:

Description of Purchase Undertaking deed An undertaking in favour of the Issuer entered into by JPMSL by

virtue of a master purchase undertaking (the Master Purchase Undertaking) and the execution by JPMSL of an

issue deed relating to the relevant Instruments, pursuant to which JPMSL undertakes, in favour of the Issuer and

following receipt of a Purchase Acceptance from the Issuer, to purchase the Sharia Assets from the Issuer at a

price determined by reference to the redemption amount.


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Background

European equities appear attractive from a medium term perspective. Europe has not unwound the sizable

underperformance it had against US since 2010.

A series of recent good figures in European economies: PMIs (Purchasing Managers Index) picking up in

Europe, current account imbalances have closed.

Quality of the underlying universe with 6 European blue chips companies (not restricted to Eurozone only) Diversified in term of sectors and location.

Buy and hold recommenda ons from analysts above 75%.

Good economic figures

European PMI (Purchasing Manager Index) figures have been picking up. Europe is not lagging behind the world

anymore and the January 2014 figure is at 3 year high. Overall the Developed World has a positive economic

backdrop

Relative Value

Europe can be seen as a long term recovery story that offers significant value. Even excluding financials Euope

P/Book is near record discount relative to US.

Eurozone composite PMI is at 3-year highs

MSCI Europe vs US P/B (ex Financials)


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Example Hypothetical Scenarios*

We have presented below the outcome of the investment under some example hypothe cal scenarios

Scenario 1: represents the worst case scenario where the basket doesnt perform and investors receive only the first

distribu on of 90% of Principal.

End of Year 1 End of Year 2 End of Year 3

Reference Assets1st

DistributionShare Level Share Level Share Level

Total

Distribution

Share 1 80% 75% 85%

Share 2 70% 75% 85%

Share 3 95% 80% 90%

Share 4 105% 85% 95%

Share 5 60% 70% 75%

Share 6 55% 60% 70%

Barrier 100% 95% 90%

All Above Barrier No No No

Distributions 90% 0% 0% 0% 90%

Scenario 2: represents an example where the profit distributions happen in only 1 of the years, and total distributions is

lower than Initial Investment


Reference Assets1st

DistributionShare Level Share Level Share Level

Total

Distribution

Share 1 105% 110% 111%

Share 2 102% 96% 95%

Share 3 95% 92% 94%

Share 4 101% 98% 91%

Share 5 80% 88% 92%

Share 6 111% 116% 125%

Barrier 100% 95%


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Scenario 3: represents an example where the profit distributions happen in 2 of the years


Reference Assets 1stDistribution

Share Level Share Level Share Level TotalDistribution

Share 1 105% 110% 111%

Share 2 102% 96% 95%

Share 3 95% 105% 94%

Share 4 101% 98% 91%

Share 5 80% 96% 92%

Share 6 111% 116% 125%

Barrier 100% 95%


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DISCLAIMER

J.P. Morgan

Neither J.P. Morgan Securities plc (JPMS plc) nor any of its affiliates (together and individually, JPMorgan) makes any representation or warranty,

express or implied, to investors in or owners of any security (the Security) (or any person taking exposure to it) or any member of the public in

any other circumstances (each an Investor): (a) regarding the advisability of investing in securities or other financial products generally or in the

Security particularly; or (b) the suitability or appropriateness of an exposure to the Strategy in seeking to achieve any particular objective. It is forthose taking an exposure to the Security and/or the Strategy to satisfy themselves of these matters and such persons should seek appropriate

professional advice before making any investment. JPMorgan is not responsible for and does not have any obligation or liability in connection

with the issuance, administration, marketing or trading of the Security. The publication of the Strategy and the referencing of any asset or other

factor of any kind in the Strategy does not constitute any form of investment recommendation or advice in respect of that asset or other factor

by JPMorgan and no person should rely upon it as such. JPMorgan does not act as an investment adviser or investment manager in respect of

the Strategy or the Security and does not accept any fiduciary duties in relation to the Strategy or to any Investor. None of the Issuer, the Trustee,

the Dealer, the Calculation Agent or the Shariah Observation Agent makes any representation as to whether the Notes and/or the Transaction

Documents and/or any transaction contemplated there under are compliant with the principles of Shariah. . Each investor shall, by becoming an

investor, be deemed to have represented that they are satisfied that the Instruments will not contravene Shariah

The Security is compiled, calculated, maintained and sponsored by JPMorgan without regard to any individual Investor. JPMorgan does not

accept any legal obligation to take the needs of any person who may invest in a Security into account in its role as calculation agent in respect of

the Securities.

JPMorgan does not give any representation, warranty or undertaking, of any type (whether express or implied, statutory or otherwise) in relationto the Security as to condition, satisfactory quality, performance or fitness for purpose or as to the results to be achieved by an investment in the

Security or any data included in or omissions from the Strategy, or the use of the Strategy in connection with the Security or the veracity, currency,

completeness or accuracy of the information on which the Strategy is based (and without limitation, JPMorgan accepts no liability to any Investor

for any errors or omissions in that information or the results of any interruption to it and JPMorgan shall be under no obligation to advise any

person of any such error, omission or interruption). To the extent any such representation, warranty or undertaking could be deemed to have

been given by JPMorgan, it is excluded save to the extent that such exclusion is prohibited by law. To the fullest extent permitted by law, JPMorgan

shall have no liability or responsibility to any person or entity (including, without limitation, any Investors) for any loss, damages, costs, charges,

expenses or other liabilities howsoever arising, including, without limitation, liability for any special, punitive, indirect or consequential damages

(including loss of business or loss of profit, loss of time and loss of goodwill), even if notified of the possibility of the same, arising in connection

with the design, compilation, calculation, maintenance or sponsoring of the Strategy or in connection with the Security.

JPMorgan may independently issue or sponsor other indices or products that are similar to and may compete with the Security. They may also

transact in assets referenced Security (or in financial instruments such as derivatives that reference those assets). It is possible that these activities

could have an effect (positive or negative) on the value of the Security.

Risk factors

The purchase of Notes involves substantial risks and will be suitable only for investors who have the knowledge and experience infinancial and business matters necessary to enable them to evaluate the risks and the merits of an investment in the Notes. Thefollowing summary of certain of these risks should be carefully evaluated before making an investment in the Notes and does notdescribe all possible risks of such an investment:

Investment Risks.The price of the Notes may fall in value as rapidly as it may rise and investors may not get back the amount invested.The price of the Notes may be affected by a number of factors, including changes in the value and volatility of the underlying asset(s),the creditworthiness of the Issuer, changes in foreign exchange rates and economic, financial and political events that are difficult topredict. The past performance of an underlying asset or other security or derivative should not be taken as an indication of the futureperformance of that underlying asset or other security or derivative during the term of the Notes. Owning the Notes is not the sameas owning the underlying asset(s) and changes in the market value of any underlying asset may not necessarily result in a comparablechange in the market value of the Notes. Investors should further note that they bear the Issuers solvency risk. For a full descriptionof the Notes including risks, costs and product conditions, as applicable, please refer to the pricing supplement, Base Prospectus and/or final terms, as applicable.

Suitability of the Notes.The purchase of the Notes involves certain risks including market risk, credit risk and liquidity risk. Investorsshould ensure that they understand the nature of all these risks before making a decision to invest in the Notes. Investors shouldcarefully consider whether the Notes are suitable for them in light of their experience, objectives, financial position and other relevantcircumstances. If in any doubt, investors should obtain relevant and specific professional advice before making any investment decision.In structuring, issuing and selling the Notes, J.P. Morgan is not acting in any form of fiduciary or advisory capacity.

Creditworthiness of Issuer.The Notes constitute general unsecured contractual obligations of the Issuer and of no other person.Investors in the Notes are relying upon and are exposed to the creditworthiness of the Issuer. If the Issuer fails to make a payment orbecomes insolvent you could lose some or all of your investment.


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Secondary market trading.No assurance can be given that any trading market for the Notes will exist or whether any such market willbe liquid or illiquid. The Issuer will use reasonable endeavours, under normal market conditions and its own discretion, to provide a bid/offer price for the Notes and will indicate at the time of providing the quotation how long such quotation will remain actionable, or, inany event, not longer than what the Issuer considers a commercially reasonable time. The Issuer will not be required to provide a bid/offer price if an event or series of events occurs outside the Issuers control (whether or not affecting the market generally) resultingin, amongst other things, (i) the unscheduled closing (ii) any suspension or (iii) the disruption of any (a) physical or electronic trading

system or market affecting the Notes or (b) computer, communications or other service system used by the Issuer to generate aquotation in respect of the Notes. The Issuer may determine a bid/offer price in a different manner than other market participants andprices can vary. Sometimes this variance may be substantial. If the Notes are not traded on any exchange, pricing information may bemore difficult to obtain and the liquidity and price of the Notes may be adversely affected. The bid/ offer spread will be subject to theIssuers discretion. Any market making activity commenced may be discontinued at any time.

Conflicts of interest.J.P. Morgan and its officers and employees may from time to time (i) have long or short positions in the underlyingor other Notes or derivatives that may affect the value of the Notes; and/or (ii) possess or acquire material information about theNotes, the Underlying or other Notes or derivatives that may affect the value of the Notes. If applicable, J.P. Morgan may at any timesolicit or provide investment banking, commercial banking, credit, advisory or other services to the issuer of the Underlying. Suchactivities and information may cause consequences that are adverse to the interests of the investors in the Notes or otherwise createvarious potential and actual conflicts of interest.J.P. Morgan has no obligation to disclose such activities or information or other potential and actual conflicts of interest and mayengage in any such activities without regard to the interests of the investors in the Notes or the effect that such activities may directlyor indirectly have on the Notes.

Early termination.The Issuer may terminate the Notes if it determines that it has become unlawful for the Issuer to perform itsobligations under the Notes or its ability to source a hedge or unwind an existing hedge in respect of the Notes is adversely affectedin any material respect. If the Issuer terminates the Notes early, the Issuer will, if and to the extent permitted by applicable law, paya holder of the Notes an amount determined to be its fair market value immediately before such termination notwithstanding suchcircumstances less the actual cost to the Issuer of unwinding any underlying related hedging arrangements.

Hedging activities.Notwithstanding any communication that you may have had with J.P. Morgan in respect of the manner in whichJ.P. Morgan may establish, maintain, adjust or unwind its hedge positions with respect to the Notes, (i) J.P. Morgan may in its absolutediscretion determine when, how or in what manner it may establish, maintain or adjust or unwind its hedge positions; (ii) J.P. Morganmay, but is not obliged to, hedge the Notes dynamically by holding a corresponding position in the underlying asset(s) or any otherNotes, derivatives or otherwise and may hedge the Notes individually or on a portfolio basis; and (iii) any hedge positions are theproprietary trading positions of J.P. Morgan and are not held on your behalf or as your agent.

Market disruption.The calculation agent for the Notes may determine that a market disruption event has occurred or exists at arelevant time. Any such determination may affect the value of the Notes and/or delay settlement in respect of the Notes. A Market

Disruption Event includes any suspension or limitation of trading on the Exchange or any Related Exchange, the declaration of ageneral moratorium in respect of banking activities in the country where the Exchange or any Related Exchange is located and theinability of J.P. Morgan to unwind its hedge or related trading position relating to the Underlying due to illiquidity. Upon the occurrenceof Market Disruption Event, the determination of the closing price of the Underlying will be made on the first succeeding exchangebusiness day on which there is no Market Disruption Event whereas such Market Disruption Event has continued for five consecutiveexchange business days after the original determination date such fifth exchange business day is deemed to be the Valuation Date andthe Calculation agent shall determine the good faith estimate of the value for the Underlying on such exchange business day. The finalsettlement date (or the settlement date in respect of an early termination or redemption date) will be delayed accordingly.

FX market disruption.If applicable, investors should note that all payments on expiry or a secondary market purchase by the Issuer aresubject to the ability of the Issuer to (i) sell the underlying asset(s); (ii) convert the currency of an underlying asset into the currencyof the Notes; and (iii) transfer the currency of the Notes from accounts in the country where an underlying asset is located to accountsoutside that country. The occurrence of any of these events may affect the value of the Notes and/or delay settlement in respect ofthe Notes or, if such events result in settlement being delayed for the period specified in the terms and conditions for the Notes, mayresult in all obligations of the Issuer in respect of the Notes being extinguished.

Adjustments.The Issuer may make adjustments to the terms of the Notes if an event (such as a market disruption event or othercircumstance affecting normal activities) which affects an underlying asset requires it. This may include (among other things) any eventwhich has or may have a concentrating or diluting effect on the theoretical value of any underlying asset, including, without limitation,any cash dividend or other cash distribution, stock dividend, bonus issue, rights issue, or extraordinary dividends, or the insolvency ofthe issuer of the underlying asset, nationalisation of the assets of the issuer of the underlying assets and delisting or suspension of theunderlying asset. The Issuer will not be under any obligation to consult with the holder of the Notes in such circumstances.

Emerging Markets. Investing in emerging markets involves certain risks and special considerations not typically associated withinvesting in other more established economies or Notes markets. Such risks may include: (i) the risk of nationalisation or expropriationof assets or confiscatory taxation; (ii) social, economic and political uncertainty; (iii) dependence on exports and the correspondingimportance of international trade and commodities prices; (iv) less liquidity of Notes markets; (v) currency exchange rate fluctuations;(vi) potentially higher rates of inflation (including hyper-inflation); (vii) controls on investment and limitations on repatriation ofinvested capital; (viii) a higher degree of governmental involvement in and control over the economies; (ix) government decisionsto discontinue support for economic reform programs and imposition of centrally planned economies; (x) differences in auditingand financial reporting standards which may result in the unavailability of material information about economics and issuers; (xi)less extensive regulatory oversight of Notes markets; (xii) longer settlement periods for Notes transactions; (xiii) less stringent lawsregarding the fiduciary duties of officers and directors and protection of investors; and (xiv) certain consequences regarding themaintenance of portfolio Notes and cash with sub-custodians and Notes depositories in emerging market countries.


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Notes.The Notes are investment instruments which, at maturity or expiration either pay an amount equal to the level of the underlyingasset(s) or deliver the underlying asset(s) according to the redemption formula, subject to the security entitlement, foreign exchangerate and expenses. As such, they entail the same level of risk as a direct investment in the underlying asset(s). Investors should be awarethat their entire investment may be lost, in the event that the underlying asset(s) are valued at zero. However, unlike direct investments,since Notes have a limited term, investors are not able to hold them beyond their stated maturity or expiration date in the expectationof a recovery in the price of the underlying asset(s). The price at which an investor will be able to sell Notes prior to maturity or

expiration may be at a substantial discount to the market value of the Notes at the date on which the Investor purchased the Notes,if, at such time and in addition to any other factors, the value of the underlying asset(s) is below, equal to or not sufficiently above thevalue of the underlying asset(s) at the issue date. If the underlying asset(s) is denominated in a currency different from the currency ofdenomination of the Notes, the FX rate may affect the value of the Notes. Past results do not guarantee and are not indicative of futureperformance. The value of each Security can fall as well as rise. The investor should be aware that the Issuer is entitled to terminate theNotes under certain circumstances against payment of an early termination amount which may be substantially less than the marketvalue of the Notes at the date on which the Investor purchased the Notes, and in an extreme case, could be zero.

Sharia Compliance.By agreeing to purchase the Notes, each investor confirms that neither J.P. Morgan nor any of its affiliates havemade or makes any representation or warranty or gives any assurance or guarantee to the investors that the Notes (which have beenissued under a structure which has been reviewed and approved as Sharia-compliant by the Sharia Board), the related documentationor the underlying structure is compliant with Sharia or Islamic principles generally or with the terms or conditions of any fatwa orinvestment principles or criteria by which the investors may be bound or which otherwise apply to it . Prospective investors must satisfythemselves as to the Sharia compliance of the Notes by seeking their own independent Sharia advice, approval or certification, asrequired, of the underlying structure and documentation for the Notes.

Dilution.The value of the equities basket will be affected by changes in the market price of the Notes comprised in it. In addition,because the basket comprises only a pro rata share of the basket (based on the net proceeds of the issue of the Notes) Holders maysuffer a comparative dilution or experience a comparative increase in the value of their pro rata share in certain events includingsubsequent sales by the Issuer of Notes issued and held by it on issue, the issue of further series of similar Notes and the repurchaseby the Issuer and cancellation of Notes.