Annual Report and Accounts - Fidelity Investments

MPF MPF 

Fidelity 

Retirement 

Master Trust 

Annual Report and and Accounts 

December 2011 2011

FIDELITY RETIREMENT MASTER TRUST 

YEAR ENDED 31ST DECEMBER 2012 

REPORTS AND FINANCIAL STATEMENTS 

Contents 

Pages 

Scheme Report 1 – 3 

Report of the Investment Manager 4 – 7 

Investment Report 8 – 33 

Independent Auditor’s Report 34 – 35 

Master Trust Scheme 

Statement of Net Assets Available for Benefits 36 

Statement of Changes in Net Assets Available for Benefits 37 – 38 

Statement of Cash Flows 39 

Constituent Funds 

Statement of Net Assets 40 – 45 

Statement of Comprehensive Income 46 – 51 

Statement of Changes in Equity 52 – 57 

Statement of Cash Flows 58 – 63 

Notes to the Financial Statements 64 – 132



1 

SCHEME REPORT 

The Trustee hereby submits the scheme report together with the audited financial statements 

of the Fidelity Retirement Master Trust (the “Scheme”) for the year ended 31st December 

2012. 

The Scheme 

The Scheme is a master trust scheme 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 the trust deed dated 31st January 2000, as 

amended, between FIL Investment Management (Hong Kong) Limited as investment 

manager (the “Investment Manager”) and HSBC Institutional Trust Services (Asia) Limited as 

trustee (the “Trustee”). The Scheme is registered under Section 21 of the Ordinance. 

Financial developments 

The Scheme commenced operations on 1st December 2000. The total contributions received 

and receivable including transfers in and benefits paid and payable including transfers out 

during the year were HK$2,547,173,093 (2011: HK$2,305,374,176) and HK$1,230,155,675 

(2011: HK$885,210,364) respectively. The net asset value as at 31st December 2012 was 

HK$19,996,779,412 (2011: HK$16,325,789,447). The Scheme had 308,345 (2011: 294,017) 

members as at 31st December 2012. 

Changes to the governing rules 

There have been no changes to the governing rules of the Scheme during the year. 

Particulars of the service providers 

Particulars of the Trustee and service providers engaged by the Trustee for the purposes of 

the Scheme during the year ended 31st December 2012 are set out below. 

Trustee, Custodian and Administrator 

HSBC Institutional Trust Services (Asia) Limited 

1 Queen’s Road Central 

Hong Kong 

Investment Manager 

FIL Investment Management (Hong Kong) Limited 

Level 21, Two Pacific Place 

88 Queensway, Admiralty 

Hong Kong



2 

SCHEME REPORT 

Particulars of the service providers (Continued) 

Bank 

The Hongkong and Shanghai Banking Corporation Limited (holding company of the Trustee) 

HSBC Main Building 

1 Queen’s Road Central 

Hong Kong 

Legal Adviser 

Deacons 

5th Floor, Alexandra House 

18 Chater Road 

Central, Hong Kong 

Auditor 

PricewaterhouseCoopers 

22nd Floor, Prince’s Building 

Central, Hong Kong 

Directors of the Trustee 

Andrew Lai Wah Law 

James Julius Bertram 

Lilian Loi Loi Wong 

Alastair Elliot Murray 

Donald John Cargill 

Sherri Elizabeth, Egbert (resigned on 30th April 2012) 

Mckinny Tsoi Hing Wai (appointed on 12th June 2012) 

The business address of the above directors is HSBC Main Building, 1 Queen’s Road Central, 

Hong Kong.



3 

SCHEME REPORT 

Directors of the Bank 

Dr William Fung Kwok Lun 

Dr Raymond Ch’ien Kuo Fung 

Victor Li Tzar Kuoi 

Dr Lo Ka Shui (resigned on 21st May 2012) 

T Brian Stevenson 

Dr Patrick Wang Shui Chung (resigned on 31st December 2012) 

Dr Rosanna Wong Yick-ming 

Marjorie Yang Mun Tak 

Laura Cha May Lung 

Peter Wong Tung Shun 

Mody Zia 

Christopher Dale Pratt 

Stuart T Gulliver 

Andreas Sohmen-Pao 

Margaret Leung Ko May Yee (resigned on 11th May 2012) 

Naina Lal Kidwai 

Paul Thurston Anthony (resigned on 31st December 2012) 

Graham John Bradley (appointed on 26th November 2012) 

Peter James Holland Riley (appointed on 1st January 2012) 

Rose Lee Wai Mun (appointed on 21st May 2012) 

Francis Yeoh Sock Ping (appointed on 1st July 2012) 

The business address of the above directors is HSBC Main Building, 1 Queen’s Road Central, 

Hong Kong. 

Further information 

Scheme members can obtain further information about the Scheme and its operations from 

the Trustee, the Scheme’s retirement hotline at 2500 1666 or website at 

http://www.fidelity.com.hk.



4 

REPORT OF THE INVESTMENT MANAGER 

Annual Report 

As at 31st December 2012 

This Annual Report does not constitute an offer of units. Units are offered on the basis of the 

information contained in the current Principal Brochure (and the documents referred to within 

it). Copies of the current Principal Brochure and latest annual report for the Fidelity Retirement 

Master Trust (“the Scheme”) are available from the registered office of the Investment 

Manager or from any of the companies registered as distributors of the Scheme.



5 


2012 Global Market Review 

United States 

US equities ended 2012 with the strongest annual gains seen since 2009 (in USD terms). 

Improvements in two of the weakest areas of the economy, i.e. jobs and housing, reiterated 

America’s relatively defensive profile among Western countries at a time when investors were 

worried about the fallout of the European debt crisis. There were intermittent “sell offs” 

stemming from concerns about the recovery and the fiscal cliff. However, the Federal 

Reserve’s (Fed) aggressive new quantitative easing programme helped to stem the tide. 

Simultaneous policy interventions in Europe also helped to restore confidence. Towards the 

end of the year, President Obama’s victory removed election related uncertainty. But a divided 

Congress made compromise finding on the divisive issue of tax increases and spending cuts 

more difficult. Encouragingly, policymakers reached a compromise agreement that prevented 

an immediate recession, although many substantive issues were pushed further down the 

road. As far as businesses were concerned, earnings expectations were tempered by 

subdued growth prospects. Many businesses also held back capital expenditures as part of 

their wait and watch strategy for dealing with the uncertainty related to the fiscal cliff. Balance 

sheets and cash holdings were healthy enough to weather an uncertain backdrop. 

Europe 

European equities advanced over the year due to the stabilisation of the eurozone debt crisis 

and positive economic data from China and the US. The improved liquidity situation at the 

beginning of the year, when the European Central Bank (ECB) offered funds to lenders at a 

very low interest rate under its three-year Long Term Refinancing Operation, supported 

sentiment. ECB President Mario Draghi’s “do all it takes to save the euro” speech at the end 

of July and the announcement of sovereign bond purchases in early September also buoyed 

markets. Moreover, there was optimism that US lawmakers would reach an agreement on 

budget talks to avert the fiscal cliff, which eventually happened. Investors rotated into risky 

assets, particularly financials and cyclical stocks, including consumer discretionary, 

technology and industrials. Telecommunications and utilities were among the laggards. At a 

country level, stocks in Turkey, Poland, Belgium, Denmark, Germany, Austria and Greece 

performed well, whilst Czech Republic, Spain and Portugal lagged.



6 


2012 Global Market Review (Continued) 

Japan 

The Japanese market rallied strongly at the start of 2012, but started to lose momentum by 

the second quarter as fears of a global slowdown took hold. Weak economic data releases 

from China and the US, coupled with the growing threat from the eurozone debt crisis, 

precipitated a correction in share prices that continued in April and May. Increased risk 

aversion fuelled demand for the yen as a safe haven currency, exerting further pressure on 

Japanese stocks. Improvements in US economic data provided a subsequent boost to 

sentiment, but Japanese stocks lacked direction. The latest wave of central bank stimulus 

measures lifted Japanese equities, though tensions with China and negative earnings 

revisions capped gains. Towards the end of the year, however, Japanese equity markets 

rebounded strongly. Expectations that a new government would push the Bank of Japan (BoJ) 

to implement more aggressive monetary policies contributed to a weakening of the yen and 

boosted share prices. An improvement in US economic indicators and signs that the Chinese 

economy was close to bottoming out further supported the market. Share prices rallied in the 

first and fourth quarters of 2012, when overseas investors were net buyers of Japanese 

stocks. However, domestic investors, including financial institutions and individuals, were net 

sellers. At a sector level, pro cyclical areas such as financials and consumer discretionary 

outperformed, particularly in the first and fourth quarters, when policy developments led to a 

weakening of the yen. In contrast, the utilities sector suffered the steepest decline, followed by 

energy. On the currency markets, the yen depreciated to a multi year low of ¥86.6 against the 

US dollar amid heightened speculation that the BoJ would respond to political pressure by 

loosening its monetary policy more aggressively. The yen fell to ¥114.3 against the euro by 

the end of 2012. 

Pacific ex Japan 

Asia Pacific ex Japan equities advanced over the 12 month period. The pro growth policy 

environment globally; receding fears over the eurozone debt issue, including an agreement 

about Greece’s bailout; and improving economic growth in the US buoyed investor sentiment. 

Central banks in the US, Europe and Japan also unveiled asset purchase programmes to spur 

growth. Meanwhile, China announced infrastructure investment projects and further eased its 

monetary policy to prop up its faltering economy. A number of central banks in the region 

loosened their policies as inflation eased. Expectations of a recovery in economic growth 

towards the end of the year further supported equities. Fourth quarter GDP growth in China 

re-accelerated after having slowed for seven straight quarters. Whilst weak external demand 

hurt the region’s overall growth, the pace of expansion in smaller economies such as the 

Philippines, Thailand, Malaysia and Indonesia remained resilient, supported by strong 

domestic consumption and investment. All sectors ended in positive territory, with health care, 

utilities and information technology at the forefront of gains. Financials, particularly real estate 

stocks, advanced in light of the loosening monetary policy environment. On the other hand, 

the materials and energy sectors lagged as weak global growth weighed on commodities and 

crude oil prices. At a country level, equities in the Philippines and Thailand surged on the back 

of buoyant economic growth. The Indian market advanced as the government announced a 

series of policy reforms, including the approval of foreign direct investment in multi brand 

retail. Attractive dividend yields supported Australian equities, but the Indonesian market was 

weighed down by concerns over its high current account deficit.



7 


2012 Global Market Review (Continued) 

Bonds 

Most traditional fixed income asset classes advanced and recorded positive absolute returns 

over the year, with global government bonds underperforming both investment grade and high 

yield corporate bonds. Outside of the sovereign sector, high yield corporate bonds 

outperformed investment grade bonds. Market sentiment improved in early 2012 as central 

banks around the world took several steps to boost economic growth and increase liquidity. 

Investor optimism was further buoyed by the positive announcements at the European Union 

summit in June and by ECB President Mario Draghi’s pledge to do “whatever it takes to 

preserve the euro” in July. Furthermore, the ECB announced the details of a new Outright 

Monetary Transactions programme that will enable it to make unlimited, sterilised purchases 

of sovereign bonds in the secondary market with a focus on maturities of one to three years. 

In the US, the Fed announced that its Operation Twist programme will continue through to the 

end of 2012 as was initially planned. The Fed also announced a third round of quantitative 

easing in September in an effort to bring down long term interest rates and spur growth. This 

was followed up by a fourth round of quantitative easing in December. As a result, the central 

bank will purchase $40 billion per month of agency mortgage backed securities and $45 billion 

per month of longer term US Treasury securities, which will add to its balance sheet. The Fed 

kept its interest rate unchanged at 0–0.25% and also discarded its previous target of keeping 

rates at low levels until 2015 and replaced it with several economic conditions. Essentially, 

interest rates will continue to be low until the unemployment rate falls to 6.5% and forecasts 

for inflation remain below 2.5%. In the UK, the Bank of England left its policy rate unchanged 

at 0.5%, but announced a £175 billion expansion to its asset purchase facility, in three stages, 

increasing it to £375 billion. 

_________________________________ _____ 

Brad Fresia - Director of the Investment Manager 

28th May 2013



8 

INVESTMENT REPORT 

The Scheme commenced operations on 1st December 2000. The Scheme offered fifteen 

constituent funds with different investment policies during the year. The constituent funds 

currently offered by the Scheme are Asia Pacific Equity Fund, Balanced Fund, MPF 

Conservative Fund, Capital Stable Fund, Fidelity SaveEasy 2020 Fund, Fidelity SaveEasy 

2025 Fund, Fidelity SaveEasy 2030 Fund, Fidelity SaveEasy 2035 Fund, Fidelity SaveEasy 

2040 Fund, Global Equity Fund, Growth Fund, Hong Kong Bond Fund, Hong Kong Equity 

Fund, Stable Growth Fund and World Bond Fund. All constituent funds are feeder funds 

which invest in approved pooled investment funds managed by the Investment Manager. 

Separate and distinct investment policies are applied in the investments of each constituent 

fund. The respective investment objectives and policies are set out below. There have been 

no changes to the investment objectives and policies during the year which would materially 

affect the risk attached to the investments of the Scheme. 

The Trustee of the Scheme confirmed that based on the information received from the 

Investment Manager of the Scheme during the year, to the best of the knowledge and belief of 

the Trustee, the investment objectives and policies for each constituent fund of the Scheme 

were complied with. 

Asia Pacific Equity Fund 

to act as a feeder fund and invest all of its assets in the Asia Pacific Equity Fund (MPF) of 

the Fidelity Global Investment Fund; 

to focus investment into the equity markets of Asia Pacific; 

to produce returns that are related to those achieved on the major stock market indices of 

Asia Pacific; 

to have the flexibility to invest in bonds in a limited manner; and 

to manage the volatility of returns in the short-term. 

Balanced Fund 

to act as a feeder fund and invest all of its assets in the Balanced Fund of the Fidelity 

Global Investment Fund; 

to build capital value over the long-term; 

to provide a degree of asset diversification within a predominantly equity portfolio; 

to maintain a broad geographic diversification with a bias towards Hong Kong; and 


MPF Conservative Fund 

to act as a feeder fund and invest all of its assets in the HK$ Money Fund of the Fidelity 


to provide a positive return each month equal to or better than the HKD savings account 

rate; 

to focus investment in HKD short-term instruments; 

to invest only into HKD securities; and 

to ensure that there is minimal risk to the capital.



9 


Capital Stable Fund 

to act as a feeder fund and invest all of its assets in the Capital Stable Fund of the Fidelity 


to produce a positive return over the long-term; 

to focus investment towards less volatile assets of bonds and cash whilst retaining some 

equity exposure; 


to ensure that the risk to the capital base is limited in the short-term. 

Fidelity SaveEasy 2020 Fund 

to act as a feeder fund and invest all of its assets in the Fidelity SaveEasy 2020 Fund of 


to achieve long-term capital growth for investors to 2020; 

to invest typically in a wide range of investments covering markets throughout the world, 

initially with a greater exposure to equities and thereafter, as the year 2020 is approached, 

greater exposure to bonds and cash; 

to maintain an asset allocation appropriate to achieve a combination of income and longterm 

capital growth as the year 2020 is approached; and 































to manage the volatility of returns in the short-term.



10 












Global Equity Fund 

to act as a feeder fund and invest all of its assets in the Global Equity Fund of the Fidelity 


to focus investment into the global equity markets; 

to produce returns that are related to those achieved on the major world stock market 

indices; 

to have the flexibility to have limited investment into bonds; and 


Growth Fund 

to act as a feeder fund and invest all of its assets in the Growth Fund of the Fidelity Global 

Investment Fund; 

to build real wealth over the long-term; 

to focus investment into the global equity markets; 

to have the flexibility to invest in global bonds; 



Hong Kong Bond Fund 

to act as a feeder fund and invest all of its assets in the Hong Kong Bond Fund of the 

Fidelity Global Investment Fund; 

to invest in the world bond markets with a focus on HKD denominated bonds and issuers; 

to produce returns that are related to those achieved on the major bond market indices; 

to limit the volatility of returns in the short-term in HKD market terms; and 

to minimise currency volatility by implementing a HKD hedged strategy (where 

investments are made other than in HKD). 

Hong Kong Equity Fund 

to act as a feeder fund and invest all of its assets in the Hong Kong Equity Fund of the 


to focus investment into the equity markets and companies of Hong Kong and Greater 

China; 

to produce returns that are related to those achieved on the major stock market indices of 

Hong Kong; 


to accept a high level of return volatility in the short-term.



11 


Stable Growth Fund 

to act as a feeder fund and invest all of its assets in the Stable Growth Fund of the Fidelity 


to generate a positive return over the long-term; 

to broadly diversify the portfolio as to asset type as between equities and bonds; 


to limit the volatility of returns in the short-term. 

World Bond Fund 

to act as a feeder fund and invest all of its assets in the World Bond Fund of the Fidelity 


to focus investment into the bond markets of the world; 

to produce returns that are related to those achieved on the major bond market indices; 

and 

to limit the volatility of returns in the short-term.



12 


Performance table 


2012 2011 2010 

HK$ HK$ HK$ 

Net loss excluding capital appreciation/ 

(depreciation) (19,073,142) (9,599,921) (6,939,664) 

Capital appreciation/(depreciation) 

- realised and unrealised 2 271,870,923 (201,360,810) 123,903,258 

Value of scheme assets derived from 

investments 1,577,727,871 1,099,728,639 1,101,380,896 

Total net asset value 1,575,367,350 1,097,988,475 1,100,246,236 

Net asset value per unit 17.922 14.829 17.837 

 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.958 14.572 20.858 

2011 18.621 13.366 (16.864) 

2010 18.003 13.585 11.880 

2009 15.943 7.819 75.236 

2008 15.954 7.621 (43.148) 

2007 17.525 11.418 34.547 

2006 11.895 9.940 18.940 

1 

2 

Net annual investment return represents the percentage change in the unit price during the year. For the 

first financial period (7th August 2006 to 31st December 2006), the actual net investment return is shown. 

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

year ended 31st December 2012, there was no distribution income from the approved pooled investment 

fund. As a result, there was no other investment income except for the appreciation of the investments as 

stated above.



13 


Performance table (Continued) 

Balanced Fund 

2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (34,537,056) (19,700,865) (16,758,134) 




investments 2,618,370,195 2,205,526,696 2,387,838,184 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 18.666 16.183 14.154 

2011 19.047 15.297 (10.617) 

2010 18.449 15.195 9.467 

2009 16.946 10.525 33.445 

2008 18.545 11.051 (32.699) 

2007 19.284 14.558 23.497 

2006 15.020 12.647 18.765 

2005 12.704 11.379 8.308 

2004 11.676 9.716 12.812 

2003 10.350 7.782 26.667 

1 




stated above.



14 




2012 2011 2010 

HK$ HK$ HK$ 

Net (loss)/gain excluding capital 

appreciation/(depreciation) (3,700,212) 716,171 132,683 


- realised and unrealised 1 3,667,844 (682,155) (19,810) 


investments 1,862,525,860 1,749,563,978 1,623,332,872 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 11.030 11.029 0.000 

2011 11.030 11.029 0.000 

2010 11.030 11.029 0.009 

2009 11.030 11.028 0.018 

2008 11.028 10.913 1.054 

2007 10.912 10.647 2.508 

2006 10.645 10.387 2.513 

2005 10.384 10.280 1.012 

2004 10.280 10.277 0.019 

2003 10.279 10.277 0.010 

1 




stated above.



15 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (15,051,933) (8,389,388) (7,089,159) 




investments 1,122,718,404 978,529,301 969,944,746 

Total net asset value 1,120,803,232 976,775,855 968,703,580 


 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 17.882 16.384 8.535 

2011 17.482 16.055 (2.647) 

2010 17.274 15.149 6.295 

2009 16.299 12.139 17.562 

2008 15.914 12.445 (14.313) 

2007 15.947 13.713 13.593 

2006 13.905 12.663 10.210 

2005 12.682 12.191 0.921 

2004 12.481 10.982 8.757 

2003 11.476 9.750 16.579 

1 




stated above.



16 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (1,158,575) (521,302) (277,405) 




investments 86,867,291 63,198,713 43,729,211 

Total net asset value 86,732,013 63,083,805 43,668,167 


 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.065 14.313 16.930 

2011 17.814 13.344 (14.735) 

2010 17.180 13.694 10.679 

2009 15.602 8.775 42.506 

2008 11.267 9.354 7.960 

1 

2 


first financial period (27th October 2008 to 31st December 2008), the actual net investment return is 

shown. 




stated above.



17 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (858,050) (402,178) (228,223) 




investments 70,947,653 44,573,434 34,271,873 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.277 14.361 17.574 

2011 18.104 13.369 (15.356) 

2010 17.413 13.791 11.111 

2009 15.761 8.725 43.837 

2008 11.307 9.334 8.060 

1 

2 



shown. 




stated above.



18 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (990,214) (410,505) (213,752) 




investments 84,600,309 48,318,564 33,781,740 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.330 14.369 17.864 

2011 18.179 13.366 (15.724) 

2010 17.499 13.809 11.378 

2009 15.791 8.695 44.340 

2008 11.318 9.304 7.960 

1 

2 



shown. 




stated above.



19 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (1,073,297) (452,156) (228,528) 




investments 89,935,846 54,066,391 36,524,204 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.411 14.393 18.095 

2011 18.250 13.388 (15.837) 

2010 17.570 13.839 11.554 

2009 15.840 8.685 44.715 

2008 11.318 9.294 7.950 

1 

2 



shown. 




stated above.



20 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (2,670,605) (1,046,940) (506,600) 




investments 237,131,661 132,248,739 91,233,482 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 17.565 14.501 18.246 

2011 18.397 13.484 (15.768) 

2010 17.702 13.925 11.697 

2009 15.939 8.715 44.957 

2008 11.368 9.324 8.460 

1 

2 



shown. 




stated above.



21 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (15,490,847) (8,192,114) (6,347,005) 




investments 1,197,853,864 934,533,432 942,966,501 

Total net asset value 1,195,936,702 932,961,136 941,898,112 


 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 16.630 14.004 16.595 

2011 16.958 12.757 (10.921) 

2010 15.850 12.638 12.085 

2009 14.204 8.282 31.361 

2008 19.268 9.040 (44.482) 

2007 20.067 15.894 18.427 

2006 16.402 13.615 16.808 

2005 14.115 12.419 9.671 

2004 12.798 10.931 12.016 

2003 11.410 9.695 14.100 

1 

2 


first financial period (2nd July 2003 to 31st December 2003), the actual net investment return is shown. 




stated above.



22 



Growth Fund 

2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (49,388,280) (28,533,158) (24,091,127) 




investments 3,777,876,551 3,121,315,113 3,518,592,453 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 18.421 15.463 16.748 

2011 19.239 14.445 (14.523) 

2010 18.489 14.763 10.954 

2009 16.776 9.547 41.728 

2008 19.611 10.130 (40.633) 

2007 20.719 14.729 28.033 

2006 15.365 12.438 22.981 

2005 12.563 10.812 12.297 

2004 11.125 9.015 14.691 

2003 9.700 6.851 31.579 

1 




stated above.



23 




2012 2011 2010 

HK$ HK$ HK$ 

Net loss excluding capital appreciation (5,779,835) (2,496,503) (1,867,539) 

Capital appreciation 

- realised and unrealised 2 21,280,371 14,875,934 9,251,612 


investments 446,537,631 341,847,756 248,381,861 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 11.873 11.383 3.962 

2011 11.596 10.782 4.988 

2010 11.171 10.452 3.564 

2009 10.672 10.062 0.749 

2008 10.431 9.739 5.415 

2007 9.924 9.353 3.078 

2006 9.598 9.156 3.240 

2005 9.528 9.149 (2.520) 

2004 9.642 9.313 (0.073) 

2003 10.000 9.419 (4.690) 

1 

2 


first financial period (8th July 2003 to 31st December 2003), the actual net investment return is shown. 




stated above.



24 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (56,070,484) (33,234,656) (27,441,813) 




investments 4,426,786,525 3,495,273,749 4,149,571,880 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 24.427 19.683 20.654 

2011 27.227 18.219 (22.319) 

2010 27.728 20.201 10.401 

2009 24.422 12.158 63.644 

2008 26.369 12.042 (45.789) 

2007 28.895 15.861 54.548 

2006 17.217 12.677 36.354 

2005 12.972 11.018 8.461 

2004 11.641 8.674 17.788 

2003 9.890 6.610 36.280 

1 




stated above.



25 




2012 2011 2010 

HK$ HK$ HK$ 


(depreciation) (25,699,284) (14,427,962) (12,079,611) 




investments 1,934,472,136 1,655,810,386 1,700,139,010 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 

HK$ HK$ % 

2012 18.567 16.594 11.508 

2011 18.473 15.907 (6.522) 

2010 18.055 15.364 8.111 

2009 16.778 11.391 25.424 

2008 17.259 11.819 (23.912) 

2007 17.645 14.237 18.552 

2006 14.517 12.720 14.407 

2005 12.736 11.861 4.592 

2004 12.131 10.371 10.836 

2003 10.945 8.758 21.665 

1 




stated above.



26 




2012 2011 2010 

HK$ HK$ HK$ 

Net loss excluding capital appreciation (6,277,311) (3,060,855) (2,416,368) 

Capital appreciation 

- realised and unrealised 2 28,612,299 19,801,274 14,764,855 


investments 491,415,833 379,848,093 318,209,321 



 

Highest 

issue 

price 

Lowest 

redemption 

price 

Net annual 

investment 

return 1 

HK$ HK$ % 

2012 13.898 13.073 5.264 

2011 13.479 12.322 5.076 

2010 13.028 11.852 4.478 

2009 12.465 10.541 5.787 

2008 11.892 10.513 1.160 

2007 11.381 10.426 5.528 

2006 10.830 10.144 2.947 

2005 10.858 10.172 (5.141) 

2004 10.885 9.880 6.005 

2003 10.259 9.575 2.580 

1 

2 


first financial period (8th July 2003 to 31st December 2003), the actual net investment return is shown. 




stated above.



27 


Distribution of constituent funds 

As at 31st December 2012, 2011 and 2010, the contributions received, net of expenses, were 

allocated to the Scheme’s constituent funds as follows: 

Net asset value 

2012 2011 2010 

HK$ HK$ HK$ 

Asia Pacific Equity Fund 1,575,367,350 1,097,988,475 1,100,246,236 

Balanced Fund 2,613,862,954 2,201,511,514 2,384,810,665 

MPF Conservative Fund 1,864,530,441 1,751,617,829 1,627,441,013 

Capital Stable Fund 1,120,803,232 976,775,855 968,703,580 

Fidelity SaveEasy 2020 Fund 86,732,013 63,083,805 43,668,167 





Global Equity Fund 1,195,936,702 932,961,136 941,898,112 

Growth Fund 3,771,402,803 3,115,624,852 3,514,227,793 

Hong Kong Bond Fund 445,859,856 341,304,472 248,095,739 

Hong Kong Equity Fund 4,419,583,321 3,489,166,182 4,144,781,817 

Stable Growth Fund 1,931,181,536 1,652,846,979 1,697,993,657 

World Bond Fund 490,650,198 379,223,176 317,840,234 

 

19,997,812,122 16,280,814,862 17,185,255,354



28 


Distribution of constituent funds (Continued) 

As at 31st December 2012, 2011 and 2010, the contributions received were allocated to the 

Scheme’s constituent funds as follows: 

% of the total investments of the Scheme 

2012 2011 2010 

Asia Pacific Equity Fund 7.9% 6.8% 6.4% 

Balanced Fund 13.1% 13.5% 13.9% 

MPF Conservative Fund 9.3% 10.8% 9.5% 

Capital Stable Fund 5.6% 6.0% 5.6% 

Fidelity SaveEasy 2020 Fund 0.4% 0.4% 0.3% 





Global Equity Fund 6.0% 5.7% 5.5% 

Growth Fund 18.9% 19.1% 20.5% 

Hong Kong Bond Fund 2.2% 2.1% 1.4% 

Hong Kong Equity Fund 22.1% 21.4% 24.1% 

Stable Growth Fund 9.7% 10.2% 9.9% 

World Bond Fund 2.5% 2.3% 1.8% 

 

100.0% 100.0% 100.0%



29 


Investment portfolio as at 31st December 2012 

Holdings 

Units 

Fair value 

HK$ 

% of net 

assets 


Fidelity Global Investment Fund 

- Asia Pacific Equity Fund (MPF) 

- Class B 145,950,774.355 1,577,727,871 100.15 

 

Total investments, at cost 1,352,956,581 

 

Balanced Fund 


- Balanced Fund - Class B 244,250,951.020 2,618,370,195 100.17 

 


 



- HK$ Money Fund - Class M 185,880,063.745 1,862,525,860 99.89 

 


 



- Capital Stable Fund - Class B 103,859,241.791 1,122,718,404 100.17 

 


 



- Fidelity SaveEasy 2020 Fund 

- Class B 8,179,594.254 86,867,291 100.16 

 

Total investments, at cost 76,949,102 

 




- Class B 6,680,569.957 70,947,653 100.15 

 

Total investments, at cost 62,591,843



30 


Investment portfolio as at 31st December 2012 (Continued) 

Holdings 

Units 

Fair value 

HK$ 

% of net 

assets 




- Class B 7,973,638.959 84,600,309 100.15 

 


 




- Class B 8,460,568.783 89,935,846 100.15 

 


 




- Class B 22,286,810.257 237,131,661 100.14 

 


 



- Global Equity Fund - Class B 105,630,852.227 1,197,853,864 100.16 

 


 

Growth Fund 


- Growth Fund - Class B 355,732,255.251 3,777,876,551 100.17 

 


 



- Hong Kong Bond Fund 

- Class B 40,594,330.094 446,537,631 100.15 

 

Total investments, at cost 429,327,225



31 


Investment portfolio as at 31st December 2012 (Continued) 

Holdings 

Units 

Fair value 

HK$ 

% of net 

assets 



- Hong Kong Equity Fund 

- Class B 462,086,276.100 4,426,786,525 100.16 

 


 



- Stable Growth Fund - Class B 179,117,790.396 1,934,472,136 100.17 

 


 



- World Bond Fund - Class B 44,552,659.411 491,415,833 100.16 

 


 

Note: The underlying approved pooled investment fund was established in Hong Kong and accounted 

for on a trade date basis.



32 


Statement of movements in portfolio holdings for the year 

ended 31st December 2012 

31st December 

2011 

Holdings 

Units 

Additions 

Units 

Disposals 

Units 

31st December 

2012 

Holdings 

Units 



- Asia Pacific Equity Fund (MPF) 

- Class B 124,685,786.775 42,552,523.684 21,287,536.104 145,950,774.355 

Balanced Fund 


- Balanced Fund - Class B 238,177,828.911 33,190,927.898 27,117,805.789 244,250,951.020 



- HK$ Money Fund - Class M 174,955,942.872 61,579,270.356 50,655,149.483 185,880,063.745 



- Capital Stable Fund - Class B 99,646,568.348 15,252,744.151 11,040,070.708 103,859,241.791 




- Class B 7,061,308.711 3,287,869.736 2,169,584.193 8,179,594.254 




- Class B 5,008,251.059 2,322,761.737 650,442.839 6,680,569.957 




- Class B 5,447,414.180 3,365,247.068 839,022.289 7,973,638.959 




- Class B 6,095,421.781 3,410,778.452 1,045,631.450 8,460,568.783 




- Class B 14,909,666.204 9,951,354.662 2,574,210.609 22,286,810.257 



- Global Equity Fund - Class B 97,448,741.558 21,977,958.793 13,795,848.124 105,630,852.227



33 


Statement of movements in portfolio holdings for the year 

ended 31st December 2012 (Continued) 

31st December 

2011 

Holdings 

Units 

Additions 

Units 

Disposals 

Units 

31st December 

2012 

Holdings 

Units 

Growth Fund 


- Growth Fund - Class B 347,972,699.382 45,157,163.676 37,397,607.807 355,732,255.251 



- Hong Kong Bond Fund - Class B 32,775,431.995 20,432,156.438 12,613,258.339 40,594,330.094 



- Hong Kong Equity Fund - Class B 446,395,114.848 102,825,566.792 87,134,405.540 462,086,276.100 



- Stable Growth Fund - Class B 173,383,286.445 23,857,654.689 18,123,150.738 179,117,790.396 



- World Bond Fund - Class B 36,771,354.639 17,459,439.862 9,678,135.090 44,552,659.411



34 

INDEPENDENT AUDITOR’S REPORT 

TO THE TRUSTEE OF FIDELITY RETIREMENT MASTER TRUST (the “Scheme”) 

Report on the Financial Statements 

We have audited the financial statements of the Scheme and each of its constituent funds set 

out on pages 36 to 132, which comprise the Statement of Net Assets Available for Benefits of 

the Scheme and the Statement of Net Assets of each of its constituent funds as at 31st 

December 2012, and the Statement of Changes in Net Assets Available for Benefits and 

Statement of Cash Flows of the Scheme and the Statement of Comprehensive Income, 

Statement of Changes in Equity and Statement of Cash Flows of each of its constituent funds 

for the year then ended, and a summary of significant accounting policies and other 

explanatory information. 

Trustee’s Responsibility for the Financial Statements 

The Trustee is responsible for the preparation of financial statements that give a true and fair 

view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong 

Institute of Certified Public Accountants and is responsible for ensuring 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”) 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. 

Auditor’s Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audit 

and to 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. 

We conducted our audit in accordance with Hong Kong Standards on Auditing and with 

reference to Practice Note 860.1 “The audit of retirement schemes” issued by the Hong Kong 

Institute of Certified Public Accountants. Those standards require that we comply with ethical 

requirements and plan and perform the audit to obtain reasonable assurance about whether 

the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the financial statements. The procedures selected depend on the auditor’s 

judgement, including the assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditor 

considers internal control relevant to the entity’s preparation of financial statements that give a 

true and fair view 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 

entity’s internal control. An audit also includes evaluating the appropriateness of accounting 

policies used and the reasonableness of accounting estimates made by the Trustee, as well 

as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 

basis for our audit opinion.



35 

INDEPENDENT AUDITOR’S REPORT 

TO THE TRUSTEE OF FIDELITY RETIREMENT MASTER TRUST (the “Scheme”) 

(Continued) 

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 31st December 2012 and of their financial 

transactions and cash flows for the year then ended in accordance with Hong Kong Financial 

Reporting Standards. 

Report on Matters under the General Regulation 

In our opinion, the financial statements have been properly prepared, in all material respects, 

in accordance with sections 80, 81, 83 and 84 of the General Regulation. 

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. 

PricewaterhouseCoopers 

Certified Public Accountants 

Hong Kong, 28th May 2013


AS AT 31ST DECEMBER 2012 

36 

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS - MASTER TRUST SCHEME 

Note 2012 2011 

HK$ 

HK$ 

Assets 

Current assets 

Investments in constituent funds 8 19,997,812,122 16,280,814,862 

Amounts receivable on 

redemption of units in constituent funds 25,125,820 14,136,993 

Contributions receivable 

From employers 112,541,329 98,717,016 

From members 78,799,190 67,199,025 

Cash and cash equivalents 61,531,394 61,876,529 

 

Total assets 20,275,809,855 16,522,744,425 

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

Liabilities 

Current liabilities 

Other payables 855,926 1,102,781 

Benefits payable 222,325,471 140,830,170 

Forfeitures payable 55,849,046 55,022,027 

 

Total liabilities 279,030,443 196,954,978 

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

Net assets available for benefits 

attributable to members 19,996,779,412 16,325,789,447 

 

On behalf of HSBC Institutional Trust Services (Asia) Limited 

........................................ ........................................ 

Director 

Director 

28th May 2013 

The notes on page 64 to 132 are an integral part of these financial statements.



37 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - MASTER 

TRUST SCHEME 

Note 2012 2011 

HK$ 

HK$ 

Income 

Net realised gains on redemption of 

units in constituent funds 258,198,210 327,801,550 

Change in unrealised gains/losses in value 

of constituent funds 2,148,966,602 (2,588,573,051) 

Other income 373 3 

 

Total income/(loss) 2,407,165,185 (2,260,771,498) 

Expenses 

Administrative expenses 3,132 1,890 

 

Total net income/(loss) 2,407,162,053 (2,260,773,388) 

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

Contributions received and receivable 6 

From employers 

Mandatory 887,257,606 773,577,334 

Additional voluntary 468,221,800 437,861,609 

From members 

Mandatory 831,253,445 726,470,109 

Additional voluntary 122,737,518 120,645,282 

Contribution surcharge received and 

receivable 424,856 215,920 

Transfers in 

Group transfers in from other schemes 34,956,692 19,911,615 

Individual transfers in from other schemes 202,746,032 226,908,227 

 

2,547,597,949 2,305,590,096 

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

Benefits paid and payable 7 

Retirement 69,374,132 44,452,225 

Early retirement 38,067,598 17,142,290 

Death 15,809,621 11,734,118 

Permanent departure 99,772,227 91,256,366 

Total incapacity 3,111,965 3,108,321 

Small balance 20,193 12,689



38 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - MASTER 

TRUST SCHEME (CONTINUED) 

2012 2011 

HK$ 

HK$ 

Refund of additional voluntary 

contributions to leavers 137,441,272 102,234,945 

Transfers out 

Group transfers out to other schemes 240,022,780 32,619,925 

Individual transfers out to other schemes 626,535,887 582,649,485 

Forfeitures 53,614,362 53,666,723 

 

1,283,770,037 938,877,087 

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

Increase/(decrease) in net assets 

available for benefits attributable to 

members 3,670,989,965 (894,060,379) 


attributable to members at the 

beginning of the year 

– Members’ accounts 16,325,789,447 17,219,849,826 

 


attributable to members at the end 

of the year 

– Members’ accounts 19,996,779,412 16,325,789,447 

 




39 

STATEMENT OF CASH FLOWS - MASTER TRUST SCHEME 

2012 2011 

HK$ 

HK$ 

Cash flows from operating activities 

Net income/(loss) 2,407,162,053 (2,260,773,388) 

Net (increase)/decrease in investments in constituent 

funds (3,716,997,260) 904,440,492 

Net increase in amounts receivable on redemption of 

units in constituent funds (10,988,827) (1,601,035) 

Net decrease in other payables (246,855) (112,859) 

 

Net cash used in operating activities (1,321,070,889) (1,358,046,790) 

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

Cash flows from financing activities 

Contributions, transfers in and others received 2,522,173,471 2,290,639,741 

Benefits, transfers out, forfeitures and others paid (1,201,447,717) (925,419,915) 

 

Net cash generated from financing activities 1,320,725,754 1,365,219,826 

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

Net (decrease)/increase in cash and cash equivalents (345,135) 7,173,036 

Cash and cash equivalents at beginning of the year 61,876,529 54,703,493 

 

Cash and cash equivalents at end of the year 61,531,394 61,876,529 

 

Analysis of cash and cash equivalents: 

Cash and bank deposits (representing cash and 

bank deposits with original maturity less than 3 

months) 61,531,394 61,876,529 

 




40 

STATEMENT OF NET ASSETS - CONSTITUENT FUNDS 

Asia Pacific Equity Fund Balanced Fund MPF Conservative Fund 

Note 2012 2011 2012 2011 2012 2011 

HK$ HK$ HK$ HK$ HK$ HK$ 

Assets 


Financial assets at fair value through profit or 

loss 8 1,577,727,871 1,099,728,639 2,618,370,195 2,205,526,696 1,862,525,860 1,749,563,978 

Amounts receivable on fund switching 2,637,862 2,288,760 336,637 2,883,366 4,270,206 1,875,936 

Amounts receivable on sales of investments 3,490,947 1,641,109 4,955,966 4,398,727 5,337,681 4,790,724 

Other receivables 104,041 103,555 129,654 134,701 112,520 1,673,479 

Cash and cash equivalents 176 655 3,372 4,412 339,030 1,154,138 

 

Total assets 1,583,960,897 1,103,762,718 2,623,795,824 2,212,947,902 1,872,585,297 1,759,058,255 

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

Liabilities 


Amounts payable on fund switching 1,417,308 445,631 559,125 2,513,712 2,532,446 2,234,266 

Amounts payable on purchases of 

investments 2,637,862 2,288,760 336,637 2,883,366 - - 

Amounts payable on redemption of units 2,073,639 1,195,478 4,396,841 1,885,015 2,805,235 2,556,458 

Other payables 2,464,738 1,844,374 4,640,267 4,154,295 2,717,175 2,649,702 

 

Total liabilities 8,593,547 5,774,243 9,932,870 11,436,388 8,054,856 7,440,426 

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

Equity 

Net assets attributable to members 1,575,367,350 1,097,988,475 2,613,862,954 2,201,511,514 1,864,530,441 1,751,617,829 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




41 

STATEMENT OF NET ASSETS - CONSTITUENT FUNDS (CONTINUED) 

Capital Stable Fund Fidelity SaveEasy 2020 Fund Fidelity SaveEasy 2025 Fund 

Note 2012 2011 2012 2011 2012 2011 


Assets 



loss 8 1,122,718,404 978,529,301 86,867,291 63,198,713 70,947,653 44,573,434 

Amounts receivable on fund switching 175,499 856,802 476,935 60,060 303,663 5,094 

Amounts receivable on sales of investments 1,304,135 1,219,074 91,477 8,096 300,454 665,472 

Other receivables 55,971 59,717 10,834 3,768 8,560 2,714 

Cash and cash equivalents 3,027 3,450 555 574 436 451 

 

Total assets 1,124,257,036 980,668,344 87,447,092 63,271,211 71,560,766 45,247,165 

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

Liabilities 


Amounts payable on fund switching 362,121 794,471 31,203 - 247,409 597,472 


investments 175,499 856,802 476,935 60,060 303,663 5,094 

Amounts payable on redemption of units 942,014 424,603 60,274 8,096 53,045 68,000 

Other payables 1,974,170 1,816,613 146,667 119,250 118,256 91,833 

 

Total liabilities 3,453,804 3,892,489 715,079 187,406 722,373 762,399 

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

Equity 

Net assets attributable to members 1,120,803,232 976,775,855 86,732,013 63,083,805 70,838,393 44,484,766 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




42 


Fidelity SaveEasy 2030 Fund Fidelity SaveEasy 2035 Fund Fidelity SaveEasy 2040 Fund 

Note 2012 2011 2012 2011 2012 2011 


Assets 



loss 8 84,600,309 48,318,564 89,935,846 54,066,391 237,131,661 132,248,739 

Amounts receivable on fund switching 18,019 - 106,856 - 56,591 577 

Amounts receivable on sales of investments 78,473 10,620 140,641 169,424 430,467 222,273 


Cash and cash equivalents 425 440 458 474 1,150 1,189 

 

Total assets 84,705,719 48,332,427 90,193,044 54,239,511 237,642,951 132,480,552 

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

Liabilities 


Amounts payable on fund switching 38,120 - 38,119 51,377 52,577 22,132 


investments 18,019 - 106,856 - 56,591 577 

Amounts payable on redemption of units 40,353 10,620 102,522 118,047 377,890 200,141 

Other payables 137,894 94,733 145,922 104,516 363,528 224,526 

 

Total liabilities 234,386 105,353 393,419 273,940 850,586 447,376 

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

Equity 

Net assets attributable to members 84,471,333 48,227,074 89,799,625 53,965,571 236,792,365 132,033,176 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




43 


Global Equity Fund Growth Fund Hong Kong Bond Fund 

Note 2012 2011 2012 2011 2012 2011 


Assets 



loss 8 1,197,853,864 934,533,432 3,777,876,551 3,121,315,113 446,537,631 341,847,756 

Amounts receivable on fund switching 497,285 706,736 534,266 1,482,773 907,061 2,352,125 



Cash and cash equivalents 152 562 383 1,917 364 473 

 

Total assets 1,200,343,061 937,110,801 3,784,231,399 3,127,051,936 450,222,972 347,352,577 

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

Liabilities 


Amounts payable on fund switching 877,632 737,502 894,752 1,778,618 2,239,023 2,845,592 


investments 497,285 706,736 534,266 1,482,773 907,061 2,352,125 

Amounts payable on redemption of units 1,054,633 1,067,279 4,739,184 2,282,057 516,477 284,620 

Other payables 1,976,809 1,638,148 6,660,394 5,883,636 700,555 565,768 

 


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

Equity 

Net assets attributable to members 1,195,936,702 932,961,136 3,771,402,803 3,115,624,852 445,859,856 341,304,472 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




44 


Hong Kong Equity Fund Stable Growth Fund World Bond Fund 

Note 2012 2011 2012 2011 2012 2011 


Assets 



loss 8 4,426,786,525 3,495,273,749 1,934,472,136 1,655,810,386 491,415,833 379,848,093 

Amounts receivable on fund switching 4,154,243 4,940,030 253,481 62,376 1,503,814 600,614 



Cash and cash equivalents 1,487 1,295 303 1,044 807 945 

 

Total assets 4,442,040,420 3,506,506,736 1,937,591,175 1,658,250,609 494,201,066 382,252,393 

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

Liabilities 


Amounts payable on fund switching 5,556,990 3,507,570 687,170 1,093,111 698,423 1,493,795 


investments 4,154,243 4,940,030 253,481 62,376 1,503,814 600,614 

Amounts payable on redemption of units 5,324,165 2,572,712 2,081,846 1,182,547 557,702 281,320 

Other payables 7,421,701 6,320,242 3,387,142 3,065,596 790,929 653,488 

 


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

Equity 

Net assets attributable to members 4,419,583,321 3,489,166,182 1,931,181,536 1,652,846,979 490,650,198 379,223,176 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




45 


Total 

Note 2012 2011 

HK$ HK$ 

Assets 



loss 8 20,025,767,630 16,304,382,984 

Amounts receivable on fund switching 16,232,418 18,115,249 

Amounts receivable on sales of investments 41,358,237 32,252,242 

Other receivables 1,068,309 2,610,643 

Cash and cash equivalents 352,125 1,172,019 

 

Total assets 20,084,778,719 16,358,533,137 

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

Liabilities 


Amounts payable on fund switching 16,232,418 18,115,249 


investments 11,962,212 16,239,313 

Amounts payable on redemption of units 25,125,820 14,136,993 

Other payables 33,646,147 29,226,720 

 

Total liabilities 86,966,597 77,718,275 

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

Equity 

Net assets attributable to members 19,997,812,122 16,280,814,862 

 


........................................ ........................................ 

Director 

Director 

28th May 2013 




46 

STATEMENT OF COMPREHENSIVE INCOME - CONSTITUENT FUNDS 


2009 1 Note 2012 2011 2012 2011 2012 2011 


Income 

Realised gains on sales of financial assets 

at fair value through profit or loss 14,177,711 83,003,557 13,738,544 526,776,218 271,685 25,497,353 


of financial assets at fair value through 

profit or loss 257,693,212 (284,364,367) 339,656,829 (766,318,153) 3,396,159 (26,179,508) 

Reimbursement income 13 - - - - 422,003 - 

Other income 180 197 160 164 110 109 

 

Total net income/(loss) 271,871,103 (201,360,613) 353,395,533 (239,541,771) 4,089,957 (682,046) 

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

Expenses 

Investment management fees 5 10,001,069 1,119,472 18,165,920 2,250,892 - - 

Legal and other professional fees 40,575 - 74,049 - - - 

Indemnity insurance 13 72,817 56,607 146,818 125,511 - - 

Administration fees 5 8,000,855 895,578 14,532,736 1,800,714 - - 

Auditor’s remuneration 11 71,880 62,105 129,904 112,119 - - 

Accounting fees 5 15,679 12,487 28,671 22,710 - - 

Handling fees 5 59,040 58,980 56,040 56,340 - - 

Compensation fund levy to the MPFA 473,632 330,189 786,173 662,137 560,976 526,627 

Constituent fund management fees 5 - 6,835,291 - 14,198,880 - - 

Other expenses 337,775 229,409 616,905 471,726 3,561,349 (1,242,689) 

 

Total operating expenses 19,073,322 9,600,118 34,537,216 19,701,029 4,122,325 (716,062) 

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

Total comprehensive income/(loss) 252,797,781 (210,960,731) 318,858,317 (259,242,800) (32,368) 34,016 

 




47 

STATEMENT OF COMPREHENSIVE INCOME - CONSTITUENT FUNDS (CONTINUED) 


2009 1 Note 2012 2011 2012 2011 2012 2011 


Income 

Realised gains/(losses) on sales of financial 

assets at fair value through profit or loss 3,846,209 206,930,252 1,622,445 (833,465) 246,931 (424,943) 



profit or loss 97,256,719 (225,009,407) 11,662,464 (7,842,398) 9,665,214 (6,716,858) 

Other income 129 120 52 49 43 41 

 

Total net income/(loss) 101,103,057 (18,079,035) 13,284,961 (8,675,814) 9,912,188 (7,141,760) 

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

Expenses 

Investment management fees 5 7,899,660 999,820 583,558 63,349 428,187 45,435 

Legal and other professional fees 31,747 - 2,349 - 1,699 - 

Indemnity insurance 13 64,975 52,281 4,182 2,241 3,018 1,814 

Administration fees 5 6,319,728 799,856 466,846 50,679 342,550 36,348 

Auditor’s remuneration 11 60,343 39,714 5,053 3,150 3,359 2,427 

Accounting fees 5 13,255 8,161 1,083 632 722 487 

Handling fees 5 55,320 54,060 39,660 38,460 32,280 33,000 


Constituent fund management fees 5 - 5,938,975 - 323,247 - 250,313 

Other expenses 269,896 202,922 29,818 20,634 24,984 19,024 

 

Total operating expenses 15,052,062 8,389,508 1,158,627 521,351 858,093 402,219 

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

Total comprehensive income/(loss) 86,050,995 (26,468,543) 12,126,334 (9,197,165) 9,054,095 (7,543,979) 

 




48 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Income 

Realised gains/(losses) on sales of financial 

assets at fair value through profit or loss 456,092 (583,834) 534,583 (519,123) 1,467,336 (505,092) 



profit or loss 11,309,674 (6,873,144) 12,382,206 (7,710,062) 31,852,739 (19,389,545) 

Other income 50 47 54 52 83 82 

 

Total net income/(loss) 11,765,816 (7,456,931) 12,916,843 (8,229,133) 33,320,158 (19,894,555) 

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

Expenses 

Investment management fees 5 496,650 47,584 539,386 54,242 1,373,844 131,271 



Administration fees 5 397,320 38,067 431,509 43,394 1,099,075 105,017 


Accounting fees 5 847 499 952 551 2,352 1,376 



Constituent fund management fees 5 - 253,223 - 278,209 - 681,389 


 

Total operating expenses 990,264 410,552 1,073,351 452,208 2,670,688 1,047,022 

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


 




49 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Income 


at fair value through profit or loss 10,594,262 38,890,264 21,550,746 659,639,784 3,090,427 26,312,068 



profit or loss 167,168,054 (143,198,797) 560,925,258 (1,155,449,148) 18,189,944 (11,436,134) 

Other income 131 138 177 198 97 79 

 

Total net income/(loss) 177,762,447 (104,308,395) 582,476,181 (495,809,166) 21,280,468 14,876,013 

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

Expenses 

Investment management fees 5 8,123,922 940,682 25,987,557 3,189,669 3,011,637 345,659 



Administration fees 5 6,499,138 752,546 20,790,046 2,551,735 2,409,309 276,527 


Accounting fees 5 12,719 10,646 39,559 35,637 5,705 2,032 


Compensation fund levy to the MPFA 359,637 280,566 1,134,266 937,167 134,078 102,583 

Constituent fund management fees 5 - 5,835,114 - 20,717,419 - 1,624,696 


 

Total operating expenses 15,490,978 8,192,252 49,388,457 28,533,356 5,779,932 2,496,582 

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

Total comprehensive income/(loss) 162,271,469 (112,500,647) 533,087,724 (524,342,522) 15,500,536 12,379,431 

 




50 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Income 


at fair value through profit or loss 37,015,559 360,789,805 7,949,558 382,168,521 3,028,802 48,447,251 



profit or loss 765,679,070 (1,315,251,214) 212,972,008 (482,223,073) 25,583,497 (28,645,977) 

Other income 308 371 156 153 103 89 

 

Total net income/(loss) 802,694,937 (954,461,038) 220,921,722 (100,054,399) 28,612,402 19,801,363 

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

Expenses 

Investment management fees 5 29,490,920 3,613,783 13,509,948 1,690,921 3,268,998 387,894 



Administration fees 5 23,592,736 2,891,027 10,807,959 1,352,737 2,615,198 310,315 


Accounting fees 5 42,924 42,689 22,164 15,395 5,766 2,548 


Compensation fund levy to the MPFA 1,329,070 1,049,661 580,869 497,057 147,550 113,997 

Constituent fund management fees 5 - 24,359,238 - 10,309,014 - 2,069,594 

Other expenses 1,009,943 788,111 456,321 340,889 117,482 88,574 

 

Total operating expenses 56,070,792 33,235,027 25,699,440 14,428,115 6,277,414 3,060,944 

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


 




51 


Total 

2009 1 Note 2012 2011 

HK$ HK$ 

Income 


at fair value through profit or loss 119,590,890 2,355,588,616 



profit or loss 2,525,393,047 (4,486,607,785) 

Reimbursement income 13 422,003 - 

Other income 1,833 1,889 

 

Total net income/(loss) 2,645,407,773 (2,131,017,280) 

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

Expenses 

Investment management fees 5 122,881,256 14,880,673 

Legal and other professional fees 499,501 - 

Indemnity insurance 13 968,545 820,426 

Administration fees 5 98,305,005 11,904,540 

Auditor’s remuneration 11 874,290 770,833 

Accounting fees 5 192,398 155,850 

Handling fees 5 710,280 706,020 

Compensation fund levy to the MPFA 6,014,305 4,896,425 

Constituent fund management fees 5 - 93,674,602 

Other expenses 7,797,381 1,944,852 

 

Total operating expenses 238,242,961 129,754,221 

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

Total comprehensive income/(loss) 2,407,164,812 (2,260,771,501) 

 




52 

STATEMENT OF CHANGES IN EQUITY - CONSTITUENT FUNDS 


2009 1 Note 2012 2011 2012 2011 2012 2011 


Balance at the beginning of the year 1,097,988,475 

1,100,246,236 2,201,511,514 2,384,810,665 1,751,617,829 1,627,441,013 

Proceeds from subscription of units 3 415,482,884 406,955,889 331,177,722 278,089,662 618,439,763 702,085,339 

Payments on redemption of units 3 (190,901,790) (198,252,919) (237,684,599) (202,146,013) (505,494,783) (577,942,539) 

 

Net increase from units transactions 224,581,094 208,702,970 93,493,123 75,943,649 112,944,980 124,142,800 

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


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

Balance at the end of the year 1,575,367,350 1,097,988,475 2,613,862,954 2,201,511,514 1,864,530,441 1,751,617,829 

 




53 

STATEMENT OF CHANGES IN EQUITY - CONSTITUENT FUNDS (CONTINUED) 


2009 1 Note 2012 2011 2012 2011 2012 2011 


Balance at the beginning of the year 976,775,855 

968,703,580 63,083,805 43,668,167 44,484,766 34,220,283 



 


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


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

Balance at the end of the year 1,120,803,232 976,775,855 86,732,013 63,083,805 70,838,393 44,484,766 

 




54 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Balance at the beginning of the year 48,227,074 33,731,308 53,965,571 36,471,112 132,033,176 91,125,638 



 


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


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

Balance at the end of the year 84,471,333 48,227,074 89,799,625 53,965,571 236,792,365 132,033,176 

 




55 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Balance at the beginning of the year 932,961,136 941,898,112 3,115,624,852 3,514,227,793 

341,304,472 248,095,739 



 


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


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

Balance at the end of the year 1,195,936,702 932,961,136 3,771,402,803 3,115,624,852 445,859,856 341,304,472 

 




56 



2009 1 Note 2012 2011 2012 2011 2012 2011 


Balance at the beginning of the year 3,489,166,182 4,144,781,817 1,652,846,979 1,697,993,657 379,223,176 317,840,234 

Proceeds from subscription of units 3 882,409,483 1,040,371,910 242,557,330 227,434,428 186,755,972 140,225,545 


 


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


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

Balance at the end of the year 4,419,583,321 3,489,166,182 1,931,181,536 1,652,846,979 490,650,198 379,223,176 

 




57 


Total 

2009 1 Note 2012 2011 

HK$ HK$ 

Balance at the beginning of the year 16,280,814,862 17,185,255,354 

Proceeds from subscription of units 3 3,945,067,969 3,981,928,131 

Payments on redemption of units 3 (2,635,235,521) (2,625,597,122) 

 

Net increase from units transactions 1,309,832,448 1,356,331,009 

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


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

Balance at the end of the year 19,997,812,122 16,280,814,862 

 




58 

STATEMENT OF CASH FLOWS - CONSTITUENT FUNDS 


2009 1 2012 2011 2012 2011 2012 2011 




Adjustment for: 

Net (increase)/decrease in financial assets at fair 

value through profit or loss (477,999,232) 1,652,257 (412,843,499) 182,311,488 (112,961,882) (126,231,106) 

Net changes in amounts receivable on sales of 

investments/payable on purchases of investments (1,500,736) 280,060 (3,103,968) (334,564) (546,957) 5,822,457 

Net (increase)/decrease in other receivables (486) (4,858) 5,047 (21,655) 1,560,959 (422,478) 

Net increase/(decrease) in other payables 620,364 609,670 485,972 994,773 67,473 (285,853) 

 

Net cash used in operating activities (226,082,309) (208,423,602) (96,598,131) (76,292,758) (111,912,775) (121,082,964) 

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


Proceeds from subscription of units 415,133,782 407,882,438 333,724,451 275,806,256 616,045,493 704,758,780 

Payments on redemption of units (189,051,952) (199,459,528) (237,127,360) (199,528,043) (504,947,826) (583,764,996) 

 

Net cash from financing activities 226,081,830 208,422,910 96,597,091 76,278,213 111,097,667 120,993,784 

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

Net decrease in cash and cash equivalents (479) (692) (1,040) (14,545) (815,108) (89,180) 

Cash and cash equivalents at beginning of year 655 1,347 4,412 18,957 1,154,138 1,243,318 

 

Cash and cash equivalents at end of year 176 655 3,372 4,412 339,030 1,154,138 

 

Analysis of balances of cash and cash equivalents: 

Cash and bank deposits (representing cash and bank 

deposits with original maturity less than 3 months) 176 655 3,372 4,412 339,030 1,154,138 

 




59 

STATEMENT OF CASH FLOWS - CONSTITUENT FUNDS (CONTINUED) 


2009 1 2012 2011 2012 2011 2012 2011 



Total comprehensive income/(loss) 86,050,995 

(26,468,543) 12,126,334 (9,197,165) 9,054,095 (7,543,979) 


Net increase in financial assets at fair value through 

profit or loss (144,189,103) (8,584,555) (23,668,578) (19,469,502) (26,374,219) (10,301,561) 


investments/payable on purchases of investments (766,364) 761,100 333,494 (231,208) 663,587 (605,281) 

Net decrease/(increase) in other receivables 3,746 (12,962) (7,066) 3,426 (5,846) 4,152 

Net increase in other payables 157,557 512,914 27,417 50,987 26,423 33,356 

 


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




 


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

Net (decrease)/increase in cash and cash equivalents (423) (12,328) (19) 549 (15) 430 

Cash and cash equivalents at beginning of year 3,450 15,778 574 25 451 21 

 

Cash and cash equivalents at end of year 3,027 3,450 555 574 436 451 

 



deposits with original maturity less than 3 months) 3,027 3,450 555 574 436 451 

 




60 



2009 1 2012 2011 2012 2011 2012 2011 





Net increase in financial assets at fair value through 

profit or loss (36,281,745) (14,536,824) (35,869,455) (17,542,187) (104,882,922) (41,015,257) 


investments/payable on purchases of investments (49,834) 30,690 135,639 (148,798) (152,180) (661,536) 

Net (increase)/decrease in other receivables (5,690) 3,945 (6,021) 3,627 (15,308) 1,482 

Net increase in other payables 43,161 37,534 41,406 44,555 139,002 107,379 

 


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




 


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

Net (decrease)/increase in cash and cash equivalents (15) 421 (16) 454 (39) 1,142 

Cash and cash equivalents at beginning of year 440 19 474 20 1,189 47 

 

Cash and cash equivalents at end of year 425 440 458 474 1,150 1,189 

 



deposits with original maturity less than 3 months) 425 440 458 474 1,150 1,189 

 




61 



2009 1 2012 2011 2012 2011 2012 2011 








investments/payable on purchases of investments (336,935) 623,574 (2,521,768) (85,385) (1,070,352) 465,922 

Net decrease/(increase) in other receivables 5,795 5,301 5,195 (26,405) (405) (5,034) 

Net increase in other payables 338,661 491,440 776,758 1,311,651 134,787 260,320 

 


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




 


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

Net decrease in cash and cash equivalents (410) (7,166) (1,534) (40,355) (109) (1,876) 

Cash and cash equivalents at beginning of year 562 7,728 1,917 42,272 473 2,349 

 

Cash and cash equivalents at end of year 152 562 383 1,917 364 473 

 



deposits with original maturity less than 3 months) 152 562 383 1,917 364 473 

 




62 



2009 1 2012 2011 2012 2011 2012 2011 








investments/payable on purchases of investments (5,586,660) (3,755,368) (302,253) (1,236,163) 1,422,191 146,904 

Net (increase)/decrease in other receivables (5,630) (11,178) 4,906 (20,174) 3,138 3,817 

Net increase in other payables 1,101,459 1,320,729 321,546 825,060 137,441 250,010 

 


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


Proceeds from subscription of units 883,195,270 1,046,811,154 242,366,225 227,660,676 185,852,772 140,022,956 


 


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

Net increase/(decrease) in cash and cash equivalents 192 (7,953) (741) (13,168) (138) (2,003) 

Cash and cash equivalents at beginning of year 1,295 9,248 1,044 14,212 945 2,948 

 

Cash and cash equivalents at end of year 1,487 1,295 303 1,044 807 945 

 



deposits with original maturity less than 3 months) 1,487 1,295 303 1,044 807 945 

 




63 


Total 

2009 1 2012 2011 

HK$ HK$ 





value through profit or loss (3,721,384,646) 895,515,250 


investments/payable on purchases of investments (13,383,096) 1,072,404 

Net decrease/(increase) in other receivables 1,542,334 (498,994) 

Net increase in other payables 4,419,427 6,564,525 

 

Net cash used in operating activities (1,321,641,169) (1,358,118,316) 

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


Proceeds from subscription of units 3,946,950,800 3,988,867,501 

Payments on redemption of units (2,626,129,525) (2,630,935,455) 

 

Net cash from financing activities 1,320,821,275 1,357,932,046 

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

Net decrease in cash and cash equivalents (819,894) (186,270) 

Cash and cash equivalents at beginning of year 1,172,019 1,358,289 

 

Cash and cash equivalents at end of year 352,125 1,172,019 

 



deposits with original maturity less than 3 months) 352,125 1,172,019 

 




64 

NOTES TO THE FINANCIAL STATEMENTS 

1 The Scheme 

Fidelity Retirement 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 (“MPFA”). 

The Scheme comprises 15 constituent funds throughout the reporting period. 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. 

The financial information of the Scheme comprises (i) the Statement of Net Assets 

Available for Benefits as at 31st December 2012, and the Statement of Changes in Net 

Assets Available for Benefits and Statement of Cash Flows for the year ended 

31st December 2012 of the Scheme on a standalone basis; and (ii) the Statement of Net 

Assets as at 31st December 2012, and the Statement of Comprehensive Income, 

Statement of Changes in Equity and Statement of Cash Flows for the year ended 

31st December 2012 of each of its 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 (“HKFRS”) 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 at fair value through profit 

or loss. 

The preparation of financial statements in conformity with HKFRS requires the Trustee 

to make judgements, 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 judgements about carrying values of 

assets and liabilities that are not readily apparent from other sources. Actual results may 

differ from these estimates. 

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.



65 


2 Summary of significant accounting policies (Continued) 

(a) 

Basis of preparation (Continued) 

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 

HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and 

recognition of financial assets and financial liabilities. HKFRS 9 was issued in November 

2009 and October 2010. It replaces the parts of HKAS 39 that relate to the classification 

and measurement of financial instruments. HKFRS 9 requires financial assets to be 

classified into two measurement categories: those measured as at fair value and those 

measured at amortised cost. The determination is made at initial recognition. The 

classification depends on the entity’s business model for managing its financial 

instruments and the contractual cash flow characteristics of the instrument. For financial 

liabilities, the standard retains most of the HKAS 39 requirements. The main change is 

that, in cases where the fair value option is taken for financial liabilities, the part of a fair 

value change due to an entity’s own credit risk is recorded in other comprehensive 

income rather than the income statement, unless this creates an accounting mismatch. 

The Scheme and its constituent funds intend to adopt HKFRS 9 no later than the 

accounting period beginning on or after 1st January 2015. The new standard is not 

expected to have a significant impact on the financial statements of the Scheme and its 

constituent funds. 

HKFRS 10, ‘Consolidated financial statements’, effective for annual periods beginning 

on or after 1st January 2013, builds on existing principles by identifying the concept of 

control as the determining factor in whether an entity should be included within the 

consolidated financial statements of the parent company. The standard provides 

additional guidance to assist in the determination of control where this is difficult to 

assess. The new standard is not expected to have a significant impact on the financial 

position or performance of the Scheme and its constituent funds. 

HKFRS 12, ‘Disclosures of interests in other entities’, effective for annual periods 

beginning on or after 1st January 2013, includes the disclosure requirements for all 

forms of interests in other entities, including joint arrangements, associates, special 

purpose vehicles and other off balance sheet vehicles. The new standard is not 

expected to have a significant impact on the financial position or performance of the 

Scheme and its constituent funds. 

Investment entities amendments to HKFRS 10 and HKFRS 12, issued in December 

2012 and effective for annual periods beginning on or after 1st January 2014. The 

amendments introduce an exception to the principle that all subsidiaries shall be 

consolidated. The amendments define an investment entity and require a parent that is 

an investment entity to measure its investments in particular subsidiaries at fair value 

through profit or loss instead of consolidating those subsidiaries. The amendments are 

not expected to have a significant impact on the financial position or performance of the 

Scheme and its constituent funds.



66 



(a) 

Basis of preparation (Continued) 

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 (Continued) 

HKFRS 13, ‘Fair value measurement’, effective for annual periods beginning on or after 

1st January 2013. The standard improves consistency and reduces complexity by 

providing a precise definition of fair value and a single source of fair value measurement 

and disclosure requirements for use across HKFRSs. The requirements do not extend 

the use of fair value accounting but provide guidance on how it should be applied where 

its use is already required or permitted by other standards within HKFRS. If an asset or 

a liability measured at fair value has a bid price and an ask price, the standard requires 

valuation to be based on a price within the bid-ask spread that is most representative of 

fair value and allows the use of mid-market pricing or other pricing conventions that are 

used by market participants as a practical expedient for fair value measurement within a 

bid-ask spread. On adoption of the standard, the Scheme and its constituent funds will 

change their valuation inputs for listed/quoted financial assets and liabilities to last 

traded prices to be consistent with the inputs prescribed in the Offering Document of the 

Scheme and its constituent funds for the calculation of their per unit trading value for 

subscriptions and redemptions. The use of last traded prices is recognised as a 

standard pricing convention within the industry. However, this new standard is not 

expected to have a significant impact on the financial statements of the Scheme and its 


There are no other standards, interpretations or amendments to existing standards that 

are not yet effective that would be expected to have a significant impact on the Scheme 

and its constituent funds. 

(b) 

Foreign currency translation 

(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”). This is the Hong Kong Dollar 

(“HKD”). 

The Scheme and its constituent funds have adopted the HKD as their 

presentation currency. 

(ii) 

Transaction 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 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.



67 



(b) 

Foreign currency translation (Continued) 

(ii) 

Transaction and balances (Continued) 

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 “Net foreign currency gains/(losses)”. 

Foreign exchange gains and losses relating to the financial assets carried at 

fair value through profit or loss are presented in the Statement of Changes in 

Net Assets Available for Benefits within “Net realised gains/(losses) on 

redemption of units in constituent funds” and “Change in unrealised 

gains/losses in value of constituent funds” for the Scheme and the Statement 

of Comprehensive Income within “Realised gains/(losses) on sales of financial 

assets at fair value through profit or loss” and “Change in unrealised 

gains/losses in value of financial assets at fair value through profit or loss” for 

the constituent funds. 

(c) 

Income 

Other income is accounted for on an accruals basis. Reimbursement income is 

recognised when the right to receive payment is established. 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

Expenses 

All expenses are accounted for on an accruals basis. 

Contributions 

Contributions are accounted for on an accruals basis. 

Benefits 

Benefits are accounted for on an accruals basis. 

Transfers in 

Transfers in amounts are recognised when the right to receive payment is established. 

Transfers out 

Transfers out amounts are accounted for when the obligation to make payment is 

established. 

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 applied in 

reducing the future contributions of the employer, or in such other manner as the 

Trustee may determine, having consulted the employers (including payment to the 

employers). Forfeitures arising from such cases which have not been designated for the 

benefit of existing members and which have not been returned to the employers would 

be treated as liabilities of the Scheme.



68 



(j) 

(k) 

Cash and cash equivalents 

Cash and cash equivalents include cash at bank, bank deposits with original maturities 

of 3 months or less from the date of placement net of bank overdrafts, if any. 

Financial assets at fair value through profit or loss 

(i) 

Classification 

The Scheme and its constituent funds classify their investments as financial 

assets at fair value through profit or loss. 

This category has two sub-categories: financial assets held for trading; and 

those designated at fair value through profit or loss at inception. 

 

Financial assets held for trading 

A financial asset is classified as held for trading if it is acquired or 

incurred principally for the purpose of selling or repurchasing in the 

near term or if on initial recognition is part of a portfolio of identifiable 

financial investments that are managed together and for which there is 

evidence of a recent actual pattern of short-term profit taking. 

 

Financial assets designated at fair value through profit or loss at 

inception 

Financial assets designated at fair value through profit or loss at 

inception are financial instruments that are not classified as held for 

trading but are managed, and their performance is evaluated on a fair 

value basis in accordance with the documented investment strategies. 

(ii) 

Recognition, derecognition and measurement 

Regular purchases and sales of investments are recognised on the trade date 

– the date on which the Scheme and its constituent funds commit to purchase 

or sell the investment. Financial assets at fair value through profit or loss are 

initially recognised at fair value, excluding transaction costs which are 

expensed as incurred. 

Financial assets are derecognised when the rights to receive cash flows from 

the investments have expired or have been transferred and 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 realised gains/(losses) on redemption of 

units in constituent funds” and “Change in unrealised gains/losses in value of 

constituent funds”; and in the Statement of Comprehensive Income of the 

constituent funds within “Change in unrealised gains/losses in value of 

financial assets at fair value through profit or loss” and “Realised gains/(losses) 

on sales of financial assets at fair value through profit or loss” in the period in 

which they arise.



69 



(k) 

Financial assets at fair value through profit or loss (Continued) 

(iii) 

Valuation of investments 

Investments in constituent funds are valued at their respective closing net asset 

value per unit. 

Investments in approved pooled investment funds are valued at their 

respective bid prices as provided by the administrators of such funds. Where 

bid prices are not available, investments in approved pooled investment funds 

are valued at their closing net asset value per unit as provided by the 

administrators of such funds. 

(l) Amounts receivable on sales of investments/payable on purchases of 

investments 

Amounts receivable on sales of investments/payable on purchases of investments 

represent receivables for investments sold and payables for investments purchased that 

have been contracted for but not yet settled or delivered on the year end date 

respectively. 

(m) Accrued expenses 

Accrued expenses are recognised initially at fair value and subsequently stated at 

amortised cost using the effective interest method. 

(n) 

Other receivables 

Other receivables are recognised initially at fair value and subsequently measured at 

amortised cost using the effective interest method, less provision for impairment. 

(o) 

Proceeds and payments on subscription and redemption of units 

Proceeds and payments on subscription and redemption of units are shown as 

movements in the Statement of Changes in Equity of the respective constituent funds. 

The net asset value of the constituent funds is computed on each business day. Prices 

for subscriptions and redemptions on each business day are based on the net asset 

value per unit as at the close of business on the relevant business day.

FIDELITY RETIREMENT MASTER TRUST 70 



3 Number of units in issue and net assets attributable to members per unit 

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: 


2012 2011 2012 2011 2012 2011 

Units Units Units Units Units Units 

Units outstanding at beginning of 

the year 74,038,499.241 61,681,849.522 135,066,261.780 130,775,782.771 158,801,029.944 147,546,016.468 

Units issued 25,486,951.611 24,341,094.763 18,985,393.389 15,784,009.968 56,068,881.571 63,652,342.494 

Units redeemed (11,625,363.222) (11,984,445.044) (13,567,171.847) (11,493,530.959) (45,829,082.774) (52,397,329.018) 

 

Units outstanding at end of the 

year 87,900,087.630 74,038,499.241 140,484,483.322 135,066,261.780 169,040,828.741 158,801,029.944 

 


Net assets attributable to 

members 1,575,367,350 1,097,988,475 2,613,862,954 2,201,511,514 1,864,530,441 1,751,617,829 

 


members per unit 17.922 14.829 18.606 16.299 11.030 11.030




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


2012 2011 2012 2011 2012 2011 



the year 59,420,859.057 57,368,040.171 4,344,875.516 2,564,415.709 3,042,986.904 1,981,393.279 

Units issued 9,175,157.757 8,706,409.893 2,041,680.016 2,427,536.096 1,424,795.823 1,476,188.804 

Units redeemed (5,774,865.424) (6,653,591.007) (1,277,852.598) (647,076.289) (346,388.826) (414,595.179) 

 


year 62,821,151.390 59,420,859.057 5,108,702.934 4,344,875.516 4,121,393.901 3,042,986.904 

 



members 1,120,803,232 976,775,855 86,732,013 63,083,805 70,838,393 44,484,766 

 


members per unit 17.841 16.438 16.977 14.519 17.187 14.618






2012 2011 2012 2011 2012 2011 



the year 3,297,119.796 1,943,457.429 3,679,319.013 2,092,782.012 8,925,606.209 5,189,028.654 

Units issued 2,055,452.066 1,677,792.981 2,077,460.170 1,933,353.398 6,009,945.721 4,591,184.708 

Units redeemed (453,038.681) (324,130.614) (572,424.328) (346,816.397) (1,397,812.407) (854,607.153) 

 


year 4,899,533.181 3,297,119.796 5,184,354.855 3,679,319.013 13,537,739.523 8,925,606.209 

 



members 84,471,333 48,227,074 89,799,625 53,965,571 236,792,365 132,033,176 

 


members per unit 17.240 14.627 17.321 14.667 17.491 14.792






2012 2011 2012 2011 2012 2011 



the year 66,076,092.603 59,425,686.459 198,474,156.614 191,357,072.399 29,914,431.712 22,828,134.214 

Units issued 15,032,037.291 15,289,331.397 25,983,872.370 24,323,024.682 18,812,352.449 16,016,961.990 


 


year 72,645,850.168 66,076,092.603 205,787,480.991 198,474,156.614 37,587,846.588 29,914,431.712 

 



members 1,195,936,702 932,961,136 3,771,402,803 3,115,624,852 445,859,856 341,304,472 

 


members per unit 16.462 14.119 18.326 15.697 11.861 11.409



74 




2012 2011 2012 2011 2012 2011 



the year 172,356,516.991 159,052,842.047 99,581,275.985 95,632,008.525 28,803,775.138 25,367,625.910 

Units issued 40,046,584.900 43,372,350.907 13,823,223.764 13,029,849.065 13,802,493.028 10,816,806.809 


 


year 180,951,382.339 172,356,516.991 104,344,388.121 99,581,275.985 35,405,317.170 28,803,775.138 

 



members 4,419,583,321 3,489,166,182 1,931,181,536 1,652,846,979 490,650,198 379,223,176 

 


members per unit 24.424 20.243 18.507 16.597 13.858 13.165



75 


4 Financial risk management 

Strategy in using financial instruments 

The constituent funds’ activities expose them to a variety of financial risks: market risk 

(including price risk, cash flow and fair value interest rate risk and foreign exchange risk), 

credit risk and liquidity risk. The constituent funds’ overall risk management programme 

seeks to minimise potential adverse effects on the constituent funds’ financial 

performance. The constituent funds may use financial futures contracts, financial 

options contracts and/or spot/forward exchange contracts subject to the requirements of 

the Hong Kong Mandatory Provident Fund Schemes (General) Regulation and the 

terms of the Trust Deed to moderate certain risk exposures. 

The Investment Manager believes that fundamental research can uncover investment 

opportunities. A bottom up investment process drives investment decision making and 

portfolio implementation. 

The constituent funds’ assets principally consist of unit trusts that are authorised as 

Approved Pooled Investment Funds for MPF Schemes. They are held in accordance 

with the published investment policies of each constituent fund. The allocations of 

assets between the various types of unit trusts are determined by Investment Manager 

to achieve their investment objectives. 

The investment objectives of the constituent funds of the Scheme are detailed below: 


to act as a feeder fund and invest all of its assets in the Asia Pacific Equity Fund 

(MPF) of the Fidelity Global Investment Fund; 

to focus investment into the equity markets of Asia Pacific; 

to produce returns that are related to those achieved on the major stock market 

indices of Asia Pacific; 



Balanced Fund 

to act as a feeder fund and invest all of its assets in the Balanced Fund of the Fidelity 


to build capital value over the long-term; 

to provide a degree of asset diversification within a predominantly equity portfolio; 




to act as a feeder fund and invest all of its assets in the HK$ Money Fund of the 


to provide a positive return each month equal to or better than the HKD savings 

account rate; 

to focus investments in HKD short-term instruments; 

to invest only into HKD securities; and 

to ensure that there is minimal risk to the capital.



76 


4 Financial risk management (Continued) 

Strategy in using financial instruments (Continued) 


to act as a feeder fund and invest all of its assets in the Capital Stable Fund of the 


to produce a positive return over the long-term; 

to focus investments towards less volatile assets of bonds and cash whilst retaining 

some equity exposure; 


to ensure that the risk to the capital base is limited in the short-term. 


to act as a feeder fund and invest all of its assets in the Fidelity SaveEasy 2020 Fund 

of the Fidelity Global Investment Fund; 

to achieve long term capital growth for investors to 2020; 

to invest typically in a wide range of investments covering markets throughout the 

world, initially with a greater exposure to equities and thereafter, as the year 2020 is 

approached, greater exposure to bonds and cash; 

to maintain an asset allocation appropriate to achieve a combination of income and 

long-term capital growth as the year 2020 is approached; and 
























77 

























to act as a feeder fund and invest all of its assets in the Global Equity Fund of the 


to focus investments into the global equity markets; 

to produce returns that are related to those achieved on the major world stock market 

indices; 

to have the flexibility to have limited investment into bonds; and 


Growth Fund 

to act as a feeder fund and invest all of its assets in the Growth Fund of the Fidelity 


to build real wealth over the long-term; 

to focus investments into the global equity markets; 

to have the flexibility to invest in global bonds; 





78 





to act as a feeder fund and invest all of its assets in the Hong Kong Bond Fund of the 


to invest in the world bond markets with a focus on HKD denominated bonds and 

issuers; 

to produce returns that are related to those achieved on the major bond market 

indices 

to limit the volatility of returns in the short-term in HKD market terms; and 

to minimise currency volatility by implementing a HKD hedged strategy (where 

investments are made other than in HKD). 


to act as a feeder fund and invest all of its assets in the Hong Kong Equity Fund of 


to focus investment into the equity markets and companies of Hong Kong and 

Greater China; 

to produce returns that are related to those achieved on the major stock market 

indices of Hong Kong; 


to accept a high level of return volatility in the short-term. 


to act as a feeder fund and invest all of its assets in the Stable Growth Fund of the 


to generate a positive return over the long-term; 

to broadly diversify the portfolio as to asset type as between equities and bonds; 


to limit the volatility of returns in the short-term. 


to act as a feeder fund and invest all of its assets in the World Bond Fund of the 


to focus investments into the bond markets of the world; 

to produce returns that are related to those achieved on the major bond market 

indices; and 

to limit the volatility of returns in the short-term.



79 



(a) 

(i) 

Market risk 

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. 

The constituent funds are subject to market price risk in relation to their investments in 

the underlying funds, for prices in the future are uncertain. The constituent funds’ market 

price risk is managed through (i) deliberate investment funds selection and (ii) 

diversification of the investment portfolio of the underlying funds. The market risks are 

managed at the underlying fund level. 

As at year end, the overall market exposures of the constituent funds were as follows: 


Held for trading 

At 31st December 

2012 2011 

Fair value Cost % of net Fair value Cost % of net 

HK$ HK$ assets HK$ HK$ assets 

Approved Pooled 

Investment Funds 1,577,727,871 1,352,956,581 100.15 1,099,728,639 1,132,650,561 100.16 

 

Asia Pacific Equity Fund invests in Fidelity Global Investment Fund - Asia Pacific Equity 

Fund (MPF) (the “underlying fund”) which in turn invests in Fidelity Global Investment 

Fund - Asia Pacific Equity Fund. The following table shows the net market exposure the 

underlying fund has to the market: 

% of investments 

2012 


2011 

Fidelity Global Investment Fund - Asia 

Pacific Equity Fund (MPF) 


- Asia Pacific Equity Fund - Class B 100.00 100.00



80 



(a) 

(i) 

Market risk (Continued) 

Price risk (Continued) 

Fidelity Global Investment Fund - Asia Pacific Equity Fund (Continued) 

Fidelity Global Investment Fund - Asia 

Pacific Equity Fund 


2012 


2011 

AUSTRALIA 20.04 21.82 

CHINA 17.94 17.61 

GREAT BRITAIN 0.88 2.40 

HONG KONG 14.01 9.12 

INDIA 6.12 6.53 

INDONESIA 2.73 3.83 

MALAYSIA - 2.35 

PAPUA NEW GUINEA - 2.29 

PHILIPPINES 0.80 - 

SINGAPORE 4.39 1.69 

SOUTH KOREA 19.88 18.20 

TAIWAN 5.92 7.41 

THAILAND 7.29 5.76 

UNITED STATES OF AMERICA - 0.99 

 

 

100.00 100.00



81 



(a) 

(i) 



Balanced Fund 



2012 2011 





 

Balanced Fund invests in Fidelity Global Investment Fund - Balanced Fund (the 

“underlying fund”) which in turn invests in a portfolio of approved pooled investment 

funds. The following table shows the net market exposure the underlying fund has to 

various markets: 


2012 


2011 

Fidelity Global Investment Fund - 

Balanced Fund 


- Americas Equity Fund - Class B 13.82 15.45 

- Asia Pacific Equity Fund - Class B 10.52 9.74 

- European Equity Fund - Class B 14.26 12.21 

- Global Bond Fund - Class B 18.24 20.56 

- Global Bond HK$ Hedged Fund - Class B 3.45 3.55 

- HK$ Money Fund - Class B 3.93 4.94 

- Hong Kong Bond Fund - Class B 1.04 1.17 

- Hong Kong Equity Fund - Class B 25.53 23.80 

- Japanese Equity Fund - Class B 9.21 8.58 

 

 

100.00 100.00 

 

 




2012 2011 





 

MPF Conservative Fund invests in Fidelity Global Investment Fund - HK$ Money Fund 

(the “underlying fund”). The investments of the underlying fund are not subject to market 

price risk.



82 



(a) 

(i) 






2012 2011 




Investment Funds 1,122,718,404 1,039,172,318 100.17 978,529,301 992,239,934 100.18 

 

Capital Stable Fund invests in Fidelity Global Investment Fund - Capital Stable Fund 

(the “underlying fund”) which in turn invests in a portfolio of approved pooled investment 




2012 


2011 

Fidelity Global Investment Fund - Capital 

Stable Fund 











 

 

100.00 100.00



83 



(a) 

(i) 






2012 2011 




Investment Funds 86,867,291 76,949,102 100.16 63,198,713 64,942,988 100.18 

 

Fidelity SaveEasy 2020 Fund invests in Fidelity Global Investment Fund - Fidelity 

SaveEasy 2020 Fund (the “underlying fund”) which in turn invests in a portfolio of 

approved pooled investment funds. The following table shows the net market exposure 

the underlying fund has to various markets: 


2012 


2011 

Fidelity Global Investment Fund - Fidelity 

SaveEasy 2020 Fund 







- Hong Kong Bond Fund - Class B - 0.01 



 

 

100.00 100.00 

 

 




2012 2011 




Investment Funds 70,947,653 62,591,843 100.15 44,573,434 45,882,838 100.20



84 



(a) 

(i) 



Fidelity SaveEasy 2025 Fund (Continued) 






2012 


2011 












 

 

100.00 100.00 

 

 




2012 2011 







85 



(a) 

(i) 









2012 


2011 












 

 

100.00 100.00 

 

 




2012 2011 







86 



(a) 

(i) 









2012 


2011 












 

 

100.00 100.00 

 

 




2012 2011 







87 



(a) 

(i) 











2012 


2011 







 

 

100.00 100.00 

 

 




2012 2011 




Investment Funds 1,197,853,864 1,051,427,176 100.16 934,533,432 955,274,798 100.17 

 

Global Equity Fund invests in Fidelity Global Investment Fund - Global Equity Fund (the 




Fidelity Global Investment Fund - Global 

Equity Fund 


2012 


2011 







 

 

100.00 100.00



88 



(a) 

(i) 



Growth Fund 



2012 2011 





 

Growth Fund invests in Fidelity Global Investment Fund - Growth Fund (the “underlying 

fund”) which in turn invests in a portfolio of approved pooled investment funds. The 

following table shows the net market exposure the underlying fund has to various 

markets: 


2012 


2011 

Fidelity Global Investment Fund - Growth 

Fund 











 

 

100.00 100.00 

 

 




2012 2011 







89 



(a) 

(i) 



Hong Kong Bond Fund (Continued) 

Hong Kong Bond Fund invests in Fidelity Global Investment Fund - Hong Kong Bond 

Fund (the “underlying fund”). The following table shows the net market exposure the 

underlying fund has to various markets: 


2012 


2011 

Fidelity Global Investment Fund - Hong 

Kong Bond Fund 

AUSTRALIA 11.57 12.25 

BERMUDA 0.72 - 

BRITISH VIRGIN 6.81 7.88 

CANADA - 0.18 

CAYMAN ISLANDS 13.44 12.57 

CHINA 6.70 4.58 

DENMARK - 1.75 

FRANCE 0.27 1.41 

GERMANY 1.26 0.49 


HONG KONG 37.10 34.74 

INDIA - 0.17 

ITALY 0.46 0.21 

JAPAN 1.00 0.98 

NETHERLANDS 0.89 0.53 

NEW ZEALAND - 0.65 

NORWAY - 0.55 

SINGAPORE 3.62 1.63 

SOUTH KOREA 8.58 9.37 

SWITZERLAND 1.00 1.20 

THAILAND 0.55 - 

UNITED STATES OF AMERICA 3.98 5.02 

 

 

100.00 100.00 

 

 




2012 2011 




Investment Funds 4,426,786,525 3,823,710,282 100.16 3,495,273,749 3,657,876,576 100.18



90 



(a) 

(i) 



Hong Kong Equity Fund (Continued) 

Hong Kong Equity Fund invests in Fidelity Global Investment Fund - Hong Kong Equity 

Fund (the “underlying fund”). The following table shows the net market exposure the 

underlying fund has to various markets: 


2012 


2011 

Fidelity Global Investment Fund - Hong 

Kong Equity Fund 

AUSTRALIA - 0.36 

CHINA 43.50 48.74 


HONG KONG 44.19 39.70 

ITALY 0.60 0.32 

LUXEMBOURG 0.18 0.13 

MACAU 1.23 1.09 

SINGAPORE - 0.32 

TAIWAN - 0.54 

UNITED STATES OF AMERICA 0.20 0.07 

 

 

100.00 100.00 

 

 




2012 2011 




Investment Funds 1,934,472,136 1,753,957,041 100.17 1,655,810,386 1,688,267,299 100.18



91 



(a) 

(i) 



Stable Growth Fund (Continued) 

Stable Growth Fund invests in Fidelity Global Investment Fund - Stable Growth Fund 

(the “underlying fund”) which in turn invests in a portfolio of approved pooled investment 



% of investments % of investments 

2012 

2011 

Fidelity Global Investment Fund - Stable 

Growth Fund 











 

 

100.00 100.00 

 

 




2012 2011 




Investment Funds 491,415,833 467,203,706 100.16 379,848,093 381,219,463 100.16 

 

World Bond Fund invests in Fidelity Global Investment Fund - World Bond Fund (the 




Fidelity Global Investment Fund - World 

Bond Fund 


2012 


2011 




 

 

100.00 100.00



92 



(a) 

(i) 



The table below summarises the impact of increases/decreases from the constituent 

funds’ underlying benchmark on the constituent funds’ net assets attributable to 

members at 31st December 2012 and 31st December 2011. The analysis is based on 

the assumption that the index component within the benchmark increased/decreased by 

a possible reasonable shift, with all other variables held constant and that the fair value 

of the constituent funds’ investments moved according to the historical correlation with 

the index. 

Constituent 

Funds 

Benchmark 

Components 

Possible reasonable shift 

Impact on net assets 

attributable to members 

2012 2011 2012 2011 

Asia Pacific 

Equity Fund 

Balanced 

Fund 

FTSE AW Asia 


ex Hong Kong 

Index 

FTSE AW North 

America Index 

FTSE AW Asia 


ex Hong Kong 

Index 

FTSE AW Europe 

Index 

FTSE MPF HK 

FTSE AW Japan 

Index 

Citigroup World 

Government 

Bond Index 

1 month HIBOR 

21% 26% HK$307,983,525 HK$263,050,692 

13% 15% HK$347,211,598 HK$354,086,283 

MPF 

Conservative 

Fund 

1 month HIBOR 0% 0% HK$nil HK$26,243



93 



(a) 

(i) 



Constituent 

Funds 

Benchmark 

Components 




2012 2011 2012 2011 

Capital Stable 

Fund 


SaveEasy 

2020 Fund 

FTSE AW North 

America Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

1 month HIBOR 

FTSE AW North 

America 

Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

6% 8% HK$80,476,455 HK$91,997,411 

16% 20% HK$14,346,307 HK$13,066,587



94 



(a) 

(i) 



Constituent 

Funds 

Benchmark 

Components 




2012 2011 2012 2011 


SaveEasy 

2025 Fund 


SaveEasy 

2030 Fund 

FTSE AW North 

America 

Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

FTSE AW North 

America 

Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

17% 20% HK$12,218,321 HK$9,215,736 

17% 21% HK$14,730,098 HK$10,058,041



95 



(a) 

(i) 



Constituent 

Funds 

Benchmark 

Components 




2012 2011 2012 2011 


SaveEasy 

2035 Fund 


SaveEasy 

2040 Fund 

FTSE AW North 

America 

Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

FTSE AW North 

America 

Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 

17% 21% HK$15,714,490 HK$11,385,571 

17% 21% HK$41,673,518 HK$27,666,436



96 



(a) 

(i) 



Constituent 

Funds 

Benchmark 

Components 




2012 2011 2012 2011 

Global Equity 

Fund 

FTSE World Index 16% 19% HK$210,496,464 HK$191,590,568 

Growth Fund 

Hong Kong 

Bond Fund 

FTSE AW North 

America Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

1 month HIBOR 

HSBC HKD Bond 

Index 

16% 19% HK$616,065,885 HK$609,555,386 

2% 3% HK$9,216,537 HK$8,710,281 

Hong Kong 

Equity Fund 

FTSE MPF HK 21% 25% HK$882,665,819 HK$866,478,362



97 



(a) 

(i) 



Constituent 

Funds 

Benchmark 

Components 




2012 2011 2012 2011 

Stable Growth 

Fund 

World Bond 

Fund 

FTSE AW North 

America Index 

FTSE AW Asia 


ex Hong Kong 

Index 


Index 

FTSE MPF HK 

FTSE AW Japan 

Index 


Government 

Bond Index 

1 month HIBOR 


Government 

Bond Index 

9% 12% HK$196,596,534 HK$208,353,932 

4% 5% HK$20,324,959 HK$22,641,605 

The Investment Manager has used their view of what would be a “possible 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 

Investment Manager’s current view of market volatility and other relevant factors. 

(ii) 

Cash flow and fair value interest rate risk 

Interest rate risk arises from the effects of fluctuations in the prevailing levels of market 

interest rates on the fair value of interest-bearing assets and liabilities and future cash 

flow. 

For the Asia Pacific Equity Fund, Fidelity SaveEasy 2040 Fund, Global Equity Fund and 

Hong Kong Equity Fund, the majority of these constituent funds’ financial assets are 

non-interest bearing, as these constituent funds invest primarily in equity funds 

managed by FIL Investment Management (Hong Kong) Limited. As a result, 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.



98 



(a) 

(ii) 


Cash flow and fair value interest rate risk (Continued) 

For the Balanced Fund, MPF Conservative Fund, Capital Stable Fund, Fidelity 

SaveEasy 2020 Fund, Fidelity SaveEasy 2025 Fund, Fidelity SaveEasy 2030 Fund, 

Fidelity SaveEasy 2035 Fund, Growth Fund, Hong Kong Bond Fund, Stable Growth 

Fund and World Bond Fund, the financial assets of these constituent funds include 

investments in bond funds and money funds which are exposed to risk due to 

fluctuations in the prevailing levels of market interest rates. 

The Scheme and its constituent funds are exposed to risks associated with the effects of 

fluctuations in the prevailing levels of market interest rates on their cash deposits. 

However, this is relatively immaterial to the size of the net assets of the Scheme and its 


At 31st December 2012 and 31st December 2011, for each 25 basis points (“bps”) 

increase or decrease in interest rates with all other variables remaining constant, the 

decrease or increase in net assets attributable to unit holders for the following 

constituent funds are as follows: 


Exposure to 

debt securities 

Exposure to 

debt securities 

Interest rates raised/lowered by 

25 bps 

Decrease/increase in net assets 


31st 

December 31st December 

2012 

2011 

31st December 

2012 

31st December 

2011 

HK$ HK$ HK$ HK$ 

Balanced Fund 2,618,370,195 2,205,526,696 8,567,850 7,412,847 

MPF Conservative 

Fund 1,862,525,860 1,749,563,978 473,071 414,041 

Capital Stable Fund 1,122,718,404 978,529,301 9,366,351 7,845,181 

Fidelity SaveEasy 

2020 Fund 86,867,291 63,198,713 121,041 75,437 


2025 Fund 70,947,653 44,573,434 44,187 25,283 


2030 Fund 84,600,309 48,318,564 22,279 13,701 


2035 Fund 89,935,846 54,066,391 4,817 5,103 

Growth Fund 3,777,876,551 3,121,315,113 2,797,787 3,037,434 

Hong Kong Bond 

Fund 446,537,631 341,847,756 4,992,964 3,965,868 

Stable Growth Fund 1,934,472,136 1,655,810,386 11,803,792 9,929,737 

World Bond Fund 491,415,833 379,848,093 7,123,607 5,055,402



99 



(a) 

(ii) 


Cash flow and fair value interest rate risk (Continued) 

The Investment Manager has used their view of what would be a “possible reasonable 

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. 

(iii) Foreign exchange risk 

The Scheme and its constituent funds hold assets which are mainly denominated in 

HKD, the functional currency. As such, there is no currency risk at the Scheme and its 

constituent fund level. 

(b) 

Credit and counterparty 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 financial assets of the Scheme and its constituent funds which are potentially 

subject to concentrations of credit risk consist principally of bank deposits and assets 

held with the custodian. As at 31st December 2012, the safe keeping of the investments 

of the Scheme and its constituent funds is the responsibility of the Trustee. The Scheme 

and its constituent funds placed bank deposits with The Hongkong and Shanghai 

Banking Corporation Limited, the holding company of the Trustee. The credit rating for 

the Trustee and the bank is A-1+ (2011: A-1+) assigned by Standard and Poor’s. 

The underlying investment funds of the constituent funds also hold debt securities and 

are therefore exposed to risk that the issuers may not be able to repay the principal 

amount at maturity and interest. This risk is mitigated as the debt securities held are 

subject to the requirements of (i) minimum credit rating, (ii) maximum holding of 10% of 

net asset value for any single issuer other than an exempt authority as defined in 

section 7(1) of Schedule 1 to the Mandatory Provident Fund Schemes (General) 

Regulation ("Exempt Authority"), and/or (iii) maximum holding of 30% of net asset value 

for any single issuer that is an Exempt Authority (or unconditionally guaranteed by an 

Exempt Authority).



100 



(b) 

Credit and counterparty risk (Continued) 

The table below summarises the credit rating of the investment portfolio of the 

underlying funds with direct exposures to bonds and money market instruments by 

Standard and Poor’s/Moody’s: 

Fidelity Global Investment Fund - Hong Kong Bond Fund 

Portfolio by rating category 

Rating 2012 2011 

AAA 1 /Aaa 2 38% 30% 

AA 1 /Aa 2 13% 15% 

A 1 /A 2 38% 40% 

BBB 1 /Baa 2 3% 2% 

A-1+ 1 3% 2% 

P-1 2 5% 9% 

P-2 2 0% - 

D 1 /WR 2 - 2% 

 

Total 100% 100% 

 

Fidelity Global Investment Fund - HK$ Money Fund 


Rating 2012 2011 

P-1 2 100% 100% 

 

Total 100% 100% 

 

Fidelity Global Investment Fund - Global Bond Fund 


Rating 2012 2011 

AAA 1 /Aaa 2 32% 26% 

AA 1 /Aa 2 46% 51% 

A 1 /A 2 8% 19% 

BBB 1 /Baa 2 14% 4% 

 

Total 100% 100% 

 

1 Standard and Poor’s 

2 Moody’s



101 



(b) 

Credit and counterparty risk (Continued) 

The Investment Manager has a dedicated Counterparty Research Group (“CRG”) which 

is responsible for conducting fundamental due diligence on all banks and brokers with 

which the Scheme trades. CRG performs due diligence, which frequently includes onsite 

meetings with senior management, financial statement modelling, publishing of formal 

written research notes and ratings, and monitoring of news flow. It also requires that, 

with exception, all securities transactions be executed with counterparties which are on 

the “Approved Trading Counterparty List” which has been formulated internally by the 

Investment Manager through analysis of independent fundamental credit reviews of all 

counterparties. 

All transactions in quoted securities are settled/paid for upon delivery using approved 

brokers. The probable loss in the event of default is considered minimal, since nearly all 

delivery of securities sold is only made when the broker has received payment. Payment 

is made on a purchase when the securities have been received by the broker. The trade 

will fail if either party fails to meet its obligation. 

The constituent funds limit their exposure to credit risk by transacting the majority of 

their investments and contractual commitment activities with broker-dealers, banks and 

regulated exchanges with acceptable credit ratings for such instruments and that the 

constituent funds consider to be well established. 

The Investment Manager monitors the constituent funds’ credit position on a daily basis 

and these are reviewed on a quarterly basis by a risk oversight committee. 

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. 

None of the assets is impaired nor past due but not impaired. 

(c) 

Liquidity risk 

Liquidity risk is the risk that the Scheme and its constituent funds may not be able to 

generate sufficient cash resources to settle their obligations in full as they fall due or can 

only do so on terms that are materially disadvantageous. 

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 underlying approved 

pooled investment funds that are traded in an active market and can be readily disposed 

of. Other investments which are neither listed nor quoted are restricted to a maximum of 

15% of the net asset value of the respective constituent funds.



102 



(c) 

Liquidity risk (Continued) 

If the Investment Manager received aggregate request for the redemption of units more 

than 10% of the net asset value of the respective constituent funds, on any redemption 

date, the Investment Manager may elect to restrict the redemption to 10% of the net 

asset value. In this case all requests will be scaled down on a pro-rata basis to ensure 

redemptions remain below 10%. The remaining balance will be redeemed in priority to 

subsequent redemption requests on the next redemption day. This procedure is in place 

to manage liquidity risk in the constituent funds and to protect the interests of the 

remaining members. The Investment Manager did not restrict any redemptions during 

2012 and 2011. The table below assumes no use of the 10% redemption restriction. 

The Investment Manager monitors the constituent funds’ liquidity position on a daily 

basis, and reviewed on a quarterly basis by a risk oversight committee. 

The tables below analyse the constituent funds’ non-derivative financial liabilities into 

relevant maturity groupings based on the remaining period at the year end date to the 

contractual maturity date. The amounts in the table are the undiscounted cash flows. 

Balances due within 12 months equal their carrying balances, as the impact of 

discounting is not significant. 


HK$ 

HK$ 

At 31st December 2012 Less than 1 month 1-3 months 

Amounts payable on fund switching 1,417,308 - 

Amounts payable on purchases of investments 2,637,862 - 

Amounts payable on redemption of units 2,073,639 - 

Other payables 2,377,229 87,509 

 

 

Financial liabilities 8,506,038 87,509 

 

 

At 31st December 2011 

Amounts payable on fund switching 445,631 - 




 

Financial liabilities 5,694,941 79,302



103 



(c) 


Balanced Fund 

HK$ 

HK$ 



Amounts payable on purchases of investments 336,637 - 



 

 


 

 






 

 


 

 


HK$ 

HK$ 



Amounts payable on purchases of investments - - 



 

 


 

 





 




104 



(c) 



HK$ 

HK$ 




Amounts payable on redemption of units 942,014 - 


 

 


 

 






 


 

 


HK$ 

HK$ 





Other payables 141,652 5,015 

 

 

Financial liabilities 710,064 5,015 

 

 





 

Financial liabilities 183,961 3,445



105 



(c) 



HK$ 

HK$ 






 

 


 

 






 


 

 


HK$ 

HK$ 






 

 


 

 




 




106 



(c) 



HK$ 

HK$ 






 

 


 

 





 


 

 


HK$ 

HK$ 






 

 


 

 



Amounts payable on purchases of investments 577 - 



 




107 



(c) 



HK$ 

HK$ 






 

 


 

 






 


 

 

Growth Fund 

HK$ 

HK$ 






 

 


 

 






 




108 



(c) 



HK$ 

HK$ 






 

 


 

 






 


 

 


HK$ 

HK$ 






 

 


 

 






 




109 



(c) 



HK$ 

HK$ 






 

 


 

 






 


 

 


HK$ 

HK$ 






 

 


 

 






 




110 



(c) 


The constituent funds manage their liquidity risk by investing predominantly in 

investment funds that they expect to be able to liquidate within 7 days or less. The 

following tables illustrate the expected liquidity of assets held by each of the constituent 

funds: 


Less than 7 

days 

7 days to 1 

month 1 - 3 months 3 - 12 months 

More than 12 

months 

At 31st December 2012 HK$ HK$ HK$ HK$ HK$ 

Total assets 1,583,856,856 - - 76,907 27,134 


Total assets 1,103,659,163 - - 65,880 37,675 

Balanced Fund 

Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 2,623,666,170 - - 129,654 - 


Total assets 2,212,813,201 - - 134,701 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 1,872,472,777 - 112,520 - - 


Total assets 1,757,384,775 - 1,673,480 - - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 1,124,201,065 - - 55,971 - 


Total assets 980,608,627 - - 59,717 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 87,436,258 - - 4,623 6,211 


Total assets 63,267,443 - - 3,768 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 71,552,206 - - 3,416 5,144 


Total assets 45,244,451 - - 2,714 -



111 



(c) 



Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 84,697,226 - - 4,109 4,384 


Total assets 48,329,624 - - 2,803 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 90,183,801 - - 4,356 4,887 


Total assets 54,236,289 - - 3,222 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 237,619,869 - - 11,422 11,660 


Total assets 132,472,778 - - 7,774 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 1,200,283,566 - - 59,495 - 


Total assets 937,045,511 - - 57,231 8,059 

Growth Fund 

Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 3,784,045,136 - - 186,263 - 


Total assets 3,126,860,478 - - 191,458 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 450,200,556 - - 22,416 - 


Total assets 347,330,566 - - 20,680 1,331



112 



(c) 



Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 4,441,823,410 - - 217,010 - 


Total assets 3,506,295,356 - - 211,380 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 1,937,494,936 - - 96,239 - 


Total assets 1,658,149,464 - - 101,145 - 


Less than 7 

days 

7 days to 1 


More than 12 

months 


Total assets 494,176,578 - - 24,488 - 


Total assets 382,224,767 - - 23,118 4,508 

As at 31st December 2012 and 31st December 2011, there were no individual member 

or employer who held more than 10% of each constituent fund’s units. 

(d) 

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 quoted market price used for financial assets held by the constituent funds is 

the current bid price; the quoted market price for financial liabilities is the current asking 

price. 

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.



113 



(d) 

Fair value estimation (Continued) 

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 7 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 

judgement, considering factors specific to the asset or liability. 

The determination of what constitutes ‘observable’ requires significant judgement 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. 

The following table analyses within the fair value hierarchy the investments held by the 

constituent funds (by class) measured at fair value at 31st December 2012 and 2011:



114 



(d) 


Level 1 Level 2 Level 3 Total 

Asia Pacific Equity Fund HK$ HK$ HK$ HK$ 


Assets 


loss 

- Approved pooled investment funds 1,577,727,871 - - 1,577,727,871 

Total assets at fair value through profit or 

loss 1,577,727,871 - - 1,577,727,871 


Assets 


loss 



loss 1,099,728,639 - - 1,099,728,639 


Balanced Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 2,618,370,195 - - 2,618,370,195 


Assets 


loss 



loss 2,205,526,696 - - 2,205,526,696



115 



(d) 



MPF Conservative Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 1,862,525,860 - - 1,862,525,860 


Assets 


loss 



loss 1,749,563,978 - - 1,749,563,978 


Capital Stable Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 1,122,718,404 - - 1,122,718,404 


Assets 


loss 

- Approved pooled investment funds 978,529,301 - - 978,529,301 


loss 978,529,301 - - 978,529,301



116 



(d) 



Fidelity SaveEasy 2020 Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 86,867,291 - - 86,867,291 


Assets 


loss 



loss 63,198,713 - - 63,198,713 




Assets 


loss 



loss 70,947,653 - - 70,947,653 


Assets 


loss 



loss 44,573,434 - - 44,573,434



117 



(d) 





Assets 


loss 



loss 84,600,309 - - 84,600,309 


Assets 


loss 



loss 48,318,564 - - 48,318,564 




Assets 


loss 



loss 89,935,846 - - 89,935,846 


Assets 


loss 



loss 54,066,391 - - 54,066,391



118 



(d) 





Assets 


loss 



loss 237,131,661 - - 237,131,661 


Assets 


loss 



loss 132,248,739 - - 132,248,739 


Global Equity Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 1,197,853,864 - - 1,197,853,864 


Assets 


loss 



loss 934,533,432 - - 934,533,432



119 



(d) 



Growth Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 3,777,876,551 - - 3,777,876,551 


Assets 


loss 



loss 3,121,315,113 - - 3,121,315,113 


Hong Kong Bond Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 446,537,631 - - 446,537,631 


Assets 


loss 



loss 341,847,756 - - 341,847,756



120 



(d) 



Hong Kong Equity Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 4,426,786,525 - - 4,426,786,525 


Assets 


loss 



loss 3,495,273,749 - - 3,495,273,749 


Stable Growth Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 1,934,472,136 - - 1,934,472,136 


Assets 


loss 



loss 1,655,810,386 - - 1,655,810,386



121 



(d) 



World Bond Fund HK$ HK$ HK$ HK$ 


Assets 


loss 



loss 491,415,833 - - 491,415,833 


Assets 


loss 



loss 379,848,093 - - 379,848,093 

Investments whose values are based on quoted market prices in active markets, and 

therefore classified within level 1 include approved pooled 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. As of 31st December 2012, 

the constituent funds did not hold any investments classified in level 2 (2011: Nil). 

Investments classified within level 3 have significant unobservable inputs, as they trade 

infrequently. As of 31st December 2012, the constituent funds did not hold any 

investments classified in level 3 (2011: Nil). 

(e) 

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 Net Assets. 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 Equity. 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.



122 



(e) 

Capital risk management (Continued) 

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 Investment Manager monitor capital on the basis of the value of net 

assets attributable to members. 

5 Fees 

Prior to 12th November 2011 

A constituent fund management fee consists of (i) an investment management fee and a 

member services fee payable to the Investment Manager, FIL Investment Management 

(Hong Kong) Limited; and (ii) a member record keeping fee, trustee & master custodian 

fee and fund administration & accounting fee payable to the Trustee, HSBC Institutional 

Trust Services (Asia) Limited. The constituent fund management fee is subject to a 

maximum of 4.25% per annum of the net asset value of the respective constituent funds. 

The constituent fund management fee of 0.695% per annum was charged to the 

constituent funds by the Investment Manager and the Trustee other than the MPF 

Conservative Fund. The constituent fund management fee of 0.835% per annum for the 

MPF Conservative Fund was charged by the Investment Manager and the Trustee. 

From 12th November 2011 

The investment management fee of 0.75% per annum is charged to the constituent 

funds by the Investment Manager other than the MPF Conservative Fund. The 

investment management fee of 0.40% per annum for the MPF Conservative Fund is 

charged by the Investment Manager. 

The administration fee of 0.60% per annum is charged to the constituent funds by the 

Investment Manager and the Trustee other than the MPF Conservative Fund. The 

administration fee of 0.68% per annum for the MPF Conservative Fund is charged by 

the Investment Manager and the Trustee. 

The total of the investment management fee and the administration fee is subject to a 

maximum of 3.75% per annum of the net asset value of the respective constituent 

funds.



123 


5 Fees (Continued) 

(a) 

Investment management fees 

The investment management fees payables as at year end were as follows: 

2012 2011 

HK$ 

HK$ 

Asia Pacific Equity Fund 988,365 700,326 

 

Balanced Fund 1,649,379 1,399,733 

 

MPF Conservative Fund 628,603 593,547 

 

Capital Stable Fund 709,243 620,242 

 

Fidelity SaveEasy 2020 Fund 56,083 39,701 

 


 


 


 


 

Global Equity Fund 755,526 588,398 

 

Growth Fund 2,375,711 1,986,019 

 

Hong Kong Bond Fund 282,507 215,886 

 

Hong Kong Equity Fund 2,775,544 2,247,029 

 

Stable Growth Fund 1,220,693 1,050,745 

 

World Bond Fund 310,223 240,444



124 



(b) 

Administration fees 

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

2012 2011 

HK$ 

HK$ 


 

Balanced Fund 1,319,503 1,119,786 

 

MPF Conservative Fund 1,068,625 1,009,030 

 


 


 


 


 


 


 


 

Growth Fund 1,900,569 1,588,815 

 


 

Hong Kong Equity Fund 2,220,435 1,797,623 

 

Stable Growth Fund 976,554 840,596 

 




125 



(c) 

Handling fees 

Transaction handling fees on purchases and sales of investments are charged by the 

Trustee. The transaction handling fees payables as at year end were as follows: 

2012 2011 

HK$ 

HK$ 


 

Balanced Fund 5,280 5,040 

 


 


 


 


 


 


 


 


 

Growth Fund 5,520 5,580 

 


 

Hong Kong Equity Fund 5,520 5,760 

 


 




126 



(d) 

Accounting fees 

Accounting fees for additional services rendered in the preparation of annual reports are 

charged by the Trustee. The accounting fees payables as at year end were as follows: 

2012 2011 

HK$ 

HK$ 


 

Balanced Fund 28,789 28,305 

 


 


 

Fidelity SaveEasy 2020 Fund 868 592 

 


 


 


 


 


 

Growth Fund 41,561 41,893 

 


 

Hong Kong Equity Fund 47,599 49,346 

 


 




127 


6 Contributions received and receivable 

Mandatory contributions for both the employers and members are equal to 5% of the 

employees’ relevant income up to HK$25,000 (prior to 1st June 2012: HK$20,000) per 

month but in respect of members earning less than HK$6,500 (prior to 1st November 

2011: HK$5,000) 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$1,250 (prior to 1st June 2012: HK$1,000) per month to the 

Scheme unless their relevant income is less than HK$6,500 (prior to 1st November 

2011: HK$5,000) per month. 

Any contributions made to the Scheme by the employers or members in excess of their 

mandatory contributions are additional voluntary contributions. 

7 Benefits paid and payable 

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 pursuant to the 

Ordinance. 

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. 

8 Financial assets at fair value through profit or loss 

The Scheme 

2012 2011 

HK$ 

HK$ 

Held for trading : 

Investments in constituent funds 

Asia Pacific Equity Fund 1,575,367,350 1,097,988,475 

Balanced Fund 2,613,862,954 2,201,511,514 

MPF Conservative Fund 1,864,530,441 1,751,617,829 

Capital Stable Fund 1,120,803,232 976,775,855 

Fidelity SaveEasy 2020 Fund 86,732,013 63,083,805 





Global Equity Fund 1,195,936,702 932,961,136 

Growth Fund 3,771,402,803 3,115,624,852 

Hong Kong Bond Fund 445,859,856 341,304,472 

Hong Kong Equity Fund 4,419,583,321 3,489,166,182 

Stable Growth Fund 1,931,181,536 1,652,846,979 

World Bond Fund 490,650,198 379,223,176 

Total financial assets at fair value through profit or 

loss 19,997,812,122 16,280,814,862



128 


8 Financial assets at fair value through profit or loss (Continued) 


2012 2011 

HK$ 

HK$ 



Approved pooled investment funds 1,577,727,871 1,099,728,639 


loss 1,577,727,871 1,099,728,639 

Balanced Fund 




loss 2,618,370,195 2,205,526,696 





loss 1,862,525,860 1,749,563,978 



Approved pooled investment funds 1,122,718,404 978,529,301 


loss 1,122,718,404 978,529,301 



Approved pooled investment funds 86,867,291 63,198,713 


loss 86,867,291 63,198,713



129 




2012 2011 

HK$ 

HK$ 




loss 70,947,653 44,573,434 





loss 84,600,309 48,318,564 





loss 89,935,846 54,066,391 





loss 237,131,661 132,248,739 



Approved pooled investment funds 1,197,853,864 934,533,432 


loss 1,197,853,864 934,533,432 

Growth Fund 




loss 3,777,876,551 3,121,315,113



130 




2012 2011 

HK$ 

HK$ 




loss 446,537,631 341,847,756 





loss 4,426,786,525 3,495,273,749 





loss 1,934,472,136 1,655,810,386 





loss 491,415,833 379,848,093 

9 Bank loans, overdrafts and other borrowings 

The Scheme and its constituent funds had no bank loans, overdrafts and other 

borrowings as at 31st December 2012 and 2011. 

10 Accrued benefits 

The total accrued benefits vested in the members’ accounts amounted to 

HK$19,585,364,375 as at 31st December 2012 (2011: HK$15,931,801,913).



131 


11 Auditor's remuneration 

The auditor's remuneration is allocated by the Investment Manager and Trustee to each 

constituent fund based on the net asset value of each individual constituent fund and 

accrued on a daily basis. 

12 Taxation 

The Scheme is not subject to Hong Kong profits tax as it is not considered to be carrying 

on a business in Hong Kong. 

13 Transactions with related parties 

In addition to the fees disclosed in note 5, the constituent funds had the following 

transactions with related parties, including the Trustee, the Investment Manager and 

their associates or delegates during the years ended 31st December 2012 and 2011. 

During the year, the Investment Manager subsidised certain expenses. These were 

disclosed as reimbursement income in the Statement of Comprehensive Income. 

As at 31st December 2012 and 2011, the Scheme and its constituent funds placed all 

bank deposits with the holding company of the Trustee. As at 31st December 2012 and 

2011, the constituent funds invested in approved pooled investment funds which are 

also managed by the Investment Manager. 

From 1st January 2012 to 30th November 2012, the constituent funds paid indemnity 

insurance expenses to HSBC Insurance (Asia) Limited, a related company of the 

Trustee. 

All transactions were entered into in the ordinary course of business and on normal 

commercial terms.



132 


14 Soft commission arrangements 

For the years ended 31st December 2012 and 2011, the Investment Manager and its 

associates did not enter into any soft commission sharing arrangements with brokers in 

relation to dealings in the assets of the Scheme and its constituent funds. 

15 Security lending arrangements 

During the year, the Scheme and its constituent funds did not enter into any security 

lending arrangements (2011: Nil). 

16 Negotiability of assets 

As at 31st December 2012 and 2011, there was no statutory or contractual requirement 

restricting the negotiability of the assets of the Scheme and its constituent funds. 

17 Commitments 

The Scheme and its constituent funds had no commitments as at 31st December 2012 

and 2011. 

18 Contingent liabilities 

The Scheme and its constituent funds had no contingent liabilities as at 31st December 

2012 and 2011. 

19 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 years ended 31st December 2012 and 2011. 

20 Approval of financial statements 

The financial statements were approved by the Trustee on 28th May 2013.

Annual Report and Accounts - Fidelity Investments

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