Manulife MPF Plan Advanced (the Plan ) DIS Pre-implementation Notice to Participating Employers and Members 1

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1 Manulife MPF Plan Advanced (the Plan ) DIS Pre-implementation Notice to Participating Employers and Members 1 Attention: This document is important and requires your immediate attention. If you are in any doubt about the contents of this document, you should seek independent professional advice. The Sponsor and the Trustee of the Plan accept responsibility for the information contained in this document. This document is only a summary of the key changes relating to the Plan. Members should also carefully review the first addendum to the consolidated explanatory memorandum of the Plan dated 1 November 2016 ( Consolidated Explanatory Memorandum ), which is enclosed herewith. A copy of the Consolidated Explanatory Memorandum as amended by the first addendum can be obtained by calling the Manulife Pension Services Hotline at or accessing the Website at You should consider your own risk tolerance level and financial circumstances before making any investment choices. In the event that you do not make any investment choices, please be reminded that your contributions made and/or accrued benefits transferred into the Plan may be invested in accordance with the Default Investment Strategy, which may not necessarily be suitable for you. Dear Participating Employers and Members, We are writing to you because important changes to the Mandatory Provident Fund Schemes Ordinance ( MPF Ordinance ) will take effect on 1 April 2017 ( Effective Date ). From the Effective Date, the default investment arrangement of the Plan will be the Default Investment Strategy ( DIS ) replacing the existing default fund of the Plan. You should read this notice carefully because the changes made to the MPF legislation may affect the investment of both your accrued benefits and future contributions. Terms used in this document bear the same meaning as in the Consolidated Explanatory Memorandum unless otherwise defined. 1. What is DIS? DIS is a default investment arrangement as stipulated in accordance with the MPF Ordinance. For Members who do not make a fund choice for their MPF account, their accrued benefits, future investments (meaning contributions and accrued benefits transferred from another MPF scheme) will be invested in the DIS. The DIS is also available as an investment choice itself for Members. The DIS is not a fund - it is a strategy that uses two constituent funds, namely the Manulife MPF Core Accumulation Fund Advanced and the Manulife MPF Age 65 Plus Fund Advanced (collectively the DIS Funds ) to automatically reduce the risk exposure as the Member approaches retirement age. The DIS Funds will invest in a globally diversified manner and invest in different assets (e.g. equities, bonds, money market instruments, etc.). The DIS Funds are subject to fee and expense caps as imposed by the legislation. For further information about the DIS Funds including their investment objective and policy, please refer to the Annex to this notice. 1 Please note that references to you or your in this notice refer to, as the case may be in the relevant context, participating employers or Members. 1

2 2. How does DIS affect you? If you have accounts in the Plan that are set up before the Effective Date ( pre-existing account ), depending on whether you have previously made any fund choices, it may affect you in different ways. If you have already given a valid Mandate for the accrued benefits and future investments in your pre-existing account or you are 60 years old or above before the Effective Date, you will not be affected by the implementation of the DIS. If all your accrued benefits in a pre-existing account are invested in the existing default fund (currently Manulife MPF Conservative Fund Advanced of the Plan) ( existing default fund ) as at the Effective Date and you have not given a valid Mandate for the pre-existing account, you will receive a separate notice (i.e. the DIS Re-Investment Notice ) sent to you within 6 months from 1 April The DIS Re-Investment Notice will explain that if you do not make an investment choice by replying within a specified period, your accrued benefits in the existing default fund will be redeemed in whole and re-invested in accordance with the DIS. Therefore, if you receive the DIS Re- Investment Notice, please pay special attention to the contents and make appropriate arrangement. You should note that the risk of the existing default fund may be different from that of the DIS and you may be exposed to market risks as a result of any reinvestment of your accrued benefits in the DIS. There are special circumstances. Where the accrued benefits in the pre-existing account are transferred from another account within the Plan (e.g. in the case of cessation of employment, where accrued benefits in your contribution account are transferred to a personal account within the Plan), your accrued benefits in the preexisting account will be invested in the same manner as they were invested immediately before the transfer but your future investments may be invested in the DIS after the implementation of the DIS, unless otherwise instructed. Please refer to the section headed C. Implications for New and Pre-existing Accounts on or after DIS Implementation below for further details. 3. Do you need to do anything? Apart from the above, there are other circumstances where your accrued benefits or future investments may be affected by the implementation of the DIS. If you have any query on how it will affect you and what actions you need to take, you should call the Manulife Pension Services Hotline at If you receive the DIS Re-Investment Notice after the Effective Date, you are advised to pay special attention to the contents and make appropriate arrangement. A. What is DIS? DIS is a ready-made investment arrangement mainly designed for those Members who are not interested or do not wish to make a fund choice, and is also available as an investment choice itself, for Members who find it suitable for their own circumstances. For those Members who do not give a Mandate, their future investments will be invested in accordance with the DIS. The DIS is required by law to be offered in every MPF scheme and is designed to be substantially similar in all MPF schemes. (a) Objective and Strategy The DIS aims to balance the long term effects of risk and return through investing in two Constituent Funds, namely the Manulife MPF Core Accumulation Fund Advanced ( CAF ) and the Manulife MPF Age 65 Plus Fund Advanced ( A65F ), according to the pre-set allocation percentages at different ages. The CAF will invest around 60% in higher risk 2

3 assets (higher risk assets generally mean equities or similar investments) and 40% in lower risk assets (lower risk assets generally mean bonds or similar investments) of its net asset value whereas the A65F will invest around 20% in higher risk assets and 80% in lower risk assets. The DIS Funds adopt globally diversified investment principles and use different classes of assets, including global equities, fixed income, money market and cash, and other types of assets allowed under the MPF legislation. For further information about the CAF and A65F including their investment objective and policy, please refer to the Annex to this notice. Diagram 1: Asset Allocation between the DIS Funds according to the DIS Lower risk assets (mainly global bonds) Higher risk assets (mainly global equities) 40% 80% 60% 20% Manulife MPF Core Accumulation Fund Under Manulife MPF Age 65 Plus Fund Age Note: The exact proportion of the portfolio in higher/lower risk assets at any point in time may deviate from the target glide path due to market fluctuations. (b) Annual de-risking Accrued benefits invested through the DIS will be invested in a way that adjusts risk depending on a Member s age. The DIS will manage investment risk exposure by automatically reducing the exposure to higher risk assets and correspondingly increasing the exposure to lower risk assets as the Member gets older. Such de-risking is to be achieved by way of reducing the holding in the CAF and increasing the holding in the A65F over time. The asset allocation stays the same up until 50 years of age, then reduces steadily until age 64, after which it stays steady again. In summary, under the DIS: (1) When a Member is below the age of 50, all accrued benefits and future investments will be invested in the CAF. 3

4 (2) When a Member is between the ages of 50 and 64, all accrued benefits and future investments will be invested according to the allocation percentages between the CAF and A65F as shown in the DIS de-risking table (see Diagram 2 below). The de-risking of the existing accrued benefits and future investments will be automatically carried out as described above. (3) When a Member reaches the age of 64, all accrued benefits and future investments will be invested in the A65F. Diagram 2: DIS De-risking Table Age Manulife MPF Core Accumulation Fund Advanced ( CAF ) Manulife MPF Age 65 Plus Fund - Advanced ( A65F ) Below % 0.0% % 6.7% % 13.3% % 20.0% % 26.7% % 33.3% % 40.0% % 46.7% % 53.3% % 60.0% % 66.7% % 73.3% % 80.0% % 86.7% % 93.3% 64 and above 0.0% 100.0% Note: The above allocation between the CAF and A65F is made at the point of annual de-risking and the proportion of the CAF and A65F in the DIS portfolio may vary during the year due to market fluctuations. (c) Fees and out-of-pocket expenses of the CAF and A65F The aggregate of the payments for services of the CAF and A65F must not, in a single day, exceed a daily rate of 0.75% per annum of the net asset value ( NAV ) of each of the DIS Funds divided by the number of days in the year. It includes, but is not limited to, the fees paid or payable for the services provided by the trustee, the administrator, the investment manager(s), the custodian and the sponsor and/or the promoter of the Plan and the underlying investment fund(s) of the respective DIS Funds, and any of the delegates from these parties and such fees are calculated as a percentage of the NAV of each of the DIS Funds and its underlying investment fund(s), but does not include any out-of-pocket expenses incurred by each DIS Fund and its underlying investment fund(s). The total amount of all payments that are charged to or imposed on the DIS Funds or Members who invest in DIS Funds, 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 the DIS Funds, shall not in a single year exceed 0.2% of the NAV of each of the DIS Funds. 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 4

5 customarily not calculated as a percentage of NAV and transaction costs incurred by a DIS Fund in connection with recurrent acquisition of investments for the DIS 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 Fund. Members should note that out-of-pocket expenses that are not incurred on a recurrent basis may still be charged to or imposed on a DIS Fund or Members who invests in a DIS Fund and such out-of-pocket expenses are not subject to the above statutory limit. (d) Key Risks Relating to the DIS DIS is an investment strategy that is subject to various risks and limitations, including: Age as the sole factor in determining the asset allocation under the DIS. The DIS does not take into account other factors such as market and economic conditions nor a Member s personal circumstances. Allocation to higher risk assets in the DIS Funds has to follow prescribed ratio and limits the investment manager s ability to respond to sudden market fluctuations. Annual de-risking between the DIS Funds operates automatically regardless of the wish of a Member to adopt a strategy which might catch market upside or avoid market downside. Potential rebalancing within each DIS Fund investments in each of the DIS Funds will need to be re-balanced continuously in accordance with prescribed allocation which may affect the performance of the DIS Funds. Additional transaction costs due to rebalancing of assets and annual de-risking may result in greater transaction costs. The DIS does not guarantee capital repayment nor positive investment returns, and the DIS Funds are subject to the general investment risks that apply to mixed asset funds. Since the DIS has been developed having regard to the long-term balance between risks and likely returns, and assumes retirement at the age of 65, any cessation of the strategy (for example through early withdrawal of accrued benefits or switching into other funds) will affect that balance. The A65F holds around 20% of its assets in higher risk assets and may not be suitable for all Members beyond the age of 64. For further information about the risks associated with investing through DIS, please refer to Contributions - Default Fund and Default Investment Strategy section of the Consolidated Explanatory Memorandum. (e) Information on Performance of DIS Funds The fund performance of the DIS Funds will be published in the fund fact sheet. One of the fund fact sheets will be attached to annual benefit statement. Members can visit or call the Manulife Pension Services Hotline on for information. Members may also obtain the fund performance information at the website of the Mandatory Provident Fund Schemes Authority ( 5

6 B. Key Features of Existing Default Fund and the DIS Please find below the key features of the existing default fund and the DIS for reference: Existing Default Fund The DIS Name and description (if applicable) Manulife MPF Conservative Fund Advanced ( MCF ) The DIS is comprised of two Constituent Funds, namely Manulife MPF Core Accumulation Fund Advanced ( CAF ) and Manulife MPF Age 65 Plus Fund Advanced ( A65F ), with derisking mechanism in accordance with pre-set allocation percentages based on Member s age Fund Type Money Market Fund For both CAF and A65F: Mixed Assets Fund De-risking feature No Yes Total management fees for Constituent Fund and Approved Pooled Investment Fund(s) 0.95% p.a. of NAV For both CAF and A65F: 0.75% p.a. of NAV Daily fees cap No (while no daily fee cap applies, fees, charges and expenses of the MCF are only payable out of the assets of the MCF to the extent permitted by the MPF Ordinance) Yes (for details, please refer to section A(c)) Expected risk profile* Low* CAF: Medium* A65F: Low to Medium* Guarantee feature No No * The expected risk profile stated indicates the expected risk profile of the underlying Approved Pooled Investment Fund as determined by the relevant investment manager. The expected risk profile generally represents only such investment manager s expectation of the Approved Pooled Investment Fund s relative level of risk within the set of underlying Approved Pooled Investment Fund(s) (if applicable) offered by the same investment manager for investment by the relevant Constituent Funds, and is not representative of the relative level of risk of underlying Approved Pooled Investment Fund(s) offered by other investment manager for investment by the relevant Constituent Funds. 6

7 For details of the key features of the existing default fund and the DIS, please refer to the offering document (or contact the Trustee). C. Implications for New and Pre-existing Accounts on or after DIS Implementation (a) Implications on accounts opened on or after Effective Date When Members join the Plan or set up a new account in the Plan on or after Effective Date, they have the opportunity to give a Mandate for their future investments. If Members fail to or do not want to submit to the Trustee a Mandate at the time of their requests to join / set up a new account in the Plan, the Trustee shall invest any of their future investments into the DIS. (b) Implications on accounts opened before Effective Date There are special rules to be applied for pre-existing accounts and these rules only apply to Members who are under or becoming 60 years of age on Effective Date (1) Generally, for a Member s pre-existing account with all accrued benefits being invested into the existing default fund but no investment instruction being given (known as DIA account ): There are special rules and arrangements to be applied to determine whether accrued benefits in a DIA account will be transferred to the DIS. If your pre-existing account is considered as a DIA account, you will receive a notice called the DIS Re-investment Notice explaining the impacts on your pre-existing account and giving you an opportunity to give a Mandate to the Trustee before the accrued benefits are invested into the DIS. For further information, Members should refer to Circumstances for Accrued Benefits to be Invested in the Default Fund or DIS in Contributions - Default Fund and Default Investment Strategy section of the Consolidated Explanatory Memorandum, as amended, and the DIS Re-investment Notice. (2) For a Member s pre-existing account with part of the accrued benefits in the existing default fund: If part of the accrued benefits of your pre-existing account was invested in the existing default fund, unless the Trustee has received any Mandates, your accrued benefits will be invested in the same manner as accrued benefits were invested immediately before the Effective Date and future investments will be invested in the DIS in the absence of a Mandate. Members should note that the implementation of the DIS legislation may have impact on their MPF investments or accrued benefits. Please call the Manulife Pension Services Hotline on if you have any doubts or questions on how your MPF investments or accrued benefits are being affected. D. Rules and Procedures Applicable to Investment through the DIS (a) Fund Choice Combination From the Effective Date, unless otherwise provided in the relevant participation agreement and/or the relevant forms, Members may choose to invest their future investments into: 7

8 (1) the DIS; or (2) one or more Constituent Funds of their own choice from the list under Factsheets section in the Consolidated Explanatory Memorandum (including the CAF and the A65F as standalone investments) and according to their assigned allocation percentage(s) to relevant fund(s) of their choice. A Member wishing to invest in the DIS is required to give a Mandate to invest 100% of his future investments into the DIS. In addition, Members should note that, if they choose the CAF and/or A65F as standalone investments, those investments/benefits will not be subject to the de-risking process. On the other hand, if a Member has made investments in the CAF or A65F according to the DIS (whether as a default arrangement or by choice) ( DIS Investments ), accrued benefits derived therefrom will be subject to the de-risking process. In this connection, Members should pay attention to the different on-going administration rules applicable to accrued benefits invested in standalone investments and DIS Investments. In particular, Members will, when giving a fund switching instruction, be required to specify to which part of the benefits (namely, under standalone investments or DIS Investments) the instruction relates. (b) Switching / transfer in and out of the DIS Each Member will have the opportunity to elect to invest his accrued benefits and contributions in an account either (i) into one or more of the Constituent Funds or (ii) in accordance with the DIS. If a Member wishes to switch into the DIS, he is required to switch out the entire portion of his accrued benefits held in an account and invested in individual Constituent Fund(s) (which may include the DIS Funds as standalone Constituent Funds) into the DIS, subject to the Trust Deed. Likewise, if a Member wishes to switch out from the DIS, he is required to switch out the entire portion of his accrued benefits held in an account invested in accordance with the DIS into individual Constituent Fund(s) (which may include the DIS Funds as standalone Constituent Funds). Members should, however, bear in mind that the DIS has been designed as a long-term investment arrangement. If a Member switches into or out of the DIS, such switching may negatively affect the balance between risk and return attributes that has been built into the DIS as a long-term strategy. For the avoidance of doubt, a Member wishing to switch into or out of the DIS is not required to at the same time change his existing Mandate for his future investments. Members should note that switching instructions only apply to accrued benefits and are not equivalent to a change of the Mandate for future investments, and vice versa. E. Rules and Procedures of Annual De-Risking (a) Dealing day of annual de-risking The annual de-risking will normally be carried out on a Member s birthday. Subject as further described in section E(b) below, if a Member s birthday falls on a day which is not on a dealing day, then the investments of such Member will be moved from the CAF to the A65F on the next available dealing day. If the birthday of the relevant Member falls on the 29th of February and in the year which is not a leap year, then the investment will be moved on 1st of March or the next available dealing day. Units in the CAF and the A65F are rounded to two decimal places. Members should note that small rounding differences in the number of Units may arise during such de-risking process. If the Trustee does not have the full date of birth of the relevant Member, the de-risking will be carried out as follows: If only the year and month of birth is available, the annual de-risking will take place on 8

9 the last calendar day of the birth month, or if it is not a dealing day, the next available dealing day. If only the year of birth is available, the annual de-risking will take place on the last calendar day of the year, or if it is not a dealing day, the next available dealing day. If no information at all on the date of birth is available, Member s accrued benefits will be fully invested in A65F with no de-risking applied. If the relevant Member subsequently provides satisfactory evidence as to his year, month and/or day of birth, the relevant Member s birthday based on such new evidence will be adopted, and the corresponding allocation percentages will be applied as soon as practicable. A de-risking notice will be sent, to the extent practicable, at least 60 days prior to a Member reaching the age of 50, and a de-risking confirmation statement will be sent to Members no later than 5 Business Days after each annual de-risking is completed. (b) De-risking process when there is one or more specified instructions When one or more of the specified instructions (including but not limited to subscription and redemption) are being processed on the annual date of de-risking for a relevant Member, the annual de-risking in respect of such Member will normally take place on the next dealing day after completion of these instructions where necessary. Members should note that the annual de-risking may be deferred as a result. For the avoidance of doubt, the sequence for processing de-risking as described above will also apply in all other circumstances involving redemption of accrued benefits from the DIS, for example where there is any partial or full withdrawal from the Plan, or withdrawal as a result of Employee Choice Arrangement or offsetting against Long Service Payment or Severance Payment, or where an employer elects to transfer out from the Plan into other MPF schemes. In all these cases, de-risking will be carried out on the next dealing day after completion of those instructions in the manner described above. In relation to switching and change of Mandate, if a Member would like to switch out from the DIS and/or change his Mandate to invest into individual Constituent Fund(s) (which may include the DIS Funds as standalone Constituent Funds) before the annual de-risking takes place (generally on a Member s birthday), he should submit a switching instruction and/or a change of Mandate (as applicable) before the dealing cut-off time at 5:00 p.m. on 2 Business Days before the Member s birthday. If the switching and/or change of Mandate (as applicable) are received after such dealing cut-off time, the switching and/or change of investment (as applicable) will only be performed after the completion of the de-risking process. Members should be aware that the above de-risking will not apply where a Member chooses the CAF and A65F as individual fund choices (rather than as part of DIS). F. Rules and Procedures relating to Investment Instructions When giving a Mandate (i.e. specific investment instructions within the meaning of section 34DA of the MPF Ordinance) in the relevant forms to direct the investment of contributions, Members should give valid instructions specifying the investment allocation (in percentage terms) of each of their accounts in respect of (i) mandatory contributions and (ii) voluntary contributions (if any) (each a category of contributions ). With effect from the Effective Date, a Mandate, in respect of a category of contributions, will be considered invalid in circumstances including: 9

10 the relevant form for Mandate is not completed in full and duly signed; the investment allocations are not specified; the investment allocations to the Constituent Funds are not specified in a multiple of 5%; the investment allocations adds up to more than or less than 100%; in respect of a category of contributions, an election to invest contributions in more than 5 individual Constituent Funds; or both in respect of a category of contributions and in respect of an account, an election to invest contributions partially in accordance with DIS and partially in one or more Constituent Funds. If no Mandate is given by a Member in respect of a category of contributions, or the Mandate in respect of a category of contributions provided is invalid, the Member will be considered to have elected to invest such category of contributions in the DIS. For the avoidance of doubt, the failure to provide a Mandate in respect of a category of contributions or an invalid Mandate in respect of a category contributions will not impact on another category of contributions in respect of which a valid Mandate has been given. G. Other Changes (a) Default investment choice in the case of termination of Constituent Fund If a Constituent Fund is terminated, contributions will cease to be invested in such Constituent Fund and amounts invested in such Constituent Fund will be switched (free of charge) into another Constituent Fund chosen by the relevant Member. With effect from the Effective Date, if the relevant Member fails to make a choice when requested to do so, the Member s Units in the terminating Constituent Fund will be switched (free of charge) into the DIS, and future investments by or on behalf of the Member which would otherwise be invested in the terminating Constituent Fund will be invested in accordance with the DIS. For the avoidance of doubt, in such case, the Member s existing accrued benefits held in other Constituent Funds will remain so invested and will not be switched into the DIS. (b) Transfers from Manulife MPF Plan Basic to Manulife MPF Plan Advanced Special Asset Transfer Arrangement If accrued benefits are invested according to the DIS, or in the Manulife MPF Core Accumulation Fund Basic or the Manulife MPF Age 65 Plus Fund Basic (i.e. the DIS Funds, as standalone fund choice) in the Manulife MPF Plan Basic, any transfer of such accrued benefits to the Manulife MPF Plan Advanced will not be made according to the Special Asset Transfer Arrangement. In the case of such transfer, the normal transfer procedures will apply, where Units held in the DIS and/or the DIS Funds under the Manulife MPF Plan Basic will be redeemed and the resulting redemption proceeds will subsequently be transferred and credited to the Member s account under the Manulife MPF Plan Advanced. Such redemption proceeds will then be applied to subscribe for Units in the relevant Constituent Fund(s), including the DIS Funds, or the DIS under the Manulife MPF Plan Advanced based on the Mandate given by such Member. If no Mandate is given by such Member, the resulting redemption proceeds will be invested in accordance with the DIS. For further details, please refer to Transfers from Other Schemes Transfers from Manulife MPF Plan Basic to Manulife MPF Plan Advanced Special Asset Transfer Arrangement section in the Consolidated Explanatory Memorandum. 10

11 (c) Treatment of unclaimed benefits Where a Member becomes entitled to benefits, such benefits may become unclaimed benefits in the circumstances specified under the Mandatory Provident Fund Schemes (General) Regulation (e.g. where such Member fails to claim his benefits or cannot be located). Where such amounts are not invested in one or more of the Constituent Funds immediately prior to being treated as unclaimed benefits, the Trustee will invest the same in the A65F (instead of the Manulife MPF Conservative Fund Advanced) after the implementation of DIS from the Effective Date. (d) Investment of monies during suspension of dealing If dealings in any Units of any class of a relevant Constituent Fund are suspended, the Trustee may retain any contributions, transfer payments or other amounts received which would otherwise be applied to the issue of Units of that class in cash or in a deposit account with any Authorized Financial Institution or Eligible Overseas Bank (which may be the Sponsor or any Associate of the Trustee or the Sponsor) or the A65F (instead of the Manulife MPF Conservative Fund Advanced) after the implementation of DIS from the Effective Date. (e) Other fees, expenses and charges for providing additional services With effect from 1 April 2017, in connection with the implementation of the DIS Funds, the following fees and charges will cease to apply: (i) (ii) Handling charge imposed on the Employer for the issuance of a cheque to refund the excess balance(s) (after deducting the handling charge) in the Employer Suspense Account and/or Employer Forfeiture Account of the Employer in the event of the Employer ceasing participation and contribution to the Plan. Nevertheless, in cases whereby the Employer requests the refund to be settled by transferring the excess balance directly to the Employer's bank account, the Employer has to bear any charges levied by the banks. Costs and expenses incurred that are wholly attributable to an Employer, Selfemployed Person or Member, such as the expenses of preparing reports at the specific request of the Employer, Self-employed Person or Member. H. Amendments to the Consolidated Explanatory Memorandum and Trust Deed The Consolidated Explanatory Memorandum is amended by way of a first addendum (the First Addendum ) to reflect the above changes, where applicable. Members are advised to carefully review the First Addendum, which is enclosed with this Notice. The Trust Deed is amended by way of a tenth supplemental deed (the Tenth Supplemental Deed ) to reflect the above changes, where applicable. The Tenth Supplemental Deed will be available on or around the Effective Date. I. Documents Available Copies of the Trust Deed, together with all amending deeds, the Consolidated Explanatory Memorandum can be inspected free of charge at any time during normal business hours on any day (excluding Saturdays, Sundays and public holidays) at the offices of the Trustee at 51 st Floor, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong or the Sponsor at 21/F, Tower A, Manulife Financial Centre, Wai Yip Street, Kwun Tong, Kowloon, Hong Kong. 11

12 A copy of the First Addendum is enclosed with this Notice. Further, a copy of the Consolidated Explanatory Memorandum can be obtained free of charge by calling the Manulife Pension Services Hotline at or accessing the Website at J. Means to Obtain Further Information Members may obtain information about the DIS through Manulife Pension Services Hotline at Manulife (International) Limited (Incorporated in Bermuda with limited liability) and RBC Investor Services Trust Hong Kong Limited 12 December

13 Annex Further information on CAF and A65F Manulife MPF Core Accumulation Fund Advanced ( CAF ) Investment Objective The investment objective of the CAF is to provide capital growth to Members by investing in a globally diversified manner. Investment Policy The CAF invests in an Approved Pooled Investment Fund that adopts a passive investment strategy with reference to the Reference Portfolio for the CAF, as further described under Investment technique below. The Reference Portfolio for the CAF is currently identified as follows: 60% FTSE MPF All-World Index (HKD unhedged total return) + 37% Citi MPF World Government Bond Index (HKD hedged total return) + 3% cash or money market instruments providing a return at MPF Prescribed Savings Rate (HKD unhedged total return)* (*inclusive of re-investment of dividends / coupons / other incomes). A passive strategy helps to minimize performance differences between the CAF and the Reference Portfolio for the CAF Note. Investment structure The CAF invests in an Approved Pooled Investment Fund named Vanguard Moderate Growth Fund ( Underlying Fund ), which in turn invests directly in a portfolio of equity securities, fixed income instruments, collective investment schemes (including index-tracking collective investment schemes) and other investments as allowed under the MPF Regulation. Asset allocation Through such underlying investment, the CAF will hold approximately 60% of its net assets in higher risk assets (such as global equities, warrants, convertible debt securities and index-tracking collective investment schemes), with the remainder investing in lower risk assets (such as global bonds and money market instruments). The asset allocation to higher risk assets may vary between 55% and 65% due to differing price movements of various equity and bond markets. The principal underlying investments will be made globally in securities listed on approved stock exchanges, government bonds, money market instruments, index-tracking collective investment schemes and other investments as allowed under the MPF Regulation. The portfolio will be rebalanced with reference to the Reference Portfolio for the CAF, and in any case, the Underlying Fund is expected to comply with the asset allocation requirements applicable to the CAF. Investment technique The investment manager of the Underlying Fund will seek to generate returns for the Underlying Fund that are substantially consistent with the Reference Portfolio for the CAF by adopting a passive investment strategy. For efficient portfolio management, the investment manager will use sampling techniques to select securities for investment. Sampling is an approach whereby the 13

14 investment manager of the Underlying Fund tracks the Reference Portfolio for the CAF by investing in a representative portion, or sample, of the full list of securities contained in the Reference Portfolio for the CAF, such that the overall characteristics of the portion of securities would be similar to those of the full list of securities contained in the Reference Portfolio for the CAF. The investment manager will seek to hold a range of securities that, in the aggregate, approximate the Reference Portfolio for the CAF in terms of the key characteristics: (i) for the equity investments, they will consist of a broadly diversified collection of stocks that approximate those included in the Reference Portfolio for the CAF in terms of factors such as country weightings, industry weightings, market capitalization and other financial characteristics of stocks; and (ii) for the bond investments, they will be made in consideration of factors such as country weightings, duration and cash flow. Under such sampling techniques, the vast majority of the Underlying Fund s holdings will be constituent securities that are within the universe of the Reference Portfolio for the CAF, except in limited circumstances where it is in the best interest of the Underlying Fund. Such limited circumstances may include but not limited to where (i) it is not possible or it is difficult to buy or hold constituent securities (e.g. due to liquidity or restrictions of ownership of such constituent securities); (ii) the holding of non-constituent securities which were originally constituent securities is, in the opinion of the investment manager, more cost efficient to reflect the overall characteristics of the Reference Portfolio for the CAF; (iii) investment in the constituent securities is not the most efficient way to reflect the performance of the Reference Portfolio for the CAF, for example when it is more cost efficient to invest in the non-constituent securities which reflect the overall characteristics of the Reference Portfolio for the CAF; (iv) the non-constituent securities which are, in the reasonable opinion of the investment manager, likely to form part of the Reference Portfolio for the CAF within six (6) months of acquisition; (v) the non-constituent securities which the investment manager considers to be an appropriate substitute for a the constituent securities of the Reference Portfolio for the CAF having regard to investment objectives of the Underlying Fund; and (vi) to gain exposure to permissible securities in countries where such access is otherwise limited. Geographical allocation There is no prescribed allocation for investments in any specific countries. Hong Kong Dollar Currency Exposure The CAF will maintain an effective currency exposure to HK dollars (as defined in the MPF Regulation) of at least 30% through investing in the Underlying Fund. Policies regarding the acquisition, holding and disposal of financial futures contracts and financial option contracts, security lending and repurchase agreement The CAF will not purchase financial futures contracts or options and will not engage in securities lending or enter into repurchase agreement. However, the CAF may have indirect exposure to financial futures contracts or options through investing into the Underlying Fund. The Underlying Fund will enter into currency forward contracts, financial futures and options contracts for hedging purposes only. The Underlying Fund will not engage in securities lending and will not enter into repurchase agreement. Risk inherent and expected return The return of the CAF over the long term is expected to be substantially consistent with the return of the Reference Portfolio for the CAF. Fund descriptor: Mixed Assets Fund Global maximum equity 65% Expected risk profile # : Medium 14

15 Manulife MPF Age 65 Plus Fund Advanced Investment Objective The investment objective of the A65F is to provide stable growth to Members by investing in a globally diversified manner. Investment Policy The A65F invests an Approved Pooled Investment Fund that adopts a passive investment strategy with reference to the Reference Portfolio for the A65F, as further described under Investment technique below. The Reference Portfolio for the A65F is currently identified as follows: 20% FTSE MPF All-World Index (HKD unhedged total return) + 77% Citi MPF World Government Bond Index (HKD hedged total return) + 3% cash or money market instruments providing a return at MPF Prescribed Savings Rate (HKD unhedged total return)* (*inclusive of reinvestment of dividends / coupons / other incomes). A passive strategy helps to minimize performance differences between the A65F and the Reference Portfolio for the A65F Note. Investment structure The A65F invests in an Approved Pooled Investment Fund Vanguard Income Fund, which in turn invests directly in a portfolio of equity securities, fixed income instruments, collective investment schemes (including index-tracking collective investment schemes) and other investments as allowed under the MPF Regulation. Asset allocation Through such underlying investment, the A65F will hold approximately 20% of its net asset value in higher risk assets (such as global equities, warrants, convertible debt securities and indextracking collective investment schemes), with the remainder investing in lower risk assets (such as global bonds and money market instruments). The asset allocation to higher risk assets may vary between 15% and 25% due to differing price movements of various equity and bond markets. The principal underlying investments will be made globally in securities listed on approved stock exchanges, government bonds, money market instruments, index-tracking collective investment schemes and other investments as allowed under the MPF Regulation. The portfolio will be rebalanced with reference to the Reference Portfolio for the A65F, and in any case, the Underlying Fund is expected to comply with the asset allocation requirements applicable to the A65F. Investment technique The investment manager of the Underlying Fund will seek to generate returns for the Underlying Fund that are substantially consistent with the Reference Portfolio for the A65F by adopting a passive investment strategy. For efficient portfolio management, the investment manager will use sampling techniques to select securities for investment. Sampling is an approach whereby the investment manager of the Underlying Fund tracks the Reference Portfolio for the A65F by investing in a representative portion, or sample, of the full list of securities contained in the 15

16 Reference Portfolio for the A65F, such that the overall characteristics of the portion of securities would be similar to those of the full list of securities contained in the Reference Portfolio for the A65F. The investment manager will seek to hold a range of securities that, in the aggregate, approximate the Reference Portfolio for the A65F in terms of the key characteristics: (i) for the equity investments, they will consist of a broadly diversified collection of stocks that approximate those included in the Reference Portfolio for the A65F in terms of factors such as country weightings, industry weightings, market capitalization and other financial characteristics of stocks; and (ii) for the bond investments, they will be made in consideration of factors such as country weightings, duration and cash flow. Under such sampling techniques, the vast majority of the Underlying Fund s holdings will be constituent securities that are within the universe of the Reference Portfolio for the A65F, except in limited circumstances where it is in the best interest of the Underlying Fund. Such limited circumstances may include but not limited to where (i) it is not possible or it is difficult to buy or hold constituent securities (e.g. due to liquidity or restrictions of ownership of such constituent securities); (ii) the holding of non-constituent securities which were originally constituent securities is, in the opinion of the investment manager, more cost efficient to reflect the overall characteristics of the Reference Portfolio for the A65F; (iii) investment in the constituent securities is not the most efficient way to reflect the performance of the Reference Portfolio for the A65F, for example when it is more cost efficient to invest in the non-constituent securities which reflect the overall characteristics of the Reference Portfolio for the A65F; (iv) the non-constituent securities which are, in the reasonable opinion of the investment manager, likely to form part of the Reference Portfolio for the A65F within six (6) months of acquisition; (v) the non-constituent securities which the investment manager considers to be an appropriate substitute for a the constituent securities of the Reference Portfolio for the A65F having regard to investment objectives of the Underlying Fund; and (vi) to gain exposure to permissible securities in countries where such access is otherwise limited. Geographical allocation There is no prescribed allocation for investments in any specific countries. Hong Kong Dollar Currency Exposure The A65F will maintain an effective currency exposure to HK dollars (as defined in the MPF Regulation) of at least 30% through investing in the Underlying Fund. Policies regarding the acquisition, holding and disposal of financial futures contracts and financial option contracts, security lending and repurchase agreement The A65F will not purchase financial futures contracts or options and will not engage in securities lending or enter into repurchase agreement. However, the A65F may have indirect exposure to financial futures contracts or options through investing into the Underlying Fund. The Underlying Fund will enter into currency forward contracts, financial futures and options contracts for hedging purposes only. The Underlying Fund will not engage in securities lending and will not enter into repurchase agreement. Risk inherent and expected return The return of the A65F over the long term is expected to be substantially consistent with the return of the Reference Portfolio for the A65F. Fund descriptor: Mixed Assets Fund - Global maximum equity 25% Expected risk profile # : Low to Medium. Note: Reference Portfolio - To provide a common reference point for the performance and asset allocation of the CAF and A65F, a reference portfolio developed by the MPF industry and published by the Hong Kong Investment Funds Association is adopted for the purpose of each of CAF and A65F. 16