July 6, 2011

Changes in the services provided by Pannónia Navigator

In order to maintain the high quality of our price monitoring and automatic fund switching service, we have reviewed the Pannónia Navigator service which can be optionally chosen to supplement our investment life insurance products.

The review led to the conclusion that the Pannónia Navigator service has continued to optimally satisfy the objectives defined at the time of its establishment (mitigating yield volatility by limiting losses, and making use of the positive effects of rising trends) with the methodology currently in use.

However, in order to develop a system which can be adapted to the different characteristics of the different types of funds, we shall discontinue the Pannónia Navigator service as of 15 July 2011 for the following funds:

• Domestic Bond Fund (Hazai Kötvény Eszközalap)
• Euro Denominated International Bond Fund (Euró Alapú Nemzetközi Kötvény Eszközalap)
• Absolute Yield Fund (Abszolút Hozam Eszközalap)
• Euro Denominated Absolute Yield Fund (Euró Alapú Abszolút Hozam Eszközalap)
• Best Select Mixed Fund (Best Select Vegyes Eszközalap)

The expected price volatility of the listed funds is very slight; the composition of the bond funds, and in themselves, the investment policies of the mixed and absolute yield funds ensure the realization of the main objective (the limitation of losses arising from weakening prices) of the Pannónia Navigator service.

The change affects all of our investment life insurance products. The withdrawal of the affected funds from the scope of the Pannónia Navigator service (with the exception of the Pannónia Harbour Retirement Investment Life Insurance) will be effected by significantly raising the related parameters of the funds (moving average: 200 days, tolerance band: 200%). Raising the parameters is expected to have the effect that no more automatic sell or buy signals will be received after the change (the probability of automatic transactions being generated at those parameters is practically zero). The affected funds will not qualify as growth funds after 15 July in relation to the Pannónia Harbour Retirement Investment Life Insurance.

We would ask our clients to please take notice of the following: if their insurance premiums accumulated in the above funds were transferred to the protected fund as a consequence of an automatic sales transaction, and no opposite transaction has taken place since then (and will not take place before 15 July), then the transferred amount will remain invested in the protected fund, barring further buy signals. If they wish to avoid that, they can order a reversal of the capital transfer by issuing a fund transfer statement to the insurer.

We trust that the changes coming into effect on 15 July will contribute to making Pannónia Navigator an even more useful service supplementing our investment life insurance products.