SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL … · 2020. 4. 1. · SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH SEPTEMBER 2019 Contents Pages

SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH SEPTEMBER 2019

SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH SEPTEMBER 2019 Contents Pages Scheme report 1 - 5 Investment report 6 - 70 Independent auditor’s report 71 - 73 Scheme

Statement of net assets available for benefits 74 Statement of changes in net assets available for benefits 75 - 76 Statement of cash flows 77

Constituent funds

Statement of financial position 78 - 82 Statement of comprehensive income 83 - 87 Statement of changes in net assets attributable to members 88 - 91 Statement of cash flows 92 - 96

Notes to the financial statements 97 - 159

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SUN LIFE MPF MASTER TRUST SCHEME REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 1 Background

Sun Life MPF Master Trust (the “Scheme”) is a master trust scheme set up for the purpose of providing benefits to members in accordance with the Hong Kong Mandatory Provident Fund Schemes Ordinance (the “Ordinance”). The Scheme is established under a trust deed dated 31st January 2000 and amended from time to time, latest supplemental deed dated on 9th December 2016 between Sun Life Hong Kong Limited as sponsor and HSBC Provident Fund Trustee (Hong Kong) Limited as trustee (the “Trustee”). The Scheme is registered under Section 21 of the Ordinance.

2 Financial development

The Scheme commenced operations on 31st January 2000. The total contributions received and receivable including transfers-in and benefits paid and payable including transfers-out during the year were HK$169,329,000 (2018: HK$175,489,000) and HK$121,226,000 (2018: HK$124,854,000) respectively. The net asset value of the Scheme as at 30th September 2019 was HK$1,798,563,000 (2018: HK$1,778,218,000). The Scheme has 2,549 (2018: 2,618) members as at 30th September 2019.

3 Changes to the governing rules

The Scheme was established by a Trust Deed dated 31st January 2000, as amended by a Deed of Substitution dated 19th July 2000, a Supplemental Trust Deed dated 13th August 2002, a Deed of Substitution dated 3rd June 2003, a Supplemental Trust Deed dated 19th November 2008, a Deed of Substitution dated 30th September 2009, a First Supplemental Trust Deed dated 26th September 2012, a Second Supplemental Trust Deed dated 31st August 2015, a Third Supplemental Trust Deed dated 30th September 2015, a Fourth Supplemental Trust Deed dated 18th December 2015, a deed of retirement and appointment of sponsor and variation dated 1st December 2016 and a Fifth Supplemental Trust Deed dated 9th December 2016. The Offering Memorandum of the Scheme dated January 2014 was superseded by the latest Offering Memorandum of the Scheme dated December 2016. The First Addendum to Offering Memorandum was issued in December 2016 which forms part of the Offering Memorandum dated December 2016. The Second Addendum to Offering Memorandum was issued in July 2018 which forms part of the Offering Memorandum dated December 2016. The Third Addendum to Offering Memorandum was issued in December 2018 which forms part of the Offering Memorandum dated December 2016. The Fourth Addendum to Offering Memorandum was issued in June 2019 which forms part of the Offering Memorandum dated December 2016. The Fifth Addendum to Offering Memorandum was issued in December 2019 which forms part of the Offering Memorandum dated December 2016. The latest Offering Memorandum of the Scheme dated December 2016. There have been no other changes to the governing rules of the Scheme during the financial years ended 30th September 2018 and 2019.

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SUN LIFE MPF MASTER TRUST SCHEME REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019

4 Major service providers

Particulars of the Trustee and service providers engaged by the Trustee for the purposes of the Scheme during the year ended 30th September 2019 are set out below.

Trustee and Custodian HSBC Provident Fund Trustee (Hong Kong) Limited Level 13 1 Queen’s Road Central Hong Kong Sponsor (Note) Sun Life Hong Kong Limited 10th Floor Sun Life Tower The Gateway 15 Canton Road, Kowloon Hong Kong Investment Manager Schroder Investment Management (Hong Kong) Limited Level 33 Two Pacific Place 88 Queensway Hong Kong Auditor PricewaterhouseCoopers 22nd Floor, Prince’s Building Central Hong Kong

Administrator and Record Keeper BestServe Financial Limited 10/F, One Harbourfront 18 Tak Fung Street Hung Hom, Kowloon Hong Kong Banks The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong Note: With effect from 2nd January 2020, the address of the sponsor has changed to 16/F, Cheung Kei Center Tower A, No. 18 Hung Luen Road, Hunghom, Kowloon, Hong Kong.

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SUN LIFE MPF MASTER TRUST SCHEME REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 4 Major service providers (Continued)

Banks (Continued) ANZ Bank 13 Floor, Three Exchange Square 8 Connaught Place Central Hong Kong Bank of China (Hong Kong) Limited Bank of China Tower 1 Garden Road Hong Kong

BNP Paribas, Hong Kong Branch 59-63/F, Two IFC 8 Finance Street Central Hong Kong National Australia Bank Limited Level 27, One Pacific Place 88 Queensway Hong Kong Hang Seng Bank Limited 83 Des Voeux Road Central Hong Kong

Dah Sing Bank Limited

36th Floor, Dah Sing Financial Centre 108 Gloucester Road Hong Kong Standard Chartered Bank (Hong Kong) Limited 4 - 4A Des Voeux Road Central Hong Kong DBS Bank (Hong Kong) Limited 18th Floor, The Center 99 Queen’s Road Central Hong Kong Citibank, N.A. 50/F Citibank Tower, Citibank Plaza 3 Garden Road, Central Hong Kong Agricultural Bank of China Limited, Hong Kong Branch 25/F, Agricultural Bank of China Tower 50 Connaught Road Central Hong Kong

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SUN LIFE MPF MASTER TRUST SCHEME REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 4 Major service providers (Continued)

Banks (Continued) Bank of Communications Co., Ltd., Hong Kong Branch 20 Pedder Street Central Hong Kong China Construction Bank (Asia) Corporation Limited 28/F, CCB Tower No.3 Connaught Road Central Hong Kong Oversea-Chinese Banking Corporation Limited 9/F, Nine Queen’s Road Central Hong Kong Industrial and Commercial Bank of China (Asia) Limited 33/F, ICBC Tower, 3 Garden Road, Central, Hong Kong Bank accounts have been maintained with The Hongkong and Shanghai Banking Corporation Limited and Hang Seng Bank Limited which are associates of the Trustee. The interim Chairman of The Hongkong and Shanghai Banking Corporation Limited is Mr. Noel Quinn, with effective from 5th August 2019, (Mr. John Flint was the Chairman until 5th August 2019) at 1 Queen’s Road Central, Hong Kong. The Chairman of Hang Seng Bank Limited is Dr. Raymond K F Ch’ien at 83 Des Voeux Road Central, Hong Kong. Solicitors Linklaters 10th Floor, Alexandra House 18 Chater Road Hong Kong Deacons 5th Floor, Alexandra House 18 Chater Road Hong Kong

5 Directors of the Trustee

Directors of the Trustee during the year were:

Mark Ivan BOYNE Elaine Yuen Man LO Sau Ling TSE Horace Kwan Hor CHAU Daniel Gareth HANKINSON Rex Pak-kuen AUYEUNG (appointed on 14th June 2019) Sai Kit HEUNG (resigned on 30th June 2019) The business address of the above directors is: HSBC Main Building 1 Queen’s Road Central, Hong Kong

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SUN LIFE MPF MASTER TRUST SCHEME REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019

6 Further information

Members can obtain information about the Scheme and its operations from the Sun Life Hong Kong Limited’s website at www.sunlife.com.hk. 24-hour Phone Response Services are available for MPF members and employers at 2971 0200. They may also contact BestServe Financial Limited, the Administrator of the Scheme, for information relating to members’ issues. Sun Life Hong Kong Limited is a Foreign Account Tax Compliance Act (“FATCA”) compliant organisation. Please find the FATCA classification of this entity and its Global Intermediary Identification Number (“GIIN”) below. Effective from 17th December 2018, the 11 GIINs of the constituent fund were deregistered from Internal Revenue Service.

FATCA entity classification : Non-reporting IGA FFI/ Registered Sponsored Investment Entity

At 30th September 2019 and during the year, the Scheme is a master trust scheme and offering the following 13 constituent funds (each refers to the “Fund”).

Sponsored entity GIIN:

Schroder MPF Capital Guaranteed Portfolio LFXG35.00006.SF.344 Schroder MPF Conservative Portfolio LFXG35.00003.SF.344 Schroder MPF RMB and HKD Fixed Income Portfolio LFXG35.00007.SF.344 Schroder MPF Capital Stable Portfolio LFXG35.00004.SF.344 Schroder MPF Stable Growth Portfolio LFXG35.00010.SF.344 Schroder MPF Balanced Investment Portfolio LFXG35.00002.SF.344 Schroder MPF Growth Portfolio LFXG35.00005.SF.344 Schroder MPF International Portfolio LFXG35.00009.SF.344 Schroder MPF Asian Portfolio LFXG35.00001.SF.344 Schroder MPF Hong Kong Portfolio LFXG35.00008.SF.344 Schroder MPF Global Fixed Income Portfolio LFXG35.00011.SF.344 Schroder MPF Core Accumulation Fund Not applicable Schroder MPF Age 65 Plus Fund Not applicable

Sponsoring entity: Sun Life Hong Kong Limited Dated: 26th March 2020

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SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 Commentary Sun Life MPF Master Trust (the “Scheme”) offers a choice of 13 constituent funds namely Schroder MPF Capital Guaranteed Portfolio, Schroder MPF Conservative Portfolio, Schroder MPF RMB and HKD Fixed Income Portfolio, Schroder MPF Capital Stable Portfolio, Schroder MPF Stable Growth Portfolio, Schroder MPF Balanced Investment Portfolio, Schroder MPF Growth Portfolio, Schroder MPF International Portfolio, Schroder MPF Asian Portfolio, Schroder MPF Hong Kong Portfolio, Schroder MPF Global Fixed Income Portfolio, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund. With effect from 13th September 2019, the investment policy of Schroder MPF Capital Stable Portfolio, Schroder MPF Stable Growth Portfolio, Schroder MPF Balanced Investment Portfolio, Schroder MPF Growth Portfolio, Schroder MPF International Portfolio have been revised to reflect the amendments to the investment policy of the Approved Pooled Investment Funds (the “Underlying APIFs”) invested by such relevant constituent funds. The Underlying APIFs will also be allowed to invest its non-cash assets in index-tracking collective investment schemes approved by the Authority. With effect from 13th September 2019, the investment policy of Schroder MPF Asian Portfolio was enhanced to reflect the clarification made to the investment policy of the Approved Pooled Investment Fund invested by it such that the APIF may invest up to 10% of its net asset value in shares listed on a stock exchange that is not an approved stock exchange as defined in the Mandatory Provident Fund Schemes (General) Regulation, including without limitation shares of companies listed on the stock exchange(s) of the People’s Republic of China via the Stock Connect programme. For the year ended 30th September 2019, investments of the constituent funds were in accordance with the respective investment policies as stated in the Offering Document. Apart from above, there have been no significant changes to the investment policies during the year which would materially affect the risk attached to the investments of the Scheme. The Trustee, HSBC Provident Fund Trustee (Hong Kong) Limited, confirmed that based on the information received from the Investment Manager, Schroder Investment Management (Hong Kong) Limited, during the year, to the best of the knowledge and belief of the Trustee, the investment policies for each constituent fund of the Scheme were complied with. 1 Statement of investment objective and policies

The Scheme offers a choice of 13 constituent funds, ranging across the risk and reward scale. Refer to page 5 for the names of the 13 constituent funds.

Each of the 13 constituent funds has a different investment policy, achieved through investing its assets into an approved pooled investment fund (each refers to the “Sub-Fund”) (other than the Schroder MPF Conservative Portfolio which invests directly in permitted investments). These policies are outlined below.

1.1 Common policies on investments which apply to each constituent fund

(i) Each constituent fund (other than the Schroder MPF Conservative Portfolio) will invest its

assets in a single pooled investment fund but may also hold cash from time to time, up to a maximum of 5% of the net asset value of each constituent fund.

(ii) None of the constituent funds (other than the Schroder MPF Conservative Portfolio) will

have direct holdings of equities or bonds, its interest in such investments being achieved through an approved pooled investment fund.

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SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 1 Statement of investment objective and policies (Continued)

1.1 Common policies on investments which apply to each constituent fund (Continued) (iii) None of the constituent funds will trade in futures or options, but may enter into currency

forward contracts for the purposes of currency hedging. Their approved pooled investment funds may acquire futures and options for the purposes of investment or hedging subject to the restrictions in Schedule 1 to the Hong Kong Mandatory Provident Fund Schemes (General) Regulation (the “General Regulation”).

(iv) None of the constituent funds or their approved pooled investment funds will lend

securities.

(v) Each constituent fund is subject to the investment and borrowing restrictions in Schedule 1 of the Mandatory Provident Fund Schemes (General) Regulation.

(vi) The intention is that the constituent funds (other than the Schroder MPF Conservative

Portfolio) only invest in the underlying approved pooled investment funds which have no less than 30% in Hong Kong dollar investments. However, the constituent funds may hedge currency from time to time. The Schroder MPF Conservative Portfolio will invest directly in permitted investments and will at all times have an effective Hong Kong currency exposure of 100%.

(vii) Investments may, however, only be acquired for the constituent funds in those countries or

markets where the Trustee is satisfied that suitable arrangements can be made for their custody.

1.2 Schroder MPF Capital Guaranteed Portfolio

(i) The objective of the constituent fund is to achieve a positive return, after expenses, for as

long as the investor remains invested in the constituent fund. (ii) The constituent fund will invest in a single approved pooled investment fund in the form of

an insurance policy, which in turn will invest in global bonds, equities and cash with the current proposed asset allocation of a range of 67% to 95%, 0% to 33% and 0% to 33% of the asset value respectively. The approved pooled investment fund is globally diversified but with a bias towards Hong Kong. The approved pooled investment fund will hold a minimum of 67% in Hong Kong dollar investments at all times through direct holdings in equities, bonds and cash and/or currency hedging.

(iii) The single approved pooled investment fund is a Class G insurance policy and will be

managed, issued and guaranteed by FWD Life Insurance Company (Bermuda) Limited (“FWD”).

(iv) Investments in the insurance policy (i.e. the underlying approved pooled investment fund)

are held as the assets of FWD. In the event where FWD is liquidated, members may not have access to their investments temporarily, or their value may be reduced.

(v) The constituent fund is low risk and, as such is appropriate for those who wish to ensure

that their benefits are not substantially less than their contributions at the end of a 5-year period or at age 65.

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1.2 Schroder MPF Capital Guaranteed Portfolio (Continued)

(vi) The overall returns of the constituent fund will be those achieved from the underlying approved pooled investment fund less expenses, charges and fees at the constituent fund level.

(vii) An investment in the constituent fund is not guaranteed at the constituent fund level, but

the underlying approved pooled investment fund in which the assets of the portfolio will be invested is a guaranteed insurance policy.

(viii) The guarantee structure results in a dilution in performance.

1.3 Schroder MPF Conservative Portfolio

(i) The objective of the constituent fund is to provide a return, after expenses, which matches or exceeds the Hong Kong dollar savings rate.

(ii) The constituent fund’s investments will be limited by the investment restrictions for a MPF

conservative fund as defined in the MPF legislation and guidelines. In summary, these are as follows:

deposits, less than 12 months’ maturity with banks meeting specific requirements;

debt securities, with a maturity of 2 years or less issued by or guaranteed by the

Government of the Hong Kong Special Administrative Region, the Exchange Fund, a company wholly owned by the Hong Kong Government; or a foreign government or multi-lateral agency (such as the World Bank) with the highest credit rating;

debt securities, with a maturity of 1 year or less with a credit rating level set by the

Mandatory Provident Fund Schemes Authority;

the average maturity of all securities must not exceed 90 days;

the constituent fund must be wholly invested in Hong Kong dollar currency investments.

(iii) The constituent fund will hold a minimum of 100% in Hong Kong dollar investments at all

times through direct holdings in the restricted investments shown above. (iv) The constituent fund is low risk and, as such, is suitable for investors with less than 3 years

before retirement. (v) It should be noted that an investment in the constituent fund is not the same as placing

funds on deposit with a bank or deposit-taking company and that there is no obligation to redeem the investment at the offer value. It should also be noted that the constituent fund is not subject to the supervision of the Hong Kong Monetary Authority.

(vi) The long-term return is expected to be in line with deposit rates for Hong Kong dollars.

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1.4 Schroder MPF RMB and HKD Fixed Income Portfolio (i) The objective of the constituent fund is to provide a long-term return of capital growth and

income in Hong Kong dollar terms through investment in a portfolio consisting mainly RMB and HKD denominated debt securities.

(ii) The constituent fund invests in a single approved pooled investment fund, a sub-fund of

the Schroder Institutional Pooled Funds namely, the RMB and Hong Kong Fixed Income Fund, which primarily invests in fixed and floating rate debt securities denominated in Renminbi and Hong Kong dollar issued by government, quasi-government, financial and corporate issuers worldwide. It may also invest in Renminbi and Hong Kong dollar denominated money market instruments including fixed deposits, certificates of deposit, commercial paper, treasury bills and cash. The current proposed allocation of the assets is: Asset Allocation Debt securities 70% to 100% Money market instruments 0% to 30% Currency Allocation Renminbi 30% to 70% Hong Kong dollar 30% to 100% Other currencies* 0% to 30% * expected to be mainly United State dollar but may also be other Asian currencies

(iii) The approved pooled investment fund will hold a minimum of 30% in Hong Kong dollar investments at all times.

(iv) The constituent fund is low risk and, as such, is suitable for investors with between 3 and 5

years before retirement.

(v) The long-term return is expected to be associated primarily with the volatility and growth in the RMB and HKD denominated debt securities.

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1.5 Schroder MPF Capital Stable Portfolio

(i) The objective of the constituent fund is to achieve a long-term return in line with Hong

Kong price inflation (as measured by the Consumer Price Index Type A). (ii) The constituent fund will invest in a single approved pooled investment fund which is a

fund of funds investing in other Schroder managed funds and index-tracking collective investment schemes approved by the Mandatory Provident Fund Schemes Authority (“ITCIS”). The underlying investments of the portfolio will primarily include quoted securities, government and corporate bonds and cash deposits worldwide. The portfolio is thus globally diversified but is biased towards Hong Kong. The current proposed allocation of the assets is:

Bonds 40% to 70% US Dollar 5% to 60% Global currencies ex US Dollar ex Hong Kong dollar 5% to 40% Hong Kong dollar 0% to 50% Equities 15% to 40% Hong Kong 0% to 20% Asia ex Hong Kong ex Japan 0% to 15% United States 0% to 15% Japan 0% to 10% Europe 0% to 10% Others 0% to 5% Cash or cash equivalents 0% to 30%

(iii) The constituent fund is suitable for inclusion in a lifecycle range of products. (iv) The approved pooled investment fund will hold a minimum of 30% in Hong Kong dollar

investments at all times. (v) The constituent fund is medium risk and, as such, is suitable for investors with between 5

and 10 years before retirement. (vi) The long-term return is expected to be in line with Hong Kong price inflation.

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1.6 Schroder MPF Stable Growth Portfolio

(i) The objective of the constituent fund is to achieve a long-term return in excess of Hong

Kong price inflation (as measured by the Consumer Price Index Type A). (ii) The constituent fund will invest in a single approved pooled investment fund which is a

fund of funds investing in other Schroder managed funds and ITCIS. The underlying investments of the portfolio will primarily include quoted securities, government and corporate bonds and cash deposits worldwide. The portfolio is thus globally diversified but is biased towards Hong Kong. The current proposed allocation of the assets is:



investments at all times. (v) The constituent fund is medium risk and, as such, is suitable for investors with between 5

and 10 years before retirement. (vi) The long-term return is expected to be in line with Hong Kong price inflation.

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1.7 Schroder MPF Balanced Investment Portfolio

(i) The objective of the constituent fund is to achieve a long-term return in excess of salary

inflation in Hong Kong (as indicated by the Hong Kong Monthly Digest of Statistics as published by the Census and Statistics Department of the Government of Hong Kong Special Administrative Region).

(ii) The constituent fund will invest in a single approved pooled investment fund which is a




investments at all times. (v) The risk profile of the constituent fund is relatively high and, as such, is suitable for

investors with more than 10 years before retirement. (vi) The long-term return is expected to be modestly in excess of salary inflation in Hong Kong.

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1.8 Schroder MPF Growth Portfolio

(i) The objective of the constituent fund is to achieve long-term return in excess of salary

inflation in Hong Kong (as indicated by the Hong Kong Monthly Digest of Statistics as published by the Census and Statistics Department of the Government of Hong Kong Special Administrative Region).

(ii) The constituent fund will invest in a single approved pooled investment fund which is a



(iii) The constituent fund is suitable for inclusion in a lifecycle range of products.

(iv) The approved pooled investment fund will hold a minimum of 30% in Hong Kong dollar

investments at all times. (v) The risk profile of the constituent fund is relatively high and, as such, is suitable for

investors with more than 10 years before retirement. (vi) The long-term return is expected to be modestly in excess of salary inflation in Hong Kong

(as indicated by the Hong Kong Monthly Digest of Statistics as published by the Census and Statistics Department of the Government of Hong Kong Special Administrative Region).

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1.9 Schroder MPF International Portfolio (i) The objective of the constituent fund is to achieve long-term capital growth. (ii) The constituent fund will invest in a single approved pooled investment fund which is a

fund of funds investing in other Schroder managed funds and ITCIS. The underlying investments of the portfolio will primarily include quoted securities and cash deposits worldwide. The portfolio is globally diversified. The current proposed allocation of the assets is:

Equities 60% to 100% Pacific ex Japan 0% to 20% United States 10% to 70% Japan 0% to 25% Europe 10% to 50% Others 0% to 20% Cash or cash equivalents 0% to 40%

(iii) It will hold a minimum of 30% in Hong Kong dollar investments at all times. (iv) The risk profile of the constituent fund is relatively high and, as such, is suitable for

investors seeking long-term capital appreciation. (v) The long-term return is expected to be modestly in excess of Hong Kong price inflation (as

measured by the Consumer Price Index Type A).

1.10 Schroder MPF Asian Portfolio (i) The objective of the constituent fund is to achieve long-term capital growth. (ii) The constituent fund will invest in a single approved pooled investment fund and the non-

cash investments of which will primarily invest in Asian (ex-Japan) equities. The approved pooled investment fund may invest up to 10% of its net asset value in shares listed on a stock exchange that is not an approved stock exchange as defined in the Mandatory Provident Fund Schemes (General) Regulation, including, without limitation, shares of companies listed on the stock exchange(s) of the People’s Republic of China (the “PRC”) via the Stock Connect programme (the “Stock Connect”). The fund may hold cash, bank deposits or cash equivalents for ancillary purposes. For indicative purposes, the current proposed allocation of assets of the portfolio is:

Equities 60% to 100% Hong Kong 20% to 70% Singapore 0% to 30% Malaysia 0% to 20% Korea 0% to 40% Taiwan 0% to 40% Thailand 0% to 20% Philippines 0% to 10% India 0% to 40% Others 0% to 10% Cash and cash equivalents 0% to 40%

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1.10 Schroder MPF Asian Portfolio (Continued)

(iii) The approved pooled investment fund will hold a minimum of 30% in Hong Kong dollar

investments at all times.

(iv) The risk profile of the constituent fund is relatively high and, as such, is suitable for investors seeking long-term capital appreciation.

(v) The long-term return is expected to be modestly in excess of Hong Kong price inflation (as

measured by the Consumer Price Index Type A).

1.11 Schroder MPF Hong Kong Portfolio (i) The objective of the constituent fund is to achieve long-term capital growth.

(ii) The constituent fund will invest in a single approved pooled investment fund namely, the

Hong Kong Equity Fund, a sub-fund of the Schroder Institutional Pooled Funds, which primarily invests in Hong Kong equities. The approved pooled investment fund may hold cash, bank deposits or cash equivalents for ancillary purposes. The current proposed allocation of the assets is:

Equities 90% to 100% Hong Kong 90% to 100% Cash or cash equivalents 0% to 10%

(iii) It will hold a minimum of 30% in Hong Kong dollar investments at all times. (iv) The risk profile of the constituent fund is relatively high and, as such, is suitable for

investors with more than 10 years before retirement. (v) The long-term return is expected to be modestly in excess of Hong Kong price inflation (as

measured by the Consumer Price Index Type A). 1.12 Schroder MPF Global Fixed Income Portfolio

(i) The objective of the constituent fund is to provide security of capital and a comparatively

high income return.

(ii) The constituent fund will invest in a single approved pooled investment fund which makes direct investments primarily in fixed interest and floating rate securities, money market instruments and cash deposits while maintaining a high income yield. The fund may hold cash, bank deposits or cash equivalents for ancillary purposes. The current proposed allocation of the assets is:

Bonds 70% to 100% US Dollar 10% to 90% Global currencies ex US Dollar 10% to 90% Cash or cash equivalents 0% to 30%

(iii) It will hold a minimum of 30% in Hong Kong dollar investments at all times.

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SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019

1 Statement of investment objective and policies (Continued)

1.12 Schroder MPF Global Fixed Income Portfolio (Continued)

(iv) The constituent fund is not a guaranteed fund. It cannot be guaranteed that the performance of the constituent fund will generate a return and there may be circumstances where no return is generated or the capital is lost.

(v) The constituent fund is low risk and, as such, is suitable for investors with between 3 and 5

years before retirement. (vi) The long-term risk and return of the constituent fund will be associated primarily with the

volatility and growth in global bonds.

1.13 Schroder MPF Core Accumulation Fund (i) The objective of the constituent fund is to provide capital growth to members by investing

in a globally diversified manner.

(ii) The constituent fund will invest in a single approved pooled investment fund namely, the Schroder MPF Core 60/40 Fund, which in turn invests in two approved pooled investment funds as allowed under the Mandatory Provident Fund Schemes (General) Regulation. The constituent fund will hold 60% of its net assets in higher risk assets (such as global equities), with the remainder investing in lower risk assets (such as global fixed income and money market instruments). The underlying investments of the portfolio will primarily include quoted securities, government and corporate bonds and cash deposits worldwide. The current proposed allocation of the assets is:

Bonds and money market instruments 35% to 45% US dollar 3.5% to 40.5% Global currencies ex US Dollar 3.5% to 40.5% Equities 55% to 65% Asia Pacific ex Japan 0% to 32.5% United States 5.5% to 45.5% Japan 0% to 16.25% Europe 5.5% to 32.5% Others 0% to 19.5%

(iii) It will hold a minimum of 30% in Hong Kong dollar investments at all times. (iv) The risk profile of the constituent fund is relatively medium and, as such, is suitable for

investors with more than 10 years before retirement.

(v) The Investment Manager of the constituent fund will not trade in currency forwards, futures or options but the investment manager of the Schroder MPF Core 60/40 Fund (and its underlying approved pooled investment funds) may enter into currency forward contracts, futures contracts and options contracts for the account of the Schroder MPF Core 60/40 Fund (and its underlying approved pooled investment funds) for hedging purposes only. The Investment Manager of the constituent fund and the investment manager of the Schroder MPF Core 60/40 Fund (and its underlying approved pooled investment funds) does not intend to engage in securities lending or repurchase agreement.

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1 Statement of investment objective and policies (Continued)

1.14 Schroder MPF Age 65 Plus Fund

(i) The objective of the constituent fund is to provide stable growth to members by investing

in a globally diversified manner.

(ii) The constituent fund will invest in a single approved pooled investment fund namely, the Schroder MPF Core 20/80 Fund, which in turn invests in two approved pooled investment funds as allowed under the Mandatory Provident Fund Schemes (General) Regulation. The constituent fund will hold 20% of its net assets in higher risk assets (such as global equities), with the remainder investing in lower risk assets (such as global fixed income and money market instruments). The underlying investments of the portfolio will primarily include quoted securities, government and corporate bonds and cash deposits worldwide. The current proposed allocation of the assets is:

Bonds and money market instruments 75% to 85% US Dollar 7.5% to 76.5% Global currencies ex US Dollar 7.5% to 76.5% Equities 15% to 25% Asia Pacific ex Japan 0% to 12.5% United States 1.5% to 17.5% Japan 0% to 6.25% Europe 1.5% to 12.5% Others 0% to 7.5%

(iii) It will hold a minimum of 30% in Hong Kong dollar investments at all times. (iv) The risk profile of the constituent fund is relatively low and, as such, is suitable for investors

with 15 or less years before retirement.

(v) The Investment Manager of the constituent fund will not trade in currency forwards, futures or options but the investment manager of the Schroder MPF Core 20/80 Fund (and its underlying approved pooled investment funds) may enter into currency forward contracts, futures contracts and options contracts for the account of the Schroder MPF Core 20/80 Fund (and its underlying approved pooled investment funds) for hedging purposes only. The Investment Manager of the constituent fund and the investment manager of the Schroder MPF Core 20/80 Fund (and its underlying approved pooled investment funds) does not intend to engage in securities lending or repurchase agreement.

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2 Market review and outlook for the year ended 30th September 2019

Schroder MPF Capital Guaranteed Portfolio

Market Review

Chinese and Hong Kong equities extended their losses in a volatile quarter for world markets. Persistent concerns over the US-China trade conflict and the pace of US interest rate hikes dominated sentiment. The darkening global economic outlook further troubled investors. Notably, China’s economy recorded its weakest quarterly growth since the global financial crisis. Industrial production and retail sales also slowed more than expected, heightening growth concerns. Policymakers responded with measures to support the economy, including cutting banks’ reserve requirement ratios and boosting credit for small and private companies. In fixed income, government bond yields also reflected broader risk aversion and macro uncertainty. The Fed’s dovish tone shift meant that, in spite of the central bank’s fourth rate rise of the year, the 10-year Treasury yield fell from 3.06% to 2.68%. 10-year Bund yields declined from 0.47% to 0.24% on the Eurozone’s lacklustre data. Elsewhere, corporate bonds had a challenging quarter and underperformed government bonds. Investment grade was marginally lower as the euro market declined. High yield was weak, led down by the energy sector, particularly in the US. Emerging market bonds (EM bonds) were mixed. Hard currency EM bonds were down, but local currency bonds were higher as US dollar strength waned and currencies of oil exporters benefited from weaker energy prices. Going into 2019, Chinese and Hong Kong equities rebounded strongly thanks to progress in US-China trade negotiations and the dovish shift by major central banks. Chinese stocks were further buoyed by index provider MSCI’s move to increase the weighting of China-listed shares in its benchmark indices. Gains were also fuelled by anticipation that Chinese authorities would continue to introduce supportive policies to counter the economic slowdown, including cut in reserve requirement ratios for banks. US 10-year Treasury yields fell 30 bps and reached their lowest level since late 2017. Notably, the three-month Treasury bill yield rose higher than that of 10-year bonds in March. This yield curve inversion highlighted growing caution among investors over economic growth. 10-year Bund yields were also more than 30bps lower and towards the end of March fell below zero for the first time since October 2016. Corporate bonds had a strong quarter, having fallen sharply in Q4. High yield credit - harder hit than investment grade in Q4 - outperformed, especially in the US. Elsewhere, EM bonds had a positive quarter with US dollar-denominated debt outperforming as local currency EM bonds weakened in March given the return of certain country-specific risks.

In Q2, Chinese and Hong Kong equities closed mixed over the quarter. Trade tensions and economic risks dominated investor sentiment, while global monetary policy was another key focus. In particular, the US-China trade war escalated in May after the US raised tariffs on US$200 billion worth of Chinese imports and added Chinese telecommunications group Huawei to a trade blacklist. China countered with retaliatory tariffs on US goods. Both countries subsequently agreed to a truce and will resume trade negotiations following a meeting between their leaders in June. Against such a backdrop, Chinese stocks finished in negative territory, though losses were pared in June thanks to easing trade tensions and hopes of further stimulus measures. Conversely, Hong Kong benefited from the rally in financials stocks and investors cheered the suspension of a contentious extradition bill. Bond yields fell markedly once again. The 10-year US Treasury yield was more than 40 bps lower over while the 10-year Bund yield also fell 30bps into negative territory. In credit, corporate bonds outperformed government bonds, delivering positive total returns. Investment grade (IG) saw better returns than high yield (HY) as it tends to benefit more from falling yields. Elsewhere, emerging market bonds had a positive quarter. Local currency bonds performed particularly well against a weaker US dollar.

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2 Market review and outlook for the year ended 30th September 2019 (Continued)

Schroder MPF Capital Guaranteed Portfolio (Continued)

Market Review (Continued)

Finally, the re-escalation of US-China trade tensions and continuing political unrest in Hong Kong in Q3 weighed on markets. In this environment, returns from the Chinese market were marginally worse than the Asian region as a whole. The US 10-year Treasury yield finished 30 bps lower at 1.67% while similarly, Bund yield fell 24bps to finish even deeper in negative territory. The Italian 10-year yield saw a substantial move, falling 126 bps due to the anticipation, and ultimately announcement, of new stimulus measures. The UK saw further escalation in Brexit uncertainty, with the 10-year yield falling 34 bps over the quarter, with most of this occurring in July. Corporate bonds benefited from the decline in global yields and outperformed government bonds. Investment grade corporate bonds returned strong returns, while the riskier high yield part of the market also performed well. Across emerging market bonds, hard currency and corporate debt made positive returns, while local currency bonds declined.

Market Outlook

While our original assessment was that the impact from the Coronavirus would be transitory, the quick deterioration of the situation in Europe and the US means that the impact is likely to be larger than our original expectation. Given the lockdown of borders and cities around the world, the severity of the economic impact is very high, and our economist team has updated their forecasts with an expectation of -3.1% impact on GDP growth this year, bringing the world into a technical recession. At the same time, we have also seen unprecedented moves by central banks globally in a coordinated manner to provide supportive measures and liquidity via interest rate cuts and quantitative easing. In addition, governments have announced various fiscal stimulus packages to help the economy brace for this heavy impact. However, these announcements have yet to calm markets thus we expect markets to remain highly volatile in the near term. For equities, we expect earnings forecasts to be adjusted downwards in some areas. Industries that are most vulnerable to the COVID-19 shock are manufacturing, gaming, tourism and consumption/travel-related industries (retail, airlines etc.) as they have borne the brunt of the demand shock as travel-related activity has dramatically reduced. At the same time, the sharp pull-back in markets in recent days is starting to throw up more interesting value opportunities. However, this is not a time for blithe risk-taking; we need to see more information on the economic damage from the twin shocks in the form of corporate earnings announcements or economic data before we can wade back into risk assets. Our bias is to look for opportunities to generate returns, but we also need to be watchful on future developments. We continue to see value in duration in a portfolio context to hedge against disappointment in growth, although valuations have become expensive following the recent rally while rates markets have continued to move aggressively in pricing further easing from global central banks. Lastly for credit, we believe the liquidity provision would remain supportive by reducing liquidity risks and funding costs.

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Schroder MPF Conservative Portfolio

Market Review

The year 2018 ended with increased uncertainty surrounding the lack of resolution in the US-China trade friction and the prospects of slowing global growth. The US Treasury yield curve flattened across the 12-month period ending September 2019, with the 10-year yield falling markedly from 3.05% as at end September 2018 to 1.68% as at end September 2019.

The fourth quarter of 2018 ended with increased volatility with the Chicago Board Options Exchange Volatility Index (VIX), otherwise known as the “fear gauge”, hit its highest level since February 2018 as investors flocked to safety. With tit-for-tat tariffs imposed on each other, the relations between US and Mainland China saw little room for improvement, dampening global growth prospects. In Q1 2019, a weaker global growth backdrop resulted in major central banks taking a dovish tone. The Fed signaled a pause on rate hikes, preferring to take a more cautious stance given muted inflation. The second quarter of 2019 saw an escalation of the trade war with both US and Mainland China increasing tariffs and banning sales to entities in each country. Q2 ended with underwhelming economic data from the US due to weakening domestic demand and tepid export orders. The Fed cut rates for the first time in July since the 2008 financial crisis by 25 basis points as an insurance policy for future economic outlook. The trade war ended the quarter with a tentative truce before the G20 summit. The deteriorating negotiation talks between US and Mainland China spilled over to Q3 2019. The yuan sunk to 7 against the US dollar, its lowest level in 11 years, to support Chinese exports, resulting in Mainland China being labelled as a currency manipulator by the US. Fears of recession awakened among investors when an accurate recession predictor, the US yield curve inversion, took place during the quarter. When the short-term 2-year Treasury yields exceed that of the long-term 10-year Treasury yields, long term debt is deemed riskier than short-term debt signaling an economic downturn in the near future. With data indicating continued moderation in growth in the US, the Fed cut rates a second time during the year in September by 25 basis points. The quarter ended on a more positive note with the US-China trade talks set to resume in October and both sides seen to be making efforts to reach a deal.

The Eurozone economic data and inflation outlook remained soft. The European Central Bank’s (ECB) took steps to boost the economy, including restarting quantitative easing and committing to buying assets until its inflation target is reached. In the UK, Brexit and domestic political uncertainty dominated headlines. Forward-looking indicators continued to point to a loss of momentum in the UK economy, amid a global slowdown in activity.

Meanwhile, Hong Kong SAR’s economic data printed in the first half of the year was weak. Retail sales and export numbers continue being sluggish while the manufacturing Purchasing Managers’ Index (PMI) extended its drop further into the contractionary space, printing 46.9 points in May. Over the period, the Hong Kong Monetary Authority (HKMA) stepped in several times to defend the USD/HKD peg whenever HKD traded on the weak side of its trading band. The Hong Kong SAR economy was dragged down by global growth slowdown while being challenged by the tensed political environment and continued uncertainty and protests. Retail sales volume plunged 25.3% over a year ago in August. Market Manufacturing PMI was in contractionary territory with a print of 41.5 in September. In line with the Fed interest rate policy, HKMA also cut its base lending rate twice this year.

Against this backdrop, the Sub-Fund posted a positive return of 1.32% (HKD, net of fees) for the 12-month period under review and outperformed the MPFA prescribed savings rate benchmark which returned 0.12%. The HKD government bond yields fell in line with the high correlation with US Treasury yields, resulting in positive returns from HKD bonds overall. HKD government bonds returned 5.58%% (as measured by the iBoxx ALBI Hong Kong Government Bond Index, in HKD) while HKD denominated corporates fared better with a 8.40% return (the iBoxx ALBI Hong Kong Non-Government Bond Index, in HKD) during the period under review.

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Schroder MPF Conservative Portfolio (Continued) Market Outlook

2020 had started on a positive note for Asian bond markets as markets reacted positively to the easing of tensions on the almost two years US-China trade war. As the world’s economic powerhouses slapped billions of dollars of tariffs on each other during the period, investor and consumer confidence had taken a toll, resulting in widespread slow-down in growth. However, the euphoria from the trade front was short-lived as global economies, in particular, Asian economies were plunged into another crisis, one that is not as easily resolved – the 2019 novel coronavirus. Originating in Mainland China, the coronavirus spread is often compared to the Severe Acute Respiratory Syndrome (SARS) outbreak back in 2003. Although the coronavirus is deemed less fatal in comparison to SARS based on its mortality rate, the increased global connectivity now has smoothen the path for the virus to become more widespread. With most parts of Mainland China effectively shut down, the economic impact of this virus will be more prominent than SARS almost two decades ago. From being the world’s sixth largest economy in 2003 to the second largest now, demand from Mainland China has now become one of the main drivers for global growth. Currently, global markets are tracking with volatilities not seen since 2008. The escalation of COVID-19 into a pandemic and Saudi-Russia oil price war happened at the same time, meaning the global economies are getting hit with both demand and supply shock at the worst time ever. Price actions in the security markets are dramatically volatile and liquidity has become the biggest concern. The recent rounds of asset sell-offs reflect investors trading more on sentiments rather than fundamentals given the current market dislocation. Policymakers are stepping up their responses to the outbreak with heavyweights such as the Fed announcing an emergency rate cut of 50basis points (bps) cut following with another 100bps cut subsequently to provide ammunition for the economy to fight against the virus. However, these responses lack in effectiveness against a virus outbreak where demand and supply shocks have simultaneously hit economies around the world significantly. In addition, as rates in the US have touched zero bound again, monetary policy will not be as capable to support the economy thus fiscal policies are expected to play a bigger role going forward. Within Asia, the coronavirus impacts economies unevenly, and these divergences may provide relative value opportunities within the region. The damage to China is severe, largely due to the significant degree to which authorities have acted to contain the outbreak. China’s GDP growth is expected to slow sharply in 1Q20 and drag down other Emerging Asian economies given the region’s close economic linkages. On the demand side, quarantines and limitation of people’s mobility would lead to a significant reduction of activities such as tourism, transportation, retail sales and entertainment. On the supply side, the disruption due to prolonged factory shutdowns does not only drag earnings of the industrial sector but would also have a repercussion effect on the other parts of the global supply chain. Given the close linkage to mainland China and domination of service sector in the economy, Hong Kong is affected primarily though sharp drop of inbound visitors and plummeting retail sales. Total exports to China and the US are also expected to plunge significantly. Its fiscal balance is estimated to turn into a deficit given the HKD120 billion of counter-cyclical fiscal package announced for the implementation of relief measures such as tax reduction and cash disbursement. If the past is any guide, business activities and economic growth should normalize over time. Still, it is too soon to tell with confidence the ultimate impact of the coronavirus and we do not expect Hong Kong to recover from the current crisis soon. With the recent market volatility and price actions, we remain highly vigilant in portfolio positioning and have a preference towards deposits from higher quality issuers.

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Schroder MPF RMB and HKD Fixed Income Portfolio

Market Review

The year 2018 ended with increased uncertainty surrounding the lack of resolution in the US-China trade friction and the prospects of slowing global growth. The US Treasury yield curve flattened across the 12-month period ended September 2019, with the 10-year yield falling markedly from 3.05% as at end of September 2018 to 1.68% as at end of September 2019. The fourth quarter of 2018 ended with increased volatility with the Chicago Board Options Exchange Volatility Index (VIX), otherwise known as the “fear gauge”, hit its highest level since February 2018 as investors flocked to safety. With tit-for-tat tariffs imposed on each other, the relations between US and Mainland China saw little room for improvement, dampening global growth prospects. In Q1 2019, a weaker global growth backdrop resulted in major central banks taking a dovish tone. The Fed signalled a pause on rate hikes, preferring to take a more cautious stance given muted inflation. The second quarter of 2019 saw an escalation of the trade war with both US and Mainland China increasing tariffs and banning sales to entities in each country. Q2 ended with underwhelming economic data from the US due to weakening domestic demand and tepid export orders. The Fed cut rates for the first time in July since the 2008 financial crisis by 25 basis points as an insurance policy for future economic outlook. The trade war ended the quarter with a tentative truce before the G20 summit. The deteriorating negotiation talks between US and Mainland China spilled over to Q3 2019. The yuan sunk to 7 against the US dollar, its lowest level in 11 years, to support Chinese exports, resulting in Mainland China being labelled as a currency manipulator by the US. Fears of recession awakened among investors when an accurate recession predictor, the US yield curve inversion, took place during the quarter. When the short-term 2-year Treasury yields exceed that of the long-term 10-year Treasury yields, long term debt is deemed riskier than short-term debt signalling an economic downturn in the near future. With data indicating continued moderation in growth in the US, the Fed cut rates a second time during the year in September by 25 basis points. The quarter ended on a more positive note with the US-China trade talks set to resume in October and both sides seen to be making efforts to reach a deal. The Eurozone economic data and inflation outlook remained soft. The European Central Bank’s (ECB) took steps to boost the economy, including restarting quantitative easing and committing to buying assets until its inflation target is reached. In the UK, Brexit and domestic political uncertainty dominated headlines. Forward-looking indicators continued to point to a loss of momentum in the UK economy, amid a global slowdown in activity. Meanwhile, Hong Kong SAR’s economic data printed in the first half of the year was weak. Retail sales and export numbers continue being sluggish while the manufacturing Purchasing Managers’ Index (PMI) extended its drop further into the contractionary space, printing 46.9 points in May. Over the period, the Hong Kong Monetary Authority (HKMA) stepped in several times to defend the USD/HKD peg whenever HKD traded on the weak side of its trading band. The Hong Kong SAR economy was dragged down by global growth slowdown while being challenged by the tensed political environment and continued uncertainty and protests. Retail sales volume plunged 25.3% over a year ago in August. Markit Manufacturing PMI was in contractionary territory with a print of 41.5 in September. In line with the Fed interest rate policy, HKMA also cut its base lending rate twice this year.

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Schroder MPF RMB and HKD Fixed Income Portfolio (Continued)

Market Review (Continued)

Over in Mainland China, economic data was generally below expectations. Mainland China’s manufacturing PMI came in at 48.3 at the beginning of the year, the country’s lowest level since 2016. Although the reading has improved since, coming in at 49.8 in September, the index levels still indicate a cooling in manufacturing activity. The impact of the US-Sino trade war also surfaced in trade data as exports from China dropped 3.2% year-on-year in September 2019 in conjunction with weakening global demand. China’s Q3 GDP growth rate was 6.0% year-on-year, its weakest level in the last 28 years. Monetary policy remained accommodative as the PBOC announced a 50bp cut in the Reserve Requirement Ratio (“RRR”) and lowered the one-year Loan Prime Rate by 5bp. The latter signalled the PBOC’s willingness to act through open market operations but that will be gradual and contingent on domestic economic conditions. Against this backdrop, the Sub-Fund posted a positive return of 2.40% (B share class, HKD, net of fees) for the 12-month period under review and outperformed the benchmark, 50% CNH 3-month Deposit + 50% 3-month HIBOR, which returned 0.86%. HKD government bonds returned 5.58% (as measured by the iBoxx ALBI Hong Kong Government Bond Index, in HKD) while HKD denominated corporates fared better with a 8.40% return (the iBoxx ALBI Hong Kong Non-Government Bond Index, in HKD) during the period under review. Conversely, RMB denominated offshore bonds rose by +6.36% in CNH (as measured by the iBoxx ALBI China Offshore Bond Index) while the CNH currency depreciated by 3.58% against the Hong Kong dollar for the 1 year ending September 2019.

Market Outlook

2020 had started on a positive note for Asian bond markets as markets reacted positively to the easing of tensions on the almost two years US-China trade war. As the world’s economic powerhouses slapped billions of dollars of tariffs during the period, investor and consumer confidence took a toll, resulting in widespread slow-down in growth. However, the euphoria from the trade front was short-lived as global economies, in particular, Asian economies were plunged into another crisis, one that is not as easily resolved – the 2019 novel coronavirus. Originating in Mainland China, the coronavirus spread is often compared to the Severe Acute Respiratory Syndrome (SARS) outbreak back in 2003. Although the coronavirus is deemed less fatal in comparison to SARS based on its mortality rate, the increased global connectivity now has smoothen the path for the virus to become more widespread. With most parts of Mainland China effectively shut down, the economic impact of this virus will be more prominent than SARS almost two decades ago. From being the world’s sixth largest economy in 2003 to the second largest now, demand from Mainland China is one of the main drivers for global growth. Currently, global markets are trekking with volatilities not seen since 2008. The escalation of COVID-19 into a pandemic and Saudi-Russia oil price war happened at the same time, meaning the global economies are getting hit with both demand and supply shock at the worst time ever. Price actions in the security markets are dramatically volatile and liquidity has become the biggest concern. The recent rounds of asset sell-offs reflect investors trading more on sentiments rather than fundamentals given the current market dislocation.

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Schroder MPF RMB and HKD Fixed Income Portfolio (Continued)

Market Outlook (Continued) Policymakers are stepping up their responses to the outbreak with heavyweights such as the Fed announcing an emergency rate cut of 50basis points (bps) cut following with another 100bps cut subsequently. However, these responses lack in effectiveness against a virus outbreak where demand and supply shocks have simultaneously hit economies around the world significantly. Within Asia, the coronavirus impacts economies unevenly, and these divergences may provide relative value opportunities within the region. The damage to China is severe, largely due to the significant degree to which authorities have acted to contain the outbreak. China’s GDP growth is expected to slow sharply in 1Q20 and drag down other EM Asia economies given the region’s close economic linkages. On the demand side, quarantines and limitation of people’s mobility would lead to a significant reduction of activities such as tourism, transportation, retail sales and entertainment. On the supply side, the disruption due to prolonged factory shutdowns does not only drag earnings of the industrial sector but would also have a repercussion effect on the other parts of the global supply chain. Given the close linkage to mainland China and domination of service sector in the economy, Hong Kong is affected primarily though sharp drop of inbound visitors and plummeting retail sales. Total exports to China and the US are also expected to plunge significantly. Its fiscal balance is estimated to turn into a deficit given the HKD120 billion of counter-cyclical fiscal package announced to implement the relief measures such as tax reduction and cash disbursement. If the past is any guide, business activities and economic growth should normalize over time. Still, it is too soon to tell with confidence the ultimate impact of the coronavirus and we do not expect Hong Kong to recover from the current crisis soon. We would therefore remain highly vigilant in portfolio positioning and have shifted stance to underweight Hong Kong duration to protect the portfolio.

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Schroder MPF Capital Stable Portfolio/Schroder MPF Stable Growth Portfolio/Schroder MPF Balanced Investment Portfolio/Schroder MPF Growth Portfolio Market Review

Global equities posted sharp declines in Q4 2018 on persistent concerns over global trade and slowing economic growth. In developed markets, US equities declined materially, with especially steep falls in December. European equities also fell amid fragile economic data and Brexit uncertainties while weakness in Japan equities coincided with periods of yen strength. Similarly, emerging markets equities fell with the familiar array of global trade and growth concerns weighing on returns. In fixed income, government bond yields reflected broader risk aversion and macro uncertainty. The 10-year Treasury yield fell from 3.06% to 2.68% while Bund yields declined from 0.47% to 0.24%. The Federal Reserve (Fed) raised rates twice over the quarter on continued stability in economic data. However, the central bank grew otherwise more dovish in tone, signalling a more cautious view for coming months. Corporate bonds had a challenging quarter and underperformed government bond, with both investment grade and high yield weaker. Hard currency EM bonds were down, but local currency bonds were higher as US dollar strength waned and currencies of oil exporters benefited from weaker energy prices. Lastly, commodities largely fell due to the large decline in the energy component, as oil prices declined heavily on concerns of oversupply in the face of a weakening outlook for global demand. On the other hand, precious metals prices posted solid gains amid spurred demand for traditionally safe-haven assets. Going into 2019, global equities rebounded strongly as trade tensions eased and major central banks grew more accommodative. US equities led gains as economic growth and corporate earnings remained firm. Elsewhere, Asian and emerging markets also recorded strong returns. In particular, Chinese equities were boosted by the ongoing government support and easing policies. In fixed income, bond yields continued to fall on the back of a more supportive policy environment. US 10-year Treasury yields fell 30 bps and reached their lowest level since late 2017. Notably, the three-month Treasury bill yield rose higher than that of 10-year bonds in March. This yield curve inversion highlighted growing caution among investors over economic growth. 10-year Bund yields were also more than 30bps lower and fell below zero for the first time since October 2016. Corporate bonds had a strong quarter, having fallen sharply in Q4. High yield credit - harder hit than investment grade in Q4 – outperformed. EM bonds also had a positive quarter with hard currency outperforming. Commodities recorded positive gains over, with the energy component leading the way as crude oil prices rebounded on the back of production cuts and US sanctions. For currencies, the US dollar index continued to move higher. Most developed currencies depreciated against the greenback apart from the Japanese Yen and Swiss Franc. Asian currencies also lost ground against the US dollar, with the exception of the Indian Rupee which gained over +2%. Global equities rose in Q2, despite a steep fall in May due to concerns over the US-China trade war. However, investors were broadly cheered by ongoing central bank dovishness and indications of progress in trade tensions by the end of June. Emerging market shares lagged their developed market counterparts, especially as trade uncertainty weighed on Chinese equities. Government bond yields fell markedly over the quarter. The 10-year US Treasury yield was more than 40 basis points (bps) lower over while the 10-year Bund yield also fell 30bps further into negative territory. In credit, corporate bonds outperformed government bonds. Investment grade saw better returns than high yield as it tends to benefit more from falling yields. Elsewhere, emerging market bonds had a positive quarter. Local currency bonds performed particularly well against a weaker US dollar. With increasing concerns over the outlook for global growth, commodities delivered a negative return, with industrial metals recording the steepest falls. By contrast, precious metals recorded gains, led by gold. For currencies, the US dollar index declined over the quarter and the greenback depreciated against most major currencies including the Euro and Japanese Yen. Asian currencies posted mixed performance against the US dollar with Chinese Renminbi being the worst performer.

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Schroder MPF Capital Stable Portfolio/Schroder MPF Stable Growth Portfolio/Schroder MPF Balanced Investment Portfolio/Schroder MPF Growth Portfolio (Continued) Market Review (Continued)

Finally in Q3 2019, US-China trade dispute rumbled on and global growth concerns continued to weigh on market sentiment. However, central banks remained supportive. The US Federal Reserve cut rates twice and the European Central Bank (ECB) cut once, while also announcing the restart of quantitative easing. Developed markets recorded small gains, with Japan equities outperforming. On the other hand, Emerging and Asian markets fell. Those markets most sensitive to US dollar strength came under pressure. Turning to fixed income, government bond yields declined markedly over the quarter due to heightened risk aversion. The US 10-year Treasury yield was more than 30 bps lower and briefly dipped lower than the two-year yield, a yield curve inversion indicating significant economic pessimism among bond investors. In Europe, the 10-year Bund yield fell 24bps to finish even deeper in negative territory. Corporate bonds benefited from the decline in global yields and outperformed government bonds. Investment grade corporate bonds returned strong returns, while the riskier high yield part of the market also performed well. Across emerging market bonds, hard currency and corporate debt made positive returns, while local currency bonds declined. Lastly, commodities posted a negative return, weighed down by US dollar strength. Energy was the weakest component, amid a selloff in crude oil prices as demand concerns outweighed ongoing supply risks. By contrast, precious metals delivered sold gains as investors moved into perceived safe haven assets. Within the currency space, the US dollar Index rose and the greenback appreciated against most developed currencies apart from the Canadian Dollar and Japanese Yen. The US dollar also appreciated against most Asian currencies, although the Thai Baht was notably stronger.

Market Outlook

The global growth rate of 2-3% over the past few years is now challenged by the twin shocks of the Covid-19 outbreak and the oil shock. While our original assessment was that the impact from the Coronavirus would be transitory, the quick deterioration of the situation in Europe and the US means that the impact is likely to be larger than our original expectation. Given the lockdown of borders and cities around the world, the severity of the economic impact is very high, and our economist team has updated their forecasts with an expectation of -3.1% impact on GDP growth this year, bringing the world into a technical recession. At the same time, we have seen unprecedented moves by central banks globally in a coordinated manner to provide supportive measures and liquidity via interest rate cuts and quantitative easing. In addition, governments have also announced various fiscal stimulus packages to help the economy brace for this heavy impact. However, these announcements have yet to calm markets. Looking ahead, we expect markets to remain highly volatile in the near term. For equities, we expect earnings forecasts to be adjusted downwards in some areas. Industries that are most vulnerable to the COVID-19 shock are manufacturing, gaming, tourism and consumption/travel-related industries (retail, airlines etc.) as they have borne the brunt of the demand shock as travel-related activity has dramatically reduced. At the same time, the sharp pull-back in markets in recent days is starting to throw up more interesting value opportunities. However, this is not a time for blithe risk-taking; we need to see more information on the economic damage from the twin shocks in the form of corporate earnings announcements or economic data before we can wade back into risk assets. Our bias is to look for opportunities to generate returns, but we also need to be watchful on future developments. Therefore, we maintain offsetting positions in hedges against growth disappointing such as bonds and gold. We continue to see value in duration in a portfolio context to hedge against disappointment in growth, although valuations have become expensive following the recent rally while rates markets have continued to move aggressively in pricing further easing from global central banks.

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Schroder MPF International Portfolio

Market Review

Global equities posted sharp declines in Q4 2018 on persistent concerns over global trade and slowing economic growth. In developed markets, US equities declined materially, with especially steep falls in December. European equities also fell amid fragile economic data and Brexit uncertainties while weakness in Japan equities coincided with periods of yen strength. Similarly, emerging markets equities fell with the familiar array of global trade and growth concerns weighing on returns. Going into 2019, global equities rebounded strongly as trade tensions eased and major central banks grew more accommodative. US equities led gains as economic growth and corporate earnings remained firm. Elsewhere, Asian and emerging markets also recorded strong returns. In particular, Chinese equities were boosted by the ongoing government support and easing policies. Global equities rose in Q2, despite a steep fall in May due to concerns over the US-China trade war. However, investors were broadly cheered by ongoing central bank dovishness and indications of progress in trade tensions by the end of June. Emerging market shares lagged their developed market counterparts, especially as trade uncertainty weighed on Chinese equities. Finally in Q3 2019, US-China trade dispute rumbled on and global growth concerns continued to weigh on market sentiment. However, central banks remained supportive. The US Federal Reserve cut rates twice and the European Central Bank (ECB) cut once, while also announcing the restart of quantitative easing. Developed markets recorded small gains, with Japan equities outperforming. On the other hand, Emerging and Asian markets fell. Those markets most sensitive to US dollar strength came under pressure. Market Outlook For equities, we expect earnings forecasts to be adjusted downwards in some areas. Industries that are most vulnerable to the COVID-19 shock are manufacturing, gaming, tourism and consumption/travel-related industries (retail, airlines etc.) as they have borne the brunt of the demand shock as travel-related activity has dramatically reduced. At the same time, the sharp pull-back in markets in recent days is starting to throw up more interesting value opportunities. However, this is not a time for blithe risk-taking; we need to see more information on the economic damage from the twin shocks in the form of corporate earnings announcements or economic data before we can wade back into risk assets. Our bias is to look for opportunities to generate returns, but we also need to be watchful on future developments. Regional wise, we continue to favour the US market given its defensive nature and strong earnings. At the same time, valuations for EM equities remain attractive. Elsewhere, we remain cautious on the European and Japanese market, as a broader outbreak of the Coronavirus could weigh on the region in the near-term. With the virus situation still fluid, we will remain watchful of the event and continue to be tactical to look for opportunities to re-risk our portfolios or manage downside risks.

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Schroder MPF Asian Portfolio

Market Review

The Sub-Fund posted negative returns over the review period, largely in line with the benchmark index. From a country perspective, positive stock selection in India and Korea were key contributors but this was counterbalanced by negative stock selection in China and Hong Kong. On a sector basis, positive stock selection in the utilities and health care sectors contributed to performance, while negative stock selection in the consumer services and oil & gas sectors detracted.

Asian equities closed Q4 2018 lower in a volatile quarter for world markets. Persistent concerns over the US-China trade conflict and the pace of US interest rate hikes dominated sentiment. The darkening global economic outlook further troubled investors. Notably, China’s economy recorded its weakest quarterly growth since the global financial crisis. Across the region, export-oriented markets Taiwan, South Korea and China posted sharp declines. In China, healthcare and energy were the worst performing sectors. Hong Kong equities retreated but outpaced the region. Weaker oil prices lifted some net oil importers; the Philippines and India bucked the downtrend to close higher.

Asian equities then rebounded strongly from the sell-off in the previous quarter. All markets closed higher, helped in part by progress in US-China trade negotiations. The dovish shift by major central banks also boosted sentiment. Global growth concerns remained a drag, however. In particular, China’s economy grew at its weakest pace since 1990 last year. Against this backdrop, markets in China and Hong Kong performed well. Aside from easing trade tensions, Chinese stocks were further buoyed by index provider MSCI’s move to increase the weighting of China-listed shares in its benchmark indices. Indian markets were pressured by geopolitical tensions with Pakistan, but they staged a late rally on optimism that the current coalition government would return to power in upcoming elections. Elsewhere, Taiwanese stocks also finished higher. South Korean stocks underperformed amid the abrupt end to the US-North Korea summit and concerns over corporate earnings. ASEAN markets also trailed the broader region. Asian equities then posted slim gains in the second quarter of 2019. Trade tensions and economic risks dominated investor sentiment, while global monetary policy was another key focus. In particular, the US-China trade war escalated in May after the US raised tariffs on US$200 billion worth of Chinese imports and added Chinese telecommunications group Huawei to a trade blacklist. China countered with retaliatory tariffs on US goods. Against such a backdrop, ASEAN markets outperformed. Indian stocks posted slim gains as Prime Minister Modi’s Bharatiya Janata Party was re-elected with a stronger mandate. Separately, the central bank cut its benchmark interest rate thrice to spur growth. In Greater China markets, Hong Kong benefited from the rally in financials stocks, while investors also cheered the suspension of a contentious extradition bill. Taiwan edged up while Chinese stocks fell. South Korean stocks retreated, weighed down by poor corporate earnings. Asian equities then lost value in the third quarter amid a renewed intensification of US-China trade tensions and rising concerns over global growth. Hong Kong was the weakest index market, as demonstrations continued, despite the authorities’ efforts to resolve social unrest. Malaysia, Singapore and Thailand all posted negative returns and also underperformed. China and South Korea lagged the index by a more modest margin. In China, the authorities announced fresh policy support in response to domestic weakness. Meanwhile, the US announced new tariffs on $300 billion of goods imported from China that did not already face a levy, some of which took effect in September. In South Korea, a trade dispute with Japan weighed on sentiment somewhat. By contrast, Taiwan posted a positive return, underpinned by strong performances from technology stocks.

- 29 -



Schroder MPF Asian Portfolio (Continued)

Market Outlook

February was a weak month for regional stock markets as the coronavirus outbreak continued to spread globally. Oil prices had fallen sharply as oil-producing countries failed to agree on production cuts. On the positive side, China appears to have successfully contained the coronavirus outbreak and economic activity is gradually reverting to normal. A similar declining trend is evident in South Korea while rest of Asia has reported only modest level of infections which appear to be largely contained. Hopefully in Asia, the worst phase of the outbreak is now behind us.

Over the weekend (7-8 March), The Organization of Petroleum Exporting Countries (OPEC) members and Russia disagreed on further production cuts and Saudi Arabia announced price cuts to oil exports and an increase in crude output. As a result, the oil price collapsed to c. USD 30/bl (from USD 45) but have since regained some ground. Whilst a supply shock coupled with a virus-induced demand shock is unhelpful, our analyst notes that The Organisation for Economic Co-operation and Development inventories are not as high as during 2015/2016. This suggests short-term oil price might find a bottom in the USD 30/bl region, a little higher than where they bottomed in 2016. For much of Asia, crude is imported and is an input cost for production or a tax on consumption, so a reduction is ultimately positive for the Asia region, barring the short-term market dislocations. Whilst there are fears that oil companies are unable to service their debt, Financials have in 2016/2017 stressed tested and mark their book to USD 30 oil. Therefore, fears on credit losses in the region are likely bounded but a meaningful risk in higher cost production regions (i.e. in North America, Oil Sands and Shale). China and India are the largest regional importers of oil and likely to experience meaningful tailwind from lower oil prices. At the margin, this is a small negative for countries where oil and gas production is meaningful (i.e. Malaysia) and likely more Neutral for countries like Indonesia.

The impact of both the coronavirus outbreak and oil price crash will continue to be felt for some time on a few sectors like tourism, financials and energy. We hold direct exposure to the tourism sector through Macau casinos which have borne the brunt of the outbreak as they were asked to shut down for two weeks in February. While we had partially trimmed earlier, we now continue to hold on to our positions after the steep price correction. We think Macau is likely to be the first beneficiary of any revival of outbound Chinese tourism. At the country level, Thailand is likely to suffer the most given its high dependence of its economy to tourism. However, post the stock correction, our exposure in the property and banking sectors are now trading at attractive dividend yields of 6-7%.

Within the financials sector, in particular banks, companies are likely to see a mid-term negative impact as monetary policy will now turn ultra-loose with low interest rates to continue for a while. There will be negative impact on banks’ earnings from lower margins, lower fees and likely higher non-performing loans. On the flip side, some economies like India and Indonesia will benefit from lower interest rates as well as lower oil prices. However, their stock markets are likely to remain globally correlated on the foreign liquidity exodus in the near term.

- 30 -



Schroder MPF Asian Portfolio (Continued)

Market Outlook (Continued)

In India, a mid-sized lender Yes Bank was effectively nationalised as the State Bank of India took control of the bank by acquiring a 49% stake. Yes Bank had been struggling with rising non-performing loans as well as low capital levels and was potentially a risk to the broader financial system. There is likely to be a fallout for other small- and mid-sized banks which may start to lose deposits to government-owned banks and bigger private banks. Our exposure is mostly to bigger banks like HDFC Bank and ICICI Bank which are likely to be beneficiaries of this deposit migration. We have a small position in Indusind Bank which will now face challenges in building its liability franchise and may suffer margin declines. We intend to reduce this position on strength. After this event, the credit market in India is likely to turn more cautious and conservative, and this will impact overall credit/loan growth in the system. The Indian economy as a result is likely to remain weak in the near term. However, on a mid-term view, the sharp fall in oil prices and interest rates will be positive for the market. These two factors will help heal the economy and start both consumption/investment cycles, likely in the later part of this year.

Our exposure in the energy sector is largely in downstream segments like petrochemicals and refining. The downstream sector is relatively better-placed than upstream given the sharp fall in its key input raw material. While end-demand weakness continues to weigh on the sector, it is now trading at very low valuations.

Leading names in the technology sector like TSMC and Samsung Electronics are likely to see a near-term negative impact from global demand weakness as well as supply chain disruption. However, the mid-term outlook still looks promising, driven by investments in areas like 5G, data centres, and cloud. Internet names in China, while being impacted in the short term by demand weakness and logistics disruptions, are expected to see a recovery going into the second half of the year as economic activity normalises. Any fiscal stimulus that China imparts can further accelerate the demand recovery. We will look for names to add in the Chinese consumption/internet sectors on weakness.

Consensus expectations for double-digit earnings growth this year is likely to be adjusted sharply lower. Regional valuations after the correction are at 13.2x PER (on 2020 consensus estimates) which is at average levels of the historical range.

- 31 -



Schroder MPF Hong Kong Portfolio

Market Review

The Sub-Fund posted a negative return over the period but outperformed the benchmark. From a regional perspective, positive stock selection in China was the key contributor. On a sector basis, positive stock selection in materials and healthcare was the key contributor, although this was partially offset by stock selection in financials and consumer services sectors.

Hong Kong and Chinese equities extended their losses in the fourth quarter of 2018. Persistent concerns over the US-China trade conflict and the pace of US interest rate hikes dominated sentiment. The darkening global economic outlook further troubled investors. Notably, China’s economy recorded its weakest quarterly growth since the global financial crisis. Industrial production and retail sales also slowed more than expected, heightening growth concerns. Policymakers responded with measures to support the economy, including cutting banks’ reserve requirement ratios and boosting credit for small and private companies.

Hong Kong and Chinese equities rebounded strongly from the sell-off in the previous quarter, thanks to progress in US-China trade negotiations and the dovish shift by major central banks. Chinese stocks were further buoyed by index provider MSCI’s move to increase the weighting of China-listed shares in its benchmark indices. Gains were also fuelled by anticipation that Chinese authorities would continue to introduce supportive policies to counter the economic slowdown. China’s economy grew at its weakest pace since 1990 last year. The Chinese government lowered its full-year growth target to 6-6.5% and outlined higher public spending and tax cuts, while the central bank cut the reserve requirement ratios for banks.

The Hong Kong and Chinese equity market corrected over the quarter. Trade tensions and economic risks dominated investor sentiment, while global monetary policy was another key focus. In particular, the US-China trade war escalated in May after the US raised tariffs on US$200 billion worth of Chinese imports and added Chinese telecommunications group Huawei to a trade blacklist. China countered with retaliatory tariffs on US goods. Both countries subsequently agreed to a truce and will resume trade negotiations following a meeting between their leaders in June.

The Hong Kong and Chinese equity market fell over the third quarter alongside other Asian equity markets, as a re-escalation of US-China trade tensions and continuing political unrest in Hong Kong sent shockwaves through equity markets. In this environment, returns from the Chinese market were marginally worse than the Asian region as a whole. The US announced 10% trade tariffs on $300 billion of goods imported from China, some of which took effect in September. Following the announcement, the renminbi weakened beyond the symbolic RMB7/$1 threshold and, in response, the US Treasury labelled the country a currency manipulator. The US also announced plans to increase existing tariffs of $250 billion of Chinese goods from 25% to 30% in October. China responded by announcing tariffs on $75 billion of US goods.

- 32 -



Schroder MPF Hong Kong Portfolio (Continued)

Market Outlook With Phase 1 of US-China trade deal being signed, the near term market focus has shifted to the outbreak of the coronavirus (COVID-19). Although case numbers in China seem to be slowing and we continue to expect a gradual return towards normality in next few weeks, the recent pick-up in non-China cases clearly increases uncertainty about the broader global impact, with a greater shock to global consumption as travel, tourism and elements of discretionary spending are curtailed and we see more widespread disruption to global manufacturing supply chains. However, our base case today is that despite the tragic loss of life, this will not represent a structural change in the growth outlook for the Chinese nor regional economies, but more of a short, sharp cyclical slowdown that lasts a few months. The economic impact will be felt most immediately in sectors linked to tourism, travel, off-line entertainment and discretionary retailing, both in and outside China. More generally, the heightened uncertainty is likely to negatively impact consumer and business confidence, and, in turn, spending and investment decisions. Given the rapidly changing expectations for the spread of the virus, it is impossible to model the hit to near term economic growth and corporate earnings, but clearly the impact will be very material in the first half of the year for many sectors. If, as with other recent outbreaks, the spread of the virus is contained within the next one to two months and confidence gradually returns, economic activity should then rebound fairly quickly in the second half of the year, helped by the release of some pent-up demand and monetary easing policies by the central banks. Earnings forecasts for 2020 will need to be adjusted downwards in some areas, but critically this should have far less carry-through impact into next year and beyond. As such, the impact on fundamental fair values for the stocks we own should be modest. In the near-term markets are likely to continue to trade based on the daily virus data. Aggregate valuations have pulled back closer to longer term averages, however, markets may well over-shoot on the downside given the limited visibility around the outlook, and a degree of ‘profit taking’ after earlier gains, is understandable. This may throw up interesting opportunities to add to our preferred names in the region. Moving specifically to China, headline growth in China has been slowing, but there has been, for some time, a dramatic explosion in the growth of “newer” parts of the economy as the service sector takes over the baton for economic development. The “engineered” economic slowdown has been complicated by trade wars uncertainties over the past year and more recently, the spread of the coronavirus across the country. These developments have negatively affected exports and consumption growth, delayed industrial production resumption, private enterprises’ CAPEX and hiring plans, thus the economy could slow much faster than anticipated. To support the economy, the government has started selective easing such as liquidity injection, RRR cuts and loan prime rate liberalization on the monetary side. On the fiscal side, there is an accelerated issuance of special local government bonds, more tax cuts and infrastructure spend but not on a scale seen in previous downturns.

- 33 -



Schroder MPF Hong Kong Portfolio (Continued)

Market Outlook (Continued) Over the past years, we have seen growth style has significantly outperformed value investing. We have witnessed that as long as secular growth trends were intact, the valuation of these stocks has been rerated sharply to over 30-40x PE on Hong Kong/China market, mostly found in the healthcare and consumer sectors. The outperformance has been concentrated in a handful of big names whilst investors shunned the value part of the market. Since the difference in valuation/performance between value and growth stocks has run to the extreme, whether we see a reversal sometime down the road would be a key question when positioning the portfolio. Although we have seen some signs of cyclical recovery starting in 4Q2019, the outbreak of the coronavirus has complicated the economic situation recently. The breakdown of the OPEC+ oil cartel in early March took the energy markets into uncharted territory and is likely to place severe stress on the higher cost and more highly leveraged oil producers around the world. But we do not think oil prices will sustain at very low prices for an extended period and expectations are that OPEC+ will eventually reach an agreement to return some stability to oil prices given this low price is not favourable to any party. We have been structurally underweight the oil sector. Our exposure to oil and gas sector only represents our positive view on renewable energy. Moving onto Hong Kong, our view is that the political unrest last year is likely to have a structural negative impact on Hong Kong’s domestic economy given the capital and brain drain from the city. Further to that, tourists are unlikely to return anytime soon, corporates will have reservations of expanding further in the city and local consumer confidence has also been seriously dampened. We have lowered our exposure in local property and banking exposure in the portfolio since the second half of last year and we believe office and retail rentals as well as domestic asset prices will need to be adjusted downwards over the medium term. On a more positive note, however, the role of Hong Kong being the international financial centre cannot be easily replaced in the near term given we have free flow of information and capital, solid regulatory and legal systems and low tax regimes. Recently, the success of Alibaba’s secondary listing in Hong Kong would probably induce more US listed Chinese companies’ ADRs to be looking to come back for HK listing. It would be natural for Chinese companies to contemplate the option to return closer to home, given same time zone of trading, to diversify investors’ base especially Southbound investors and reduced risk of US scrutiny. This is generally positive for HK Exchange and we have been adding the stock in the portfolios. Elsewhere within the portfolio, the greatest attraction of the Hong Kong equity universe is that it offers a diversified exposure to companies operating in greater China, regionally and globally that are headquartered and listed locally – companies like Techtronics (global power tool brands), Macau gaming stocks, AIA (regional life insurance), Prada (global luxury brand name), ASM Pacific (global IT equipment manufacturer) that in most cases have fairly limited local revenues.

- 34 -



Schroder MPF Global Fixed Income Portfolio

Market Review

In the final quarter of 2018, government bond yields reflected broader risk aversion and macro uncertainty. The Fed’s dovish tone shift meant that, in spite of the central bank’s fourth rate rise of the year, the 10-year Treasury yield fell from 3.06% to 2.68%. 10-year Bund yields declined from 0.47% to 0.24% on the Eurozone’s lacklustre data. The Federal Reserve (Fed) raised rates twice, in October and December, on continued stability in economic data. However, the central bank grew otherwise more dovish in tone, signalling a more cautious view for coming months. Elsewhere, corporate bonds had a challenging quarter and underperformed government bonds. Investment grade was marginally lower as the euro market declined. High yield was weak, led down by the energy sector, particularly in the US. EM bonds were mixed. Hard currency EM bonds were down, but local currency bonds were higher as US dollar strength waned and currencies of oil exporters benefited from weaker energy prices. Going into 2019, bond yields continued to fall on the back of a more supportive policy environment. US 10-year Treasury yields fell 30 bps and reached their lowest level since late 2017. Notably, the three-month Treasury bill yield rose higher than that of 10-year bonds in March. This yield curve inversion highlighted growing caution among investors over economic growth. 10-year Bund yields were also more than 30bps lower and towards the end of March fell below zero for the first time since October 2016. Corporate bonds had a strong quarter, having fallen sharply in Q4. High yield credit - harder hit than investment grade in Q4 - outperformed, especially in the US. Elsewhere, EM bonds had a positive quarter with US dollar-denominated debt outperforming as local currency EM bonds weakened in March given the return of certain country-specific risks.

In Q2 2019, bond yields fell markedly once again. The 10-year US Treasury yield was more than 40 basis points (bps) lower over while the 10-year Bund yield also fell 30bps into negative territory. In credit, corporate bonds outperformed government bonds, delivering positive total returns. Investment grade (IG) saw better returns than high yield (HY) as it tends to benefit more from falling yields. Elsewhere, emerging market bonds had a positive quarter. Local currency bonds performed particularly well against a weaker US dollar.

Finally in Q3, the US 10-year Treasury yield finished 30 bps lower at 1.67%. The 10-year yield reached below 1.5% in late-August, and briefly dipped lower than the two-year yield, a yield curve inversion indicating significant economic pessimism among bond investors. In Europe, the 10-year Bund yield fell 24bps to finish even deeper in negative territory. The Italian 10-year yield saw a substantial move, falling 126 bps due to the anticipation, and ultimately announcement, of new stimulus measures. The UK saw further escalation in Brexit uncertainty, with the 10-year yield falling 34 bps over the quarter, with most of this occurring in July. Corporate bonds benefited from the decline in global yields and outperformed government bonds. Investment grade corporate bonds returned strong returns, while the riskier high yield part of the market also performed well. Across emerging market bonds, hard currency and corporate debt made positive returns, while local currency bonds declined.

- 35 -



Schroder MPF Global Fixed Income Portfolio (Continued)

Market Outlook

In fixed income, we remain positive on government bonds. Although valuations have worsened, strengthening momentum and weak economic indicators continue to support the asset class. We maintain our preference for US Treasuries as a hedge against growth disappointment and a higher yield relative to other markets. On the other hand, we remain neutral on German Bunds as valuations continue to trade at extreme levels, and the ECB is still indicating that it has reached its limits on monetary policy. As for Japan, there have been no significant developments and therefore our neutral view remains unchanged. For credit, we believe that short-term there could be wobbles in spreads, which could present opportunity for investors. We continue to believe that the technical and liquidity backdrop should remain supportive of the asset class over the medium term as the cycle extends. We favour US IG and HY credit over European peers given the favourable technical and valuation backdrop. Elsewhere, we also like EM hard currency sovereigns, given the supportive environment and broadly dovish orientation of EM monetary policy.

- 36 -



Schroder MPF Core Accumulation Fund/Schroder MPF Age 65 Plus Fund

Market Review

Global equities posted sharp declines in Q4 2018 on persistent concerns over global trade and slowing economic growth. In developed markets, US equities declined materially, with especially steep falls in December. European equities also fell amid fragile economic data and Brexit uncertainties while weakness in Japan equities coincided with periods of yen strength. Similarly, emerging markets equities fell with the familiar array of global trade and growth concerns weighing on returns. In fixed income, government bond yields reflected broader risk aversion and macro uncertainty. The 10-year Treasury yield fell from 3.06% to 2.68% while Bund yields declined from 0.47% to 0.24%. The Federal Reserve (Fed) raised rates twice over the quarter on continued stability in economic data. However, the central bank grew otherwise more dovish in tone, signalling a more cautious view for coming months. Going into 2019, global equities rebounded strongly as trade tensions eased and major central banks grew more accommodative. US equities led gains as economic growth and corporate earnings remained firm. Elsewhere, Asian and emerging markets also recorded strong returns. In particular, Chinese equities were boosted by the ongoing government support and easing policies. In fixed income, bond yields continued to fall on the back of a more supportive policy environment. US 10-year Treasury yields fell 30 bps and reached their lowest level since late 2017. Notably, the three-month Treasury bill yield rose higher than that of 10-year bonds in March. This yield curve inversion highlighted growing caution among investors over economic growth. 10-year Bund yields were also more than 30bps lower and fell below zero for the first time since October 2016. Global equities rose in Q2, despite a steep fall in May due to concerns over the US-China trade war. However, investors were broadly cheered by ongoing central bank dovishness and indications of progress in trade tensions by the end of June. Emerging market shares lagged their developed market counterparts, especially as trade uncertainty weighed on Chinese equities. Government bond yields fell markedly over the quarter. The 10-year US Treasury yield was more than 40 basis points (bps) lower over while the 10-year Bund yield also fell 30bps further into negative territory. Finally in Q3 2019, US-China trade dispute rumbled on and global growth concerns continued to weigh on market sentiment. However, central banks remained supportive. The US Federal Reserve cut rates twice and the European Central Bank (ECB) cut once, while also announcing the restart of quantitative easing. Developed markets recorded small gains, with Japan equities outperforming. On the other hand, Emerging and Asian markets fell. Those markets most sensitive to US dollar strength came under pressure. Turning to fixed income, government bond yields declined markedly over the quarter due to heightened risk aversion. The US 10-year Treasury yield was more than 30 bps lower and briefly dipped lower than the two-year yield, a yield curve inversion indicating significant economic pessimism among bond investors. In Europe, the 10-year Bund yield fell 24bps to finish even deeper in negative territory.

- 37 -



Schroder MPF Core Accumulation Fund/Schroder MPF Age 65 Plus Fund (Continued)

Market Outlook

Given the requirement of low benchmark relative risk of the strategy, asset allocation is maintained closed to the reference portfolio over the period. Within the equity portfolio, we continue to maintain a balanced approach with exposure to the four style strategies namely value, minimum volatility, quality and momentum. As we enter the late cycle environment, quality stocks should provide some defensiveness to the portfolio. In addition, rising inflation expectation could provide some tailwind for our value oriented exposure. This is balanced by the exposures to momentum and minimum volatility which could act as a hedge should inflation fail to pick up.

The bond portfolio is managed to deliver a return close to the market index, and thus positioning of the portfolio remains very close to the benchmark. The fixed income portfolio is also 100% hedged back to Hong Kong dollar from a currency point of view.

- 38 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 3 Trustee’s commentary on analysis of the investments held by the Scheme and

supporting information of its commentary

Annualized return (in terms of %)

1 year 5 years 10 years Since

Launch Schroder MPF Capital Guaranteed Portfolio

- Ordinary Class - Class B Launch date: 1st December 2000

3.28% 3.52%

1.21% 1.56%

1.60% 1.84%

2.86% 3.16%

Performance Target (Note 2) 2.90% 0.80% 1.60% N/A Deviation from the performance target - Ordinary Class

- Class B

Out-perform

Out-

perform

Out-perform

Out-

perform

Inline

Out-perform

N/A

N/A

Trustee commentary Class B of the Fund has outperformed the market median in 1 year, 5 years and 10 years terms, while Ordinary Class of the fund has outperformed the market median in 1 year and 5 years terms and its 10 years performance is in-line with the market median. The reason for the performance difference between the 2 different classes was due to the difference in fees charged. According to the investment manager, majority of the assets were allocated to fixed income securities and the performance of the fund was mainly attributable to the following factors: - Asian credit market delivered a small

negative return with the J.P. Morgan Credit Index reporting -0.18% total return;

- The negative return was compensated by the moderately improved risk sentiment on the back of rate cut by the US Federal Reserve and in China.

- 39 -


supporting information of its commentary (Continued)



Launch Schroder MPF Conservative Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

0.26% 0.35%

0.07% 0.07%

0.04% 0.04%

0.69% 0.71%

Performance Target (Note 2) 1.08% 0.28% 0.14% N/A

Deviation from the performance target - Ordinary Class

- Class B

Under-

perform

Under-perform

Under-

perform

Under-perform

Under-

perform

Under-perform

N/A

N/A

Trustee commentary While the Fund has out-performed the

performance benchmark set by the investment manager (that is, the Hong Kong Dollar Deposit Rate), the Fund have been under-performed against the market median in 1 year, 5 years and 10 years terms. According to the information provided by the investment manager, over 60% of the assets of the Fund were invested in either short term bank deposits or bonds with remaining duration of less than 1 month which offer relatively lower interest rate. Thus, the performance of the Fund was under-performed against the market median.

- 40 -





Launch Schroder MPF RMB and HKD Fixed Income Portfolio


0.84% 0.94%

0.69% 0.84%

0.71% 0.93%

1.51% 1.77%



- Class B

Under-perform

Out-

perform

Under-perform

Under-perform

Under-perform

Under-perform

N/A

N/A

Trustee commentary Apart from Class B of the Fund which

performance has out-performed the benchmark of the Fund for the 1 year term, the Fund has underperformed against its benchmark for 1 year, 5 year and 10 year terms. According to the information provided by the investment manager, over 50% of the assets of the Fund was allocated to HKD Bonds, while over 40% of the assets of the Fund was allocated to Global Currencies Bonds, the Fund’s performance was attributable to the following factors: - While Government bond yields broadly

rose over the quarter due to positive economic data, particularly from the US, the third quarter was clouded with trade war issues as friction continued to intensify during the quarter. This drives down the valuation of the bonds

- The global expansion continues to be led by the US with European growth stabilising but remaining slower than some had envisaged. Rising global bond yields have reflected this, especially in the US, where further rate hikes are being embedded into valuations.

- 41 -





Launch Schroder MPF Capital Stable Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

3.09% 3.31%

1.55% 1.75%

2.06% 2.36%

2.64% 2.92%

Performance Target (Note 2) 3.10% 1.90% 2.20% N/A Deviation from the performance target - Ordinary Class

- Class B

Under-

perform

Out-perform

Under-

perform

Under-perform

Under-

perform

Out-perform

N/A

N/A

Trustee commentary For Ordinary Class, the Fund has underperformed the market median in 1 year, 5 years and 10 years terms. For Class B, the Fund has underperformed the market median in 5 year terms and has out-performed the market median in 1 year and 10 year terms. The difference in performance among classes during the same period of time was due to difference in fee rates charged to respective class. According to the information provided by investment manager, over 60% of the assets of the funds were allocated to Bonds, while over 30% of the assets of the Fund was allocated to equity. The performance of the fund was mainly attributable to the following factors: - While the developed markets making a

small gains, the emerging market and Asian market fell.

- The mixed third quarter for the equity market was compensated by the performance in the bond market where both Government bond yields declined markedly over the quarter and the Corporate bonds benefited from the decline in global yields and outperformed government bonds.

- 42 -





Launch Schroder MPF Stable Growth Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

1.36% 1.56%

2.44% 2.66%

3.31% 3.61%

3.38% 3.62%



- Class B

Under-perform

Out-

perform

Under-perform

Out-

perform

Out-perform

Out-

perform

N/A

N/A

Trustee commentary For Ordinary Class, the Fund has

underperformed the market median in 1 year and 5 years term and has out-performed the market median in 10 years term. For Class B, the Fund has out-performed the market median in 1 year, 5 years and 10 years terms. The difference in performance among classes during the same period of time was due to difference in fee rates charged to respective class. According to the information provided by investment manager, over 45% of the assets of the funds were allocated to Bonds, while over 50% of the assets of the Fund was allocated to equity. The performance of the fund was mainly attributable to the following factors: - While the developed markets making a


- The mixed third quarter for the equity market was partly compensated by the performance in the bond market where both Government bond yields declined markedly over the quarter and the Corporate bonds benefited from the decline in global yields and outperformed government bonds.

- 43 -





Launch Schroder MPF Balanced Investment Portfolio


-0.76% -0.55%

3.25% 3.46%

4.36% 4.65%

3.96% 4.17%

Performance Target (Note 2) -0.80% 3.20% 4.20% N/A Deviation from the performance target - Ordinary Class

- Class B

Out-perform

Out-

perform

Out-

perform

Out-perform

Out-

perform

Out-perform

N/A

N/A

Trustee commentary According to the information provided by investment manager, the Fund invests in a single approved pooled investment fund which invests primarily in quoted securities, government and corporate bonds. The performance of the Fund was mainly attributable to the following factors: - While the developed markets making a


- The mixed third quarter for the equity market was partly compensated by the performance in the bond market where both Government bond yields declined markedly over the quarter and the corporate bonds benefited from the decline in global yields and outperformed government bonds.

- 44 -





Launch Schroder MPF Growth Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

-2.67% -2.43%

4.02% 4.23%

5.32% 5.61%

4.52% 4.69%

Performance Target (Note 2) -3.20% 3.70% 4.50% N/A


- Class B

Out-

perform Out-

perform

Out-perform

Out-

perform

Out-

perform Out-

perform

N/A

N/A

Trustee commentary While the Fund has out-performed the

median in the 1-year term 5-years and 10-years terms. According to the information provided by investment manager, the Fund invests in a single approved pooled investment fund which invests primarily in quoted securities, government and corporate bonds. The performance of the Fund was mainly attributable to the following factors: - While the developed markets making a


- The mixed third quarter for the equity market was partly compensated by the performance in the bond market where both Government bond yields declined markedly over the quarter and the corporate bonds benefited from the decline in global yields and outperformed government bonds.

- 45 -





Launch Schroder MPF International Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

-2.23% -2.01%

5.14% 5.35%

6.90% 7.20%

2.61% 3.02%


- Class B

Under-perform

Under-

perform

Out-

perform

Out-perform

Out-

perform Out-

perform

N/A

N/A

Trustee commentary The Fund has underperformed against the market median for 1 year term and have outperformed the market median for 5 years and 10 years terms. According to information provided by investment manager, the Fund was overweigh on the US equities. The performance of the Fund was attributable to the following factors: - A mixed quarter for equity markets,

with developed markets making small gains while emerging market and Asian markets fell.

- The US-China trade dispute rumbled on and global growth concerns also weighed on market sentiment.

- 46 -





Launch Schroder MPF Asian Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

-4.75% -4.57%

3.61% 3.82%

5.04% 5.33%

7.63% 7.80%

Performance Target (Note 2) -5.10% 2.80% 4.80% N/A


- Class B

Out-

perform Out-

perform

Out-perform

Out-

perform

Out-

perform Out-

perform

N/A

N/A

Trustee commentary While the Fund posted a negative return for the current year, it has outperformed the market median for the 1 year, 5 years and 10 years terms. According to information provided by investment manager, the Fund was overweigh in the Hong Kong market sharing over 45% of the asset allocation of the Fund. The performance of the Fund was attributable to the following factors: - Share price in Hong Kong weakness we

pronounced amid ongoing and steadily escalating protests and demonstrations in the city, and

- Returns from the Chinese market were marginally worse than the Asian region as a whole.

- Asia ex Japan equities also lost value in Q3 amid renewed intensification of US-China trade tensions and rising concern over global growth.

- 47 -





Launch Schroder MPF Hong Kong Portfolio - Ordinary Class - Class B Launch date: 1st December 2000

-3.90% -3.71%

4.49% 4.70%

4.62% 4.91%

6.88% 7.14%


- Class B

Out-

perform Out-

perform

Out-perform

Out-

perform

Out-

perform Out-

perform

N/A

N/A

Trustee commentary The Fund posted a negative return in the current year. The Fund has outperformed the market median by 1 year, 5 years and 10 years terms. According to information provided by investment manager, over 90% of the assets of the Fund was allocated to the Hong Kong market. The negative return of the Fund for the current year was attributable to the following factors: - Share price in Hong Kong weakness we

pronounced amid ongoing and steadily escalating protests and demonstrations in the city, and

- Returns from the Chinese market were marginally worse than the Asian region as a whole.

- 48 -





Launch Schroder MPF Global Fixed Income Portfolio

- Ordinary Class - Class B Launch date: 13th January 2014

6.47% 6.43%

0.54% 0.62%

N/A N/A

0.37% -0.12%

Performance Target (Note 2) 6.60% 0.70% N/A N/A


- Class B

Under-perform

Under-perform

Under-perform

Under-

perform

N/A N/A

N/A

N/A

Trustee commentary The Fund has underperformed the median in

1-year and 5-year term. According to the investment manager, the Fund’s under-performing was mainly attributable to the following factors: - Government Bond Yields declined

markedly due to heightened risk aversion in August when US-China trade tensions escalated.

- The US 10-year Treasury yield reached below 1.5% in late - August at 1.67% and briefly dipped lower than the two-year yield indicating significant economic pessimism among bond investors which were being embedded into valuations

- 49 -





Launch Schroder MPF Core Accumulation Fund Launch date: 1st April 2017

2.20% N/A N/A 4.49%

Performance Target (Note 3) 4.09% N/A N/A 6.17%

Deviation from the performance target

Under-

perform

N/A

N/A

Under-

perform Trustee commentary The performance of the Fund underperformed

the Reference Portfolio. For the equity portion, developed markets made small gains while emerging and Asian market fells. Whereas for the fixed income portion, Government bond yields declined markedly over the quarter due to heightened risk aversion in August when US-China trade tensions escalated.



Launch Schroder MPF Age 65 Plus Fund Launch date: 1st April 2017

7.37%

N/A

N/A

3.63%

Performance Target (Note 3) 7.97% N/A N/A 4.52%

Deviation from the performance target

Under-

perform

N/A

N/A

Under-

perform Trustee commentary The Fund has underperformed the reference

portfolio in the 1 year term and since launch of the Fund. Given the investment objective of the Fund, it was overweighed on the fixed income instruments in the US market. According to information provided by investment manager, the underperforming of the Fund was mainly attributed to corporate bonds outperforming government bonds.

- 50 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 4 Trustee’s performance assessment framework and Trustee’s action, if any, to

increase efficiency of the Scheme and investment return (value) for members

The Trustee has an Investment Committee represented by members of the Board of Directors of the Trustee to review the fund managers’ fund performance on a regular basis. The criteria for assessment of the overall performance and capabilities of fund managers are :-

- Compliance with Investment Objectives tracking error from benchmark performance and benchmark asset allocation

- Breaches in investment restrictions and other regulations

- Quantitative assessment - Fund performance relative to benchmark, and peer comparison

Note 1: While the objective of the Fund is different from other funds in the WTW MPF Funds

Performance Book. The performance of the Fund is not ranked by WTW. The fund performance is compared against the internal benchmark provided by Investment Manager.

Note 2: The performance target represents the market median provided in the Willis Towers Watson

MPF Performance Book (“WTW”) as of 30 September 2019.

Note 3: The performance target represents the performance of the reference portfolio during the period.

- 51 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 5 Distribution of constituent funds

As at 30th September 2019, 2018 and 2017, the contributions received were allocated to the Scheme’s constituent funds as follows:

Net asset value 2019 2018 2017 HK$’000 HK$’000 HK$’000

Schroder MPF Capital Guaranteed Portfolio 87,535 76,711 65,212

Schroder MPF Conservative Portfolio 91,482 81,989 66,984

Schroder MPF RMB and HKD Fixed Income Portfolio 58,351 54,151 47,320

Schroder MPF Capital Stable Portfolio 93,241 87,420 76,900 Schroder MPF Stable Growth Portfolio 153,782 146,181 143,230

Schroder MPF Balanced Investment Portfolio 277,379 286,045 282,118

Schroder MPF Growth Portfolio 179,565 188,924 186,338 Schroder MPF International Portfolio 182,292 183,515 171,014 Schroder MPF Asian Portfolio 276,866 288,933 304,005 Schroder MPF Hong Kong Portfolio 271,124 287,074 303,247

Schroder MPF Global Fixed Income Portfolio 18,582 12,361 8,758

Schroder MPF Core Accumulation Fund 92,713 67,761 47,403 Schroder MPF Age 65 Plus Fund 14,242 8,389 3,830 ─────────── ─────────── ─────────── 1,797,154 1,769,454 1,706,359 ═══════════ ═══════════ ═══════════ % of the total investments of the Scheme 2019 2018 2017 % % %

Schroder MPF Capital Guaranteed Portfolio 4.87 4.34 3.82

Schroder MPF Conservative Portfolio 5.09 4.63 3.93

Schroder MPF RMB and HKD Fixed Income Portfolio 3.25 3.06 2.77

Schroder MPF Capital Stable Portfolio 5.19 4.94 4.51 Schroder MPF Stable Growth Portfolio 8.56 8.26 8.39

Schroder MPF Balanced Investment Portfolio 15.43 16.17 16.53

Schroder MPF Growth Portfolio 9.99 10.68 10.92 Schroder MPF International Portfolio 10.14 10.37 10.02 Schroder MPF Asian Portfolio 15.41 16.33 17.82 Schroder MPF Hong Kong Portfolio 15.09 16.22 17.77

Schroder MPF Global Fixed Income Portfolio 1.03 0.70 0.51

Schroder MPF Core Accumulation Fund 5.16 3.83 2.78 Schroder MPF Age 65 Plus Fund 0.79 0.47 0.23 ─────────── ─────────── ─────────── 100.00 100.00 100.00 ═══════════ ═══════════ ═══════════

- 52 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 6 Investment portfolio and movements of investment portfolio

6.1 Investment portfolio as at 30th September 2019

Holdings Fair

value % of net

asset value HK$’000

Schroder MPF Capital Guaranteed Portfolio

FWD MPF Capital Guaranteed Policy 3,947,150 86,758 99.11 ═════════ ═════════ ══════ Total investments at cost 77,997 ═════════


Schroder Institutional Pooled Funds - RMB and HKD Fixed Income Fund 3,812,733 58,396 100.08 ═════════ ═════════ ══════ Total investments at cost 56,732 ═════════

Schroder MPF Capital Stable Portfolio

Schroder MPF Umbrella Fund - Schroder MPF Capital Stable Fund 4,572,272 93,183 99.94 ═════════ ═════════ ══════ Total investments at cost 80,586 ═════════

Schroder MPF Stable Growth Portfolio

Schroder MPF Umbrella Fund - Schroder MPF Stable Growth Fund 6,663,785 154,000 100.14 ═════════ ═════════ ══════ Total investments at cost 125,449 ═════════

- 53 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 6 Investment portfolio and movements of investment portfolio (Continued)

6.1 Investment portfolio as at 30th September 2019 (Continued)

Holdings Fair

value % of net


Schroder MPF Balanced Investment Portfolio

Schroder MPF Umbrella Fund

- Schroder MPF Balanced Investment Fund 10,945,327 277,574 100.07

═════════ ═════════ ══════ Total investments at cost 210,487 ═════════ Schroder MPF Growth Portfolio Schroder MPF Umbrella Fund - Schroder MPF Growth Fund 6,452,249 179,824 100.14 ═════════ ═════════ ══════ Total investments at cost 126,313 ═════════


Schroder MPF Umbrella Fund - Schroder MPF International Fund 8,883,799 182,562 100.15 ═════════ ═════════ ══════ Total investments at cost 122,218 ═════════ Schroder MPF Asian Portfolio Schroder MPF Umbrella Fund - Schroder MPF Asian Fund 5,709,053 277,060 100.07 ═════════ ═════════ ══════ Total investments at cost 204,011 ═════════ Schroder MPF Hong Kong Portfolio Schroder Institutional Pooled Funds - Hong Kong Equity Fund 4,504,462 271,413 100.11 ═════════ ═════════ ══════ Total investments at cost 229,445 ═════════

- 54 -


6.1 Investment portfolio as at 30th September 2019 (Continued)

Holdings Fair

value % of net



Schroder Institutional Pooled Funds - Global Bond Fund 1,091,075 18,589 100.04 ═════════ ═════════ ══════ Total investments at cost 17,886 ═════════

Schroder MPF Core Accumulation Fund

Schroder MPF Umbrella Fund - Schroder MPF Core 60/40 Fund 8,028,414 92,568 99.84 ═════════ ═════════ ══════ Total investments at cost 86,127 ═════════ Schroder MPF Age 65 Plus Fund Schroder MPF Umbrella Fund - Schroder MPF Core 20/80 Fund 1,248,242 14,055 98.69 ═════════ ═════════ ══════ Total investments at cost 13,091 ═════════

Note: Investments are accounted for on a trade date basis. The underlying approved pooled

investment funds were established in Hong Kong.

- 55 -


6.2 Movements in portfolio holdings for the year ended 30th September 2019

30th September

2018

30th September

2019 Holdings Additions Disposals Holdings Schroder MPF Capital

Guaranteed Portfolio

FWD MPF Capital Guaranteed Policy 3,647,432 1,097,948 798,230 3,947,150 ════════ ════════ ════════ ════════ Schroder MPF RMB and HKD

Fixed Income Portfolio

Schroder Institutional Pooled Funds - RMB and HKD Fixed Income Fund 3,749,188 803,535 739,990 3,812,733 ════════ ════════ ════════ ════════ Schroder MPF Capital Stable

Portfolio

Schroder MPF Umbrella Fund - Schroder MPF Capital Stable Fund 4,379,396 948,146 755,270 4,572,272 ════════ ════════ ════════ ════════ Schroder MPF Stable Growth

Portfolio

Schroder MPF Umbrella Fund - Schroder MPF Stable Growth Fund 6,556,178 1,104,639 997,032 6,663,785 ════════ ════════ ════════ ════════ Schroder MPF Balanced

Investment Portfolio

Schroder MPF Umbrella Fund - Schroder MPF Balanced Investment

Fund 11,315,056 1,075,262 1,444,991 10,945,327 ════════ ════════ ════════ ════════ Schroder MPF Growth Portfolio Schroder MPF Umbrella Fund - Schroder MPF Growth Fund 6,669,789 660,873 878,413 6,452,249 ════════ ════════ ════════ ════════ Schroder MPF International

Portfolio

Schroder MPF Umbrella Fund - Schroder MPF International Fund 8,828,574 894,420 839,195 8,883,799 ════════ ════════ ════════ ════════ Schroder MPF Asian Portfolio Schroder MPF Umbrella Fund - Schroder MPF Asian Fund 5,731,249 626,681 648,877 5,709,053 ════════ ════════ ════════ ════════

- 56 -


6.2 Movements in portfolio holdings for the year ended 30th September 2019 (Continued) 30th

September 2018

30th September

2019 Holdings Additions Disposals Holdings Schroder MPF Hong Kong

Portfolio

Schroder Institutional Pooled Funds - Hong Kong Equity Fund 4,581,518 1,114,309 1,191,365 4,504,462 ════════ ════════ ════════ ════════ Schroder MPF Global Fixed

Income Portfolio

Schroder Institutional Pooled Funds - Global Bond Fund 775,448 755,533 439,906 1,091,075 ════════ ════════ ════════ ════════ Schroder MPF Core

Accumulation Fund

Schroder MPF Umbrella Fund - Schroder MPF Core 60/40 Fund 6,012,590 3,003,002 987,178 8,028,414 ════════ ════════ ════════ ════════ Schroder MPF Age 65 Plus Fund Schroder MPF Umbrella Fund - Schroder MPF Core 20/80 Fund 746,924 814,453 313,135 1,248,242 ════════ ════════ ════════ ════════

- 57 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 7 Performance table

7.1 Schroder MPF Capital Guaranteed Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000

Net loss excluding capital appreciation/ (depreciation) (728) (668) (470)

Capital appreciation/(depreciation) - realised and unrealised 1 3,515 347 1,434

Value of scheme assets derived from investments 86,758 76,851 65,368

Total net asset value 87,535 76,711 65,212

Net asset value per unit 2 Ordinary Class (HK$) 17.01 16.46 16.53 Class B (HK$) 17.96 17.35 17.38 ═════════ ═════════ ═════════ Fund expense ratio Ordinary Class 1.92% Class B 1.72% ═════════ Transaction costs Ordinary Class - Class B - ═════════

Performance record for the past 10 years/year of inception

Highest issue price

per unit

Lowest redemption price

per unit Net annualised

investment return 3

Ordinary Class Class B



HK$ HK$ HK$ HK$ % % 2019 17.15 18.11 16.19 17.06 3.3 3.5 2018 16.94 17.83 16.35 17.23 (0.4) (0.2) 2017 16.61 17.47 15.76 16.55 1.4 1.6 2016 16.35 17.17 15.57 16.33 3.3 3.5 2015 16.66 17.44 14.04 14.68 9.7 9.8 2014 14.84 15.49 14.39 15.05 (3.1) (2.8) 2013 15.63 16.27 14.63 15.25 (4.5) (4.2) 2012 15.55 16.17 14.91 15.46 3.6 3.9 2011 15.51 16.04 14.98 15.50 (1.4) (1.1) 2010 15.23 15.75 14.51 14.98 4.8 5.1 ═════ ═════ ═════ ═════ ═════ ═════

1 The constituent fund is a feeder fund which invests in an approved pooled investment fund. 2 The net asset value per unit has been rounded down to the next complete cent in accordance

with the Trust Deed of the Scheme. 3 The net annualised investment return is calculated by comparing the net asset value per

unit at the end of the year against the net asset value per unit at the beginning of the year.

- 58 -

SUN LIFE MPF MASTER TRUST INVESTMENT REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019 7 Performance table (Continued)

7.2 Schroder MPF Conservative Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000

Net income excluding capital appreciation/

(depreciation) 333 6 4 Income derived from investments Interest on bank deposits 1,551 784 360 Total net asset value 91,482 81,989 66,984 Net asset value per unit 1 Ordinary Class (HK$) 11.39 11.36 11.36 Class B (HK$) 11.42 11.38 11.38 ═════════ ═════════ ═════════ Fund expense ratio Ordinary Class 1.31% Class B 1.22% ═════════ Transaction costs Ordinary Class - Class B - ═════════


Highest issue price

per unit



investment return 2

Ordinary

Class Class B Ordinary


Class Class B HK$ HK$ HK$ HK$ % % 2019 11.39 11.42 11.36 11.38 0.3 0.4 2018 11.36 11.38 11.36 11.38 - - 2017 11.36 11.38 11.36 11.38 - - 2016 11.36 11.38 11.36 11.38 - - 2015 11.36 11.38 11.35 11.38 0.1 0.1 2014 11.35 11.38 11.34 11.38 0.1 - 2013 11.34 11.39 11.34 11.38 - - 2012 11.34 11.38 11.34 11.38 - - 2011 11.35 11.39 11.34 11.38 - - 2010 11.35 11.39 11.34 11.38 - - ═════ ═════ ═════ ═════ ═════ ═════

1 The net asset value per unit has been rounded down to the next complete cent in accordance

with the Trust Deed of the Scheme.

2 The net annualised investment return is calculated by comparing the net asset value per unit at the end of the year against the net asset value per unit at the beginning of the year.

- 59 -


7.3 Schroder MPF RMB and HKD Fixed Income Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000

Net loss excluding capital appreciation/

(depreciation) (487) (517) (384)

Capital appreciation/(depreciation) - realised and unrealised 1 947 133 1,117





Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 13.58 14.25 13.08 13.71 0.8 0.9 2018 13.71 14.36 13.09 13.72 (0.5) (0.3) 2017 13.38 14.01 12.63 13.20 1.5 1.7 2016 13.16 13.74 12.81 13.37 (0.7) (0.6) 2015 13.18 13.73 12.82 13.35 2.4 2.5 2014 12.88 13.42 12.58 13.09 1.0 1.2 2013 13.16 13.67 12.45 12.95 (3.2) (3.0) 2o12 13.14 13.62 12.86 13.30 0.5 0.9 2011 13.11 13.55 12.36 12.75 1.6 1.9 2010 12.88 13.27 12.20 12.54 4.0 4.3 ═════ ═════ ═════ ═════ ═════ ═════



unit at the end of the year against the net asset value per unit at the beginning of the year.

- 60 -


7.4 Schroder MPF Capital Stable Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000

Net loss excluding capital appreciation/ (depreciation) (752) (742) (610)

Capital appreciation/(depreciation) - realised and unrealised 1 3,632 (137) 3,619





Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 16.48 17.32 15.26 16.02 3.1 3.3 2018 16.88 17.68 15.76 16.53 (0.8) (0.6) 2017 16.15 16.91 14.60 15.27 3.8 4.0 2016 15.50 16.20 14.36 14.99 4.8 5.1 2015 15.67 16.32 14.62 15.25 (2.9) (2.7) 2014 15.47 16.09 14.79 15.38 2.1 2.3 2013 15.18 15.74 14.33 14.88 1.0 1.4 2012 14.67 15.18 13.39 13.79 8.2 8.7 2011 14.65 15.06 13.53 13.93 (4.8) (4.3) 2010 14.24 14.60 13.20 13.49 6.8 7.3 ═════ ═════ ═════ ═════ ═════ ═════




- 61 -


7.5 Schroder MPF Stable Growth Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000

Net loss excluding capital appreciation/ (depreciation) (1,236) (1,266) (1,149)

Capital appreciation/(depreciation) - realised and unrealised 1 3,533 1,805 12,598





Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 18.94 19.77 17.21 17.95 1.4 1.6 2018 19.96 20.78 18.20 18.98 0.3 0.5 2017 18.55 19.30 16.26 16.89 8.4 8.6 2016 17.14 17.79 15.38 15.95 6.6 6.8 2015 17.56 18.18 15.79 16.37 (4.0) (3.7) 2014 17.09 17.67 15.95 16.48 3.6 3.8 2013 16.31 16.81 15.19 15.63 4.0 4.4 2012 15.42 15.85 13.44 13.76 12.3 12.8 2011 15.49 15.82 13.63 13.95 (6.1) (5.6) 2010 14.61 14.88 13.22 13.45 8.1 8.5 ═════ ═════ ═════ ═════ ═════ ═════




- 62 -


7.6 Schroder MPF Balanced Investment Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000


Capital appreciation/(depreciation) - realised and unrealised 1 286 7,322 38,381





Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 21.23 22.05 18.91 19.62 (0.8) (0.6) 2018 22.92 23.74 20.45 21.21 1.7 1.8 2017 20.76 21.48 17.54 18.12 13.1 13.4 2016 18.40 19.01 15.92 16.42 8.3 8.6 2015 19.18 19.76 16.59 17.10 (5.1) (4.9) 2014 18.40 18.93 16.76 17.22 5.0 5.3 2013 17.17 17.62 15.45 15.81 7.1 7.5 2012 15.79 16.14 13.20 13.44 15.8 16.3 2011 16.15 16.41 13.46 13.70 (8.3) (7.9) 2010 14.83 15.03 13.06 13.21 9.3 9.6 ═════ ═════ ═════ ═════ ═════ ═════




- 63 -


7.7 Schroder MPF Growth Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000


Capital appreciation/(depreciation) - realised and unrealised 1 (3,494) 7,143 30,392





Highest issue price

per unit



investment return 3

Ordinary







- 64 -


7.8 Schroder MPF International Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000







Highest issue price

per unit



investment return 3

Ordinary







- 65 -


7.9 Schroder MPF Asian Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000







Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 43.99 45.25 37.03 38.05 (4.7) (4.6) 2018 48.60 49.86 40.74 41.86 (0.6) (0.3) 2017 43.29 44.38 31.97 32.74 20.1 20.3 2016 35.71 36.54 27.99 28.61 13.1 13.3 2015 37.87 38.64 30.04 30.67 (7.1) (7.0) 2014 35.57 36.24 29.56 30.09 8.7 9.0 2013 32.79 33.32 28.44 28.91 1.9 2.2 2012 30.20 30.61 23.56 23.76 21.5 22.1 2011 31.93 32.19 23.83 24.04 (11.9) (11.5) 2010 28.20 28.32 23.15 23.21 15.4 15.8 ═════ ═════ ═════ ═════ ═════ ═════




- 66 -


7.10 Schroder MPF Hong Kong Portfolio

2019 2018 2017 HK$’000 HK$’000 HK$’000





Net asset value per unit 2 Ordinary Class (HK$) 35.01 36.43 36.40 Class B (HK$) 36.63 38.04 37.94 ═════════ ══════════ ══════════ Fund expense ratio Ordinary Class 1.69% Class B 1.50% ═════════ Transaction costs Ordinary Class - Class B - ═════════


Highest issue price

per unit



investment return 3

Ordinary







- 67 -


7.11 Schroder MPF Global Fixed Income Portfolio 2019 2018 2017 HK$’000 HK$’000 HK$’000

Net loss excluding capital appreciation/(depreciation) (119) (103) (117)

Capital appreciation/(depreciation) - realised and unrealised 1 987 (252) 35



Net asset value per unit 2 Ordinary Class (HK$) 10.21 9.59 9.85 Class B (HK$) 9.93 9.33 9.57 ═════════ ══════════ ══════════ Fund expense ratio Ordinary Class 0.93% Class B 0.87% ═════════ Transaction costs Ordinary Class - Class B - ═════════

- 68 -


7.11 Schroder MPF Global Fixed Income Portfolio (Continued) Performance record for the past 10 years/year of inception

Highest issue price

per unit



investment return 3

Ordinary



Class Class B HK$ HK$ HK$ HK$ % % 2019 10.41 10.13 9.48 9.22 6.5 6.4 2018 10.13 9.85 9.59 9.33 (2.6) (2.5) 2017 10.12 9.84 9.28 9.02 (2.4) (2.4) 2016 10.17 9.88 9.46 9.18 5.1 5.3 2015 10.07 9.76 9.52 9.24 (3.3) (3.1) 2014 (Year of inception) 4 10.12 9.85 9.78 7.97 (0.6) (3.7) ═════ ═════ ═════ ═════ ═════ ═════



unit at the end of the year against the net asset value per unit at the beginning of the year. For the first financial period (13th January 2014 to 30th September 2014 for Ordinary Class and 29th January 2014 to 30th September 2014 for Class B), the initial offer price (HK$10.00 for Ordinary Class units and HK$10.00 for Class B units) is used and the actual net investment return is shown without annualisation.

4 Pursuant to the Notice to Unitholders issued by the Trustee of Schroder MPF Global Fixed

Income Portfolio (the “Affected Fund”), the net asset value (“NAV”) per unit of the Affected Fund during the period from 13th January 2014 to 12th February 2014 (the “Affected Period”) was understated. The remedial action had been taken by the Trustee to ensure the interests of the unitholders in the Affected Fund would not have been affected.

- 69 -


7.12 Schroder MPF Core Accumulation Fund 2

2019 2018 2017 HK$’000 HK$’000 HK$’000


Capital appreciation/(depreciation) - realised and unrealised 1 2,954 3,225 1,234



Net asset value per unit (HK$) 3, 4 11.16 10.92 N/A Ordinary Class (HK$) N/A N/A - Class B (HK$) N/A N/A 10.40 ═════════ ═════════ ══════════ Fund expense ratio 0.92% ═════════ Transaction costs - ═════════


Highest issue price

per unit



investment return 5 HK$ HK$ % 2019 11.19 9.89 2.2 2018 4 11.20 10.43 5.0 2017 (Year of inception) Ordinary Class - - - Class B 10.42 9.96 4.0 ══════ ═════ ═════

1 The constituent fund is a feeder fund which invests in an approved pooled investment fund.

2 The constituent fund was launched on 1st April 2017. 3 The net asset value per unit has been rounded down to the next complete cent in accordance

with the Trust Deed of the Scheme. 4 Effective from 16th July 2018, Schroder MPF Core Accumulation Fund only has one class

of units and therefore not subject to any class. Prior to 16th July 2018, Schroder MPF Core Accumulation Fund only issued Class B units and those unitholders had become the unitholders of the single class of units on 16th July 2018.

5 The net annualised investment return is calculated by comparing the net asset value per

unit at the end of the year against the net asset value per unit at the beginning of the year. For the first financial period (5th of April 2017 (date of commencement of operations) to 30th September 2017) where the initial offer price of HK$10.00 for Class B units is used and the actual net investment return is shown without annualisation.

- 70 -


7.13 Schroder MPF Age 65 Plus Fund 2

2019 2018 2017 HK$’000 HK$’000 HK$’000


Capital appreciation/(depreciation) - realised and unrealised 1 999 85 37



Net asset value per unit (HK$) 3, 4 10.93 10.18 N/A Ordinary Class (HK$) N/A N/A - Class B (HK$) N/A N/A 10.11 ═════════ ═════════ ══════════ Fund expense ratio 0.88% ═════════ Transaction costs - ═════════


Highest issue price

per unit



investment return 5 HK$ HK$ % 2019 10.96 9.96 7.4 2018 4 10.33 10.10 0.7 2017 (Year of inception) Ordinary Class - - - Class B 10.19 9.98 1.1 ══════ ══════ ═════

1 The constituent fund is a feeder fund which invests in an approved pooled investment fund. 2 The constituent fund was launched on 1st April 2017. 3 The net asset value per unit has been rounded down to the next complete cent in accordance

with the Trust Deed of the Scheme. 4 Effective from 16th July 2018, Schroder MPF Age 65 Plus Fund only has one class of units

and therefore not subject to any class. Prior to 16th July 2018, Schroder MPF Age 65 Plus Fund only issued Class B units and those unitholders had become the unitholders of the single class of units on 16th July 2018.

5 The net annualised investment return is calculated by comparing the net asset value per

unit at the end of the year against the net asset value per unit at the beginning of the year. For the first financial period (5th April 2017 (date of commencement of operations) to 30th September 2017) where the initial offer price of HK$10.00 for Class B units is used and the actual net investment return is shown without annualisation.

- 71 -

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST (THE “SCHEME”) Report on the Audit of the Financial Statements Opinion What we have audited The financial statements of Sun Life MPF Master Trust (the “Scheme”) and each of its constituent funds, Schroder MPF Capital Guaranteed Portfolio, Schroder MPF Conservative Portfolio, Schroder MPF RMB and HKD Fixed Income Portfolio, Schroder MPF Capital Stable Portfolio, Schroder MPF Stable Growth Portfolio, Schroder MPF Balanced Investment Portfolio, Schroder MPF Growth Portfolio, Schroder MPF International Portfolio, Schroder MPF Asian Portfolio, Schroder MPF Hong Kong Portfolio, Schroder MPF Global Fixed Income Portfolio, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund set out on pages 74 to 159, which comprise: • the statement of net assets available for benefits of the Scheme and the statement of financial

position of each of its constituent funds as at 30th September 2019; • the statement of comprehensive income of each of the constituent funds for the year then

ended; • the statement of changes in net assets available for benefits of the Scheme and the statement

of changes in net assets attributable to members of each of its constituent funds for the year then ended;

• the statement of cash flows of the Scheme and each of its constituent funds for the year then ended; and

• the notes to the financial statements, which include a summary of significant accounting policies.

Our opinion In our opinion, the financial statements give a true and fair view of the financial position of the Scheme and each of its constituent funds as at 30th September 2019, and of their financial transactions and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Basis for Opinion We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) and with reference to Practice Note 860.1 (Revised), “The Audit of Retirement Schemes” issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Scheme and each of its constituent funds in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.

- 72 -

INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST (THE “SCHEME”) Report on the Audit of the Financial Statements (Continued) Other Information The Trustee is responsible for the other information. The other information comprises all of the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Trustee and Those Charged with Governance for the Financial Statements The Trustee is responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and for such internal control as the Trustee determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Trustee is responsible for assessing the Scheme’s and each of its constituent funds’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustee either intends to liquidate the Scheme and its constituent funds or to cease operations, or has no realistic alternative but to do so. In addition, the Trustee is required to ensure that the financial statements have been properly prepared in accordance with sections 80, 81, 83 and 84 of the Hong Kong Mandatory Provident Fund Schemes (General) Regulation (the “General Regulation”). Those charged with governance are responsible for overseeing the Scheme’s and each of its constituent funds’ financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body, in accordance with section 102 of the General Regulation, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Scheme and each of its constituent funds have been properly prepared, in all material respects, in accordance with sections 80, 81, 83 and 84 of the General Regulation.

INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST (THE "SCHEME'')

Report on the Audit of the Financial Statements (Continued)

Auditor's Responsibilities for the Audit of the Financial Statements (Continued)

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Scheme's and its constituent funds' internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Trustee. Conclude on the appropriateness of the Trustee's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Scheme's and its constituent funds' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Scheme and its constituent funds to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on matters under the General Regulation

a. In our opinion, the financial statements of the Scheme and each of its constituent funds have been properly prepared, in all material respects, in accordance with sections So, 81, 83 and 84 of the General Regulation.

b. We have obtained all the information and explanations which, to the best of our knowledge and belief, are necessary for the purpose of our audit.

Hong Kong, 26th March 2020

-73-

SUN UFE MPF MASTER TRUST

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS - SCHEME AS AT 30TH SEPTEMBER 2019

Note 2019 HK$'ooo

Assets Current assets Bank balances 6(t) 18,312 Amounts receivable on redemption of units in constituent funds 2,659

Contributions receivable From employers 5,816 From members 3,864

Investments in constituent funds 3 1,797,154

Total assets 1,827,805

Liabilities Current liabilities Benefits payable 8,058 Forfeitures payable 10,807 Severance payment payable 34 Transfers-out payable 7,507 Amounts payable on subscription of units in

constituent funds 2,520 Other payables 316

Liabilities (excluding net assets available for benefits attributable to members) 29,242

Net assets available for benefits attributable to members 1,798,563

2018 HK$'ooo

15,145

8,305

7,364 4,557

1,769,454

1,804,825

5,700 10,091

135 4,026

6,358 297

26,607

1,778,218

The financial statements were approved by the board of directors of HSBC Provident Fund Trustee (Hong Kong) Limited on 26th March 2020 and were signed on its behalf by:

A ~ j. I~

ni~~~i;~ .. D Director

The notes on pages 97 to 159 are an integral part of the financial statements.

- 75 -

SUN LIFE MPF MASTER TRUST STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - SCHEME FOR THE YEAR ENDED 30TH SEPTEMBER 2019

Note 2019 2018 HK$’000 HK$’000 Income Net change in unrealised appreciation/depreciation in value of investments in constituent funds (67,207) (42,167)

Net realised gain on redemption of units in constituent funds 44,713 68,833

Other income 2 3 ────────── ────────── Total investment (loss)/income (22,492) 26,669 Expenses Administrative and other expenses 1 6 ────────── ────────── Net (loss)/income (22,493) 26,663 ────────── ────────── Contributions received and receivable 8 From employers Mandatory 37,122 38,855 Additional voluntary 53,327 50,299

From members Mandatory 35,611 37,199 Additional voluntary 20,671 18,894

────────── ────────── 146,731 145,247 ────────── ────────── Contribution surcharge received and receivable 1 8 ────────── ────────── Transfers-in Individual transfers-in from other schemes 22,598 30,242

────────── ────────── 22,598 30,242 ────────── ────────── Benefits paid and payable 9 Retirement 7,423 8,034 Early retirement 10,301 5,878 Permanent departure 21,990 16,055 Death 565 169 Refund of additional voluntary contributions to

leavers 6,505 - ────────── ────────── 46,784 30,136 ────────── ──────────


- 76 -

SUN LIFE MPF MASTER TRUST STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - SCHEME (CONTINUED) FOR THE YEAR ENDED 30TH SEPTEMBER 2019

2019 2018 HK$’000 HK$’000 Transfers-out Group transfers-out to other schemes 13,912 25,617 Individual transfers-out to other schemes 60,530 69,101

─────────── ─────────── 74,442 94,718 ─────────── ─────────── Forfeitures 3,801 6,739 ─────────── ─────────── Severance payments, long service payments and others 1,465 2,782

─────────── ─────────── Change in net assets available for benefits attributable to members 20,345 67,785

Net assets available for benefits attributable to members at the beginning of the year

- Members’ accounts 1,778,218 1,710,433 ─────────── ─────────── Net assets available for benefits attributable to members at the end of the year

- Members’ accounts 1,798,563 1,778,218 ═══════════ ═══════════


- 77 -

SUN LIFE MPF MASTER TRUST STATEMENT OF CASH FLOWS - SCHEME FOR THE YEAR ENDED 30TH SEPTEMBER 2019

2019 2018 HK$’000 HK$’000 Cash flows from operating activities Net (loss)/income (22,493) 26,663 Increase in investments in constituent funds (27,700) (63,095) Decrease/(increase) in amounts receivable on redemption of units in constituent funds 5,646 (6,135)

(Decrease)/increase in amounts payable on subscription of units in constituent funds (3,838) 4,994

Increase in other payables 19 40 ────────── ────────── Net cash used in operating activities (48,366) (37,533) ────────── ────────── Cash flows from financing activities Contributions, transfers-in and others received 171,571 173,259 Benefits, transfers-out, forfeitures and others paid (120,038) (129,192)

────────── ────────── Net cash generated from financing activities 51,533 44,067 ────────── ────────── Net increase in cash and cash equivalents 3,167 6,534 Cash and cash equivalents at the beginning of the year 15,145 8,611

────────── ────────── Cash and cash equivalents at the end of the year 18,312 15,145 ══════════ ══════════ Analysis of balance of cash and cash equivalents: Bank balances 18,312 15,145

══════════ ══════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 78 -

SUN LIFE MPF MASTER TRUST STATEMENT OF FINANCIAL POSITION - CONSTITUENT FUNDS AS AT 30TH SEPTEMBER 2019

Schroder MPF

Capital Guaranteed Portfolio Schroder MPF

Conservative Portfolio Schroder MPF RMB and HKD

Fixed Income Portfolio Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Current assets Bank balances 42 11 88,178 83,575 50 72 Fixed deposits with original maturity more than three months - - 3,557 - - -

Bank deposit interest receivable - - 188 129 - - Amounts receivable on sale of investments - - - - 5 - Amounts receivable on subscription 875 - 7 954 2 - Investments 3, 5(b) 86,758 76,851 - - 58,396 56,360 Other receivables - - 1 1 - -

────────── ────────── ────────── ────────── ────────── ────────── Total assets 87,675 76,862 91,931 84,659 58,453 56,432 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Liabilities Current liabilities Amounts payable on redemption 1 27 251 2,489 6 2,186 Accruals and other payables 139 124 198 181 96 95

────────── ────────── ────────── ────────── ────────── ────────── Liabilities (excluding net assets attributable to members) 140 151 449 2,670 102 2,281

---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Net assets attributable to members 87,535 76,711 91,482 81,989 58,351 54,151 ══════════ ══════════ ══════════ ══════════ ══════════ ══════════


- 79 -


Schroder MPF

Capital Stable Portfolio Schroder MPF

Stable Growth Portfolio Schroder MPF

Balanced Investment Portfolio Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Current assets Bank balances 28 43 30 66 66 104 Fixed deposits with original maturity more than three months - - - - - -

Bank deposit interest receivable - - - - - - Amounts receivable on sale of investments - - 147 249 - 250 Amounts receivable on subscription 175 1,764 81 - 162 - Investments 3, 5(b) 93,183 85,749 154,000 148,104 277,574 286,384 Other receivables - - - - - -

───────── ───────── ───────── ───────── ───────── ────────── Total assets 93,386 87,556 154,258 148,419 277,802 286,738 -------------- -------------- -------------- -------------- -------------- ---------------- Liabilities Current liabilities Amounts payable on redemption 1 1 240 2,015 2 274 Accruals and other payables 144 135 236 223 421 419

───────── ───────── ───────── ───────── ───────── ────────── Liabilities (excluding net assets attributable to members) 145 136 476 2,238 423 693

-------------- -------------- -------------- -------------- -------------- ---------------- Net assets attributable to members 93,241 87,420 153,782 146,181 277,379 286,045 ═════════ ═════════ ═════════ ═════════ ═════════ ══════════


- 80 -


Schroder MPF

Growth Portfolio Schroder MPF

International Portfolio Schroder MPF Asian Portfolio

Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Current assets Bank balances 29 51 52 65 84 95 Fixed deposits with original maturity more than three months - - - - - -

Bank deposit interest receivable - - - - - - Amounts receivable on sale of investments 261 68 246 373 140 216 Amounts receivable on subscription 221 - 32 - 297 8 Investments 3, 5(b) 179,824 189,155 182,562 183,723 277,060 289,256 Other receivables - - - - - -

───────── ───────── ───────── ───────── ───────── ───────── Total assets 180,335 189,274 182,892 184,161 277,581 289,575 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities Current liabilities Amounts payable on redemption 487 70 326 374 292 220 Accruals and other payables 283 280 274 272 423 422

───────── ───────── ───────── ───────── ───────── ───────── Liabilities (excluding net assets attributable to members) 770 350 600 646 715 642

-------------- -------------- -------------- -------------- -------------- -------------- Net assets attributable to members 179,565 188,924 182,292 183,515 276,866 288,933 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════


- 81 -


Schroder MPF

Hong Kong Portfolio Schroder MPF

Global Fixed Income Portfolio Note 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 Assets Current assets Bank balances 154 120 68 55 Fixed deposits with original maturity more than three months

- - - -

Bank deposit interest receivable - - - - Amounts receivable on sale of investments 423 325 - - Amounts receivable on subscription 259 2,673 2 19 Investments 3, 5(b) 271,413 284,716 18,589 12,305 Other receivables - - - -

───────── ────────── ───────── ───────── Total assets 272,249 287,834 18,659 12,379 -------------- ---------------- -------------- -------------- Liabilities Current liabilities Amounts payable on redemption 703 352 53 - Accruals and other payables 422 408 24 18

───────── ────────── ───────── ───────── Liabilities (excluding net assets attributable to members)

1,125 760 77 18

-------------- ---------------- -------------- -------------- Net assets attributable to members 271,124 287,074 18,582 12,361 ═════════ ══════════ ═════════ ═════════


SUN LIFE MPF MASTER TRUST

STATEMENT OF FINANCIAL POSmON - CONSTITUENT FUNDS AS AT 30TH SEPTEMBER 2019

Schroder MPF Schroder MPF Core Accumulation Fund Age 65 Plus Fund Total

Note 2019 2018 2019 2018 2019 2018 HK$'ooo HK$'ooo HK$'ooo HK$'ooo HK$'ooo HK$'ooo

Assets Current assets Bank balances 31 148 Fixed deposits with original maturity more

54 56 88,866 84,461

than three months - 3,557 Bank deposit interest receivable - 188 129 Amounts receivable on sale of investments 174 249 111 38 1,507 1,768 Amounts receivable on subscription 251 355 154 584 2,518 6,357 Investments 3, 5(b) 92,568 67,341 14,055 7,761 1,705,982 1,687,705 Other receivables 1 1

Total assets 93,024 68,093 14,374 8,439 1,802,619 1,780,421

Liabilities Current liabilities Amounts payable on redemption 178 249 113 38 2,653 8,295 Accruals and other payables 133 83 19 12 2,812 2,672

Liabilities ( excluding net assets attributable to members) 311 332 132 50 5,465 10,967

Net assets attributable to members 92,713 67,761 14,242 8,389 1,797,154 1,769,454

Note: As at 30th September 2019 and 2018, the redeemable units were recognised as equity for Schroder MPF Core Accnmulation Fund and Schroder MPF Age 65 Plus Fund. Refer to note 2(q) for details.

The financial statements were approved by the board of directors of HSBC Provident Fund Trustee (Hong Kong) Limited on 26th March 2020 and were signed on its behalf by: _,, )(l

.-/\ ~ J . ) ,._..,, "Di~~~t~~·u· .. ··................ . .. ..:-::t ........................... ...

Director The notes on pages 97 to 159 are an integral part of the financial statements.

- 82-

- 83 -

SUN LIFE MPF MASTER TRUST STATEMENT OF COMPREHENSIVE INCOME - CONSTITUENT FUNDS FOR THE YEAR ENDED 30TH SEPTEMBER 2019

Schroder MPF



Fixed Income Portfolio Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Income Interest on bank deposits - - 1,551 784 - - Net change in unrealised appreciation/depreciation in value of investments 1,854 (920) - - 649 (250)

Net realised gain on sale of investments 1,661 1,267 - - 298 383 Other income - 2 - - - 1

──────── ──────── ──────── ──────── ──────── ──────── Total investment income 3,515 349 1,551 784 947 134 ------------- ------------- ------------- ------------- ------------- ------------- Expenses Investment management fee 6(a) - - 265 99 - - Trustee fee 6(b) 83 73 145 117 55 56 Administration fee 6(c) 538 473 562 472 291 358 Sponsor fee 6(d) - - 114 - 63 - Legal and professional fee 6(e) 2 15 - - 1 13 Administrative expenses 6(e) 105 109 132 90 77 91

──────── ──────── ──────── ──────── ──────── ──────── Total operating expenses 728 670 1,218 778 487 518 ------------- ------------- ------------- ------------- ------------- ------------- Increase/(decrease) in net assets attributable to members 2,787 (321) 333 6 460 (384)

════════ ════════ ════════ ════════ ════════ ════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 84 -


Schroder MPF



Balanced Investment Portfolio Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Income Interest on bank deposits - - - - - - Net change in unrealised appreciation/depreciation in value of investments 1,735 (1,760) (529) (2,689) (8,133) (2,822)

Net realised gain on sale of investments 1,897 1,623 4,062 4,494 8,419 10,144 Other income - 2 - 4 - 7

──────── ──────── ──────── ──────── ──────── ───────── Total investment income/(loss) 3,632 (135) 3,533 1,809 286 7,329 ------------- ------------- ------------- ------------- ------------- -------------- Expenses Investment management fee 6(a) - - - - - - Trustee fee 6(b) 90 85 149 151 273 291 Administration fee 6(c) 446 525 742 923 1,394 1,821 Sponsor fee 6(d) 105 - 174 - 317 - Legal and professional fee 6(e) 2 16 3 21 6 31 Administrative expenses 6(e) 109 118 168 175 277 299

──────── ──────── ──────── ──────── ──────── ───────── Total operating expenses 752 744 1,236 1,270 2,267 2,442 ------------- ------------- ------------- ------------- ------------- -------------- Increase/(decrease) in net assets attributable to members 2,880 (879) 2,297 539 (1,981) 4,887

════════ ════════ ════════ ════════ ════════ ═════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 85 -


Schroder MPF



Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Income Interest on bank deposits - - - - - - Net change in unrealised appreciation/depreciation in value of investments (10,499) (1,804) (7,606) 6,473 (20,443) (17,300)

Net realised gain on sale of investments 7,005 8,947 5,327 7,811 8,920 19,538 Other income - 5 - 4 - 7

──────── ──────── ──────── ──────── ──────── ──────── Total investment (loss)/income (3,494) 7,148 (2,279) 14,288 (11,523) 2,245 ------------- ------------- ------------- ------------- ------------- ------------- Expenses Investment management fee 6(a) - - - - - - Trustee fee 6(b) 181 194 174 180 280 309 Administration fee 6(c) 924 1,213 862 1,093 1,416 1,917 Sponsor fee 6(d) 211 - 203 - 328 - Legal and professional fee 6(e) 4 24 4 23 6 32 Administrative expenses 6(e) 195 211 188 206 287 303

──────── ──────── ──────── ──────── ──────── ──────── Total operating expenses 1,515 1,642 1,431 1,502 2,317 2,561 ------------- ------------- ------------- ------------- ------------- ------------- (Decrease)/increase in net assets attributable to members (5,009) 5,506 (3,710) 12,786 (13,840) (316)

════════ ═════════ ════════ ═════════ ════════ ═════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 86 -


Schroder MPF


Global Fixed Income Portfolio Note 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 Income Interest on bank deposits - - - - Net change in unrealised appreciation/depreciation in value of investments (22,655) (16,500) 861 (342)

Net realised gain on sale of investments 14,168 21,477 126 90 Other income - 7 - -

───────── ───────── ───────── ───────── Total investment (loss)/income (8,487) 4,984 987 (252) -------------- -------------- -------------- -------------- Expenses Investment management fee 6(a) - - 43 31 Trustee fee 6(b) 279 310 9 6 Administration fee 6(c) 1,380 1,896 54 39 Sponsor fee 6(d) 326 - - - Legal and professional fee 6(e) 6 32 - 9 Administrative expenses 6(e) 287 296 13 18 ───────── ───────── ───────── ─────────

Total operating expenses 2,278 2,534 119 103 -------------- -------------- -------------- -------------- (Decrease)/increase in net assets attributable to members (10,765) 2,450 868 (355)

═════════ ═════════ ═════════ ═════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 87 -


Schroder MPF

Core Accumulation Fund Schroder MPF

Age 65 Plus Fund Total Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Income Interest on bank deposits - - - - 1,551 784 Net change in unrealised appreciation/depreciation in value of investments 2,483 2,775 881 52 (61,402) (35,087)

Net realised gain on sale of investments 471 450 118 33 52,472 76,257 Other income - 1 - - - 40

───────── ───────── ───────── ───────── ───────── ───────── Total investment income/(loss) 2,954 3,226 999 85 (7,379) 41,994 -------------- -------------- -------------- -------------- -------------- -------------- Expenses Investment management fee 6(a) 195 139 29 16 532 285 Trustee fee 6(b) 78 56 10 6 1,806 1,834 Administration fee 6(c) 311 223 46 25 8,966 10,978 Sponsor fee 6(d) - - - - 1,841 - Legal and professional fee 6(e) 2 5 - - 36 221 Administrative expenses 6(e) 88 86 11 7 1,937 2,009 ───────── ───────── ───────── ───────── ───────── ─────────

Total operating expenses 674 509 96 54 15,118 15,327 -------------- -------------- -------------- -------------- -------------- -------------- Increase/(decrease) in net assets attributable to members 2,280 2,717 903 31 (22,497) 26,667

═════════ ═════════ ═════════ ═════════ ═════════ ══════════ Note: The increase in net assets attributable to members represented total comprehensive income for Schroder MPF Core Accumulation Fund and Schroder MPF

Age 65 Plus Fund. The notes on pages 97 to 159 are an integral part of the financial statements.

- 88 -

SUN LIFE MPF MASTER TRUST STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS - CONSTITUENT FUNDS FOR THE YEAR ENDED 30TH SEPTEMBER 2019

Schroder MPF


Conservative Portfolio Schroder MPF RMB and

HKD Fixed Income Portfolio Schroder MPF

Capital Stable Portfolio Note 2019 2018 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Balance at the beginning of the year 76,711 65,212 81,989 66,984 54,151 47,320 87,420 76,900

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Proceeds from subscription of units 4 24,711 22,525 62,459 54,675 12,457 19,720 17,435 21,376

Payments on redemption of units 4 (16,674) (10,705) (53,299) (39,676) (8,717) (12,505) (14,494) (9,977)

───────── ───────── ───────── ───────── ───────── ───────── ───────── ───────── Net subscription 8,037 11,820 9,160 14,999 3,740 7,215 2,941 11,399 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Increase/(decrease) in net assets attributable to members 2,787 (321) 333 6 460 (384) 2,880 (879)

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Balance at the end of the year 87,535 76,711 91,482 81,989 58,351 54,151 93,241 87,420

═════════ ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ The notes on pages 97 to 159 are an integral part of the financial statements.

- 89 -


Schroder MPF

Stable Growth Portfolio

Schroder MPF Balanced Investment

Portfolio Schroder MPF


International Portfolio Note 2019 2018 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Balance at the beginning of the year 146,181 143,230 286,045 282,118 188,924 186,338 183,515 171,014

-------------- -------------- --------------- -------------- --------------- -------------- -------------- -------------- Proceeds from subscription of units 4 25,190 23,051 27,068 31,783 18,466 19,718 17,896 19,204

Payments on redemption of units 4 (19,886) (20,639) (33,753) (32,743) (22,816) (22,638) (15,409) (19,489)

───────── ───────── ───────── ───────── ───────── ───────── ───────── ───────── Net subscription/ (redemption) 5,304 2,412 (6,685) (960) (4,350) (2,920) 2,487 (285)

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Increase/(decrease) in net assets attributable to members 2,297 539 (1,981) 4,887 (5,009) 5,506 (3,710) 12,786

-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Balance at the end of the year 153,782 146,181 277,379 286,045 179,565 188,924 182,292 183,515

═════════ ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ The notes on pages 97 to 159 are an integral part of the financial statements.

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Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Balance at the beginning of the year 288,933 304,005 287,074 303,247 12,361 8,758 --------------- ---------------- ---------------- ---------------- -------------- -------------- Proceeds from subscription of units 4 31,506 33,677 66,511 50,220 12,619 7,816 Payments on redemption of units 4 (29,733) (48,433) (71,696) (68,843) (7,266) (3,858) ───────── ────────── ───────── ────────── ───────── ───────── Net subscription/(redemption) 1,773 (14,756) (5,185) (18,623) 5,353 3,958 --------------- ---------------- -------------- ---------------- -------------- -------------- (Decrease)/increase in net assets attributable to members (13,840) (316) (10,765) 2,450 868 (355)

--------------- ---------------- -------------- ---------------- -------------- -------------- Balance at the end of the year 276,866 288,933 271,124 287,074 18,582 12,361 ══════════ ══════════ ═════════ ══════════ ═════════ ═════════


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Schroder MPF


Age 65 Plus Fund Total Note 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Balance at the beginning of the year 67,761 47,403 8,389 3,830 1,769,454 1,706,359 -------------- -------------- -------------- -------------- ---------------- ---------------- Proceeds from subscription of units 4 33,448 26,179 8,310 6,981 358,076 336,925 Payments on redemption of units 4 (10,776) (8,538) (3,360) (2,453) (307,879) (300,497) ───────── ───────── ───────── ───────── ────────── ────────── Net subscription 22,672 17,641 4,950 4,528 50,197 36,428 -------------- -------------- -------------- -------------- ---------------- ---------------- Increase/(decrease) in net assets attributable to members 2,280 2,717 903 31 (22,497) 26,667

-------------- -------------- -------------- -------------- ---------------- ---------------- Balance at the end of the year 92,713 67,761 14,242 8,389 1,797,154 1,769,454 ═════════ ═════════ ═════════ ═════════ ══════════ ══════════

Note: For the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund, the net assets attributable to members was classified as equity as at

30th September 2019 and 2018. The notes on pages 97 to 159 are an integral part of the financial statements.

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SUN LIFE MPF MASTER TRUST STATEMENT OF CASH FLOWS - CONSTITUENT FUNDS FOR THE YEAR ENDED 30TH SEPTEMBER 2019

Schroder MPF



Fixed Income Portfolio 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Cash flows from operating activities Increase/(decrease) in net assets attributable to members 2,787 (321) 333 6 460 (384) Adjustments: - Interest on bank deposits - - (1,551) (784) - - ───────── ───────── ───────── ───────── ───────── ───────── Operating profit/(loss) before working capital changes 2,787 (321) (1,218) (778) 460 (384) Increase in fixed deposits with original maturity more than three months - - (3,557) - - -

Net increase in investments and amounts receivable on sale of investments (9,907) (11,481) - - (2,041) (9,319)

Decrease in other receivables - - - 49 - - Increase/(decrease) in accruals and other payables 15 (5) 17 34 1 (7) Decrease in establishment cost payable - (37) - - - (29) ───────── ───────── ───────── ───────── ───────── ───────── Cash used in operations (7,105) (11,844) (4,758) (695) (1,580) (9,739) Interest received - - 1,492 697 - - ───────── ───────── ───────── ───────── ───────── ───────── Net cash (used in)/generated from operating activities (7,105) (11,844) (3,266) 2 (1,580) (9,739)

-------------- -------------- -------------- -------------- -------------- -------------- Cash flows from financing activities Proceeds on subscription of units 23,836 22,531 63,406 53,787 12,455 19,720 Payments on redemption of units (16,700) (10,681) (55,537) (38,172) (10,897) (10,337) ───────── ───────── ───────── ───────── ───────── ───────── Net cash generated from financing activities 7,136 11,850 7,869 15,615 1,558 9,383 -------------- -------------- -------------- -------------- -------------- -------------- Net increase/(decrease) in cash and cash equivalents 31 6 4,603 15,617 (22) (356) Cash and cash equivalents as at the beginning of the year 11 5 83,575 67,958 72 428 ───────── ───────── ───────── ───────── ───────── ───────── Cash and cash equivalents as at the end of the year 42 11 88,178 83,575 50 72

═════════ ═════════ ═════════ ═════════ ═════════ ═════════ Analysis of balances of cash and cash equivalents: Bank balances 42 11 88,178 83,575 50 72 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════


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Schroder MPF



Balanced Investment Portfolio 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Cash flows from operating activities Increase/(decrease) in net assets attributable to members 2,880 (879) 2,297 539 (1,981) 4,887

Adjustments: - Interest on bank deposits - - - - - -

───────── ───────── ───────── ───────── ───────── ─────────Operating profit/(loss) before working capital changes 2,880 (879) 2,297 539 (1,981) 4,887 Increase in fixed deposits with original maturity more than three months - - - - - -

Net (increase)/decrease in investments and amounts receivable on sale of investments (7,434) (8,774) (5,794) (4,827) 9,060 (3,814)

Decrease in other receivables - - - - - - Increase/(decrease) in accruals and other payables 9 (10) 13 (22) 2 (39) Decrease in establishment cost payable - (46) - (88) - (172) ───────── ───────── ───────── ───────── ───────── ───────── Cash (used in)/generated from operations (4,545) (9,709) (3,484) (4,398) 7,081 862 Interest received - - - - - - ───────── ───────── ───────── ───────── ───────── ───────── Net cash (used in)/generated from operating activities (4,545) (9,709) (3,484) (4,398) 7,081 862

-------------- -------------- -------------- -------------- -------------- --------------Cash flows from financing activities Proceeds on subscription of units 19,024 19,760 25,109 23,066 26,906 31,800 Payments on redemption of units (14,494) (10,046) (21,661) (18,689) (34,025) (32,686)

───────── ───────── ───────── ───────── ───────── ───────── Net cash generated from/(used in) financing activities 4,530 9,714 3,448 4,377 (7,119) (886)

-------------- -------------- -------------- -------------- -------------- --------------

Net (decrease)/increase in cash and cash equivalents (15) 5 (36) (21) (38) (24) Cash and cash equivalents as at the beginning of the year 43 38 66 87 104 128 ───────── ───────── ───────── ───────── ───────── ───────── Cash and cash equivalents as at the end of the year 28 43 30 66 66 104 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ Analysis of balances of cash and cash equivalents: Bank balances 28 43 30 66 66 104

═════════ ═════════ ═════════ ═════════ ═════════ ═════════The notes on pages 97 to 159 are an integral part of the financial statements.

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Schroder MPF



2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Cash flows from operating activities (Decrease)/increase in net assets attributable to members (5,009) 5,506 (3,710) 12,786 (13,840) (316)

Adjustments: - Interest on bank deposits - - - - - -

───────── ───────── ───────── ───────── ───────── ─────────Operating (loss)/profit before working capital changes (5,009) 5,506 (3,710) 12,786 (13,840) (316) Increase in fixed deposits with original maturity more than three months - - - - - -

Net decrease/(increase) in investments and amounts receivable on sale of investments 9,138 (2,436) 1,288 (12,713) 12,272 15,312

Decrease in other receivables - - - - - - Increase/(decrease) in accruals and other payables 3 (32) 2 (13) 1 (68) Decrease in establishment cost payable - (113) - (103) - (179)

───────── ───────── ───────── ───────── ───────── ─────────Cash generated from/(used in) operations 4,132 2,925 (2,420) (43) (1,567) 14,749 Interest received - - - - - -

───────── ───────── ───────── ───────── ───────── ─────────Net cash generated from/(used in) operating activities 4,132 2,925 (2,420) (43) (1,567) 14,749

-------------- -------------- -------------- -------------- -------------- --------------Cash flows from financing activities Proceeds on subscription of units 18,245 19,743 17,864 19,218 31,217 33,684 Payments on redemption of units (22,399) (22,701) (15,457) (19,190) (29,661) (48,451)

───────── ───────── ───────── ───────── ───────── ─────────Net cash (used in)/generated from financing activities (4,154) (2,958) 2,407 28 1,556 (14,767)

-------------- -------------- -------------- -------------- -------------- --------------

Net decrease in cash and cash equivalents (22) (33) (13) (15) (11) (18) Cash and cash equivalents as at the beginning of the year 51 84 65 80 95 113 ───────── ───────── ───────── ───────── ───────── ───────── Cash and cash equivalents as at the end of the year 29 51 52 65 84 95 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ Analysis of balances of cash and cash equivalents: Bank balances 29 51 52 65 84 95 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════


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Schroder MPF


Global Fixed Income Portfolio 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 Cash flows from operating activities (Decrease)/increase in net assets attributable to members (10,765) 2,450 868 (355) Adjustments: - Interest on bank deposits - - - - ───────── ───────── ───────── ───────── Operating (loss)/profit before working capital changes (10,765) 2,450 868 (355) Increase in fixed deposits with original maturity more than three months - - - - Net decrease/(increase) in investments and amounts receivable on sale of investments 13,205 17,901 (6,284) (3,594) Decrease in other receivables - - - - Increase/(decrease) in accruals and other payables 14 (79) 6 5 Decrease in establishment cost payable - (178) - (4) ───────── ───────── ───────── ───────── Cash generated from/(used in) operations 2,454 20,094 (5,410) (3,948) Interest received - - - - ───────── ───────── ───────── ───────── Net cash generated from/(used in) operating activities 2,454 20,094 (5,410) (3,948) -------------- -------------- -------------- -------------- Cash flows from financing activities Proceeds on subscription of units 68,925 48,567 12,636 7,798 Payments on redemption of units (71,345) (68,702) (7,213) (3,875) ───────── ───────── ───────── ───────── Net cash (used in)/generated from financing activities (2,420) (20,135) 5,423 3,923 -------------- -------------- -------------- --------------

Net increase/(decrease) in cash and cash equivalents 34 (41) 13 (25) Cash and cash equivalents as at the beginning of the year 120 161 55 80 ───────── ───────── ───────── ───────── Cash and cash equivalents as at the end of the year 154 120 68 55 ═════════ ═════════ ═════════ ═════════ Analysis of balances of cash and cash equivalents: Bank balances 154 120 68 55 ═════════ ═════════ ═════════ ═════════


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Schroder MPF


Age 65 Plus Fund Total 2019 2018 2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Cash flows from operating activities Increase/(decrease) in net assets attributable to members 2,280 2,717 903 31 (22,497) 26,667

Adjustments: - Interest on bank deposits - - - - (1,551) (784)

───────── ───────── ───────── ───────── ───────── ─────────Operating profit/(loss) before working capital changes 2,280 2,717 903 31 (24,048) 25,883 Increase in fixed deposits with original maturity more than three months - - - - (3,557) -

Net increase in investments and amounts receivable on sale of investments (25,152) (20,390) (6,367) (4,021) (18,016) (48,156)

Decrease in other receivables - - - - - 49 Increase/(decrease) in accruals and other payables 50 10 7 6 140 (220) Decrease in establishment cost payable - (27) - (1) - (977)

───────── ───────── ───────── ───────── ───────── ─────────Cash used in operations (22,822) (17,690) (5,457) (3,985) (45,481) (23,421) Interest received - - - - 1,492 697 ───────── ───────── ───────── ───────── ───────── ───────── Net cash used in operating activities (22,822) (17,690) (5,457) (3,985) (43,989) (22,724) -------------- -------------- -------------- -------------- -------------- -------------- Cash flows from financing activities Proceeds on subscription of units 33,552 25,835 8,740 6,421 361,915 331,930 Payments on redemption of units (10,847) (8,411) (3,285) (2,423) (313,521) (294,364) ───────── ───────── ───────── ───────── ───────── ───────── Net cash generated from financing activities 22,705 17,424 5,455 3,998 48,394 37,566 -------------- -------------- -------------- -------------- -------------- --------------

Net (decrease)/increase in cash and cash equivalents (117) (266) (2) 13 4,405 14,842 Cash and cash equivalents as at the beginning of the year 148 414 56 43 84,461 69,619 ───────── ───────── ───────── ───────── ───────── ───────── Cash and cash equivalents as at the end of the year 31 148 54 56 88,866 84,461 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════ Analysis of balances of cash and cash equivalents: Bank balances 31 148 54 56 88,866 84,461 ═════════ ═════════ ═════════ ═════════ ═════════ ═════════


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SUN LIFE MPF MASTER TRUST NOTES TO THE FINANCIAL STATEMENTS

1 The Scheme Sun Life MPF Master Trust (the “Scheme”) is established and governed by its trust deed dated 31st January 2000, as amended. The Scheme is registered under Section 21 of the Hong Kong Mandatory Provident Fund Schemes Ordinance (the “Ordinance”) and is required to comply with the Ordinance and the relevant regulations, guidelines and codes issued by the Mandatory Provident Fund Schemes Authority (the “MPFA”). The Scheme comprises 13 (2018: 13) constituent funds (“constituent funds”) as at the end of the reporting year. Each of the constituent funds is approved by the MPFA and has its own investment policy and predetermined fees and charges. Contributions and benefits are dealt with at the scheme level whereas investments in approved pooled investment funds are dealt with at the constituent funds level. Units of the constituent funds of the Scheme are issued in two classes, Ordinary Class and Class B, except for Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund. Effective from 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only have one class of units each and therefore not subject to any class. Prior to 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only issued Class B and those unitholders had become the unitholders of the single class of units on 16th July 2018. The financial information of the Scheme comprises (i) the statement of net assets available for benefits as at 30th September 2019, and the statement of changes in net assets available for benefits and statement of cash flows for the year ended 30th September 2019 of the Scheme on a standalone basis; and (ii) the statement of financial position as at 30th September 2019, and the statement of comprehensive income, statement of changes in net assets attributable to members and statement of cash flows for the year ended 30th September 2019 for each of the Scheme’s constituent funds.

2 Summary of significant accounting policies The principal accounting policies adopted in the preparation of financial statements of the Scheme and its constituent funds are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (the “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets held at fair value through profit or loss. The preparation of financial statements in conformity with HKFRSs requires the Trustee to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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2 Summary of significant accounting policies (Continued) (a) Basis of preparation (Continued)

All references to net assets throughout the financial statements refer to net assets attributable to members unless otherwise stated. All the assets and liabilities are held for the purpose of being traded or are expected to be realised within one year.

Standards and amendments to existing standards effective from 1st October 2018 HKFRS 9 ‘Financial Instruments’ addresses the classification, measurement and derecognition of financial assets and financial liabilities. It replaces the multiple classification and measurement models in Hong Kong Accounting Standard (“HKAS”) 39 and is effective for reporting periods beginning on or after 1st January 2018. Classification and measurement of debt assets is driven by the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument is measured at amortised cost if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows and the contractual cash flows under the instrument solely represent payments of principal and interest (“SPPI”). A debt instrument is measured at fair value through other comprehensive income if the objective of the business model is to hold the financial asset both to collect contractual cash flows from SPPI and to sell. All other debt instruments must be recognised at fair value through profit or loss. An entity may however, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Derivative and equity instruments are measured at fair value through profit or loss unless, for equity instruments not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income. HKFRS 9 also introduces a new expected credit loss (“ECL”) impairment model. HKFRS 9 has been applied retrospectively by the Scheme and its constituent funds and did not result in a change to the classification or measurement of financial instruments as outlined in note 2(b). The Scheme and its constituent funds’ investment portfolios continue to be classified as fair value through profit or loss and other financial assets which are held for collection continue to be measured at amortised cost. There was no material impact on adoption from the application of the new impairment model.

There are no other standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning on 1st October 2018 that would be expected to have a material impact on the Scheme and its constituent funds.

New standards and amendments to standards that are relevant to the Scheme and its constituent funds but are not yet effective and have not been early adopted by the Scheme and its constituent funds A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1st October 2018, and have not been early adopted in preparing these financial statements. None of these are expected to have a material effect on the financial statements of the Scheme and its constituent funds.

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2 Summary of significant accounting policies (Continued) (b) Investments

Classification Assets The Scheme and its constituent funds classify its investments based on both the Scheme and its constituent funds’ business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Scheme and its constituent funds are primarily focused on fair value information and uses that information to assess the assets’ performance and to make decisions. The Scheme and its constituent funds have not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. The Scheme is investing through the 13 constituent funds and each of the constituent funds (except for Schroder MPF Conservative Portfolio) is investing in a single pooled approved investment fund. Investments in those pooled approved investment funds are considered to be investments in unconsolidated structured entities, refer to Note 2(c) for details. The Scheme and constituent funds have not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. As such, the Scheme and its constituent funds (except for Schroder MPF Conservative Portfolio) classify all of its investment portfolio as financial assets at fair value through profit or loss. Recognition, derecognition and measurement Purchases and sales of investments are accounted for on the trade date basis. Investments are initially recognised at fair value, excluding transaction costs which are expensed as incurred, and are subsequently re-measured at fair value. Realised and unrealised gains and losses on investments are included in the statement of comprehensive income in the year in which they arise. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Scheme and its constituent funds have transferred substantially all risks and rewards of ownership. Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the “Financial assets at fair value through profit or loss” category are presented in the statement of changes in net assets available for benefits of the scheme within “Net change in unrealised appreciation/depreciation in value of investments in constituent funds” and “Net realised gain on redemption of units in constituent funds”; and in the statement of comprehensive income of the constituent funds within “Net change in unrealised appreciation/depreciation in value of investments” and “Net realised gain on sale of investments” in the year in which they arise.

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2 Summary of significant accounting policies (Continued) (b) Investments (Continued)

Fair value estimation Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market and participants at the measurement date. The fair value of financial assets traded in active markets are based on quoted market prices at the close of trading on the reporting date. Investments in constituent funds by the Scheme are valued at their respective closing net asset value per unit. Investments in approved pooled investment funds by the constituent funds are fair valued based on last traded prices.

(c) Structured entities A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following features or attributes; (a) restricted activities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches). The Scheme and the constituent funds consider all of their investments in other funds (“Investee Funds”) to be investments in unconsolidated structured entities. The Scheme and the constituent funds invest in Investee Funds whose objective is to achieve long term capital growth. The Investee Funds are managed by related and unrelated asset managers who apply various investment strategies to accomplish their respective investment objectives. The Investee Funds finance their operations by issuing redeemable units which are puttable at the holder’s option and entitles the holder to a proportional stake in the respective fund’s net assets. The Scheme and constituent funds hold redeemable units in each of their Investee Funds. The change in fair value of each Investee Funds is included in the statement of changes in net assets available for benefits of the Scheme within the “net change in unrealised appreciation/depreciation in value of investments in constituent funds” and in the statement of comprehensive income of the constituent funds in “Net change in unrealised appreciation/depreciation in value of investments”.

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2 Summary of significant accounting policies (Continued) (d) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

(e) Amounts receivable on sale/payable on purchase of investments Amounts receivable on sale/payable on purchase of investments represent receivables for investments sold and payables for investments purchased that have been contracted for but not yet delivered by the end of the year.

(f) Accounts receivables Under the adoption of HKFRS 9, accounts receivables are recognised initially at fair value and subsequently measured at amortised cost. At each reporting date, the constituent funds shall measure the loss allowance on amounts due from counterparties at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the constituent funds shall measure the loss allowance at an amount equal to 12-month expected credit losses. Significant financial difficulties of the counterparties, probability that the counterparties will enter bankruptcy or financial reorganisation, and default in payments are all considered indicators that a loss allowance may be required. If the credit risk increases to the point that it is considered to be credit impaired, interest income will be calculated based on the gross carrying amount adjusted for the loss allowance. A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due. Any contractual payment which is more than 90 days past due is considered credit impaired. Accounts receivables are classified as current assets if the collections of receivables are expected within one year of less. If not, they are presented as non-current assets.

(g) Accounts payables and accruals Accounts payables and accruals are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Accounts payables and accruals are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

(h) Income and expenses Interest income is recognised on a time proportion basis using the effective interest method. Other income and expenses are accounted for on an accruals basis.

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2 Summary of significant accounting policies (Continued) (i) Translation of foreign currencies

(i) Functional and presentation currency Items included in the financial statements of the Scheme and its constituent funds are measured using the currency of the primary economic environment in which they operate (the “functional currency”). The financial statements are presented in Hong Kong dollars, which is the functional and presentation currency of the Scheme and its constituent funds.

(ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the year end date. Foreign exchange gains and losses arising from translation are included in the statement of changes in net assets available for benefits for the Scheme and the statement of comprehensive income for the constituent funds. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the statement of changes in net assets available for benefits for the Scheme and the statement of comprehensive income for the constituent funds within exchange gains or losses. Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value through profit or loss are presented in the statement of changes in net assets available for benefits within “net realised gain/(loss) on redemption of units in constituent funds” and “net change in unrealised appreciation/depreciation in value of investments in constituent funds” for the Scheme, and in the statement of comprehensive income within “net realised gain/(loss) on sale of investments” and “net change in unrealised appreciation/depreciation in value of investments” for the constituent funds.

(j) Contributions Contributions are accounted for on an accruals basis.

(k) Benefits Benefits are accounted for on an accruals basis.

(l) Transfers-in Transfers-in amounts are recognised when the right to receive payment is established.

(m) Transfers-out Transfers-out amounts are accounted for when the obligation to make payment is established.

(n) Forfeitures If a member ceases to be a member, the part of the employer’s voluntary balance not otherwise disposed of in accordance with the rules of the Scheme may be either maintained in the Trustee’s account to offset against future employer’s contributions or returned to the employer.

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2 Summary of significant accounting policies (Continued)

(o) Proceeds and payments on subscription and redemption of units

The net asset value of the constituent funds is computed on each business day. Prices for subscriptions and redemptions on each dealing day are based on the closing valuation of that dealing day. Proceeds and payments for units subscribed and redeemed are included in the statement of changes in net assets attributable to members of the constituent funds.

(p) Cash and cash equivalents Cash and cash equivalents comprise cash at bank, demand deposits with banks and other financial institutions with original maturities of three months or less from the date of placement, and short-term, highly liquid investments that are readily convertible into known amounts of cash which are subject to an insignificant risk of changes in value.

(q) Redeemable units A constituent fund issues redeemable units, which are redeemable at the holder’s option represents puttable financial instruments of a constituent fund. Puttable financial instruments are classified as equity in accordance with HKAS 32 (Amendment), “Financial instruments: Presentation” if they meet all the following criteria: the puttable financial instruments entitle the holder to a pro-rata share of net asset value; the puttable financial instruments are the most subordinated units in issue and unit features

are identical; there are no contractual obligations to deliver cash or another financial asset; and the total expected cash flows from the puttable financial instrument over its life are based

substantially on the profit or loss of a constituent fund.

Otherwise, puttable financial instruments are classified as financial liability. Redeemable units for Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund are recognised as equities while redeemable units for Schroder MPF Capital Guaranteed Portfolio, Schroder MPF Conservative Portfolio, Schroder MPF RMB and HKD Fixed Income Portfolio, Schroder MPF Capital Stable Portfolio, Schroder MPF Stable Growth Portfolio, Schroder MPF Balanced Investment Portfolio, Schroder MPF Growth Portfolio, Schroder MPF International Portfolio, Schroder MPF Asian Portfolio, Schroder MPF Hong Kong Portfolio and Schroder MPF Global Fixed Income Portfolio are recognised as financial liabilities. The redeemable units of the constituent funds are issued or redeemed at the holder’s option at prices based on the constituent funds’ net asset value per unit as at the close of business on the relevant dealing day. The constituent funds’ net asset value per unit is calculated by dividing the net assets attributable to the unitholders with the total number of outstanding units.

(r) Income tax The Scheme is registered under the Ordinance and is therefore a recognised scheme for Hong Kong profits tax purposes. The policy of the Hong Kong Inland Revenue Department (“IRD”), as set out in IRD Practice Note No. 23, is that “recognised retirement schemes and their trustees are not considered to be subject to profits tax on their investment income”. Accordingly, no provision for Hong Kong profits tax has been made in the Scheme’s financial statements.

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3 Investments

2019 2018 HK$’000 HK$’000 The Scheme Investments in constituent funds Schroder MPF Capital Guaranteed Portfolio 87,535 76,711 Schroder MPF Conservative Portfolio 91,482 81,989 Schroder MPF RMB and HKD Fixed Income Portfolio 58,351 54,151 Schroder MPF Capital Stable Portfolio 93,241 87,420 Schroder MPF Stable Growth Portfolio 153,782 146,181 Schroder MPF Balanced Investment Portfolio 277,379 286,045 Schroder MPF Growth Portfolio 179,565 188,924 Schroder MPF International Portfolio 182,292 183,515 Schroder MPF Asian Portfolio 276,866 288,933 Schroder MPF Hong Kong Portfolio 271,124 287,074 Schroder MPF Global Fixed Income Portfolio 18,582 12,361 Schroder MPF Core Accumulation Fund 92,713 67,761 Schroder MPF Age 65 Plus Fund 14,242 8,389 ─────────── ─────────── Investments at fair value 1,797,154 1,769,454 ═══════════ ═══════════ Investments at cost 1,483,248 1,388,341 ═══════════ ═══════════

2019 2018 HK$’000 HK$’000 Constituent funds Schroder MPF Capital Guaranteed Portfolio FWD MPF Capital Guaranteed Policy1 86,758 76,851 Schroder MPF RMB and HKD Fixed Income Portfolio Schroder Institutional Pooled Funds - RMB and HKD Fixed Income2 58,396 56,360 Schroder MPF Capital Stable Portfolio Schroder MPF Umbrella Fund - Schroder MPF Capital Stable Fund2 93,183 85,749 Schroder MPF Stable Growth Portfolio Schroder MPF Umbrella Fund - Schroder MPF Stable Growth Fund2 154,000 148,104 Schroder MPF Balanced Investment Portfolio Schroder MPF Umbrella Fund - Schroder MPF Balanced Investment Fund2 277,574 286,384

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3 Investments (Continued)

2019 2018 HK$’000 HK$’000 Constituent funds (Continued) Schroder MPF Growth Portfolio Schroder MPF Umbrella Fund - Schroder MPF Growth Fund2 179,824 189,155 Schroder MPF International Portfolio Schroder MPF Umbrella Fund - Schroder MPF International Fund2 182,562 183,723 Schroder MPF Asian Portfolio Schroder MPF Umbrella Fund - Schroder MPF Asian Fund2 277,060 289,256 Schroder MPF Hong Kong Portfolio Schroder Institutional Pooled Funds - Hong Kong Equity Fund2 271,413 284,716 Schroder MPF Global Fixed Income Portfolio Schroder Institutional Pooled Funds - Global Bond Fund2 18,589 12,305 Schroder MPF Core Accumulation Fund Schroder MPF Umbrella Fund - Schroder MPF Core 60/40 Fund2 92,568 67,341 Schroder MPF Age 65 Plus Fund Schroder MPF Umbrella Fund - Schroder MPF Core 20/80 Fund2 14,055 7,761 ─────────── ─────────── Investments at fair value 1,705,982 1,687,705 ═══════════ ═══════════

Investments at cost 1,350,342 1,270,663

═══════════ ═══════════

1 This policy guarantees that the capital will be preserved at the end of every five years. 2 These funds are managed by Schroder Investment Management (Hong Kong) Limited, the

Investment Manager of the Scheme.

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4 Number of units in issue and net assets attributable to members per unit (a) Net assets attributable to members Net assets attributable to members represent a liability in the statement of net assets of the constituent funds, carried at the redemption amount that would

be payable at the year end date if the members exercised the right to redeem units in the constituent funds. (b) Number of units in issue and net assets attributable to members per unit

The net assets attributable to members per unit are calculated by dividing the net assets attributable to members by the number of units in issue at the year end. The movement of the number of units in issue during the year and the net assets attributable to members per unit as at year end are as follows:

Schroder MPF Capital Guaranteed Portfolio Schroder MPF Conservative Portfolio 2019 2018 2019 2018

Ordinary




Class Class B Units Units Units Units Units Units Units Units

Units outstanding at the beginning of the year 2,454,761 2,090,094 1,909,271 1,935,326 2,905,941 4,300,806 2,083,468 3,803,860

Units issued 735,544 704,897 734,850 582,869 2,657,922 2,833,325 1,232,758 3,573,900 Units redeemed (514,906) (455,511) (189,360) (428,101) (2,458,943) (2,225,215) (410,285) (3,076,954) ──────── ──────── ──────── ──────── ──────── ──────── ──────── ────────

Units outstanding at the end of the year 2,675,399 2,339,480 2,454,761 2,090,094 3,104,920 4,908,916 2,905,941 4,300,806

════════ ════════ ════════ ════════ ════════ ════════ ════════ ════════ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$

Net assets attributable to members per unit 17.01 17.96 16.46 17.35 11.39 11.42 11.36 11.38

════════ ════════ ════════ ════════ ════════ ════════ ════════ ════════

- 107 -


4 Number of units in issue and net assets attributable to members per unit (Continued) (b) Number of units in issue and net assets attributable to members per unit (Continued)

Schroder MPF RMB and HKD Fixed Income Portfolio Schroder MPF Capital Stable Portfolio 2019 2018 2019 2018

Ordinary




Class Class B Units Units Units Units Units Units Units Units Units outstanding at the

beginning of the year 1,251,970 2,734,912 1,065,259 2,405,618 1,797,863 3,542,380 1,506,298 3,155,430 Units issued 303,952 602,166 337,154 1,078,540 281,335 767,439 582,954 696,991 Units redeemed (249,421) (389,391) (150,443) (749,246) (420,062) (461,006) (291,389) (310,041) ─────── ──────── ──────── ──────── ─────── ──────── ──────── ──────── Units outstanding at the end of

the year 1,306,501 2,947,687 1,251,970 2,734,912 1,659,136 3,848,813 1,797,863 3,542,380 ═══════ ════════ ════════ ════════ ═══════ ════════ ════════ ════════ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ Net assets attributable to

members per unit 13.25 13.91 13.14 13.78 16.34 17.18 15.85 16.63 ═══════ ════════ ════════ ════════ ═══════ ════════ ════════ ════════

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Schroder MPF Stable Growth Portfolio Schroder MPF Balanced Investment Portfolio 2019 2018 2019 2018

Ordinary





beginning of the year 2,639,002 5,066,110 2,330,796 5,242,164 5,283,022 8,090,054 5,256,690 8,160,399 Units issued 421,865 913,412 547,649 646,257 685,063 619,476 727,282 736,321 Units redeemed (307,492) (745,281) (239,443) (822,311) (784,447) (842,098) (700,950) (806,666) ──────── ─────── ──────── ──────── ──────── ──────── ──────── ──────── Units outstanding at the

end of the year 2,753,375 5,234,241 2,639,002 5,066,110 5,183,638 7,867,432 5,283,022 8,090,054 ════════ ═══════ ════════ ════════ ════════ ════════ ════════ ════════ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ Net assets attributable to

members per unit 18.70 19.54 18.45 19.24 20.76 21.57 20.92 21.69 ════════ ═══════ ════════ ════════ ════════ ════════ ════════ ════════

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Schroder MPF Growth Portfolio Schroder MPF International Portfolio 2019 2018 2019 2018

Ordinary





beginning of the year 3,008,424 4,845,464 3,039,620 4,928,606 3,304,673 7,190,101 3,113,362 7,385,163 Units issued 413,888 388,530 391,041 414,835 593,677 506,007 564,466 571,485 Units redeemed (330,973) (663,497) (422,237) (497,977) (386,383) (551,506) (373,155) (766,547) ──────── ──────── ──────── ──────── ──────── ─────── ──────── ──────── Units outstanding at the

end of the year 3,091,339 4,570,497 3,008,424 4,845,464 3,511,967 7,144,602 3,304,673 7,190,101 ════════ ════════ ════════ ════════ ════════ ═══════ ════════ ════════ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ Net assets attributable to

members per unit 23.00 23.72 23.63 24.31 16.25 17.52 16.62 17.88 ════════ ════════ ════════ ════════ ════════ ═══════ ════════ ════════

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Schroder MPF Asian Portfolio Schroder MPF Hong Kong Portfolio 2019 2018 2019 2018

Ordinary





beginning of the year 2,488,217 4,283,347 2,500,120 4,591,064 2,369,488 5,277,195 2,531,492 5,562,811 Units issued 347,215 412,582 406,972 340,968 948,801 868,626 402,153 859,567 Units redeemed (278,551) (447,917) (418,875) (648,685) (812,787) (1,140,664) (564,157) (1,145,183) ──────── ──────── ──────── ──────── ──────── ─────── ──────── ──────── Units outstanding at the

end of the year 2,556,881 4,248,012 2,488,217 4,283,347 2,505,502 5,005,157 2,369,488 5,277,195 ════════ ════════ ════════ ════════ ════════ ═══════ ════════ ════════ HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$ Net assets attributable to

members per unit 39.94 41.12 41.93 43.09 35.01 36.63 36.43 38.04 ════════ ════════ ════════ ════════ ════════ ═══════ ════════ ════════

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Schroder MPF Global Fixed Income Portfolio Schroder MPF Core Accumulation Fund 2019 2018 2019 2018 1

Ordinary


Class Class B

Units Units Units Units Units Units Units outstanding at the

beginning of the year 752,144 552,998 559,393 338,902 6,202,529 4,555,485 Units issued 491,367 797,277 470,798 327,212 3,105,300 2,438,641 Units redeemed (300,767) (447,401) (278,047) (113,116) (1,000,489) (791,597) ─────── ─────── ─────── ─────── ──────── ──────── Units outstanding at the

end of the year 942,744 902,874 752,144 552,998 8,307,340 6,202,529 ═══════ ═══════ ═══════ ═══════ ════════ ════════

1 Effective from 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only have one class of units each and

therefore not subject to any class. Prior to 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only issued Class B and those unitholders had become the unitholders of the single class of units on 16th July 2018.

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Schroder MPF Global Fixed Income Portfolio Schroder MPF Core Accumulation Fund 2019 2018 2019 2018 1

Ordinary


Class Class B HK$ HK$ HK$ HK$ HK$ HK$ Net assets attributable to

members per unit (i) 10.20 9.92 9.58 9.31 11.16 10.92 Adjustment for different basis

adopted for establishment cost per unit (ii) 0.01 0.01 0.01 0.02 - -

─────── ─────── ─────── ─────── ─────── ─────── Net assets attributable to

members per unit (iii) 10.21 9.93 9.59 9.33 11.16 10.92 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════

(i) Net Assets Value (“NAV”) is calculated according to HKFRSs. (ii) In accordance with the Scheme’s Consolidated Offering Document, the establishment cost of Schroder MPF Global Fixed Income Portfolio will be

amortised over five years. However, the accounting policy of the Scheme for the purpose of financial statements preparation in compliance with HKFRSs is to expense the establishment cost in the statement of comprehensive income as incurred. The differences between expensing the establishment cost as incurred in accordance with HKFRSs and capitalisation and amortisation of the establishment cost indicated in the Scheme’s Consolidated Offering Document resulted in adjustments in the net asset attributable to members. This resulted in a decrease of HK$15,000 (2018: a decrease of HK$22,000) in the statement of financial position as at 30th September 2019 and an increase of HK$7,000 (2018: an increase of HK$20,000) is recognised in the statement of comprehensive income for the year ended 30th September 2019 of Schroder MPF Global Fixed Income Portfolio.

(iii) NAV is calculated according to the conditions stated in the Scheme’s Consolidated Offering Document. 1 Effective from 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only have one class of units each and


- 113 -



Schroder MPF Age 65 Plus Fund 2019 2018 1 Units Units Units outstanding at the

beginning of the year 823,506 378,644 Units issued 799,914 685,236 Units redeemed (321,447) (240,374) ─────── ─────── Units outstanding at the

end of the year 1,301,973 823,506 ═══════ ═══════ HK$ HK$ Net assets attributable to

members per unit 10.93 10.18 ════════ ════════

1 Effective from 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only have one class of units each and


- 114 -


5 Financial risk management

(a) Strategy in using financial instruments The investment objective of Schroder MPF Capital Guaranteed Portfolio is to achieve a positive return, after expenses, for as long as the investor remains invested in the constituent fund. The investment objective of Schroder MPF Conservative Portfolio is to provide a return, after expenses, which matches or exceeds the Hong Kong dollar savings rate. The investment objective of Schroder MPF RMB and HKD Fixed Income Portfolio is to provide a long term return of capital growth and income in Hong Kong dollars terms through investment in a portfolio consisting mainly of RMB and HKD denominated debt securities. The investment objective of Schroder MPF Capital Stable Portfolio is to achieve a long-term return in line with Hong Kong price inflation (as measured by the Consumer Price Index Type A). The investment objective of Schroder MPF Stable Growth Portfolio is to achieve a long-term return in excess of Hong Kong price inflation (as measured by the Consumer Price Index Type A). The investment objective of Schroder MPF Balanced Investment Portfolio and Schroder MPF Growth Portfolio is to achieve a long-term return in excess of salary inflation in Hong Kong (as indicated by the Hong Kong Monthly Digest of Statistics as published by the Census and Statistics Department of the Government of Hong Kong Special Administrative Region). The investment objective of Schroder MPF International Portfolio, Schroder MPF Asian Portfolio and Schroder MPF Hong Kong Portfolio is to achieve long-term capital growth. The investment objective of Schroder MPF Global Fixed Income Portfolio is to provide security of capital and a comparatively high income return. The investment objective of Schroder MPF Core Accumulation Fund is to provide capital growth to members by investing in a globally diversified manner. The investment objective of Schroder MPF Age 65 Plus Fund is to provide stable growth to members by investing in a globally diversified manner. Except for the Schroder MPF Conservative Portfolio that holds only time deposits and bank balances, other constituent funds achieve their respective investment objectives through investing in approved pooled investment funds that are either unit trusts or insurance policies which ultimately invest in equities, debt securities and money market instruments in designated markets. The constituent funds are therefore exposed to market price risk, interest rate risk, credit risk, liquidity risk and currency risk arising from the financial instruments held. The risks and the respective risk management policies employed by the Scheme and its constituent funds to manage these risks are discussed below:

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5 Financial risk management (Continued)

(b) Market price risk Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or factors affecting all instruments in the market. All investments present a risk of loss of capital. The constituent funds’ market price risk is managed through diversification of the underlying investment portfolio of the approved pooled investment funds held. The constituent funds’ overall market positions are monitored on a regular basis by the Investment Manager. As at year end, the overall market exposures for the constituent funds were as follows: Schroder MPF Capital Guaranteed Portfolio

2019 2018 Fair value Cost % of net Fair value Cost % of net Held for trading HK$’000 HK$’000 assets HK$’000 HK$’000 assets FWD MPF Capital Guaranteed

Policy 86,758 77,997 99.11%

76,851

69,944

100.18% ════════ ════════ ══════ ════════ ════════ ══════

Schroder MPF Capital Guaranteed Portfolio invests in FWD MPF Capital Guaranteed Policy (“the insurance policy”) which in turns invests in listed/quoted equities and debt securities. The following table shows the net market exposures of the investments in the insurance policy:

% of total investments of the insurance policy

2019 2018 FWD MPF Capital Guaranteed Policy America 42.30% 41.50% Asia Pacific (excl. Japan and Hong Kong) 2.10% 2.20% Europe 32.90% 35.20% Hong Kong 11.50% 12.30% Japan 7.70% 7.70% Others 0.50% 0.60% ──────── ──────── 97.00% 99.50% ════════ ════════

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(b) Market price risk (Continued) Schroder MPF RMB and HKD Fixed Income Portfolio

2019 2018 Fair value Cost % of net Fair value Cost % of net Held for trading HK$’000 HK$’000 Assets HK$’000 HK$’000 assets

Schroder

Institutional

Pooled Funds – RMB and HKD Fixed Income Fund 58,396 56,732

100.08% 56,360 55,345 104.08%

════════ ════════ ══════ ════════ ════════ ═══════

Schroder MPF RMB and HKD Fixed Income Portfolio invests in a single approved pooled investment fund, a sub-fund of the Schroder Institutional Pooled Funds – RMB and HKD Fixed Income Fund (the “underlying fund”) which in turns invests in RMB and HKD denominated debt securities and money market instruments including fixed deposits, certificates of deposits, commercial papers, treasury bills and cash. The following table shows the net market exposures of the investments in the underlying fund:

% of net assets of the underlying fund

2019 2018 Schroder Institutional Pooled Funds – RMB and

HKD Fixed Income Fund Listed/quoted debt securities Australia 8.21% 11.63% British Virgin Islands 5.75% 5.67% Canada 6.84% 7.44% Cayman Islands 6.97% 6.82% China 5.01% 5.05% France 4.70% 4.81% Germany 0.00% 2.79% Great Britain 0.00% 4.01% Honduras 0.00% 1.39% Hong Kong 39.62% 16.49% Netherlands 4.12% 6.95% New Zealand 0.00% 4.65% Saudi Arabia 2.28% 2.33% Singapore 1.83% 5.09% South Africa 2.05% 0.00% South Korea 12.72% 11.01% ──────── ──────── 100.10% 96.13% Foreign exchange forward contracts 0.30% 0.17% ──────── ──────── 100.40% 96.30% ════════ ════════

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(b) Market price risk (Continued) Schroder MPF Capital Stable Portfolio

2019 2018

Fair value Cost % of

net Fair value Cost % of net Held for trading HK$’000 HK$’000 assets HK$’000 HK$’000 assets

Schroder MPF

Umbrella Fund –Schroder MPF Capital Stable Fund 93,183 80,586 99.94% 85,749 74,887 98.09%

════════ ════════ ══════ ════════ ════════ ═══════ Schroder MPF Capital Stable Portfolio invests in Schroder MPF Capital Stable Fund (the “underlying fund”). The underlying fund invests in a portfolio of approved pooled investment funds which in turns invest in listed/quoted equities and debt securities.

The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Capital Stable Fund America 34.34% 32.47% Asia Pacific 32.18% 31.46% Europe 29.40% 30.05% Others 2.48% 4.12%

──────── ──────── 98.40% 98.10% Foreign exchange forward contracts 0.13% 0.01% ──────── ──────── 98.53% 98.11% ════════ ════════

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(b) Market price risk (Continued) Schroder MPF Stable Growth Portfolio

2019 2018 Fair value Cost % of net Fair value Cost % of net Held for trading HK$’000 HK$’000 assets HK$’000 HK$’000 assets

Schroder MPF Umbrella Fund –Schroder MPF Stable Growth Fund 154,000 125,449 100.14% 148,104 119,024 101.32%

═════════ ════════ ══════ ═════════ ═════════ ══════ Schroder MPF Stable Growth Portfolio invests in Schroder MPF Stable Growth Fund (the “underlying fund”). The underlying fund invests in a portfolio of approved pooled investment funds which in turns invest in listed/quoted equities and debt securities. The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Stable Growth Fund America 32.41% 30.88% Asia Pacific 39.25% 38.60% Europe 27.20% 27.39% Others 0.30% 0.76%


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(b) Market price risk (Continued) Schroder MPF Balanced Investment Portfolio


Schroder MPF Umbrella Fund – Schroder MPF Balanced Investment Fund 277,574 210,487 100.07% 286,384 211,164 100.12%

═════════ ═════════ ═══════ ═════════ ═════════ ═══════ Schroder MPF Balanced Investment Portfolio invests in Schroder MPF Balanced Investment Fund (the “underlying fund”). The underlying fund invests in a portfolio of approved pooled investment funds which in turns invest in listed/quoted equities and debt securities. The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Balanced Investment Fund America 30.84% 28.27% Asia Pacific 46.56% 45.91% Europe 21.75% 23.20% Others 0.32% 0.59%


Schroder MPF Growth Portfolio


Schroder MPF Umbrella Fund – Schroder MPF Growth Fund 179,824 126,313 100.14% 189,155 125,145 100.12%

═════════ ═════════ ═══════ ═════════ ═════════ ═══════ Schroder MPF Growth Portfolio invests in Schroder MPF Growth Fund (the “underlying fund”). The underlying fund invests in a portfolio of approved pooled investment funds which in turns invest in listed/quoted equities and debt securities.

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(b) Market price risk (Continued) Schroder MPF Growth Portfolio (Continued) The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Growth Fund America 25.39% 24.92% Asia Pacific 54.36% 52.96% Europe 19.82% 19.71% Others 0.01% 0.03%



2019 2018 Fair value Cost % of net Fair value Cost % of net Held for trading HK$’000 HK$’000 assets HK$’000 HK$’000 Assets

Schroder MPF Umbrella Fund – Schroder MPF International Fund 182,562 122,218 100.15% 183,723 115,773 100.11%

═════════ ═════════ ══════ ═════════ ═════════ ══════

Schroder MPF International Portfolio invests in Schroder MPF International Fund (the “underlying fund”). The underlying fund invests in a portfolio of approved pooled investment funds which in turns invest in listed equities. The following table shows the net market exposures of the investments in the underlying fund:

% of net assets of the

underlying fund 2019 2018

Schroder MPF International Fund America 58.81% 57.01% Asia Pacific 21.94% 23.46% Europe 18.84% 19.04% Others 0.01% 0.01%


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(b) Market price risk (Continued) Schroder MPF Asian Portfolio


Schroder MPF Umbrella Fund – Schroder MPF Asian Fund 277,060 204,011 100.07% 289,256 195,764 100.11%

═════════ ═════════ ══════ ═════════ ═════════ ══════ Schroder MPF Asian Portfolio invests in Schroder MPF Asian Fund (the “underlying fund”) which in turns invests in listed equities and debt securities. The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Asian Fund

Listed equities America 3.27% 3.43% Asia Pacific 95.91% 91.99% ──────── ──────── 99.18% 95.42% Listed Debt Securities Asia Pacific 0.02% 0.00% ──────── ──────── 99.20% 95.42% Foreign exchange forward contracts 0.00% 0.02% ──────── ──────── 99.20% 95.44% ════════ ════════


2019 2018



Schroder Institutional

Pooled Funds – Hong Kong Equity Fund 271,413 229,445 100.11% 284,716 220,093 99.18%

═════════ ═════════ ══════ ═════════ ══════════ ══════

Schroder MPF Hong Kong Portfolio invests in a sub-fund of the Schroder Institutional Pooled Funds – Hong Kong Equity Fund (the “underlying fund”) which in turns mainly invests in Hong Kong equities.

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(b) Market price risk (Continued) Schroder MPF Hong Kong Portfolio (Continued) The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder Institutional Pooled Funds - Hong Kong

Equity Fund Listed equities

Hong Kong 91.91% 95.73% Singapore 1.18% 1.36% United States 5.93% 2.48% ──────── ──────── 99.02% 99.57% ════════ ════════


2019 2018



Schroder Institutional

Pooled Funds – Global Bond Fund 18,589 17,886 100.04% 12,305 12,463 99.55%

════════ ════════ ══════ ════════ ════════ ══════

Schroder MPF Global Fixed Income Portfolio invests in Schroder Institutional Pooled Funds - Global Bond Fund (the “underlying fund”) which in turns invests in listed/quoted debt securities and derivative financial instruments.

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(b) Market price risk (Continued) Schroder MPF Global Fixed Income Portfolio (Continued)

The following table shows the net market exposures of the investments in the underlying fund:

% of net assets of the

underlying fund 2019 2018

Schroder Institutional Pooled Funds - Global Bond Fund Listed/quoted debt securities Australia 2.23% 2.69% Austria 0.53% 0.60% Belgium 1.78% 1.82% British Virgin Islands 0.00% 0.42% Canada 5.53% 2.45% Cayman Islands 0.00% 0.60%

Denmark 0.03% 0.04% Finland 0.44% 0.63% France 6.21% 5.04% Germany 10.50% 12.79% Great Britain 6.12% 4.29% Ireland 0.00% 0.16% Israel 0.23% 0.24% Italy 1.72% 1.67% Japan 17.23% 17.34% Luxembourg 8.73% 9.41% Netherlands 5.06% 6.65% Norway 0.18% 0.06% Philippines 2.39% 2.95% Poland 0.27% 0.32% South Korea 2.77% 2.72% United States 26.87% 25.59% ──────── ──────── 98.82% 98.48% Foreign exchange forward contracts (0.14%) 0.09% ──────── ──────── 98.68% 98.57% ════════ ════════

- 124 -



(b) Market price risk (Continued) Schroder MPF Core Accumulation Fund


Schroder MPF Umbrella Fund – Schroder MPF Core 60/40 Fund 92,568 86,127 99.84% 67,341 63,383 99.38%

════════ ════════ ════════ ════════ ════════ ══════

Schroder MPF Core Accumulation Fund invests in Schroder MPF Umbrella Fund – Schroder MPF Core 60/40 Fund (the “underlying fund”) which in turns invests in two approved pooled investment funds as allowed under the Mandatory Provident Fund Schemes (General) Regulation. The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Core 60/40 Fund America 54.11% 52.87% Asia Pacific 15.80% 15.29% Europe 27.64% 29.05% Others 0.36% 0.46% ──────── ──────── 97.91% 97.67% ════════ ════════

- 125 -



(b) Market price risk (Continued) Schroder MPF Age 65 Plus Fund

2019 2018



Schroder MPF Umbrella Fund – Schroder MPF Core 20/80 Fund 14,055 13,091 98.69% 7,761 7,678 92.51%

════════ ════════ ══════ ═══════ ════════ ══════

Schroder MPF Age 65 Plus Fund invests in Schroder MPF Umbrella Fund – Schroder MPF Core 20/80 Fund (the “underlying fund”) which in turns invests in two approved pooled investment funds as allowed under the Mandatory Provident Fund Schemes (General) Regulation. The following table shows the net market exposures of the investments in the underlying fund:


2019 2018 Schroder MPF Core 20/80 Fund America 49.41% 46.22% Asia Pacific 13.02% 12.86% Europe 36.50% 38.21% Others 0.12% 0.16% ──────── ──────── 99.05% 97.45% ════════ ════════

- 126 -



(b) Market price risk (Continued) The table below summarizes the impact on the constituent funds’ net assets attributable to members as a result of increases/(decreases) of the key indices to which the constituent funds’ underlying investments are exposed. The analysis is based on the assumption that the indices had increased/(decreased) by the respective percentage with all other variables held constant and the fair value of the constituent funds’ investments moved according to the historical correlation with the indices. Market price risk for the Schroder MPF RMB and HKD Fixed Income Portfolio and Schroder MPF Global Fixed Income Portfolio are disclosed in note 5(c) under interest rate risk. The Schroder MPF Conservative Portfolio had no market price risk as it did not hold any investments as at 30th September 2019 and 2018.

Benchmark increases/ (decreases) by 5%

Constituent funds Benchmark components

Impact on net assets

attributable to members



2019 2018 HK$’000 HK$’000 Schroder MPF Capital

Guaranteed Portfolio (Note1) - 4,338 3,843

Schroder MPF Capital

Stable Portfolio FTSE MPF Asia Pacific ex Japan ex HK, FTSE MPF China, FTSE Europe, FTSE MPF Hong Kong, FTSE Japan, FTSE N.America(Note2) 1,482 1,327

Schroder MPF Stable

Growth Portfolio FTSE MPF Asia Pacific ex Japan ex HK, FTSE MPF China, FTSE Europe, FTSE MPF Hong Kong, FTSE Japan, FTSE N.America(Note2) 4,073 3,765

Schroder MPF Balanced

Investment Portfolio FTSE MPF Asia Pacific ex Japan ex HK, FTSE MPF China, FTSE Europe, FTSE MPF Hong Kong, FTSE Japan, FTSE N.America(Note2) 10,051 10,112

Schroder MPF Growth

Portfolio FTSE MPF Asia Pacific ex Japan ex HK, FTSE MPF China, FTSE Europe, FTSE MPF Hong Kong, FTSE Japan, FTSE N.America(Note2) 8,408 8,491

Schroder MPF

International Portfolio FTSE MPF Asia Pacific ex Japan ex HK, FTSE MPF China, FTSE Europe, FTSE MPF Hong Kong, FTSE Japan, FTSE N.America, FTSE MPF Allworld IDX(Note2) 9,099 9,010

Schroder MPF Asian

Portfolio FTSE MPF Asia Pacific ex JP ex AU ex NZ 13,380 11,869

- 127 -



(b) Market price risk (Continued)

Benchmark increases/ (decreases) by 5%

Constituent funds Benchmark components





2019 2018 HK$’000 HK$’000 Schroder MPF Hong

Kong Portfolio FTSE MPF Hong Kong 13,840 14,034 Schroder MPF Core

Accumulation Fund FTSE MPF Allworld IDX 2,794 1,844 Schroder MPF Age 65

Plus Fund FTSE MPF Allworld IDX 146 73

Note1 - The Schroder MPF Capital Guaranteed Portfolio provides a guarantee payable upon 5 years of continuous investment or over a lesser period if the member reaches 65. The analysis is based on the assumption that with all other variables held constant and the fair value of the policy’s investments will be impacted by the same extent as the market movement. Note2 - The composition of benchmark components depends on the weighted investment holdings of the respective underlying funds.

- 128 -



(b) Market price risk (Continued) The Investment Manager has used their view of what would be a “reasonable shift” in each key market to estimate the change for use in the market sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Investment Manager’s current view of market volatility and other relevant factors. Each constituent fund’s investments in Investee Funds are subject to the terms and conditions of the respective Investee Funds’ offering documents and are susceptible to market price risk arising from uncertainties about future values of those Investee Funds. The right of the constituent fund to request redemption of its investments in the Investee Funds is on daily basis. Each constituent fund’s holding in an Investee Fund, as a percentage of the Investee Fund’s total net asset value, will vary from time to time dependent on the volume of subscriptions and redemptions at the Investee Fund level. It is possible that each constituent fund, may, at any point of time, hold a majority of an Investee Fund’s total units in issue. The exposure to investments in Investee Funds at fair value by strategy employed is disclosed in the following table. These investments are included in “investments” in the statement of financial position of each of the constituent fund. Schroder MPF Capital Guaranteed Portfolio

2019 2018 Quoted investment funds

Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net

assets HK$’000 HK$’000 Capital Guaranteed Insurance Policy 1 86,758 99.11% 1 76,851 100.18%

During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$3,515,000 (2018: total net gains incurred HK$347,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF RMB and HKD Fixed Income Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds

Fair value

% of net

assets HK$’000 HK$’000 Fixed income fund 1 58,396 100.08% 1 56,360 104.08%

During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$947,000 (2018: total net gains incurred HK$133,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases.

- 129 -






Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net

assets HK$’000 HK$’000 Multi-Asset Fund 1 93,183 99.94% 1 85,749 98.09%

During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$3,632,000 (2018: total net loss incurred HK$137,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF Stable Growth Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$3,533,000 (2018: total net gains incurred HK$1,805,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF Balanced Investment Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$286,000 (2018: total net gains incurred HK$7,322,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases.

- 130 -






Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net loss incurred on investments in Investee Fund was HK$3,494,000 (2018: total net gains incurred HK$7,143,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF International Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net

assets HK$’000 HK$’000 Equity fund 1 182,562 100.15% 1 183,723 100.11%

During the year ended 30th September 2019 total net loss incurred on investments in Investee Fund was HK$2,279,000 (2018: total net gains incurred HK$14,284,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF Asian Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net loss incurred on investments in Investee Fund was HK$11,523,000 (2018: total net gains incurred HK$2,238,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases.

- 131 -



(b) Market price risk (Continued) Schroder MPF Hong Kong Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net loss incurred on investments in Investee Fund was HK$8,487,000 (2018: total net gains incurred HK$4,977,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF Global Fixed Income Portfolio


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net

assets HK$’000 HK$’000 Fixed income fund 1 18,589 100.04% 1 12,305 99.55%

During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$987,000 (2018: total net loss incurred HK$252,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases. Schroder MPF Core Accumulation Fund


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$2,954,000 (2018: total net gains incurred HK$3,225,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases.

- 132 -



(b) Market price risk (Continued) Schroder MPF Age 65 Plus Fund


Number of Investee

Funds Fair value

% of net

assets

Number of Investee

Funds Fair value

% of net


During the year ended 30th September 2019 total net gains incurred on investments in Investee Fund was HK$999,000 (2018: total net gains incurred HK$85,000). As at 30th September 2019 and 30th September 2018 there were no capital commitment obligations and no amounts due to Investee Funds for unsettled purchases.

(c) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As at 30th September 2019 and 2018, the majority of the financial assets and liabilities of the Scheme, Schroder MPF Capital Guaranteed Portfolio, Schroder MPF Asian Portfolio, Schroder MPF Hong Kong Portfolio and Schroder MPF International Portfolio are non-interest bearing. As a result, the Scheme and these constituent funds are not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents are invested at short-term market interest rates. For the Schroder MPF Conservative Portfolio, the underlying assets include mainly bank balances and time deposits. For the Schroder MPF Balanced Investment Portfolio, Schroder MPF Capital Stable Portfolio, Schroder MPF Growth Portfolio, Schroder MPF RMB and HKD Fixed Income Portfolio, Schroder MPF Stable Growth Portfolio, Schroder MPF Global Fixed Income Portfolio, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund, the underlying investment funds invest partly in debt securities and money market instruments. These constituent funds are therefore exposed to risk due to fluctuations in the prevailing levels of market interest rates. At year end, should the relevant market interest rates have moved down by 5 basis points with all other variables held constant, the impacts on the net assets attributable to members of these 9 (2018: 9) constituent funds are shown at the table below. The same change in opposite direction would cause the opposite movement in the net assets attributable to members by equal amounts.

- 133 -



(c) Interest rate risk (Continued)

Constituent funds

Estimated impact

Estimated impact

2019 2018 HK$’000 HK$’000 Schroder MPF Balanced Investment Portfolio 278 236 Schroder MPF Capital Stable Portfolio 232 181 Schroder MPF Growth Portfolio 45 38 Schroder MPF RMB and HKD Fixed Income Portfolio 25 44 Schroder MPF Conservative Portfolio 4 5 Schroder MPF Stable Growth Portfolio 279 226 Schroder MPF Global Fixed Income Portfolio 77 42 Schroder MPF Core Accumulation Fund 135 92 Schroder MPF Age 65 Plus Fund 43 22

The Investment Manager has used their view of what would be a “reasonable possible shift” in the market interest rates to estimate the change for use in the interest rate risk sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in basis points are revised annually depending on the Investment Manager’s current view of market interest rate sensitivity and other relevant factors.

(d) Credit and custody risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Scheme and its constituent funds. The Scheme and its constituent funds’ financial assets which are potentially subject to concentrations of credit risk consist principally of bank deposits and assets held with the banks and the custodian. The Scheme and its constituent funds limit their exposure to credit risk by depositing and transacting the majority of its investments and contractual commitment activities with banks, custodian and counterparties with high credit ratings and that the Scheme and its constituent funds consider to be well established. The Scheme’s financial assets that are potentially subject to concentration of credit risk consist principally of bank deposits of HK$18,312,000 (2018: HK$15,145,000) which are placed with The Hongkong and Shanghai Banking Corporation Limited with credit rating issued by S&P at the year end of A-1+ (2018: A-1+). The constituent funds’ financial assets which are potentially subject to concentration of credit risk consist principally of bank deposits and investments held with the custodians. Indirect credit risk from the underlying funds are managed by the investment manager of the underlying funds.

- 134 -


5 Financial risk management (Continued) (d) Credit and custody risk (Continued)

The table below summarises the deposits placed with banks and investments placed with custodian at 30th September 2019 and 2018: Schroder MPF Capital Guaranteed Portfolio

HK$’000 Credit rating

Source of credit rating

At 30th September 2019 Custodian HSBC Provident Fund Trustee (Hong Kong)

Limited 86,758 A-1+ S&P Bank The Hongkong and Shanghai Banking

Corporation Limited 42 A-1+ S&P At 30th September 2018 Custodian HSBC Provident Fund Trustee (Hong Kong)


Corporation Limited 11 A-1+ S&P

Schroder MPF Conservative Portfolio

HK$’000

Credit rating


At 30th September 2019 Banks Agricultural Bank of China 8,194 A-1 S&P ANZ Bank 7,141 A-1+ S&P Bank of China, Hong Kong Branch 9,119 A-1 S&P BNP Paribas, Hong Kong Branch 7,101 A-1 S&P China Construction Bank (Asia) 9,289 A-1 S&P Dah Sing Bank Limited 7,393 P-1 Moody’s DBS Bank Ltd 9,151 A-1+ S&P The Hongkong and Shanghai Banking

Corporation Limited 5,521 A-1+ S&P Industrial and Commercial Bank of China

(Asia) 6,331 A-1 S&P National Australia Bank Limited 7,875 A-1+ S&P Standard Chartered Bank 7,629 A-1 S&P Oversea-Chinese Banking Corporation Ltd 6,991 A-1+ S&P ──────── 91,735 ════════

- 135 -



Schroder MPF Conservative Portfolio (Continued)

HK$’000

Credit rating


At 30th September 2018 Banks Agricultural Bank of China 8,116 A-1 S&P ANZ Bank 7,503 A-1+ S&P Bank of China, Hong Kong Branch 4,509 A-1 S&P Bank of Communications, Hong Kong Branch 3,822 A-2 S&P BNP Paribas, Hong Kong Branch 6,500 A-1 S&P China Construction Bank (Asia) 7,858 A-1 S&P Dah Sing Bank Limited 6,757 P-1 Moody’s DBS Bank Ltd 6,333 A-1+ S&P The Hongkong and Shanghai Banking

Corporation Limited 4,471 A-1+ S&P Industrial and Commercial Bank of China

(Asia) 7,921 A-1 S&P National Australia Bank Limited 6,742 A-1+ S&P Standard Chartered Bank 6,692 A-1 S&P Oversea-Chinese Banking Corporation Ltd 6,351 A-1+ S&P ──────── 83,575 ════════









- 136 -










Corporation Limited 43 A-1+ S&P Schroder MPF Stable Growth Portfolio








- 137 -



Schroder MPF Balanced Investment Portfolio









HK$’000

Credit rating







- 138 -












HK$’000

Credit rating







- 139 -










Corporation Limited 120 A-1+ S&P Schroder MPF Global Fixed Income Portfolio








- 140 -










Corporation Limited 148 A-1+ S&P Schroder MPF Age 65 Plus Fund







Corporation Limited 56 A-1+ S&P All constituent funds (other than the Schroder MPF Capital Guaranteed Portfolio and Schroder MPF Conservative Portfolio) invested in approved pooled investment funds as at 30th September 2019 and 2018, managed by Schroder Investment Management (Hong Kong) Limited, also the Investment Manager of the Scheme and its constituent funds. As such, these constituent funds are not exposed to significant credit risk.

- 141 -



As at 30th September 2019 and 2018, Schroder MPF Capital Guaranteed Portfolio invested in an insurance policy issued by a reputable insurer, FWD Life Insurance Company (Bermuda) Limited. FWD Life Insurance Company (Bermuda) Limited is a part of FWD Group whose long-term credit rating is A3 (2018: A3) by Moody’s. As such, Schroder MPF Capital Guaranteed Portfolio is not exposed to significant credit risk.

The maximum exposure to credit risk at year end is the carrying amount of the financial assets as shown on the statement of net assets available for benefits for the Scheme and the statement of net assets for the constituent funds. The Scheme and its constituent funds measure credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management consider both historical analysis and forward looking information in determining any expected credit loss. Management consider the probability of default to be close to zero as the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12-month expected credit losses as any such impairment would be wholly insignificant to the Scheme and its constituent funds.

(e) Liquidity risk

Liquidity risk is the risk that the Scheme and its constituent funds will encounter difficulty in settling a liability. In accordance with the Mandatory Provident Fund legislation, for the Scheme, the maximum intervals for a request for redemption and the actual payment of accrued benefits (whether from mandatory or voluntary contributions) and a request by the Trustee of the Scheme for redemption and the actual payment to the Trustee of the Scheme of redemption proceeds of the underlying pooled investment funds of any constituent fund will be thirty days. The constituent funds are exposed to daily cash redemptions of units in the constituent funds. The constituent funds invest the majority of their assets in investments that are considered to be readily realisable. The financial liabilities of the Scheme and its constituent funds as at 30th September 2019 and 2018 were due within 1 month based on the remaining period at the year end date to the contractual maturity date. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. Units are redeemed on demand at members’ option of the constituent funds. However, the Trustee does not envisage that the contractual maturity of less than one month for net assets attributable to members will be representative of the actual cash outflows, as members typically retain them for the long term. As at 30th September 2019 and 2018, no individual member held more than 10% of each constituent fund’s units. The Scheme and its constituent funds manage their liquidity risk by investing in investments that they expect to be able to liquidate within 1 month or less. The expected liquidity of all assets of the Scheme and its constituent funds is less than 1 month.

- 142 -


5 Financial risk management (Continued) (f) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.

As at 30th September 2019 and 2018, the Scheme and its constituent funds did not have any assets or liabilities denominated in currencies other than their functional currency, Hong Kong dollar. As a result, the Scheme and its constituent funds have no currency exposure.

(g) Fair value estimation

The fair value of financial assets and liabilities traded in active markets (such as trading securities) are based on quoted market prices at the close of trading on the year end date. The constituent funds utilise the last traded market price as its fair valuation inputs for both financial assets and financial liabilities. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the constituent funds for similar financial instruments.

HKFRS 13 requires the constituent funds to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs) (Level 3). The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. The determination of what constitutes ‘observable’ requires significant judgment by the constituent funds. The constituent funds consider observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

- 143 -



(g) Fair value estimation (Continued) The following table analyses within the fair value hierarchy the constituent funds’ investments (by class) measured at fair value at 30th September 2019 and 2018: Schroder MPF Capital Guaranteed Portfolio At 30th September 2019

Assets Level 1 Level 2 Level 3 Total balance HK$’000 HK$’000 HK$’000 HK$’000 Held for trading FWD MPF Capital

Guaranteed Policy - 86,758 - 86,758 ───────── ───────── ────── ───────── Total assets at fair value

through profit or loss - 86,758 - 86,758 ═════════ ═════════ ══════ ═════════

At 30th September 2018

Assets Level 1 Level 2 Level 3 Total balance HK$’000 HK$’000 HK$’000 HK$’000 Held for trading FWD MPF Capital

Guaranteed Policy - 76,851 - 76,851 ───────── ───────── ────── ───────── Total assets at fair value

through profit or loss - 76,851 - 76,851 ═════════ ═════════ ══════ ═════════

Schroder MPF RMB and HKD Fixed Income Portfolio At 30th September 2019

Assets Level 1 Level 2 Level 3 Total balance HK$’000 HK$’000 HK$’000 HK$’000 Held for trading Schroder Institutional Pooled

Funds – RMB and HKD Fixed Income Fund 58,396 - - 58,396

───────── ───────── ────── ───────── Total assets at fair value

through profit or loss 58,396 - - 58,396 ═════════ ═════════ ══════ ═════════



Funds – RMB and HKD Fixed Income Fund 56,360 - - 56,360

───────── ───────── ────── ───────── Total assets at fair value

through profit or loss 56,360 - - 56,360 ═════════ ═════════ ══════ ═════════

- 144 -


5 Financial risk management (Continued) (g) Fair value estimation (Continued)

Schroder MPF Capital Stable Portfolio At 30th September 2019

Assets Level 1 Level 2 Level 3 Total balance HK$’000 HK$’000 HK$’000 HK$’000 Held for trading Schroder MPF Umbrella

Fund – Schroder MPF Capital Stable Fund 93,183 - - 93,183

───────── ────── ────── ───────── Total assets at fair value

through profit or loss 93,183 - - 93,183 ═════════ ══════ ══════ ═════════



Fund – Schroder MPF Capital Stable Fund 85,749 - - 85,749



Schroder MPF Stable Growth Portfolio At 30th September 2019


Fund – Schroder MPF Stable Growth Fund 154,000 - - 154,000





Fund – Schroder MPF Stable Growth Fund 148,104 - - 148,104



- 145 -



Schroder MPF Balanced Investment Portfolio At 30th September 2019


Fund – Schroder MPF Balanced Investment Fund 277,574 - - 277,574

────────── ────── ────── ────────── Total assets at fair value

through profit or loss 277,574 - - 277,574 ══════════ ══════ ══════ ══════════



Fund – Schroder MPF Balanced Investment Fund 286,384 - - 286,384



Schroder MPF Growth Portfolio At 30th September 2019


Fund – Schroder MPF Growth Fund 179,824 - - 179,824





Fund – Schroder MPF Growth Fund 189,155 - - 189,155



- 146 -



(g) Fair value estimation (Continued) Schroder MPF International Portfolio At 30th September 2019


Fund – Schroder MPF International Fund 182,562 - - 182,562





Fund – Schroder MPF International Fund 183,723 - - 183,723



Schroder MPF Asian Portfolio At 30th September 2019


Fund – Schroder MPF Asian Fund 277,060 - - 277,060





Fund – Schroder MPF Asian Fund 289,256 - - 289,256



- 147 -



Schroder MPF Hong Kong Portfolio At 30th September 2019


Funds – Hong Kong Equity Fund 271,413 - - 271,413





Funds – Hong Kong Equity Fund 284,716 - - 284,716



Schroder MPF Global Fixed Income Portfolio At 30th September 2019


Funds – Global Bond Fund 18,589 - - 18,589 ────────── ────── ────── ────────── Total assets at fair value




Funds – Global Bond Fund 12,305 - - 12,305 ────────── ────── ────── ────────── Total assets at fair value


- 148 -



Schroder MPF Core Accumulation Fund At 30th September 2019


Fund – Core 60/40 Fund 92,568 - - 92,568 ────────── ────── ────── ────────── Total assets at fair value






Schroder MPF Age 65 Plus Fund At 30th September 2019








- 149 -



(g) Fair value estimation (Continued)

Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1, include quoted investment funds. The constituent funds do not adjust the quoted price for these instruments.

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. As of 30th September 2019 and 2018, the constituent funds did not hold any investments classified in level 3. For the year ended 30th September 2019 and 2018, there were no transfers between levels of investments held by the constituent funds. The financial assets and liabilities included in the statement of financial position, other than investments, are carried at amortised cost; their carrying values are a reasonable approximation of fair value. There are no other assets or liabilities not at fair value but for which the fair value is disclosed.

(h) Capital risk management

The capital of the constituent funds is represented by the units in the constituent funds, and shown as net assets attributable to members in the statement of financial position. The amount of net assets attributable to members for each constituent fund can change significantly on a daily basis as the constituent funds are subject to daily subscriptions and redemptions at the discretion of members. Subscriptions and redemptions of units during the year are shown in the statement of changes in net assets attributable to members. The constituent funds’ objective when managing capital is to safeguard their ability to continue as a going concern in order to provide retirement benefits to members and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the constituent funds.

In order to maintain or adjust the capital structure, the policy of the constituent funds is to perform the following: - monitor the level of daily subscriptions and redemptions relative to the liquid assets; and - redeem and issue units in accordance with the trust deed of the Scheme. The Trustee and the Investment Manager monitor capital on the basis of the value of net assets attributable to members.

(i) Financial instruments by category of the Scheme and the constituent funds

Financial assets

Apart from investments as disclosed in the statement of financial position, all other financial assets as disclosed in the statement of financial position, including fixed deposits with original maturity more than three months, bank deposit interest receivable, amounts receivable on sale of investments, amounts receivable on subscription, other receivables and bank balances are categorised as “financial assets at amortised cost”.

- 150 -


5 Financial risk management (Continued) (i) Financial instruments by category of the Scheme and the constituent funds

(Continued)

Financial liabilities

All financial liabilities as disclosed in the statement of financial position, including amounts payable on redemption and accruals and other payables are categorised as “other financial liabilities at amortised cost”.

6 Transactions with related parties/associates

Except as disclosed in Note 3 and below, the Scheme and its constituent funds did not have any transactions with related parties, including the Trustee, the Sponsor, the Investment Manager and their associates or delegates of the Investment Manager during the year ended 30th September 2019 and 2018. Associates or delegates of the Investment Manager or Trustee are those as defined in the Ordinance established by the MPFA. All related party transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) Investment management fee

The Investment Manager, Schroder Investment Management (Hong Kong) Limited, is entitled to receive a fee calculated daily at 0.25% per annum of the net asset value of the Schroder MPF Conservative Portfolio, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund and 0.30% per annum of the net asset value of the Schroder MPF Global Fixed Income Portfolio. There is no investment management fee charged to any other constituent funds of the Scheme for the year ended 30th September 2019 and 2018. The investment management fee payables as at year end were as follows:

2019 2018 HK$’000 HK$’000 Schroder MPF Conservative Portfolio 20 25 ══════ ══════ Schroder MPF Global Fixed Income Portfolio 5 3 ══════ ══════ Schroder MPF Core Accumulation Fund 19 7 ══════ ══════ Schroder MPF Age 65 Plus Fund 3 2 ══════ ══════

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6 Transactions with related parties/associates (Continued) (b) Trustee fee

The Trustee, HSBC Provident Fund Trustee (Hong Kong) Limited, is entitled to receive a fee calculated daily at 0.1% per annum of the net asset value of the respective constituent funds, except for Schroder MPF Conservative Portfolio which is calculated daily at 0.15% per annum of the net asset value of the constituent fund and for Schroder MPF Global Fixed Income Portfolio which is calculated daily at 0.06% per annum of the net asset value of the constituent fund. The trustee fee payables as at year end were as follows:

2019 2018 HK$’000 HK$’000 Schroder MPF Capital Guaranteed Portfolio 7 6 ══════ ══════ Schroder MPF Conservative Portfolio 12 11 ══════ ══════ Schroder MPF RMB and HKD Fixed Income Portfolio 5 5 ══════ ══════ Schroder MPF Capital Stable Portfolio 8 7 ══════ ══════ Schroder MPF Stable Growth Portfolio 13 12 ══════ ══════ Schroder MPF Balanced Investment Portfolio 24 23 ══════ ══════ Schroder MPF Growth Portfolio 16 15 ══════ ══════ Schroder MPF International Portfolio 16 15 ══════ ══════ Schroder MPF Asian Portfolio 24 24 ══════ ══════ Schroder MPF Hong Kong Portfolio 24 23 ══════ ══════ Schroder MPF Global Fixed Income Portfolio 1 1 ══════ ══════ Schroder MPF Core Accumulation Fund 8 3 ══════ ══════ Schroder MPF Age 65 Plus Fund 1 1 ══════ ══════

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6 Transactions with related parties/associates (Continued) (c) Administration fee

The Administrator, BestServe Financial Limited, is entitled to receive a fee calculated daily, of the net assets of the respective constituent funds. For the Schroder MPF Conservative Portfolio, the Investment Manager, Schroder Investment Management (Hong Kong) Limited shall pay to the Administrator any shortfall between (a) the amount received by the Administrator and (b) 75% of the Administration fee which would have been payable to the Administrator. Effective from 24th December 2018, the administration fee rates are as follows:

Ordinary

Class Class B

Schroder MPF Capital Guaranteed Portfolio 0.75% 0.55%

Schroder MPF Conservative Portfolio 0.60% 0.45%

Schroder MPF RMB and HKD Fixed Income Portfolio 0.60% 0.45%

Schroder MPF Capital Stable Portfolio 0.60% 0.40%

Schroder MPF Stable Growth Portfolio 0.60% 0.40%

Schroder MPF Balanced Investment Portfolio 0.60% 0.40%

Schroder MPF Growth Portfolio 0.60% 0.40%

Schroder MPF International Portfolio 0.60% 0.40%

Schroder MPF Asian Portfolio 0.60% 0.40%

Schroder MPF Hong Kong Portfolio 0.60% 0.40%

Schroder MPF Global Fixed Income Portfolio 0.40% 0.35% Prior to 24th December 2018 and for the year ended 30th September 2018, the administration fee rates were as follows:

Ordinary

Class Class B

Schroder MPF Capital Guaranteed Portfolio 0.75% 0.55%

Schroder MPF Conservative Portfolio 0.75%* 0.60%*

Schroder MPF RMB and HKD Fixed Income Portfolio 0.75%* 0.60%*

Schroder MPF Capital Stable Portfolio 0.75%* 0.55%*

Schroder MPF Stable Growth Portfolio 0.75%* 0.55%*

Schroder MPF Balanced Investment Portfolio 0.75%* 0.55%*

Schroder MPF Growth Portfolio 0.75%* 0.55%*

Schroder MPF International Portfolio 0.75%* 0.55%*

Schroder MPF Asian Portfolio 0.75%* 0.55%*

Schroder MPF Hong Kong Portfolio 0.75%* 0.55%*

Schroder MPF Global Fixed Income Portfolio 0.40% 0.35% Effective from 16th July 2018, Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund only have one class of units respectively and therefore not subject to any class. Effective from 16th July 2018, the administration fee was charged at 0.40% per annum to Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund respectively. Prior to 16th July 2018, the administration fee rates were charged at 0.40% per annum to Ordinary Class and Class B Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund.

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6 Transactions with related parties/associates (Continued) (c) Administration fee (Continued)

* Prior to 24th December 2018, the administration fee which charged by the Administrator had included fees related to sponsor services and sponsor fee was not separately charged to the constituent funds. With effective from 24th December 2018, for enhancing the fee disclosures in the Consolidated Offering Document, the sponsor fee is separately presented and charged by the Sponsor on the constituent funds. As such, no additional fee, charge or expense was levied on the constituent funds for the year ended 30th September 2019. Refer to Note 6(d) for details.

The administration fee payables as at year end were as follows:


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6 Transactions with related parties/associates (Continued) (d) Sponsor fee

The Sponsor is entitled to receive a fee for providing client servicing, members’ communication and investor education services to the Scheme and providing ancillary services to the Trustee. With effective from 24th December 2018, the sponsor fee was separately presented from the administrative fee and charged by the Sponsor directly. Refer to Note 6(c) for details. Effective from 24th December 2018, the sponsor fee rates are as follows:

Ordinary

Class Class B

Schroder MPF Conservative Portfolio 0.15% 0.15%

Schroder MPF RMB and HKD Fixed Income Portfolio 0.15% 0.15%

Schroder MPF Capital Stable Portfolio 0.15% 0.15%

Schroder MPF Stable Growth Portfolio 0.15% 0.15%

Schroder MPF Balanced Investment Portfolio 0.15% 0.15%

Schroder MPF Growth Portfolio 0.15% 0.15%

Schroder MPF International Portfolio 0.15% 0.15%

Schroder MPF Asian Portfolio 0.15% 0.15%

Schroder MPF Hong Kong Portfolio 0.15% 0.15%

Except for the above, there is no sponsor fee charged to any other constituent funds of the Scheme for the year ended 30th September 2019. The sponsor fee payables to the Sponsor as at year end were as follows:

2019 2018 HK$’000 HK$’000 Schroder MPF Conservative Portfolio 12 - ══════ ══════ Schroder MPF RMB and HKD Fixed Income Portfolio 8 - ══════ ══════ Schroder MPF Capital Stable Portfolio 12 - ══════ ══════ Schroder MPF Stable Growth Portfolio 20 - ══════ ══════ Schroder MPF Balanced Investment Portfolio 37 - ══════ ══════ Schroder MPF Growth Portfolio 24 - ══════ ══════ Schroder MPF International Portfolio 24 - ══════ ══════ Schroder MPF Asian Portfolio 35 - ══════ ══════ Schroder MPF Hong Kong Portfolio 36 - ══════ ══════

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6 Transactions with related parties/associates (Continued) (e) Administrative expenses

The Sponsor is entitled to receive an reimbursement in respect of legal and professional fee and all other administrative expenses paid on behalf of the constituent funds such as auditor’s remuneration, fund publication costs, accounting, stamp duties, printing, publishing of notices, compensation fund levy paid to the MPFA, regulatory charges and safe custody and bank charges (if applicable) except for Schroder MPF Conservative Portfolio which is calculated daily at a maximum of 0.25% per annum of the net asset value of the respective constituent funds in order to cap charges to a maximum amount (the “cap amount”). The administrative expenses payables to the Sponsor as at year end were as follows:


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6 Transactions with related parties/associates (Continued)

(f) Bank balances As at 30th September 2019, the Scheme and its constituent funds placed bank deposits amounted to HK$18,312,000 (2018: HK$15,145,000) and HK$6,209,000 (2018: HK$5,357,000) respectively with related companies of the Trustee. Refer to Note 5(d) for details. For the year ended 30th September 2019, interest income amounted to HK$329 (2018: HK$26) and HK$8,000 (2018: HK$32,000) have been earned by the Scheme and its constituent funds from the bank deposits placed with the related companies of the Trustee.

7 Payments charged to default investments strategy (“DIS”) constituent funds or scheme or members who invest in the constituent funds In accordance with the Mandatory Provident Fund legislation, the aggregate of the payments for services of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund must not, in a single day, exceed a daily rate of 0.75% per annum of the net asset value of each of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund divided by the number of days in the year. The above aggregate payments for services include, but is not limited to, the fees paid or payable for the services provided by the Trustee, the Administrator, the Investment Manager, the Custodian and the Sponsor and/or promoter (if any) of each of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund and its underlying investment fund(s), and any of the delegates from these parties and such fees are calculated as a percentage of the net asset value of each of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund and its underlying investment fund(s), but do not include any out-of-pocket expenses incurred by each of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund and their underlying investment fund(s). In accordance with the Mandatory Provident Fund legislation, the total amount of all payments that are charged to or imposed on a DIS constituent fund or members who invest in a DIS constituent fund, for out-of-pocket expenses incurred by the Trustee on a recurrent basis in the discharge of the Trustee’s duties to provide services in relation to a DIS constituent fund, shall not in a single year exceed 0.2% of the net asset value of each of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund. For this purpose, out-of-pocket expenses include, for example, annual audit expenses, printing or postage expenses relating to recurrent activities (such as issuing annual benefit statements), recurrent legal and professional expenses, safe custody charges which are customarily not calculated as a percentage of the net asset value and transaction costs incurred by a DIS constituent fund in connection with recurrent acquisition of investments for the DIS constituent fund (including, for example, costs incurred in acquiring underlying investment funds) and annual statutory expenses (such as compensation fund levy where relevant) of the DIS constituent fund. Out-of-pocket expenses that are not incurred on a recurrent basis may still be charged to or imposed on a DIS constituent fund and such out-of-pocket expenses are not subject to the above statutory limit. Payment for services, out-of-pocket expenses and other payment charged to the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund are disclosed below. Payments for services and out-of-pocket expenses are those defined in the MPF Ordinance.

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7 Payments charged to default investments strategy (“DIS”) constituent funds or scheme or members who invest in the constituent funds (Continued)


Schroder MPF Age 65 Plus Fund

2019 2018 2019 2018 HK$’000 HK$’000 HK$’000 HK$’000 Payments for services

- Investment management fee 195 139 29 16 - Trustee fee 78 56 10 6 - Administration fee 311 223 46 25

─────── ─────── ─────── ───────Total payments services 584 418 85 47 ----------- ----------- ----------- ----------- Out-of-pocket expenses

- Listing fee expenses 15 26 - - - Auditor fee expenses 70 56 11 7 - Professional fee expenses 2 5 - - - Printing fee expenses 3 4 - -

─────── ─────── ─────── ───────Total out-of-pocket expenses 90 91 11 7 ----------- ----------- ----------- ----------- ─────── ─────── ─────── ───────Total payments 674 509 96 54 ═══════ ═══════ ═══════ ═══════Out-of-pocket expenses expressed as a percentage

of average net asset value as at the last dealing day of each month of the constituent funds 0.11% 0.15% 0.10% 0.12%

═══════ ══════ ═══════ ═══════

8 Contributions

Mandatory contributions for both the employers and members are equal to 5% of the members’ relevant income up to HK$30,000 per month but in respect of members earning less than HK$7,100 per month, the members’ mandatory contribution is nil. Self-employed persons must contribute 5% of their relevant income subject to a maximum contribution of HK$1,500 per month to the Scheme unless their relevant income is less than HK$7,100 per month.

Any contributions made to the Scheme by the employers or members in excess of their mandatory contributions are additional voluntary contributions.

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9 Benefits

Members will become entitled to benefits in respect of mandatory contributions to the Scheme in the circumstances set out in the Ordinance. Currently, these circumstances include where the members (i) reach the age of 65; (ii) permanently cease employment after reaching the age of 60; (iii) become totally incapacitated; (iv) permanently depart from Hong Kong; (v) die or (vi) have the right to claim a small balance or (vii) get terminal - illness pursuant to the Ordinance. With effect from 1 February 2016, under the Mandatory Provident Fund Schemes (Amendment) Ordinance 2015 - section 15 Withdrawal of Accrued Benefits, the scheme member can choose one of the following ways to manage MPF benefits: (a) withdraw MPF benefits by instalments, (b) withdraw all MPF benefits in a lump sum and (c) retain all the MPF benefits in the account for continuous investment. Members will become entitled to benefits in respect of voluntary contributions to the Scheme in circumstances set out in the trust deed and the relevant participation agreement.

10 Reconciliation of movement in liabilities arising from financing activities The Scheme Benefits

payable Forfeitures

payable Severance

payment payable Transfers-out

payable HK$’000 HK$’000 HK$’000 HK$’000 Beginning balance as at 30th September 2018 and 1st October 2018 5,700 10,091 135 4,026 Charged to statement of changes in net assets available for benefits 46,784 3,801 1,465 74,442 Cash outflow (44,426) (3,085) (1,566) (70,961) ───────── ───────── ───────── ───────── Ending balance as at 30th September 2019 8,058 10,807 34 7,507 ═════════ ═════════ ═════════ ═════════

The Scheme Benefits

payable Forfeitures

payable Severance

payment payable Transfers-out

payable HK$’000 HK$’000 HK$’000 HK$’000 Beginning balance as at 30th September 2017 and 1st October 2017 2,070 7,177 - 5,522 Charged to statement of changes in net assets available for benefits 30,136 6,739 2,782 94,718 Cash outflow (26,506) (3,825) (2,647) (96,214) ───────── ───────── ───────── ───────── Ending balance as at 30th September 2018 5,700 10,091 135 4,026 ═════════ ═════════ ═════════ ═════════

11 Bank loans, overdrafts and other borrowings

The Scheme and its constituent funds had no bank loans, overdrafts or other borrowings as at 30th September 2019 and 2018.

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12 Accrued benefits

The total accrued benefits vested in the members’ accounts amounted to HK$1,758,517,000 as at 30th September 2019 (2018: HK$1,730,044,000).

13 Soft commission arrangements

During the year, the Investment Manager and its associates did not enter into any soft commission arrangements with brokers in relation to dealings in the assets of the Scheme and its constituent funds (2018: nil).

14 Security lending arrangements

During the year, the Scheme and its constituent funds did not enter into any security lending arrangements (2018: nil).

15 Negotiability of assets

As at 30th September 2019 and 2018, there was no statutory or contractual requirement restricting the negotiability of the assets of the Scheme and its constituent funds.

16 Commitments

The Scheme and its constituent funds had no commitments as at 30th September 2019 and 2018. 17 Contingent liabilities

The Scheme and its constituent funds had no contingent liabilities as at 30th September 2019 and 2018.

18 Marketing expenses

There have been no advertising expenses, promotional expenses or commissions or brokerage fees paid and payable to the MPF intermediaries deducted from the Scheme or its constituent funds during the year ended 30th September 2019 and 2018.

19 Approval of financial statements

The financial statements were approved by the Trustee on 26th March 2020.

SUN LIFE MPF MASTER TRUST INDEPENDENT AUDITOR’S ASSURANCE REPORT FOR THE YEAR ENDED 30TH SEPTEMBER 2019

INDEPENDENT AUDITOR’S ASSURANCE REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST We have audited the financial statements of Sun Life MPF Master Trust and each of its constituent funds (hereafter referred to as the “Scheme”) for the year ended 30th September 2019 in accordance with Hong Kong Standards on Auditing and with reference to Practice Note 860.1 (Revised) “The Audit of Retirement Schemes” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), and have issued an unqualified auditor’s report thereon dated 26th March 2020. Pursuant to section 102 of the Hong Kong Mandatory Provident Fund Schemes (General) Regulation (the “General Regulation”), we are required to report whether the Scheme complied with certain requirements of the Hong Kong Mandatory Provident Fund Schemes Ordinance (the “Ordinance”) and the General Regulation. Trustee’s Responsibility The General Regulation requires the Trustee to ensure that: (a) proper accounting and other records are kept in respect of the constituent funds of the Scheme, the

Scheme assets and all financial transactions entered into in relation to the Scheme; (b) the requirements specified in the guidelines made by the Mandatory Provident Fund Schemes

Authority (the “MPFA”) under section 28 of the Ordinance with respect to forbidden investment practices and the requirements of sections 37(2), 51 and 52 and Part X of, and Schedule 1 to, the General Regulation are complied with;

(c) the requirements under sections 34DB(1)(a), (b), (c) and (d), 34DC(1), 34DD(1) and (4) of the

Ordinance are complied with; and (d) the Scheme assets are not subject to any encumbrance, otherwise than as permitted by the General

Regulation. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. Our firm applies Hong Kong Standard on Quality Control 1 issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

INDEPENDENT AUDITOR’S ASSURANCE REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST (Continued) Auditor’s Responsibility Our responsibility is to report solely to the Trustee, in accordance with section 102 of the General Regulation, on the Scheme’s compliance with the above requirements based on the results of the procedures performed by us, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 860.1 (Revised) “The Audit of Retirement Schemes” issued by the HKICPA. We have planned and performed our work to obtain reasonable assurance on whether the Scheme has complied with the above requirements. We have planned and performed such procedures as we considered necessary with reference to the procedures recommended in Practice Note 860.1 (Revised), which included reviewing, on a test basis, evidence obtained from the Trustee regarding the Scheme’s compliance with the above requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion Based on the foregoing: (a) in our opinion:

(i) proper accounting and other records have been kept during the year ended 30th September 2019 in respect of the constituent funds of the Scheme, the Scheme assets and all financial transactions entered into in relation to the Scheme; and

(ii) the requirements specified in the guidelines made by the MPFA under section 28 of the

Ordinance with respect to forbidden investment practices and the requirements of sections 37(2), 51 and 52 and Part X of, and Schedule 1 to, the General Regulation have been complied with, in all material respects, as at 30th September 2019, 21st May 2019 and 18th January 2019; and

(iii) the requirements specified in the Ordinance under sections 34DB(1)(a), (b), (c) and (d),

34DC(1) and 34DD(1) and (4)(a) with respect to the investment of accrued benefits and control of payment for services relating to Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund have been complied with, in all material respects, as at 30th September 2019, 21st May 2019 and 18th January 2019; and

INDEPENDENT AUDITOR'S ASSURANCE REPORT TO THE TRUSTEE OF SUN LIFE MPF MASTER TRUST (Continued)

Opinion (Continued)

(iv) the requirements specified in section 34DD(4)(b) of the Ordinance with respect to the controls of out-of-pocket expenses of the Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund have been complied with, in all material respects, as at 30th September 2019.

(b) as at 30th September 2019, the Scheme assets were not subject to any encumbrance, otherwise than as permitted by the General Regulation.

Other Matter

The requirements specified in the Ordinance under sections 34D1(1) and (2) and 34DK(2) with respect to the transfer of accrued benefits to an account and specified notice, and 34DJ(2), (3), (4) and (5) with respect to locating scheme members relating to Schroder MPF Core Accumulation Fund and Schroder MPF Age 65 Plus Fund are not applicable to the Trustee for the year ended 30th September 2019 as the Trustee has completed the relevant transitional provisions during the years ended 30th September 2017 and 30th September 2018. Accordingly, there is no reporting on these sections.

Intended Users and Purpose

This report is intended solely for submission by the Trustee to the MPFA pursuant to section 102 of the General Regulation, and is not intended to be, and should not be, used by anyone for any other purpose.

~'7~ ~ PricewaterhouseCoopers Certified Public Accountants

Hong Kong, 26th March 2020

Documents

SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL … · 2020. 4. 1. · SUN LIFE MPF MASTER TRUST REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH SEPTEMBER 2019 Contents Pages