Code on Disclosure
MPFA published the Code on Disclosure for MPF Investment Funds in June 2004 to provide guidance to approved trustees and other service providers on the disclosure of information about MPF funds. Disclosure of such information can help scheme members make informed MPF investment decisions. Approved trustees and other service providers should:
- provide clear and simple information; and
- enhance the transparency of fees and charges.
The following disclosure tools have been developed to help scheme members make informed MPF investment decisions. Most of them are designed to help scheme members understand the fees and charges that apply to MPF funds, which are the key factors in managing MPF investments and making investment decisions across funds or across different service providers.
Fee tables disclose fee information in a standardized format. They are updated when there are changes in fees, expenses and charges. Fee tables should provide the following information:
- joining fee and annual fee;
- member account level fees, expenses and charges:
a) contribution charge;
b) offer spread;
c) bid spread; and
d) withdrawal charge;
- fees, expenses and charges of constituent funds:
a) management fees;
b) guarantee charge; and
c) other expenses (audit and professional fees, compensation fund levy, indemnity insurance, etc.);
- fees, expenses and charges of underlying funds (applicable to funds invested through other underlying funds, rather than directly in investments like equities and bonds); and
- fees, expenses and charges payable for providing additional services e.g. an additional copy of annual benefit statement or other documents.
The fee table is provided along with any application form (e.g. enrolment form) or upon request.
Funds with less than two years of history need not provide an FER. The FER percentage is a relatively easy way of comparing costs across MPF funds and schemes as it is expressed as a single figure.
FFSs summarize the key information of MPF funds, including their particulars and performance of the funds.
At least two FFSs will be issued by trustees to scheme members for each financial period: one reporting as at the end of the financial period and the other as at a date six months after the end of that financial period. The former is provided along with annual benefit statement (i.e. within three months after the end of the financial period of the scheme) and the latter distributed within two months from a date, which is six months after the end of the financial period of the scheme.
An FFS provides the following information:
- fund size – the net asset value of the fund as at the reporting date of FFS
- launch date – the date on which the fund was launched
- investment objectives of each fund offered in the scheme – a brief description of the investment objectives of the fund, such as whether it is intended to achieve high/medium/stable capital growth or to preserve capital
- asset allocation – the allocation of the fund’s assets as at the reporting date of FFS, normally by the types of investments and by their geographical location
- top 10 portfolio holdings – the 10 largest security holdings of the fund as a percentage of the fund’s net asset value as at the reporting date of FFS
- fund performance information – the periodic rate of return of the fund over periods of one, five and 10 years, and since its launch
- performance measurement against any benchmark used – a comparison of the fund’s performance against the benchmark (if any) stated in the MPF Scheme Brochure (also known as “offering document”)
- performance measurement against recognized reference portfolio – for each of the DIS funds, a comparison of the performance of the fund against the relevant recognized reference portfolio over periods of one, five, 10 years and since launch as a fund of DIS, and a brief description of the reason for any material difference between the return of the fund and the relevant recognized reference portfolio over any of those periods
- latest FER - a ratio that measures fund expenses as a percentage of the fund size
- fund risk indicator - a general indication of the risk level of the fund; in general, the higher the fund risk indicator, the higher the risk level of the fund
- risk class – for each fund, the risk class of the fund as at the reporting date and a brief description of the classification methodology
- fund descriptor – a description of the fund type to facilitate comparison with similar funds; it displays the characteristics of the fund’s underlying investments (such as asset types and geographic regions) with reference to the fund’s investment objectives and policy
- commentary – a general discussion of the fund performance, market review and outlook
ABS is a record of the scheme member's account at a point in time. It confirms scheme membership and membership details, the status and the number of accounts held by the member. It also allows scheme members to easily check the income and expenditure of their accounts (including contributions, transfers and transactions), account balance and MPF assets, the extent to which they are vested, and the gains and losses associated with their accounts over the relevant financial period.
ABSs provide three types of information.
Part 1 – Summary Information
- personal information – name of the member, name of the trustee and the scheme, and the member account number
- summary of account movements for the financial period – contributions, transfers, and the gain or loss of the account made during the financial period
- pie chart showing the fund allocation of the closing balance
- gain or loss in the account since inception – gain or loss in the account from MPF investments since joining the scheme
- account balances by source of contributions and account type – a breakdown of the mandatory and voluntary contribution balances in the contribution and personal accounts, the balance of tax deductible voluntary contributions in the TVC account, and the balance of vested MPF by source of contributions
- total contributions made and fees charged – the total amount of the contributions made to the account in the financial period, and the total amount of the fees deducted from contributions (contribution charge, offer spread, etc.)
- transfers made and fees deducted – transfers in or out of the scheme in the financial period (the amount transferred, the date of transfer, etc.) and the fees deducted for transfers (e.g. bid and offer spread applicable to each transaction)
- total fees charged to account – the total amount of the fees charged to the account in the financial period in respect of transactions related to contributions, transfers, withdrawals or redemptions (e.g. member account level fees and charges such as contribution charge, offer spread, bid spread and withdrawal charge)
- periods with outstanding contributions and/or surcharges
Part 2 – Contribution Statement
- details of each contribution made in the financial period, including the date of the contribution (e.g. dates of the monthly contribution), breakdown of mandatory and voluntary contributions by employer and employee, tax-deductible voluntary contributions, and any fees deducted from the contributions (e.g. contribution charge).
Part 3 – Fund Transaction Statement
- details of each fund transaction made in the financial period, including all the fund transactions in the account (e.g. contributions, fund switching and transfers) in respect of each of the funds invested (e.g. bond fund, mixed assets fund or equity fund); and the date of the contribution, transfer or fund switching, the amount transacted, the fund price for the transaction, the number of units invested, switched or transferred, and the fee deducted.
Trustees are required to provide scheme members with ABS within three months after the end of the financial period of the scheme.