Glossary

Glossary

• Trustee Fee/ Custodian Fee

  Fee components of Management Fee in percentage of NAV per annum paid to trustee and/or custodian.

• eMPF Platform Fee

  Fee components of Management Fee in percentage of NAV per annum paid to eMPF Platform Company Limited.

• Annual fee

  Amount charged by the trustee/MPF scheme provider of a MPF scheme on an annual basis, payable by the employer and/or scheme members. Details are provided in the Fee Table of a scheme.

• Annualized Return

  "Annualized Return" is the average 12-month return for a number of consecutive years (e.g. 5 years and 10 years) of a constituent fund. The average is not a simple average as the calculation of the annualized return takes into consideration the compounding effect of the investment return for each year.

  For example, assuming that the unit prices of a fund as at the end of three consecutive years were $10.00 (as at 31 Dec 2019), $10.20 (as at 31 Dec 2020) and $11.22 (as at 31 Dec 2021) respectively,

  the cumulative two-year return of the fund would be:

    [($11.22 ÷ $10.00) – 1] x 100% = 12.2%

  Whereas, the annualized return of the fund over the two-year period was the rate of return that produced the cumulative return rate taking into account the effect of compounding:

    $11.22 = $10.00 x (1 + 5.925%) x (1 + 5.925%)

  Therefore, the annualized return of the fund over the two-year period would be 5.925%. It is neither 6.1% (derived by 12.2% ÷ 2) nor 6.0% (derived by (2% + 10%) ÷ 2).

• Approved Pooled Investment Fund (APIF)

  A type of investment fund that a Constituent Fund invests into. An APIF can be in form of an insurance policy or a unit trust.

• Average Fund Expense Ratio (average FER)

  The average FER of all MPF Constituent Funds weighted by their respective net asset values.

  The average FER is the average of the FERs of MPF constituent funds with their financial periods ending on [1 January 2025] to [31 December 2025].

• Bid Spread

  Amount charged by the trustee/MPF scheme provider upon redemption of units of a Constituent Fund by a scheme member. Bid spread does not apply to an MPF Conservative Fund. Bid spread for a transfer of benefits, withdrawal of benefits in a lump sum, or the first four withdrawals of benefits by instalments in a year can only include necessary transaction costs incurred or reasonably likely to be incurred in selling or purchasing investments in order to give effect to the transfer or withdrawal and are payable to a party other than the trustee. Details are provided in the Fee Table of a scheme.

• Calendar Year Return

  "Calendar Year Return" is the annual investment return of a constituent fund in a calendar year. It is the difference in percentage terms between the unit prices of the fund on 31 December of two consecutive calendar years.

  For example, assuming that the unit prices of a fund as at the end of three consecutive years were $10.00 (as at 31 Dec 2019), $10.20 (as at 31 Dec 2020) and $11.22 (as at 31 Dec 2021) respectively,

  the calendar year return of the fund for 2020 would be:

    [($10.20 ÷ $10.00) – 1] x 100% = 2%

  the calendar year return of the fund for 2021 would be:

    [($11.22 ÷ $10.20) – 1] x 100% = 10%

• Constituent Fund (CF)

  An investment fund that constitutes or forms part of a MPF scheme. The constituent fund may be comprised of different Fund Classes. Each Fund Class of a constituent fund is displayed and, in effect, treated as a separate investment fund on the platform.

• Contribution charge

  Amount charged by the trustee/MPF scheme provider of a scheme against any contributions paid to the scheme. The charge does not apply to MPF Conservative Fund. Details are provided in the Fee Table of a scheme.

• Cumulative Return

  "Cumulative Return" is the investment return of a constituent fund cumulated in a given time period. It is a point-to-point measurement calculated by the percentage change in the fund price of a constituent fund from the beginning to the end of a given time period.

  For example, assuming that the unit prices of a fund as at the end of three consecutive years were $10.00 (as at 31 Dec 2019), $10.20 (as at 31 Dec 2020) and $11.22 (as at 31 Dec 2021) respectively,

  the cumulative two-year return of the fund would be:

    [($11.22 ÷ $10.00) – 1] x 100% = 12.2%

• Fee Table

  A standardized table showing fees, expenses and charges imposed on an MPF scheme at a glance. The format of the Fee Table is the same across different trustees to help you make basic comparison of fees, expenses and charges across different schemes and service providers. The Fee Table is contained in the MPF Scheme Brochure of a scheme.

• Financial Period End Date

  The last day of the financial period of the MPF scheme.

• Fund Class

  A class of units within a Constituent Fund held by a particular group or class of scheme members.

• Fund Expense Ratio (FER)

  The FER is a ratio that measures the expenses of your MPF fund as a percentage of fund size. Whilst you do not directly pay fund expenses, they do impact directly on the investment returns of your fund. Fees and charges are generally the main component of fund expenses. The FER is calculated for each financial period of a Constituent Fund. The FER is provided in the Fund Fact Sheet of a scheme. Note that the FER is calculated based on data from the previous financial period. The published FER will not reflect any increases or decreases in fees, charges or expenses in the current financial period. It is not necessary for funds with less than 2 years of history to show a FER.
  If you are interested, you can refer to Chapter E of the Code on Disclosure for MPF Investment Funds for details on the calculation of the FER.

• Fund Fact Sheet

  The Fund Fact Sheet is like the report card of a MPF fund, reporting on how the fund is doing. It provides key summary information on a Constituent Fund, such as fund size, investment objectives, portfolio allocation, main holdings in the portfolio, fund performance, FER, Fund Risk Indicator and future outlook for each Constituent Fund in a scheme. The Fund Fact Sheet is issued on a half-yearly basis.

• Fund Risk Indicator

  The Fund Risk Indicator shows the risk of a MPF fund. It is provided in your Fund Fact Sheet and helps you choose the risk you like to take in your MPF investment.

  There will also be some time lag between changes in data and its inclusion in this platform. Users should therefore check information against the most recent information available from the trustee or sponsor of any scheme being considered before any final investment decisions are made.

  The risk of a fund is important because research suggests that there is a tradeoff between risk and investment return. A fund with higher risk tends to show greater volatility of return than a low risk fund. It also has the potential to offer higher expected return than a low risk fund. Its downside potential is increased similarly.

  The figure is calculated as the annualized standard deviation based on monthly rates of return of the fund over a 3-year period. Please refer to Section C of the Performance Presentation Standards for MPF Investment Funds for details on the calculation of the Fund Risk Indicator.

• Fund Size

  The Net Asset Value of the Constituent Fund. If applicable, it refers to the Net Asset Value of the Constituent Fund within the corresponding Fund Class.

• Fund Types

  There are six different MPF fund types. The characteristics of each fund type are set out in the table below. The fund type and characteristics of a MPF fund are specified in the fund descriptor in the Fund Fact Sheet.

  Fund Type

  Mixed Assets Fund

  Characteristics

  The fund or a class of units of the fund invests majority of its assets in bonds and equities. The fund type is further broken down into different fund categories according to their normal range of the equity exposure. The fund categories under this fund type are: 1. 81% to 100% Equity 2. 61% to 80% Equity 3. 41% to 60% Equity 4. 21% to 40% Equity 5. Default Investment Strategy - Core Accumulation Fund 6. Default Investment Strategy - Age 65 Plus Fund 7. Uncategorized Mixed Asset Fund

  Fund Type

  Bond Fund

  Characteristics

  The fund or a class of units of the fund invests majority of assets in bonds. The fund type is further classified by investment objective of the fund as disclosed in the statement of investment objective and policy. The fund categories under this fund type are: 1. Asia Bond Fund 2. Global Bond Fund 3. Hong Kong Dollar Bond Fund 4. RMB Bond Fund 5. Uncategorized Bond Fund

  Fund Type

  Equity Fund

  Characteristics

  The fund or a class of units of the fund invests majority of assets in equities. The fund type is further broken down into different fund categories according to their geographic region. The fund categories under this fund type are: 1. Asia Equity Fund 2. China Equity Fund 3. Europe Equity Fund 4. Global Equity Fund 5. Greater China Equity Fund 6. Hong Kong Equity Fund 7. Hong Kong Equity Fund (Index Tracking) 8. Japan Equity Fund 9. United States Equity Fund 10. Uncategorized Equity Fund

  Fund Type

  Guaranteed Fund

  Characteristics

  A guaranteed amount of return of capital of the fund or a class of units of the fund will be paid to holders in future according to the features of the guarantee.

  Fund Type

  Money Market Fund - MPF Conservative Fund

  Characteristics

  The fund, previously known as the capital preservation fund, is essentially a money market fund investing in Hong Kong dollar based assets such as short-term bank deposits and high quality debt securities. The expenses of the fund are deducted based on a mechanism specified in the regulation.

  Fund Type

  Money Market Fund - Other than MPF Conservative Fund

  Characteristics

  Money market fund other than MPF Conservative Fund

• Fund Type - Fund Descriptor

  A short description of the characteristics of the fund type to facilitate comparison with other similar funds. There are six different types of MPF funds, each with a different fund descriptor. The fund descriptor is based on the fund type (e.g. equity, bond, or mixed assets), its investment objectives and policy, the maximum exposure to equity (for mixed assets funds), and the geographical region where assets are invested. The fund descriptor is provided in the Fund Fact Sheet.

• Guarantee Charge

  Amount deducted out of the assets of a guaranteed fund for the purpose of providing the guarantee. Details are provided in the Fee Table of a scheme.

• Investment Management Fee

  Fee component of Management Fee in percentage of NAV per annum paid to investment manager.

• Joining Fee

  A one-off fee charged by the trustee/MPF scheme provider of a scheme, payable by the employer and/or scheme members. Details are provided in the Fee Table of a scheme.

• Launch Date

  The date that a Constituent Fund was first made available to scheme members for investment purposes.

• Management Fee

  Fees paid to one or more of the trustee, custodian, eMPF Platform Company Limited, investment manager (including fees based on fund performance, if any) and MPF scheme provider or promotor of a scheme for providing their services to the fund. Generally, these fees are paid out of the Constituent Fund (i.e. management fees payable at CF level).

  Constituent Funds (CF) that are invested in Approved Pooled Investment Funds (APIF) and other permissible investment funds may be subject to fees and charges of those underlying funds (i.e. management fees payable at APIF level). Depending on the actual fee structure, fees and charges payable at Constituent Fund and/or underlying funds may be combined (i.e. management fees payable at CF & APIF levels) or disclosed separately in the Fee Table of a scheme.

  Management Fee for a DIS Constituent Fund can only be charged as a percentage of the net asset value of the fund and be subject to a statutory daily limit equivalent to 0.75% per annum of the net asset value of the fund which applies across both the fund and underlying funds.

• Maximum Equity [%]

  Maximum exposure to equity of a Mixed Assets Fund (or such other terms as used in the MPF Scheme Brochure), as specified in the fund descriptor of the Mixed Assets Fund.

• Median Risk Indicator

  The median of the Fund Risk Indicators of the selected basket of Constituent Funds. In other words, half of the selected basket of Constituent Funds are above the median risk indicator and half are below it.

• Net Asset Value (NAV)

  The NAV of a Constituent Fund or a class of a Constituent Fund is the total value of asset net of any liabilities of the fund.

• Offer Spread

  Amount charged by the trustee/MPF scheme provider upon subscription of units of a Constituent Fund by a scheme member. Offer spread does not apply to an MPF Conservative Fund. Offer spread for a transfer of benefits can only include necessary transaction costs incurred or reasonably likely to be incurred in selling or purchasing investments in order to give effect to the transfer and are payable to a party other than the trustee. Details are provided in the Fee Table of a scheme.

• MPF Scheme Brochure

  It should contain the necessary information for you to make informed decisions about the scheme. It contains important information about the scheme, operators, constituent funds, contributions and withdrawals, fees, expenses and charges, warnings and other important issues.

• On-going Cost Illustration (OCI)

  The OCI illustrates the total effect of fees, expenses and charges payable in dollar terms by converting the latest Fund Expense Ratio (FER) figure into dollars and adding that to any direct charges that you might pay such as contribution charge or offer spread. It shows the dollar costs of investing $1,000 in different funds over periods of one, three and five years.

  The OCI is updated each year, based on the FER from the previous year, and for the purpose of comparison only, assumes an annual rate of investment return of 5%. The OCI provides you with an easy basis to compare the likely costs of different funds and different schemes. In addition, the OCI is not required for MPF Conservative Fund, guaranteed funds where the amount accrued is not affected by the performance of the fund, and funds with one year or less of operational history.

  It is however important to remember that the OCI is not promising 5% investment return, nor is it suggesting that the FER figure will not change over the periods. Those figures are used so that a cost illustration can be calculated on a common set of assumptions. These common assumptions provide a solid basis for comparison across funds and service providers.

• Other Expenses

  In addition to joining fees, management fees, guarantee charges, bid spread and/ or offer spread and withdrawal charge, there are a variety of, usually smaller, miscellaneous fees and charges that may be chargeable to a Constituent Fund and scheme. Examples may include compensation fund levy, establishment cost of the scheme, indemnity insurance, auditor's fees and legal charges. Details are provided in the Fee Table of a scheme.

  Certain recurrent expenses relating to a DIS Constituent Fund are subject to a statutory annual limit of 0.20% of the net asset value of the fund and will not be charged to or imposed on the fund in excess of that amount.

• Risk Class

  A risk class is assigned to each Constituent Fund with reference to a seven-point risk classification scale (Risk Class) to indicate the risk level of the fund. Generally, a fund in a higher risk class has a higher level of risk. The seven risk classes are divided according to the volatility intervals of the Fund Risk Indicator of a Constituent Fund as shown below.
  
  7-point Risk Class Classification
  

  Risk Class	Fund Risk Indicator
  	Equal or above	Less than
  1	0.0%	0.5%
  2	0.5%	2.0%
  3	2.0%	5.0%
  4	5.0%	10.0%
  5	10.0%	15.0%
  6	15.0%	25.0%
  7	25.0%

  Risk Class is independent of and an addition to the pre-existing risk rating scales developed with a number of different methodologies currently adopted by some MPF trustees themselves (Pre-existing Risk Scales). Unlike the Risk Class which is standardized across all trustees, schemes and Constituent Funds, these Pre-existing Risk Scales may not be comparable among different trustees or schemes.

• Member Servicing Fee

  Fee component of Management Fee in percentage of NAV per annum paid to MPF scheme provider.

• Withdrawal Charge

  Fee charged by the trustee/MPF scheme provider of a scheme upon withdrawal of accrued benefits from the scheme. This fee is usually charged as a percentage of the withdrawal amount and will be deducted from the withdrawal amount. This charge does not apply to an MPF Conservative Fund. A withdrawal charge for a transfer of benefits, withdrawal of benefits in a lump sum, or the first four withdrawals of benefits by instalments in a year can only include necessary transaction costs incurred or reasonably likely to be incurred in selling or purchasing investments in order to give effect to the transfer or withdrawal and are payable to a party other than the trustee. Details are provided in the Fee Table of a scheme.