independent professional advice. - aia …aug 09).pdfindependent professional advice. ... for the...

MPF

MPF

IMPORTANT: IF YOU ARE IN ANY DOUBTABOUT THE MEANING OR EFFECT OF THISPRINCIPAL BROCHURE, YOU SHOULD SEEKINDEPENDENT PROFESSIONAL ADVICE.

Please note that investment income and prices may go down as well as up. Therecan be no safeguards against investment losses. Scheme participants must thereforeensure they choose the appropriate funds to meet their risk tolerance.

[Note: References in brackets are to paragraphs of the SFC Code on MPF Products]

[5.22]

Any information or representation given or made by any dealer, salesman or other person not containedin this Principal Brochure or in the report and/or financial statements forming part of this Principal Brochuremust be regarded as unauthorised and accordingly must not be relied upon.

Neither the delivery of this Principal Brochure nor the offer or issue of units in any product described inthis Principal Brochure shall under any circumstances constitute a representation that the informationcontained in this Principal Brochure is correct as of any time subsequent to the date of this PrincipalBrochure. To reflect material changes, this Principal Brochure may from time to time be updated andintending subscribers should enquire of American International Assurance Company (Trustee)Limited as to the issue of any later Principal Brochure.

American International Assurance Company (Trustee) Limited accepts responsibility forthe information contained in this Principal Brochure being accurate as at the date of this Principal Brochure.

August 2008

[5.33] [5.34]

1

MPF

MPF

2

GLOSSARY“Associate” has the meaning in section 2(1) of the MPF Ordinance.

“Business Day” means any day (other than a Saturday) on which banks in Hong Kong are openfor normal banking business provided that where, as a result of a typhoon signal number 8 (or above)or a black rainstorm warning or other similar event, the period during which banks in Hong Kong areopen for normal banking business on any day is reduced, any such day shall not be a “Business Day”unless the Trustee and the Sponsor otherwise determine.

“Constituent Fund” means an investment fund contained within the trust constituting the Scheme.

“Contribution Period”, for the purposes of paragraph D1 of this Principal Brochure, means thesame as "contribution period" in section 7A(10) of the MPF Ordinance.

“Deferred Member” means, for the purpose of this Principal Brochure, a Member who is not anEmployee Member, an External Relevant Employee Member or a Self-employed Member. AnEmployee Member or any person may become a Deferred Member under any of the followingcircumstances:

(i) where an Employee Member becomes entitled to the Voluntary Benefits but does not becomeimmediately entitled to the MPF Benefits,

(ii) where any person makes a transfer to the Scheme in accordance with the rules governing theparticipation in the Scheme but that person is not an employee of a Participating Employer or aself-employed person,

(iii) where any Employee Member, on his Participating Employer's ceasing its participation in theScheme, has any part of his benefits (whether deriving from his Member's Voluntary Account,Employer's Voluntary Account or MPF Account) retained in the Scheme.

“Employee Member” means any employee of a Participating Employer who has made anapplication to become a Member of the Scheme and who has been admitted as a Member.

“Employer's Voluntary Account” means that notional account maintained in respect of thatMember into which voluntary contributions by the Participating Employer, and amounts transferredfrom another retirement benefits scheme (other than amounts in respect of mandatory contributionsunder the MPF Ordinance, amounts transferred from that retirement benefits scheme to the Member'sVoluntary Account, amounts the Participating Employer contributes to the Scheme that are treatedas mandatory contributions under section 2(3) of the MPF Ordinance, any contribution surchargepaid in respect of the Member in accordance with the MPF Ordinance, any amounts equal to thatMember's Minimum MPF Benefits and any income or profits arising from any investments of thecontributions, surcharges and benefits mentioned above but taking into account any losses in respectthereof), are credited in accordance with the terms of the Master Trust Deed.

“External Relevant Employee Member” means any employee who is not a Deferred Memberand who has made an application to become a Member of the Scheme and has been admitted as aMember notwithstanding that his employer does not participate in the Scheme.

“General Regulation” means the Mandatory Provident Fund Schemes (General) Regulation.

“Investment Manager” means in respect of any matter or Constituent Fund, the relevantinvestment manager or investment managers appointed pursuant to the terms and conditions of theMaster Trust Deed and its or their investment agreement, with responsibility for that matter or thatConstituent Fund.

“LifeEasy” means the automatic asset rebalancing service as described in Section D of this PrincipalBrochure.

“Master Trust Deed” means the Master Trust Deed dated 31 January 2000 which establishedthe AIA-JF Mandatory Provident Fund Scheme.

“Member” means a person who has been admitted to membership of the Scheme and who has notceased to be a Member. For the avoidance of doubt, "Member" includes an "Employee Member","Deferred Member", "External Relevant Employee Member" and "Self-employed Member".

“Member's Voluntary Account” means that notional account maintained in respect of thatMember into which voluntary contributions by that Member, voluntary contributions by an employerin respect of that Employee Member who has then become a Deferred Member and has elected to

3

TABLE OF CONTENTSPage

Glossary 3

A. Introduction 51. What is the Mandatory Provident Fund ("MPF")?2. The AIA-JF MANDATORY PROVIDENT FUND SCHEME ("Scheme")3. Constituent Funds4. Investment objectives and policies5. Investment and borrowing restrictions

B. Service Providers 8

C. Application, Withdrawal and Transfer 101. Application for participating in the Scheme2. Withdrawal from participation in the Scheme3. Transfers from the Scheme4. Transfers to the Scheme

D. Contributions, Switching and Payment of Benefits 121. Contributions2 Switching between Constituent Funds3. Payment of benefits4. Deferral and suspension of dealing5. Valuation of funds and benefits6. LifeEasy

E. Fees and Expenses 20A. Joining fee & annual feeB. Fees and charges payable arising from transactions in individual Member’s AccountC. Fund operating charges & expenses of Constituent FundsD. Fees and charges payable out of the underlying fundsE. Other fees and charges for providing additional services

- Definitions- Explanatory notes- Additional notes- Annex: other fees and charges for providing additional services

F. General Information 311. MPF hotline and other assistance2. Taxation3. Reports and accounts4. Constitutive documents5. Scheme termination, restructure and cancellation of registration6. Personal Data (Privacy) Ordinance

Schedules 32Schedule 1 - Guaranteed PortfolioSchedule 2 - Capital Preservation PortfolioSchedule 3 - Global Bond FundSchedule 4 - Conservative PortfolioSchedule 5 - Balanced PortfolioSchedule 6 - Growth PortfolioSchedule 7 - Manager’s Choice FundSchedule 8 - World Equity FundSchedule 9 - North American Equity FundSchedule 10 - Japan Equity FundSchedule 11 - European Equity FundSchedule 12 - Hong Kong Equity FundSchedule 13 - Asian Equity FundSchedule 14 - Greater China Equity FundSchedule 15 - RCM Capital Stable FundSchedule 16 - RCM Stable Growth FundSchedule 17 - RCM Growth FundSchedule 18 - Green Fund

MPF

MPF

retain his benefits payable under the Scheme in his Member's Voluntary Account, amounts transferredfrom another retirement benefits scheme and amounts transferred from an Employer's VoluntaryAccount (other than amounts in respect of mandatory contributions under the MPF Ordinance, amountsthe Participating Employer contributes to the Scheme that are treated as mandatory contributionsunder section 2(3) of the MPF Ordinance, any contribution surcharge paid in respect of the Memberin accordance with the MPF Ordinance, any amount equal to that Member's Minimum MPF Benefitsand any income or profits arising from any investments of the contributions, surcharges and benefitsmentioned above but taking into account any losses in respect thereof), are credited in accordancewith the terms of the Master Trust Deed.

“Minimum MPF Benefits” in respect of a Member (who is not an External Relevant EmployeeMember), has the same meaning as in Schedule 2 to the Mandatory Provident Fund Schemes(Exemption) Regulation.

“MPF” has the meaning given to it in paragraph A1 of this Principal Brochure.

“MPF Account” means, in respect of a Member (who is not an External Relevant EmployeeMember), that account maintained into which mandatory contributions under the MPF Ordinance(including any amounts that are treated as mandatory contributions under section 2(3) of the MPFOrdinance, any contribution surcharge in respect of mandatory contributions in accordance with theMPF Ordinance, any amount equal to that Member's Minimum MPF Benefits and any income orprofits arising from any investments of the contributions, surcharges and benefits mentioned abovebut taking into account any losses in respect thereof) are credited in accordance with the terms of theMaster Trust Deed.

“MPF Balance” means, in respect of a Member (other than an External Relevant EmployeeMember), and at any date, the value of any amounts credited to the appropriate Member's MPFAccount in accordance with the terms of the Master Trust Deed.

“MPF Benefits” means benefits, in respect of a Member (other than an External Relevant EmployeeMember), derived from mandatory contributions credited to the MPF Account and payable inaccordance with the terms of the Master Trust Deed.

“MPF Legislation” means the MPF Ordinance and the General Regulation.

“MPF Ordinance” means the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of thelaws of Hong Kong).

“MPFA” means the Mandatory Provident Fund Schemes Authority established under the MPFOrdinance.

“ORSO” means the Occupational Retirement Schemes Ordinance (Cap. 426 of the laws of HongKong).

“Participating Employer” means any employer admitted to participate in the Scheme inaccordance with the terms of the Master Trust Deed.

“Permitted Period”, for the purposes of paragraph D1 of this Principal Brochure, means thesame as "permitted period" in section 7(3)(a) of the MPF Ordinance.

“Registered Scheme” means a retirement benefits scheme registered under section 21 or 21Aof the MPF Ordinance.

“Relevant Income” has the meaning in section 2(1) of the MPF Ordinance.

“Relevant Time”, for the purpose of paragraph D1 of this Principal Brochure, has the same meaningas the term "relevant time" in section 7(3) of the MPF Ordinance.

“Reserve Account” means that notional account maintained in respect of that ParticipatingEmployer into which undisposed employer's voluntary balances together with such other amounts asthe Master Trust Deed may provide are credited in accordance with the terms of the Master TrustDeed.

“Scheme” means the AIA-JF MANDATORY PROVIDENT FUND SCHEME.

“Scheme Year” means the period from the commencement of the Scheme to 30 November 2000,and each period of 12 months thereafter ending on 30 November, unless changed in accordancewith the terms of the Master Trust Deed.

4

“Self-employed Member” means a self-employed person who has been admitted to participatein the Scheme as a Member in accordance with the terms of the Master Trust Deed.

“SFC” means the Securities & Futures Commission of Hong Kong.

“Sponsor” means American International Assurance Company, Limited.

“Valuation Date” means, in respect of each Constituent Fund, each Business Day or such otherday or days as the Trustee, with the approval of the SFC, may from time to time determine to be aValuation Date either generally or in respect of a particular Constituent Fund, in accordance with theterms of the Master Trust Deed.

“Voluntary Balance” means, in respect of a Member, and at any date, the value of the Member'svoluntary contributions, and of that portion of his employer's voluntary balance, as determined inaccordance with terms of the Master Trust Deed.

“Voluntary Benefits” means benefits, in respect of a Member, derived from voluntary contributionsof the Member and his employer and payable in accordance with the terms of the Master Trust Deed.

“Wage Period”, in relation to an employee and his employer, means the period for which theemployee is paid, or should be paid, Relevant Income by the employer.

A. INTRODUCTION1. What is the Mandatory Provident Fund ("MPF")?

The government objective in establishing the MPF is to help workers accumulate financial benefitsfor retirement. Under the MPF, every employer must ensure that their employees participate in aprovident fund scheme, into which both the employee and employer contribute. Under the MPFlegislation, these provident fund schemes must include certain features, which are detailed in thissection.

All employees between the age of 18 and under 65 who have been working for 60 days or more foran employer must be covered by the MPF. All self-employed people between the age of 18 andunder 65 must also contribute to an MPF scheme. There are, however, a few exceptions:

• employees covered under government pension arrangements,• domestic helpers,• employees temporarily entering Hong Kong on a 13-month contract or shorter, or covered by a

home country scheme,• hawkers, and• members of an MPF exempt ORSO registered or ORSO exempted scheme.

2. The AIA-JF MANDATORY PROVIDENT FUND SCHEME ("Scheme")The Scheme is constituted by means of a Master Trust Deed dated 31 January 2000 made betweenAmerican International Assurance Company (Trustee) Limited, AIG Global InvestmentCorporation (Hong Kong) Limited, JF Asset Management Limited, and AmericanInternational Assurance Company, Limited and is governed by the laws of Hong Kong.

The trust constituted by the Master Trust Deed will continue in perpetuity until terminated in accordancewith the provisions of the Master Trust Deed.

[5.2] [5.25]

The Scheme is registered as a master trust scheme under the MPF Ordinance and has been authorisedby the SFC. However, such registration or authorisation does not imply official approval orrecommendation by either the MPFA or the SFC.

[5.2] [5.35] [5.36]

Whilst the Scheme has been designed to ensure that Participating Employers can comply with therequirements of the MPF Ordinance in respect of those employees covered by the mandatoryprovisions of the MPF, it is also possible for employees aged between 18 and 65 (even though their

5

MPF

MPF

6 7

employers do not participate in the Scheme), self-employed persons and non-employed persons tojoin the Scheme.

If an Employee Member changes employment, he can leave the whole or any part of his accruedbenefits in the Scheme and become a Deferred Member.

3. Constituent Funds

Members will have a choice of 18 Constituent Funds in which to invest contributions paid by and inrespect of them. Contributions may be allocated to one or more of the Constituent Funds in accordancewith the Member's instructions on a membership application form that has been signed and returnedto the Trustee.

If the indicated investment selections on the membership application form or on such other form asthe Trustee may prescribe in respect of any contributions add up to more than 100%, or if anyinvestment selection on the form is not a multiple of 5% or if no investment selection has been made,then the Trustee may determine that 100% of contributions in respect of that Member will be investedin the Guaranteed Portfolio, or such other Constituent Fund as the Trustee may determine from timeto time. If the indicated investment selections on the membership application form or on such otherform as the Trustee may prescribe in respect of any contributions are in multiples of 5% but do notadd up to 100%, then the part of the contributions in respect of that Member for which an investmentselection has not been made will be invested in the Guaranteed Portfolio, or such other ConstituentFund as the Trustee may determine from time to time.

Confirmation of the investment allocations made by the Member (or determined by the Trustee asabove) will be provided to the Member.

During the first 3 months after a Member's first contribution to the Scheme, a Member will be permittedto make one switch out of an investment in a Constituent Fund and this switch will not be countedtowards any limit on the number of switches or restrictions on the method of providing instructionscontained in section D2 of this Principal Brochure.

Any balances credited to the Participating Employer's Reserve Account will be invested in theGuaranteed Portfolio, unless the Participating Employer and the Trustee agree otherwise.

Separate and distinct investment policies will be applied by the relevant Investment Managers (ifapplicable) in managing the investments of each Constituent Fund and those investment policies willreflect the investment risk relevant to each Constituent Fund. The Constituent Funds are:

Name of Type of Fund Structure of Fund Investment MixConstituent Fund

Guaranteed Portfolio Guaranteed Fund Feeder fund Deposits and bonds, withsmall amount in equities

Capital Preservation Money Market Feeder fund Deposits and debt securitiesPortfolio Fund - Hong Kong

Global Bond Fund Bond Fund Feeder fund Mainly debt securities- Global

Conservative Portfolio Mixed Assets Fund Portfolio Mainly bonds and cash,- Global - Maximum management fund with balance in equitiesequity around 30%

Balanced Portfolio Mixed Assets Fund Portfolio Even split between equities- Global - Maximum management fund and cash/bondsequity around 50%

Growth Portfolio Mixed Assets Fund Portfolio Mainly equities with balance- Global - Maximum management fund in bonds and cashequity around 90%

Name of Type of Fund Structure of Fund Investment MixConstituent Fund

Manager’s Choice Mixed Assets Fund - Portfolio management A dynamic combination ofFund Global - Maximum fund equities, bonds, money

equity around 90% market instruments and cash

World Equity Fund Equity Fund - Portfolio management Mainly invest in approved IndexGlobal fund Tracking Collective Investment

Schemes (“ITCISs”) that trackequity market indices aroundthe world with balance ofassets in derivativesinstruments for hedgingpurpose

North American Equity Fund - Feeder fund Mainly equities with balanceEquity Fund North America in bonds and cash

Japan Equity Fund - Feeder fund Mainly equities with balanceEquity Fund Japan in bonds and cash

European Equity Fund - Feeder fund Mainly equities with balanceEquity Fund Europe in bonds and cash

Hong Kong Equity Fund - Feeder fund Mainly equities with balanceEquity Fund Hong Kong in bonds and cash

Asian Equity Fund - Feeder fund Mainly equities with balanceEquity Fund Asia in bonds and cash

Greater China Equity Fund - Feeder fund Mainly equities with balanceEquity Fund Greater China in bonds and cash

Region

RCM Capital Mixed Assets Fund Feeder fund Mainly fixed interest securitiesStable Fund - Global - Maximum with balance in equities

equity around 30%

RCM Stable Mixed Assets Fund Feeder fund Even split between equitiesGrowth Fund - Global - Maximum and fixed interest securities

equity around 50%

RCM Growth Fund Mixed Assets Fund Feeder fund Mainly equities, with small- Global - Maximum amount in fixed interestequity around 90% securities and cash

Green Fund Equity Fund - Feeder fund Most of the assets investedGlobal in equity securities and may

invest in exchange tradedfunds, convertible bonds andother bonds or collectiveinvestment schemes

In general terms, equities have a higher risk profile than bonds whilst cash is considered to have thelowest risk profile. However, investors should always consider their own risk/reward profile beforemaking an investment choice.

Each of the Constituent Funds, other than the Guaranteed Portfolio, is unitised. The value of units ineach fund, other than the Guaranteed Portfolio, will be published on a daily basis in the South ChinaMorning Post, the Hong Kong Economic Times, and the Hong Kong Economic Journal, or may beobtained by ringing the Trustee on 2100-1888.

MPF

MPF

Dealing is permitted on any Valuation Date.

Each of the Constituent Funds is denominated in Hong Kong dollars.

Interest on any amount in transit pending investment or transfer to a Constituent Fund or the Scheme,or pending payment or transfer from a Constituent Fund or the Scheme will be applied for the benefitof the Members either for the payment of any administrative expenses of the Scheme or as incomeof the Scheme.

4. Investment objectives and policies

The Statement of Investment Policy of each Constituent Fund is set out in the Schedules to thisPrincipal Brochure. Members and Participating Employers in the Scheme will be notified of any changesto any Statement of Investment Policy.

[5.5] [5.37]

5. Investment and borrowing restrictions

Each Constituent Fund will be operated as a feeder fund or as a portfolio management fund investingprimarily in one or more collective investment schemes authorised by the SFC and approved by theMPFA under section 6 of the General Regulation. Each underlying collective investment scheme isrequired to comply with the investment and borrowing restrictions in Schedule 1 of the GeneralRegulation.

The Capital Preservation Portfolio is required to comply with the investment restrictions in section 37of the General Regulation.

[5.6]

The portfolio of any Constituent Fund may from time to time include cash and/or short-term bankdeposits and a significant portion of the assets of any Constituent Fund may be so held if the relevantInvestment Manager considers that market conditions make that prudent.

Further details are contained in the Schedules to this Principal Brochure.

[5.5] [5.23] [5.24]

B. SERVICE PROVIDERSTrustee

American International Assurance Company (Trustee) Limited15/F, 1 Stubbs Road, AIA Building, Wanchai, Hong Kong

Administrator

AIA Pension and Trustee Co. Ltd.Vanterpool Plaza, 2nd Floor,Wickhams Cay I, P.O. Box 873, Road Town,Tortola, British Virgin Islands

Hong Kong Administration Office:5th Floor, Cornwall House,Taikoo Place,979 King's Road,Quarry Bay, Hong Kong

Custodian

HSBC Provident Fund Trustee (Hong Kong) Limited1 Queen's Road Central, Hong Kong

8

Investment Managers

AIG Global Investment Corporation (Hong Kong) Limited16th Floor, AIG Tower, 1 Connaught Road Central, Hong Kong

AIG Global Investment Corporation (Hong Kong) Limited is Investment Manager for the GuaranteedPortfolio, the Capital Preservation Portfolio, the Conservative Portfolio, the Balanced Portfolio, theGrowth Portfolio, the North American Equity Fund, the Hong Kong Equity Fund, the Greater ChinaEquity Fund, the Global Bond Fund, the World Equity Fund and the Manager’s Choice Fund.

JF Asset Management Limited21st Floor, Chater House, 8 Connaught Road Central, Hong Kong

JF Asset Management Limited is Investment Manager for the Conservative Portfolio, the BalancedPortfolio, the Growth Portfolio, the Japan Equity Fund, the European Equity Fund and the AsianEquity Fund.

RCM Asia Pacific Limited21st Floor, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong

RCM Asia Pacific Limited is Investment Manager for the RCM Capital Stable Fund, the RCM StableGrowth Fund and the RCM Growth Fund.

Credit Agricole Asset Management Hong Kong Limited901-907, One Pacific Place, No. 88 Queensway, Hong Kong

Credit Agricole Asset Management Hong Kong Limited is Investment Manager for the Green Fund.

The Delegate of the Investment ManagerAIG Global Investment Corporation (Hong Kong) Limited has delegated its investment functions ofthe Guaranteed Portfolio, the Capital Preservation Portfolio, the Conservative Portfolio, the BalancedPortfolio, the Growth Portfolio, the North American Equity Fund, the Hong Kong Equity Fund, theGreater China Equity Fund, the Global Bond Fund and the World Equity Fund to AIG Global InvestmentCorporation (Asia) Limited and its investment functions of the Manager’s Choice Fund to AIG GlobalInvestment Corp.

Legal Adviser

JSM16-19th Floor, Prince's Building,10 Chater Road, Central,Hong Kong

Insurer (for the underlying fund in which the Guaranteed Portfolio invest only)

American International Assurance Company, LimitedAIA Building,1 Stubbs Road,Wanchai,Hong Kong

Auditor

PricewaterhouseCoopers22nd Floor, Prince’s Building,Central,Hong Kong

[5.3]

9

MPF

MPF

C. APPLICATION, WITHDRAWAL AND TRANSFER

1. Application for participating in the Scheme

Membership of the Scheme is open to the following persons:

• any employees (regardless of whether their employers are Participating Employers),

• self-employed persons, and

• persons applying to become Deferred Members.

Employers who wish to enrol their employees in the Scheme should apply to become a ParticipatingEmployer.

To apply for membership in or to become a Participating Employer of the Scheme, please submit acompleted application form (enclosed with this brochure), together with the relevant documents statedin the application form, to:

American International Assurance Company (Trustee) Limitedc/o AIA Pension and Trustee Co. Ltd.

5/F Cornwall House, Taikoo Place, 979 King's Road,Quarry Bay, Hong Kong

Additional copies of this brochure and application form may be obtained from the above address.

[5.12]

2. Withdrawal from participation in the Scheme

A Participating Employer, an External Relevant Employee Member or a Self-employed Member willcease to participate in the Scheme upon:

• the Participating Employer, External Relevant Employee Member or Self-employed Member givingnotice in writing to the Trustee terminating its liability to contribute to the Scheme,

• with the written consent of the Participating Employer, External Relevant Employee Member orSelf-employed Member, the Trustee giving 3 months' notice in writing to the Participating Employer,External Relevant Employee Member or Self-employed Member terminating its participation in theScheme, or

• the Trustee, and the Participating Employer, External Relevant Employee Member or Self-employedMember agreeing in writing that the participation of the Participating Employer, External RelevantEmployee Member or Self-employed Member in the Scheme is to end on a particular date.

Upon such event occurring:

• the Participating Employer, External Relevant Employee Member or Self-employed Member willcease to participate in the Scheme as from such date (the "Cessation Date") as the Trustee maydecide,

• the Trustee will notify the MPFA of the cessation of participation of the Participating Employer,External Relevant Employee Member or Self-employed Member,

• Employee Members employed by the Participating Employer, the relevant Self-employed Member,or External Relevant Employee Member will cease to be Members of the Scheme,

• the MPF Benefits will be transferred to a Registered Scheme nominated by the ParticipatingEmployer or Self-employed Member; or failing such nomination, retained in the Scheme and eachEmployee Member or the Self-employed Member will become a Deferred Member on the CessationDate, and

• the Voluntary Benefits will, in part or in whole, where applicable be transferred to another RegisteredScheme, or paid to the relevant Member, or retained in the Scheme for the relevant Member.

10

It is expected that the transfer or payment of MPF Benefits and Voluntary Benefits will normally becompleted within 10 Business Days but in any event not exceeding 30 days from the occurrence ofthe event.

In addition, in respect of a Deferred Member who elects to make voluntary contributions to the Schemein accordance with the governing rules of the Scheme, the Deferred Member may cease to makecontributions to the Scheme at such time and in such manner as the Deferred Member may agreewith the Trustee and the Sponsor.

3. Transfers from the Scheme

Transfer of MPF Balance on cessation of employment

An Employee Member who becomes a Deferred Member may on cessation of employment with hisParticipating Employer elect to have his MPF Balance:

• retained in the Scheme, or

• transferred to an account in another master trust scheme nominated by the employee, or

• transferred to an existing account of the employee in an industry scheme.

Subject to that Deferred Member's election being in accordance with the provisions of section 146 ofthe General Regulation, the Trustee must comply with the election in accordance with section 146 ofthe General Regulation.

Transfer of MPF Balance of Self-employed Members

A Self-employed Member may, at any time, elect to have his MPF Balance transferred to:

• an existing account of the Self-employed Member in an industry scheme (as defined in the MPFOrdinance), or

• an account in an industry scheme which that Self-employed Member is eligible to join (as definedin the MPF Ordinance), or

• an account in another master trust scheme (as defined in the MPF Ordinance).

Subject to that Member election being in accordance with the provisions of section 148 of the GeneralRegulation, the Trustee must comply with the election in accordance with section 148 of the GeneralRegulation.

Transfer of MPF Balance of Deferred Members

A Deferred Member may elect to have his MPF Balance transferred to any other Registered Schemeto which that Deferred Member is eligible to belong in accordance with section 149 of the GeneralRegulation and the Trustee must comply with such election.

Transfer of Voluntary Balance

For the avoidance of doubt, this section does not apply to voluntary contributions paid by a Memberwhich are not related to that Member's employment or self-employment.

Any Employee Member who ceases to be in employment with his Participating Employer may requestthe Trustee to transfer a sum representing the whole or any part of his Voluntary Balance:

• to a separate Deferred Member account within the Scheme, or

• to the relevant Member.

Any Self-employed Member may upon cessation of his self-employment request the Trustee to transfera sum representing the whole or any part of his Voluntary Balance:

• to a separate Deferred Member account within the Scheme, or

• to the relevant Member.

The Trustee may with the consent of the Sponsor in accordance with the terms of the Master TrustDeed, and on receipt of such information as it may reasonably require, comply with such request.

11

MPF

MPF

Time limits for completing transfer requests

It is expected that the transfer of MPF Balances and Voluntary Balances will normally be completedwithin 10 Business Days but in any event not exceeding 30 days from the earlier of the date of receiptof a completed transfer request form, or the date that the Member who has ceased to be employedby the Participating Employer is deemed to have made a transfer election.

However if contributions are outstanding on receipt of a proper transfer request the transfer will notproceed until all of the outstanding contributions and contribution surcharges have been paid or theMPFA has given its written consent to proceed with the transfer. Once either of the aforementionedconditions have been met it is expected that the transfer of MPF Balances and Voluntary Balanceswill normally be completed within 10 Business Days but in any event not exceeding 30 days.

Minimum residual balance for partial transfers of a Member's Voluntary Balance

The Trustee, with the consent of the Sponsor, may refuse to comply with a request for a partialtransfer of a Member's Voluntary Balance if the value of the Member's Voluntary Balance remainingin the Scheme after such transfer will be less than HK$5,000, or such other amount as the Trusteemay specify to the Member.

[5.12] [5.16] [5.17(a)]

4. Transfers to the Scheme

The Trustee may allow transfers into the Scheme from other retirement benefit schemes, providedsuch transfers are made in accordance with and permitted under the MPF Legislation. Normallysuch transfers will be the result of:

• a Participating Employer requesting the Trustee to accept sums in respect of an Employee Memberor Deferred Member, who is an employee of that Participating Employer, from another retirementbenefits scheme, or

• an Employee Member, a Self-employed Member, an External Relevant Employee Member or aDeferred Member requesting the Trustee to accept a sum to be paid to the Scheme from anotherretirement benefits scheme.

D. CONTRIBUTIONS, SWITCHINGAND PAYMENT OF BENEFITS

1. Contributions

Contributions to the Scheme must be paid only to the Trustee in accordance with the provisions ofthe General Regulation. The General Regulation requires any mandatory contributions to be paidwithin 10 days after the last day of the calendar month within which the relevant Contribution Periodends, or the month during which the Permitted Period ends, whichever is the later.

Self-employed Members can elect to contribute either monthly or on an annual basis. In either case,a Self-employed Member must pay mandatory contributions by the end of the Scheme Year or eachmonthly period in question (as appropriate). Contributions should only be paid in Hong Kong dollarsor such other currencies on such terms as the Trustee may, subject to the MPF Legislation, from timeto time determine.

The calculation of the amount of any voluntary contributions paid by a Member or an employer for orin respect of an Employee Member will be the responsibility of the Member or the employer. Neitherthe Trustee nor the Sponsor will be liable for checking or validating the manner of calculation of suchvoluntary contributions.

Each Member will, prior to making their first contribution to the Scheme, be given the opportunity todirect how their contributions are to be invested between each of the Constituent Funds, by signingand returning to the Trustee a membership application form.

12

If the indicated investment selections on the membership application form or on such other form asthe Trustee may prescribe in respect of any contributions add up to more than 100%, or if anyinvestment selection on the form is not a multiple of 5% or if no investment selection has been made,then the Trustee may determine that 100% of contributions in respect of that Member will be investedin the Guaranteed Portfolio, or such other Constituent Fund as the Trustee may determine from timeto time. If the indicated investment selections on the membership application form or on such otherform as the Trustee may prescribe in respect of any contributions are in multiples of 5% but do notadd up to 100%, then the part of the contributions in respect of that Member for which an investmentselection has not been made will be invested in the Guaranteed Portfolio, or such other ConstituentFund as the Trustee may determine from time to time.

Confirmation of the investment allocations made by the Member (or determined by the Trustee asabove) will be provided to the Member.

During the first 3 months after a Member's first contribution to the Scheme, a Member will be permittedto make one switch out of an investment in a Constituent Fund and this switch will not be countedtowards any limit on the number of switches or restrictions on the method of providing instructionscontained in section D2 of this Principal Brochure.

Treatment of excess payment by the employer

(1) Any contributions paid to the Scheme prior to the date when they become payable under theMPF Legislation ("advance contributions") will be invested in accordance with the appropriateemployee's investment selection or be treated in such manner as the Sponsor may from time totime determine.

(2) Any part of any advance contributions which it subsequently transpires are in excess of theamount required to be paid by the Participating Employer to the Scheme under the MPF Legislationshall be transferred to the Reserve Account of the appropriate Participating Employer and dealtwith in accordance with the provisions of the Master Trust Deed.

(3) The Participating Employer shall be responsible for repaying to the appropriate employee theamount of any contributions mistakenly deducted from the employee's salary. Neither the Sponsornor the Trustee shall be liable for any reduction in the value of the contributions mistakenly paidto the Scheme as the result of investment performance.

Mandatory contributions

Each Participating Employer must, in respect of each Employee Member, make a minimum contributionto the Scheme of 5% of each such Member's Relevant Income (up to a maximum of HK$20,000 permonth) in accordance with the MPF Ordinance.

Each Employee Member must pay an equivalent amount if he earns at least HK$5,000 or more permonth up to the maximum of HK$20,000.

A Self-employed Member must contribute to the Scheme if he earns at least HK$60,000 per annumsubject to a maximum of HK$240,000 per annum. Where less than the maximum mandatorycontributions are paid, the Self-employed Member must at least 30 days prior to the end of eachScheme Year, submit to the Trustee details of his/her income for the next Scheme Year.

No mandatory contributions need be made by either a Participating Employer or an Employee Memberuntil the Employee Member has been employed by the Participating Employer for at least 60 days.

In respect of mandatory contributions by an Employee Member:

(i) no mandatory contributions need to be made by an Employee Member in respect of anyContribution Period in respect of which the Relevant Income of an Employee Member is lessthan the minimum level set out in Schedule 2 to the MPF Ordinance,

(ii) in respect of an Employee Member (not being a casual employee) whose Wage Period is notmore than 1 month, no contribution can be deducted for the purpose of making the EmployeeMember's mandatory contribution in respect of the Employee Member's Relevant Income earnedfor any Wage Period that commences on or before the 30th day of employment after the RelevantTime, and

13

MPF

MPF(iii) in respect of an Employee Member (not being a casual employee) whose Wage Period is more

than 1 month, no contribution can be deducted for the purpose of making the employee'smandatory contribution in respect of the Employee Member's Relevant Income earned for theperiod commencing from the Relevant Time and ending on the last day of the calendar monthin which the 30th day of employment after the Relevant Time falls.

Voluntary contributions

Members can choose to make additional regular monthly contributions on Relevant Income in excessof HK$20,000 (or less than HK$5,000) or contribute at a rate higher than the 5% minimum. Further,each Member may pay voluntary contributions of any amount at such time and in such manner as theTrustee and the Member may agree from time to time. In addition Members who are not obliged tomake mandatory contributions may nonetheless pay voluntary contributions to the Scheme. For theavoidance of doubt, subject to the MPF Legislation, the word "Member" in this paragraph and in anyother provisions of this Principal Brochure where a Member's voluntary contributions or voluntarybenefits are concerned includes "Deferred Member" and "External Relevant Employee Member".

An Employee Member who chooses to make a voluntary contribution other than as provided in therules governing the Scheme (including the rules governing the participation in the Scheme by aParticipating Employer) may do so upon payment of a fee of up to HK$500 per contribution, asdetermined by the Trustee and Sponsor.

Participating Employers can choose to make a voluntary contribution although it is not compulsory.Unlike the statutory minimum MPF contributions, benefits accruing on an employer's voluntarycontributions need not belong immediately to the Employee Member, but may be subject to a gradedvesting scale determined by length of employment or other restrictions. The Administrator will providea document with details of any graded vesting scale to each Member. Members may call the MPFHotline for details (see section F1).

[5.13] [5.10] [5.11]

2. Switching between Constituent Funds

Future contributions invested in Constituent Funds

Each Member can reallocate their future contributions among the Constituent Funds upon 10 BusinessDays' notice. There is no limit on the number of requests for reallocation of any future contributionsamong the Constituent Funds, but the provisions of paragraph (4) below apply.

Existing investments in Constituent Funds

Each Member can switch all or part of their existing investments free of charge from one ConstituentFund to another within the Scheme upon 10 Business Days' notice, subject to the following:

(1) Subject to paragraph (4) below, there is no limit on the number of switches into any of theConstituent Funds.

(2) Subject to paragraph (4) below, there is no limit on the number of switches out of any ConstituentFund (other than the Guaranteed Portfolio or the Capital Preservation Portfolio).

(3) Subject to paragraph (4) below, in each Scheme Year, only one switch request out of theGuaranteed Portfolio and only one switch request out of the Capital Preservation Portfolio ispermitted. With every switch request, the previous and the requested revised allocation percentagefor existing balance in the Guaranteed Portfolio or the Capital Preservation Portfolio, as the casemay be, will be compared. If the revised allocation percentage is smaller than the previousallocation percentage, it will be deemed to be a switch out from the Constituent Fund concerned.

(4) All switches or reallocations via the internet or interactive voice response system are free ofcharge, but this is subject to an access fee for each Scheme Year (which currently is waived).Only one switch or reallocation request either into or out (as defined in paragraph (3) above) ofany Constituent Fund using a method of instruction other than via the internet or interactive voiceresponse system will be permitted in each Scheme Year (unless agreed by the Trustee).

14

3. Payment of benefits

All benefits from the Scheme are defined contribution benefits and are paid in a lump sum. As suchthe actual amount paid from the Scheme will depend upon the amount of contributions paid to theScheme, the charges and investment returns.

Benefits from the Scheme are split into 2 types: MPF Benefits (derived from the mandatory 5%contributions), and Voluntary Benefits (derived from voluntary contributions).

All benefits will be paid in Hong Kong dollars or in such other currencies on such terms as theTrustee may, subject to the MPF Legislation, from time to time determine.

MPF Benefits

This paragraph does not apply to an External Relevant Employee Member.

The MPF Ordinance sets out the circumstances in which MPF Benefits may be paid. MPF Benefitsare only payable to a Member:

• on a Member reaching his 65th birthday,

• on a Member's death (in which case the benefits are paid to the Member's legal personalrepresentatives),

• on the total incapacity of a Member,

• on the early retirement of a Member on reaching age 60,

• upon a Member's permanent departure from Hong Kong, and

• where the accrued benefits of a Member does not exceed $5,000 and, as at the date of the claim,at least 12 months have elapsed since the contribution day in respect of the latest contributionperiod for which a mandatory contribution is required to be made in respect of the member and themember does not have accrued benefits kept in any other registered scheme.

A request for payment of MPF Benefits shall be made in a form specified by the MPFA and beaccompanied by such documents as may be required by the MPF Legislation or by the Trustee.

Voluntary Benefits

Voluntary Benefits are payable to a Member:

• upon retirement of the Member,

• on the Member's death (in which case the benefits are paid to the Member's legal personalrepresentatives),

• on the total incapacity of the Member,

• on an Employee Member leaving the employment of his Participating Employer, or

• in such other circumstances as the Member, the Member's Participating Employer, the Trusteeand the Sponsor, may agree.

[5.13] [5.11] [5.16] [5.17(b) & (c)]

The Participating Employer portion of any accrued benefits in the Scheme can be used to reduce theParticipating Employer's liability to make long service or severance payments under the EmploymentOrdinance. Subject to the consent of the relevant Participating Employer and the Sponsor, an EmployeeMember's Voluntary Benefits may be paid only in part.

If an Employee Member is dismissed from employment and the Trustee receives written confirmationfrom that Employee Member's Participating Employer that the dismissal was for wilfully disobeying alawful and reasonable order, misconducting himself, such conduct being inconsistent with the dueand faithful discharge of his duties, being guilty of fraud or dishonesty, being habitually neglectful ofhis duties, upon any other grounds on which the Participating Employer is entitled to terminate hisemployment without notice at common law, or that Employee Member has left his employment toavoid such a dismissal, then that Employee Member will not, to the extent permitted by the MPFLegislation, be entitled to receive any benefit from the Scheme other than the value of that Employee

15

MPF

MPF

16 17

Member's MPF Benefits and that Employee Member's Voluntary Benefits derived from that EmployeeMember's own voluntary contributions.

A request for payment of Voluntary Benefits shall be made in a form determined by the Trustee andbe accompanied by such documents as may be required by the Trustee.

An employer's voluntary contributions may be subject to a graded vesting scale applicable on theValuation Date following the date on which the Trustee has been notified of the circumstances givingrise to the Employee Member ceasing to be a Member (or following the actual date of termination ofmembership, if later) and the amount of Voluntary Benefits payable will be affected as a result.

For the payment of MPF Benefits or Voluntary Benefits, the normal period for payment will be 10days after receipt of a request for payment. The maximum period between the date of receipt of arequest for payment and the date of payment will be 30 days, but if contributions or charges areoutstanding, then the payment will be made within 60 days. If the Scheme is subject to an audit orinvestigation by or on behalf of the MPFA, then any payment will be made within 30 days after theMPFA has given its consent or appropriate notification to the Trustee.

Any undisposed employer's voluntary balances credited to the Participating Employer's ReserveAccount will be invested in the Guaranteed Portfolio, unless the Participating Employer and theTrustee agree otherwise.

4. Deferral and suspension of dealing

AIG Global Investment Corporation (Hong Kong) Limited (“AIGGIC”) (being the relevant InvestmentManager of the Guaranteed Portfolio, the Capital Preservation Portfolio, the Conservative Portfolio,the Balanced Portfolio, the Growth Portfolio, the North American Equity Fund, the Hong Kong EquityFund, the Greater China Equity Fund, the Global Bond Fund, the World Equity Fund and the Manager’sChoice Fund only), or JF Asset Management Limited (“JFAM”) (being the relevant Investment Managerof the Japan Equity Fund, European Equity Fund and the Asian Equity Fund only), or RCM AsiaPacific Limited (being the relevant Investment Manager of the RCM Capital Stable Fund, the RCMStable Growth Fund and the RCM Growth Fund only), or Credit Agricole Asset Management HongKong Limited (being the relevant Investment Manager of the Green Fund) may direct the Trustee todeclare the deferral or suspension in dealing for a Constituent Fund. Requests for realisations ofunits received prior to or during the suspension or deferral will be actioned after the suspension ordeferral is declared at an end by the Trustee.

A deferral or suspension of dealing may occur only during any of the following:

(1) any period when any market on which a substantial part of the securities or other property for thetime being comprised in the relevant Constituent Fund is quoted, listed or dealt in is closedotherwise than for ordinary holidays;

(2) any period when dealings on any such market are restricted or suspended;

(3) during the existence of any state of affairs as a result of which disposal of any of the securities orother property for the time being comprised in the relevant Constituent Fund cannot, in thereasonable opinion of the relevant Investment Manager, be effected normally or without seriouslyprejudicing the interests of beneficiaries;

(4) during any breakdown in the means of communications normally employed in determining thenet asset value of the relevant Constituent Fund or when for any other reason the net asset valueof any securities or other property for the time being comprised in the relevant Constituent Fundcannot be promptly and accurately ascertained;

(5) any period when the realisation of securities or other property for the time being comprised in therelevant Constituent Fund or the transfer of funds involved in such realisation cannot, in thereasonable opinion of the relevant Investment Manager, be effected at normal prices or normalrates of exchange;

(6) any period, in the reasonable opinion of the relevant Investment Manager, when the payment orreceipt of the proceeds of the realisation of any of the securities or other property comprised inthe relevant Constituent Fund is the subject of delay due to exceptional circumstances;

(7) any period where there exists exceptional circumstance such that it would, in the reasonableopinion of the relevant Investment Manager or the Trustee, be detrimental to the beneficiaries tocontinue dealing in the units of the relevant Constituent Fund.

[5.18]

Any declaration of a deferral or suspension in dealing of a Constituent Fund shall be consistent withany relevant official rules and regulations and will not cause the Trustee to contravene the MPFLegislation.

5. Valuation of funds and benefits

Each of the unitised Constituent Funds will be valued on a Valuation Date. The Guaranteed Portfoliowill be valued on the last Valuation Date of the month.

The unitised Constituent Funds are valued by means of dividing the net asset value of each fund (inaccordance with the governing documentation of the Scheme) by the total number of units of thatfund then in existence. When determining the value of a unit for the purposes of the calculation ofbenefit payments the unit price used will be coincident with or next following the date upon which theTrustee receives a valid payment request. An offer spread may be added to the unit price to arrive atan issue price when units are issued and a bid spread may be deducted from the unit price to arriveat a redemption price when units are realised. Please refer to section E for details.

Quoted investments (other than interests in open-ended collective investment schemes) will normallybe valued at the last traded price on the stock exchange or over-the-counter market on which theinvestment is listed, traded or ordinarily dealt in. The value of unquoted investments will be the valuecertified by an approved valuer and approved by, or in accordance with a method approved by, theTrustee, or the value as determined by the Trustee. The value of each unit in any open-ended collectiveinvestment scheme will be the last published bid price for such unit in such collective investmentscheme. Cash, deposits and similar property will be valued at their face value, together with accruedinterest. There is included in, or deducted from, the assets of the Constituent Fund in respect of eachoutstanding futures contract entered into on behalf of the Constituent Fund an amount equal to thegain or (as the case may be) loss which would have accrued to the Constituent Fund at the time atwhich the relevant valuation is made as if the relevant Investment Manager had at that time closedout the position of the Constituent Fund under that contract by entering into an equal and oppositefutures contract at market prices prevailing at that time.

The Trust Deed permits AIGGIC, otherwise the Trustee, to adjust the value of any asset or permitsome other method of valuation to be used if, having regard to such considerations as AIGGIC, orthe Trustee, as appropriate, may deem relevant, AIGGIC, or the Trustee, as appropriate, considersthat such adjustment or other method of valuation is required to reflect more fairly the value of suchasset.

6. LifeEasy

LifeEasy is an automatic asset rebalancing service based on the age band or the number of yearsuntil the end of your desired saving years. It is available to all Members.

A Member who selects LifeEasy need not designate a specific investment allocation betweenConstituent Funds. A predefined investment mixes will be automatically applied to the Member’sexisting and future investments as set out below.

In determining the investment allocation to be applied in respect of a relevant Member, that Member’sfuture contributions and existing investments are split between:

• Employment Related Investments - Contributions and investments (including any amountstransferred to the Scheme) not derived from a Member’s participation in the Happy RetirementSavings Program; and

• Non-Employment Related Investments - Voluntary contributions and investments from a Memberunder the Happy Retirement Savings Program.

MPF

MPFAge World Equity Fund Global Bond Fund Guaranteed Portfolio

Below 50 100% 0% 0%

at least 50 but not90% 10% 0%

more than 52


more than 54


more than 56


more than 58


more than 60


more than 62


more than 63


more than 65

Employment Related Investments

Employment Related Investments will be invested in the World Equity Fund, Global Bond Fund andGuaranteed Portfolio in the proportions determined by reference to the Member’s age and set out inthe table below:

Years to end of desired World Equity Fund Global Bond Fund Guaranteed Portfoliosavings years

15 years or over 100% 0% 0%

less than 15 years90% 10% 0%

but at least 13 years













less than 2 years 20% 40% 40%

Non-Employment Related Investments

Members who have participated in the Happy Retirement Savings Program, a voluntary savings planto help Members accumulate future potential wealth and prepare for the Members’ retirement, canselect to contribute in the Non-Employment Related Investments. Non-Employment RelatedInvestments will also be invested in the same three Constituent Funds in the proportions determinedby reference to the number of years to the end of the desired savings years set by the Member(which must be a minimum of 5 years from the date the Member chooses LifeEasy). The relevantproportions are set out in the table below:

18 19

MPF

MPF

E. FEES AND EXPENSESThe following table describes the fees, charges and expenses that Participating Employers andMembers may pay upon and after joining the Scheme. Important explanatory notes and definitionsare set out at the bottom of the table.

Procedural matters

There is no fee or charge for a Member to select LifeEasy. Such selection may be made either online(via AIA-JF Interactive Website www.mpf-aiajf.com) or by using the forms prescribed by the Trusteefrom time to time.

A Member can select to leave LifeEasy at any time (again by using AIA-JF Interactive Website or theforms as referred to above). Again, there will be no fee or charge for such change.

Should a Member submit a fund switching request in accordance with Section D2, then the Memberwill be deemed to have elected to leave LifeEasy and the Member’s investment allocation will not berebalanced automatically according to the predefined investment mixes. The Member’s investmentwill be allocated into the relevant Constituent Funds according to the Member’s latest fund switchingrequest.

Where a Member has provided the Trustee with a personal e-mail address, the Trustee will send ane-mail to such Member about 5 Business Days prior to the next fund switching date (i.e. a date onwhich the Member’s investment allocation is scheduled to change). Where a Member has not providedthe Trustee with a personal e-mail address, a similar message will be sent to the Member’s loginaccount at www.mpf-aiajf.com. Similar confirmation message will be sent after rebalancing is doneor whenever should there be any change to LifeEasy.

Should a Member who has selected LifeEasy service, upon reaching each scheduled rebalancingdate which is determined by such Member’s age or number of years until the end of desired savingsyears, to the extent that it is reasonably practicable, in accordance to the predefined investmentmixes set out in Section D6(1) and/or Section D6(2),

- for Employment Related Investments, rebalancing of portfolio(s) will be performed on the next dayof the Member’s birthday;

- for Non-Employment Related Investments, rebalancing of portfolio(s) will be performed on the nextday of the anniversary date of confirmation of LifeEasy service.

In the event that such rebalancing cannot be carried out on the specified date, it will be carried out inthe next Business Date after such date. A confirmation statement will be sent to the Member afterrebalancing is completed.

Under normal circumstances, Member’s opt-in or opt-out request of the LifeEasy can be processedwithin one Business Day for online submission or 10 Business Days for submission in forms.

(A) JOINING FEE & ANNUAL FEE

Payable byType of fees

Joining fee1,(a) Participating Employer,Self-employed Memberand External RelevantEmployee Memberrespectively

Current amount (HK$)

Currently waived

Payable byType of fees

Annual fee2,(b) Participating Employer,Self-employed Member,Deferred Member andExternal RelevantEmployee Memberrespectively

Current amount (HK$)

Currently waived

Name of constituent fundType of fees& charges

Contributioncharge3,(c)

Capital Preservation Portfolio

Other Constituent Funds

Current level

N/A

Currently waived

Payable by

Participating Employer /Self-employed Member /Deferred Member /External RelevantEmployee Member

(B) FEES AND CHARGES PAYABLE ARISING FROM TRANSACTIONS ININDIVIDUAL MEMBER'S ACCOUNT

Offer spread4,(d)

Bid spread5,(e)

Withdrawalcharge6


Guaranteed Portfolio





All Constituent Funds

N/A

Currently waived

N/A

Currently waived

N/A

Employee Member /External RelevantEmployee Member /Self-employed Member /Deferred Member(as part of issue price)

Employee Member /External RelevantEmployee Member /Self-employed Member /Deferred Member(as part of redemptionprice)

20 21

MPF

MPF

22 23

Name of constituent fundType ofcharges &expenses

Current level Deducted from

Managementfees7,(f)

Guaranteecharge8,(g)

Other expenses



Guaranteed Portfolio(h)



N/A

2.0% per annum ofnet asset value

N/A

N/A

See AdditionalNote (i)

Relevant ConstituentFund Assets

Relevant ConstituentFund Assets

(C) FUND OPERATING CHARGES & EXPENSES OF CONSTITUENT FUNDS


Managementfees7,(f)

Guaranteed Portfolio(h)


Hong Kong Equity Fund

Global Bond Fund

World Equity Fund

North American Equity Fund

Greater China Equity Fund

Japan Equity Fund

European Equity Fund

Asian Equity Fund

RCM Capital Stable Fund

RCM Stable Growth Fund

RCM Growth Fund

Current level

2.0% per annumof net asset value



0.09% - 0.5% perannum of net assetvalue*




Deducted from

Relevant insurancepolicy assets

Relevant underlyingfund assets

(D) FEES AND CHARGES PAYABLE OUT OF THE UNDERLYING FUNDS

Definitions:

The following are the definitions of the different types of fees and charges.

1. "Joining fee" means the one-off fee charged by the Trustee and payable by the ParticipatingEmployers and/or Members upon joining the Scheme.

2. "Annual fee" means the fee charged by the Trustee on an annual basis and payable by theParticipating Employers and/or Members.

3. "Contribution charge" means the fee charged by the Sponsor against any contributions paid tothe Scheme. This fee is usually charged as a percentage of contributions and will be deducted fromthe contributions. This charge does not apply to capital preservation fund.

4. "Offer spread" is charged by the Trustee upon subscription of units of a Constituent Fund by aMember. Offer spread does not apply to a capital preservation fund.

5. "Bid spread" is charged by the Trustee upon redemption of units of a Constituent Fund by aMember. Bid spread does not apply to a capital preservation fund.

6. "Withdrawal charge" means the fee charged by the Trustee upon withdrawal of accrued benefitsfrom the Scheme. This fee is usually charged as a percentage of the withdrawal amount and will bededucted from the withdrawal amount. This charge does not apply to capital preservation fund.

7. "Management fees" include fees paid to the Trustee, Custodian, Administrator, InvestmentManager (including fees based on fund performance, if any) and Sponsor for providing their servicesto the relevant fund. They are usually charged as a percentage of the net asset value of a fund.

8. "Guarantee charge" refers to an amount that is deducted out of the assets of a guaranteed fundfor the purpose of providing the guarantee. This fee is usually charged as a percentage of the netasset value of a guaranteed fund.


Current level Deducted from

Managementfees7,(f)

Green Fund


All Constituent Funds

0.125% per annumof net asset value(subject to aminimum fee ofHK$125,000 p.a.)

0% - 0.18% perannum of net assetvalue

See AdditionalNote (i)

(E) OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICES(relating to non-standard voluntary contribution, member accountmaintenance(j), administrative / legal documents, payment of accruedbenefits, payroll / contribution, payroll software, and recordmaintenance)

These fees, if any, are to be received by the Administrator. For details, please refer to Annex.

Relevant underlying fundassets / insurance policyassets

* This is the level of fee charged by the underlying funds as at the date of this Principal Brochure.

Other expenses

Relevant underlyingfund assets

MPF

MPF

24 25

Explanatory notes:

In respect of any increase in fees and charges from the current level as stated, at least three months priornotice must be given to all Members of the Scheme and Participating Employers.

Additional notes:

(a) Joining fee

The maximum joining fee that can be charged is

(i) for a Participating Employer: HK$5,000 per Participating Employer or HK$25 per EmployeeMember, whichever is greater,

(ii) for a Self-employed Member: HK$500,

(iii) for an External Relevant Employee Member: HK$5,000.

This fee is currently waived.

(b) Annual fee

This fee is payable in advance for a Scheme Year and is not refundable. The maximum annual feethat can be charged is

(i) for a Participating Employer: HK$5,000 per Participating Employer or HK$25 per EmployeeMember, whichever is greater,

(ii) for a Self-employed Member or Deferred Member: HK$500,

(iii) for an External Relevant Employee Member: HK$5,000.

This fee is currently waived.

(c) Contribution charge

A contribution charge of up to 2.5% of contribution amount, as determined by the Sponsor, may beapplied to new contributions (but not to amounts transferred from or to the Scheme, or from oneaccount to another account within the Scheme), and such contribution charge will be payable withrespect to a Member’s contribution, by the relevant Participating Employer of the Employee Member,Self-employed Member, External Relevant Employee Member or Deferred Member. This charge iscurrently waived.

(d) Offer spread

The maximum offer spread that can be applied is 3.0% of the unit price. A Constituent Fund willutilise underlying pooled investment funds, which have waived any offer spread. This charge iscurrently waived.

(e) Bid spread

The maximum bid spread that can be applied is 1.0% of the unit price. This charge is currentlywaived.

(f) Management fees

At Constituent Fund level:

For Constituent Funds (except Guaranteed Portfolio), trustee fee (including administration) is 1.0%per annum of net asset value at current level and 1.1% per annum of net asset value at maximumlevel. Investment management fee is 1.0% per annum of net asset value at current level and 1.2%per annum of net asset value at maximum level. All percentage rates are per annum and will beaccrued daily and paid monthly in arrears.

In respect of the Capital Preservation Portfolio, an incentive fee equal to the net returns (after the“Management Fees” and “Other Expenses” as stated in Parts C & D of the Fee Table above) of theCapital Preservation Portfolio in excess of the MPFA monthly savings rate will apply and are payableto the investment manager of the Capital Preservation Portfolio. Fees are accrued daily and withrespect to each month, will be only payable in that month in arrears. Only to the extent required will

fees for the Capital Preservation Portfolio be reduced to ensure the net return on the CapitalPreservation Portfolio equals the MPFA monthly savings rate. The return of the Capital PreservationPortfolio may be below, but will never exceed, the MPFA monthly savings rate.

Despite the fees described above, fees will be payable out of the Capital Preservation Portfolio onlyto the extent permitted by MPF Legislation.

For Guaranteed Portfolio, no fees (except for the contribution charge above) apply directly in theconstituent fund level. Fees are charged on the underlying investment of this Portfolio which is aninsurance policy. The fees on the insurance policy are currently 2.0% per annum of the net assetvalue of the policy although the maximum permitted is 2.3% per annum of the net asset value. Outof the fees of 2.0%, 0.1% will be paid to the Trustee, 0.9% will be paid to the Administrator and 1.0%will be paid to the Investment Manager. All percentage rates are of per annum basis and will beaccrued daily and paid monthly in arrears.

An Investment Manager shall be entitled to share any investment management fees payable to itwith such persons as it thinks fit, including but not limited to, intermediaries and distributors whointroduce investors.

At underlying fund level:

For Capital Preservation Portfolio, Global Bond Fund, Conservative Portfolio, Balanced Portfolio,Growth Portfolio, Manager’s Choice Fund, North American Equity Fund, Japan Equity Fund, EuropeanEquity Fund, Hong Kong Equity Fund, Asian Equity Fund and Greater China Equity Fund, the maximumtrustee fees that can be applied to the underlying pooled investment funds will not exceed 0.3% perannum of net asset value whereas the maximum total investment management fees that can beapplied to a Constituent Fund and its underlying pooled investment funds from time to time will notexceed 1.2% per annum of net asset value.

For RCM Capital Stable Fund, RCM Stable Growth Fund and RCM Growth Fund, the maximumtrustee fee that can be applied to the underlying pooled investment funds will not exceed 0.25% perannum of net asset value.

For Green Fund, the maximum trustee fee that can be applied to the underlying pooled investmentfunds will not exceed 0.2% per annum of net asset value subject to a minimum of HK$125,000.

Moreover, the underlying funds of the Constituent Funds are subject to administrator’s fee levied ona per-transaction basis:

For Hong Kong Equity Fund, the administrator’s fee is HK$400 per transaction.

For Global Bond Fund and North American Equity Fund, the administrator’s fee is in the range ofUS$15 per transaction to US$205 per transaction.

For Greater China Equity Fund, the administrator’s fee is in the range of US$50 per transaction toUS$90 per transaction.

For Conservative Portfolio, Balanced Portfolio, Growth Portfolio and Manager’s Choice Fund, theadministrator’s fee may vary depending on which underlying funds that the Constituent Fund investin. The maximum administrator’s fee payable is US$205 per transaction.

(g) Underlying insurance policy of Guaranteed Portfolio

Please note that for the underlying insurance policy of Guaranteed Portfolio, net income of theunderlying insurance policy in excess of its declared investment return will be transferred from theRevenue Statement to the Investment Guarantee and Contingency Account for reserving purpose.In case of net loss, the amount will be transferred to the Investment Guarantee and ContingencyAccount.

(h) Guaranteed Portfolios (Discretionary charges)

For investments in the Guaranteed Portfolio and when a Participating Employer is withdrawing fromthe Scheme, a discretionary adjustment may be applied to the payments due to a Member as a resultof such withdrawal. The discretionary adjustment will be deducted by the insurer of the insurancepolicy and in an amount to be determined by the said insurer, in its sole and absolute discretion butnot to exceed 5% of any payment under any circumstances.

MPF

MPF

26 27

(i) Other expenses

Subject to MPF Legislation in addition to the fees described in the Fee Table above, the ConstituentFunds or their corresponding approved pooled investment funds will bear all fees and expensesincurred in connection with or in relation to the Scheme, including custody, sub-custody expensesand stamp duties, any application, authorisation, annual or other fees payable to the SFC, the MPFAand any other regulatory authority, and any levy (if applicable) imposed by the MPFA under the MPFOrdinance, in particular the compensation levy, taxes, governmental charges, brokerages,commissions, exchange costs and commissions, bank charges, valuation fees, transfer fees andexpenses, registration fees and expenses, proxy fees and expenses, collection fees and expenses,insurance and security costs, the fees and expenses of the auditors, legal charges and other advisorycharges, the expenses of giving notices to or otherwise communicating with Participating Employers(if applicable), Members (if applicable), the costs and expenses incurred in effecting and maintainingany insurance, including any indemnity insurance (if applicable), required by the MPF Ordinance orany other applicable law or regulation, and other expenses as described in the constitutive / offeringdocuments.

The costs and expenses incurred in establishing the underlying approved pooled investment fund ofthe Green Fund are approximately up to HK$490,000 which will be taken by the trust constituting thisapproved pooled investment fund. For the purpose of determining the unit price of this approvedpooled investment fund, this amount will be amortized over a period of 3 accounting years startingfrom the inception date of the first investment fund of the trust constituting this approved pooledinvestment fund.

The costs and administrative expenses incurred in establishing each of the Global Bond Fund andthe World Equity Fund are approximately HK$47,500 which will be allocated to the relevant Fundwhen such costs and expenses are incurred and settled.

The costs and administrative expenses incurred in establishing the Manager’s Choice Fund isapproximately HK$85,000 which will be allocated to the Fund when such costs and expenses areincurred and settled.

Any interest which may accrue on amounts pending investment in Constituent Funds will be appliedfor the benefit of the Members either for the payment of any administrative expenses of the Schemeor as income of the Scheme.

(j) Member account maintenance fees

Additional Member Account Maintenance Fees will be charged directly to the Member and may beimposed for additional services which are not described in this Principal Brochure. If the Memberfails to pay such fees, then the Trustee may (and, where directed by the Sponsor, must), subject tothe MPF Legislation, redeem units credited to the Member’s voluntary account of the Member (and,if there is no Member’s voluntary account, or the Member’s voluntary account is insufficient to coverthe outstanding amount, the Member’s Employer’s voluntary account). Any imposition of these feesare subject to 3 months’ notice to Members and the revision of this Principal Brochure.

If no contributions have been received during a continuous period of at least 12 months and if theaggregate of a Member’s MPF Balance and Voluntary Balance is less than a figure determined fromtime to time by the Sponsor, then a charge may be imposed. If this charge is imposed, the amountwill be HK$50 per month. This charge does not apply to the Capital Preservation Portfolio. Anyimposition of these fees are subject to 3 months’ notice to Members and the revision of this PrincipalBrochure.

(k) Transfer fees

No fees will be charged for transferring accrued benefits from the Scheme to another RegisteredScheme, for transferring accrued benefits from another Registered Scheme to the Scheme, or fortransferring from one account to another account within the Scheme, other than actual and reasonableexpenses incurred by the Trustee as a result of redeeming funds in connection with the transfer froma unit trust or similar type of investment and of purchasing units in another such investment, and aspermitted by the MPF Legislation.

(l) Soft dollars and cash rebates

The Investment Manager and any of its Associates may effect transactions by or through the agencyof another person with whom the Investment Manager and any of its Associates have an arrangementunder which that party will from time to time provide to or procure for the Investment Manager andany of its Associates, goods, services or other benefits (such as research and advisory services,computer hardware associated with specialised software or research services and performancemeasures, etc.) the nature of which is such that their provision can reasonably be expected to benefitthe Scheme as a whole and may contribute to an improvement in the performance of the Scheme orof the Investment Manager or any of its Associates in providing services to the Scheme and for whichno direct payment is made but instead the Investment Manager and any of its Associates undertaketo place business with that party. For the avoidance of doubt, such goods and services do notinclude travel, accommodation, entertainment, general administrative goods or services, generaloffice equipment or premises, membership fees, employee salaries or direct money payments.

Neither the Investment Manager nor any Associate shall retain the benefit of any cash commissionrebate (being repayment of a cash commission made by a broker or dealer to the Investment Managerand/or any Associate) paid or payable from any such broker or dealer in respect of any businessplaced with such broker or dealer by the Investment Manager or any Associate for or on behalf of theScheme. Any such cash commission rebate received from any such broker or dealer will be held bythe Investment Manager and any Associate for the benefit of the Scheme.

(m)Other fees and charges for providing additional services

Additional costs and expenses may be imposed by the Trustee or Administrator, subject to the MPFLegislation, for additional services which are not described in the Principal Brochure or not requiredunder the MPF Legislation to be provided. Any costs and expenses (whether being set-up fee,annual fee or any other additional costs and expenses) which the Trustee and the Administratordetermine to be wholly attributable to a specific Participating Employer, External Relevant EmployeeMember, Self-employed Member or Deferred Member will be borne by that Participating Employer,External Relevant Employee Member, Self-employed Member or Deferred Member. If the ParticipatingEmployer, External Relevant Employee Member, Self-employed Member or Deferred Member failsto pay such costs and expenses, then the Trustee may (and, where directed by the Sponsor, must),subject to the MPF Legislation, redeem units credited to,

(i) in respect of any amount outstanding from the Participating Employer, the Reserve Account, and

(ii) in respect of any amount outstanding from an External Relevant Employee Member, Self-employedMember or Deferred Member: that External Relevant Employee Member’s, Self-employedMember’s or Deferred Member’s voluntary account (and, if there is no Member’s voluntary account,or the Member’s voluntary account is insufficient to cover the outstanding amount, the Member’sEmployer’s voluntary account).

The Trustee has the discretion to waive part or all of the above fees.

(n) Right to alter charges

For decreases in charges, Participating Employers and Members will be informed of the changes assoon as is reasonably practicable. Also charges may be varied for individual Members and ParticipatingEmployers.

A document that illustrates the on-going costs on contributions to constituent funds in this Scheme (exceptfor the Capital Preservation Portfolio) is distributed with the Principal Brochure. An illustrative exampledemonstrating how the total amounts of annual fees and charges are payable in respect of the CapitalPreservation Portfolio is attached in Appendix 1. Before making any investment decisions concerningMPF investments, you should ensure that you have the latest version of these documents which can beobtained from AIA-JF Interactive Website www.mpf-aiajf.com or via hotline (852) 2100 1888 for employersor (852) 2200 6288 for employees.

MPF

MPF

Annex:

OTHER FEES AND CHARGES FOR PROVIDING ADDITIONAL SERVICES

28 29

(A) JOINING FEE & ANNUAL FEETypes of chargesand expenses

Amount Remarks Payable by

Copies of Master Trust Deed /other Constitutive Document(s)

Extra copies of

- Employer Welcome Pack

- Member Booklet

Participating Employer /Employee Member /Self-employed Member/ External RelevantEmployee Member

Participating Employer

Employee Member /Self-employed Member/ External RelevantEmployee Member

HK$1,000 per copy

HK$200 per copy

HK$50 per copy

No third partycheque will beissued

Payment by Bank Draft /Telegraphic Transfer / DirectCredit

Special arrangement for chequeissuance (including cheque re-issuance)

Participating Employer /Employee Member /Self-employed Member/ External RelevantEmployee Member /Deferred Member


HK$200 per request ontop of bank charges

HK$200 per cheque

Administrative / Legal Documents

Payment of Accrued Benefits

Fees for non-standard voluntarycontribution

Member account maintenancefees(j)

Employee Member

Employee Member /Self-employed Member/ Deferred Member /External RelevantEmployee Member

HK$500 per contribution

Currently waived

Maximum level atHK$500 percontribution

Change of contributionfrequency

Change of information on Noticeof Contribution Arrangement

Change of information onRemittance Statement

Change of voluntarycontribution arrangement

- Re-arranging contribution method, withdrawal method, etc.

Change of voluntarycontribution amount by ExternalRelevant Employee Member,Deferred Member andEmployee Member

Refund of excess payment byEmployer / Self-employedMember

Retrieval / Adjustment ofprevious data / record

Re-processing of Direct DebitInstruction rejected due toinsufficient funds

Tracing and correction ofmisplaced contributions madeby the client

Tracing of unidentified cheque

Participating Employer /Self-employed Member/ External RelevantEmployee Member /Deferred Member

Self-employed Member


Participating Employer /Self-employed Member

External RelevantEmployee Member /Deferred Member /Employee Member

Participating Employer /Self-employed Member





HK$200 per request

HK$200 per request

HK$200 per adjustment

HK$200 per request

HK$200 per request

HK$200 per request

HK$200 per request

HK$100 per transactionon top of bank charges

HK$200 per adjustment

HK$200 per cheque

Waived for the firstrequest for eachscheme year ANDOne-month noticeis required

Any investmentgains / losses willbe borne by theclient






Payroll / Contributions

MPF

MPF

Additional Payroll Supplementmodification

- Defining user requirement, programming, testing and implementation of the system, etc.

Extra copies of AIA-JF PayrollMaster / AIA-JF MPF Calculator

On-site technical support forAIA-JF Payroll Master anddatabase investigation by email




HK$600 per man hour(minimum 4 man hours)

HK$50 per copy

HK$1,200 for the first 2hours (minimum) andthereafter HK$300 perhour

Payroll Software

Change of Date of Participation

Copies of In-force Member List

Extra copies of Statement ofAccount (Quarterly) / AnnualBenefit Statement

Retrieval of Notice ofContribution Arrangement

Retrieval of RemittanceStatement

Re-issuance of

- Monthly Statement of Payment Account

- Member Certificate

- Notice of Acceptance

Withdrawal of MemberTermination and Reinstatementof Membership

HK$100 per request

HK$100 per copy

HK$100 per copy

HK$100 per copy

HK$100 per copy

HK$100 per copy

HK$100 per copy

HK$100 per copy

HK$500 per member

Record Maintenance

Waived forrequestingstatement(s) of thecurrent period

For EmployerPlans only ANDany investmentgains / losses willbe borne by theclient







Employee Member /Self-employed Member/ External RelevantEmployee Member /Deferred Member



30 31

F. GENERAL INFORMATION

1. MPF hotline and other assistance

If you require any assistance, please call: 2100-1888 (AIA) / 2978-7588 (JF).

[5.32]

2. Taxation

It is our understanding that investors will enjoy the following tax benefits:

(a) An employer's profits tax liability will be reduced by his contributions to the Scheme, up to thelimits set out in the Inland Revenue Ordinance.

(b) Employees will be able to deduct a maximum of $12,000 per annum of mandatory contributionsfor salaries tax purposes.

(c) Benefits attributable to mandatory contributions may be received by an employee free of taxwhilst benefits attributable to voluntary contributions may be received by an employee free of taxif they fall within the limits set out in the Inland Revenue Ordinance.

We recommend that you seek professional advice regarding your own particular tax circumstances.

[5.26] [5.27] [5.28]

3. Reports and accounts

Members will receive the following:

• an information booklet and membership certificate on joining, and

• annual statements within 3 months after the Scheme Year end.

Participating Employers will receive the following:

• employer information booklet and participation certificate upon participation in the Scheme,

• quarterly investment performance reports, and

• annual summary within 3 months after the Scheme Year end.

The financial year end of each Scheme is the Scheme Year end.

[5.29] [5.30]

4. Constitutive documents

Copies of the Master Trust Deed and other constitutive documents may be obtained from the Trusteeat such reasonable price as the Trustee may from time to time determine or may be inspected duringnormal working hours at the offices of the Trustee, free of charge. The offices of the Trustee areshown on page 8.

[5.31]

The constitutive documents include the following:

• Master Trust Deed

• Custodian Agreement

• Investment Management Agreements

• Delegation of the Investment Management Agreement by AIG Global Investment Corporation (HongKong) Limited

MPF

MPF

32 33

5. Scheme termination, restructure and cancellation of registration

Participating Employers and Members will be given 3 months' notice (or any shorter period as agreedwith the SFC or the MPFA) of the merger, division or termination of a Constituent Fund of the Scheme,or the restructuring of the Scheme including restructuring by means of merger or division of theScheme.

Subject to compliance with the appropriate provisions of the MPF Legislation, the Trustee may, uponthe request of the Sponsor, apply to the MPFA to cancel the registration of the Scheme.

[5.2] [5.38]

6. Personal Data (Privacy) Ordinance

Personal data provided by Members and Participating Employers on the application form and detailsof transactions or dealings by Members and Participating Employers may be used, disclosed andtransferred (in and outside Hong Kong) to such persons as the Trustee and Investment Managersmay consider necessary, including any of its advisors, auditors, delegates of investment managers,regulators and government authorities in any jurisdiction and any Associates of the Trustee and anyInvestment Manager for any purpose in connection with the services they may provide to Membersand Participating Employers and/or in connection with matching for whatever purpose with otherpersonal data concerning the Members and Participating Employers concerned and/or for the purposeof promoting, improving and furthering the provision of services by the Trustee and InvestmentManagers, and any of their Associates to their customers generally. Members and ParticipatingEmployers have a right to request access to and correction of any personal data or to request thatpersonal data about them not be used for direct marketing purposes. Such requests may be made tothe Trustee at the address given above.

SCHEDULE 1


Statement of investment policy

(a) Objective

The primary objective of the Guaranteed Portfolio is to minimise capital risk in Hong Kong dollarterms. The secondary objective is to achieve a stable, consistent and predictable rate of return.

Due to the nature and inclusion of the guarantee (details of which are set out in (h) below), it ispossible that there may be a dilution in performance of this Portfolio.

(b) Types of investments

Except for a small portion that may be held in cash or cash based investments for operational purposes,the Guaranteed Portfolio is a feeder fund investing solely in an approved pooled investment fund.The underlying pooled investment fund is a guaranteed insurance policy investing in deposits, equitiesand bonds. Investment in equities will not exceed 15% of the portfolio. Investment in fixed incomesecurities may at times be up to 100% of the portfolio.

(c) Geographical distribution

The underlying investments of the Guaranteed Portfolio are investments located primarily in (but notlimited to) Hong Kong.

(d) Security lending and repurchase agreements

The Guaranteed Portfolio will not engage in security lending nor enter into repurchase agreements.The pooled investment fund in which the Guaranteed Portfolio invests may engage in security lendingand/or enter into repurchase agreements through the custodian of the fund and subject to therestrictions set out in the General Regulation.

(e) Futures and options

The Constituent Fund set out in this Schedule will not deal in financial futures and option contracts(with the exception of currency forward contracts) for whatever reason. The Constituent Fund setout in this Schedule will deal in currency forward contracts for hedging purpose only.

(f) Risks

The performance of the Guaranteed Portfolio is subject to the following risks:

(i) Market risk - The investments in the underlying pooled investment fund are subject to the risksinherent in all securities; the value of holdings may rise as well as fall.

(ii) Interest rate risk - Interest rate movements may affect the Annual Rate declared. The underlyingpooled investment fund may invest in securities whose values will be subject to interest ratemovements.

(iii) Political, economic and social risks - The guarantee feature of the Guaranteed Portfolio will notbe affected by political, economic and social risks. However, the guarantor and the value of theassets in the underlying pooled investment fund may be affected by changes in political, economicand social conditions and policies.

(g) Expected return

The Guaranteed Portfolio is expected to provide a return in excess of the average Hong Kong dollarsavings rate.

(h) Features of the Guarantee

Separate individual accounts are maintained for each Member in the Guaranteed Portfolio (the“Individual Accounts”).

The guarantor of the insurance policy in which the Guaranteed Portfolio is invested is AmericanInternational Assurance Company, Limited (“AIA”).

An interim rate (which will not be less than 0% per annum) will be declared by AIA each month.Interest on Individual Accounts will be accrued daily based on the interim rate. At the end of eachfinancial year (ending on the reporting date of 30 November) AIA will declare an annual interest rate(the “Annual Rate”). The Annual Rate and any interim rate declared are determined in the solediscretion of AIA and are reviewed regularly based on various factors including actual return, valueand nature of assets, economic and market conditions. AIA guarantees that the Annual Rate declared,however, will not be less than 0% per annum. The Annual Rate and interim rate declared for the past6 years can be found in the attached Appendix 2.

On a withdrawal due to a Guaranteed Event, each Member will be entitled to his Individual Accounts.

A Guaranteed Event is any withdrawal other than a "Deemed Withdrawal" or total withdrawal which,in the opinion of the Trustee, is due to the cessation of participation of a Participating Employer(other than a Self-employed Member, Deferred Member or External Relevant Employee Member) inthe Scheme. A "Deemed Withdrawal" would be any event where a Participating Employer (other thana Self-employed Member, Deferred Member or External Relevant Employee Member) sets up a newRegistered Scheme with another Registered Scheme provider and funds are then withdrawn fromthe Guaranteed Portfolio.

On a "Deemed Withdrawal" or total withdrawal which, in the opinion of the Trustee, is due to thecessation of participation of a Participating Employer (other than a Self-employed Member, DeferredMember or External Relevant Employee Member) in the Scheme, Individual Accounts may be subjectto a discretionary adjustment. The discretionary adjustment is determined at the sole discretion ofthe insurer of the insurance policy. The discretionary adjustment is no more than 5% of the IndividualAccounts.

MPF

MPF

34 35

The following example shows how interest is credited to the Individual Account (in HK$):

Monthly Initial Monthly Declared IndividualDate Contribution Balance Return (p.a.) Accounts

12/1/x 1,000 1,000

12/31/x 50 5% 1,054

1/31/x+1 50 5% 1,108

2/28/x+1 50 5% 1,163

3/31/x+1 50 5% 1,218

4/30/x+1 50 4% 1,272

5/31/x+1 50 4% 1,326

6/30/x+1 50 4% 1,380

7/31/x+1 50 4% 1,435

8/31/x+1 50 6% 1,492

9/30/x+1 50 6% 1,549

10/31/x+1 50 6% 1,606

11/30/x+1 50 6% 1,664

The guaranteed Individual Accounts based on 0% Annual Rate is HK$1,600 (which is the beginningof year balance plus contributions during the financial year).

At the end of the financial year, the Annual Rate declared by AIA is 5%, and the Individual Accountsis HK$1,664. Since the actual Individual Accounts of HK$1,664 is greater than the guaranteed IndividualAccounts of HK$1,600, the guarantee is satisfied.

Individual Accounts of HK$1,664 at end of the financial year becomes the beginning of year balancefor the next financial year.

Members will be entitled to their Individual Accounts which include any investment income (or loss)credited to the Members' Individual Accounts up to the date of withdrawal.

Past performance should not be taken as an indication of future performance.

AIA at its sole discretion has the right to retain investment income of the insurancepolicy in excess of that required to be set aside to meet the guaranteed benefitsunder the insurance policy.

SCHEDULE 2



(a) Objective

The objective of the Capital Preservation Portfolio is to preserve principal value.

(b) Types of investments

Except for a small portion to be held in cash or cash based investments for operational purposes, theCapital Preservation Portfolio is a feeder fund investing solely in an approved pooled investmentfund. The underlying pooled investment fund is a money market fund investing in deposits and debtsecurities subject to the restrictions set out in section 37 of the General Regulation.

(c) Geographical distribution

The underlying investments of the Capital Preservation Portfolio are investments located in HongKong.

(d) Security lending and repurchase agreements

The Capital Preservation Portfolio will not engage in security lending nor enter into repurchaseagreements. The pooled investment fund in which the Capital Preservation Portfolio invests will notengage in security lending but may enter into repurchase agreements through the custodian of thefund and subject to the restrictions set out in the General Regulation.

(e) Futures and options


(f) Risks

The performance of the Capital Preservation Portfolio is subject to the following risks:

(i) Political, economic and social risks - The underlying pooled investment fund may invest in assetswhose value may be affected by changes in political, economic and social conditions and policies.

(ii) Interest rate risk - The underlying pooled investment fund may invest in deposits and debt securitieswhose value will be subject to interest rate movements.

(iii) Counterparty risk - The underlying pooled investment fund may invest in deposits and debtsecurities and hence will be subject to counterparty defaults.

(g) Expected return

The Capital Preservation Portfolio is expected to provide a return roughly equal to the average HongKong dollar savings rate.

It should be noted that contributions invested in this fund are not the same as placing cash on depositwith a bank or deposit-taking company. There is no obligation by the Trustee to redeem investmentsat offer value.

The Capital Preservation Portfolio is not subject to the supervision of the Hong Kong MonetaryAuthority.

MPF

MPF

36 37

SCHEDULE 3

Global Bond Fund


(a) Objective

The Global Bond Fund is a feeder fund investing solely in an approved pooled investment fund. Theinvestment objective of the Fund is to seek long term stable return from a combination of currentincome and capital appreciation by investing in a portfolio of debt securities in the international markets,issued by government, supranational organizations and corporates.

(b) Balance of investments

Except for a small portion that may be held in cash or cash based investments for operational purposes,the Global Bond Fund will invest solely in an approved pooled investment fund that normally investsin a portfolio of debt securities in the international market, issued by governments, supranationalorganizations and corporates.

(c) Security lending and repurchase agreements

The Global Bond Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.

(d) Futures and options

The Constituent Fund set out in this Schedule will not deal in financial futures and option contracts(with the exception of currency forward contracts) for whatever reason. The Constituent Fund set outin this Schedule will deal in currency forward contracts for hedging purpose only.

(e) Risks

The performance of the Global Bond Fund is subject to a number of risks, including the following:

(i) Political, economic and social risks - All financial markets may at times be adversely affected bychanges in political, economic and social conditions and policies.

(ii) Market risk - The Fund investments are subject to the risks inherent in all securities; the value ofholdings may rise as well as fall.

(iii) Interest rate risk - The Fund may invest in debt securities whose values will be subject to interestrate movements.

(iv) Exchange rate risk - The Fund may invest in holdings denominated in other currencies andtherefore be exposed to currency movements.

(v) Counterparty risk - The underlying pooled investment fund may invest in deposits and debtsecurities and hence will be subject to counterparty defaults.

SCHEDULE 4

Conservative Portfolio


(a) Objective

The primary objective of the Conservative Portfolio is to minimise its short term capital risk in HongKong dollar terms. The secondary objective is to enhance returns over the long term through limitedexposure to global equities. The Conservative Portfolio seeks to achieve these investment objectivesthrough a professionally managed portfolio, invested in two or more pooled investment funds (and tothe extent permitted, any other permissible investment as approved by the MPFA and SFC).


The Conservative Portfolio asset allocation policy is normally to have the greater proportion of assetsinvested in bonds and cash, with the balance invested in equities. Investments may be made in anymarket in any country where permitted by the General Regulation.


The Conservative Portfolio will not engage in security lending and will not enter into repurchaseagreements. The selected pooled investment funds may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.


The Conservative Portfolio may deal in financial futures contracts and financial options contracts(including currency forward contracts) but only for hedging purposes.

(e) Risks

The performance of the Conservative Portfolio is subject to a number of risks, including the following:


(ii) Market risk - The Portfolio investments are subject to the risks inherent in all securities; the valueof holdings may rise as well as fall.

(iii) Interest rate risk - The Portfolio may invest in equity funds and bonds whose values will besubject to interest rate movements.

(iv) Exchange rate risk - The Portfolio may invest in holdings denominated in other currencies andtherefore be exposed to currency movements.


(f) Returns expected from the Conservative Portfolio

The Conservative Portfolio aims to provide returns in the long term that will exceed Hong Kong dollardeposit rates.

(g) Selection criteria of underlying pooled investment funds

Pooled investment funds will be selected from those available in the market that will allow theConservative Portfolio to achieve the stated investment objectives.

MPF

MPF

SCHEDULE 5

Balanced Portfolio


(a) Objective

The primary objective of the Balanced Portfolio is to maximise its long term capital appreciation inHong Kong dollar terms within moderate risk parameters. The secondary objective is to outperformHong Kong price inflation over the long term. The Balanced Portfolio seeks to achieve these investmentobjectives through a professionally managed portfolio, invested in two or more pooled investmentfunds (and to the extent permitted, any other permissible investment as approved by the MPFA andSFC).


The Balanced Portfolio asset allocation policy is normally to have an equity content of 50% with theremainder in cash and bonds. Investments may be made in any market in any country where permittedby the General Regulation.


The Balanced Portfolio will not engage in security lending and will not enter into repurchaseagreements. The selected pooled investment funds may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.


The Balanced Portfolio may deal in financial futures contracts and financial options contracts (includingcurrency forward contracts) but only for hedging purposes.

(e) Risks

The performance of the Balanced Portfolio is subject to a number of risks, including the following:






(f) Returns expected from the Balanced Portfolio

The Balanced Portfolio aims to provide an expected return in the long term that will exceed HongKong price inflation.


Pooled investment funds will be selected from those available in the market that will allow the BalancedPortfolio to achieve the stated investment objectives.

38 39

SCHEDULE 6

Growth Portfolio


(a) Objective

The primary objective of the Growth Portfolio is to maximise its long term capital appreciation inHong Kong dollar terms. The secondary objective is to outperform Hong Kong salary inflation overthe long term. The Growth Portfolio seeks to achieve these investment objectives through aprofessionally managed portfolio, invested in two or more pooled investment funds (and to the extentpermitted, any other permissible investment as approved by the MPFA and SFC).


The Growth Portfolio asset allocation policy is normally to have the greater proportion of assetsinvested in equities, with the balance invested in bonds and cash. Investments may be made in anymarket in any country where permitted by the General Regulation.


The Growth Portfolio will not engage in security lending and will not enter into repurchase agreements.The selected pooled investment funds may engage in security lending and repurchase agreements,subject to the restrictions set out in the General Regulation.


The Growth Portfolio may deal in financial futures contracts and financial options contracts (includingcurrency forward contracts) but only for hedging purposes.

(e) Risks

The performance of the Growth Portfolio is subject to a number of risks, including the following:






(f) Returns expected from the Growth Portfolio

The Growth Portfolio aims to provide an expected return in the long term that will exceed Hong Kongsalary inflation.


Pooled investment funds will be selected from those available in the market that will allow the GrowthPortfolio to achieve the stated investment objectives.

MPF

MPF

SCHEDULE 7

Manager’s Choice Fund


(a) Objective

The Manager’s Choice Fund seeks to achieve long term capital appreciation through a professionallymanaged portfolio, invested in two or more pooled investment funds. The Manager’s Choice Fundattempts to perform dynamic asset allocation in order to maximize long term capital appreciation.The Manager’s Choice Fund would be suitable to investors who are willing to accept an above averagelevel of risk in order to achieve long term capital appreciation.


Depending on the market condition, the Manager’s Choice Fund may allocate from 10% to 90% of itsassets in equities, with the balance invested in bonds, money market instruments and cash.Investments may be made in the above mentioned asset classes and may be in various marketsglobally where permitted by the General Regulation. The allocations will change based on theinvestment manager’s view on the economic and market outlook, with higher allocation to equitywhen equity market outlook is positive, balanced allocation when equity market outlook is neutraland higher allocation to bonds, money market instruments and cash when equity market outlook isnegative.


The Manager’s Choice Fund will not engage in security lending and will not enter into repurchaseagreements. The selected pooled investment funds may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the Manager’s Choice Fund is subject to a number of risks, including the following:






(vi) Hedging - The Investment Manager is permitted, but not obliged, to use hedging techniques toattempt to offset currency risks. There is no guarantee that hedging techniques will achieve theirdesired results.

The Manager’s Choice Fund investment manager has full discretion to allocate the fund of theManager’s Choice Fund in the above mentioned asset classes. The allocation in the above mentionedasset classes may change significantly based on the investment manager’s view on the economicand market outlook.

(f) Selection criteria of underlying pooled investment funds

Pooled investment funds will be selected from those available in the market that will allow the Manager’sChoice Fund to achieve the stated investment objectives.

40 41

SCHEDULE 8

World Equity Fund


(a) Objective

The World Equity Fund is a portfolio management fund investing entirely in approved Index-trackingCollective Investment Schemes (ITCISs). The investment objective of the Fund is to seek a longterm capital appreciation by investing in a combination of global equity market index tracking funds.Please note that the World Equity Fund is not an index tracking fund.


The World Equity Fund will invest mainly in approved ITCISs that track equity market indices thatcover Large Cap companies in their respective markets around the world. A greater proportion of theassets will primarily be invested in equity market indices that track North American, European, FarEastern and Australasian markets and a smaller proportion will be invested in Latin American markets.The remaining assets will be held in cash or cash based investments for operational and hedgingpurposes.


The World Equity Fund will not engage in security lending and will not enter into repurchaseagreements.



(e) Risks

The performance of the World Equity Fund is subject to a number of risks, including the following:



(iii) Exchange rate risk - The Fund may invest in holdings denominated in other currencies andtherefore be exposed to currency movements.

(iv) Counterparty risk - The Fund invests in Exchange Traded Funds (ETF) and may be exposed todefault and settlement risks.

(v) Tracking error risk - The underlying ITCISs seek to track as closely as possible their respectivelystated equity market indices. However, due to inherent tracking errors brought about by thenature of such investments of of the ITCISs, the performance of the ITCISs may not track exactlythe respective equity market indices.

(f) Selection criteria of ITCISs

ITCISs will be selected from those available in the market that will allow the World Equity Fund toachieve the stated investment objectives.

MPF

MPF

SCHEDULE 9

North American Equity Fund


(a) Objective

The North American Equity Fund is a feeder fund investing entirely in an approved pooled investmentfund. The Fund seeks to provide long term capital appreciation through the underlying investmentfund which consists primarily of shares in US companies.


Except for a small portion to be held in cash or cash based investments for operational purposes, theNorth American Equity Fund is a feeder fund investing solely in an approved pooled investment fundwhose asset allocation policy is normally to have the greater proportion of assets invested in equitiesand convertibles, primarily in the US market, with the remainder in cash and bonds.


The North American Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the North American Equity Fund is subject to a number of risks, including thefollowing:



(iii) Interest rate risk - The Fund may invest in equity funds and bonds whose values will be subjectto interest rate movements.



SCHEDULE 10

Japan Equity Fund


(a) Objective

The Japan Equity Fund is a feeder fund investing solely in an approved pooled investment fund. Theinvestment objective of the Fund is to provide investors with long term capital growth through theunderlying investment fund which consists primarily of securities of companies based or operatingprincipally in Japan.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the Japan Equity Fund will invest solely in an approved pooled investment fund whose asset allocationpolicy is normally to have the greater proportion of assets invested in equities and convertibles,primarily in the Japan market, with the remainder in cash and bonds.


The Japan Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the Japan Equity Fund is subject to a number of risks, including the following:






42 43

MPF

MPF

SCHEDULE 11

European Equity Fund


(a) Objective

The European Equity Fund is a feeder fund investing solely in an approved pooled investment fund.The investment objective of the Fund is to provide investors with long term capital growth through theunderlying investment fund which consists primarily of securities of companies based or operatingprincipally in countries in Western Europe.

A portion of the underlying investment fund may be invested in companies which are based or operatein other countries in Eastern Europe.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the European Equity Fund will invest solely in an approved pooled investment fund whose assetallocation policy is normally to have the greater proportion of assets invested in equities andconvertibles, primarily in the European market, with the remainder in cash and bonds.


The European Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the European Equity Fund is subject to a number of risks, including the following:






SCHEDULE 12

Hong Kong Equity Fund


(a) Objective

The Hong Kong Equity Fund is a feeder fund investing entirely in an approved pooled investmentfund. The Fund seeks to provide long term capital appreciation through the underlying investmentfund which consists primarily of shares in companies quoted on the Stock Exchange of Hong Kong.Hong Kong is well placed to prosper directly from economic activity in the Asian region and theeconomic emergence of the People's Republic of China. Implementation of the investment policy isconsidered to be of high inherent risk.


Except for a small portion to be held in cash or cash based investments for operational purposes, theHong Kong Equity Fund is a feeder fund investing solely in an approved pooled investment fundwhose asset allocation policy is normally to have the greater proportion of assets invested in equitiesand convertibles, primarily in the Hong Kong market, with the remainder in cash and bonds.


The Hong Kong Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the Hong Kong Equity Fund is subject to a number of risks, including the following:






44 45

MPF

MPF

SCHEDULE 13

Asian Equity Fund


(a) Objective

The Asian Equity Fund is a feeder fund investing entirely in an approved pooled investment fund.The investment objective of the Fund is to provide investors with long term capital growth in US dollarterms through a portfolio consisting primarily of securities of companies based or operating principallyin the Asia-Pacific region, excluding Japan and Hong Kong.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the Asian Equity Fund will invest solely in an approved pooled investment fund whose asset allocationpolicy is normally to have a maximum equity content of 100%.


The Asian Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the Asian Equity Fund is subject to a number of risks, including the following:

(i) Political, economic and social risks - All financial markets may at times be adversely affected bychanges in political, economic and social conditions.

(ii) Market risk - The Fund’s investments are subject to the risks inherent in all securities i.e. thevalue of holdings may fall as well as rise. Various countries in which the Fund will invest areconsidered as emerging markets. As emerging markets tend to be more volatile than developedmarkets, any holdings in emerging markets are exposed to higher levels of markets risks.

(iii) Liquidity - The securities markets of some of the emerging countries in which the Fund’s assetsmay be invested are not yet fully developed which may, in some circumstances, lead to a potentiallack of liquidity.

(iv) Accounting standards and disclosure - Accounting, auditing and financial reporting standards insome of the emerging markets in which the Fund’s assets may be invested may be less vigorousthan international standards. As a result, certain material disclosures may not be made by somecompanies.

(v) Currency risk - The Fund is denominated in US dollar, although it will be principally invested inassets quoted in other currencies. The performance of the Fund will therefore be affected bymovements in the exchange rate between the currencies in which the assets are held and theUS dollar.

Since the Fund Manager aims to maximise return in US dollar terms, investors whose basecurrency is not the US dollar (or a currency linked to it) may be exposed to additional currencyrisk.

(vi) Hedging - The Manager is permitted, but not obliged, to use hedging techniques to attempt tooffset market and currency risks. There is no guarantee that hedging techniques will achievetheir desired result.

SCHEDULE 14

Greater China Equity Fund


(a) Objective

The Greater China Equity Fund is a feeder fund investing entirely in an approved pooled investmentfund. The fund seeks to provide long term capital appreciation by investing in the equity securities ofcompanies with exposure to the economies of countries within the Greater China Region, i.e. China,Hong Kong and Taiwan. Implementation of the investment policy is considered to be of high inherentrisk.


Except for a small portion to be held in cash or cash based investments for operational purposes, theGreater China Equity Fund is a feeder fund investing solely in an approved pooled investment fundwhose asset allocation policy is to have at least 70% of assets invested in equity securities, securitiesconvertible into equity securities and other investments giving exposure to equity securities, in eachcase where the equity securities are listed or to be listed on the stock exchanges of Hong Kong andTaiwan. The manager of the underlying pooled investment fund may, in its discretion, reduce thispercentage should, in its opinion, market or other conditions warrant such reduction. The remainingassets of the underlying pooled investment fund will be held in cash or near-cash securities.


The Greater China Equity Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the Greater China Equity Fund is subject to a number of risks, including thefollowing:






46 47

MPF

MPF

48 49

SCHEDULE 15

RCM Capital Stable Fund


(a) Objective

The RCM Capital Stable Fund is a feeder fund investing entirely in an approved pooled investmentfund. The objective of the Fund is to provide investors with capital preservation combined withsteady capital appreciation over the long term by investing in a diversified portfolio of global equitiesand fixed-interest securities through the underlying investment fund. This RCM Capital Stable Fundis designed for Members who are willing to assume a relatively low level of risk.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the RCM Capital Stable Fund is intended to invest entirely in an approved pooled investment fund.This approved pooled investment fund is expected to invest 30% of its assets in equities and 70% infixed-interest securities. The fixed income portion will consist of a range of instruments issued incountries around the world. The equity portion of the approved pooled investment fund will be investedprimarily in the Hong Kong, Japan, North American and European markets with a smaller proportion,being invested, at the discretion of the Manager, in other Asian countries and emerging markets.


The RCM Capital Stable Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the RCM Capital Stable Fund is subject to a number of risks, including thefollowing:



(iii) Interest rate risk - The Fund may invest in equities and bonds whose values will be subject tointerest rate movements.



SCHEDULE 16

RCM Stable Growth Fund


(a) Objective

The RCM Stable Growth Fund is a feeder fund investing entirely in an approved pooled investmentfund. The objective of the Fund is to achieve a stable overall return over the long term by investingin a diversified portfolio of global equities and fixed-interest securities through the underlying investmentfund. This RCM Stable Growth Fund is designed for Members who are willing to assume a mediumlevel of risk.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the RCM Stable Growth Fund is intended to invest entirely in an approved pooled investment fund.This approved pooled investment fund, is expected to invest 50% of its assets in equities and 50% infixed-interest securities. The fixed income portion will consist of a range of instruments issued incountries around the world. The equity portion of the approved pooled investment fund will be investedprimarily in the Hong Kong, Japan, North American and European markets with a smaller proportionbeing invested, at the discretion of the Manager, in other Asian countries and emerging markets.


The RCM Stable Growth Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the RCM Stable Growth Fund is subject to a number of risks, including thefollowing:






MPF

MPF

SCHEDULE 17

RCM Growth Fund


(a) Objective

The RCM Growth Fund is a feeder fund investing entirely in an approved pooled investment fund.The objective of the Fund is to maximise long term overall returns by investing primarily in globalequities through the underlying investment fund. This RCM Growth Fund is designed for Memberswho are willing to assume a relatively higher level of risk to achieve potentially higher long-termreturns.


Except for a small portion that may be held in cash or cash based investments for operational purposes,the RCM Growth Fund is intended to invest entirely in an approved pooled investment fund. Thisapproved pooled investment fund may invest in the countries comprised in the MSCI World Indexwhich covers all the major world stock markets including those in Japan, North America, Asia andEurope.


The RCM Growth Fund will not engage in security lending and will not enter into repurchaseagreements. The underlying pooled investment fund may engage in security lending and repurchaseagreements, subject to the restrictions set out in the General Regulation.



(e) Risks

The performance of the RCM Growth Fund is subject to a number of risks, including the following:






50 51

SCHEDULE 18

Green Fund


(a) Objective

The Green Fund is a feeder fund investing entirely in an approved pooled investment fund. Theobjective of the Fund is to provide investors with long term capital appreciation through well diversifiedinvestments in global equities principally by investing in companies according to (1) their environmentalratings as classified by Innovest Strategic Advisors (“Innovest”), an independent rating agency, and(2) financial performance expectations, as refined by I.DE.A.M.’s research for under/overweighting,with a view to outperforming the MSCI World Index over the medium to long term.

Innovest is a New York based agency covering the world equity universe and primarily focusing onenvironmental issues. Innovest has developed a model to generate environmental ratings on thebasis of its evaluation of companies as to how keen they are in developing and applying pro-activeenvironmental policy.

The independent rating agency may be changed upon notice of a period to be determined by theSFC.


The Green Fund is intended to invest entirely in an approved pooled investment fund. With anexception of a small portion that may be held in cash or cash based investments for operationalpurposes, most of the assets of this approved pooled investment fund is invested in equity securities.This approved pooled investment fund may also invest in exchange traded funds to maintain flexibilityand in convertible bonds and other bonds permitted by the General Regulation or collective investmentschemes permitted by the General Regulation for performance management purposes.

The geographical distribution of investments will be driven purely by bottom-up stock selectionprocesses based on the securities comprised in the MSCI World Index which covers all the majorworld stock markets including but not limited to North America, Europe, Asia and Japan. The Fundwill not invest in emerging market equities.


The Green Fund will not engage in security lending and will not enter into repurchase agreements.



(e) Risks

The performance of the Green Fund is subject to a number of risk factors, including those set outbelow:


(ii) Currency risk - The Fund may invest in assets quoted in currencies other than the base currencyof the Fund. The performance of the Fund will therefore be affected by movements in the exchangerate between the currencies in which the assets are held and the base currency of the Fund.

(iii) Interest rates - Interest rates may be subject to fluctuation. Any such fluctuation may have adirect effect on the income received by the Fund and its capital value.

(iv) Market risk - The Fund investments are subject to the risks inherent in all securities; the value ofholdings may rise as well as fall.

(v) Credit risk - If the issuer of any of the securities in which the Fund’s assets are invested defaults,the performance of the Fund will be negatively affected.

MPF

MPF

52

APPENDIX 1

ILLUSTRATIVE EXAMPLE FOR CAPITAL PRESERVATION PORTFOLIOOF THE AIA-JF MANDATORY PROVIDENT FUND SCHEME

Issued December 2005

PURPOSE OF THE EXAMPLE

This example is intended to help you compare the total amounts of annual fees and charges payableunder this Scheme with those under other registered schemes.

This example assumes that:

Your MPF Account Activities

(a) your monthly relevant income is $8,000

(b) you have put all your accrued benefits into the Capital Preservation Fund; you have not switchedyour accrued benefits to other constituent funds during the financial period

(c) you have not transferred any accrued benefits into or out of this Scheme during the financial period

Your Company Profile

(d) 5 employees (including yourself) of your employer participating in this Scheme

(e) the monthly relevant income of each employee is $8,000

(f) no voluntary contribution is made

(g) each of the other 4 employees has the same MPF account activities as yours

Investment Return and Savings Rate

(h) the monthly rate of investment return is 0.5% on total assets

(i) the prescribed savings rate is 3.25% per annum throughout the financial period

Based on these assumptions, the total amounts of annual fees you need to pay under this Scheme(including those payable to the underlying approved pooled investment fund) in one financial periodwould be: $124.00

Warning: This is just an illustrative example. The actual amounts of fees you need to pay may behigher or lower, depending on your choice of investments and activities taken during the financialperiod.

53

(vi) Hedging - The Manager is permitted, but not obliged, to use hedging techniques to attempt tooffset currency and market risks. There is no guarantee that hedging techniques will achievetheir desired result.

(vii) Investment risk - An investment in the Fund is meant to produce returns over the long-term.Investment should not expect to obtain short-term gains from such investment. Although theFund seeks to outperform the MSCI World Index, the Fund is not an index-tracking fund andaccordingly, it may outperform as well as underperform the relevant index depending on theperformance of its investments.

(viii) Derivatives - As the Fund may be investing in derivatives for hedging purposes and otherwisepermitted by the MPF Ordinance, the General Regulation, the Code on MPF Investment Fundsand the SFC’s Code on Unit Trusts and Mutual Funds, it will be subject to risks associated withsuch investments. Investments in derivatives may require the deposit of initial margin andadditional deposit of margin on short notice if the market moves against the investment positions.If no provision is made for the required margin within the prescribed time, the Fund’s investmentmay be liquidated at a loss. Therefore, it is essential that such investments in derivatives aremonitored closely.

MPF

MPF

APPENDIX 2

The Interim and Annual Rate Declared in respect of the GuaranteedPortfolio1

1 American International Assurance Company, Limited ("AIA") is the guarantor of the insurance policyunderlying the Guaranteed Portfolio. The guarantee is subject to conditions and applies only whenmembers hold the investment until the end of the scheme year. In the event a participating employerparticipates in a scheme provided by another service provider, any withdrawals from the GuaranteedPortfolio may be subject to discretionary adjustment. Scheme participants are advised to refer to thePrincipal Brochure for more information regarding this and other funds.

An interim rate will be declared by AIA each month. Interest on Individual Accounts will be accrueddaily based on the interim rate. At the end of each financial year AIA will declare an annual interestrate (the "Annual Rate"). The Annual Rate and any interim rate declared is at the sole discretion ofAIA. AIA guaranteed that the Annual Rate declared, however, will not be less than 0% per annum.

Investment involves risks. Past performance is not indicative of future performance.

FinancialYear

AnnualRate

(% p.a.)

Interim Rate (% p.a.)

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

2001-2002 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

2002-2003 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

2003-2004 1.54 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 2.00

2004-2005 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

2005-2006 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

2006-2007 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

54