Utilizing the Disclosure Tools

These disclosure tools have been developed to help you make effective MPF investment decisions. Most of the tools have been designed to help you get a better understanding about the fees and charges that apply to a fund. It is very important that you understand these fees and charges, because they are one of the key factors that you should take into account when making investment decisions across funds or across different service providers. Please click here for more information. The new disclosure tools are summarized below:

Fee Table - There is no such thing as a free lunch, and you have to pay for services received. However, it is only fair that you are able to ascertain what charges and fees are being imposed on your MPF investments. With the provision of a fee table you can see at a glance the fees and charges that relate to your MPF investments rather than having to search through a range of different documents. As the format of the Fee Table is the same across different trustees, you can also make some basic comparisons of fees and charges across different schemes and service providers.

Fund Expense Ratio - The FER will show you, as a single percentage figure, the level of fees and charges of a fund over the last year. While the Fee Table tells you in advance what the components of fees and charges will be, the FER figure will show you what they actually were over the last year. Because it is a single figure, the FER percentage is a relatively easy way of comparing costs across funds and schemes. The cost of investing in a fund or scheme is one of the key factors that you should consider when making investment decisions.

On-going Cost Illustration - Because some people prefer to think of costs in dollar terms rather than as a percentage, the OCI helps convert the FER percentage figures into dollars. It does this by showing the dollar costs of investing $1,000 in different funds over periods of one, three and five years. The OCI, which will be updated each year, is based on the FER from the previous year, and, for the purpose of comparison only, assumes an annual rate of investment return of 5%. The OCI therefore gives you a very easy basis to compare the likely costs of different funds and different schemes. It is however important to remember that the OCI is not promising 5% investment return, nor is it suggesting that the FER figure will not change over the period. Those figures are used only so that a cost illustration can be calculated on a common set of assumptions. These common assumptions provide a solid basis for comparison across funds and service providers.

Fund Fact Sheet - The FFS can be likened to the report card of a fund. When you invest your money into a fund based on the information presented in the offering document, you may wish to receive a regular report on how the fund is doing. The FFS provides you with key summary information such as fund size, latest investment objectives and policy, portfolio mix, primary holdings, fund performance, FER, fund risk, future outlook and so on. With the FFS, you can gain a better idea of how the fund has performed.

Annual Benefit Statement (“ABS”) – ABS serves as the “report card” on the performance of scheme members’ MPF investments.  An ABS will show the income and expenditure of scheme members’ accounts (including contributions, transfers and transactions), account balance and accruals, the extent to which they are vested as well as the gains and losses associated with your accounts over the relevant financial period and since their inception.  This enables a scheme member to understand the contributions and investments made during the year and conduct reviews accordingly.  The legislation requires that trustees must issue the ABS to scheme members within 3 months after the end of each financial year of the MPF scheme.

In accordance with the “Code on Disclosure for MPF Investment Funds”, an ABS issued in respect of a financial period ending after 1 September 2009 will need to comply with the new content requirements, which require trustees to provide more detailed information on contributions, transfers and transactions as well as investment performance.  In the first year after the new content requirements become effective, trustees should provide the Long Version (showing all transaction details) of the ABS to all scheme members and inform them how they can obtain the relevant information in the future.  After that first year, trustees can elect to either provide the Long Version or a Short Version of the ABS.  Should trustees choose to provide the Short Version, they are required to make available to all members the details on each contribution, transfer and transaction of the latest six quarters through paper-based, electronic, web-based or other means.