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Information Centre

Repository of MPF schemes' documents

General

1
Who is responsible for the appropriateness and accuracy of the information provided in the offering documents, fund fact sheets and annual consolidated reports?

It is the trustees’ duty to ensure the appropriateness and accuracy of the information provided in the offering documents, fund fact sheets and annual consolidated reports made available to scheme members.

 

FAQ on the Annual Consolidated Reports of MPF Schemes

2
What should scheme members look for in an annual consolidated report of an MPF scheme?

An annual consolidated report of an MPF scheme consists mainly of the following:

i.Financial statements of an MPF scheme and its constituent funds – The financial statements give an overview of the financial position of the scheme and its constituent funds by showing the types of assets and liabilities held by the scheme and its individual constituent funds. They also provide an itemized list of various costs which have been debited from the scheme and its constituent funds, including but not limited to fees paid to the trustee, investment manager or other service providers for the financial period. A lot of information is covered in the notes to the financial statements. For example, transactions with related parties of the trustee and the investment managers are disclosed with a statement confirming that the transactions were entered into in the ordinary course of business and on normal commercial terms.
ii.Scheme report – This provides scheme members with an overview of the financial development of an MPF scheme. For example, it includes (i) the particulars of changes made to the governing rules of the scheme; or (ii) the particulars of the appointment and termination of directors of the trustee during the financial period.
iii.Investment report of an MPF scheme and its constituent funds – This is where scheme members can learn what assets the constituent funds hold and their market value. Scheme members can review commentary made by the trustee on analysis of investments held by the MPF scheme to determine how well each constituent fund has met its goals and investment strategies during the financial period.
The net annualized investment return tells scheme members about a constituent fund’s performance trend during the past 10 financial years (i.e. whether it was relatively steady or volatile). However, scheme members should note that past performance is not necessarily an indication of future results.
iv.Auditor’s report – Scheme members can review the auditor’s opinion on whether the financial statements were properly prepared by the trustee in accordance with the relevant legislative requirements.
3
Which financial year of the MPF schemes’ annual consolidated reports are made available on the MPFA website?

The MPFA started to post the latest annual consolidated reports (for the year ended 31 December 2017 or later) of all MPF schemes from July 2018 onwards. They can be downloaded from the MPFA website (www.mpfa.org.hk/eng/public_registers/registered_schemes_cf/fulist.do). Scheme members can also obtain from their trustee the annual consolidated reports going back seven financial years preceding the date of the request.

4
Can scheme members compare the performance of constituent funds among different schemes by using the figures provided in the annual consolidated report of MPF schemes?

When scheme members compare the performance of constituent funds among different schemes using the figures provided in annual consolidated report of MPF schemes, they should note the financial periods of the MPF schemes. Different schemes may have different financial periods, which end on different dates.
To help scheme members carry out a cross comparison among the different constituent funds, the MPFA posts the performance data on the Fund Performance Platform (fpp.mpfa.org.hk/english) on the MPFA website.

5
Why can’t the investment portfolios of the constituent funds disclosed in the annual consolidated report of an MPF scheme be reconciled with those presented in the fund fact sheets?

For constituent funds investing only in underlying funds (called a fund-of-fund arrangement), their investment portfolios disclosed in the annual consolidated reports show their holdings in each underlying fund, but not the securities held by the underlying funds. According to the Code on Disclosure for MPF Investment Funds, the fund fact sheet should disclose the top 10 portfolio holdings of a constituent fund down to the securities level if it has adopted the fund-of fund arrangement.

6
What is the role of the auditor of an MPF scheme in the annual consolidated report, and what is an auditor’s report?

It is a statutory requirement for an approved trustee to appoint an independent auditor for its MPF schemes. The approved trustee of an MPF scheme must ensure that the scheme’s financial statements for a financial period are audited by the independent auditor.
The auditor provides an independent opinion on whether the financial statements give a true and fair view of the financial position of the scheme as at the financial year end date, and its financial transactions and cash flows for the financial year. In addition, the auditor is required to assess whether the financial statements have been properly prepared in all material respects.

7
How should scheme members read the auditor’s report?

Scheme members should read the auditor’s report to see if the auditor expresses any qualified opinions. If so, scheme members should read carefully why the auditor has issued the opinion.

The auditor will issue a qualified opinion if it believes that the financial statements do not give a true and fair view, or were not prepared in accordance with applicable accounting standards.

 

FAQ on Fund Fact Sheets

8
Why are only the top 10 portfolio holdings disclosed in the fund fact sheet?

The Code on Disclosure for MPF Investment Funds prescribes the minimum content of information to be disclosed in fund fact sheets, including the disclosure of the top 10 portfolio holdings of a constituent fund expressed as a percentage of a fund’s net asset value as at the reporting date of the fund fact sheet.

9
Why are the fund expense ratios of some constituent funds not provided in the respective fund fact sheets?

According to the Code on Disclosure for MPF Investment Funds, it is not necessary to show the fund expense ratio for a constituent fund if the period between the reporting date of the fund fact sheet and the inception date for the fund is less than two years.

10
Why are the fund expense ratios of different fund classes of the same constituent fund may be different?

Different fund classes of the same constituent fund may have different fee rates.

11
Why are the fund risk indicators of some constituent funds not provided in the fund fact sheets?

The fund risk indicator measures volatility of performance of a constituent fund based on its monthly rates of return over the previous three years. Constituent funds with a performance history of less than three years since inception to the reporting date of the fund fact sheet are not required to show a risk indicator.

12
When do scheme members receive the fund fact sheets?

Trustees are required by the MPF legislation to issue at least two fund fact sheets to scheme members for each financial year of a scheme. One of them must be provided within three months after the end of each financial period of the scheme. The other must be distributed within the seventh or eighth month after the end of the financial period of the scheme, by mail, or through the employer’s email, internet, fax or call centre. Scheme members may request fund fact sheets directly from the respective trustee or download them from the Fund Performance Platform (fpp.mpfa.org.hk/english) or the Public Register (www.mpfa.org.hk/eng/public_registers/registered_schemes_cf/fulist.do) on the MPFA website.

Scheme members should note that different schemes may have different financial periods, which end on different dates.

 

FAQ on Offering Documents

13
Where can scheme members find out more about the fees and charges of their MPF funds in the offering documents?

Scheme member can find out more about the fees and charges of their MPF funds as follows:

  • The fee table shows the fees and charges of all constituent funds of an MPF scheme.
  • The on-going cost illustration shows the total effect of fees, expenses and charges payable in dollar terms by converting the latest fund expense ratio figure into dollars and adding that to any direct charges that a scheme member might pay, such as a contribution charge or offer spread.
  • Illustrative examples show the annual fees charged by an MPF Conservative Fund.
14
When will the offering document of an MPF scheme be provided to scheme members?

The offering document will be distributed together with an application form (e.g. enrolment form) to prospective scheme members upon their enrolment.

15
How can scheme members get a copy of the offering document of an MPF scheme?

Scheme members can download the latest offering documents of all MPF schemes from the MPFA website (www.mpfa.org.hk/eng/public_registers/registered_schemes_cf/fulist.do) or obtain them from the respective trustees.

 

Last Revision Date: 04/07/2018