Guaranteed Fund Forte 7

What is Guaranteed Fund Forte 7?

It is a new guaranteed fund offered by Komerční pojišťovna, a.s., which opens new possibilities for investing within the Vital Invest life insurance. The fund is perfect for clients who understand that there is a potential for growth of stock prices of prominent European companies but are not willing to be exposed to the risk that the value of their investment might decrease.

Guaranteed Fund Forte 7 offers:

• guarantee of a 100% return on investment upon the fund’s maturity (after deduction of administrative costs)
• possibility of a 21% yield after only 3 years (7 % per year)
• opportunity to participate in the growth of shares of prominent European companies
• effect of locking the highest performance achieved after year 1, 2, up to year 8 of the fund’s existence
• protection against the currency risk (potential negative impacts of the Czech crown strengthening are reinsured and will not affect the portfolio yield)
• the portfolio is managed by professionals from the French company Société Générale which is one of the largest and most stable banks operating in the Eurozone

The insurance contract’s elements when investing into Guaranteed Fund Forte 7:

• single premium
• minimum insurance period of 9 years
• subscription period: 18/04 – 29/07/2011 or until the fund is sold out)

How does the investment strategy of Guaranteed Fund Forte 7 work?

Performance of Fund Forte 7: the fund’s performance and maturity depends on the performance of the SGI Euro Equity strategic index (referred to here as “the Index“)

Index characteristics

Performance of the Index depends on the performance of the stock index “Euro STOXX 50“ in Czech crowns, supplemented by active volatility management. The Euro STOXX 50 measures performance of stock titles of 50 leading European companies.

Fund’s maturity: 3 – 8 years; the fund shall become mature no later than by 16 August 2019

How is the monthly performance of the Index calculated?

The monthly performance of the Index is governed by the following principles:

• if the performance of the Index for the relevant month ranges between -10 % up to +4 %, the real performance of the Index is included in the monthly performance
• if the performance of the Index for the relevant month is lower than -10 %, a value equal to -10 % is used for the calculation
• if the performance of the Index for the relevant month is higher than +4 %, a value equal to +4 % is used for the calculation

Effect of locking the highest performance achieved after year 1, 2, up to year 8 of the fund’s existence

The highest annual performance of the Index (i.e. a sum of monthly performances of the Index after year 1, 2, up to year 8 of the fund’s existence) is locked and may influence the fund’s maturity after year 3 (a) and the amount of yield after year 8 (b).

1. if the sum of monthly Index performances after year 1 or 2 of the fund’s existence is higher than or equal to 10 %, the fund becomes mature ahead of schedule after year 3 regardless of the total value of monthly Index performances after year 3.
2. the amount of the yield paid out to a client upon the fund’s maturity (after 8 years) equals the highest of 8 annual Index performances achieved (i.e. a sum of monthly performances of the Index after year 1, 2, up to year 8 of the fund’s existence) and this value cannot be negative.

According to the performance development of the Index, the fund will mature in three to eight years:

Fund’s maturity after 3 years

• if the sum of monthly Index performances is higher than or equal to 10 % by one of the following dates: 08/08/2012, 09/08/2013 or 08/08/2014, the client will receive a 21% yield + 100 % of the initial investment (after deduction of administrative costs)

Fund’s maturity after 4 years

• if the sum of monthly Index performances is higher than or equal to 10 % by 10/08/2015, the client will receive a 28% yield + 100 % of the initial investment (after deduction of administrative costs)

Fund’s maturity after 5 years

• if the sum of monthly Index performances is higher than or equal to 10 % by 09/08/2016, the client will receive a 35% yield + 100 % of the initial investment (after deduction of administrative costs)

Fund’s maturity after 6 years

• if the sum of monthly Index performances is higher than or equal to 10 % by 09/08/2017, the client will receive a 42% yield + 100 % of the initial investment (after deduction of administrative costs)

Fund’s maturity after 7 years

• if the sum of monthly Index performances is higher than or equal to 10 % by 08/08/2018, the client will receive a 49% yield + 100 % of the initial investment (after deduction of administrative costs)

Unless the premature redemption condition is met within 7 years, the client will receive, upon the maturity of the fund (after 8 years), the following amount: 100 % of the initial investment (after deduction of administrative costs) + a yield the amount of which equals the highest annual Index performance achieved (i.e. a sum of monthly Index performances after year 1, 2, up to year 8 of the fund’s existence); and this value cannot be negative.

Example 1 – fund’s maturity after only 3 years (clients gain a 21% yield to their investment)

Example 2 - fund’s maturity after only 3 years thanks to the effect of locking the highest performances (clients gain a 21% yield to their investment)

Example 3 – fund’s maturity with a positive yield after 8 years

Example 4 – fund’s maturity after 8 years (clients gain 100 % of their investment after the administrative costs have been deducted)